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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
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Date of Report (Date of earliest event reported): December 11, 1997
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 333-27355 13-3526694
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
One New York Plaza 10292
New York, New York (Zip Code)
(Address of Principal
Executive Offices)
Registrant's telephone number, including area code: (212) 778-1000
No Change
(Former name or former address, if changed since last report)
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<PAGE>
Item 2. Acquisition or Disposition of Assets
Description of the Certificates and the Mortgage Loans
Prudential Securities Secured Financing Corporation registered
issuances of up to $1,500,000,000 principal amount of Mortgage Pass-Through
Certificates on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, as amended (the "Act"), by the Registration Statements
on Form S-3 (Registration File No. 333-27355) (as amended, the "Registration
Statement"). Pursuant to the Registration Statement, Wilshire Mortgage Loan
Trust 1997-2 (the "Trust") issued approximately $127,505,000 in aggregate
principal amount of its Mortgage Pass-Through Certificates, Series 1997-2 (the
"Certificates"), on December 11, 1997. This Current Report on Form 8-K is being
filed to satisfy an undertaking to file copies of certain agreements executed in
connection with the issuance of the Certificates, the forms of which were filed
as Exhibits to the Registration Statement.
The Certificates were issued pursuant to a Pooling and
Servicing Agreement (the "Pooling and Servicing Agreement") attached hereto as
Exhibit 4.1, dated as of November 1, 1997, between Prudential Securities Secured
Financing Corporation, Wilshire Servicing Corporation, in its capacity as
servicer (the "Servicer"), and Bankers Trust Company of California N.A., in its
capacity as trustee (the "Trustee"). The Certificates consist of ten classes of
senior Certificates, the Class A-1 Certificates (the "Class A-1 Certificates"),
the Class A-2 Certificates (the "ClassA-2 Certificates"), the Class A-3
Certificates (the "Class A-3 Certificates"), the Class A-4 Certificates (the
"Class A-4 Certificates"), the Class A-5 Certificates (the "Class A-5
Certificates"), the Class A-6 Certificates (the "Class A-6 Certificates"), the
Class A-7 Certificates (the "Class A-7 Certificates"), the Class M-1
Certificates (the "Class M-1 Certificates"), the Class M-2 Certificates (the
"Class M-2 Certificates") and the Class M-3 Certificates (the "Class M-3
Certificates") (collectively the "Offered Certificates"), two classes of
subordinated Certificates, the Class B Certificates (the "Class B Certificates")
and the Class C Certificates (the "Class C Certificates") (together the
"Subordinate Certificates"), and one class of residual certificates, the Class R
Certificates (the "Class R Certificates"). Only the Offered Certificates were
offered. The Certificates initially evidenced, in the aggregate, 100% of the
undivided beneficial ownership interests in the Trust.
The assets of the Trust consist primarily of fixed- and adjustable-rate,
closed-end, monthly pay, generally fully amortizing, mortgage loans (the
"Mortgage Loans") secured by first or second lien mortgages or deeds of trust
(the "Mortgages") on real properties (the "Mortgage Properties"). The Mortgaged
Properties securing the Mortgage Loans consist primarily of one-to-four family
residential properties.
Interest distributions on the Offered Certificates are based
on the Certificate Principal Balance thereof and the then applicable
Pass-Through Rate thereof. The Pass-Through Rates for the Class A-1 Certificates
and the Class A-6 Certificates are variable. The Pass-Through Rates for the
Class A-2 Certificates, the Class A-3 Certificates, the Class A-4 Certificates,
the Class A-5 Certificates, the Class A-7 Certificates, the Class M-1
Certificates, the Class M-2 Certificates and the Class M-3 Certificates are
6.650%, 6.720%, 6.865%, 7.255%, 6.835%, 7.180%, 7.425% and 7.770% per annum,
respectively.
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 M-1
Certificates, the Class M-2 Certificates and the Class M-3 Certificates have
original Certificate Principal Balances of $36,217,000, $10,000,000,
$12,000,000, $12,000,000,
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$10,000,000, $16,302,000, $8,912,000, $8,236,000, $7,578,000 and $6,260,000.
respectively.
As of the Closing Date, the Mortgage Loans possessed the
characteristics described in the Prospectus dated June 10, 1997 and the
Prospectus Supplement dated December 4, 1997 filed pursuant to Rule 424(b) (5)
of the Act on December 16, 1997.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Not applicable
(b) Not applicable
(c) Exhibits:
1.1 Underwriting Agreement, dated December 4, 1997, between Prudential
Securities Secured Financing Corporation and Prudential Securities
Incorporated.
4.1 Pooling and Servicing Agreement, dated as of November 1, 1997, between
Prudential Securities Secured Financing Corporation, Wilshire
Servicing Corporation, as servicer, WMFC 1997-2 Inc. as unaffiliated
seller, and Bankers Trust Company of California N.A., as trustee.
4.2 Unaffiliated Seller's Agreement, dated as of November 1, 1997, among
Prudential Securities Secured Financing Corporation, and WMFC 1997-2,
Inc. and Wilshire Servicing Corporation.
20.1 Tax opinion of Dewey Ballantine L.L.P.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
PRUDENTIAL SECURITIES SECURED
FINANCING CORPORATION
As Depositor and on
behalf of Wilshire
Mortgage Loan Trust 1997-2
Registrant
By:/s/
--------------------------
Name:
Title:
Dated: December 26, 1997
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EXHIBIT INDEX
Exhibit No. Description
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1.1 Underwriting Agreement, dated December 4, 1997, between
Prudential Securities Secured Financing Corporation and
Prudential Securities Incorporated.
4.1 Pooling and Servicing Agreement, dated as of November
1, 1997, between Prudential Securities Secured
Financing Corporation, Wilshire Servicing Corporation,
as servicer, WMFC 1997-2 Inc. as unaffiliated seller,
and Bankers Trust Company of California N.A., as
trustee.
4.2 Unaffiliated Seller's Agreement, dated as of November
1, 1997, among Prudential Securities Secured Financing
Corporation, and WMFC 1997-2, Inc. and Wilshire
Servicing Corporation.
20.1 Tax opinion of Dewey Ballantine L.L.P.
EXHIBIT 1.1
WILSHIRE MORTGAGE LOAN TRUST 1997-2
MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1997-2
UNDERWRITING AGREEMENT
<PAGE>
UNDERWRITING AGREEMENT
PRUDENTIAL SECURITIES INCORPORATED
One New York Plaza
New York, New York 10292
December 4, 1997
Ladies and Gentlemen:
Prudential Securities Secured Financing Corporation (the
"Depositor") proposes, subject to the terms and conditions stated herein and in
the attached Underwriting Agreement Standard Provisions, dated December 4, 1997
(the "Standard Provisions"), between the Depositor and Prudential Securities
Incorporated, to issue and sell to you (the "Underwriter") the Securities
specified in Schedule I hereto (the "Offered Securities"). The Depositor agrees
that each of the provisions of the Standard Provisions is incorporated herein by
reference in its entirety, and shall be deemed to be a part of this Agreement to
the same extent as if such provisions had been set forth in full herein; and
each of the representations and warranties set forth therein shall be deemed to
have been made at and as of the date of this Underwriting Agreement. Each
reference to the "Representative" herein and in the provisions of the Standard
Provisions so incorporated by reference shall be deemed to refer to you. Unless
otherwise defined herein, terms defined in the Standard Provisions are used
herein as therein defined. The Prospectus Supplement and the accompanying
Prospectus relating to the Offered Securities (together, the "Prospectus") are
incorporated by reference herein.
Subject to the terms and conditions set forth herein and in
the Standard Provisions incorporated herein by reference, the Depositor agrees
to issue and sell to the Underwriter, and the Underwriter agrees to purchase
from the Depositor, at the time and place and at the purchase price to the
Underwriter and in the manner set forth in Schedule I hereto, the entire
original principal balance of the Offered Securities.
If the foregoing is in accordance with your understanding,
please sign and return to us two counterparts hereof, and upon acceptance hereof
by you, this letter and such acceptance hereof, including the provisions of the
Standard Provisions incorporated herein by reference, shall constitute a binding
agreement between the Underwriter and the Depositor.
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Yours truly,
PRUDENTIAL SECURITIES SECURED
FINANCING CORPORATION
By:/s/
-------------------------
Name:
Title:
Accepted as of the date hereof:
PRUDENTIAL SECURITIES INCORPORATED
By:/s/
-------------------------
Name:
Title:
[Signature Page to Underwriting Agreement]
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SCHEDULE I
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Title of Offered
Securities: Wilshire Mortgage Loan Trust 1997-2, Mortgage Loan
Pass-Through Certificates, Series 1997-2, Class A-1,
Class A-2, Class A-3, Class A-4, Class A-5, Class A-6,
Class A-7, Class M-1, Class M-2 and Class M-3 (the
"Offered Securities").
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Terms of Offered
Securities: The Offered Securities shall have the terms set forth
in the Prospectus and shall conform in all material
respects to the descriptions thereof contained therein,
and shall be issued pursuant to a Pooling and Servicing
Agreement to be dated as of November 1, 1997 among the
Depositor, WMFC 1997-2 Inc., Wilshire Servicing
Corporation, as Servicer and Bankers Trust Company of
California, N.A., as Trustee and as Backup Servicer.
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Purchase Price: The purchase price for the Offered Securities shall be
$127,612,439.42 (which includes accrued interest on the
Offered Certificates, except for the Class A-1
Certificates and the Class A-6 Certificates, from
November 1, 1997 up to but not including December 11,
1997).
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Specified funds
for payment of
Purchase Price: Federal Funds (immediately available funds).
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Required Ratings: By Moody's Investors Service, Inc.
Class A Certificates: Aaa
Class M-1 Certificates: Aa2
Class M-2 Certificates: A2
Class M-3 Certificates: Baa3
By Fitch Investor's Service L.P.
Class A Certificates: AAA
Class M-1 Certificates: AA+
Class M-2 Certificates: A+
Class M-3 Certificates: BBB+
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Closing Date: On or about December 11, 1997 at 11:00 A.M. eastern
standard time or at such other time as the Depositor
and the Underwriter shall agree.
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Closing Location: Offices of Dewey Ballantine LLP, 1301 Avenue of the
Americas, New York, New York.
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Name and Address Prudential Securities Incorporated
of Designated One New York Plaza
Representative: New York New York 10292
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Address for
Notices, etc.: One New York Plaza
New York, New York 10292
Attn: Len Blum
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<PAGE>
STANDARD PROVISIONS TO UNDERWRITING AGREEMENT
December 4, 1997
From time to time, Prudential Securities Secured Financing
Corporation, a Delaware corporation (the "Depositor") may enter into one or more
underwriting agreements (each, an "Underwriting Agreement") that provide for the
sale of designated securities to the several underwriters named therein (such
underwriters constituting the "Underwriters" with respect to such Underwriting
Agreement and the securities specified therein). The several underwriters named
in an Underwriting Agreement will be represented by one or more representatives
as named in such Underwriting Agreement (collectively, the "Representative").
The term "Representative" also refers to a single firm acting as sole
representative of the Underwriters and to Underwriters who act without any firm
being designated as their representative. The standard provisions set forth
herein (the "Standard Provisions") may be incorporated by reference in any
Underwriting Agreement. This Agreement shall not be construed as an obligation
of the Depositor to sell any securities or as an obligation of any of the
Underwriters to purchase such securities. The obligation of the Depositor to
sell any securities and the obligation of any of the Underwriters to purchase
any of the securities shall be evidenced by the Underwriting Agreement with
respect to the securities specified therein. An Underwriting Agreement shall be
in the form of an executed writing (which may be in counterparts), and may be
evidenced by an exchange of telegraphic communications or any other rapid
transmission device designed to produce a written record of the communications
transmitted. The obligations of the underwriters under this Agreement and each
Underwriting Agreement shall be several and not joint. Unless otherwise defined
herein, the terms defined in the Underwriting Agreement are used herein as
defined in the Prospectus referred to below.
1. The Offered Securities. The Depositor proposes to sell
pursuant to the applicable Underwriting Agreement to the several Underwriters
named therein mortgage loan certificates (the "Securities") representing
beneficial ownership interests in a trust, the trust property of which consists
of a pool of mortgage loans (the "Mortgage Loans") and certain related property.
The Securities will be issued pursuant to a pooling and servicing agreement (the
"Pooling and Servicing Agreement") by and among the Depositor, WMFC 1997-2 Inc.,
as unaffiliated seller (the "Unaffiliated Seller"), Wilshire Servicing
Corporation, as servicer (the "Servicer"), and Bankers Trust Company of
California, N.A., as trustee (the "Trustee") and as backup servicer (the "Backup
Servicer"). .
The terms and rights of any particular issuance of Securities
shall be as specified in the Underwriting Agreement relating thereto and in or
pursuant to the Pooling and Servicing Agreement identified in such Underwriting
Agreement. The Securities which are the subject of any particular Underwriting
Agreement into which this Agreement is incorporated are herein referred to as
the "Offered Securities."
The Depositor has filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3 (File No.
333-16511), including a prospectus relating to the Securities under the
Securities Act of 1933, as amended (the "1933 Act"). The term "Registration
Statement" means such registration statement as amended to the date of the
Underwriting Agreement. The term "Base Prospectus" means the prospectus included
in the Registration Statement. The term "Prospectus" means the Base Prospectus
together with the prospectus supplement specifically relating to the Offered
Securities, as first filed with the Commission pursuant to Rule 424. The term
"Preliminary Prospectus" means a preliminary
<PAGE>
prospectus supplement specifically relating to the Offered Securities together
with the Base Prospectus.
2. Offering by the Underwriters. Upon the execution of the
Underwriting Agreement applicable to any Offered Securities and the
authorization by the Representative of the release of such Offered Securities,
the several Underwriters propose to offer for sale to the public the Offered
Securities at the prices and upon the terms set forth in the Prospectus.
3. Purchase, Sale and Delivery of the Offered Securities.
Unless otherwise specified in the Underwriting Agreement, payment for the
Offered Securities shall be made by wire transfer, certified or official bank
check or checks payable to the order of the Depositor in immediately available
or next day funds, at the time and place set forth in the Underwriting
Agreement, upon delivery to the Representative for the respective accounts of
the several Underwriters of the Offered Securities registered in definitive form
and in such names and in such denominations as the Representative shall request
in writing not less than five full business days prior to the date of delivery.
The time and date of such payment and delivery with respect to the Offered
Securities are herein referred to as the "Closing Date".
4. Conditions of the Underwriters' Obligations. The respective
obligations of the several Underwriters pursuant to the Underwriting Agreement
shall be subject, in the discretion of the Representative, to the accuracy in
all material respects of the representations and warranties of the Depositor
contained herein as of the date of the Underwriting Agreement and as of the
Closing Date as if made on and as of the Closing Date, to the accuracy in all
material respects of the statements of the officers of the Depositor, the
Unaffiliated Seller and the Servicer made in any certificates pursuant to the
provisions hereof and of the Underwriting Agreement, to the performance by the
Depositor of its covenants and agreements contained herein and to the following
additional conditions precedent:
(a) All actions required to be taken and all filings required
to be made by or on behalf of the Depositor under the 1933 Act and the
Securities Exchange Act of 1934, as amended (the "1934 Act") prior to
the sale of the Offered Securities shall have been duly taken or made.
(b) (i) No stop order suspending the effectiveness of the
Registration Statement shall be in effect; (ii) no proceedings for such
purpose shall be pending before or threatened by the Commission, or by
any authority administering any state securities or "Blue Sky" laws;
(iii) any requests for additional information on the part of the
Commission shall have been complied with to the Representative's
reasonable satisfaction; (iv) since the respective dates as of which
information is given in the Registration Statement and the Prospectus
except as otherwise stated therein, there shall have been no material
adverse change in the condition, financial or otherwise, earnings,
affairs, regulatory situation or business prospects of the Depositor;
(v) there are no material actions, suits or proceedings pending before
any court or governmental agency, authority or body or threatened,
affecting the Depositor or the transactions contemplated by the
Underwriting Agreement; (vi) the Depositor is not in violation of its
charter or its by-laws or in default in the performance or observance
of any obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, loan agreement, note, lease or other
instrument to which it is a party or by which it or its properties may
be bound, which violations or defaults separately or in the aggregate
would have a material adverse effect on the Depositor; and (vii) the
Representative shall have received,
<PAGE>
on the Closing Date a certificate, dated the Closing Date and signed by
an executive officer of the Depositor, to the foregoing effect.
(c) Subsequent to the execution of the Underwriting Agreement,
there shall not have occurred any of the following: (i) if at or prior
to the Closing Date, trading in securities on the New York Stock
Exchange shall have been suspended or any material limitation in
trading in securities generally shall have been established on such
exchange, or a banking moratorium shall have been declared by New York
or United States authorities; (ii) if at or prior to the Closing Date,
there shall have been an outbreak or escalation of hostilities between
the United States and any foreign power, or of any other insurrection
or armed conflict involving the United States which results in the
declaration of a national emergency or war, and, in the reasonable
opinion of the Representative, makes it impracticable or inadvisable to
offer or sell the Offered Securities or (iii) if at or prior to the
Closing Date, a general moratorium on commercial banking activities in
New York shall have been declared by either federal or New York State
authorities.
(d) The Representative shall have received, on the Closing
Date, a certificate dated the Closing Date and signed by an executive
officer of the Depositor to the effect that attached thereto is a true
and correct copy of the letter from each nationally recognized
statistical rating organization (as that term is defined by the
Commission for purposes of Rule 436(g)(2) under the 1933 Act) that
rated the Offered Securities and confirming that, unless otherwise
specified in the Underwriting Agreement, the Offered Securities have
been rated in the highest rating categories by each such organization
and that each such rating has not been rescinded since the date of the
applicable letter.
(e) The Representative shall have received, on the Closing
Date, an opinion of Dewey Ballantine LLP, special counsel for the
Depositor, dated the Closing Date, in form and substance satisfactory
to the Representative and containing opinions substantially to the
effect set forth in Exhibit A hereto.
(f) The Representative shall have received, on the Closing
Date, an opinion of counsel for the Unaffiliated Seller, dated the
Closing Date, in form and substance satisfactory to the Representative
and counsel for the Underwriters and containing opinions substantially
to the effect set forth in Exhibit B hereto.
(g) The Representative shall have received, on the Closing
Date, an opinion of counsel for the Trustee, dated the Closing Date, in
form and substance satisfactory to the Representative and to counsel
for the Underwriters and containing opinions substantially to the
effect set forth in Exhibit C hereto.
(h) The Representative shall have received, on the Closing
Date, an opinion of Dewey Ballantine LLP, counsel for the Underwriters,
dated the Closing Date, with respect to the incorporation of the
Depositor, the validity of the Offered Securities, the Registration
Statement, the Prospectus and other related matters as the Underwriters
may reasonably require, and the Depositor shall have furnished to such
counsel such documents as they request for the purpose of enabling them
to pass upon such matters.
(i) The Representative shall have received, on or prior to the
date of first use of the prospectus supplement relating to the Offered
Securities, and on the Closing Date if requested by the Representative,
letters of independent accountants of the Depositor in
<PAGE>
the form and reflecting the performance of the procedures previously
requested by the Representative.
(j) The Depositor shall have furnished or caused to be
furnished to the Representative on the Closing Date a certificate of an
executive officer of the Depositor satisfactory to the Representative
as to the accuracy of the representations and warranties of the
Depositor herein at and as of such Closing Date as if made as of such
date, as to the performance by the Depositor of all of its obligations
hereunder to be performed at or prior to such Closing Date, and as to
such other matters as the Representative may reasonably request;
(k) The Unaffiliated Seller shall have furnished or caused to
be furnished to the Representative on the Closing Date a certificate of
officers of the Unaffiliated Seller in form and substance reasonably
satisfactory to the Representative;
(l) The Representative shall have received executed copies of
the Pooling and Servicing Agreement, and the Unaffiliated Seller's
Agreement among the Unaffiliated Seller, the Servicer and the Depositor
(the "Unaffiliated Seller's Agreement"), (together, the "Transaction
Documents").
(m) The Representative shall have been furnished such further
information, certificates, documents and opinions as the Representative
may reasonably request.
5. Covenants of the Depositor. In further consideration of the
agreements of the Underwriters contained in the Underwriting Agreement, the
Depositor covenants as follows:
(a) To furnish the Representative, without charge, copies of
the Registration Statement and any amendments thereto including
exhibits and as many copies of the Prospectus and any supplements and
amendments thereto as the Representative may from time to time
reasonably request.
(b) Immediately following the execution of the Underwriting
Agreement, the Depositor will prepare a prospectus supplement setting
forth the principal amount, notional amount or stated amount, as
applicable, of Offered Securities covered thereby, the price at which
the Offered Securities are to be purchased by the Underwriters from the
Depositor, either the initial public offering price or prices or the
method by which the price or prices at which the Offered Securities are
to be sold will be determined, the selling concessions and
reallowances, if any, any delayed delivery arrangements, and such other
information as the Representative and the Depositor deem appropriate in
connection with the offering of the Offered Securities, but the
Depositor will not file any amendment to the Registration Statement or
any supplement to the Prospectus of which the Representative shall not
previously have been advised and furnished with a copy a reasonable
time prior to the proposed filing or to which the Representative shall
have reasonably objected. The Depositor will use its best efforts to
cause any amendment to the Registration Statement to become effective
as promptly as possible. During the time when a Prospectus is required
to be delivered under the 1933 Act, the Depositor will comply so far as
it is able with all requirements imposed upon it by the 1933 Act and
the rules and regulations thereunder to the extent necessary to permit
the continuance of sales or of dealings in the Offered Securities in
accordance with the provisions hereof and of the Prospectus, and the
Depositor will prepare and file with the Commission, promptly upon
request by the Representative, any amendments to the Registration
Statement or
<PAGE>
supplements to the Prospectus which may be necessary or advisable in
connection with the distribution of the Offered Securities by the
Underwriters, and will use its best efforts to cause the same to become
effective as promptly as possible. The Depositor will advise the
Representative, promptly after it receives notice thereof, of the time
when any amendment to the Registration Statement or any amended
Registration Statement has become effective or any supplement to the
Prospectus or any amended Prospectus has been filed. The Depositor will
advise the Representative, promptly after it receives notice or obtains
knowledge thereof, of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or any order
preventing or suspending the use of any Preliminary Prospectus or the
Prospectus, or the suspension of the qualification of the Offered
Securities for offering or sale in any jurisdiction, or of the
initiation or threatening of any proceeding for any such purpose, or of
any request made by the Commission for the amending or supplementing of
the Registration Statement or the Prospectus or for additional
information, and the Depositor will use its best efforts to prevent the
issuance of any such stop order or any order suspending any such
qualification, and if any such order is issued, to obtain the lifting
thereof as promptly as possible.
(c) If, at any time when a prospectus relating to the Offered
Securities is required to be delivered under the 1933 Act, any event
occurs as a result of which the Prospectus as then amended or
supplemented would include any untrue statement of a material fact, or
omit to state any material fact 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, or if it is
necessary for any other reason to amend or supplement the Prospectus to
comply with the 1933 Act, to promptly notify the Representative thereof
and upon its request to prepare and file with the Commission, at the
Depositor's own expense, an amendment or supplement which will correct
such statement or omission or any amendment which will effect such
compliance.
(d) During the period when a prospectus is required by law to
be delivered in connection with the sale of the Offered Securities
pursuant to the Underwriting Agreement, the Depositor will file, on a
timely and complete basis, all documents that are required to be filed
by the Depositor with the Commission pursuant to Sections 13, 14, or
15(d) of the 1934 Act.
(e) To qualify the Offered Securities for offer and sale under
the securities or "Blue Sky" laws of such jurisdictions as the
Representative shall reasonably request and to pay all expenses
(including fees and disbursements of counsel) in connection with such
qualification of the eligibility of the Offered Securities for
investment under the laws of such jurisdictions as the Representative
may designate provided that in connection therewith the Depositor shall
not be required to qualify to do business or to file a general consent
to service of process in any jurisdiction.
(f) To make generally available to the Depositor's security
holders, as soon as practicable, but in any event not later than
eighteen months after the date on which the filing of the Prospectus,
as amended or supplemented, pursuant to Rule 424 under the 1933 Act
first occurs, an earnings statement of the Depositor covering a
twelve-month period beginning after the date of the Underwriting
Agreement, which shall satisfy the provisions of Section 11(a) of the
1933 Act and the applicable rules and regulations of the Commission
thereunder (including, at the option of the Depositor, Rule 158).
<PAGE>
(g) For so long as any of the Offered Securities remain
outstanding, to furnish to the Representative upon request in writing
copies of such financial statements and other periodic and special
reports as the Depositor may from time to time distribute generally to
its creditors or the holders of the Offered Securities and to furnish
to the Representative copies of each annual or other report the
Depositor shall be required to file with the Commission.
(h) For so long as any of the Offered Securities remain
outstanding, the Depositor will, or will cause the Servicer to, furnish
to the Representative, as soon as available, a copy of (i) the annual
statement of compliance delivered by the Servicer to the Trustee under
the applicable Pooling and Servicing Agreement, (ii) the annual
independent public accountants' servicing report furnished to the
Trustee pursuant to the applicable Pooling and Servicing Agreement,
(iii) each report regarding the Offered Securities mailed to the
holders of such Securities, and (iv) from time to time, such other
information concerning such Securities as the Representative may
reasonably request.
6. Representations and Warranties of the Depositor. The
Depositor represents and warrants to, and agrees with, each Underwriter, as of
the date of the Underwriting Agreement, as follows:
(a) The Registration Statement including a prospectus relating
to the Securities and the offering thereof from time to time in
accordance with Rule 415 under the 1933 Act has been filed with the
Commission and such Registration Statement, as amended to the date of
the Underwriting Agreement, has become effective. No stop order
suspending the effectiveness of such Registration Statement has been
issued and no proceeding for that purpose has been initiated or
threatened by the Commission. A prospectus supplement specifically
relating to the Offered Securities will be filed with the Commission
pursuant to Rule 424 under the 1933 Act; provided, however, that a
supplement to the Prospectus prepared pursuant to Section 5(b) hereof
shall be deemed to have supplemented the Basic Prospectus only with
respect to the Offered Securities to which it relates. The conditions
to the use of a registration statement on Form S-3 under the 1933 Act,
as set forth in the General Instructions on Form S-3, and the
conditions of Rule 415 under the 1933 Act, have been satisfied with
respect to the Depositor and the Registration Statement. There are no
contracts or documents of the Depositor that are required to be filed
as exhibits to the Registration Statement pursuant to the 1933 Act or
the rules and regulations thereunder that have not been so filed.
(b) On the effective date of the Registration Statement, the
Registration Statement and the Basic Prospectus conformed in all
material respects to the requirements of the 1933 Act and the rules and
regulations thereunder, and did not include any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading; on
the date of the Underwriting Agreement and as of the Closing Date, the
Registration Statement and the Prospectus conform, and as amended or
supplemented, if applicable, will conform in all material respects to
the requirements of the 1933 Act and the rules and regulations
thereunder, and on the date of the Underwriting Agreement and as of the
Closing Date, neither of such documents includes any untrue statement
of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading, and neither of such documents as amended or supplemented,
if applicable, will include any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary to make the statements
<PAGE>
therein not misleading; provided, however, that the foregoing does not
apply to statements or omissions in any of such documents based upon
written information furnished to the Depositor by any Underwriter
specifically for use therein.
(c) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as
otherwise stated therein, there has been no material adverse change in
the condition, financial or otherwise, earnings, affairs, regulatory
situation or business prospects of the Depositor, whether or not
arising in the ordinary course of the business of the Depositor.
(d) The Depositor has been duly organized and is validly
existing as a corporation in good standing under the laws of the State
of Delaware.
(e) The Depositor has all requisite power and authority
(corporate and other) and all requisite authorizations, approvals,
orders, licenses, certificates and permits of and from all government
or regulatory officials and bodies to own its properties, to conduct
its business as described in the Registration Statement and the
Prospectus and to execute, deliver and perform this Agreement, the
Underwriting Agreement and the Pooling and Servicing Agreement, except
such as may be required under state securities or Blue Sky laws in
connection with the purchase and distribution by the Underwriter of the
Offered Securities; all such authorizations, approvals, orders,
licenses, certificates are in full force and effect and contain no
unduly burdensome provisions; and, except as set forth or contemplated
in the Registration Statement or the Prospectus, there are no legal or
governmental proceedings pending or, to the best knowledge of the
Depositor, threatened that would result in a material modification,
suspension or revocation thereof.
(f) The Offered Securities have been duly authorized, and when
the Offered Securities are issued and delivered pursuant to the
Underwriting Agreement, the Offered Securities will have been duly
executed, issued and delivered and will be entitled to the benefits
provided by the applicable Pooling and Servicing Agreement, subject, as
to the enforcement of remedies, to applicable bankruptcy,
reorganization, insolvency, moratorium and other laws affecting the
rights of creditors generally, and to general principles of equity
(regardless of whether the entitlement to such benefits is considered
in a proceeding in equity or at law), and will conform in substance to
the description thereof contained in the Registration Statement and the
Prospectus, and will in all material respects be in the form
contemplated by the Pooling and Servicing Agreement.
(g) The execution and delivery by the Depositor of this
Agreement, the Underwriting Agreement and the Pooling and Servicing
Agreement are within the corporate power of the Depositor and neither
the execution and delivery by the Depositor of this Agreement, the
Underwriting Agreement and the Pooling and Servicing Agreement nor the
consummation by the Depositor of the transactions therein contemplated,
nor the compliance by the Depositor with the provisions thereof, will
conflict with or result in a breach of, or constitute a default under,
the charter or the by-laws of the Depositor or any of the provisions of
any law, governmental rule, regulation, judgment, decree or order
binding on the Depositor or its properties, or any of the provisions of
any indenture, mortgage, contract or other instrument to which the
Depositor is a party or by which it is bound, or will result in the
creation or imposition of a lien, charge or encumbrance upon any of its
property pursuant to the terms of any such indenture, mortgage,
contract or other instrument, except such as have been obtained under
the 1933 Act and such consents, approvals, authorizations,
registrations or
<PAGE>
qualifications as may be required under state securities or Blue Sky
laws in connection with the purchase and distribution of the Offered
Securities by the Underwriters.
(h) The Underwriting Agreement has been, and at the Closing
Date the Pooling and Servicing Agreement will have been, duly
authorized, executed and delivered by the Depositor.
(i) At the Closing Date, each of the Underwriting Agreement
and the Pooling and Servicing Agreement will constitute a legal, valid
and binding obligation of the Depositor, enforceable against the
Depositor, in accordance with its terms, subject, as to the enforcement
of remedies, to applicable bankruptcy, reorganization, insolvency,
moratorium and other laws affecting the rights of creditors generally,
and to general principles of equity and the discretion of the court
(regardless of whether the enforcement of such remedies is considered
in a proceeding in equity or at law).
(j) No filing or registration with, notice to, or consent,
approval, non-disapproval, authorization or order or other action of,
any court or governmental authority or agency is required for the
consummation by the Depositor of the transactions contemplated by the
Underwriting Agreement or the Pooling and Servicing Agreement, except
such as have been obtained and except such as may be required under the
1933 Act, the rules and regulations thereunder, or state securities or
"Blue Sky" laws, in connection with the purchase and distribution of
the Offered Securities by the Underwriters.
(k) The Depositor owns or possesses or has obtained all
material governmental licenses, permits, consents, orders, approvals
and other authorizations necessary to lease, own or license, as the
case may be, and to operate, its properties and to carry on its
business as presently conducted and has received no notice of
proceedings relating to the revocation of any such license, permit,
consent, order or approval, which singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would materially
adversely affect the conduct of the business, results of operations,
net worth or condition (financial or otherwise) of the Depositor.
(l) Other than as set forth or contemplated in the Prospectus,
there are no legal or governmental proceedings pending to which the
Depositor is a party or of which any property of the Depositor is the
subject which, if determined adversely to the Depositor would
individually or in the aggregate have a material adverse effect on the
condition (financial or otherwise), earnings, affairs, or business or
business prospects of the Depositor and, to the best of the Depositor's
knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others.
(m) Each of the Offered Securities will, when issued, be a
"mortgage related security" as such term is defined in Section 3(a)(41)
of the 1934 Act.
(n) At the Closing Date each of the Mortgage Loans which is a
subject of the Pooling and Servicing Agreement and all such Mortgage
Loans in the aggregate will meet the criteria for selection described
in the Prospectus, and at the Closing Date the representations and
warranties made by the Depositor in such Pooling and Servicing
Agreement will be true and correct as of such date.
<PAGE>
(o) At the time of execution and delivery of the Pooling and
Servicing Agreement, the Depositor will have good and marketable title
to the Mortgage Loans being transferred to the Trustee pursuant to the
Pooling and Servicing Agreement, free and clear of any lien, mortgage,
pledge, charge, encumbrance, adverse claim or other security interest
(collectively, "Liens"), and will not have assigned to any person any
of its right, title or interest in such Mortgage Loans or in such
Pooling and Servicing Agreement or the Offered Securities being issued
pursuant thereto, the Depositor will have the power and authority to
transfer such Mortgage Loans to the Trustee and to transfer the Offered
Securities to each of the Underwriters, and upon execution and delivery
to the Trustee of the Pooling and Servicing Agreement and delivery to
each of the Underwriters of the Offered Securities, the Trustee will
have good and marketable title to the Mortgage Loans and each of the
Underwriters will have good and marketable title to the Offered
Securities, in each case free and clear of any Liens.
(p) The Pooling and Servicing Agreement is not required to be
qualified under the Trust Indenture Act of 1939, as amended, and the
Trust Fund (as defined in the Pooling and Servicing Agreement) is not
required to be registered under the Investment Company Act of 1940, as
amended.
(q) Any taxes, fees and other governmental charges in
connection with the execution, delivery and issuance of the
Underwriting Agreement, this Agreement, the Pooling and Servicing
Agreement and the Offered Securities have been or will be paid at or
prior to the Closing Date.
7. Indemnification and Contribution.
(a) The Depositor agrees to indemnify and hold harmless each
Underwriter (including Prudential Securities Incorporated acting in its
capacity as Representative and as one of the Underwriters), and each
person, if any, who controls any Underwriter within the meaning of the
1933 Act, against any losses, claims, damages or liabilities, joint or
several, to which such Underwriter or such controlling person may
become subject under the 1933 Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement,
any Preliminary Prospectus, the Prospectus, or any amendment or
supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and
will reimburse each Underwriter and each such controlling person for
any legal or other expenses reasonably incurred by such Underwriter or
such controlling person in connection with investigating or defending
any such loss, claim, damage, liability or action; provided, however,
that the Depositor will not be liable in any such case to the extent
that any such loss, claim, damage or liability arises out of or is
based upon any untrue statement or alleged untrue statement or omission
or alleged omission made in the Registration Statement, any Preliminary
Prospectus, the Prospectus or any amendment or supplement thereto in
reliance upon and in conformity with (1) written information furnished
to the Depositor by any Underwriter through the Representative
specifically for use therein or (2) information regarding the Mortgage
Loans except to the extent that the Depositor has been indemnified by
the Unaffiliated Seller or the Servicer. This indemnity agreement will
be in addition to any liability which the Depositor may otherwise have.
<PAGE>
(b) Each Underwriter will indemnify and hold harmless the
Depositor, each of the Depositor's directors, each of the Depositor's
officers who signed the Registration Statement and each person, if any,
who controls the Depositor, within the meaning of the 1933 Act, against
any losses, claims, damages or liabilities to which the Depositor, or
any such director, officer or controlling person may become subject,
under the 1933 Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, any Preliminary
Prospectus, the Prospectus, or any amendment or supplement thereto, or
any other prospectus relating to the Offered Securities, or arise out
of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but only
to the extent, that such untrue statements or alleged untrue statements
or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Depositor by any
Underwriter through the Representative specifically for use therein;
and each Underwriter will reimburse any legal or other expenses
reasonably incurred by the Depositor or any such director, officer or
controlling person in connection with investigating or defending any
such loss, claim, damage, liability or action. This indemnity agreement
will be in addition to any liability which such Underwriter may
otherwise have. The Depositor acknowledges that the statements set
forth under the caption "Plan of Distribution" in the Prospectus
Supplement constitute the only information furnished to the Depositor
by or on behalf of any Underwriter for use in the Registration
Statement, any Preliminary Prospectus or the Prospectus, and each of
the several Underwriters represents and warrants that such statements
are correct as to it.
(c) Promptly after receipt by an indemnified party under this
Section 7 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the
indemnifying party under this Section 7, notify the indemnifying party
of the commencement thereof, but the omission to so notify the
indemnifying party will not relieve the indemnifying party from any
liability which the indemnifying party may have to any indemnified
party hereunder except to the extent such indemnifying party has been
prejudiced thereby. In case any such action is brought against any
indemnified party, and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to
participate therein and, to the extent that it may wish, jointly with
any other indemnifying party similarly notified, to assume the defense
thereof with counsel satisfactory to such indemnified party. After
notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party will
not be liable to such indemnified party under this Section 7 for any
legal or other expenses subsequently incurred by such indemnified party
in connection with the defense thereof other than reasonable costs of
investigation; provided, however, that the Representative shall have
the right to employ separate counsel to represent the Representative,
those other Underwriters and their respective controlling persons who
may be subject to liability arising out of any claim in respect of
which indemnity may be sought by the Underwriters against the Depositor
under this Section 7 if, in the reasonable judgment of the
Representative, it is advisable for the Representative and those
Underwriters and controlling persons to be represented by separate
counsel, and in that event the fees and expenses of such separate
counsel shall be paid by the Depositor (it being understood, however,
that the Depositor shall not, in connection with any one such claim or
separate but substantially similar or related claim in the same
jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of
<PAGE>
more than one separate firm of attorneys at any time for the
Representative and those Underwriters and controlling persons).
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in the
preceding parts of this Section 7 is for any reason held to be
unavailable to or insufficient to hold harmless an indemnified party
under subsection (a) or (b) above in respect of any losses, claims,
damages or liabilities (or actions in respect thereof) referred to
therein, then the indemnifying party shall contribute to the amount
paid or payable by the indemnified party as a result of such losses,
claims, damages or liabilities (or actions in respect thereof);
provided, however, that no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act)
shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. In determining the amount of
contribution to which the respective parties are entitled, there shall
be considered the relative benefits received by the Depositor on the
one hand, and the Underwriters on the other, from the offering of the
Offered Securities (taking into account the portion of the proceeds of
the offering realized by each), the Depositor's and the Underwriters'
relative knowledge and access to information concerning the matter with
respect to which the claim was asserted, the opportunity to correct and
prevent any statement or omission, and any other equitable
considerations appropriate in the circumstances. The Depositor and the
Underwriters agree that it would not be equitable if the amount of such
contribution were determined by pro rata or per capita allocation (even
if the Underwriters were treated as one entity for such purpose). No
Underwriter or person controlling such Underwriter shall be obligated
to make contribution hereunder which in the aggregate exceeds the total
underwriting fee of the Offered Securities purchased by such
Underwriter under the Underwriting Agreement, less the aggregate amount
of any damages which such Underwriter and its controlling persons have
otherwise been required to pay in respect of the same or any
substantially similar claim. The Underwriters' obligation to contribute
hereunder are several in proportion to their respective underwriting
obligations and not joint. For purposes of this Section 7, each person,
if any, who controls an Underwriter within the meaning of Section 15 of
the 1933 Act shall have the same rights to contribution as such
Underwriter, and each director of the Depositor, each officer of the
Depositor who signed the Registration Statement, and each person, if
any, who controls the Depositor within the meaning of Section 15 of the
1933 Act, shall have the same rights to contribution as the Depositor.
8. Survival of Certain Representations and Obligations. The
respective representations, warranties, agreements, covenants, indemnities and
other statements of the Depositor, its officers and the several Underwriters set
forth in, or made pursuant to, the Underwriting Agreement shall remain in full
force and effect, regardless of any investigation, or statement as to the result
thereof, made by or on behalf of any Underwriter, the Depositor, or any of the
officers or directors or any controlling person of any of the foregoing, and
shall survive the delivery of and payment for the Offered Securities.
9. Termination.
(a) The Underwriting Agreement may be terminated by the
Depositor by notice to the Representative in the event that a stop
order suspending the effectiveness of the Registration Statement shall
have been issued or proceedings for that purpose shall have been
instituted or threatened.
<PAGE>
(b) The Underwriting Agreement may be terminated by the
Representative by notice to the Depositor in the event that the
Depositor shall have failed, refused or been unable to perform all
obligations and satisfy all conditions to be performed or satisfied
hereunder by the Depositor at or prior to the Closing Date.
(c) Termination of the Underwriting Agreement pursuant to this
Section 9 shall be without liability of any party to any other party
other than as provided in Sections 7 and 11 hereof.
10. Default of Underwriters. If any Underwriter or
Underwriters defaults or default in their obligation to purchase Offered
Securities which it or they have agreed to purchase under the Underwriting
Agreement and the aggregate principal amount of the Offered Securities which
such defaulting Underwriter or Underwriters agreed but failed to purchase is ten
percent (10%) or less of the aggregate principal amount, notional amount or
stated amount, as applicable, of the Offered Securities to be sold under the
Underwriting Agreement, as the case may be, the other Underwriters shall be
obligated severally in proportion to their respective commitments under the
Underwriting Agreement to purchase the Offered Securities which such defaulting
Underwriter or Underwriters agreed but failed to purchase. If any Underwriter or
Underwriters so defaults or default and the aggregate principal amount of the
Offered Securities with respect to which such default or defaults occurs or
occur is more than ten percent (10%) of the aggregate principal amount, notional
amount or stated amount, as applicable, of Offered Securities to be sold under
the Underwriting agreement, as the case may be, and arrangements satisfactory to
the Representative and the Depositor for the purchase of such Offered Securities
by other persons (who may include one or more of the non-defaulting Underwriters
including the Representative) are not made within 36 hours after any such
default, the Underwriting Agreement will terminate without liability on the part
of any non-defaulting Underwriters or the Depositor except for the expenses to
be paid or reimbursed by the Depositor pursuant to Section 11 hereof. As used in
the Underwriting Agreement, the term "Underwriter" includes any person
substituted for an Underwriter under this Section 10. Nothing herein shall
relieve a defaulting Underwriter from liability for its default.
11. Expenses. The Depositor agrees with the several
Underwriters that:
(a) whether or not the transactions contemplated in the
Underwriting Agreement are consummated or the Underwriting Agreement is
terminated, the Depositor will pay all fees and expenses incident to
the performance of its obligations under the Underwriting Agreement,
including, but not limited to, (i) the Commission's registration fee,
(ii) the expenses of printing and distributing the Underwriting
Agreement and any related underwriting documents, the Registration
Statement, any Preliminary Prospectus, the Prospectus, any amendments
or supplements to the Registration Statement or the Prospectus, and any
Blue Sky memorandum or legal investment survey and any supplements
thereto, (iii) fees and expenses of rating agencies, accountants and
counsel for the Depositor, (iv) the expenses referred to in Section
5(e) hereof, and (v) all miscellaneous expenses referred to in Item 30
of the Registration Statement;
(b) all out-of-pocket expenses, including counsel fees,
disbursements and expenses, reasonably incurred by the Underwriters in
connection with investigating, preparing to market and marketing the
Offered Securities and proposing to purchase and purchasing the Offered
Securities under the Underwriting Agreement will be borne and paid by
the Depositor if the Underwriting Agreement is terminated by the
Depositor pursuant to Section 9(a) hereof or by the Representative on
account of the failure, refusal
<PAGE>
or inability on the part of the Depositor to perform all obligations
and satisfy all conditions on the part of the Depositor to be performed
or satisfied hereunder; and
(c) the Depositor will pay the cost of preparing the
certificates for the Offered Securities.
Except as otherwise provided in this Section 11, the
Underwriters agree to pay all of their expenses in connection with
investigating, preparing to market and marketing the Offered Securities and
proposing to purchase and purchasing the Offered Securities under the
Underwriting Agreement, including the fees and expenses of their counsel and any
advertising expenses incurred by them in making offers and sales of the Offered
Securities.
12. Notices. All communications under the Underwriting
Agreement shall be in writing and, if sent to the Underwriters, shall be mailed,
delivered or telegraphed and confirmed to the Representative at the address and
to the attention of the person specified in the Underwriting Agreement, and, if
sent to the Depositor, shall be mailed, delivered or telegraphed and confirmed
to Prudential Securities Secured Financing Corporation, One New York Plaza, New
York, New York 10292, Attention: Managing Director-Asset Finance Group;
provided, however, that any notice to any Underwriter pursuant to the
Underwriting Agreement shall be mailed, delivered or telegraphed and confirmed
to such Underwriter at the address furnished by it.
13. Representative of Underwriters. Any Representative
identified in the Underwriting Agreement will act for the Underwriters of the
Offered Securities and any action taken by the Representative under the
Underwriting Agreement will be binding upon all of such Underwriters.
14. Successors. The Underwriting Agreement shall inure to the
benefit of and shall be binding upon the several Underwriters and the Depositor
and their respective successors and legal representatives, and nothing expressed
or mentioned herein or in the Underwriting Agreement is intended or shall be
construed to give any other person any legal or equitable right, remedy or claim
under or in respect of the Underwriting Agreement, or any provisions herein
contained, the Underwriting Agreement and all conditions and provisions hereof
being intended to be and being for the sole and exclusive benefit of such
persons and for the benefit of no other person except that (i) the
representations and warranties of the Depositor contained herein or in the
Underwriting Agreement shall also be for the benefit of any person or persons
who controls or control any Underwriter within the meaning of Section 15 of the
1933 Act, and (ii) the indemnities by the several Underwriters shall also be for
the benefit of the directors of the Depositor, the officers of the Depositor who
have signed the Registration Statement and any person or persons who control the
Depositor within the meaning of Section 15 of the 1933 Act. No purchaser of the
Offered Securities from any Underwriter shall be deemed a successor because of
such purchase. This Agreement and each Underwriting Agreement may be executed in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
15. Time of the Essence. Time shall be of the essence of each
Underwriting Agreement.
16. Governing Law. This Agreement and each Underwriting
Agreement shall be governed by and construed in accordance with the laws of the
State of New York.
<PAGE>
[Signature Page Follows]
<PAGE>
If the foregoing is in accordance with your understanding,
please sign and return two counterparts hereof.
Yours truly,
PRUDENTIAL SECURITIES SECURED
FINANCING CORPORATION
By:/s/
---------------------------
Name:
Title:
Accepted as of the date hereof:
PRUDENTIAL SECURITIES INCORPORATED
By:/s/
---------------------------
Name:
Title:
[Signature Page to Underwriting Agreement Standard Provisions]
<PAGE>
Exhibit A
Opinion of Dewey Ballantine LLP,
special counsel for the Depositor
(1) Each of the Transaction Documents constitutes the valid,
legal and binding agreement of the Depositor, and is enforceable against the
Depositor in accordance with its terms.
(2) The Certificates, assuming the due execution by the
Trustee and due authentication by the Trustee and payment therefor pursuant to
the Underwriting Agreement, are validly issued and outstanding and are entitled
to the benefits of the Pooling and Servicing Agreement.
(3) No consent, approval, authorization or order of,
registration or filing with, or notice to, any governmental authority or court
is required under federal laws or the laws of the State of New York for the
execution, delivery and performance of the Transaction Documents or the offer,
issuance, sale or delivery of the Certificates or the consummation of any other
transaction contemplated thereby by the Depositor, except such which have been
obtained.
(4) The Registration Statement and the Prospectus (other than
the financial and statistical data included therein, as to which we are not
called upon to express any opinion), at the time the Registration Statement
became effective, as of the date of execution of the Underwriting Agreement and
as of the date hereof comply as to form in all material respects with the
requirements of the Securities Act of 1933, as amended, and the rules and
regulations thereunder, and the Exchange Act and the rules and regulations
thereunder, and we do not know of any amendment to the Registration Statement
required to be filed, or of any contracts, indentures or other documents of a
character required to be filed as an exhibit to the Registration Statement or
required to be described in the Registration Statement or the Prospectus, which
has not been filed or described as required.
(5) Neither the qualification of the Pooling and Servicing
Agreement under the Trust Indenture Act of 1939, as amended, nor the
registration of the Trust Fund created by the Pooling and Servicing Agreement
under the Investment Company Act of 1940 is required.
(6) The statements in the Prospectus Supplement set forth
under the caption "Description of the Certificates" to the extent such
statements purport to summarize certain provisions of the Certificates or the
Pooling and Servicing Agreement or the Unaffiliated Seller's Agreement, are fair
and accurate in all material respects.
<PAGE>
Exhibit B
Opinion of Counsel to
the Unaffiliated Seller
(1) The Unaffiliated Seller has been duly organized and is
validly existing as a corporation in good standing under the laws of the State
of Delaware.
(2) The Unaffiliated Seller has the requisite power and
authority to execute and deliver, engage in the transactions contemplated by,
and perform and observe the conditions of, the Pooling and Servicing Agreement
and the Unaffiliated Seller's Agreement, dated as of the Closing Date (the
"Unaffiliated Seller's Agreement"), between the Unaffiliated Seller, the
Servicer and the Depositor, collectively referred to hereinafter as the
"Unaffiliated Seller's Agreement".
(3) The Unaffiliated Seller's Agreement and the Pooling and
Servicing Agreement have been duly and validly authorized, executed and
delivered by the Unaffiliated Seller, all requisite corporate action having been
taken with respect thereto, and each constitutes the valid, legal and binding
agreement of the Unaffiliated Seller, and are enforceable against the
Unaffiliated Seller in accordance with their respective terms.
(4) Neither the transfer of the Mortgage Loans to the
Depositor, nor the execution, delivery or performance by the Unaffiliated Seller
of the Unaffiliated Seller's Agreement (A) conflicts or will conflict with or
results or will result in a breach of, or constitutes or will constitute a
default under or violates or will violate, (i) any term or provision of the
Certificate of Formation or Operating Agreement of the Unaffiliated Seller, (ii)
any term or provision of any material agreement, contract, instrument or
indenture, to which the Unaffiliated Seller or any of its subsidiaries is a
party or is bound; or (iii) any order, judgment, writ, injunction or decree of
any court or governmental agency or body or other tribunal having jurisdiction
over the Unaffiliated Seller or any of its properties; or (B) results in, or
will result in the creation or imposition of any lien, charge or encumbrance
upon the Trust Fund or upon the Certificates, except as otherwise contemplated
by the Pooling and Servicing Agreement.
(5) The endorsement and delivery of each Mortgage Note, and
the preparation, delivery and recording of an Assignment of Mortgage with
respect to each Mortgage is sufficient fully to transfer to the Depositor and
its assignees all right, title and interest of the Unaffiliated Seller in the
Mortgage Note and Mortgage, as noteholder and mortgagee or assignee thereof.
(6) No consent, approval, authorization or order of,
registration or qualification of or with or notice to, any courts, governmental
agency or body or other tribunal is required under the laws of New York or
Delaware, for the execution, delivery and performance of the Unaffiliated
Seller's Agreement or the consummation of any other transaction contemplated
thereby by the Unaffiliated Seller, except such which have been obtained.
(7) There are no legal or governmental suits, proceedings or
investigations pending or, to such counsel's knowledge, threatened against the
Unaffiliated Seller before any court, governmental agency or body or other
tribunal (A) which, if determined adversely to the
<PAGE>
Unaffiliated Seller, would individually or in the aggregate have a material
adverse effect on (i) the consolidated financial position, business prospects,
stockholders's equity or results of operations of the Unaffiliated Seller, (ii)
the Unaffiliated Seller's ability to perform its obligations under, or the
validity or enforceability of, the Transaction Documents; (iii) any Mortgage
Note or Mortgaged Property, or the title of any Mortgagor to any Mortgaged
Property; or (B) which have not otherwise been disclosed in the Registration
Statement and to the best of such counsel's knowledge, no such proceedings or
investigations are threatened or contemplated by governmental authorities or
threatened by others.
B-2
<PAGE>
Exhibit C
Opinion of Counsel to
the Trustee
(1) The Trustee is a national banking association duly
organized, validly existing and in good standing under the laws of the United
States and has the power and authority to enter into and to take all actions
required of it under the Pooling and Servicing Agreement.
(2) The Pooling and Servicing Agreement has been duly
authorized, executed and delivered by the Trustee and the Pooling and Servicing
Agreement constitutes the legal, valid and binding obligation of the Trustee,
enforceable against the Trustee in accordance with its terms, except as
enforceability thereof may be limited by (A) bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of creditors'
rights generally, as such laws would apply in the event of a bankruptcy,
insolvency or reorganization or similar occurrence affecting the Trustee, and
(B) general principles of equity regardless of whether such enforcement is
sought in a proceeding at law or in equity.
(3) No consent, approval, authorization or other action by any
governmental agency or body or other tribunal is required on the part of the
Trustee in connection with its execution and delivery of the Pooling and
Servicing Agreement or the performance of its obligations thereunder.
(4) The Certificates have been duly executed, authenticated
and delivered by the Trustee.
(5) The execution and delivery of, and performance by the
Trustee of its obligations under, the Pooling and Servicing Agreement do not
conflict with or result in a violation of any statute or regulation applicable
to the Trustee, or the charter or bylaws of the Trustee, or to the best
knowledge of such counsel, any governmental authority having jurisdiction over
the Trustee or the terms of any indenture or other agreement or instrument to
which the Trustee is a party or by which it is bound.
EXHIBIT 4.1
EXECUTION COPY
POOLING AND SERVICING AGREEMENT
Relating to
WILSHIRE MORTGAGE LOAN TRUST 1997-2
Among
WMFC 1997-2 INC.
as Unaffiliated Seller,
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION,
as Depositor,
WILSHIRE SERVICING CORPORATION,
as Servicer,
and
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
as Trustee and as Backup Servicer
Dated as of November 1, 1997
<PAGE>
TABLE OF CONTENTS
Page
----
Parties ........................................................1
Recitals ........................................................1
ARTICLE I DEFINITIONS; RULES OF CONSTRUCTION 1
Section 1.1. Definitions.............................................1
Section 1.2. Use of Words and Phrases...............................32
Section 1.3. Captions; Table of Contents............................32
Section 1.4. Opinions...............................................32
ARTICLE II ESTABLISHMENT AND ORGANIZATION OF THE TRUST 32
Section 2.1. Establishment of the Trust.............................32
Section 2.2. Office.................................................32
Section 2.3. Purposes and Powers....................................32
Section 2.4. Appointment of the Trustee; Declaration of Trust.......33
Section 2.5. Expenses of the Trust..................................33
Section 2.6. Ownership of the Trust.................................33
Section 2.7. Receipt of Trust Estate................................33
Section 2.8. Miscellaneous REMIC Provisions.........................33
Section 2.9. Grant of Security Interest.............................36
ARTICLE III REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
UNAFFILIATED SELLER, THE DEPOSITOR AND THE SERVICER;
COVENANT OF DEPOSITOR TO CONVEY MORTGAGE LOANS 36
Section 3.1. Representations, Warranties and Covenants
of the Unaffiliated Seller.............................36
Section 3.2. Representations and Warranties of the Servicer.........41
Section 3.3. Representations and Warranties of the Depositor........42
Section 3.4. Representations and Warranties as to Each Mortgage
Loan and the other Transferred Assets..................44
Section 3.5. Repurchases and Remedies...............................49
Section 3.6. Conveyance of the Mortgage Loans.......................49
Section 3.7. Acceptance by Trustee; Certain Substitutions
of Mortgage Loans; Certification by Trustee............52
Section 3.8. Cooperation Procedures.................................54
ARTICLE IV ISSUANCE AND SALE OF CERTIFICATES 54
Section 4.1. Issuance of Certificates...............................54
Section 4.2. Sale of Certificates...................................54
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ARTICLE V CERTIFICATES AND TRANSFER OF INTERESTS 55
Section 5.1. Terms..................................................55
Section 5.2. Forms..................................................55
Section 5.3. Execution, Authentication and Delivery.................56
Section 5.4. Registration and Transfer of Certificates..............56
Section 5.5. Mutilated, Destroyed, Lost or Stolen Certificates......58
Section 5.6. Persons Deemed Owners..................................59
Section 5.7. Cancellation...........................................59
Section 5.8. Limitation on Transfer of Ownership Rights.............59
Section 5.9. Assignment of Rights...................................60
ARTICLE VI COVENANTS 60
Section 6.1. Distributions..........................................60
Section 6.2. Money for Distributions to be Held in Trust;
Withholding............................................60
Section 6.3. Protection of Trust Estate.............................61
Section 6.4. Performance of Obligations.............................62
Section 6.5. Negative Covenants.....................................62
Section 6.6. No Other Powers........................................63
Section 6.7. Limitation of Suits....................................63
Section 6.8. Unconditional Rights of Owners to
Receive Distributions..................................63
Section 6.9. Rights and Remedies Cumulative.........................63
Section 6.10. Delay or Omission Not Waiver...........................64
Section 6.11. Control by Owners......................................64
ARTICLE VII ACCOUNTS, DISBURSEMENTS AND RELEASES 64
Section 7.1. Collection of Money....................................64
Section 7.2. Establishment of Certificate Account...................64
Section 7.3. Reserved...............................................64
Section 7.4. Payments from the Principal and Interest Account.......65
Section 7.5. Flow of Funds..........................................65
Section 7.6. Investment of Accounts.................................67
Section 7.7. Eligible Investments...................................68
Section 7.8. Reports by Trustee.....................................69
Section 7.9. Additional Reports by Trustee..........................72
ARTICLE VIII SERVICING AND ADMINISTRATION OF MORTGAGE LOANS 72
Section 8.1. Servicer and Sub-Servicers.............................72
Section 8.2. Collection of Certain Mortgage Loan Payments...........74
Section 8.3. Sub-Servicing Agreements Between Servicer
and Sub-Servicers......................................75
Section 8.4. Successor Sub-Servicers................................75
Section 8.5. Liability of Servicer..................................76
Section 8.6. No Contractual Relationship Between Sub-Servicer
and Trustee or the Owners..............................76
Section 8.7. Assumption or Termination of Sub-Servicing
Agreement by Trustee...................................76
Section 8.8. The Lockbox Account....................................76
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Section 8.9. Principal and Interest Account.........................77
Section 8.10. Servicer Reports.......................................78
Section 8.11. Delinquency Advances, Servicing Advances
and Compensating Interest..............................79
Section 8.12. Maintenance of Insurance and Tax Services..............80
Section 8.13. Due-on-Sale Clauses; Assumption and
Substitution Agreements................................81
Section 8.14. Realization Upon Defaulted Mortgage Loans..............82
Section 8.15. Servicing Compensation.................................83
Section 8.16. Records, Inspections...................................83
Section 8.17. Assignment of Agreement................................84
Section 8.18. Removal of Servicer; Resignation of Servicer;
Term of Servicing......................................84
Section 8.19. Errors and Omissions Insurance; Fidelity Bond..........87
Section 8.20. Change in Business of the Servicer.....................87
Section 8.21. Servicer Expenses......................................88
Section 8.22. The Backup Servicer....................................88
Section 8.23. Escrows for Taxes; Insurance, Assessments and
Similar Items; Taxes and Insurance Accounts............89
Section 8.24. Servicer to Give Notice of Certain Breaches............89
Section 8.25. The Designated Depository Institution..................90
Section 8.26. Appointment of Custodian...............................90
Section 8.27. Indemnification by the Unaffiliated Seller
and the Servicer.......................................90
Section 8.28. Eligibility Requirements of the Servicer...............90
ARTICLE IX TERMINATION OF TRUST 91
Section 9.1. Termination of Trust...................................91
Section 9.2. Termination Upon Option of Class C Certificate Owners..91
Section 9.3. Termination Upon Loss of REMIC Status..................92
Section 9.4. Disposition of Proceeds................................93
Section 9.5. Netting of Amounts.....................................93
Section 9.6. Auction Sale...........................................93
ARTICLE X THE TRUSTEE 94
Section 10.1. Certain Duties and Responsibilities....................94
Section 10.2. Removal of Trustee for Cause...........................96
Section 10.3. Certain Rights of the Trustee..........................97
Section 10.4. Not Responsible for Recitals or
Issuance of Certificates...............................98
Section 10.5. May Hold Certificates..................................98
Section 10.6. Money Held in Trust....................................99
Section 10.7. Compensation and Reimbursement; No Lien for Fees.......99
Section 10.8. Corporate Trustee Required; Eligibility................99
Section 10.9. Resignation and Removal; Appointment of Successor......99
Section 10.10 Acceptance of Appointment by Successor Trustee........100
Section 10.11 Merger, Conversion, Consolidation or
Succession to Business of the Trustee.................101
Section 10.12 Reporting; Withholding................................101
Section 10.13 Liability of the Trustee..............................101
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Section 10.14 Appointment of Co-Trustee or Separate Trustee.........102
ARTICLE XI MISCELLANEOUS 103
Section 11.1. Compliance Certificates and Opinions..................103
Section 11.2. Form of Documents Delivered to the Trustee............104
Section 11.3. Acts of Owners........................................104
Section 11.4. Notices, etc. to Trustee..............................105
Section 11.5. Notices and Reports to Owners; Waiver of Notices......105
Section 11.6. Rules by Trustee and the Depositor....................106
Section 11.7. Successors and Assigns................................106
Section 11.8. Severability..........................................106
Section 11.9. Benefits of Agreement.................................106
Section 11.10. Legal Holidays........................................106
Section 11.11. Governing Law.........................................106
Section 11.12. Counterparts..........................................106
Section 11.13. Usury.................................................107
Section 11.14. Amendment.............................................107
Section 11.15. REMIC Status; Taxes...................................108
Section 11.16. Additional Limitation on Action and
Imposition of Tax.....................................109
Section 11.17. Appointment of Tax Matters Person.....................110
Section 11.18. [Reserved]............................................110
Section 11.19. Notices...............................................110
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<PAGE>
SCHEDULE I -- Schedule of Mortgage Loans
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 M-1-- Form of Class M-1 Certificate
EXHIBIT M-2-- Form of Class M-2 Certificate
EXHIBIT M-3-- Form of Class M-3 Certificate
EXHIBIT B-1-- Form of Class B Certificate
EXHIBIT B-2 Form of Class C Certificate
EXHIBIT C -- Form of Class R Certificate
EXHIBIT D -- Form of Certificate Re: Mortgage Loans Prepaid in Full After
the Cut-Off Date
EXHIBIT E -- Form of Trustee's Acknowledgment of Receipt
EXHIBIT F -- Form of Pool Certification
EXHIBIT G -- Form of Authentication Order
EXHIBIT H -- Form of Class R Tax Matters Transfer Certificate
EXHIBIT I -- Form of Servicer's Monthly Report
EXHIBIT J -- Form of Servicer's Trust Receipt
EXHIBIT K -- Liquidation Report
EXHIBIT L -- Auction Sale Procedures
EXHIBIT M -- RESERVED
EXHIBIT N -- Investment Letter - Accredited Investor
EXHIBIT O -- Investment Letter - Qualified Institutional Buyer
EXHIBIT P -- ERISA Representation Letter
<PAGE>
POOLING AND SERVICING AGREEMENT, relating to WILSHIRE MORTGAGE LOAN TRUST
1997-2, dated as of November 1, 1997 (this "Agreement"), by and among Prudential
Securities Secured Financing Corporation, a Delaware corporation, in its
capacity as Depositor (the "Depositor"), Wilshire Servicing Corporation, a
Delaware corporation, in its capacity as Servicer (the "Servicer"), WMFC 1997-2
Inc., a Delaware corporation, in its capacity as Unaffiliated Seller (the
"Unaffiliated Seller"), and Bankers Trust Company of California, N.A., in its
capacity as Trustee (the "Trustee") and in its capacity as Backup Servicer, (the
"Backup Servicer").
WHEREAS, the Unaffiliated Seller has sold and assigned the Mortgage Loans
(as defined herein) to the Depositor as of the date hereof;
WHEREAS, the Depositor wishes to establish a trust which provides for the
allocation and sale of the beneficial interests therein and the maintenance and
distribution of the trust estate;
WHEREAS, the Servicer has agreed to service the Mortgage Loans, which
constitute the principal assets of the trust estate;
WHEREAS, all things necessary to make the Certificates, when executed and
authenticated by the Trustee valid instruments, and to make this Agreement a
valid agreement, in accordance with their and its terms, have been done;
WHEREAS, Bankers Trust Company of California, N.A. is willing to serve in
the capacity of Trustee and Backup Servicer hereunder.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein contained, the Depositor, the Unaffiliated Seller, the Servicer, the
Backup Servicer and the Trustee hereby agree as follows:
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION
Section 1.1. Definitions. For all purposes of this Agreement, the
following terms shall have the meanings set forth below, unless the context
clearly indicates otherwise:
"Account": Any account established in accordance with Section 7.2, Section
8.8(a) or Section 8.9(a) hereof.
"Accrual Period": With respect to each Distribution Date and each Class of
Certificates (other than the Variable Rate Certificates), the calendar month
immediately preceding the month in which the Distribution Date occurs. With
respect to each Distribution Date and the Variable Rate Certificates, the period
from the 25th day of the month (or the Closing Date with respect to the December
1997 Distribution Date) immediately preceding the month in which such
Distribution Date occurs to the 24th day of the month in which such Distribution
Date occurs.
<PAGE>
"Adjustable Rate Group Available Funds Cap Rate": With respect to any
Distribution Date, an amount, expressed as a per annum rate, equal to (i) the
sum of (x) the aggregate amount of interest due and collected (or advanced) on
all of the Mortgage Loans in the Adjustable Rate Group for the related
Remittance Period and (y) the excess of (A) the aggregate amount of interest due
and collected (or advanced) on all of the Mortgage Loans in the Fixed Rate Group
for the related Remittance Period over (B) the aggregate of the Servicing Fee,
the Trustee Fee, in each case relating to the Fixed Rate Loan Group and such
Distribution Date, and the Current Interest with respect to the Class A
Certificates (other than the Class A-6 Certificates) minus (ii) the aggregate of
the Servicing Fee and the Trustee Fee, in each case relating to the Adjustable
Rate Loan Group, on such Distribution Date.
"Adjustable Rate Loan Group": The pool of Mortgage Loans identified as
having been assigned to the Adjustable Rate Loan Group in Schedule I-B hereto,
including any Qualified Replacement Mortgages thereof.
"Adverse Claim": Any claim of ownership or any lien, security interest,
title retention, trust or other charge or encumbrance, or other type of
preferential arrangement having the effect or purpose of creating a lien or
security interest, other than the security interest created under this
Agreement.
"Aggregate Certificate Principal Balance": As of the Startup Date,
$131,789,104.39, and as of any date thereafter, the sum of the Class A-1
Certificate Principal Balance, the Class A-2 Certificate Principal Balance, the
Class A-3 Certificate Principal Balance, the Class A-4 Certificate Principal
Balance, the Class A-5 Certificate Balance, the Class A-6 Certificate Principal
Balance, the Class A-7 Certificate Principal Balance, the Class M-1 Certificate
Principal Balance, the Class M-2 Certificate Principal Balance, the Class M-3
Certificate Principal Balance and the Class B Certificate Principal Balance.
"Aggregate Loan Balance": As of any date, the aggregate Loan Balance of all
Mortgage Loans in both Loan Groups as of such date.
"Agreement": This Pooling and Servicing Agreement, as it may be amended
from time to time, and including the Exhibits hereto.
"Applied Realized Loss Amount": As to any Distribution Date, the excess, if
any, of the Aggregate Certificate Principal Balance (after application of all
distributions for such Distribution Date) over the Aggregate Loan Balance as of
the last day of the related Remittance Period for both Loan Groups.
"Appraised Value": The amount set forth in the Schedule of Mortgage Loans
which shall be the appraised value of any Mortgaged Property based upon the
appraisal or other valuation made at the time of the origination of the related
Mortgage Loan, or, in the case of a Mortgage Loan which is a purchase money
mortgage, the sales price of the Mortgaged Property at such time of origination,
if such sales price is less than such appraised value or, in the case of an
appraised value or purchase price determined by the related originator to be
excessive, such appraised value adjusted downward or, in the case of a Mortgage
Loan purchased by the
2
<PAGE>
Unaffiliated Seller from an independent originator, if available, a broker price
opinion at some time between origination and the Cut-Off Date.
"Assignment Opinion": As defined in Section 3.6(b)(ii) hereof.
"Authentication Order": The delivery order in the form set forth as Exhibit
G hereto and delivered by the Depositor to the Trustee on the Startup Day
pursuant to Section 4.1 hereof.
"Authorized Officer": With respect to any Person, any individual who is
authorized to act for such Person in matters relating to this Agreement, and
whose action is binding upon such Person and, with respect to the Trustee, the
Depositor, the Unaffiliated Seller, the Backup Servicer and the Servicer,
initially including those individuals whose names and specimen signatures appear
on the lists of Authorized Officers delivered on the Startup Day.
"Available Funds": As to any Distribution Date, the sum of the Principal
Remittance Amount and the Interest Remittance Amount.
"Backup Servicer": Bankers Trust Company of California, N.A., a national
association in its capacity as Backup Servicer, and any successor hereunder.
"Balloon Loan": Any Mortgage Loan which has an amortization schedule which
extends beyond its maturity date, resulting in a relatively large unamortized
principal balance due in a single payment at maturity.
"Business Day": Any day that is not a Saturday, Sunday or other day on
which commercial banking institutions in the State of New York, the State of
Oregon or in the city in which the Corporate Trust Office of the Trustee is
located, which initially is Irvine, California, are authorized or obligated by
law or executive order to be closed.
"Certificate": Any one of or all of the Class A Certificates, the Class M
Certificates, the Class B Certificates, Class C Certificates or the Residual
Certificates, each representing the interests and the rights described in this
Agreement.
"Certificate Account": The Certificate Account established in accordance
with Section 7.2 hereof and maintained by the Trustee.
"Certificate Principal Balance": As to the Class A-1 Certificates, the
Class A-1 Certificate Principal Balance; as to the Class A-2 Certificates, the
Class A-2 Certificate Principal Balance; as to the Class A-3 Certificates, the
Class A-3 Certificate Principal Balance; as to the Class A-4 Certificates, the
Class A-4 Certificate Principal Balance; as to the Class A-5 Certificates, the
Class A-5 Certificate Principal Balance; as to the Class A-6 Certificates, the
Class A-6 Certificate Principal Balance; as to the Class A-7 Certificates, the
Class A-7 Certificate Principal Balance; as to the Class M-1 Certificates, the
Class M-1 Certificate Principal Balance; as to the Class M-2 Certificates, the
Class M-2 Certificate Principal Balance; as to the Class M-3 Certificates, the
Class M-3 Certificate Principal Balance; and as to the Class B Certificates, the
Class B Certificate Principal Balance. The Class C Certificates and the Residual
Certificates do not have a "Certificate Principal Balance".
3
<PAGE>
"Class": All of the Class A-1 Certificates, all of the Class A-2
Certificates, all of the Class A-3 Certificates, all of the Class A-4
Certificates, all of the Class A-5 Certificates, all of the Class A-6
Certificates, all of the Class A-7 Certificates, all of the Class M-1
Certificates, all of the Class M-2 Certificates, all of the Class M-3
Certificates, all of the Class B Certificates, all of the Class C Certificates
or all of the Residual Certificates, as the case may be.
"Class A Certificate": Any one of or all of 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 and the Class A-7
Certificates, as the case may be.
"Class A Certificate Principal Balance": As of any date, the sum of the
Class A-1 Certificate Principal Balance, the Class A-2 Certificate Principal
Balance, the Class A-3 Certificate Principal Balance, the Class A-4 Certificate
Principal Balance, the Class A-5 Certificate Principal Balance, the Class A-6
Certificate Principal Balance and the Class A-7 Certificate Principal Balance,
as of such date.
"Class A Principal Distribution Amount": As to any Distribution Date, (A)
for each Distribution Date before the Stepdown Date or after the Stepdown Date
with respect to which Distribution Date a Trigger Event has occurred and is
continuing, 100% of the Principal Distribution Amount or (ii) for each
Distribution Date after the Stepdown Date with respect to which no Trigger Event
has occurred and is continuing, the product of (x) the Principal Distribution
Amount for such Distribution Date and (y) a fraction, the numerator of which is
the Class A Certificate Principal Balance immediately prior to such Distribution
Date and the denominator of which is the aggregate Certificate Principal Balance
of all Certificates.
"Class A-1 Certificate": Any Certificate designated as a "Class A-1
Certificate" on the face thereof, in the form of Exhibit A-1 hereto. The Class
A-1 Certificates shall be issued with an initial aggregate Certificate Principal
Balance equal to the Original Certificate Principal Balance therefor.
"Class A-1 Certificate Principal Balance": As of any time of determination,
the Original Certificate Principal Balance of the Class A-1 Certificates less
any amounts actually distributed as principal pursuant to Section 7.5(b)(i)
hereof with respect to principal thereon on all prior Distribution Dates. The
Class A-1 Certificate Principal Balance shall in no event be less than zero.
"Class A-1 Certificate Termination Date": The Distribution Date on which
the Class A-1 Certificate Principal Balance is reduced to zero.
"Class A-1 Current Interest": The aggregate amount of interest accrued on
the Class A-1 Certificate Principal Balance immediately prior to such
Distribution Date during the related Accrual Period at the Class A-1
Pass-Through Rate (based on a 360-day year and the actual number of days in the
related Accrual Period).
"Class A-1 Pass-Through Rate": With respect to any Distribution Date, a per
annum rate equal to the lesser of (x) LIBOR plus 0.18% and (ii) the Fixed Rate
Group Available Funds Cap Rate applicable to such Distribution Date.
4
<PAGE>
"Class A-1 Principal Distribution Amount": With respect to the Class A-1
Certificates for any Distribution Date, the lesser of (x) the Class A Principal
Distribution Amount for such Distribution Date, and (y) the Class A-1
Certificate Principal Balance as of such Distribution Date. On the Class A-1
Certificate Termination Date, any excess of (a) the amount described in clause
(x) of the preceding paragraph over (b) the amount described in clause (y) of
the preceding paragraph shall be distributed as principal with respect to the
Class A-2 Certificates, as elsewhere provided herein.
"Class A-2 Certificate": Any Certificate designated as a "Class A-2
Certificate" on the face thereof, in the form of Exhibit A-2 hereto. The Class
A-2 Certificates shall be issued with an initial aggregate Certificate Principal
Balance equal to the Original Certificate Principal Balance therefor.
"Class A-2 Certificate Principal Balance": As of any time of determination,
the Original Certificate Principal Balance of the Class A-2 Certificates less
any amounts actually distributed as principal pursuant to Section 7.5(b)(i)
hereof with respect to principal thereon on all prior Distribution Dates. The
Class A-2 Certificate Principal Balance shall in no event be less than zero.
"Class A-2 Certificate Termination Date": The Distribution Date on which
the Class A-2 Certificate Principal Balance is reduced to zero.
"Class A-2 Current Interest": The aggregate amount of interest accrued on
the Class A-2 Certificate Principal Balance immediately prior to such
Distribution Date during the related Accrual Period at the Class A-2
Pass-Through Rate (based on a 360-day year consisting of twelve 30-day months).
"Class A-2 Pass-Through Rate": With respect to any Distribution Date, a per
annum rate equal to the lesser of (x) 6.650% and (ii) the Fixed Rate Group
Available Funds Cap Rate applicable to such Distribution Date.
"Class A-2 Principal Distribution Amount": With respect to the Class A-2
Certificates for any Distribution Date, the lesser of (x) the Class A Principal
Distribution Amount for such Distribution Date, and (y) the Class A-2
Certificate Principal Balance as of such Distribution Date. On the Class A-2
Certificate Termination Date, any excess of (a) the amount described in clause
(x) of the preceding paragraph over (b) the amount described in clause (y) of
the preceding paragraph shall be distributed as principal with respect to the
Class A-3 Certificates, as elsewhere provided herein.
"Class A-3 Certificate": Any Certificate designated as a "Class A-3
Certificate" on the face thereof, in the form of Exhibit A-3 hereto. The Class
A-3 Certificates shall be issued with an initial aggregate Certificate Principal
Balance equal to the Original Certificate Principal Balance therefor.
"Class A-3 Certificate Principal Balance": As of any time of determination,
the Original Certificate Principal Balance of the Class A-3 Certificates less
any amounts actually distributed as principal pursuant to Section 7.5(b)(i)
hereof with respect to principal thereon on
5
<PAGE>
all prior Distribution Dates. The Class A-3 Certificate Principal Balance shall
in no event be less than zero.
"Class A-3 Certificate Termination Date": The Distribution Date on which
the Class A-3 Certificate Principal Balance is reduced to zero.
"Class A-3 Current Interest": The aggregate amount of interest accrued on
the Class A-3 Certificate Principal Balance immediately prior to such
Distribution Date during the related Accrual Period at the Class A-3
Pass-Through Rate (based on a 360-day year consisting of twelve 30-day months).
"Class A-3 Pass-Through Rate": With respect to any Distribution Date, a per
annum rate equal to the lesser of (x) 6.720% per annum and (ii) the Fixed Rate
Group Available Funds Cap Rate applicable to such Distribution Date.
"Class A-3 Principal Distribution Amount": With respect to the Class A-3
Certificates for any Distribution Date, the lesser of (x) the Class A Principal
Distribution Amount for such Distribution Date, and (y) the Class A-3
Certificate Principal Balance as of such Distribution Date. On the Class A-3
Certificate Termination Date, any excess of (a) the amount described in clause
(x) of the preceding paragraph over (b) the amount described in clause (y) of
the preceding paragraph shall be distributed as principal with respect to the
Class A-4 Certificates, as elsewhere provided herein.
"Class A-4 Certificate": Any Certificate designated as a "Class A-4
Certificate" on the face thereof, in the form of Exhibit A-4 hereto. The Class
A-4 Certificates shall be issued with an initial aggregate Certificate Principal
Balance equal to the Original Certificate Principal Balance therefor.
"Class A-4 Certificate Principal Balance": As of any time of determination,
the Original Certificate Principal Balance of the Class A-4 Certificates less
any amounts actually distributed as principal pursuant to Section 7.5(b)(i)
hereof with respect to principal thereon on all prior Distribution Dates. The
Class A-4 Certificate Principal Balance shall in no event be less than zero.
"Class A-4 Certificate Termination Date": The Distribution Date on which
the Class A-4 Certificate Principal Balance is reduced to zero.
"Class A-4 Current Interest": The aggregate amount of interest accrued on
the Class A-4 Certificate Principal Balance immediately prior to such
Distribution Date during the related Accrual Period at the Class A-4
Pass-Through Rate (based on a 360-day year consisting of twelve 30-day months).
"Class A-4 Pass-Through Rate": With respect to any Distribution Date, a per
annum rate equal to the lesser of (x) 6.865% per annum and (ii) the Fixed Rate
Group Available Funds Cap Rate applicable to such Distribution Date.
"Class A-4 Principal Distribution Amount": With respect to the Class A-4
Certificates for any Distribution Date, the lesser of (x) the Class A Principal
Distribution
6
<PAGE>
Amount for such Distribution Date, and (y) the Class A-4 Certificate Principal
Balance as of such Distribution Date. On the Class A-4 Certificate Termination
Date, any excess of (a) the amount described in clause (x) of the preceding
paragraph over (b) the amount described in clause (y) of the preceding paragraph
shall be distributed as principal with respect to the Class A-5 Certificates, as
elsewhere provided herein.
"Class A-5 Certificate": Any Certificate designated as a "Class A-5
Certificate" on the face thereof, in the form of Exhibit A-5 hereto. The Class
A-5 Certificates shall be issued with an initial aggregate Certificate Principal
Balance equal to the Original Certificate Principal Balance therefor.
"Class A-5 Certificate Principal Balance": As of any time of determination,
the Original Certificate Principal Balance of the Class A-5 Certificates less
any amounts actually distributed as principal pursuant to Section 7.5(b)(i)
hereof with respect to principal thereon on all prior Distribution Dates. The
Class A-5 Certificate Principal Balance shall in no event be less than zero.
"Class A-5 Certificate Termination Date": The Distribution Date on which
the Class A-5 Certificate Principal Balance is reduced to zero.
"Class A-5 Current Interest": The aggregate amount of interest accrued on
the Class A-5 Certificate Principal Balance immediately prior to such
Distribution Date during the related Accrual Period at the Class A-5
Pass-Through Rate (based on a 360-day year consisting of twelve 30-day months).
"Class A-5 Pass-Through Rate": With respect to any Distribution Date, a per
annum rate equal to the lesser of (x) 7.255% and (ii) the Fixed Rate Group
Available Funds Cap Rate applicable to such Distribution Date.
"Class A-5 Principal Distribution Amount": With respect to the Class A-5
Certificates for any Distribution Date, the lesser of (x) the Class A Principal
Distribution Amount for such Distribution Date, and (y) the Class A-5
Certificate Principal Balance as of such Distribution Date. On the Class A-5
Certificate Termination Date, any excess of (a) the amount described in clause
(x) of the preceding paragraph over (b) the amount described in clause (y) of
the preceding paragraph shall be distributed as principal with respect to the
Class A-7 Certificates, as elsewhere provided herein.
"Class A-6 Certificate": Any Certificate designated as a "Class A-6
Certificate" on the face thereof, in the form of Exhibit A-6 hereto. The Class
A-6 Certificates shall be issued with an initial aggregate Certificate Principal
Balance equal to the Original Certificate Principal Balance therefor.
"Class A-6 Certificate Principal Balance": As of any time of determination,
the Original Certificate Principal Balance of the Class A-6 Certificates less
any amounts actually distributed as principal pursuant to Section 7.5(b)(i)
hereof with respect to principal thereon on all prior Distribution Dates. The
Class A-6 Certificate Principal Balance shall in no event be less than zero.
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"Class A-6 Certificate Termination Date": The Distribution Date on which
the Class A-6 Certificate Principal Balance is reduced to zero.
"Class A-6 Current Interest": The aggregate amount of interest accrued on
the Class A-6 Certificate Principal Balance immediately prior to such
Distribution Date during the related Accrual Period at the Class A-6
Pass-Through Rate (based on a 360-day year and the actual number of days in the
related Accrual Period).
"Class A-6 Formula Pass-Through Rate": With respect to any Distribution
Date, LIBOR plus 0.28% per annum.
"Class A-6 Pass-Through Rate": With respect to any Distribution Date, a per
annum rate equal to the least of (i) the Class A-6 Formula Pass-Through Rate for
such Distribution Date, (ii) the Adjustable Rate Available Funds Cap Rate and
(iii) 14.59%.
"Class A-6 Principal Distribution Amount": As to any Distribution Date, the
lesser of (A) the greater of (i) the product of (x) the Class A Principal
Distribution Amount for such Distribution Date and (y) a fraction, the numerator
of which is the Class A-6 Certificate Principal Balance immediately prior to
such Distribution Date, and the denominator of which is the Class A Certificate
Principal Balance immediately prior to such Distribution Date, and (ii) the
excess, if any, of (x) the Class A-6 Certificate Principal Balance immediately
prior to such Distribution Date over (y) the aggregate Loan Balance of the
Mortgage Loans in the Adjustable Rate Loan Group as of the last day of the
related Remittance Period and (B) the Class A Principal Distribution Amount. On
the Class A-6 Certificate Termination Date, any excess of (a) the amount
described in clause (x) of the preceding paragraph over (b) the amount described
in clause (y) of the preceding paragraph shall be distributed as principal with
respect to the Class A Certificates (other than the Class A-6 Certificates), as
elsewhere provided herein.
"Class A-7 Certificate": Any Certificate designated as a "Class A-7
Certificate" on the face thereof, in the form of Exhibit A-7 hereto. The Class
A-7 Certificates shall be issued with an initial aggregate Certificate Principal
Balance equal to the Original Certificate Principal Balance therefor.
"Class A-7 Certificate Principal Balance": As of any time of determination,
the Original Certificate Principal Balance of the Class A-7 Certificates less
any amounts actually distributed as principal pursuant to Section 7.5(b)(i)
hereof with respect to principal thereon on all prior Distribution Dates. The
Class A-7 Certificate Principal Balance shall in no event be less than zero.
"Class A-7 Certificate Termination Date": The Distribution Date on which
the Class A-7 Certificate Principal Balance is reduced to zero.
"Class A-7 Current Interest": The aggregate amount of interest accrued on
the Class A-7 Certificate Principal Balance immediately prior to such
Distribution Date during the related Accrual Period at the Class A-7
Pass-Through Rate (based on a 360-day year consisting of twelve 30-day months).
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"Class A-7 Pass-Through Rate": With respect to any Distribution Date, a per
annum rate equal to the lesser of (x) 6.835% and (ii) the Fixed Rate Group
Available Funds Cap Rate applicable to such Distribution Date.
"Class A-7 Percentage": As to any Distribution Date, the applicable
percentage set forth below:
Distribution Dates Percentages
December 1997-November 2000.......................... 0%
December 2000-November 2002.......................... 45%
December 2002-November 2003.......................... 80%
December 2003-November 2004.......................... 100%
December 2004 and thereafter......................... 300%
"Class A-7 Principal Distribution Amount": As to any Distribution Date, the
lesser of (A) the product of (i) the applicable Class A-7 Percentage and (ii)
the product of (x) the Fixed Rate Group Principal Allocation and (y) a fraction,
the numerator of which is the Class A-7 Certificate Principal Balance
immediately prior to such Distribution Date, and the denominator of which is the
Class A Certificate Principal Balance immediately prior to such Distribution
Date, and (B) the Fixed Rate Group Principal Allocation. On the Class A-7
Certificate Termination Date, any excess of (a) the amount described in clause
(x) of the preceding paragraph over (b) the amount described in clause (y) of
the preceding paragraph shall be distributed as principal with respect to the
Class M Certificates and the Class B Certificates, as elsewhere provided herein.
"Class B Applied Realized Loss Amount": As to the Class B Certificates and
as of any Distribution Date, the lesser of (x) the Class Certificate Principal
Balance thereof (after taking into account the distribution of the Principal
Distribution Amount on such Distribution Date, but prior to the application of
the Class B Applied Realized Loss Amount, if any, on such Distribution Date) and
(y) the Applied Realized Loss Amount as of such Distribution Date.
"Class B Certificates": Those certificates in substantially the form set
forth in Exhibit B-1 hereto. The Class B Certificates shall be issued with the
aggregate initial Certificate Principal Balance equal to the Original
Certificate Principal Balance therefor.
"Class B Certificate Principal Balance": As of any time of determination,
the Original Certificate Principal Balance of the Class B Certificates less (i)
any amounts actually distributed as part of the Class B Principal Distribution
Amount pursuant to Section 7.5(b)(ii) hereof with respect to principal thereon
on all prior Distribution Dates and (ii) the amount of any Applied Realized Loss
Amount allocated as a reduction of the Class B Certificate Principal Balance on
all prior Distribution Dates pursuant to Section 7.5(d) hereof. The Class B
Certificate Principal Balance shall in no event be less than zero.
"Class B Current Interest": The aggregate amount of interest accrued on the
Class B Certificate Principal Balance immediately prior to such Distribution
Date during the related Accrual Period at the Class B Pass-Through Rate (based
on a 360-day year consisting of twelve 30-day months).
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"Class B Pass-Through Rate": With respect to any Distribution Date, a per
annum rate equal to the lesser of (x) 8.99% and (ii) the Fixed Rate Group
Available Funds Cap Rate applicable to such Distribution Date.
"Class B Realized Loss Amortization Amount": As to the Class B Certificates
and as of any Distribution Date, the lesser of (x) the Unpaid Realized Loss
Amount with respect to the Class B Certificates as of such Distribution Date and
(y) the excess of (i) the Net Monthly Excess Cashflow over (ii) the sum of the
Extra Principal Distribution Amount, the Class M-1 Realized Loss Amortization
Amount, the Class M-2 Realized Loss Amortization Amount, the Class M-3 Realized
Loss Amortization Amount, in each case for such Distribution Date.
"Class C Certificates": Those Certificates in substantially the form set
forth as Exhibit B-2 hereto.
"Class C Current Interest": As of any Distribution Date, the product of (i)
one-twelfth of the Class C Pass-Through Rate and (ii) the Aggregate Loan Balance
of the Mortgage Loans as of the opening of business on the first day of the
related Remittance Period.
"Class C Distribution Amount": With respect to the Class C Certificates for
any Distribution Date, the amount actually distributed to the Owners of the
Class C Certificates on such Distribution Date, which amount shall be the lesser
of (x) the Class C Formula Distribution Amount for such Distribution Date and
(y) the amount available for distribution on account of the Class C Certificates
for such Distribution Date.
"Class C Formula Distribution Amount": As of any Distribution Date, the sum
of (i) the Class C Interest Distribution Amount for such Distribution Date and
(ii) if no Cumulative Loss Trigger Event is in effect, the Overcollateralization
Reduction Amount for such Distribution Date.
"Class C Interest Distribution Amount": As of any Distribution Date, the
Class C Current Interest for such Distribution Date minus the amount of any
Class C Current Interest actually paid to the Owners of the Class A
Certificates, the Class M Certificates or the Class B Certificates pursuant to
Section 7.5(a)(i) and Section 7.5(a)(ii) hereof, respectively.
"Class C Pass-Through Rate": With respect to any Distribution Date, the Net
Weighted Average Mortgage Rate less the weighted average of the interest rates
borne by the Class A Certificates, the Mezzanine Certificates and the Class B
Certificates.
"Class M Certificates": Any one of or all of the Class M-1 Certificates,
the Class M-2 Certificates and the Class M-3 Certificates, as the case may be.
"Class M-1 Applied Realized Loss Amount": As to the Class M-1 Certificates
and as of any Distribution Date, the lesser of (x) the Class Certificate Balance
thereof (after taking into account the distribution of the Principal
Distribution Amount on such Distribution Date, but prior to the application of
the Class M-1 Applied Realized Loss Amount, if any on such Distribution Date)
and (y) the excess of (i) the Applied Realized Loss Amount as of such
Distribution Date over (ii) the sum of the Class M-2 Applied Realized Loss
Amount, the Class
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M-3 Applied Realized Loss Amount and the Class B Applied Realized Loss Amount,
in each case as of such Distribution Date.
"Class M-1 Certificate": Any Certificate designated as a "Class M-1
Certificate" on the face thereof, in the form of Exhibit M-1 hereto. The Class
M-1 Certificates shall be issued with an initial aggregate Certificate Principal
Balance equal to the Original Certificate Principal Balance therefor.
"Class M-1 Certificate Principal Balance": As of any time of determination,
the Original Certificate Principal Balance of the Class M-1 Certificates less
(i) any amounts actually distributed as principal pursuant to Section 7.5(b)(ii)
hereof with respect to principal thereon on all prior Distribution Dates and
(ii) the amount of any Applied Realized Loss Amount allocated as a reduction of
the Class M-1 Certificate Principal Balance on all prior Distribution Dates
pursuant to Section 7.5(d) hereof. The Class M-1 Certificate Principal Balance
shall in no event be less than zero.
"Class M-1 Certificate Termination Date": The Distribution Date on which
the Class M-1 Certificate Principal Balance is reduced to zero.
"Class M-1 Current Interest": The aggregate amount of interest accrued on
the Class M-1 Certificate Principal Balance immediately prior to such
Distribution Date during the related Accrual Period at the Class M-1
Pass-Through Rate (based on a 360-day year consisting of twelve 30-day months).
"Class M-1 Pass-Through Rate": With respect to any Distribution Date, a per
annum rate equal to the lesser of (x) 7.180% and (ii) the Fixed Rate Group
Available Funds Cap Rate applicable to such Distribution Date.
"Class M-1 Realized Loss Amortization Amount": As to the Class M-1
Certificates and as of any Distribution Date, the lesser of (x) the Unpaid
Realized Loss Amount with respect to the Class M-1 Certificates as of such
Distribution Date and (y) the excess of (i) the Net Monthly Excess Cashflow over
(ii) the Extra Principal Distribution Amount for such Distribution Date.
"Class M-2 Applied Realized Loss Amount": As to the Class M-2 Certificates
and as of any Distribution Date, the lesser of (x) the Class Certificate Balance
thereof (after taking into account the distribution of the Principal
Distribution Amount on such Distribution Date, but prior to the application of
the Class M-2 Applied Realized Loss Amount, if any on such Distribution Date)
and (y) the excess of (i) the related Applied Realized Loss Amount as of such
Distribution Date over (ii) the Class M-3 Applied Realized Loss Amount and the
Class B Applied Realized Loss Amount, in each case as of such Distribution Date.
"Class M-2 Certificate": Any Certificate designated as a "Class M-2
Certificate" on the face thereof, in the form of Exhibit M-2 hereto. The Class
M-2 Certificates shall be issued with an initial aggregate Certificate Principal
Balance equal to the Original Certificate Principal Balance therefor.
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"Class M-2 Certificate Principal Balance": As of any time of determination,
the Original Certificate Principal Balance of the Class M-2 Certificates less
(i) any amounts actually distributed as principal pursuant to Section 7.5(b)(ii)
hereof with respect to principal thereon on all prior Distribution Dates and
(ii) the amount of any Applied Realized Loss Amount allocated as a reduction of
the Class M-2 Certificate Principal Balance on all prior Distribution Dates
pursuant to Section 7.5(d) hereof. The Class M-2 Certificate Principal Balance
shall in no event be less than zero.
"Class M-2 Certificate Termination Date": The Distribution Date on which
the Class M-2 Certificate Principal Balance is reduced to zero.
"Class M-2 Current Interest": The aggregate amount of interest accrued on
the Class M-2 Certificate Principal Balance immediately prior to such
Distribution Date during the related Accrual Period at the Class M-2
Pass-Through Rate (based on a 360-day year consisting of twelve 30-day months).
"Class M-2 Pass-Through Rate": With respect to any Distribution Date, a per
annum rate equal to the lesser of (x) 7.425% and (ii) the Fixed Rate Group
Available Funds Cap Rate applicable to such Distribution Date.
"Class M-2 Realized Loss Amortization Amount": As to the Class M-2
Certificates and as of any Distribution Date, the lesser of (x) the Unpaid
Realized Loss Amount with respect to the Class M-2 Certificates as of such
Distribution Date and (y) the excess of (i) the Net Monthly Excess Cashflow over
(ii) the sum of the Extra Principal Distribution Amount and the Class M-1
Realized Loss Amortization Amount, in each case for such Distribution Date.
"Class M-3 Applied Realized Loss Amount": As to the Class M-3 Certificates
and as of any Distribution Date, the lesser of (x) the Class Certificate Balance
thereof (after taking into account the distribution of the Principal
Distribution Amount on such Distribution Date, but prior to the application of
the Class M-3 Applied Realized Loss Amount, if any on such Distribution Date)
and (y) the excess of (i) the related Applied Realized Loss Amount as of such
Distribution Date over (ii) the Class B Applied Realized Loss Amount, in\ each
case as of such Distribution Date.
"Class M-3 Certificate": Any Certificate designated as a "Class M-3
Certificate" on the face thereof, in the form of Exhibit M-3 hereto. The Class
M-3 Certificates shall be issued with an initial aggregate Certificate Principal
Balance equal to the Original Certificate Principal Balance therefor.
"Class M-3 Certificate Principal Balance": As of any time of determination,
the Original Certificate Principal Balance of the Class M-3 Certificates less
(i) any amounts actually distributed as principal pursuant to Section 7.5(b)(ii)
hereof with respect to principal thereon on all prior Distribution Dates and
(ii) the amount of any Applied Realized Loss Amount allocated as a reduction of
the Class M-3 Certificate Principal Balance on all prior Distribution Dates
pursuant to Section 7.5(d) hereof. The Class M-3 Certificate Principal Balance
shall in no event be less than zero.
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"Class M-3 Certificate Termination Date": The Distribution Date on which
the Class M-3 Certificate Principal Balance is reduced to zero.
"Class M-3 Current Interest": The aggregate amount of interest accrued on
the Class M-3 Certificate Principal Balance immediately prior to such
Distribution Date during the related Accrual Period at the Class M-3
Pass-Through Rate (based on a 360-day year consisting of twelve 30-day months).
"Class M-3 Pass-Through Rate": With respect to any Distribution Date, a per
annum rate equal to the lesser of (x) 7.770% and (ii) the Fixed Rate Group
Available Funds Cap Rate applicable to such Distribution Date.
"Class M-3 Realized Loss Amortization Amount": As to the Class M-3
Certificates and as of any Distribution Date, the lesser of (x) the Unpaid
Realized Loss Amount with respect to the Class M-3 Certificates as of such
Distribution Date and (y) the excess of (i) the Net Monthly Excess Cashflow over
(ii) the sum of the Extra Principal Distribution Amount, the Class M-1 Realized
Loss Amortization Amount and the Class M-2 Realized Loss Amortization Amount ,
in each case for such Distribution Date.
"Class LT1 Certificates": The uncertificated class interests in the
Lower-Tier REMIC, as described in and designated in Section 2.8 hereof.
"Class LT2 Certificates": The uncertificated class of interests in the
Lower-Tier REMIC, as described in and designated in Section 2.8 hereof.
"Class LT3 Certificates": The uncertificated class of interests in the
Lower-Tier REMIC, as described in and designated in Section 2.8 hereof.
"Class LT4 Certificates": The uncertificated class of interests in the
Lower-Tier REMIC, as described in and designated in Section 2.8 hereof.
"Class LT5 Certificates": The uncertificated class of interests in the
Lower-Tier REMIC, as described in and designated in Section 2.8 hereof.
"Class LT6 Certificates": The uncertificated class of interests in the
Lower-Tier REMIC, as described in and designated in Section 2.8 hereof.
"Class LT8 Certificates": The uncertificated class of interests in the
Lower-Tier REMIC, as described in and designated in Section 2.8 hereof.
"Class LT9 Certificates": The uncertificated class of interests in the
Lower-Tier REMIC, as described in and designated in Section 2.8 hereof.
"Class LT10 Certificates": The uncertificated class of interests in the
Lower-Tier REMIC, as described in and designated in Section 2.8 hereof.
"Class LT11 Certificates": The uncertificated class of interests in the
Lower-Tier REMIC, as described in and designated in Section 2.8 hereof.
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"Class LT12 Certificates": The uncertificated class of interests in the
Lower-Tier REMIC, as described in and designated in Section 2.8 hereof.
"Class LT13 Certificates": The uncertificated class of interests in the
Lower-Tier REMIC, as described in and designated in Section 2.8 hereof.
"Class R Certificates": Those certificates representing certain residual
rights to distributions from the Upper-Tier REMIC and the Lower-Tier REMIC
created hereby in substantially the form set forth as Exhibit C hereto.
"Class RL Certificates": The class of interests represented by the Class R
Certificates representing the residual rights to distributions from the
Lower-Tier REMIC created thereby.
"Class RU Certificates": The class of interests represented by the Class R
Certificates representing the residual rights to distributions from the
Upper-Tier REMIC created thereby.
"Clean-Up Call Date": The first Remittance Date following the date on which
the aggregate Loan Balances of all Mortgage Loans has declined to 10% or less of
the Original Aggregate Loan Balance.
"Closing Date": December 11, 1997.
"Code": The Internal Revenue Code of 1986, as amended and any successor
statute.
"Collected Principal Amount": With respect to any Distribution Date and
Loan Group, the sum of (without duplication):
(a) the scheduled or unscheduled principal (other than the principal
portion of Prepaid Installments) due and received with respect to the
Mortgage Loans during the related Remittance Period and actually collected
by the Servicer during the related Remittance Period, in each case to the
extent actually received by the Trustee on the related Remittance Date
including the principal portion of all full and partial principal
prepayments made by the respective Mortgagors during the related Remittance
Period,
(b) the Loan Balance of each Mortgage Loan that either was repurchased
by the Originator or by the Depositor or purchased by the Servicer or the
Unaffiliated Seller on the related Remittance Date, to the extent such Loan
Balance is actually received by the Trustee on the related Remittance Date,
(c) any Substitution Amounts delivered by the Depositor on the related
Remittance Date in connection with a substitution of a Mortgage Loan, to
the extent such Substitution Amounts are actually received by the Trustee
on the related Remittance Date and to the extent such Substitution Amounts
relate to principal,
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(d) all Net Liquidation Proceeds and Net Insurance Proceeds actually
collected by the Servicer with respect to the Mortgage Loans during the
related Remittance Period (to the extent such Net Liquidation Proceeds and
Net Insurance Proceeds relate to principal and are actually received by the
Trustee on the related Remittance Date), and
(e) the proceeds of any termination of the Trust received by the
Trustee on the related Remittance Date (to the extent such proceeds relate
to principal of the Mortgage Loans).
"Collections": As defined in Section 8.9(b) hereof.
"Combined Loan-to-Value Ratio": With respect to any First Mortgage Loan,
the percentage equal to the Loan Balance as of the Cut-Off Date of the related
Note divided by the Appraised Value of the related Mortgaged Property and with
respect to any Second Mortgage Loan, the percentage equal to (a) the sum of (i)
the remaining Loan Balance, as of origination of the Second Mortgage Loan of the
Senior Lien note(s) relating to such Second Mortgage Loan and (ii) the Original
Loan Balance of the Note, or if available, the Loan Balance as of the Cut-Off
Date, relating to such Second Mortgage Loan divided by (b) the Appraised Value.
"Compensating Interest": With respect to any Mortgage Loan for a Remittance
Period in which a Prepayment in full (and not a partial Prepayment) was received
with respect to such Mortgage Loan, an amount equal to the difference between
(x) 30 days' interest at the Mortgage Rate with respect to such Mortgage Loan
less the Servicing Fee Rate on the Loan Balance of such Mortgage Loan as of the
first day of the related Remittance Period and (y) to the extent not previously
advanced, the interest (less the Servicing Fee) actually paid by the Mortgagor
with respect to the Mortgage Loan during such Remittance Period; provided,
however, that the Servicer will in no event be required to pay Compensating
Interest with respect to any Remittance Period in an amount in excess of the
aggregate Servicing Fee received by the Servicer with respect to all Mortgage
Loans for the related Remittance Period.
"Corporate Trust Office" means the principal corporate trust office of the
Trustee at which, at any particular time, its corporate trust business shall be
administered, which office at the date hereof is located at 3 Park Place, 16th
Floor, Irvine, California 92614, Attention: Wilshire 1997-2. The telecopy number
for the Corporate Trust Office on the Closing Date is (714) 253-7577.
"Cumulative Loss Percentage": With respect to any Distribution Date, the
percentage of all Realized Losses as a percentage of the Original Aggregate
Principal Balance of the Mortgage Loans.
"Cumulative Loss Trigger Event": A Cumulative Loss Trigger Event has
occurred if (i) the Cumulative Loss Percentage for a specified period exceeds
the applicable percentage set forth below and (ii) the 60+ Delinquency
Percentage exceeds two times the original (prior to the Stepdown Date)
percentage used to determine the Required Overcollateralization Amount:
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Distribution Dates Loss Percentages
December 1997-November 2000.......................... 2.30%
December 2000-November 2001.......................... 3.80%
December 2001-November 2002.......................... 4.80%
December 2002-November 2003.......................... 5.40%
December 2003-November 2004.......................... 5.90%
December 2004 and thereafter......................... 6.20%
"Cut-Off Date": The close of business on October 31, 1997.
"Debt": For any Person, (a) indebtedness of such Person for borrowed money,
(b) obligations of such Person evidenced by bonds, debentures, notes or other
similar instruments, (c) obligations of such Person to pay the deferred purchase
price of property or services, (d) obligations of such Person as lessee under
leases which have been or should be, in accordance with GAAP, recorded as
capital leases, (e) obligations secured by any lien or other charge upon
property or assets owned by such Person, even though such Person has not assumed
or become liable for the payment of such obligations, (f) obligations of such
Person under direct or indirect guaranties in respect of, and obligations
(contingent or otherwise) to purchase or otherwise acquire, or otherwise to
assure a creditor against loss in respect of, indebtedness or obligations of
others of the kinds referred to in clauses (a) through (e) above, and (g)
liabilities in respect of unfunded vested benefits under plans covered by ERISA.
"Delinquency Advance": With respect to any Delinquent Mortgage Loan and
Remittance Period, the interest (calculated at the Mortgage Rate with respect to
such Mortgage Loan net of the Servicing Fee Rate) due, but not collected, with
respect to such Mortgage Loan during such Remittance Period.
"Delinquent": A Mortgage Loan is "delinquent" if any payment due thereon is
not made by the close of business on the day such payment is scheduled to be
due. A Mortgage Loan is "30 days delinquent" if such payment has not been
received by the close of business on the corresponding day of the month
immediately succeeding the month in which such payment was due, or, if there is
no such corresponding day (e.g., as when a 30-day month follows a 31-day month
in which a payment was due on the 31st day of such month) then on the last day
of such immediately succeeding month. Similarly for "60 days delinquent," "90
days delinquent" and so on.
"Depositor": Prudential Securities Secured Financing Corporation, a
Delaware corporation.
"Depository": The Depository Trust Company, 7 Hanover Square, New York, New
York 10004 and any successor Depository hereafter named.
"Designated Depository Institution": With respect to each Account, an
institution whose deposits are insured by the Bank Insurance Fund or the Savings
Association Insurance Fund of the FDIC, the long-term deposits of which shall be
rated (x) A or better by Fitch and (y) A2 or better by Moody's and in one of the
two highest short-term ratings categories of each of the Rating Agencies, unless
otherwise approved in writing by each of the Rating Agencies, and
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which is any of the following: (i) a federal savings and loan association duly
organized, validly existing and in good standing under the federal banking laws,
(ii) an institution duly organized, validly existing and in good standing under
the applicable banking laws of any state, (iii) a national banking association
duly organized, validly existing and in good standing under the federal banking
laws, (iv) a principal subsidiary of a bank holding company, or (v) approved in
writing by each of the Rating Agencies, and, in each case acting or designated
by the Servicer in the case of the Lockbox Account or by the Trustee in the
cases of the Principal and Interest Account and the Certificate Account as the
depository institution for such Account; provided, however, that any such
institution or association shall have combined capital, surplus and undivided
profits of at least $100,000,000. Notwithstanding the foregoing, an Account may
be held by an institution otherwise meeting the preceding requirements except
that the only applicable rating requirement shall be that the unsecured and
uncollateralized debt obligations thereof shall be rated Baa3 or better by
Moody's if such institution has trust powers and the Account is held by such
institution in its trust capacity and not in its commercial capacity.
"Determination Date": As to each Distribution Date, the fifteenth (15th)
day of each calendar month, or if such day is not a Business Day, the next
succeeding Business Day.
"Direct Participant" or "DTC Participant": Any broker-dealer, bank or other
financial institution for which the Depository holds Offered Certificates from
time to time as a securities depository.
"Disqualified Organization": "Disqualified Organization" shall have the
meaning set forth from time to time in the definition thereof at Section
860E(e)(5) of the Code (or any successor statute thereto) and applicable to the
Trust.
"Distribution Date": Any date on which the Trustee is required to make
distributions to the Owners, which shall be the twenty-fifth (25th) day of each
month (or, if such day is not a Business Day, the next succeeding Business Day),
commencing in the month in which the Startup Day occurs.
"Document Delivery Requirements": The Unaffiliated Seller's obligations to
deliver certain legal documents, to prepare and record certain Mortgage
assignments or to deliver certain opinions relating to Mortgage assignments, in
each case with respect to the Mortgage Loans and as set forth in Section 3.6
hereof.
"Electronic Report": As defined in Section 8.10(a) hereof.
"Eligible Investments": Those investments so designated pursuant to Section
7.7 hereof.
"ERISA": The Employee Retirement Income Security Act of 1974, as amended.
"Escrow Amounts": As defined in Section 8.23 hereof.
"Event of Servicer Default": Any event described in clause (a) of Section
8.18 hereof.
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"Exception Report": As defined in Section 3.7 hereof.
"Excess Interest Amount": As to any Distribution Date, the excess of (x)
the Interest Remittance Amount for both Loan Groups over (y) the sum of (i) the
aggregate of the Current Interest for each Class of Class A Certificates, Class
M Certificates and Class B Certificates and (ii) the Trustee Fee for both Loan
Groups.
"Extra Principal Distribution Amount": As to any Distribution Date, the
lesser of (x) the Excess Interest Amount for such Distribution Date and (y) the
Overcollateralization Deficiency Amount for such Distribution Date.
"FDIC": The Federal Deposit Insurance Corporation, or any successor
thereto.
"FHLMC": The Federal Home Loan Mortgage Corporation, a corporate
instrumentality of the United States created pursuant to the Emergency Home
Finance Act of 1970, as amended, or any successor thereof.
"Final Certification": As defined in Section 3.7(b) hereof.
"Final Determination": As defined in Section 9.3(a) hereof.
"First Mortgage Loan": A Mortgage Loan secured by a first priority mortgage
lien with respect to any Mortgaged Property.
"Fitch": Fitch IBCA, Inc.
"Fixed Rate Group Available Funds Cap Rate": With respect to any
Distribution Date, an amount, expressed as a per annum rate, equal to (i) the
sum of (x) the aggregate amount of interest due and collected (or advanced) on
all of the Mortgage Loans in the Fixed Rate Loan Group for the related
Remittance Period and (y) the excess of (A) the aggregate amount of interest due
and collected (or advanced) on all of the Mortgage Loans in the Adjustable Rate
Group for the related Remittance Period over (B) the aggregate of the Servicing
Fee and the Trustee Fee, in each case relating to the Adjustable Rate Group and
such Distribution Date, and the Current Interest with respect to the Class A-6
Certificates minus (ii) the aggregate of the Servicing Fee and the Trustee Fee,
in each case relating to the Fixed Rate Loan Group, on such Distribution Date.
"Fixed Rate Group Principal Allocation": As to any Distribution Date, the
excess of (i) the Class A Principal Distribution Amount for such Distribution
Date over (ii) the Class A-6 Principal Distribution Amount for such Distribution
Date.
"Fixed Rate Loan Group": The pool of Mortgage Loans identified as having
been assigned to the Fixed Rate Loan Group in Schedule I-A hereto, including any
Qualified Replacement Mortgages thereof.
"FNMA": The Federal National Mortgage Association, a federally-chartered
and privately-owned corporation existing under the Federal National Mortgage
Association Charter Act, as amended, or any successor thereof.
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"GAAP": Generally accepted accounting principles as in effect in the United
States, consistently applied, as of the date of such application.
"Governmental Authority": The United States of America, any state, local or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions thereof or
pertaining thereto.
"Highest Lawful Rate": As defined in Section 11.13.
"Indirect Participant": Shall mean any financial institution for whom any
Direct Participant holds an interest in an Offered Certificate.
"Insurance Policy": Any hazard, title or primary mortgage insurance policy
relating to a Mortgage Loan.
"Insurance Proceeds": The proceeds of any Insurance Policy relating to a
Mortgage Loan, a Mortgaged Property or a REO Property, net of proceeds to be
applied to the repair of the Mortgaged Property or released to the Mortgagor and
net of expenses reimbursable therefrom.
"Interest Remittance Amount": As to either Loan Group and any Distribution
Date, without duplication, of the following amounts, without duplication, with
respect to the Mortgage Loans: (i) scheduled payments of interest on the
Mortgage Loans due after the Cut-Off Date received by the Servicer during the
related Remittance Period (net of amounts representing the Servicing Fee with
respect to each Mortgage Loan and reimbursement for Delinquency Advances and
Servicing Advances); (ii) payments from the Servicer in connection with (a)
Delinquency Advances and (b) Compensating Interest, (iii) the interest portion
of any Substitution Amounts and Loan Purchase Price, (iv) the amount of losses
required to be paid by the Servicer pursuant to Section 7.6(e) and (v) amounts
received by the Trustee in respect of interest in connection with the
termination of the Trust with respect to the Mortgage Loans as provided in
Article IX hereof.
"LIBOR": With respect to any Accrual Period and the Variable Rate
Certificates, the rate determined by the Trustee on the related LIBOR
Determination Date on the basis of the offered rate for one-month U.S. dollar
deposits as such rate appears on Telerate Page 3750 as of 11:00 a.m. (London
time) on such date; provided that if such rate does not appear on Telerate Page
3750, the rate for such date will be determined on the basis of the rates at
which one-month U.S. dollar deposits are offered by the Reference Banks at
approximately 11:00 a.m. (London time) on such date to prime banks in the London
interbank market. In such event, the Trustee will request the principal London
office of each of the Reference Banks to provide a quotation of its rate. If at
least two such quotations are provided, the rate for that date will be the
arithmetic mean of the quotations (rounded upwards if necessary to the nearest
whole multiple of 1/16%). If fewer than two quotations are provided as
requested, the rate for that date will be the arithmetic mean of the rates
quoted by major banks in New York City, selected by the Servicer, at
approximately 11:00 a.m. (New York City time) on such date for one-month U.S.
dollar loans to leading European banks.
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"LIBOR Determination Date": With respect to any Accrual Period and the
Variable Rate Certificates, the second London Business Day preceding the
commencement of such Accrual Period.
"LIBOR Shortfall Amount": The excess, if any, of (x) the interest due on
the Class A-6 Certificates on any Distribution Date calculated at the Class A-6
Formula Pass-Through Rate over (y) the interest due on the Class A-6
Certificates calculated at the Adjustable Rate Group Available Funds Cap Rate
applicable to such Distribution Date.
"Liquidated Loan": Any defaulted Mortgage Loan or REO Property with respect
to which the Servicer has made a determination that all Net Liquidation Proceeds
and other payments or recoveries that the Servicer, in its reasonable judgment,
expects to be finally recoverable have been recovered or that the Servicer
believes the cost of obtaining any additional recoveries would exceed the amount
of such recoveries. A Mortgage Loan which is purchased from the Trust pursuant
to Section 3.5 or 3.7(b) hereof is not a "Liquidated Loan".
"Liquidation Expenses": Expenses which are incurred by the Servicer or any
Sub-Servicer in connection with the liquidation of any defaulted Mortgage Loan,
such expenses, including, without limitation, reasonable legal fees and
expenses, and any unreimbursed Servicing Advances expended by the Servicer or
any Sub-Servicer pursuant to Section 8.12(b) with respect to the related
Mortgage Loan.
"Liquidation Proceeds": With respect to any Liquidated Loan, any amounts
(including the proceeds of any Insurance Policy) recovered by the Servicer in
connection with such Liquidated Loan, whether through trustee's sale,
foreclosure sale or otherwise.
"Loan Balance": With respect to each Mortgage Loan, as of any date of
determination, the outstanding principal balance thereof on the Cut-Off Date,
less any related principal collections or recoveries relating to such Mortgage
Loan received by the Servicer as of the date of determination, as reported by
the Servicer in its report to the Trustee pursuant to Section 7.8(b) hereof, as
applicable; provided, however, that the Loan Balance for any Mortgage Loan which
has become a Liquidated Loan shall be zero following the date on which such
Mortgage Loan becomes a Liquidated Loan, and at all times thereafter. The Loan
Balance of any Mortgage Loan as of the Cut-Off Date shall be the balance of such
Mortgage Loan as of the Cut-Off Date.
"Loan Collateral": The personal or real property (if any) securing the
related Mortgage Loan, including any lessor's interest in such Loan Collateral,
whether characterized or recharacterized as an ownership or security interest.
"Loan File": The documents delivered to the Trustee pursuant to Section 3.6
hereof pertaining to a particular Mortgage Loan and any additional documents
required to be added to the Loan File pursuant to this Agreement.
"Loan Group": Any of the Adjustable Rate Loan Group and the Fixed Rate Loan
Group.
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"Loan Purchase Price": With respect to any Mortgage Loan purchased from the
Trust on a Remittance Date pursuant to Section 3.5 or 3.7(b) hereof, an amount
equal to the Loan Balance of such Mortgage Loan as of the date of purchase, plus
one month's interest on the outstanding Loan Balance thereof as of the beginning
of the preceding Remittance Period computed at the related Mortgage Rate less,
if the Servicer is the purchasing party, the Servicing Fee Rate, together with,
without duplication, the aggregate amount of (i) all delinquent interest and all
unreimbursed Reimbursable Advances and (ii) all amounts received by the Servicer
with respect to such Mortgage Loan during the related Remittance Period.
"Lockbox Account": Means the account in the name of the Trust at the
Lockbox Bank to which all Collections in respect of the Mortgage Loans shall be
remitted by the obligors and the Servicer.
"Lockbox Agreement": Means the agreement between the Servicer and the
Lockbox Bank providing that all funds received into a particular lockbox on a
Business Day shall be remitted directly to the Principal and Interest Account by
the close of the following Business Day.
"Lockbox Bank": Means Bank of America Oregon, N.A.
"London Business Day": Any day in which banks in the City of London are
open and conducting transactions in U.S. dollars.
"Lower-Tier Distribution Amount": As of any Remittance Date, the Available
Funds.
"Lower-Tier Interests": As defined in Section 2.8(c) hereof.
"Lower-Tier REMIC": The segregated pool of assets held by the Trust
consisting of the Mortgage Loans.
"Majority Owners": The Owner or Owners of a Class of Certificates
evidencing Percentage Interests in excess of 51% in the aggregate of such Class
or Classes.
"Monthly Remittance Amount": As of any Remittance Date, the Interest
Remittance Amount and the Principal Remittance Amount for the related Remittance
Period.
"Moody's": Moody's Investors Service, Inc.
"Mortgage": The mortgage, deed of trust or other instrument creating a
first or second lien on an estate in fee simple interest in real property
securing a Note.
"Mortgage Loans": Such of the mortgage loans transferred and assigned to
the Trust pursuant to Section 3.6(a) hereof, together with any Qualified
Replacement Mortgages substituted therefor in accordance with this Agreement, as
from time to time are held as a part of the Trust Estate, the Mortgage Loans
originally so held being identified in the Schedule of Mortgage Loans. The term
"Mortgage Loan" includes the terms "First Mortgage Loan", and "Second Mortgage
Loan". The term "Mortgage Loan" includes any Mortgage Loan which is
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Delinquent, which relates to a foreclosure or which relates to a Mortgaged
Property which is a REO Property prior to such Mortgaged Property's disposition
by the Trust. Any mortgage loan which, although intended by the parties hereto
to have been, and which purportedly was, transferred and assigned to the Trust
by the Depositor, in fact was not transferred and assigned to the Trust for any
reason whatsoever shall nevertheless be considered a "Mortgage Loan" for all
purposes of this Agreement.
"Mortgage Rate": The rate of interest borne by each Note.
"Mortgaged Property": The underlying property on which a lien is granted
securing a Mortgage Loan.
"Mortgagor": The obligor on a Note.
"Net Liquidation Proceeds": As to any Liquidated Loan, Liquidation Proceeds
net of, without duplication, Liquidation Expenses and unreimbursed Servicing
Advances, unreimbursed Delinquency Advances and accrued and unpaid Servicing
Fees through the date of liquidation relating to such Liquidated Loan. In no
event shall Net Liquidation Proceeds with respect to any Liquidated Loan be less
than zero.
"Net Monthly Excess Cashflow": As of any Distribution Date, the sum of (i)
the Excess Interest Amount and (ii) the Overcollateralization Reduction Amount,
in each case, for such Distribution Date.
"Net Weighted Average Mortgage Rate": With respect to any Remittance
Period, the weighted average Mortgage Rates (weighted by Loan Balances) of the
related Mortgage Loans, calculated at the opening of business on the first day
of such Remittance Period, less the Servicing Fee Rate with respect to such
Remittance Period and less the Trustee Fee Rate.
"Nonrecoverable Delinquency Advance": Any Delinquency Advance (i)
previously made and not previously reimbursed to the Servicer or (ii) proposed
to be made in respect of a Mortgage Loan or REO Property, that the Servicer
determines will not, or, in the case of a proposed Delinquency Advance, would
not, be recovered from late collections, Insurance Proceeds or Liquidation
Proceeds on such Mortgage Loan or REO Property.
"Note": The note or other evidence of indebtedness evidencing the
indebtedness of a Mortgagor under a Mortgage Loan.
"Offered Certificates": The Class A Certificates and the Class M
Certificates.
"Officer's Certificate": A certificate signed by any Authorized Officer of
any Person delivering such certificate and delivered to the Trustee.
"Original Aggregate Loan Balance": The Aggregate Loan Balances of all
Mortgage Loans as of the Cut-Off Date, i.e., $131,789,104.39.
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"Original Certificate Principal Balance": As of the Startup Day and as to
each Class of Offered Certificates and the Class B Certificates, the original
Certificate Principal Balances thereof, as follows:
Class A-1 Certificates $36,217,000.00
Class A-2 Certificates $10,000,000.00
Class A-3 Certificates $12,000,000.00
Class A-4 Certificates $12,000,000.00
Class A-5 Certificates $10,000,000.00
Class A-6 Certificates $16,302,000.00
Class A-7 Certificates $ 8,912,000.00
Class M-1 Certificates $ 8,236,000.00
Class M-2 Certificates $ 7,578,000.00
Class M-3 Certificates $ 6,260,000.00
Class B Certificates $ 4,284,104.39
The Class C Certificates and the Residual Certificates do not have an
Original Certificate Principal Balance.
"Original Credit Support Percentage": As to any Class of Class A
Certificates or Subordinate Certificates, the applicable percentage set forth
below:
Senior 20%
Class M-1 13.75%
Class M-2 8%
Class M-3 3.25%
Class B 0%
"Original Loan Balance": With respect to each Note, the Loan Balance of
such Note or the mortgage note relating to a Senior Lien, as the case may be, on
the date of origination thereof.
"Originator": The Person that originated the Mortgage Loan pursuant to a
written agreement with the related obligor.
"Outstanding Certificates": With respect to all Certificates of a Class, as
of any date of determination, all such Certificates theretofore executed and
delivered hereunder except:
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(i) Certificates theretofore cancelled by the Trustee or delivered to
the Trustee for cancellation;
(ii) Certificates or portions thereof for which full and final payment
money in the necessary amount has been theretofore deposited with the
Trustee in trust for the Owners of such Certificates;
(iii) Certificates in exchange for or in lieu of which other
Certificates have been executed and delivered pursuant to this Agreement,
unless proof satisfactory to the Trustee is presented that any such
Certificates are held by a bona fide purchaser; and
(iv) Certificates alleged to have been destroyed, lost or stolen for
which replacement Certificates have been issued as provided for in Section
5.5 hereof.
"Overcollateralization Amount": As of any Distribution Date, the excess, if
any, of (x) the Aggregate Loan Balance as of the close of business on the last
day of the related Remittance Period over (y) the sum of the Class A Certificate
Principal Balance, the Class M Certificate Principal Balance and the Class B
Certificate Principal Balance as of such Distribution Date (assuming 100% of the
Collected Principal Amount is applied in reduction of the amount specified in
clause (y)).
"Overcollateralization Deficiency Amount": As to any Distribution Date, the
excess, if any, of (i) the Required Overcollateralization Amount for such
Distribution Date over (ii) the Overcollateralization Amount for such
Distribution Date after giving effect to the distribution of the Collected
Principal Amount on such Distribution Date.
"Overcollateralization Reduction Amount": As to any Distribution Date, the
lesser of (i) the Collected Principal Amount for such Distribution Date and (ii)
the excess, if any, of (x) the Overcollateralization Amount (assuming 100% of
the Collected Principal Amount is distributed on the Offered Certificates) over
(y) the Required Overcollateralization Amount.
"Owner": The Person in whose name a Certificate is registered in the
Register, to the extent described in Section 5.4.
"Pass-Through Rate". With respect to any Distribution Date as to the Class
A-1 Certificates, the Class A-1 Pass-Through Rate, as to the Class A-2
Certificates, the Class A-2 Pass-Through Rate, as to the Class A-3 Certificates,
the Class A-3 Pass-Through Rate, as to the Class A-4 Certificates, the Class A-4
Pass-Through Rate, as to the Class A-5 Certificates, the Class A-5 Pass-Through
Rate, as to the Class A-6 Certificates, the Class A-6 Pass-Through Rate, as to
the Class A-7 Certificates, the Class A-7 Pass-Through Rate, as to the Class M-1
Certificates, the Class M-1 Pass-Through Rate, as to the Class M-2 Certificates,
the Class M-2 Pass-Through Rate, as to the Class M-3 Certificates, the Class M-3
Pass-Through Rate, as to the Class B Certificates, the Class B Pass-Through Rate
and as to the Class C Certificates, the Class C Pass-Through Rate.
"Percentage Interest": As to any Class A Certificate, Class M Certificate
or Class B Certificate, that percentage, expressed as a fraction, the numerator
of which is the Certificate Principal Balance of such Certificate as of the
Closing Date and the denominator of which is the
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Original Certificate Principal Balance of all Certificates of the same Class and
as to any Class C Certificate or Residual Certificate, that Percentage Interest
set forth on such Certificate. As to the Offered Certificates, that percentage,
expressed as a fraction, the numerator of which is the Certificate Principal
Balance of such Certificate and the denominator of which is the Certificate
Principal Balance of all Offered Certificates.
"Person": Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Prepaid Installment": With respect to any Mortgage Loan, any installment
of principal thereof and interest thereon received prior to the scheduled due
date for such installment, intended by the Mortgagor as an early payment thereof
and not as a Prepayment with respect to such Mortgage Loan.
"Prepayment": Any payment of principal of a Mortgage Loan which is received
by the Servicer in advance of the scheduled due date for the payment of such
principal (other than the principal portion of any Prepaid Installment), and the
proceeds of any Insurance Policy which are to be applied as a payment of
principal on the related Mortgage Loan shall be deemed to be Prepayments for all
purposes of this Agreement.
"Preservation Expenses": Expenditures made by the Servicer or any
Sub-Servicer in connection with a foreclosed Mortgage Loan prior to the
liquidation thereof, including, without limitation, expenditures for real estate
property taxes, hazard insurance premiums, property restoration or preservation.
"Primary Parcel": With respect to any Mortgaged Property with multiple
parcels, the parcel having the greatest Appraised Value.
"Principal Distribution Amount": As to any Distribution Date, the sum of
(i) the Collected Principal Amount (and with respect to any Distribution Date on
which a Trigger Event is not in effect, less the Overcollateralization Reduction
Amount, if any) and (ii) the Extra Principal Distribution Amount.
"Principal and Interest Account": The principal and interest account
created by the Servicer or any Sub-Servicer pursuant to Section 8.9(a) hereof,
or pursuant to any Sub-Servicing Agreement.
"Principal Remittance Amount": With respect to any Remittance Period, the
Collected Principal Amount.
"Prohibited Transaction": "Prohibited transaction" shall have the meaning
set forth from time to time in the definition thereof at Section 860F(a)(2) of
the Code (or any successor statute thereto) and applicable to the Trust.
"Prospectus": Any prospectus (including any prospectus supplement) relating
to the Registration Statement pursuant to which the Offered Certificates are
offered.
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"Purchase Option Period": As defined in Section 9.3(b) hereof.
"Qualified Liquidation": "Qualified liquidation" shall have the meaning set
forth from time to time in the definition thereof at Section 860F(a)(4) of the
Code (or any successor statute thereto) and applicable to the Trust.
"Qualified Mortgage": "Qualified mortgage" shall have the meaning set forth
from time to time in the definition thereof at Section 860G(a)(3) of the Code
(or any successor statute thereto) and applicable to the Trust.
"Qualified Replacement Mortgage": A Mortgage Loan substituted for another
pursuant to Section 3.5 or 3.7(b) hereof, which (i) bears a fixed rate of
interest if the Mortgage Loan being substituted is a Fixed Rate Mortgage Loan
and bears an adjustable rate of interest if the Mortgage Loan being substituted
is an Adjustable Rate Mortgage Loan, (ii) has a Mortgage Rate at least equal to
the Mortgage Rate of the Mortgage Loan being replaced, (iii) is of the same or
better property type and the same or better occupancy status as the replaced
Mortgage Loan, (iv) shall be of the same or better credit quality classification
at origination of the Mortgage Loan (determined in accordance with the
Unaffiliated Seller's credit underwriting guidelines) as the Mortgage Loan being
replaced, (v) shall mature no later than April 25, 2027, (vi) has a Combined
Loan-to-Value Ratio as of the Replacement Cut-Off Date no higher than the
Combined Loan-to-Value Ratio of the replaced Mortgage Loan at such time and
shall relate to a Mortgagor having a debt-to-income ratio no higher than the
debt-to-income ratio of the Mortgagor whose Mortgage Loan is being replaced,
(vii) has a Loan Balance as of the related Replacement Cut-Off Date equal to or
less than the Loan Balance of the replaced Mortgage Loan as of such Replacement
Cut-Off Date, (viii) satisfies the criteria set forth from time to time in the
definition thereof at Section 860G(a)(4) of the Code (or any successor statute
thereto) and applicable to the Trust, all as evidenced by an Officer's
Certificate of the Depositor delivered to the Trustee prior to any such
substitution and (ix) is a valid First Mortgage Loan. In the event that one or
more mortgage loans are proposed to be substituted for one or more Mortgage
Loans, the foregoing tests may be met on a weighted average basis or other
aggregate basis except that the requirement of clause (viii) hereof must be
satisfied as to each Qualified Replacement Mortgage.
"Rating Agencies": Moody's and Fitch.
"Realized Loss": As to any Liquidated Loan, the amount, if any, by which
the Loan Balance thereof, accrued and unpaid interest as of the date of
liquidation is in excess of Net Liquidation Proceeds realized thereon.
"Record Date": With respect to the December 1997 Distribution Date, the
Closing Date. With respect to each other Distribution Date, the last day of the
calendar month immediately preceding the calendar month in which such
Distribution Date occurs, whether or not such day is a Business Day.
"Reference Banks": Bankers Trust Company, Barclays Bank PLC, The Bank of
Tokyo and National Westminster Bank PLC, provided that if any of the foregoing
banks are not suitable to serve as a Reference Bank, then any leading banks
selected by the Trustee which are
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engaged in transactions in Eurodollar deposits in the international Eurocurrency
market (i) with an established place of business in London, (ii) not
controlling, under the control of or under common control with either Seller or
any affiliate thereof, (iii) whose quotations appear on Telerate Page 3750 on
the relevant LIBOR Determination Date and (iv) which have been designated as
such by the Trustee.
"Register": The register maintained by the Trustee in accordance with
Section 5.4 hereof, in which the names of the Owners are set forth.
"Registrar": The Trustee, acting in its capacity as Trustee appointed
pursuant to Section 5.4 hereof, or any duly appointed and eligible successor
thereto.
"Registration Statement": The Registration Statement filed by the Depositor
with the Securities and Exchange Commission, including all amendments thereto
and including the Prospectus relating to the Offered Certificates constituting a
part thereof.
"Reimbursable Advances": As to any Mortgage Loan, all Delinquency Advances
and Servicing Advances made by the Servicer with respect thereto, to the extent
not previously paid to or withheld by the Servicer.
"REMIC": A "real estate mortgage investment conduit" within the meaning of
Section 860D of the Code.
"REMIC Provisions": Provisions of the federal income tax law relating to
real estate mortgage investment conduits, which appear at Sections 860A through
860G of the Code, and related provisions, and regulations and rulings
promulgated thereunder, as the foregoing may be in effect from time to time.
"Remittance Date": The date on or prior to which the Servicer is required
to direct the Trustee to transfer the Monthly Remittance Amount to the
Certificate Account which shall be the third Business Day prior to the
Distribution Date commencing in December, 1997 (or, if such day is not a
Business Day, the next succeeding Business Day).
"Remittance Period": The calendar month immediately preceding the month in
which a Remittance Date occurs.
"REO Property": A Mortgaged Property acquired by the Servicer or any
Sub-Servicer on behalf of the Trust through foreclosure or deed-in-lieu of
foreclosure in connection with a defaulted Mortgage Loan.
"Replacement Cut-Off Date": With respect to any Qualified Replacement
Mortgage, the close of business on the tenth day of the calendar month in which
such Qualified Replacement Mortgage is conveyed to the Trust.
"Representation Letter": Letters to, or agreements with, the Depository to
effectuate a book entry system with respect to the Offered Certificates
registered in the Register under the nominee name of the Depository.
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"Representations and Warranties": The representations and warranties
relating to the Mortgage Loans, as set forth in Section 3.4 hereof.
"Required Information": With respect to a Mortgage Loan, (a) the name and
address of the obligor, (b) the outstanding principal balance of the Mortgage
Loan, (c) the maturity date and (d) the interest rate; provided, that the
Servicer's obligation to furnish any portion of the Required Information to any
Person shall not require the Servicer to fail to observe any applicable law
prohibiting disclosure of information regarding the obligors.
"Required OC Percentage": As of any date of determination, the percentage
then applicable in clause (b)(i) of the Required Overcollateralization Amount.
"Required Overcollateralization Amount": As to any Distribution Date (a)
prior to the Stepdown Date, the product of 2.75% and the Original Aggregate
Principal Balance of the Mortgage Loans; (b) on and after the Stepdown Date, (i)
if no Trigger Event is in effect, the lesser of (A) 5.50% of the Aggregate Loan
Balance as of the end of the related Remittance Period and (B) 2.75% of the
Original Aggregate Principal Balance of the Mortgage Loans or (ii) if a Trigger
Event or a Cumulative Loss Trigger Event is in effect, the Required
Overcollateralization Amount will equal the Required Overcollateralization
Amount in effect as of the Distribution Date immediately preceding the date on
which the Trigger Event first occurred.
"Residual Certificate": Any Class RL Certificate or any Class RU
Certificate.
"Schedule of Mortgage Loans": Each of the Schedule of Mortgage Loans
attached hereto as Schedule I-A and I-B listing each of the Mortgage Loans in
the related Loan Group.
"Second Mortgage Loan": A Mortgage Loan which is secured by a second
priority mortgage lien with respect to the related Mortgaged Property.
"Securities Act": The Securities Act of 1933, as amended.
"Seller": Any Person from which the Unaffiliated Seller through its
affiliate, Wilshire Credit Corporation acquired a Mortgage Loan.
"Senior Enhancement Percentage": As to any Distribution Date, the
percentage equivalent of a fraction, the numerator of which is the sum of (i)
the aggregate Class Certificate Principal Balance of the Class A Certificates,
the Class M Certificates and the Class B Certificates minus the Certificate
Principal Balance of the Class with the highest priority and (ii) the
Overcollateralization Amount, in each case after giving effect to the
distribution of the Principal Distribution Amount on such Distribution Date, and
the denominator of which is the Aggregate Loan Balance as of the last day of the
related Remittance Period.
"Senior Lien": With respect to any Second Mortgage Loan, the mortgage loan
relating to the corresponding Mortgaged Property having a first priority lien.
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"Servicer": Wilshire Servicing Corporation, a Delaware Corporation, and its
permitted successors and assigns.
"Servicer Affiliate": A Person (i) controlling, controlled by or under
common control with the Servicer and (ii) which is qualified to service
residential mortgage loans.
"Servicer Extension Notice": As defined in Section 8.18(i) hereof.
"Servicer's Monthly Report": The report in substantially the form of
Exhibit I hereto.
"Servicer's Report Date": The Determination Date.
"Servicer's Trust Receipt": The Servicer's trust receipt in the form set
forth as Exhibit J hereto.
"Servicing Advance": As defined in Section 8.11(b) and Section 8.14(a)
hereof.
"Servicing Fee": With respect to any Mortgage Loan, the monthly amount
retained by the Servicer or by any successor thereto as compensation for
servicing and administration duties relating to such Mortgage Loan pursuant to
Section 8.15 hereof and equal to the product of (x) 1/12 (y) the related
Servicing Fee Rate and (z) the outstanding Loan Balance of such Mortgage Loan as
of the opening of business on the first day of the immediately preceding
Remittance Period.
"Servicing Fee Rate": 0.375% per annum.
"Servicing Standards": Means servicing, collection and investor reporting
systems and procedures consistent with (i) those systems and procedures set
forth in the WCC Servicing Guide, (ii) this Agreement, (iii) applicable law and
(iv) customary and prudent practices in the residential mortgage loan servicing
industry.
"60+ Delinquency Amount": A fraction expressed as a percentage, the
numerator of which is (A) (i) with respect to any Distribution Date on or after
the Stepdown Date but prior to the December 2001 Distribution Date, 100% of the
aggregate Principal Balance of the Mortgage Loans that are more than 60 days
Delinquent; (ii) with respect to the December 2001 Distribution Date and the
Distribution Dates prior to December 2003, 75% of the aggregate Principal
Balance of the Mortgage Loans that are more than 60 days Delinquent; and (iii)
with respect to the December 2003 Distribution Date and all the Distribution
Dates thereafter, 50% of the aggregate Principal Balance of the Mortgage Loans
that are more than 60 days Delinquent and the denominator of which is (B) the
Aggregate Loan Balance, in each case as determined as of the last day of the
related Remittance Period. For the purposes of this definition, "more than 60
days Delinquent" shall include Mortgage Loans relating to Mortgagors in
bankruptcy or insolvency proceedings under the United States Bankruptcy Code
which limit the ability of the Servicer to pursue collection of such loans), in
foreclosure or converted to REO Properties, as the case may be.
"Startup Day": December 11, 1997.
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"Stepdown Date": The later to occur of (x) the Distribution Date in
December 2000, and (y) the first Distribution Date on which the Senior
Enhancement Percentage (assuming 100% of the Collected Principal Amount is
distributed on the Offered Certificates on such Distribution Date) is at least
equal to the sum of (i) two times the Original Credit Support Percentage for the
Class A Certificates and (ii) the Required OC Percentage.
"Sub-Servicer": Any Person with whom the Servicer has entered into a
Sub-Servicing Agreement and who is Wilshire Credit Corporation or satisfies any
requirements set forth in Section 8.3 hereof in respect of the qualification of
a Sub-Servicer.
"Sub-Servicing Agreement": A written contract between the Servicer and any
Sub-Servicer relating to servicing and/or administration of certain Mortgage
Loans as permitted by Section 8.3.
"Substitution Amount": In connection with the delivery of any Qualified
Replacement Mortgage, if the outstanding principal amount of such Qualified
Replacement Mortgage as of the applicable Replacement Cut-Off Date is less than
the Loan Balance of the Mortgage Loan being replaced as of such Replacement
Cut-Off Date, an amount equal to such difference together with accrued and
unpaid interest on such amount calculated at the Mortgage Rate less, if the
Servicer is the replacing party, the Servicing Fee Rate of the Mortgage Loan
being replaced.
"T&I Account": As defined in Section 8.23 hereof.
"Tax Matters Person": The Tax Matters Person appointed pursuant to Section
11.17 hereof.
"Termination Notice": As defined in Section 9.3(b) hereof.
"Termination Price": As defined in Section 9.2(a) hereof.
"Transaction Documents": Collectively this Agreement, the Unaffiliated
Seller's Agreement, the Underwriting Agreement relating to the Class A
Certificates, any Sub-Servicing Agreement, the Registration Statement and the
Certificates.
"Trigger Event": A Trigger Event shall have occurred and be continuing, if
at any time, the percentage equivalent of a fraction, the numerator of which is
the Aggregate Loan Balance of all Mortgage Loans that are more than 60 days
Delinquent (including Mortgage Loans relating to Mortgagors in bankruptcy or
insolvency proceedings under the United States Bankruptcy Code which limit the
ability of the Servicer to pursue collection of such loans), in foreclosure or
converted to REO Properties, as the case may be, and the denominator of which is
the Aggregate Loan Balance as of the last day of the related Remittance Period
exceeds 40% of the Senior Enhancement Percentage
"Trust": Wilshire Mortgage Loan Trust 1997-2, the trust created under this
Agreement.
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"Trust Estate": Collectively, all money, instruments and other property, to
the extent such money, instruments and other property are subject or intended to
be held in trust, and in the subtrusts, for the benefit of the Owners, including
all proceeds thereof, including, without limitation, (i) the Mortgage Loans,
(ii) such amounts, including Eligible Investments, as from time to time may be
held in all Accounts, (iii) any REO Property that has not been withdrawn from
the Trust, (iv) any Insurance Policies relating to the Mortgage Loans and any
rights of the Unaffiliated Seller under any Insurance Policies, (v) Net
Liquidation Proceeds with respect to any Liquidated Loan, and (vi) the
Depositor's rights under the Unaffiliated Seller's Agreement.
"Trustee": Bankers Trust Company of California, N.A., located on the date
of execution of this Agreement at the Corporate Trust Office, not in its
individual capacity but solely as Trustee under this Agreement, and any
successor hereunder.
"Trustee Fee": As of any Distribution Date and any Loan Group, the product
of (x) 1/12, (y) the Trustee Fee Rate and (z) the Aggregate Loan Balance of such
Loan Group as of the beginning of the related Remittance Period.
"Trustee Fee Rate": 0.02% per annum.
"Unaffiliated Seller": WMFC 1997-2 Inc., a Delaware corporation, and its
permitted successors and assigns.
"Unaffiliated Seller's Agreement": The Unaffiliated Seller's Agreement,
dated as of November 1, 1997, between the Unaffiliated Seller, the Servicer and
the Depositor.
"Underwriter": Prudential Securities Incorporated.
"Unpaid Realized Loss Amount": For any Class of Subordinated Certificates
and as to any Distribution Date, the excess of (x) the aggregate cumulative
amount of related Applied Realized Loss Amounts with respect to such Class for
all prior Distribution Dates over (y) the aggregate, cumulative amount of
related Realized Loss Amortization Amounts with respect to such Class for all
prior Distribution Dates.
"Unrecoverable Delinquency Advance": Any Delinquency Advance which the
Servicer, in its good faith business judgment, believes will not ultimately be
recovered from the related Mortgage Loan.
"Unregistered Certificates": The Class B and C Certificates.
"Updated Diskette Report": As defined in Section 8.10 hereof.
"Upper-Tier REMIC": The segregated pool of assets held by the Trust
consisting of the Lower-Tier Interests (except for the RL Lower-Tier Interest,
as set forth in the chart in Section 2.8(c) hereof).
"Variable Rate Certificates": The Class A-1 Certificates and the Class A-6
Certificates.
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"Weighted Average Class Pass-Through Rate": With respect to any Remittance
Period, the weighted average Pass-Through Rates (weighted by Certificate
Principal Balance) of the Offered Certificates, calculated at the opening of
business on the first day of such Remittance Period.
"WCC": Wilshire Credit Corporation, a Nevada corporation.
"WCC Servicing Guide": The Wilshire Credit Corporation Servicing Guide
dated December 31, 1994, or any replacement supplement or amendment thereto.
Section 1.2. Use of Words and Phrases. "Herein", "hereby", "hereunder",
"hereof", "hereinbefore", "hereinafter" and other equivalent words refer to this
Agreement as a whole and not solely to the particular section of this Agreement
in which any such word is used. The definitions set forth in Section 1.1 hereof
include both the singular and the plural. Whenever used in this Agreement, any
pronoun shall be deemed to include both singular and plural and to cover all
genders.
Section 1.3. Captions; Table of Contents. The captions or headings in this
Agreement and the Table of Contents are for convenience only and in no way
define, limit or describe the scope and intent of any provisions of this
Agreement.
Section 1.4. Opinions. Each opinion with respect to the validity, binding
nature and enforceability of documents or Certificates may be qualified to the
extent that the same may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity (whether
considered in a proceeding or action in equity or at law) and may state that no
opinion is expressed on the availability of the remedy of specific enforcement,
injunctive relief or any other equitable remedy. Any opinion required to be
furnished by any Person hereunder must be delivered by counsel upon whose
opinion the addressee of such opinion may reasonably rely, and such opinion may
state that it is given in reasonable reliance upon an opinion of another, a copy
of which must be attached, concerning the laws of a foreign jurisdiction.
ARTICLE II
ESTABLISHMENT AND ORGANIZATION OF THE TRUST
Section 2.1. Establishment of the Trust. The parties hereto do hereby
create and establish, pursuant to the laws of the State of New York and this
Agreement, the Trust, which, for convenience, shall be known as "Wilshire
Mortgage Loan Trust 1997-2".
Section 2.2. Office. The office of the Trust shall be in care of the
Trustee, addressed to the Corporate Trust Office, or at such other address as
the Trustee may designate by notice to the Unaffiliated Seller, the Servicer and
the Owners.
Section 2.3. Purposes and Powers. The purpose of the Trust is to engage in
the following activities, and only such activities: (i) the issuance of the
Certificates and the acquiring, owning and holding of Mortgage Loans and the
Trust Estate in connection therewith;
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(ii) activities that are necessary, suitable or convenient to accomplish the
foregoing or are incidental thereto or connected therewith, including the
investment of moneys in accordance with this Agreement; and (iii) such other
activities as may be required in connection with conservation of the Trust
Estate and distributions to the Owners; provided, however, that nothing
contained herein shall require or permit the Trustee to take any action which
would result in the loss of REMIC status for the Trust.
Section 2.4. Appointment of the Trustee; Declaration of Trust. The
Unaffiliated Seller hereby appoints the Trustee as trustee of the Trust
effective as of the Startup Day, to have all the rights, powers and duties set
forth herein. The Trustee hereby acknowledges and accepts such appointment,
represents and warrants its eligibility as of the Startup Day to serve as
Trustee pursuant to Section 10.8 hereof and declares that it will hold the Trust
Estate in trust upon and subject to the conditions set forth herein for the
benefit of the Owners.
Section 2.5. Expenses of the Trust. On each Distribution Date the Trustee
shall receive the Trustee Fee , as provided in Section 7.4 hereof. Any other
expenses of the Trust that have been reviewed and approved by the Unaffiliated
Seller or the Servicer (which approval shall not be unreasonably withheld),
including the reasonable expenses of the Trustee, its agents and counsel, shall
be paid directly by the Unaffiliated Seller or the Servicer to the Trustee or to
such other Person to whom such amounts may be due. Failure by the Unaffiliated
Seller to pay any such fees or other expenses shall not relieve the Trustee of
its obligations hereunder.
Section 2.6. Ownership of the Trust. On the Startup Day the ownership
interests in the Trust and the subtrusts shall be transferred as set forth in
Section 4.2 hereof, such transfer to be evidenced by sale of the Certificates as
described therein. Thereafter, transfer of any ownership interest shall be
governed by Sections 5.4 and 5.8 hereof.
Section 2.7. Receipt of Trust Estate. The Unaffiliated Seller hereby
directs the Trustee to accept the property conveyed to it pursuant to Section
3.6 hereof in connection with the establishment of the Trust, and the Trustee
hereby acknowledges receipt of such property to the extent delivered. The
Unaffiliated Seller further directs, upon a written order to authenticate from
the Depositor, the Trustee to issue the Certificates, to deliver the Offered
Certificates to the Depository as provided in Section 5.4, and to deliver the
Class B Certificates, the Class C Certificates to the Depositor and the Residual
Certificates to the Unaffiliated Seller.
Section 2.8. Miscellaneous REMIC Provisions. Error! Bookmark not
defined.The Trust shall elect that the Upper-Tier REMIC and the Lower-Tier REMIC
shall be treated as REMICs under Section 860D of the Code, as described in
Section 11.15. Any inconsistencies or ambiguities in this Agreement or in the
administration of the Trust shall be resolved in a manner that preserves the
validity of such REMIC elections.
(b) The Class A-1 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 M-1 Certificates, the
Class M-2 Certificates, the Class M-3 Certificate, the Class B Certificates and
the Class C Certificates are hereby designated as "regular interests" with
respect to the Upper-Tier
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REMIC and the Class RU Certificates are hereby designated as the single Class of
"residual interest" with respect to the Upper-Tier REMIC. The Class LT1, LT2,
LT3, LT4, LT5, LT6, LT7, LT8, LT9, LT10, LT11, LT12 and LT13 Certificates are
hereby designated as "regular interests" with respect to the Lower-Tier REMIC
and the Class RL Certificates are hereby designated as the single class of
"residual interest" with respect to the Lower-Tier REMIC.
(c) Any Extra Principal Amount applies pursuant to Section 7.5(b) that is
payable from interest on the Mortgage Loans will not be paid to the Lower Tier
Interests as interest, but a portion of the interest payable with respect to the
LT13 which equals 1% of the Extra Principal Amount will be payable as a
reduction of the principal balances of the LT2, LT3, LT4, LT5, LT6, L1 7, L1 8,
LT9, LT10, LT11 and LT12 Classes in the same manner in which the Extra Principal
Amount is allocated among the Class A-1, Class A-2, Class A-3, Class A 4, Class
A-5, Class A-6, Class A-7, Class M-1, Class M-2, Class M-3 and Class B
Certificates, respectively (and will be accrued and added to principal on the
LT13 Class).
Principal payments on the Mortgage Loans shall be allocated 98% to the LT1
Class, 1% to the LT13 Class and 1% to the LT2, LT3, LT4, LT5, LT6, LT7, LT8,
LT9, LT10, LT11 and LT12 Classes until paid in full. The aggregate amount of
principal allocated to the LT2, LT3, LT4, LT5, LT6 ,, LT7, LT8, LT9, LT10, LT11
and LT12 Classes shall be apportioned among such Classes in the same manner in
which principal is payable with respect to the Class A-1, Class A-2, Class A-3,
Class A-4, Class A-5, Class A-6, Class A-7, Class M-1, Class M-2, Class M-3 and
Class B Certificates, respectively.
Notwithstanding the above, 98% and 2% of any principal payment on the
Mortgage Loans that is attributable to an Overcollateralization Reduction Amount
shall be allocated to the LT1 Class and LT13 Classes, respectively, until paid
in full. Realized Losses shall be applied such that after all distributions have
been made on such Payment Date, the principal balance of the LT1 Class is 98% of
the aggregate Loan Balances of the Mortgage Loans, the principal balances of the
LT2, LT3, LT4, LT5, LT6, LT7, LT8, LT9, LT10, LT11 and LT12 Classes are each 1%
of the Class A-1, Class A-2, Class A-3, Class A", Class A-5, Class A-6, Class
A-7, Class M-l, Class M-2, Class M-3 and Class B Certificates, respectively, and
the principal balance of the LT13 Class is equal to the aggregate Loan Balances
of the Mortgage Loans less an amount equal to the sum of the principal balances
of the LT l, LT2, LT3, LT4, LT5. LT6, LT7, LT8. LT9, LT10, LT11 and LT12
Classes.
The Lower-Tier Interests will have the following designations and interest
rates, and distributions of principal and interest thereon shall be allocated
Certificates in the following manner:
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<TABLE>
<CAPTION>
Original
Class Companion Principal Allocation Allocation Final Scheduled
Designation Classes Balance of Principal of Interest Distribution Date
----------- ------- ------- ------------ ----------- -----------------
<S> <C> <C> <C> <C> <C>
LT1 All $129,153,322.30 N2 N3, N4 January 25, 2013
LT2 A-1 362,170.00 N2 N3, N4 May 25, 2015
LT3 A-2 100,000.00 N2 N3, N4 October 25, 2018
LT4 A-3 120,000.00 N2 N3, N4 November 25, 2021
LT5 A-4 120,000.00 N2 N3, N4 May 25, 2028
LT6 A-5 100,000.00 N2 N3, N4 May 25, 2028
LT7 A-6 163,020.00 N2 N3, N4 March 25, 2028
LT8 A-7 89,120.00 N2 N3, N4 May 25, 2028
LT9 M-1 82,360.00 N2 N3, N4 May 25, 2028
LT10 M-2 75,780.00 N2 N3, N4 May 25, 2028
LT11 M-3 62,600.00 N2 N3, N4 May 25, 2028
LT12 B 42,841.04 N2 N3, N4 May 25, 2028
LT13 All 1,330,180.81 N2 N3, N4 May 25, 2028
RL 0.00 0% N/A N/A, N5 May 25, 2028
</TABLE>
(1) The interest rate on the Lower-Tier Interests shall at any time of
determination equal the Net Weighted Average Mortgage Rate.
(2) Principal will be allocated to and apportioned among the Class A, Class M
and Class B Certificates in the same proportion as principal is payable
with respect to such Certificates, except that a portion of such principal
in an amount equal to the Overcollateralization Reduction Amount shall
first be allocated as a payment of interest to the Class C Certificates,
and all principal will be allocated as a payment of interest to the Class C
Certificates after the principal balance of the Class A, Class M and Class
B Certificates have been reduced to zero.
(3) Except as provided in footnote (4), interest will be allocated among the
Class A, Class M and Class B Certificates in the same proportion as
interest is payable on such Certificates.
(4) Any interest with respect to this Lower Tier Regular Interest in excess of
the product of (i) two times the weighted average coupon of the LT2, LT3.
LT4, LT5, LT6, LT7, LT8, LT9, LTl0, LT11, LTl2, and LTl3 Classes, where
each of such Classes, other than the Class LT13 Class, is first subject to
a cap and floor equal to the Class A-l, Class A-2, Class A-3, Class A-4,
Class A-5, Class A-6, Class A-7, Class M-l, Class M-2, M-3 and Class B
Pass-Through Rate, respectively, and the LTl3 Class is subject to a cap
equal to 0%, and (ii) the principal balance of this Lower Tier Regular
Interest, shall not be allocated to the Class A, Class M and Class B
Certificates but will be allocated to the Class C Certificates as a
separate component. However, the Class C Certificates shall be subordinated
to the extent provided in Section 7.5.
(5) The Class RL Certificate has no principal balance and does not bear
interest. On each Distribution Date, available funds, if any, remaining in
the Lower Tier REMIC after payments of interest and principal, as
designated above, will be distributed to the Class RL Certificate.
The Lower-Tier Interests LT1, LT2, LT3, LT4, LT5, LT6, LT7, LT8, LT9, LT10,
LT11, LT12 and LT13 shall be issued as non-certificated interests and recorded
on the records of the Lower-Tier REMIC as being issued to and held by the
Trustee on behalf of the Upper-Tier REMIC.
(d) The Startup Day is hereby designated as the "startup day" of the Lower
Tier REMIC and Upper Tier REMIC within the meaning of Section 860G(a)(9) of the
Code.
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Section 2.9. Grant of Security Interest. (a) Except with respect to the
REMIC Provisions, it is the intention of the parties hereto that the conveyance
by the Depositor of the Trust Estate to the Trustee on behalf of the Trust shall
constitute a purchase and sale of such Trust Estate and not a loan. In the
event, however, that a court of competent jurisdiction were to hold that the
transaction evidenced hereby constitutes a loan and not a purchase and sale, it
is the intention of the parties hereto that this Agreement shall constitute a
security agreement under applicable law, and that the Depositor shall be deemed
to have granted to the Trustee, on behalf of the Owners, a first priority
perfected security interest in all of the Depositor's right, title and interest
in, to and under the Trust Estate. The conveyance by the Depositor of the Trust
Estate to the Trustee on behalf of the Trust shall not constitute and is not
intended to result in an assumption by the Trustee or any Owner of any
obligation of the Originators or any other Person in connection with the Trust
Estate.
(b) The Unaffiliated Seller, the Depositor and the Servicer shall take no
action inconsistent with the Trust's ownership of the Trust Estate and shall
indicate or shall cause to be indicated in their records and records held on
their behalf that ownership of each Mortgage Loan and the assets in the Trust
Estate are held by the Trustee on behalf of the Owners. In addition, the
Unaffiliated Seller, the Depositor and the Servicer shall respond to any
inquiries from third parties with respect to ownership of a Mortgage Loan or any
other asset in the Trust Estate by stating that it is not the owner of such
asset and that ownership of such Mortgage Loan or other Trust Estate asset is
held by the Trustee on behalf of the Owners; provided that this paragraph shall
not be construed to prohibit the Servicer from appearing as lienholder of record
of the Mortgage Loans on behalf of the Trustee for the purpose of receiving
notices, executing release and modification documents and taking other actions
related to the Servicing of the Mortgage Loans, so long as such actions are
consistent with Article VIII hereof.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE UNAFFILIATED SELLER, THE DEPOSITOR AND THE SERVICER;
COVENANT OF DEPOSITOR TO CONVEY MORTGAGE LOANS
Section 3.1. Representations, Warranties and Covenants of the Unaffiliated
Seller . (a) The Unaffiliated Seller represents and warrants to the Servicer,
the Trustee, for its own benefit and for the benefit of the Owners of the
Certificates and the Depositor, as of the Closing Date, as follows:
(i) The Unaffiliated Seller is a corporation duly organized, validly
existing and in good standing under the laws of the state of its
jurisdiction of organization and is duly qualified to do business, and is
in good standing in each jurisdiction in which the nature of its business
requires it to be so qualified;
(ii) The Unaffiliated Seller has the power and authority to own and
convey all of its properties and assets and to execute and deliver this
Agreement and the Transaction Documents and to perform the transactions
contemplated hereby and thereby;
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(iii) The execution, delivery and performance by the Unaffiliated
Seller of this Agreement, the Certificates, the Unaffiliated Seller's
Agreement and the Transaction Documents and the transactions contemplated
hereby and thereby, (A) have been duly authorized by all necessary action
on the part of the Unaffiliated Seller, (B) do not contravene or cause the
Unaffiliated Seller to be in default under (x) the Unaffiliated Seller's
Articles of Incorporation or By-laws, (y) any contractual restriction
contained in any indenture, loan or credit agreement, lease, mortgage,
security agreement, bond, note, or other agreement or instrument binding on
or affecting the Unaffiliated Seller or its property or (z) any law, rule,
regulation, order, writ, judgment, award, injunction, or decree applicable
to, binding on or affecting the Unaffiliated Seller or its property and (C)
do not result in or require the creation of any material Adverse Claim upon
or with respect to any of the property of the Unaffiliated Seller;
(iv) This Agreement, the Certificates and any Transaction Documents to
which the Unaffiliated Seller is a party have each been duly executed and
delivered on behalf of the Unaffiliated Seller;
(v) No consent of, or other action by, and no notice to or filing
with, any Governmental Authority or any other party, is required for the
due execution, delivery and performance by the Unaffiliated Seller of this
Agreement, or the Transaction Documents;
(vi) Each of this Agreement and each of the Transaction Documents is
the legal, valid and binding obligation of the Unaffiliated Seller
enforceable against the Unaffiliated Seller in accordance with its
respective terms, subject to bankruptcy laws and other similar laws of
general application affecting creditors, and subject to the application of
rules of equity, including those respecting the availability of specific
performance;
(vii) There is no pending or, to the best knowledge of the
Unaffiliated Seller, threatened action, suit, proceeding or investigation,
against or affecting the Unaffiliated Seller, its officers or managers, or
the property of the Unaffiliated Seller, in any court or tribunal, or
before any arbitrator of any kind or before or by any Governmental
Authority which may result in a material adverse change in the business,
condition (financial or otherwise) or operations of the Unaffiliated Seller
or its performance hereunder;
(viii) No injunction, writ, restraining order or other order against
or affecting the Unaffiliated Seller, its officers, managers or property
has been issued by a Governmental Authority;
(ix) The Unaffiliated Seller has complied in all material respects
with all applicable laws, rules, regulations, and orders with respect to
it, its business and properties and all Mortgages and all restrictions
contained in any indenture, loan or credit agreement, mortgage, security
agreement, bond, note, or other agreement or instrument binding on or
affecting the Unaffiliated Seller or its property;
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(x) The Unaffiliated Seller has filed on a timely basis all tax
returns (federal, state, and local) required to be filed and has paid or
made adequate provisions for the payment of all taxes, assessments, and
other governmental charges due from the Unaffiliated Seller (if any);
(xi) With respect to the Unaffiliated Seller, there has occurred no
event which has a material adverse effect on the Unaffiliated Seller's
operations, including its ability to perform its obligations under this
Agreement;
(xii) The Unaffiliated Seller is solvent and will not become insolvent
after giving effect to the transactions contemplated by this Agreement; the
Unaffiliated Seller has not incurred Debts beyond its ability to pay; the
Unaffiliated Seller, after giving effect to the transactions contemplated
by this Agreement, will have an adequate amount of capital to conduct its
business in the foreseeable future; and the transfer of the Mortgage Loans
hereunder is made in good faith and without intent to hinder, delay or
defraud present or future creditors of the Unaffiliated Seller;
(xiii) For federal income tax reporting and accounting purposes, the
Unaffiliated Seller will treat the transfer of each Mortgage Loan pursuant
to the Unaffiliated Seller's Agreement as an absolute assignment of the
Unaffiliated Seller's right, title and ownership interest in, such Mortgage
Loan to the Unaffiliated Seller and has not in any other manner accounted
for or treated the transactions in the Mortgage Loans by the Unaffiliated
Seller contemplated thereby;
(xiv) The principal place of business and chief executive office of
the Unaffiliated Seller are located at the address of the Unaffiliated
Seller set forth in Section 11.19 and there are currently no, and during
the past four months there have not been any, other locations where the
Unaffiliated Seller is located (as that term is used in the UCC) or keeps
Records;
(xv) Each Mortgage Loan was sold by the Unaffiliated Seller on the
Closing Date pursuant to the Unaffiliated Seller's Agreement; any
amendments or waivers in respect thereto have been delivered to the
Trustee; no such amendment or waiver is material in any respect; and all
conditions precedent for the sale under the Unaffiliated Seller's Agreement
were satisfied;
(xvi) The Unaffiliated Seller's Agreement represents the entire
agreement of the Depositor and the Unaffiliated Seller with respect to the
subject matter thereof;
(xvii) The Unaffiliated Seller will at all times have at least two
independent directors;
(xviii) Neither the Unaffiliated Seller nor the Trust is an
"investment company" or "under the control of an investment company" as
such terms are defined in the Investment Company Act of 1940, as amended;
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(xix) The Trust will not be treated as an association taxable as a
corporation, and the Unaffiliated Seller will take no action inconsistent
with such treatment;
(xx) Neither the Trust nor the Unaffiliated Seller is a "taxable
mortgage pool"; the Unaffiliated Seller will take no action inconsistent
with such tax characterization;
(xxi) No certificate of an officer, statement furnished in writing or
report delivered or to be delivered pursuant to the terms hereof by the
Unaffiliated Seller contains or will contain any untrue statement of a
material fact or omits to state any material fact necessary to make the
certificate, statement or report not misleading.
(xxii) All actions, approvals, consents, waivers, exemptions,
variances, franchises, orders, permits, au thorizations, rights and
licenses required to be taken, given or obtained, as the case may be, by or
from any court or any federal, state or other governmental authority or
agency that are required in connection with the execution, delivery and
performance by the Unaffiliated Seller of this Agreement, have been duly
taken, given or obtained, as the case may be, are in full force and effect
on the date hereof, are not subject to any pending proceedings or appeals
(administrative, judicial or otherwise) and either the time within which
any appeal therefrom may be taken or review thereof may be obtained has
expired or no review thereof may be obtained or appeal therefrom taken, and
are adequate to authorize the consummation of the transactions contemplated
by this Agreement on the part of the Unaffiliated Seller and the
performance by the Unaffiliated Seller of its obligations under this
Agreement.
(xxiii) The statistical information regarding the Mortgage Loans set
forth in the Prospectus Supplement dated December 4, 1997 relating to the
Offered Certificates is a fair and accurate presentation of such
statistical information, which is accurate in all material respects as of
its date.
(b) The Unaffiliated Seller covenants and agrees so long as any
Certificates are outstanding as follows:
(i) The Unaffiliated Seller will do or cause to be done all things
necessary to preserve and maintain in full force and effect its existence,
rights, franchises and privileges in the jurisdiction of its organization;
(ii Without limiting the foregoing, the Unaffiliated Seller shall not
amend its Articles of Incorporation or By-laws in any manner that would
enable it to undertake any actions prohibited by this Section 3.01(b) or
that is otherwise adverse to the Owners of the Certificates, or that would
cause either of the Rating Agencies to lower or withdraw its then-current
rating on any class of Certificates. Notice of any amendment to the
Articles of Incorporation or By-laws shall be given to each Rating Agency;
(iii) The Unaffiliated Seller will not incur, create, assume or suffer
to exist any Adverse Claim on any of its properties, revenues or assets,
whether now owned or hereafter acquired;
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(iv) The Unaffiliated Seller will not engage in any business activity
other than acquiring and holding mortgage loans, financing (the
"Financings") and securitizing the same, issuing the Certificates,
acquiring and holding Mortgages securing the Certificates and entering into
and performing its obligations under the transactions contemplated hereby,
together with, the related underwriting agreement, the Unaffiliated
Seller's Agreement and the other Transaction Documents and engaging in any
activities incidental thereto;
(v) The Unaffiliated Seller will not incur, create, assume or suffer
to exist or otherwise become or be liable in respect of any Debt,
obligation or certificate other than in respect of or relating to (a) the
Certificates or the Financings, (b) the related underwriting agreement, or
(c) taxes, assessments or governmental charges not yet due and payable;
(vi) The Unaffiliated Seller will promptly deliver to the Trustee any
amendment or waiver of any Mortgage Loan;
(vii) The Unaffiliated Seller will not impede the Servicer or the
Trustee from exercising any right or remedy to which it is entitled under a
Mortgage Loan;
(viii) The Unaffiliated Seller warrants, covenants and agrees that it
is operated and will be operated in such a manner that it would not be
substantively consolidated in the trust estate of any Affiliate such that
the separate existence of the Unaffiliated Seller would be disregarded in
the event of a bankruptcy or insolvency of such Affiliate, and in such
regard.
(A) The Unaffiliated Seller will not engage in any intercorporate
transactions with any other Affiliates except for transactions in the
ordinary course of business and those set forth in this Agreement, the
Unaffiliated Seller's Agreement and the other Transaction Documents;
(B) The Unaffiliated Seller will maintain separate corporate
records and books of account; the Unaffiliated Seller will hold
regular corporate meetings and otherwise observe corporate
formalities; and the Unaffiliated Seller has a separate room
designated as its business office;
(C) The financial statements and books and records of the
Unaffiliated Seller will reflect the separate existence of the
Unaffiliated Seller as a corporation;
(D) The Unaffiliated Seller will maintain its assets separately
from the assets of any Affiliate (including through the maintenance of
a separate bank account), the Unaffiliated Seller's funds and assets,
and records relating thereto, will not be commingled with those of any
Affiliate and the separate creditors of the Unaffiliated Seller will
be entitled to be satisfied out of the Unaffiliated Seller's assets
prior to any value in the Unaffiliated Seller becoming available to
the Unaffiliated Seller's equityholders;
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(E) No Affiliate shall (i) pay the Unaffiliated Seller's
expenses; (ii) guarantee the Unaffiliated Seller's obligations (except
that WSFG may guarantee the Unaffiliated Seller's repurchase
obligations hereunder) or (iii) advance funds (other than the
Advances) to, or for the account of, the Unaffiliated Seller for the
payment of expenses or otherwise;
(F) All business correspondence of the Unaffiliated Seller and
other communications will be conducted in the Unaffiliated Seller's
own name and on its own stationery;
(G) No Affiliate except for WCC will act as an agent of the
Unaffiliated Seller in any capacity and the Unaffiliated Seller will
not act as agent or any Affiliate, but instead will present itself to
the public as a company separate from WCC and any other Person,
independently engaged in the business of purchasing and selling
mortgages; and
(H) The independent directors of the Unaffiliated Seller shall
not at any time be shareholders, directors, officers, employees or
Affiliates of the Unaffiliated Seller.
Section 3.2. Representations and Warranties of the Servicer. The Servicer
hereby represents, warrants and covenants to the Unaffiliated Seller, the
Depositor, the Trustee for its own benefit and for the benefit of the Owners of
the Certificates that, as of the Closing Date:
(a) The Servicer is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware, and is duly
qualified to do business, and is in good standing in each jurisdiction in
which the nature of its business requires it to be so qualified.
(b) The execution and delivery of this Agreement by the Servicer and
its performance and compliance with the terms of this Agreement have been
duly authorized by all necessary corporate action on the part of the
Servicer.
(c) This Agreement, assuming due authorization, execution and delivery
by the other parties hereto, constitutes a valid, legal and binding
obligation of the Servicer, enforceable against it in accordance with the
terms hereof, except as the enforcement hereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally and by general principles of equity
(whether considered in a proceeding or action in equity or at law).
(d) The Servicer is not in violation of, and the execution, delivery
and performance of this Agreement by the Servicer and its compliance with
the terms hereof will not constitute a violation with respect to, any
existing law or regulation or any order or decree of any court or any
order, regulation or demand of any federal, state, municipal or
governmental agency, which violation would have consequences that would
materially adversely affect the condition (financial or other) or
operations of the Servicer or its properties or would have consequences
that would adversely affect its performance
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hereunder. The execution, delivery and performance of this Agreement by the
Servicer and its compliance with the terms hereof will not conflict with,
result in any breach of any of the terms and provisions of, or constitute
(with or without notice, lapse of time or both) a default under, the
charter documents or by-laws of the Servicer, or any material indenture,
agreement, mortgage, deed of trust or other instrument to which the
Servicer is a party or by which it is bound, or result in the creation or
imposition of any lien encumbrance upon any of its material properties
pursuant to the terms of any such indenture, agreement, mortgage, deed of
trust or other instrument.
(e) No litigation, actions, proceedings or investigations are pending
or, to the best of the Servicer's knowledge, threatened against the
Servicer which would have consequences that would prohibit its entering
into this Agreement or that would materially and adversely affect the
condition (financial or otherwise) or operations of the Servicer or its
properties or would have consequences that would adversely affect its
performance hereunder, or the validity or enforceability of this Agreement,
or prevent the consummation on the part of the Servicer of any of the
transactions contemplated by this Agreement.
(f) No certificate of an officer, statement furnished in writing or
report delivered or to be delivered pursuant to the terms hereof by the
Servicer contains or will contain any untrue statement of a material fact
or omits to state any material fact necessary to make the certificate,
statement or report not misleading.
(g) All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required
to be taken, given or obtained, as the case may be, by or from any court or
any federal, state or other governmental authority or agency that are
required in connection with the execution, delivery and performance by the
Servicer of this Agreement, have been duly taken, given or obtained, as the
case may be, are in full force and effect on the date hereof, are not
subject to any pending proceedings or appeals (administrative, judicial or
otherwise) and either the time within which any appeal therefrom may be
taken or review thereof may be obtained has expired or no review thereof
may be obtained or appeal therefrom taken, and are adequate to authorize
the consummation of the transactions contemplated by this Agreement on the
part of the Servicer and the performance by the Servicer of its obligations
under this Agreement.
(h) The statistical information regarding the Mortgage Loans set forth
in the Prospectus Supplement dated December 4, 1997 relating to the Offered
Certificates is a fair and accurate presentation of such statistical
information, which is accurate in all material respects as of its date.
Section 3.3. Representations and Warranties of the Depositor. The Depositor
hereby represents and warrants to the Servicer, the Unaffiliated Seller, the
Backup Servicer, the Trustee for its own benefit and for the benefit of the
Owners of the Certificates that as of the Closing Date:
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(a) The Depositor is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, and is duly
qualified to do business, and is in good standing in each jurisdiction in
which the nature of its business requires it to be so qualified.
(b) The execution and delivery of this Agreement by the Depositor and
its performance and compliance with the terms of this Agreement have been
duly authorized by all necessary corporate action on the part of the
Depositor.
(c) This Agreement, assuming due authorization, execution and delivery
by the other parties hereto, constitutes a valid, legal and binding
obligation of the Depositor, enforceable against it in accordance with the
terms hereof, except as the enforcement hereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally and by general principles of equity
(whether considered in a proceeding or action in equity or at law).
(d) The Depositor is not in violation of, and the execution, delivery
and performance of this Agreement by the Depositor and its compliance with
the terms hereof will not constitute a violation with respect to, any
existing law or regulation or any order or decree of any court or any
order, regulation or demand of any federal, state, municipal or
governmental agency, which violation would have consequences that would
materially adversely affect the condition (financial or other) or
operations of the Depositor or its properties or would have consequences
that would adversely affect its performance hereunder. The execution,
delivery and performance of this Agreement by the Depositor and its
compliance with the terms hereof will not conflict with, result in any
breach of any of the terms and provisions of, or constitute (with or
without notice, lapse of time or both) a default under, the charter
documents or by-laws of the Depositor, or any material indenture,
agreement, mortgage, deed of trust or other instrument to which the
Depositor is a party or by which it is bound, or result in the creation or
imposition of any lien encumbrance upon any of its material properties
pursuant to the terms of any such indenture, agreement, mortgage, deed of
trust or other instrument.
(e) No litigation, actions, proceedings or investigations are pending
or, to the best of the Depositor's knowledge, threatened against the
Depositor which would have consequences that would prohibit its entering
into this Agreement or that would materially and adversely affect the
condition (financial or otherwise) or operations of the Depositor or its
properties or would have consequences that would adversely affect its
performance hereunder, or the validity or enforceability of this Agreement,
or prevent the consummation on the part of the Depositor of any of the
transactions contemplated by this Agreement.
(f) No certificate of an officer, statement furnished in writing or
report delivered or to be delivered pursuant to the terms hereof by the
Depositor contains or will contain any untrue statement of a material fact.
(g) All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required
to be taken, given or
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obtained, as the case may be, by or from any court or any federal, state or
other governmental authority or agency that are required in connection with
the execution, delivery and performance by the Depositor of this Agreement,
have been duly taken, given or obtained, as the case may be, are in full
force and effect on the date hereof, are not subject to any pending
proceedings or appeals (administrative, judicial or otherwise) and either
the time within which any appeal therefrom may be taken or review thereof
may be obtained has expired or no review thereof may be obtained or appeal
therefrom taken, and are adequate to authorize the consummation of the
transactions contemplated by this Agreement on the part of the Depositor
and the performance by the Depositor of its obligations under this
Agreement.
(h) The Depositor is conveying to the Trust the entire interest in the
Mortgage Loans which the Depositor has acquired from the Unaffiliated
Seller, free and clear of any Adverse Claims created by, or for the benefit
of, the Depositor.
Section 3.4. Representations and Warranties as to Each Mortgage Loan and
the other Transferred Assets . The Unaffiliated Seller represents and warrants
to the Servicer, the Depositor, the Backup Servicer, the Trustee for its own
benefit and for the benefit of the Owners of the Certificates, as to each
Mortgage Loan, that, as of the Closing Date:
(a) it has entered into the Unaffiliated Seller's Agreement with the
Depositor and it has made the following representations and warranties in
respect of the Mortgage Loans conveyed by it pursuant to the Unaffiliated
Seller's Agreement, which representations and warranties are or will be
true and correct as of the Closing Date, and which the Unaffiliated Seller
is hereby restating as true and correct as of the Closing Date:
(i) (A) the information with respect to each Mortgage Loan set
forth in the Schedule of Mortgage Loans is true and correct; (B) such
Mortgage Loan is denominated and payable in United States Dollars; (C)
except as set forth in the Prospectus Supplement each Mortgage Loan
will provide for a schedule of payments which are, if timely paid,
sufficient to fully pay the principal balance of such Mortgage Loan on
or before its maturity date and to pay interest at the applicable
interest rate (without giving effect to any contingent interest or
shared appreciation feature); (D) to the best of its knowledge, the
down payment, if any, described in the Loan File was paid in the
manner stated in the Loan File; (E) to the best of its knowledge, the
Loan Collateral, if any, the purchase of which was financed by the
seller thereof under the Mortgage Loan, has been delivered to and
accepted by the Mortgagor; (F) except as otherwise noted on the
Exception Report, to the best of the Unaffiliated Seller's knowledge,
the related Loan File is complete and the contractual documents
contained therein constitute the entire agreement with respect to the
Mortgage Loan with respect to the Mortgagor, the Originator and the
Unaffiliated Seller; and (G) each Loan File contains a true and
complete original of any (1) Note and (2) Mortgage;
(ii) no Mortgage Loan was more than 60 days Delinquent.
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(iii) (A) the proceeds of the Mortgage Loan have been fully
disbursed, and there is no obligation on the part of any Person to
make future advances thereunder; (B) any and all requirements as to
completion of any on-site or off-site improvements and as to
disbursements of any escrow funds therefor have been complied with;
(C) all costs, fees and expenses incurred in making or closing or
recording the Mortgage Loans were paid;
(iv)(A) such Mortgage Loan has not been satisfied, subordinated
or rescinded, and no provision of the Mortgage Loan has been waived,
altered or modified in any respect, except by instruments or documents
identified in the Loan File; and (B) such Mortgage Loan is not and
will not be subject to any right of rescission, set-off, recoupment,
counterclaim or defense, whether arising out of transactions
concerning the Mortgage Loan between the Mortgagor and the originator
of the Mortgage Loan or otherwise, and no such claim has been asserted
with respect thereto;
(v) (A) immediately prior to assigning such Mortgage Loan the
Unaffiliated Seller was the sole owner and had full right to transfer
the Mortgage Loan to the Depositor and such Mortgage Loan has not been
sold, assigned or pledged to any other Person; (B) the Unaffiliated
Seller's Agreement constitutes valid transfer, assignment, set-over
and conveyance to the Unaffiliated Seller of all right, title and
interest of the Unaffiliated Seller in and to the Mortgage Loans sold
thereunder, free and clear of any Adverse Claim (except for any
Permitted Liens on the related Loan Collateral, as set forth in the
Schedule of Mortgage Loans); (C) without limiting the generality of
the foregoing, the Unaffiliated Seller has duly fulfilled all
obligations on its part to be fulfilled under or in connection with
the Mortgage Loan and has done nothing to impair the rights of the
Unaffiliated Seller or the Trust in the Mortgage Loan or the proceeds
with respect thereto, including, without limitation, paying in full
all taxes and other charges payable in connection with the Mortgage
Loan and the transfer of the Mortgage Loan to the Unaffiliated Seller
or the Trust, which could impair or become an Adverse Claim to the
Unaffiliated Seller or the Trust's interest in such Mortgage Loan; and
(D) the transfer, assignment and conveyance of the related Mortgage
Loans by the Unaffiliated Seller pursuant to the Unaffiliated Seller's
Agreement is not subject to the bulk transfer laws or any similar
statutory provisions in effect in any applicable jurisdiction;
(vi) to the best knowledge of the Unaffiliated Seller, (A) there
is no Adverse Claim in respect of the Loan Collateral (including any
mechanics' lien or claim for work, labor or material or tax or
assessment lien) except for any Permitted Lien and (B) either (1) no
consent for the Mortgage Loan is required by the holder of any
Permitted Lien or (2) such consent has been obtained and is contained
in the Loan File;
(vii) to the best knowledge of the Unaffiliated Seller, (A) there
is no default, breach, violation, or event permitting acceleration
under the Mortgage Loan, and no event has occurred which, with notice
and the expiration of any grace or cure period or both, would
constitute a default, breach, violation, or event permitting
acceleration under such Mortgage Loan; (B) there are no proceedings or
investigations pending or threatened before any Governmental Authority
(1) asserting the invalidity of such
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Mortgage Loan, (2) asserting the bankruptcy or insolvency of the
related Mortgagor, (3) seeking the payment of such Mortgage Loan or
(4) seeking any determination or ruling that might materially and
adversely affect the validity or enforceability of such Mortgage Loan;
and (C) to the best of the Unaffiliated Seller's knowledge, no
Mortgagor on such Mortgage Loan is bankrupt, insolvent, or is unable
to make payment of its obligations when due;
(viii) the Mortgage Loan (1) constitutes the legal, valid and
binding obligation of the Mortgagor thereunder enforceable against the
Mortgagor in accordance with its terms (except as may be limited by
laws affecting creditors' rights generally) and (2) the Mortgage Loan
contains customary enforceable provisions such as to render the rights
and remedies of the holder thereof adequate for the realization
against the Loan Collateral for the benefit of the security afforded
thereby;
(ix) the Mortgage Loan was originated by the related Originator
without any conduct constituting fraud or misrepresentation on the
part of such Originator, and the Unaffiliated Seller has no knowledge
of any specific fact which should have led it to expect at the time of
assignment of such Mortgage Loan that the Mortgage Loan would not be
paid in full when due;
(x) (A) all parties which have had any ownership interest or
servicing rights in the Mortgage Loan are (or, during the period in
which they held and disposed of such interest, were) in compliance
with any and all applicable licensing requirements of the laws of the
state wherein the Mortgagor and the Loan Collateral is located; and
(B) the Mortgage Loan was not originated in, nor is subject to the
laws of any jurisdiction, the laws of which would make the transfer of
the Mortgage Loan to the Unaffiliated Seller or the Trust unlawful;
(xi) such Mortgage Loan does not contravene in any material
respect any laws, rules or regulations applicable thereto (including,
without limitation, laws, rules and regulations relating to usury,
consumer protection, truth-in-lending, fair credit billing, fair
credit reporting, equal credit opportunity, fair debt collection
practices and privacy);
(xii) each Mortgage Loan immediately prior to its sale pursuant
to the Unaffiliated Seller's Agreement was being serviced by the
Servicer;
(xiii) (A) the Unaffiliated Seller has performed in all material
respects any and all acts required to be performed (if any) to
preserve the rights and remedies of the Trustee in any insurance
policies applicable to the Mortgage Loans; and (B) each insurance
policy with respect to the Mortgage Loan or the Loan Collateral is a
valid, binding, enforceable and subsisting insurance policy of its
respective kind and is in full force and effect;
(xiv) to the best knowledge of the Unaffiliated Seller, the Loan
Collateral is in good repair and free and clear of any damage that
would affect materially and adversely the value of the Mortgage Loan
Collateral as security for the Mortgage Loan;
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(xv) to the best knowledge of the Unaffiliated Seller:
(A) (1) all of the improvements which were included for the
purpose of determining the appraised value of the Loan Collateral
lie wholly within the boundaries and building restriction lines
of such property, and no improvements on adjoining properties
encroach upon the Loan Collateral and (2) no improvement located
on or being part of the Loan Collateral is in violation of any
applicable zoning law or regulation, and all inspections,
licenses and certificates required to be made or issued with
respect to all occupied portions of the Loan Collateral and, with
respect to the use and occupancy of the same, including, but not
limited to, certificates of occupancy and fire underwriting
certificates, have been made or obtained from the appropriate
authorities and the Loan Collateral is lawfully occupied under
applicable law;
(B) with respect to each Mortgage Loan secured by a deed of
trust, a trustee, duly qualified under applicable law to serve as
such, has been properly designated and currently so serves and is
named in such deed of trust, and no fees or expenses are or will
become payable by the Unaffiliated Seller or the Trust to the
trustee under the deed of trust, except in connection with a
trustee's sale after default by the Mortgagor;
(C) the Mortgage contains a customary provision for the
acceleration of the payment of the unpaid principal balance of
the Mortgage Loan in the event the related security for the
Mortgage Loan is sold without the prior consent of the mortgagee
thereunder;
(D) the Loan Collateral constituting residential real estate
is lawfully occupied under applicable law and the Unaffiliated
Seller has no actual knowledge that such Loan Collateral is not
so occupied;
(E) except as otherwise noted in the Exception Report, the
Mortgage is contained in the Loan File, each such document was
recorded, and all subsequent assignments have been recorded in
the appropriate jurisdictions wherein such recordation is
necessary to perfect the lien thereof as against creditors of the
Originator;
(F) except as otherwise noted in the Exception Report, a
lender's title insurance policy, issued in standard American Land
Title Association form, or other form acceptable in a particular
jurisdiction, by a title insurance company authorized to transact
business in the state in which the related Loan Collateral is
situated, together with any applicable endorsement, in an amount
at least equal to the original principal balance of such Mortgage
Loan insuring the mortgagee's interest under the related Mortgage
Loan as the holder of a valid first or second mortgage lien of
record on the real property described in the Mortgage Loan was in
full force and effect on the date of the
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origination of such Mortgage Loan and as of the Closing Date a
true and complete original copy thereof is in the Loan File;
(G) the improvements relating to any Loan Collateral are
covered by a valid and existing hazard insurance policy with a
generally acceptable carrier that provides for fire and extended
coverage customarily applicable in the mortgage industry;
(H) a flood insurance policy, if customarily required in the
mortgage industry in the area in which the Loan Collateral is
situated, is in effect with respect to each Loan Collateral with
a generally acceptable carrier in an amount representing coverage
customarily applicable in the mortgage industry;
(I) either (1) any taxes, governmental assessments,
insurance premiums, water, sewer and municipal charges or ground
rents which previously became due and owing have been paid, or
(2) an escrow of funds has been established in an amount
sufficient to pay for every such item which remains unpaid and
which has been assessed but is not yet due and payable. Except
for payments in the nature of escrow payments, including, without
limitation, taxes and insurance payments, the Servicer has not
advanced funds, or induced, solicited or knowingly received any
advance of funds by a party other than the mortgagor, directly or
indirectly, for the payment of any amount required by the
Mortgage Loan, except for interest accruing from the date of the
Mortgage Loan or date of disbursement of the Mortgage proceeds,
whichever is greater, to the day which precedes by one month the
due date of the first installment of principal and interest; and
(J) there is no proceeding pending or, to the best of the
Unaffiliated Seller's or the Servicer's knowledge, threatened for
the total or partial condemnation of the Loan Collateral, nor is
such a proceeding currently occurring, and such property is
undamaged by waste, fire, earthquake or earth movement,
windstorm, flood, tornado or other casualty, so as to affect
materially and adversely the value of the Loan Collateral as
security for the Mortgage Loan or the use for which the premises
were intended; and
(xvi) Upon receipt of each Mortgage Loan by the Trust pursuant to
Article II hereof, the Trust has a perfected, first-priority security
interest in each Mortgage Loan and the proceeds thereof, subject to
Permitted Liens.
(b) The Depositor hereby assigns to the Trustee on behalf of the Trust
its rights under the Unaffiliated Seller's Agreement (such rights having
been assigned to the Depositor by the Unaffiliated Seller) to cause the
Unaffiliated Seller to repurchase any Mortgage Loan conveyed by the
Unaffiliated Seller as to which there has occurred an uncured breach of a
representation or warranty (without regard to any qualification as to
knowledge) which materially and adversely affects the value of, or the
interests of the
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Trust in, any Mortgage Loan in respect of the representations and
warranties with respect to the Mortgage Loans set forth in such
Unaffiliated Seller's Agreement. The Trustee hereby acknowledges such
assignment, and the Servicer on the Trustee's behalf agrees to exercise
such rights as provided herein.
(c) The representations and warranties described in this Section 3.4
shall survive the assignment of the Mortgage Loans to the Trust.
Section 3.5. Repurchases and Remedies. (a) Upon discovery by any of the
Unaffiliated Seller, the Servicer, or actual knowledge of a Responsible Officer
of the Trustee, of (i) a breach of any of the representations and warranties set
forth in Section 3.4, without regard to any limitation set forth in such
representation or warranty concerning the knowledge of the related Seller or the
Unaffiliated Seller as to the facts stated therein, or, with respect to the
completeness of any Loan File, without regard to any exceptions set forth on the
Exception Report or (ii) a failure to make any filing or take any action
required by Section 3.5 hereof, which materially and adversely affects the value
of, or the interests of the Trust in, any Mortgage Loan, the party discovering
such breach shall give prompt written notice to the others and the Depositor.
Any exception set forth on the Exception Report shall not, in and of itself be
deemed material and adverse to such value or interests unless otherwise
determined to be so.
If, on the Remittance Date in the month following the expiration of a 60
day period following the date of the notice referred to in the immediately
preceding sentence, such breach or failure shall remain uncured, the Mortgage
Loan as to which the breach or failure relates shall be repurchased or purchased
for the Loan Purchase Price by the Unaffiliated Seller.
(b) Following confirmation that the Loan Purchase Price has been deposited
in the Principal and Interest Account and receipt by the Trustee of a written
Request for Release in the form of Exhibit F hereto from the Servicer, the
Trustee on behalf of the Trust shall release such Mortgage Loan and the related
Loan File to the Unaffiliated Seller and the Trustee on behalf of the Trust
shall assign to such party or its designee, all of the Trust's right, title and
interest in such purchased or repurchased Mortgage Loan, and all property and
rights conveyed to the Trustee relating thereto, without recourse,
representation or warranty, except as to the absence of liens, charges or
encumbrances created by or arising as a result of actions of the Trustee except
as to liens, charges or encumbrances created or arising out of this Agreement.
The Trustee and the Unaffiliated Seller shall execute and deliver to the
Unaffiliated Seller an assignment, prepared and furnished to the Trustee
substantially in the form of Exhibit G to vest ownership of the repurchased
Mortgage Loan in such party. The repurchase and purchase obligations pursuant to
this Section 3.5 constitute the sole remedy available to the Trustee and the
Owners of the Certificates for a breach of a representation or warranty or
agreement of the Unaffiliated Seller set forth in this Article III. For the
purposes of this Agreement, a Mortgage Loan has not been "repurchased" or
"purchased" by the Unaffiliated Seller or the Servicer, as the case may be,
pursuant to this Section 3.6 unless the Loan Purchase Price therefor has been
deposited into the Principal and Interest Account.
Section 3.6. Conveyance of the Mortgage Loans. (a) The Depositor
concurrently with the execution and delivery hereof, hereby transfers, sells,
assigns, sets over and otherwise conveys without recourse, to the Trustee on
behalf of the Trust, all right, title and
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interest of the Depositor in and to each Mortgage Loan listed on the Schedule of
Mortgage Loans delivered by the Depositor on the Startup Day, all its right,
title and interest in and to payments of principal and interest (including
Prepaid Installments) due after the Cut-Off Date, and all payments of principal
collected after the Cut-Off Date, together with all of its right, title and
interest in and to all related Insurance Policies. The transfer by the Depositor
of the Mortgage Loans set forth on the Schedule of Mortgage Loans to the Trustee
on behalf of the Trust is absolute and is intended by the Owners and all parties
hereto to be treated as a sale by the Depositor.
(b) In connection with the transfer, sale and assignment of the Mortgage
Loans, the Unaffiliated Seller agrees to:
(i) cause to be delivered, on the Startup Day with respect to the
Mortgage Loans, without recourse, to the Trustee (A) the original Notes,
endorsed without recourse by the Unaffiliated Seller "Pay to the order of
Bankers Trust Company of California, N.A., as Trustee for Wilshire Mortgage
Loan Trust 1997-2 under the Pooling and Servicing Agreement dated November
1, 1997, without recourse"; (B) originals or certified copies of all
intervening assignments, if any, showing a complete chain of assignment
from origination to the Unaffiliated Seller, including warehousing
assignments, with evidence of recording or certification of filing for
recordation thereon; (C) originals of all assumption and modification
agreements, if any; (D) either: (1) the original Mortgage, with evidence of
recording thereon, (2) a true and accurate copy of the Mortgage where the
original Mortgage has been transmitted for recording, until such time as
the original Mortgage is returned by the public recording office, or (3) a
copy of the Mortgage certified by the public recording office in those
instances where the original recorded Mortgage has been lost; (E) the
original mortgage title insurance policy, title commitment, binder or
attorney's opinion of title and abstract of title; provided that, in the
event a copy of any mortgage title insurance policy or title commitment was
originally delivered to the Trustee pursuant to this Section 3.6(b)(i)(E),
the Unaffiliated Seller shall cause the related original mortgage, title
policy, or title commitment to be delivered to the Trustee within one year
of the Startup Day; and (F) an original assignment of the Mortgage Loan
from the Unaffiliated Seller to "Bankers Trust Company of California, N.A.,
as Trustee for Wilshire Mortgage Loan Trust 1997-2 under the Pooling and
Servicing Agreement dated November 1, 1997".
(ii) cause, within 30 days following the Startup Day, assignments of
the Mortgages from the Unaffiliated Seller to "Bankers Trust Company of
California, N.A., as Trustee of Wilshire Mortgage Loan Trust 1997-2 under
the Pooling and Servicing Agreement dated as of November 1, 1997", to be
submitted for recording in the appropriate jurisdictions wherein such
recordation is necessary to perfect the lien thereof as against creditors
of or purchasers from the Unaffiliated Seller to the Trustee on behalf of
the Trust; provided, however, that the Unaffiliated Seller shall not be
required to prepare an assignment for any Mortgage (x) until such original
recording information is available or (y) as to which the Unaffiliated
Seller furnishes, within such 30-day period, at the Unaffiliated Seller's
expense, an opinion of counsel to the Trustee ("Assignment Opinion") which
opines that recording is not necessary to perfect the rights of the Trustee
on behalf of the Trust in the related Mortgage (in form and substance
satisfactory to each
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of the Rating Agencies). Following the expiration of such 30-day period and
except with respect to Mortgages covered by the Assignment Opinions, the
Unaffiliated Seller shall cause to be prepared a Mortgage assignment for
any Mortgage for which original recording information is subsequently
received by the related Originator, and shall promptly deliver a copy of
such Mortgage assignment to the Trustee; and
(iii) cause, within five (5) Business Days following the expiration of
such 30-day period referred to in clause (ii) above, to be delivered to the
Trustee certified copies of all Mortgage assignments submitted for
recording, together with a list of (x) all Mortgages for which no Mortgage
assignment has yet been submitted for recording by the Unaffiliated Seller
and (y) reasons why the Unaffiliated Seller has not yet submitted such
Mortgage assignments for recording. With respect to any Mortgage assignment
set forth on the aforementioned list which has not been submitted for
recording for a reason other than a lack of original recording information
or with respect to Mortgages covered by the Assignment Opinions, the
Trustee shall make an immediate demand on the Unaffiliated Seller to cause
such Mortgage assignments to be prepared.
All Mortgage assignments as to which an acceptable Assignment Opinion has
not been delivered shall be accomplished within twelve months of the Startup Day
(including any assignments not originally recorded due to lack of recordation
information) at the expense of the Originator or of the Unaffiliated Seller.
Notwithstanding anything to the contrary contained in this Section 3.6, in those
instances as identified by the Unaffiliated Seller where the public recording
office retains the original Mortgage, the assignment of a Mortgage or the
intervening assignments of the Mortgage after it has been recorded, the
Unaffiliated Seller shall be deemed to have satisfied its obligations hereunder
upon delivery to the Trustee of a copy of such Mortgage, such assignment or
assignments of Mortgage certified by the public recording office to be a true
copy of the recorded original thereof.
If the initial Servicer is removed pursuant to Section 8.18, the Trustee or
other successor Servicer shall submit all assignments for recording; the costs
of such assignments shall be paid by the initial Servicer or the Trust Fund.
Copies of all Mortgage assignments received by the Trustee shall be kept in
the related Loan File.
From time to time hereafter, the Servicer shall take or cause to be taken
such actions and execute such documents as are necessary to perfect and protect
the Trust's and the Owners' interests in the Loan Files against all other
Persons, including, without limitation, the filing of financing statements,
amendments thereto and continuation statements.
(c) In the case of Mortgage Loans which have been prepaid in full on or
after the Cut-Off Date and prior to the Startup Day, the Unaffiliated Seller, in
lieu of the foregoing, will deliver within three Business Days after the Startup
Day to the Trustee a certification of an Authorized Officer in the form set
forth in Exhibit D.
(d) The Unaffiliated Seller shall transfer, sell, assign, set over and
otherwise convey without recourse, to the Trustee on behalf of the Trust all
right, title and interest of the
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Unaffiliated Seller in and to any Qualified Replacement Mortgage delivered to
the Trustee on behalf of the Trust by the Unaffiliated Seller pursuant to
Section 3.5 or Section 3.7 hereof and all its right, title and interest to
unscheduled payments of principal (including Prepayments) collected on and after
the applicable Replacement Cut-Off Date, together with all payments of principal
collected and interest due after the applicable Replacement Cut-Off Date, and
all of its right, title and interest in and to all related Insurance Policies.
(e) As to each Mortgage Loan released from the Trust in connection with the
conveyance of a Qualified Replacement Mortgage therefor, the Unaffiliated Seller
will prepare and deliver to the Trustee an appropriate instrument for execution
by the Trustee, and the Trustee will transfer, assign, set over and otherwise
convey without representation, warranty or recourse, on the Unaffiliated
Seller's order, all of its right, title and interest in and to such released
Mortgage Loan and all of the Trust's right, title and interest to unscheduled
payments of principal (including Prepayments) collected on and after the
applicable Replacement Cut-Off Date, together with all payments of principal
collected and interest due after the applicable Replacement Cut-Off Date, and
all of its right, title and interest in and to all related Insurance Policies.
(f) In connection with any transfer, sale and assignment of a Qualified
Replacement Mortgage to the Trustee on behalf of the Trust, the Unaffiliated
Seller agrees to cause to be delivered to the Trustee the items described in
Section 3.6(b) on the date of such transfer, sale and assignment or, if a later
delivery time is permitted by Section 3.6(b), then no later than such later
delivery time.
(g) As to each Mortgage Loan released from the Trust in connection with the
conveyance of a Qualified Replacement Mortgage, the Trustee shall deliver on the
date of conveyance of such Qualified Replacement Mortgage and on the order of
the Unaffiliated Seller (to the extent received by the Trustee and not
previously released pursuant to the terms of this Agreement) (i) the original
Note, or the certified copy, relating thereto, if the certified copy is a legal
substitute for an otherwise unavailable original Note endorsed without recourse,
to the Unaffiliated Seller and (ii) such other documents as constitute the Loan
File with respect thereto.
(h) If a Mortgage assignment is lost during the process of recording, or is
returned from the recorder's office unrecorded due to a defect therein, the
Unaffiliated Seller shall prepare a substitute assignment or cure such defect,
as the case may be, and thereafter cause each such assignment to be duly
recorded.
(i) The Unaffiliated Seller shall reflect on its records that the Mortgage
Loans have been sold to the Trust.
Section 3.7. Acceptance by Trustee; Certain Substitutions of Mortgage
Loans; Certification by Trustee. (a) The Trustee agrees to execute and deliver
on the Startup Day an acknowledgment of receipt of the Notes delivered by the
Unaffiliated Seller in the form attached as Exhibit E hereto, and declares that
it will hold the related Loan File, together with any amendments, replacements
or supplements thereto, as well as any other assets included in the definition
of Trust Estate and delivered to the Trustee, as Trustee in trust upon and
subject to the conditions set forth herein for the benefit of the Owners. The
Trustee further agrees to review
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any other documents delivered by the Unaffiliated Seller within 90 days after
the Startup Day (or within 90 days with respect to any Qualified Replacement
Mortgage after the assignment thereof) and to deliver to the Unaffiliated Seller
and the Servicer a Pool Certification in the form attached hereto as Exhibit F
to the effect that, except as described in such certification (such description
an "Exception Report"), as to each Mortgage Loan listed in the Schedule of
Mortgage Loans (other than any Mortgage Loan paid in full or any Mortgage Loan
specifically identified in such Pool Certification as not covered by such Pool
Certification), (i) all documents described in Sections 3.6(b)(i)(A), (B), (D),
(E) and (F) required to be delivered to it pursuant to this Agreement are in its
possession, (ii) such documents have been reviewed by it and have not been
mutilated, damaged, torn or otherwise physically altered and relate to such
Mortgage Loan and (iii) based on its examination and only as to the foregoing
documents, the information set forth on the Schedule of Mortgage Loans
accurately reflects the information set forth in the related Loan File but only
with regard to the loan number, the mortgagor's name, the property address and
the original principal balance; provided, however, that such Pool Certification
shall not be delivered prior to 90 days after the Startup Day. The Trustee shall
be under no duty or obligation to inspect, review or examine any such documents,
instruments, certificates or other papers to determine that they are genuine,
enforceable, or appropriate for the represented purpose or that they are other
than what they purport to be on their face, nor shall the Trustee be under any
duty to determine independently whether there are any intervening assignments or
assumption or modification agreements with respect to any Mortgage Loan.
(b) If the Trustee during such 90-day period finds any document
constituting a part of a Loan File which is not properly executed, has not been
received within the specified period, or is unrelated to the Mortgage Loans
identified in the Schedule of Mortgage Loans, or that any Mortgage Loan does not
conform in a material respect to the description thereof as set forth in the
Schedule of Mortgage Loans, the Trustee shall promptly so notify the
Unaffiliated Seller. In performing any such review, the Trustee may conclusively
rely on the Unaffiliated Seller as to the purported genuineness of any such
document and any signature thereon. It is understood that the scope of the
Trustee's review of the items delivered by the Unaffiliated Seller pursuant to
Section 3.6(b)(i) is limited solely to confirming that the documents listed in
Section 3.6(b)(i) have been executed and received, relate to the Loan Files
identified in the Schedule of Mortgage Loans and conform materially to the
description thereof in the Schedule of Mortgage Loans. The Unaffiliated Seller
agrees to use reasonable efforts to remedy a material defect in a document
constituting part of a Loan File of which it is so notified by the Trustee. If,
however, within 60 days after the Trustee's notice to it respecting such defect
the Unaffiliated Seller has not remedied or caused to be remedied the defect and
the defect materially and adversely affects the interest in the related Mortgage
Loan of the Owners, the Unaffiliated Seller will (or will cause the Originator
or an affiliate of the Unaffiliated Seller to) on the next succeeding Remittance
Date (i) substitute in lieu of such Mortgage Loan a Qualified Replacement
Mortgage and, deliver the Substitution Amount applicable thereto to the Servicer
for deposit in the Principal and Interest Account or (ii) purchase such Mortgage
Loan at a purchase price equal to the Loan Purchase Price thereof, which
purchase price shall be delivered to the Servicer for deposit in the Principal
and Interest Account. In connection with any such proposed purchase or
substitution the Unaffiliated Seller shall cause at the Unaffiliated Seller's
expense to be delivered promptly to the Trustee an opinion of counsel
experienced in federal income tax matters stating whether or not such a proposed
purchase or substitution would constitute a Prohibited Transaction for the Trust
or would jeopardize the status of the Trust as a REMIC, and the
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Unaffiliated Seller shall only be required to take either such action to the
extent such action would not constitute a Prohibited Transaction for the Trust
or would not jeopardize the status of the Trust as a REMIC. Within 270 days
after the Closing Date, the Trustee shall deliver to the Unaffiliated Seller,
the Servicer and the Depositor a final certification (the "Final Certification")
evidencing the completeness of the Loan Files acquired by the Trustee on behalf
of the Trust. To the extent that the Final Certification reflects any
exceptions, the Trustee shall continue to deliver to the Unaffiliated Seller,
the Servicer and the Depositor a monthly certification and Exception Report
reflecting the status of any exceptions until all such material exceptions have
been cured.
Section 3.8. Cooperation Procedures. (a) The Unaffiliated Seller shall, in
connection with the delivery of each Qualified Replacement Mortgage to the
Trustee, provide the Trustee with the information set forth in the Schedule of
Mortgage Loans with respect to such Qualified Replacement Mortgage.
(b) The Unaffiliated Seller, the Servicer and the Trustee covenant to
provide each other and each of the Rating Agencies with all data and information
required to be provided by them hereunder at the times required hereunder, and
additionally covenant reasonably to cooperate with each other in providing any
additional information required by any of them or either of the Rating Agencies
in connection with their respective duties hereunder.
(c) The Trustee shall have no duty hereunder with respect to any complaint,
claim, demand, notice or other document it may receive or which may be alleged
to have been delivered to or served upon it by third parties as a consequence of
the assignment of any Mortgage Loan hereunder, and the Servicer hereby expressly
releases, indemnifies and agrees to hold the Trustee harmless from any losses to
the Trustee or Trust Fund resulting therefrom; provided, however, that the
Trustee shall use commercially reasonable efforts to deliver to the Servicer any
such complaint, claim, demand, notice or other document which is delivered to
the Corporate Trust Office of the Trustee and contains sufficient information to
enable the Trustee to identify it as pertaining to a Mortgage Loan.
(d) The Trustee shall file on behalf of the Trust all reports required to
be filed subsequent to the Closing Date with the Securities and Exchange
Commission or any exchange or association of securities dealers pursuant to the
Securities and Exchange Act of 1934, as amended, or any rules and regulations
thereunder.
ARTICLE IV
ISSUANCE AND SALE OF CERTIFICATES
Section 4.1. Issuance of Certificates. On the Startup Day, upon the
Trustee's receipt from the Unaffiliated Seller of an executed Authentication
Order in the form set forth as Exhibit G hereto, the Trustee shall execute,
authenticate and deliver the Certificates on behalf of the Trust in accordance
with the directions set forth in such Authentication Order.
Section 4.2. Sale of Certificates. At 11:00 a.m. New York City time on the
Startup Date, at the offices of Dewey Ballantine, 1301 Avenue of the Americas,
New York, New
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York, the Depositor will sell and convey the Mortgage Loans and the money,
instruments and other property related thereto to the Trustee, and the Trustee
will (i) deliver to the Underwriter, the Offered Certificates with an aggregate
Percentage Interest in each Class equal to 100%, registered in the name of Cede
& Co. or in such other names as the Depositor shall direct, against payment of
the purchase price thereof as specified in Exhibit O hereto by wire transfer of
immediately available funds to the Trustee, (ii) deliver the Class B
Certificates and the Class C Certificates with an aggregate Percentage Interest
in each Class equal to 100%, registered as the Depositor shall request, and
(iii) deliver the Residual Certificates, with an aggregate Percentage Interest
equal to 100%, registered as the Unaffiliated Seller shall request. Upon receipt
of the proceeds of the sale of the Certificates, the Trustee shall, from the
proceeds of the sale of the Certificates, pay such fees and expenses as are
identified by the Unaffiliated Seller and specified in Exhibit O hereto, and pay
to the Unaffiliated Seller the balance after deducting such amounts; provided,
however, that, the Depositor and the Unaffiliated Seller agree that at the
instruction of the Depositor, $11,000,000 of such proceeds may be withheld from
such payment to the Unaffiliated Seller pending the sale of the Class B
Certificates and the Class C Certificates by the Underwriter.
ARTICLE V
CERTIFICATES AND TRANSFER OF INTERESTS
Section 5.1. Terms. (a) The Certificates are pass-through securities having
the rights described herein and therein. Notwithstanding references herein or
therein with respect to the Certificates as to "principal" and "interest", no
debt of any Person is represented thereby, nor are the Certificates or the
underlying Notes guaranteed by any Person (except that the Notes may be recourse
to the Mortgagors thereof to the extent permitted by law). Distributions on the
Certificates are payable solely from payments received on or with respect to the
Mortgage Loans (other than the Servicing Fees), moneys in the Principal and
Interest Account and the Certificate Account, except as otherwise provided
herein, from earnings on moneys and the proceeds of property held as a part of
the Trust Estate upon the occurrence of certain events, Delinquency Advances
made and Compensating Interest paid by the Servicer or otherwise held by the
Servicer in Trust for the Owners, except as otherwise provided herein. Each
Certificate entitles the Owner thereof to receive monthly on each Distribution
Date, in order of priority of distributions with respect to such Class of
Certificates, a specified portion of such payments with respect to the Mortgage
Loans, pro rata in accordance with such Owner's Percentage Interest.
(b) Each Owner is required, and hereby agrees, to return to the Trustee any
Certificate with respect to which the Trustee has made the final distribution
due thereon. Any such Certificate as to which the Trustee has made the final
distribution thereon shall be deemed cancelled and shall no longer be an
Outstanding Certificate for any purpose of this Agreement, whether or not such
Certificate is ever returned to the Trustee.
Section 5.2. Forms. 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
M-1 Certificates, the Class M-2 Certificates, the Class M-3 Certificates, the
Class B Certificates, the Class C Certificates, and the Class R Certificates
shall be in substantially the forms set forth in Exhibits A-1, A-2, A-3, A-4,
A-5, A-6,
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A-7, M-1, M-2, M-3, B-1, B-2, and C hereof, respectively, with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Agreement or as may in the Unaffiliated Seller's judgment be
necessary, appropriate or convenient to comply, or facilitate compliance, with
applicable laws, and may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any applicable securities laws.
Section 5.3. Execution, Authentication and Delivery. Each Certificate shall
be executed on behalf of the Trust, by the manual or facsimile signature of one
of the Trustee's Authorized Officers and shall be authenticated by the manual
signature of one of the Trustee's Authorized Officers.
Certificates bearing the signature of individuals who were at any time the
proper officers of the Trustee shall, upon proper authentication by the Trustee,
bind the Trust, notwithstanding that such individuals or any of them have ceased
to hold such offices prior to the execution and delivery of such Certificates or
did not hold such offices at the date of authentication of such Certificates.
The initial Certificates shall be dated as of the Startup Day and delivered
at the Closing to the parties specified in Section 4.2 hereof.
No Certificate shall be valid until executed and authenticated as set forth
above.
Section 5.4. Registration and Transfer of Certificates. (a) The Trustee, as
registrar, shall cause to be kept a register (the "Register") in which, subject
to such reasonable regulations as it may prescribe, the Trustee shall provide
for the registration of Certificates and the registration of transfer of
Certificates. The Trustee is hereby appointed registrar for the purpose of
registering Certificates and transfers of Certificates as herein provided. The
Owners shall have the right to inspect the Register at all reasonable times and
to obtain copies thereof.
(b) Subject to the provisions of Section 5.8 hereof, upon surrender for
registration of transfer of any Certificate at the office designated as the
location of the Register, the Trustee shall execute, authenticate and deliver,
in the name of the designated transferee or transferees, one or more new
Certificates of a like Class and in the aggregate Percentage Interest of the
Certificate so surrendered.
(c) At the option of any Owner, Certificates of any Class owned by such
Owner may be exchanged for other Certificates authorized of like Class, tenor
and a like aggregate Percentage Interest and bearing numbers not
contemporaneously outstanding, upon surrender of the Certificates to be
exchanged at the office designated as the location of the Register. Whenever any
Certificate is so surrendered for exchange, the Trustee shall execute,
authenticate and deliver the Certificate or Certificates which the Owner making
the exchange is entitled to receive.
(d) All Certificates issued upon any registration of transfer or exchange
of Certificates shall be valid evidence of the same ownership interests in the
Trust and entitled to the same benefits under this Agreement as the Certificates
surrendered upon such registration of transfer or exchange.
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(e) Every Certificate presented or surrendered for registration of transfer
or exchange shall be duly endorsed, or be accompanied by a written instrument of
transfer in form satisfactory to the Trustee duly executed by the Owner thereof
or his attorney duly authorized in writing.
(f) No service charge shall be made to an Owner for any registration of
transfer or exchange of Certificates, but the Trustee may require payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection with any registration of transfer or exchange of Certificates; any
other expenses in connection with such transfer or exchange shall be an expense
of the Trust. The Trustee shall not be liable for any expenses in connection
with the issuance of Certificates pursuant to this Section 5.4.
(g) It is intended that the Offered Certificates be registered so as to
participate in a global book-entry system with the Depository, as set forth
herein. Each Class of Offered Certificates shall, except as otherwise provided
in the next paragraph, be initially issued in the form of a single fully
registered Offered Certificate with a denomination equal to the related Original
Certificate Principal Balance. Upon initial issuance, the ownership of each such
Offered Certificate shall be registered in the Register in the name of Cede &
Co., or any successor thereto, as nominee for the Depository.
The minimum denominations shall be $1,000 and integrals thereof for any
Offered Certificate or Class B Certificate, and 10% Percentage Interest and
integrals thereof for any Class C Certificate or Residual Certificate.
The Unaffiliated Seller and the Trustee are hereby authorized to execute
and deliver the Representation Letter with the Depository.
With respect to Offered Certificates registered in the Register in the name
of Cede & Co., as nominee of the Depository, the Unaffiliated Seller, the
Servicer and the Trustee shall have no responsibility or obligation to Direct or
Indirect Participants or beneficial owners for which the Depository holds
Offered Certificates from time to time as a Depository. Without limiting the
immediately preceding sentence, the Unaffiliated Seller and the Servicer and the
Trustee shall have no responsibility or obligation with respect to (i) the
accuracy of the records of the Depository, Cede & Co., or any Direct or Indirect
Participant with respect to the ownership interest in the Offered Certificates,
(ii) the delivery to any Direct or Indirect Participant or any other Person,
other than a registered Owner of an Offered Certificate as shown in the
Register, of any notice with respect to the Offered Certificates or (iii) the
payment to any Direct or Indirect Participant or any other Person, other than a
registered Owner of an Offered Certificate as shown in the Register, of any
amount with respect to any distribution of principal or interest on the Offered
Certificates. No Person other than a registered Owner of an Offered Certificate
as shown in the Register shall receive a certificate evidencing such Offered
Certificate.
Upon delivery by the Depository to the Trustee of written notice to the
effect that the Depository has determined to substitute a new nominee in place
of Cede & Co., and subject to the provisions hereof with respect to the payment
of interest by the mailing of checks or drafts to the registered Owners of
Offered Certificates appearing as registered Owners in the
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registration books maintained by the Trustee at the close of business on a
Record Date, the name "Cede & Co." in this Agreement shall refer to such new
nominee of the Depository.
(h) In the event that (i) the Depository or the Unaffiliated Seller advises
the Trustee in writing that the Depository is no longer willing or able to
discharge properly its responsibilities as nominee and depository with respect
to the Offered Certificates and the Unaffiliated Seller is unable to locate a
qualified successor or (ii) the Unaffiliated Seller at its sole option elects to
terminate the book-entry system through the Depository, the Offered Certificates
shall no longer be restricted to being registered in the Register in the name of
Cede & Co. (or a successor nominee) as nominee of the Depository. At that time,
the Unaffiliated Seller may determine that the Offered Certificates shall be
registered in the name of and deposited with a successor depository operating a
global book-entry system, as may be acceptable to the Unaffiliated Seller, or
such depository's agent or designee but, if the Unaffiliated Seller does not
select such alternative global book-entry system, then the Offered Certificates
may be registered in whatever name or names registered Owners of Offered
Certificates transferring Offered Certificates shall designate, in accordance
with the provisions hereof.
(i) Notwithstanding any other provision of this Agreement to the contrary,
so long as any Offered Certificate is registered in the name of Cede & Co., as
nominee of the Depository, all distributions of principal or interest on such
Offered Certificates as the case may be and all notices with respect to such
Offered Certificates as the case may be shall be made and given, respectively,
in the manner provided in the Representation Letter.
Section 5.5. Mutilated, Destroyed, Lost or Stolen Certificates. If (i) any
mutilated Certificate is surrendered to the Trustee, or the Trustee receives
evidence to its satisfaction of the destruction, loss or theft of any
Certificate, and (ii) in the case of any mutilated Certificate, such mutilated
Certificate shall first be surrendered to the Trustee, and in the case of any
destroyed, lost or stolen Certificate, there shall be first delivered to the
Trustee such security or indemnity as may be reasonably required by it to hold
the Trust and the Trustee harmless (provided, that with respect to an Owner
which is an insurance company of investment grade credit rating, a letter of
indemnity furnished by it shall be sufficient for this purpose), then, in the
absence of notice to the Trustee that such Certificate has been acquired by a
bona fide purchaser, the Trustee shall execute, authenticate and deliver, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate of like Class, tenor and aggregate Percentage
Interest , bearing a number not contemporaneously outstanding.
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; any other expenses
in connection with such issuance shall be an expense of the Trust. The Trustee
shall not be liable for any expenses in connection with the issuance of
Certificates pursuant to this Section 5.5.
Every new Certificate issued pursuant to this Section in exchange for or in
lieu of any mutilated, destroyed, lost or stolen Certificate shall constitute
evidence of a substitute interest in the Trust, and shall be entitled to all the
benefits of this Agreement equally and
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proportionately with any and all other Certificates of the same Class duly
issued hereunder and such mutilated, destroyed, lost or stolen Certificate shall
not be valid for any purpose.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Certificates.
Section 5.6. Persons Deemed Owners. The Trustee and any of its agents may
treat the Person in whose name any Certificate is registered as the Owner of
such Certificate for the purpose of receiving distributions with respect to such
Certificate and for all other purposes whatsoever, and neither the Trustee nor
any of its agents shall be affected by notice to the contrary.
Section 5.7. Cancellation. All Certificates surrendered for registration of
transfer or exchange shall, if surrendered to any Person other than the Trustee,
be delivered to the Trustee and shall be promptly cancelled by it. No
Certificate shall be authenticated in lieu of or in exchange for any Certificate
cancelled as provided in this Section, except as expressly permitted by this
Agreement. All cancelled Certificates may be held or destroyed by the Trustee in
accordance with its standard policy.
Section 5.8. Limitation on Transfer of Ownership Rights. (a) No sale or
other transfer of record or beneficial ownership of any Residual Certificate
(whether pursuant to a purchase, a transfer resulting from a default under a
secured lending agreement or otherwise) shall be made to a Disqualified
Organization or agent of a Disqualified Organization. The transfer, sale or
other disposition of any Residual Certificate (whether pursuant to a purchase, a
transfer resulting from a default under a secured lending agreement or
otherwise) to a Disqualified Organization shall be deemed to be of no legal
force or effect whatsoever and such transferee shall not be deemed to be an
Owner for any purpose hereunder, including, but not limited to, the receipt of
distributions on such Residual Certificate. Furthermore, in no event shall the
Trustee accept surrender for transfer, registration of transfer, or register the
transfer, of any Residual Certificate nor authenticate and make available any
new Residual Certificate unless the Trustee has received an affidavit from the
proposed transferee substantially in the form attached hereto as Exhibit H. Each
holder of any Residual Certificate, by his acceptance thereof, shall be deemed
for all purposes to have consented to the provisions of this Section 5.8(a).
(b) No other sale or other transfer of record or beneficial ownership of an
Unregistered Certificate shall be made unless such transfer is exempt from the
registration requirements of the Securities Act and any applicable state
securities laws or is made in accordance with said Act and laws. In the event
such a transfer is to be made, (i) the Trustee and the Unaffiliated Seller shall
require a written opinion of counsel acceptable to and in form and substance
satisfactory to them that such transfer may be made pursuant to an exemption,
describing the applicable exemption and the basis therefor, from said Act or is
being made pursuant to said Act, which opinion of counsel shall not be an
expense of the Trustee or the Unaffiliated Seller, or (ii) the Trustee shall
require the Transferee to execute an investment letter, in the form of Exhibit N
or Exhibit O, as applicable, certifying to the Trustee and the Unaffiliated
Seller the facts surrounding such transfer, which investment letter shall not be
an expense of the Trustee. The Owner of an Unregistered Certificate desiring to
effect such transfer
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shall, and does hereby agree to, indemnify the Trustee and the Unaffiliated
Seller against any liability that may result if the transfer is not so exempt or
is not made in accordance with such federal and state laws.
(c) Notwithstanding the foregoing, no sale or other transfer of record or
beneficial ownership of a Class B Certificate, Class C Certificate or a Residual
Certificate shall be made unless the Trustee shall have received a
representation letter, in the form of Exhibit P, from the transferee of such
Certificate, to the effect that such transferee is not an employee benefit plan
subject to Section 406 of the Employee Retirement Income Security Act nor a plan
nor other arrangement subject to Section 4975 of the Code (collectively, a
"Plan"), nor is acting on behalf of any Plan nor using the assets of any Plan to
affect such transfer. Notwithstanding the foregoing, no sale or other transfer
of record or beneficial ownership of an Offered Certificate shall be made to a
Plan, or to a Person acting on behalf of, or using the assets of, a Plan. Each
Person acquiring the Offered Certificates, or to whom the Offered Certificates
are transferred, shall be deemed to have represented that it is not a Plan, nor
is it acting on behalf of any Plan nor using the assets of any Plan to affect
such transfer. Notwithstanding the foregoing, no sale or other transfer of
record or beneficial ownership of a Offered Certificate shall be made to a Plan,
or to a Person acting on behalf of, or using the assets of, a Plan. Each Person
acquiring the Offered Certificates, or to whom the Offered Certificates are
transferred, shall be deemed to have represented that it is not a Plan, nor is
it acting on behalf of any Plan nor using the assets of any Plan to affect such
transfer.
Section 5.9. Assignment of Rights. An Owner may pledge, encumber,
hypothecate or assign all or any part of its right to receive distributions
hereunder, but such pledge, encumbrance, hypothecation or assignment shall not
constitute a transfer of an ownership interest sufficient to render the
transferee an Owner of the Trust without compliance with the provisions of
Section 5.4 and Section 5.8 hereof.
ARTICLE VI
COVENANTS
Section 6.1. Distributions. The Trustee will duly and punctually pay
distributions with respect to the Certificates from the Trust Estate in
accordance with the terms of the Certificates and this Agreement based on the
related Servicer's Monthly Report. Such distributions shall be made (i) by check
mailed on each Distribution Date or (ii) if requested by any Owner, to such
Owner by wire transfer to an account within the United States designated no
later than five (5) Business Days prior to the related Record Date, made on each
Distribution Date, in each case to each Owner of record on the immediately
preceding Record Date; provided, however, that an Owner of an Offered
Certificate shall only be entitled to payment by wire transfer if such Owner
owns Offered Certificates with an Original Certificate Principal Balance of at
least $5,000,000.
Section 6.2. Money for Distributions to be Held in Trust; Withholding. (a)
All payments of amounts due and payable with respect to any Certificate that are
to be made from amounts withdrawn from the Certificate Account pursuant to
Section 7.5 hereof shall be made by the Trustee on behalf of the Trust, and no
amounts so withdrawn from the Certificate Account
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for payments of the Certificates shall be paid over to the Trustee except as
provided in this Section.
(b) The Trustee on behalf of the Trust shall comply with all requirements
of the Code and applicable state and local law with respect to the withholding
from any distributions made by it to any Owner of any applicable withholding
taxes imposed thereon and with respect to any applicable reporting requirements
in connection therewith.
(c) Any money held by the Trustee in trust for the payment of any amount
due with respect to any Class A Certificate, Class M Certificate, Class B
Certificate, Class C Certificate or Residual Certificate and remaining unclaimed
by the Owner of such Certificate for the period then specified in the escheat
laws of the State of New York after such amount has become due and payable shall
be discharged from such trust and be paid first, to the Owners of the Class
Certificates and second, to the Owners of the Residual Certificates; and the
Owner of such Certificate shall thereafter, as an unsecured general creditor,
look only to the Unaffiliated Seller for payment thereof (but only to the extent
of the amounts so paid to the Unaffiliated Seller), and all liability of the
Trustee with respect to such trust money shall thereupon cease; provided,
however, that the Trustee, before being required to make any such payment, shall
at the expense of the Trust cause to be published once, in the eastern edition
of The Wall Street Journal, notice that such money remains unclaimed and that,
after a date specified therein, which shall be not fewer than 30 days from the
date of such publication, any unclaimed balance of such money then remaining
will be paid to the Unaffiliated Seller. The Trustee shall, at the direction of
the Unaffiliated Seller, also adopt and employ, at the expense of the
Unaffiliated Seller, any other reasonable means of notification of such payment
(including but not limited to mailing notice of such payment to Owners whose
right to or interest in moneys due and payable but not claimed is determinable
from the Register at the last address of record for each such Owner).
Section 6.3. Protection of Trust Estate. (a) The Trustee will hold the
Trust Estate in trust for the benefit of the Owners, and at the request and
expense of the Unaffiliated Seller, will from time to time execute and deliver
all such supplements and amendments hereto pursuant to and subject to Section
11.14 hereof and all instruments of further assurance and other instruments, and
will take such other action upon such request to:
(i) more effectively hold in trust all or any portion of the Trust
Estate;
(ii) perfect, publish notice of, or protect the validity of any grant
made or to be made by this Agreement;
(iii) enforce any of the Mortgage Loans; or
(iv) preserve and defend title to the Trust Estate and the rights of
the Trustee, and the ownership interests of the Owners represented thereby,
in such Trust Estate against the claims of all Persons and parties;
provided, however, the Trustee shall have no obligation to take any such
action that might affect its rights or obligations under this Agreement.
The Trustee shall send copies of any request received from the Unaffiliated
Seller to take any action pursuant to this Section 6.3 to the other party.
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(b) The Trustee shall have the power to enforce, and shall enforce the
obligations of the other parties to this Agreement , by action, suit or
proceeding at law or equity, and shall also have the power to enjoin, by action
or suit in equity, any acts or occurrences which may be unlawful or in violation
of the rights of the Owners; provided, however, that nothing in this Section
shall require any action by the Trustee unless the Trustee shall first (i) have
been furnished indemnity satisfactory to it and (ii) when required by this
Agreement, have been requested to take such action by a majority of the
Percentage Interests represented by the affected Class or Classes of Offered
Certificates then Outstanding or, if there are no longer any affected Offered
Certificates then outstanding, by such majority of the Percentage Interests
represented by the Class B Certificates.
(c) Subject to the proviso of Section 6.3(a), the Trustee shall execute any
instrument reasonably required pursuant to this Section so long as such
instrument does not conflict with this Agreement or with the Trustee's fiduciary
duties.
Section 6.4. Performance of Obligations. The Trustee will not take any
action that would release the Unaffiliated Seller, the Servicer, or the
Originator from any of their respective covenants or obligations under any
instrument or document relating to the Trust Estate or the Certificates or which
would result in the amendment, hypothecation, subordination, termination or
discharge of, or impair the validity or effectiveness of, any such instrument or
document, except as expressly provided in this Agreement or such other
instrument or document.
The Trustee may contract with other Persons to assist it in performing its
duties hereunder.
Section 6.5. Negative Covenants. The Trustee will not, to the extent within
the control of the Trustee, take any of the following actions:
(i) sell, transfer, exchange or otherwise dispose of any of the Trust
Estate except as expressly permitted by this Agreement;
(ii) claim any credit on or make any deduction from the distributions
payable in respect of, the Certificates (other than amounts properly
withheld from such payments under the Code) or assert any claim against any
present or former Owner by reason of the payment of any taxes levied or
assessed upon any of the Trust Estate;
(iii) incur, assume or guaranty on behalf of the Trust any
indebtedness of any Person except pursuant to this Agreement;
(iv) dissolve or liquidate the Trust Estate in whole or in part,
except pursuant to Article IX hereof; or
(v) (A) impair the validity or effectiveness of this Agreement, or
release any Person from any covenants or obligations with respect to the
Trust or to the Certificates under this Agreement, except as may be
expressly permitted hereby or (B) create or extend any lien, charge,
adverse claim, security interest, mortgage or other encumbrance to or upon
the Trust Estate or any part thereof or any interest therein or the
proceeds thereof except as may be expressly permitted herein.
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Section 6.6. No Other Powers. The Trustee will not, to the extent within
the control of the Trustee, permit the Trust to engage in any business activity
or transaction other than those activities permitted by Section 2.3 hereof.
Section 6.7. Limitation of Suits. No Owner shall have any right to
institute any proceeding, judicial or otherwise, with respect to this Agreement
or for the appointment of a receiver or trustee, or for any other remedy
hereunder, unless:
(1) such Owner has previously given written notice to the Unaffiliated
Seller and the Trustee of such Owner's intention to institute such
proceeding;
(2) the Owners of not less than 25% of the Percentage Interests
represented by the affected Class or Classes of Offered Certificates
then Outstanding or, if there are no affected (3) Classes of Offered
Certificates then Outstanding, by such percentage of the Percentage
Interests represented by the Class B Certificates, shall have made
written request to the Trustee to institute such proceeding in respect
of an Event of Servicer Default;
(4) such Owner or Owners have offered to the Trustee reasonable indemnity
against the costs, expenses and liabilities to be incurred in
compliance with such request;
(5) the Trustee for 60 days after its receipt of such notice, request and
offer of indemnity has failed to institute such proceeding; and no
direction inconsistent with such written request has been given to the
Trustee during such 60-day period by the Owners of a majority of the
Percentage Interests represented by the Offered Certificates or, if
there are no Offered Certificates then Outstanding, by such majority
of the Percentage Interests represented by the Class B Certificates;
it being understood and intended that no one or more Owners shall have any right
in any manner whatever by virtue of, or by availing themselves of, any provision
of this Agreement to affect, disturb or prejudice the rights of any other Owner
of the same Class or to obtain or to seek to obtain priority or preference over
any other Owner of the same Class or to enforce any right under this Agreement,
except in the manner herein provided and for the equal and ratable benefit of
all the Owners of the same Class.
Section 6.8. Unconditional Rights of Owners to Receive Distributions.
Notwithstanding any other provision in this Agreement, the Owner of any
Certificate shall have the right, which is absolute and unconditional, to
receive distributions to the extent provided herein and therein with respect to
such Certificate or to institute suit for the enforcement of any such
distribution, and such right shall not be impaired without the consent of such
Owner.
Section 6.9. Rights and Remedies Cumulative. Except as otherwise provided
herein, no right or remedy herein conferred upon or reserved to the Trustee or
to the Owners is intended to be exclusive of any other right or remedy, and
every right and remedy shall, to the extent permitted by law, be cumulative and
in addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. Except as otherwise
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provided herein, the assertion or employment of any right or remedy hereunder,
or otherwise, shall not prevent the concurrent assertion or employment of any
other appropriate right or remedy.
Section 6.10. Delay or Omission Not Waiver. No delay of the Trustee or any
Owner of any Certificate to exercise any right or remedy under this Agreement to
any Event of Servicer Default shall impair any such right or remedy or
constitute a waiver of any such Event of Servicer Default or an acquiescence
therein. Every right and remedy given by this Article VI or by law to the
Trustee or to the Owners may be exercised from time to time, and as often as may
be deemed expedient, by the Trustee or by the Owners, as the case may be.
Section 6.11. Control by Owners. The Majority Owners may direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee with respect to the Certificates or exercising any trust or power
conferred on the Trustee with respect to the Certificates or the Trust Estate,
including, but not limited to, those powers set forth in Section 6.3 and Section
8.20 hereof; provided that:
(1) such direction shall not be in conflict with any rule of law or with
this Agreement;
(2) the Trustee shall have been provided with indemnity satisfactory to
it; and
(3) the Trustee may take any other action deemed proper by the Trustee,
which is not inconsistent with such direction; provided, however, that
the Trustee need not take any action which it determines might involve
it in liability or may be unjustly prejudicial to the Owners not so
directing.
ARTICLE VII
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 7.1. Collection of Money. Except as otherwise expressly provided
herein, the Trustee may demand payment or delivery of all money and other
property payable to or receivable by the Trustee pursuant to this Agreement,
including all payments due on the Mortgage Loans in accordance with the
respective terms and conditions of such Mortgage Loans and required to be paid
over to the Trustee by the Servicer or by any Sub-Servicer. The Trustee shall
hold all such money and property received by it, other than pursuant to or as
contemplated by Section 6.2(b) hereof, as part of the Trust Estate and shall
apply it as provided in this Agreement.
Section 7.2. Establishment of Certificate Account. The Trustee shall
establish and maintain, at a Designated Depository Institution, a Certificate
Account to be held by the Trustee in the name of the Trust for the benefit of
the Owners of the Certificates.
Section 7.3. Reserved
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Section 7.4. Payments from the Principal and Interest Account. On each
Remittance Date, the Servicer shall direct the Trustee to apply the Monthly
Remittance Amount for such Remittance Date, as follows:
(a) first, to pay the Servicer the Servicing Fee then due and unpaid;
(b) second, to the Trustee, the Trustee Fee with respect to each Loan
Group and expenses (to the extent not paid by the Unaffiliated Seller or
the Servicer pursuant to Section 2.5) for such Distribution Date; and
(c) third, to deposit the remainder of such Monthly Remittance Amount
in the Certificate Account.
Section 7.5. Flow of Funds. On each Distribution Date, the Trustee will
withdraw the balance of the Monthly Remittance Amount for each Loan Group after
making the deductions described in Section 7.4 from amounts on deposit in the
Certificate Account and apply such amounts in the following order of priority,
in each case, to the extent of the funds remaining therefor:
(a) The Interest Remittance Amount shall be applied as follows:
(i) to the Class A Certificates, the related Current Interest for
such Distribution Date on a pro rata basis among such Classes;
(ii) any remaining amounts shall be applied in the following
order of priority:
(A) to the Class M-1 Certificates the related Current
Interest;
(B) to the Class M-2 Certificates the related Current
Interest;
(C) to the Class M-3 Certificates the related Current
Interest;
(D) to the Class B Certificates the related Current
Interest;
(iii) the Excess Interest Amount shall be allocated and applied
pursuant to subsection (c) below.
(b) The Principal Remittance Amount, along with any Extra Principal
Distribution Amount, with respect to such Distribution Date shall be
applied as follows:
(i) amounts up to the Principal Distribution Amount as follows:
(A) from the Class A Principal Distribution Amount, shall be
distributed concurrently (x) to the Class A-6 Certificates, the
Class A-6 Principal Distribution, until the Certificate Principal
Balance thereof has been reduced to zero, and (y) to the Class A
Certificates (other than the Class A-6
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Certificates), the Fixed Rate Group Principal Allocation,
allocated in the following order of priority:
(1) to the Class A-7 Certificates, the Class A-7
Principal Distribution Amount, until the Class A-7
Certificate Principal Balance thereof has been reduced to
zero; and
(2) sequentially, to the Class A-1 Certificates, the
Class A-1 Principal Distribution Amount, to the Class A-2
Certificates, the Class A-2 Principal Distribution Amount,
to the Class A-3 Certificates, the Class A-3 Principal
Distribution Amount, to the Class A-4 Certificates, the
Class A-4 Principal Distribution Amount, to the Class A-5
Certificates, the Class A-5 Principal Distribution Amount
and to the Class A-7 Certificates, the remainder, in that
order, until the respective Certificate Principal Balances
thereof have been reduced to zero;
(B) any amount remaining, to the Class M-1 Certificates,
Class M-2 Certificates, Class M-3 Certificates, and the Class B
Certificates on a pro rata basis; and
(ii) any amount remaining shall be distributed pursuant to
subsection (c) below; provided, however, that if a Cumulative Loss
Trigger Event is in effect, such amount shall be distributed
sequentially, to the Class B Certificates, the Class M-3 Certificates,
the Class M-2 Certificates and the Class M-1 Certificates, in that
order, as principal until the respective Certificate Principal
Balances thereof have been reduced to zero.
Notwithstanding the priority set forth in clause (A) above, if the
aggregate Certificate Principal Balance of the Class M Certificates and the
Class B Certificates is reduced to zero, the amount to be distributed pursuant
to clause (i) above shall be distributed concurrently to each Class of Class A
Certificates on a pro rata basis in accordance with their respective Certificate
Principal Balances.
(c) The Net Monthly Excess Cashflow shall be allocated and applied in
the following order of priority on such Distribution Date:
(i) to the Owners of the Class A-6 Certificates, to fund any
LIBOR Shortfall Amount;
(ii) to fund the Extra Principal Distribution Amount of such
Distribution Date;
(iii) to the Class M-1 Certificates, the Class M-1 Realized Loss
Amortization Amount for such Distribution Date, if any;
(iv) to the Class M-2 Certificates, the Class M-2 Realized Loss
Amortization Amount for such Distribution Date, if any;
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(v) to the Class M-3 Certificates, the Class M-3 Realized Loss
Amortization Amount for such Distribution Date, if any;
(vi) to the Class B Certificates, the Class B Realized Loss
Amortization Amount for such Distribution Date, if any;
(vii) to the Class C Certificates, the Class C Distribution
Amount;
(viii) any amounts remaining shall be distributed to the Class RU
Certificates.
(d) On each Distribution Date, the Trustee shall allocate the Applied
Realized Loss Amount for such Distribution Date to reduce the Certificate
Principal Balances of the Class M Certificates and the Class B Certificates
in the following order of priority:
(i) to the Class B Certificates, the Class B Applied Realized
Loss Amount until the Class B Certificate Principal Balance is zero;
(ii) to the Class M-3 Certificates, the Class M-3 Applied
Realized Loss Amount until the Class M-3 Certificate Principal Balance
is zero;
(iii) to the Class M-2 Certificates, the Class M-2 Applied
Realized Loss Amount until the Class M-2 Certificate Principal Balance
is zero; and
(iv) to the Class M-1 Certificates, the Class M-1 Applied
Realized Loss Amount until the Class M-1 Certificate Principal Balance
is zero.
(e) Notwithstanding clause (b) above, the aggregate amounts
distributed on all Distribution Dates to the Owners of any Class
of Class A, Class M or Class B Certificates on account of
principal shall not exceed the Original Certificate Principal
Balance for such Class.
(f) Any amounts properly distributed to the Owners of the
Class M Certificates, the Class B Certificates, the Class C
Certificates or to the Owners of the Residual Certificates
pursuant to the terms of this Agreement shall be distributed free
of the subordination described herein, and any such amounts shall
in no event be required to be returned to the Trustee or paid
over to the Owners of the Class A Certificates.
(g) Whenever, during the administration of the Trust, there
comes into the possession of the Trustee any money or property
which this Agreement does not otherwise require to be distributed
on account of the Class A Certificates, the Class M Certificates,
the Class B Certificates, or the Class C Certificates, the
Trustee shall distribute such money or other property to the
Owners of the Class C Certificates.
Section 7.6. Investment of Accounts. Error! Bookmark not defined.So long as
no event described in Sections 8.18(a) hereof shall have occurred and be
continuing, and consistent with any requirements of the Code, all or a portion
of the Accounts held by the Trustee shall be invested and reinvested by the
Trustee in the name of the Trustee for the benefit of the Owners, as directed in
writing by the Servicer, in one or more Eligible Investments bearing interest or
sold at
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a discount. No investment in any Account shall mature later than the Business
Day preceding the next Distribution Date.
(b) If any amounts are needed for disbursement from any Account held by the
Trustee and sufficient uninvested funds are not available to make such
disbursement, the Trustee shall cause to be sold or otherwise converted to a
sufficient amount of the investments in such Account. No investments will be
liquidated prior to maturity unless the proceeds thereof are needed for
disbursement.
(c) Subject to Section 10.1 hereof, the Trustee shall not in any way be
held liable by reason of any insufficiency in any Account held by the Trustee
resulting from any loss on any Eligible Investment included therein (except to
the extent that the bank serving as Trustee is the obligor thereon).
(d) The Trustee shall hold funds in the Accounts held by the Trustee
uninvested upon the occurrence of either of the following events:
(i) the Servicer shall have failed to give investment directions to
the Trustee within ten days after receipt of a written request for such
directions from the Trustee; or
(ii) the Servicer shall have failed to give investment directions to
the Trustee during the ten-day period described in clause (i) preceding, by
11:15 a.m. New York time (or such other time as may be agreed by the
Servicer and the Trustee) on any Business Day.
If the Servicer fails to give such directions, the Servicer hereby
instructs the Trustee to invest in investments meeting the requirements of
Section 7.7(h) managed or operated by the Trustee or one of its affiliates.
(e) For purposes of investment, the Trustee may but shall not be required
to aggregate all amounts on deposit in the Accounts. All income or other gain
from investments in the Accounts shall be for the benefit of the Servicer. The
Servicer shall liable for any losses and shall deposit the amount of losses as
provided in Section 8.9(b)(v), without any right of reimbursement therefor. The
Trustee shall, no later than the fifth (5th) Business Day of the month following
each Distribution Date, remit to the Servicer the net investment income earned
with respect to the Accounts.
Section 7.7. Eligible Investment. The following are Eligible Investments:
(a) Direct general obligations of the United States or the obligations
of any agency or instrumentality of the United States fully and
unconditionally guaranteed, the timely payment or the guarantee of which
constitutes a full faith and credit obligation of the United States.
(b) Federal Housing Administration debentures, but excluding any such
securities whose terms do not provide for payment of a fixed dollar amount
upon maturity or call for redemption.
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(c) FHLMC senior debt obligations, but excluding any such securities
whose terms do not provide for payment of a fixed dollar amount upon
maturity or call for redemption.
(d) FNMA senior debt obligations, but excluding any such securities
whose terms do not provide for payment of a fixed dollar amount upon
maturity or call for redemption.
(e) Federal funds, certificates of deposit, time and demand deposits,
and bankers' acceptances (having original maturities of not more than 365
days) of any domestic bank, the short-term debt obligations of which have
been rated F-1 or better by Fitch and P-1 or better by Moody's.
(f) Deposits of any bank or savings and loan association which has
combined capital, surplus and undivided profits of at least $50,000,000
which deposits are not in excess of the applicable limits insured by the
Bank Insurance Fund or the Savings Association Insurance Fund of the FDIC,
provided that the long-term deposits of such bank or savings and loan
association are rated at least "BBB-" by Fitch and "Baa3" by Moody's.
(g) Commercial paper (having original maturities of not more than 270
days) rated F-1 or better by Fitch and P-1 or better by Moody's.
(h) Investments in money market or common trust funds rated in the
highest rating category by Moody's and, if rated, by Fitch.
(i) Such other investments as have been approved in writing by the
Rating Agencies.
provided that no instrument described above is permitted to evidence either the
right to receive (a) only interest with respect to obligations underlying such
instrument or (b) both principal and interest payments derived from obligations
underlying such instrument and the interest and principal payments with respect
to such instrument provided a yield to maturity at par greater than 120% of the
yield to maturity at par of the underlying obligations; and provided, further,
that no instrument described above may be purchased at a price greater than par
if such instrument may be prepaid or called at a price less than its purchase
price prior to stated maturity. Any Eligible Investment may be purchased by or
through the Trustee or any of its affiliates on the same terms applicable to
commercial clients of the Trustee or its affiliates.
Section 7.8. Reports by Trustee. (a) On each Distribution Date, the Trustee
shall provide to each Owner, to the Servicer, to the Underwriter, to the
Unaffiliated Seller and to the Rating Agencies a written report in substantially
the form set forth as Exhibit I hereto, as such form may be revised by the
Trustee, the Servicer and the Rating Agencies from time to time, but in every
case setting forth the information requested on Exhibit I hereto and the
following information, in each case as of such Distribution Date and in each
case to the extent it has received adequate information from the Unaffiliated
Seller or the Servicer to determine such information:
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(i) the amount of the distribution with respect to each Class of the
Class A Certificates, the Class M Certificates, the Class B Certificates,
the Class C Certificates and the Residual Certificates;
(ii) the amount of such distributions allocable to principal on the
related Certificates, separately identifying the aggregate amount of any
Prepayments or other unscheduled recoveries of principal included therein
and separately identifying any Extra Principal Distribution Amount;
(iii) the amount of such distributions allocable to interest on the
related Certificates;
(iv) the Monthly Remittance Amount, separately identifying the
Interest Remittance Amount and Principal Remittance Amount included
therein;
(v) the Certificate Principal Balance for each Class of Class A
Certificates as of such Distribution Date, together with the principal
amount of such Class of Class A Certificates (based on a Certificate in an
original principal amount of $1,000) then outstanding, in each case after
giving effect to any payment of principal on such Distribution Date;
(vi) the Certificate Principal Balance for each Class of Class M
Certificates as of such Distribution Date, together with the principal
amount of such Class of Class M Certificates (based on a Certificate in an
original principal amount of $1,000) then outstanding, in each case after
giving effect to any payment of principal on such Distribution Date;
(vii) the Certificate Principal Balance for the Class B Certificates
as of such Distribution Date together with the principal amount of the
Class B Certificates (based on a Certificate in an original principal
amount of $1,000) then outstanding, in each case after giving effect to any
payment of principal on such Distribution Date;
(viii) information furnished by the Unaffiliated Seller pursuant to
Section 6049(d)(7)(C) of the Code and the regulations promulgated
thereunder to assist the Owners in computing their market discount;
(ix) the total of any Substitution Amounts and any Loan Purchase Price
amounts included in such distribution;
(x) the amount of any Overcollateralization Reduction Amount;
(xi) the amounts, if any, of any Realized Losses for the related
Remittance Period and the Aggregate Loan Balance of the Mortgage Loans
which experienced such Realized Losses and the Cumulative Loss Amount as of
such Distribution Date;
(xii) a number with respect to each Class of Class A Certificates and
Class M Certificates (the "Pool Factor" for such Class) computed by
dividing the Certificate Principal Balance for such Class (after giving
effect to any distribution of principal to be
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made on such Distribution Date) by the Original Certificate Principal
Balance for such Class on the Startup Day;
(xiii) the Required Overcollateralization Amount, and the
Overcollateralization Amount;
(xiv) the weighted average Mortgage Rate of the Mortgage Loans as a
whole and by Loan Group, and the weighted average maturity of the Mortgage
Loans; and
(xv) the Aggregate Loan Balance.
Items (i) through (iii) above shall, with respect to each Class of Class A
Certificates and Class M Certificates, be presented on the basis of a
Certificate having a $1,000 denomination. In addition, by January 31 of each
calendar year following any year during which the Certificates are outstanding,
the Trustee shall furnish a report to each Owner of record at any time during
each calendar year as to the aggregate of amounts reported pursuant to (i), (ii)
and (iii) with respect to the Certificates for such calendar year.
(b) In addition, on each Distribution Date, the Trustee will distribute to
each Owner, to the Underwriter, to the Servicer, to the Unaffiliated Seller, to
the Rating Agencies, together with the information described in subsection (a)
preceding, the following information as of the close of business last day of the
related Remittance Period (or if such day is not a Business Day, the preceding
Business Day), which is hereby required to be prepared by the Servicer and
furnished to the Trustee for such purpose on or prior to the related Servicer's
Report Date:
(i) the total number of Mortgage Loans and the Aggregate Loan Balance
thereof, together with the number, aggregate principal balances of the
Mortgage Loans and the percentage of all Mortgage Loans (a) 31-60 days
Delinquent, (b) 61-90 days Delinquent and (c) 91 or more days Delinquent;
(ii) the number, Aggregate Loan Balance of all Mortgage Loans and
percentage of the Aggregate Loan Balance of such Mortgage Loans in
foreclosure proceedings (and whether any such Mortgage Loans are also
included in any of the statistics described in the foregoing clause (i));
(iii) the number, Aggregate Loan Balance of all Mortgage Loans and
percentage of the Aggregate Loan Balance of such Mortgage Loans relating to
REO Properties (and whether any such Mortgage Loans are also included in
any of the statistics described in the foregoing clause (i));
(iv) the number and amount of all Prepayments;
(v) the number and amount of all Mortgages subject to losses;
(vi) the number and amount of Mortgages outstanding; and
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(vii) a Form of Liquidation Report, substantially in the form of
Exhibit K hereto, for each Mortgage Loan which has experienced a Realized
Loss during the Remittance Period.
Section 7.9. Additional Reports by Trustee. (a) The Trustee shall report to
the Unaffiliated Seller and the Servicer with respect to the amount then held in
each Account (including investment earnings accrued or scheduled to accrue) held
by the Trustee and the identity of the investments included therein, as the
Unaffiliated Seller or the Servicer may from time to time request. Without
limiting the generality of the foregoing, the Trustee shall, at the request of
the Unaffiliated Seller or the Servicer, transmit promptly to the Unaffiliated
Seller and the Servicer copies of all accountings of receipts in respect of the
Mortgage Loans furnished to it by the Servicer. The content of reports by the
Trustee pursuant to this subsection shall consist of its trust accounting system
statements.
(b) The Trustee is hereby authorized to execute purchases and sales
directed by the Servicer through the facilities of its own or one of its
affiliates trading or capital markets operations. The Trustee shall send
statements to the Servicer monthly reflecting activity for each account created
hereunder for the preceding month. Although the Servicer recognizes that it may
obtain a broker confirmation or written statement containing comparable
information at no additional cost, the Servicer hereby agrees that confirmations
of investments are not required to be issued by the Trustee for each month in
which a monthly statement is rendered. No statement need be rendered pursuant to
the provision hereof if no activity occurred in the account for such month.
(c) At the request of any Owner, the Underwriter, the Depositor, or either
Rating Agency, the Trustee shall furnish such other reports regarding the
Certificates or Mortgage Loans if the Trustee can reasonably prepare such
reports from the information provided by the Servicer and if such requesting
party pays the fees and expenses of the Trustee for their preparation and
delivery.
ARTICLE VIII
SERVICING AND ADMINISTRATION
OF MORTGAGE LOANS
Section 8.1. Servicer and Sub-Servicers. (a) Acting directly or through one
or more Sub-Servicers as provided in Section 8.3 hereof, the Servicer shall
service and administer the Mortgage Loans in accordance with the Servicing
Standards. Unless otherwise specified herein with respect to specific
obligations of the Servicer, the Servicer shall service and administer the
Mortgage Loans in accordance with the Servicing Standards, and, subject only to
the terms of the respective Mortgage Loans, shall have full power and authority,
acting alone or through Sub-Servicers as provided herein, to do or cause to be
done any and all things in connection with such servicing and administration
which it may deem necessary or desirable. The Servicer shall promptly notify the
Backup Servicer in writing of any event, circumstance or occurrence which
materially adversely affects the ability of the Servicer to service the Mortgage
Loans or to otherwise perform and carry out its duties, responsibilities and
obligations under and in accordance with the Servicing Standards.
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(b) The duties of the Servicer shall include, without limitation,
collecting and posting of all payments, responding to inquiries by Mortgagors or
by federal, state or local government authorities with respect to the Mortgage
Loans, investigating delinquencies, reporting tax information to Mortgagors in
accordance with its customary practices and all applicable law, accounting for
collections and furnishing monthly and annual statements to the Backup Servicer
and the Trustee with respect to distributions and making Delinquency Advances
and Servicing Advances pursuant hereto. The Servicer's duties and obligations
hereunder shall commence on the date hereof, and the Servicer shall have no
obligations or liabilities hereunder with respect to the prior servicing of the
Mortgage Loans. The Servicer shall follow the provisions of this Agreement and
the Servicing Standards. The Servicer shall service and administer the Mortgage
Loans in accordance with applicable state and federal law and shall provide to
the Mortgagors any reports required to be provided to them thereby.
(c) Consistent with the Servicing Standards, the Servicer may, on behalf of
itself, the Owners of the Certificates, the Trust and the Trustee, effect
modifications of any Mortgage Loan if, in the Servicer's reasonable
determination made in good faith, such modification is necessary to maximize
collections with respect to such Loan.
The Servicer agrees that it will not renew, extend, renegotiate,
compromise, settle or release any Note or Mortgage Loan, except upon payment in
full thereof, unless all Mortgagors on such Note or Mortgage Loan shall first
release and discharge the Depositor, the Unaffiliated Seller, the Trust and the
Trustee, the Backup Servicer and the Servicer, their agents and assigns (the
"Released Parties"), from and against all claims, demands and causes of action
which any such Mortgagor may have against any such Released Party arising from
or growing out of any act or omission occurring prior to the date of such
release. To the extent the Servicer does not obtain such release, it will not
renew, extend, renegotiate, compromise, settle or release any Note or Mortgage
Loan, except upon payment in full thereof. If the Servicer fails to obtain such
release, and renews, extends, renegotiates, compromises or settles any Note or
Mortgage Loan in violation of this Section, the Servicer agrees to indemnify and
hold the Released Parties harmless from any and all claims, demands, losses,
damages, penalties, fines, forfeitures, judgments, legal fees and other costs,
fees, and expenses suffered by the Released Parties as a result of the
Servicer's failure to obtain a release.
(d) Consistent with the Servicing Standards the Servicer may, on behalf of
itself, the Owners of the Certificates, the Trust and the Trustee, enter into an
assumption agreement whereby a new Mortgagor agrees to assume liability on a
Mortgage Loan; provided, that (i) at the time of such assumption (x) the related
Mortgage Loan is either a defaulted Mortgage Loan or the Servicer reasonably
believes that such Mortgage Loan's becoming a defaulted Mortgage Loan is
imminent and (y) the new Mortgagor agrees to repay a principal balance on such
Mortgage Loan which is at least equal to the Servicer's good faith estimate of
the Net Liquidation Proceeds which would be recovered with respect to such loan
(excluding any potential for a deficiency judgment against the prior Mortgagor)
if the related Loan Collateral were to be liquidated in a commercially
reasonably manner and (ii) no such assumption shall extend the maturity date of
such Mortgage Loan beyond the latest maturity date of any other Mortgage Loan
then held by the Trust. The ability of the Servicer to effect assumptions
pursuant to this Section 8.1(d) is independent of the Servicer's rights and
obligations under Section 8.14
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hereof, and no assumptions permitted pursuant to Section 8.14 shall be counted
for purposes of clause (i)(y) above.
(e) Subject to Sections 8.3 through 8.7 hereof, the Servicer may, and is
hereby authorized to, perform any of its servicing responsibilities with respect
to all or certain of the Mortgage Loans through a Sub-Servicer as it may from
time to time designate, but no such designation of a Sub-Servicer shall serve to
release the Servicer from any of its obligations under this Agreement.
(f) Without limiting the generality of the foregoing, but subject to
Section 8.15 hereof, the Servicer, on behalf of the Trustee, is authorized and
empowered, pursuant to a special or limited power of attorney hereby granted by
the Trust and the Trustee, to execute and deliver, on behalf of itself, the
Trust and the Trustee, (i) any and all instruments of satisfaction or
cancellation or of partial or full release or discharge and all other comparable
instruments with respect to the Mortgage Loans and with respect to the
Properties, (ii) to institute foreclosure proceedings or obtain a deed in lieu
of foreclosure so as to effect ownership of any Mortgaged Property on behalf of
the Trust and (iii) to hold title to any Mortgaged Property upon such
foreclosure or deed in lieu of foreclosure in the name of the Servicer on behalf
of the Trust. Subject to Section 8.17 hereof, the Trust and the Trustee shall
promptly sign and return to the Servicer and any Sub-Servicer any special or
limited powers of attorney and other documents as the Servicer or such
Sub-Servicer shall reasonably request to enable the Servicer and such
Sub-Servicer to carry out their respective servicing and administrative duties
hereunder as are delivered to the Trustee accompanied by a certificate of an
Authorized Officer to the effect that the Trustee's signature is required
pursuant to this Agreement (and neither the Trust nor the Trustee shall have any
liability for any misuse of any such special or limited powers of attorney).
(g) The Servicer shall give prompt notice to the Trustee of any action, of
which the Servicer has actual knowledge, to (i) assert a claim against the Trust
or (ii) assert jurisdiction over the Trust.
(h) Servicing Advances incurred by the Servicer or any Sub-Servicer in
connection with the servicing of the Mortgage Loans (including any penalties in
connection with the payment of any taxes and assessments or other charges) on
any Mortgaged Property shall be recoverable by the Servicer or such Sub-Servicer
to the extent described in Section 8.11(b) hereof.
(i) All accounting and loan servicing records pertaining to the Mortgage
Loans shall be maintained in a manner consistent with the Servicing Standards,
and in such manner as will permit the Trustee, the Backup Servicer or their
respective duly authorized representatives and designees to examine and audit
and make legible reproductions of records during reasonable business hours upon
reasonable notice. All such records, including but not limited to all
transaction registers and loan ledger histories, shall be maintained for the
period required under applicable law.
Section 8.2. Collection of Certain Mortgage Loan Payments. (a) The Servicer
shall, as required by the Servicing Standards, make all reasonable efforts to
collect payments called for under the terms and provisions of the Mortgage
Loans, and shall, to the extent such
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procedures shall be consistent with this Agreement, follow such collection
procedures with respect to the Mortgage Loans as it follows with respect to
comparable mortgage loans in its own servicing portfolio; provided, that the
Servicer shall always at least follow collection procedures that are consistent
with or better than the Servicing Standards. Consistent with the foregoing, the
Servicer may in its discretion and subject to Section 8.1(c) hereof (i) waive
any assumption fees, late payment charges, charges for checks returned for
insufficient funds, prepayment fees, if any, or other fees which may be
collected in the ordinary course of servicing the Mortgage Loans, (ii) modify
payments of monthly principal and interest on any Mortgage Loan becoming subject
to the terms of the Soldiers' and Sailors' Civil Relief Act of 1940, as amended,
in accordance with the Servicer's general policies relating to comparable
mortgage loans subject to such Act.
The Servicer may modify and extend the maturity of a "balloon" Loan which
matures and which is not otherwise paid in full at such maturity date by the
related Mortgagor; provided that the rescheduled final maturity date of such
Mortgage Loan is not beyond one year prior to the latest maturity date of any
other Mortgage Loan held by the Trust, the related Mortgage Rate is not
decreased, and the Mortgagor does not receive any additional proceeds and that
such Mortgage Loan fully amortizes by such rescheduled final maturity date.
(b) The Servicer shall apply all Prepaid Installments received by it with
respect to any Mortgage Loan as set forth in the related Note, and in a manner
consistent with the Servicer's standard procedures and applicable law.
Section 8.3. Sub-Servicing Agreements Between Servicer and Sub-Servicers.
The Servicer may enter into Sub-Servicing Agreements for the servicing and
administration of Mortgage Loans with any institution which is in compliance
with the laws of each state necessary to enable it to perform its obligations
under any such Sub-Servicing Agreement. For purposes of this Agreement, the
Servicer shall be deemed to have received payments on Mortgage Loans when any
Sub-Servicer has received such payments. The Servicer covenants that any such
Sub-Servicing Agreement shall be consistent with and not in violation of the
provisions of this Agreement. The Servicer shall give written notice to the
Backup Servicer, the Depositor, the Rating Agencies and the Trustee of the
appointment of any Sub-Servicer (other than WCC), and shall provide to each of
them a copy of the related Sub-Servicing Agreement.
Section 8.4. Successor Sub-Servicers. The Servicer may terminate any
Sub-Servicing Agreement in accordance with the terms and conditions of such
Sub-Servicing Agreement and directly service the related Mortgage Loans itself
or enter into a Sub-Servicing Agreement with a successor Sub-Servicer that
qualifies under Section 8.3 hereof.
In the event of termination of any Sub-Servicer, all servicing obligations
of such Sub-Servicer shall be assumed simultaneously by the Servicer without any
act or deed on the part of such Sub-Servicer or the Servicer, and the Servicer
either shall service directly the related Mortgage Loans or shall enter into a
Sub-Servicing Agreement with a successor Sub-Servicer. The Servicer shall give
written notice to the Backup Servicer of the termination of any Sub-Servicer.
Any Sub-Servicing Agreement shall include the provision that such agreement
may be immediately terminated, without cause and without payment of any penalty
or fee, by (x)
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the Backup Servicer and (y) the Trustee, in either case in the event that the
Servicer shall, for any reason, no longer be the Servicer (including termination
due to a Servicer Event of Default), together with a provision stating that none
of the Depositor, the Backup Servicer or the Trustee shall be deemed a party
thereto and shall have no claims, rights, obligations, duties or liabilities
with respect to any Sub-Servicer, except as set forth herein.
Section 8.5. Liability of Servicer. The Servicer shall not be relieved of
its obligations under this Agreement notwithstanding any Sub-Servicing Agreement
or any of the provisions of this Agreement relating to agreements or
arrangements between the Servicer and a Sub-Servicer or otherwise, and the
Servicer shall be obligated to the same extent and under the same terms and
conditions as if it alone were servicing and administering the Mortgage Loans.
Nothing contained in any such Sub-Servicing Agreement shall be deemed to limit
or modify this Agreement. The Servicer shall be entitled to enter into any
agreement with a Sub-Servicer for indemnification of the Servicer by such
Sub-Servicer.
Section 8.6. No Contractual Relationship Between Sub-Servicer and Trustee
or the Owners . Any Sub-Servicing Agreement and any other transactions or
services relating to the Mortgage Loans involving a Sub-Servicer shall be deemed
to be between the Sub-Servicer and the Servicer alone and none of the Depositor,
the Unaffiliated Seller, the Backup Servicer or the Trustee shall be deemed a
party thereto and shall have no claims, rights, obligations, duties or
liabilities with respect to any Sub-Servicer, except as set forth in Sections
8.5 and 8.7 hereof. The Servicer shall be solely liable for all fees owed by it
to any Sub-Servicer, irrespective of whether the Servicer's compensation
pursuant to this Agreement is sufficient to pay such fees.
Section 8.7. Assumption or Termination of Sub-Servicing Agreement by
Trustee . Subject to the second paragraph of Section 8.4 hereof, in connection
with the assumption of the responsibilities, duties and liabilities and of the
authority, power and rights of the Servicer hereunder pursuant to Section 8.18
hereof, it is understood and agreed that the Servicer's rights and obligations
under any Sub-Servicing Agreement then in force between the Servicer and a
Sub-Servicer may be assumed or terminated by the assuming party at its option.
The Servicer shall, upon request of the Trustee or of the Backup Servicer,
but at the expense of the Servicer, deliver to the assuming party documents and
records relating to each Sub-Servicing Agreement and an accounting of amounts
collected and held thereunder and otherwise use its best reasonable efforts to
effect the orderly and efficient transfer of the Sub-Servicing Agreements to the
assuming party.
Section 8.8. The Lockbox Account. (a) Prior to the Closing Date, the
Servicer shall (i) establish and maintain the Lockbox Account, (ii) enter into
the Lockbox Agreement and (iii) within thirty (30) days of the Closing Date,
notify each Mortgagor to remit all payments with respect to the Mortgage Loans
to the Lockbox Account. If, at any time, the Lockbox Account ceases to be
maintained at the Lockbox Bank, the Servicer shall within ten (10) Business Days
of obtaining actual knowledge of such cessation establish a new lockbox account
which shall be an Account at a Designated Depository Institution, transfer any
cash and/or any investments from the Lockbox Account to such new lockbox account
and from the date such new lockbox account is established, it shall be the
"Lockbox Account", provided that notice of such new lockbox account is given to
each Rating Agency. In the event that a successor servicer
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is appointed, the Trustee, the Lockbox Bank and such successor servicer will
enter into a new lockbox agreement replacing the Lockbox Agreement and such new
lockbox agreement shall be the "Lockbox Agreement" for all purposes hereunder.
(b) The Servicer shall instruct, or cause any Sub-Servicer to instruct, all
Mortgagors to make payments only to the Lockbox Account. The Servicer shall
instruct the Lockbox Bank to remit by wire transfer of immediately available
funds (x) Escrow Amounts to the appropriate T&I Account, as directed by the
Servicer, and (y) all other Collections in the Lockbox Account to the Principal
and Interest Account, in each case on the next Business Day following the
Business Day of their receipt by the Lockbox Bank.
(c) The Servicer shall provide the Backup Servicer and the Trustee with the
location and account number of the Lockbox Account immediately following its
establishment. The Servicer shall not, and shall not permit any Sub-Servicer to,
instruct any Mortgagor to remit Collections to any Person, address or account
other than the Lockbox Account. The Servicer shall not (i) add or delete any
Lockbox Account or add or delete any Lockbox Bank except upon 30 days' prior
notice to the Trustee and to the Backup Servicer or (ii) change such
instructions at any time.
(d) For all purposes of this Agreement, no amounts shall be considered to
be on deposit in the Lockbox Account unless such amounts are available for
withdrawal therefrom in "good funds"; i.e., until any check or "Automated
Clearing House" transfer has "cleared". The Servicer shall have the right to
withdraw from the Lockbox Account the amount of any misapplied payment or other
amount deposited therein in error. The Servicer is not required to deposit into
the Principal and Interest Account any amounts received by the Servicer to the
Lockbox Account in accordance with the provisions hereof until the Servicer has
determined that such amounts relate to the Mortgage Loans and such amounts are
available as "good funds".
Section 8.9. Principal and Interest Account. (a) The Servicer and/or each
Sub-Servicer shall establish, at the corporate trust office of the Trustee or at
an office of an affiliate designated by the Trustee so long as the Trustee or
such affiliate qualifies as a Designated Depository Institution and if the
Trustee does not qualify, then at any Designated Depository Institution, the
Principal and Interest Account, to be held in the name of the Trustee for the
benefit of the Owners of the Certificates.
(b) The Servicer shall deposit (with respect to any such amounts it
receives directly), or cause to be deposited, to the Principal and Interest
Account, on a daily basis in accordance with Section 8.8(b) hereof, the
following payments and collections received or made by it, without duplication,
together with all Delinquency Advances and Compensating Interest required to be
paid by the Servicer pursuant to Section 8.11 hereof (such amounts set forth
below together with such Delinquency Advances and Compensating Interest,
"Collections"):
(i) all payments on the Mortgage Loans;
(ii) all payments received as a result of the enforcement of the
Trustee's rights under the Unaffiliated Seller's Agreement or the
Unaffiliated Seller's rights under the Unaffiliated Seller's Agreement;
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(iii) all Net Liquidation Proceeds or Net Insurance Proceeds with
respect to the Mortgage Loans;
(iv) all amounts required to be deposited by the Servicer pursuant to
Section 8.12(c) hereof;
(v) any amount required to be deposited by the Servicer in connection
with losses with respect to funds invested pursuant to Section 7.6 hereof;
and
(vi) any other amounts required to be deposited in the Principal and
Interest Account pursuant to the terms hereof.
Section 8.10. Servicer Reports. (a) The Servicer shall deliver to or cause
to be delivered to the Backup Servicer and to the Trustee within three (3)
Business Days of the Closing Date an electronic tape or diskette (the
"Electronic Report") detailing the Mortgage Loan characteristics as of the
Cut-Off Date consistent with the Servicer's ordinary course of business;
(b) Each month, not later than 12:00 noon Pacific time on each Servicer's
Report Date, the Servicer shall deliver or cause to be delivered to the Backup
Servicer the Servicer's Monthly Report. This report shall contain (i) a summary
report of the Mortgage Loan payment activity for such month, (ii) exception
payment reports for Mortgage Loans with respect to which scheduled payments due
in such month were not made, (iii) an itemization by category of all amounts to
be paid on the related Distribution Date and (iv) a diskette containing the
Required Information (the "Updated Diskette Report"). Each Servicer's Monthly
Report shall include a certification that the information contained in such
certificate is accurate and that no Event of Servicer Default, or event that
with notice or lapse of time or both would become an Event of Servicer Default,
has occurred, or if an Event of Servicer Default or such event has occurred and
is continuing, specifying the Event of Servicer Default or such event and its
status.
(i) No later than two (2) Business Days after each Servicer's Report Date,
the Backup Servicer shall review the information contained in the Servicer's
Monthly Report to the extent that such information relates to the aggregate
Collections and Aggregate Loan Balance, against the information on the Updated
Diskette Report, on an aggregate basis. On the third Business Day after each
Servicer's Report Date, the Backup Servicer shall notify the Servicer of any
material inconsistencies relating to the aggregate Collections and Aggregate
Loan Balance between the Servicer's Monthly Report and the Updated Diskette
Report. The Backup Servicer shall only review the information provided by the
Servicer in the Servicer's Monthly Report and in the Updated Diskette Report and
its obligation to report any inconsistencies shall be limited to those apparent
from the Backup Servicer's review thereof and those relating to the aggregate
Collections and Aggregate Loan Balance.
(ii) No later than 12:00 p.m. Pacific Time the fifteenth calendar day of
each month (or if such fifteenth day is not a Business Day, on the immediately
succeeding Business Day), the Servicer shall deliver to the Trustee and the
Unaffiliated Seller the Servicer's Monthly Report. The Servicer shall deliver
such Servicer's Monthly Report to the Trustee in a computer readable format in a
manner reasonably specified by the Trustee.
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Section 8.11. Delinquency Advances, Servicing Advances and Compensating
Interest. (a) Not later than 10:00 a.m. Pacific time on each Remittance Date,
the Servicer shall advance funds (each such advance, a "Delinquency Advance") to
the Principal and Interest Account in the amount of the interest (calculated at
the Mortgage Rate of the related Mortgage Loan net of the Servicing Fee Rate and
the Trustee Fee Rate) of each scheduled monthly payment due on any Mortgage Loan
during the related Remittance Period, but delinquent as of the end of such
Remittance Period; provided, however, that (i) the Servicer will not be required
to make any such Delinquency Advance if the Servicer determines in reasonable
good faith that such Delinquency Advance is a Nonrecoverable Delinquency Advance
and (ii) the Servicer shall only be required to make Delinquency Advances up to
an amount necessary to pay any shortfall in Current Interest for the Class A
Certificates, the Class M Certificates and the Class B Certificates arising
because of the insufficiency of Available Funds (other than Delinquency
Advances).
The Servicer may recover a Delinquency Advance (i) from the Principal and
Interest Account out of collections on the Mortgage Loan whose delinquency gave
rise to such Delinquency Advance subsequent to the related Remittance Period,
from Liquidation Proceeds and/or Insurance Proceeds recovered on account of such
Mortgage Loan to the extent of the amount of such Delinquency Advance prior to,
or after, the deposit of such Liquidation Proceeds and/or Insurance Proceeds in
the Principal and Interest Account, (ii) from the Principal and Interest Account
out of collections on the Mortgage Loans once a Delinquency Advance is deemed to
be a Nonrecoverable Delinquency Advance and (iii) as provided in Section 7.4
hereof.
(b) The Servicer will advance all "out-of-pocket" costs and expenses
incurred in the performance of its servicing obligations with respect to
defaulted Mortgage Loans, including, but not limited to, the cost of (i)
Preservation Expenses, (ii) any enforcement or judicial proceedings, including
foreclosures, and any reasonable legal expenses in connection with the assertion
by a Mortgagor of any claim or defense that the Mortgagor may have had against
the originator in connection with the sale, financing or construction of such
Mortgagor's home and which the Mortgagor asserts against the Servicer and (iii)
the management and liquidation of REO Property, but shall only pay such costs
and expenses to the extent the Servicer reasonably believes such costs and
expenses will be recovered from the related Mortgage Loan and will increase Net
Liquidation Proceeds on the related Mortgage Loan. Each such expenditure, if
customary and reasonable, and exclusive of overhead, together with any Servicing
Advance as defined in Section 8.14(a) hereof, will constitute a "Servicing
Advance." The Servicer may recover a Servicing Advance (i) from the Mortgagor to
the extent permitted by the related Mortgage Loan, from the Principal and
Interest Account out of collections on the related Mortgage Loan, or from
Liquidation Proceeds realized upon the liquidation of the related Mortgage Loan,
from Insurance Proceeds collected with respect to the related Mortgage Loan
prior to, or after, the deposit of such Liquidation Proceeds and/or Insurance
Proceeds in the Principal and Interest Account and (ii) from the Principal and
Interest Account once such Servicing Advance is determined to be nonrecoverable
from Liquidation Proceeds or Insurance Proceeds or otherwise from the related
Mortgage Loan.
The Servicer shall, not later than 10:00 a.m. Pacific time on the second
Business Day preceding the related Distribution Date deposit in the Principal
and Interest Account, without any right to reimbursement therefor, the
Compensating Interest, if any, as required to be deposited in
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accordance with the definition thereof, for the related Remittance Period;
provided, however, that the Servicer: (i) shall only be required to pay
Compensating Interest to the extent that there is a shortfall in the Interest
Remittance Amount (other than with respect to Compensating Interest) necessary
to pay the aggregate of the Current Interest for the Class A Certificates, the
Class M Certificates and the Class B Certificates, (ii) shall not be required to
pay Compensating Interest with respect to any Remittance Period in an amount in
excess of the aggregate Servicing Fee received by the Servicer for such
Remittance Period and (iii) shall not be required to cover shortfalls in
collections of interest due to curtailments or partial prepayments. The Servicer
is permitted to fund its payment of Delinquency Advances from amounts then on
deposit in the Principal and Interest Account representing collections on the
Mortgage Loans relating to the then-current or any subsequent Due Period. The
Servicer shall be required to make Delinquency Advances from its own funds
(subject to reimbursement from subsequent collections on the Mortgage Loans,
when available) to the extent that such amounts in the Principal and Interest
Account are insufficient.
(c) In the event that no Delinquency Advances are required to be made
pursuant to paragraph (a) above, no calculation of the Delinquency Advance need
be made by the Servicer; in the event that no Compensating Interest is required
to be paid by the Servicer pursuant to clause (c) above, no calculation of the
amount of Compensating Interest need be made by the Servicer.
Section 8.12. Maintenance of Insurance and Tax Services. (a) The Servicer
shall cause to be maintained with respect to each Mortgage Loan a hazard
insurance policy with a generally acceptable carrier that provides for fire and
extended coverage, and which provides for a recovery by the Servicer on behalf
of the Trust and its assignees of insurance proceeds relating to such Mortgage
Loan, in an amount not less than the least of (i) the outstanding principal
balance of the Mortgage Loan, (ii) the minimum amount required to compensate for
damage or loss on a replacement cost basis and (iii) the full insurable value of
the improvements which are a part of the related Mortgaged Property, but in any
case not less than the amount necessary to avoid the application of any
co-insurance clause.
(b) If a Mortgage Loan relates to a Mortgaged Property in an area
identified in the Federal Register by the Federal Emergency Management Agency as
having special flood hazards, the Servicer shall cause to be maintained with
respect thereto a flood insurance policy in a form meeting the requirements of
the current guidelines of the Federal Insurance Administration with a generally
acceptable carrier in an amount that provides for coverage, and which provides
for a recovery by the Servicer on behalf of the Trust of insurance proceeds
relating to such Mortgage Loan, in an amount not less than the least of (i) the
outstanding principal balance of the Mortgage Loan, (ii) the minimum amount
required to fully compensate for damage or loss to the improvements which are a
part of the related Mortgaged Property on a replacement cost basis and (iii) the
maximum amount of insurance that is available under the Flood Disaster
Protection Act of 1973, the National Flood Insurance Act of 1968 or the Flood
Insurance Reform Act of 1994, as amended, but in each case in an amount not less
than such amount as is necessary to avoid the application of any co-insurance
clause contained in the related hazard insurance policy. The Servicer shall
indemnify the Trust out of the Servicer's own funds for any loss to the Trust
resulting from the Servicer's failure to maintain such flood and hazard
insurance required by this Section 8.12(b).
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(c) In the event that the Servicer shall obtain and maintain a blanket
policy insuring against fire, flood and hazards of extended coverage on all of
the Mortgage Loans, then, to the extent such policy names the Servicer as loss
payee and provides coverage in an amount equal to the Aggregate Loan Balance
without co-insurance, and otherwise complies with the requirements of this
Section 8.12, the Servicer shall be deemed conclusively to have satisfied its
obligations with respect to fire, flood and hazard insurance coverage under this
Section 12, it being understood and agreed that such blanket policy may contain
a deductible clause, in which case the Servicer shall, in the event that there
shall not have been maintained on the related Mortgaged Property a policy
complying with Sections 8.12(a) and (b) hereof, and there shall have been a loss
which would have been covered by such policy, deposit in the Principal and
Interest Account from the Servicer's own funds the difference, if any, between
the amount that would have been payable under a policy complying with Sections
8.12(a) and (b) and the amount paid under such blanket policy. Upon the request
of the Backup Servicer, the Servicer shall cause to be delivered to the
requesting party a copy of such policy.
(d) If any Person asserts that on any Mortgage Loan the borrower has not
procured credit, life, accident, health or disability insurance or the like, the
Servicer's sole obligation shall be to examine the related file maintained by
the Servicer and, if evidence corroborating the assertion is found, refer such
Person to the underwriter of such insurance.
Section 8.13. Due-on-Sale Clauses; Assumption and Substitution Agreements.
When a Mortgaged Property has been or is about to be conveyed by the Mortgagor
(whether by absolute conveyance or by contract of sale, and whether or not the
Mortgagor remains liable under the Note and/or Mortgage), the Servicer shall, to
the extent it has knowledge of such conveyance or prospective conveyance,
exercise the Trust's rights to accelerate the maturity of the related Mortgage
Loan under any "due-on-sale" clause contained in the related Mortgage or Note;
provided, that the Servicer shall not exercise any such right if the
"due-on-sale" clause is not enforceable under applicable law or under the
related Note or if the Servicer is prohibited by law from doing so or that the
Servicer may not exercise such right if, in the reasonable belief of the
Servicer, determined in accordance with the Servicing Standards, the value of
the Mortgage Loan would be enhanced by waiving such provision. In such event,
the Servicer, subject to Section 8.1(d) hereof, shall enter into an assumption
and modification agreement with the person to whom such Mortgaged Property has
been or is about to be conveyed, pursuant to which such person becomes liable
under the Note and, unless prohibited by applicable law or the documents in the
related Loan File, the Mortgagor remains liable thereon. If the foregoing is not
permitted under applicable law or the documents in the related Loan File, the
Servicer is authorized, subject to Section 8.1(d) hereof, to enter into a
substitution of liability agreement with such person, pursuant to which the
original Mortgagor is released from liability and such person is substituted as
Mortgagor and becomes liable under the Note; provided, that the Mortgage Loan,
as assumed, shall conform in all respects to the requirements, representations
and warranties of the Unaffiliated Seller's Agreement.
The Servicer shall forward to the Trustee the original of such assumption
or substitution agreement, which copy shall be added by the Trustee to the
related Loan File and which shall, for all purposes, be considered a part of
such Loan File to the same extent as all other documents and instruments
constituting a part thereof. In connection with any such assumption or
substitution agreement, no material term of the Note (including but not limited
to
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the related Mortgage Rate and the Monthly Payment on the related Mortgage Loan)
may be changed and all such terms shall remain as in effect immediately prior to
the assumption or substitution, the stated maturity and the Principal Balance of
such Mortgage Loan shall not be changed nor shall any required Monthly Payments
of principal or interest be deferred or forgiven.
Notwithstanding the foregoing paragraph or any other provision of this
Agreement, the Servicer shall not be deemed to be in default, breach or any
other violation of its obligations hereunder by reason of any assumption of a
Mortgage Loan by operation of law or any assumption which the Servicer may be
restricted by law from preventing, for any reason whatsoever.
Section 8.14. Realization Upon Defaulted Mortgage Loans. (a) The Servicer
shall, consistent with the Servicing Standards, foreclose upon or otherwise
comparably effect the ownership in the name of the Servicer on behalf of the
Trust of Properties relating to defaulted Mortgage Loans as to which no
satisfactory arrangements can be made for collection of Delinquent payments. The
foregoing is subject to the proviso that the Servicer shall not advance its own
funds unless it shall reasonably believe that doing so will increase Net
Liquidation Proceeds on the Mortgage Loans. Any amounts so advanced, if
customary and reasonable, and exclusive of overhead, shall constitute "Servicing
Advances" within the meaning of Section 8.11.(b) hereof. Notwithstanding the
foregoing, with respect to any Mortgage Loan as to which the Servicer has
received notice of, or has actual knowledge of, the presence of any toxic or
hazardous substance on the related Mortgaged Property (a "Potentially Hazardous
Property"), the Servicer shall not, on behalf of the Trust, 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 Trust would be considered to hold title 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 ("CERCLA") from time to time, or any comparable law. The
Servicer shall not be required to make Delinquency Advances with respect to a
Mortgage Loan relating to a Potentially Hazardous Property. In the event the
Servicer requires any professional guidance with respect to CERCLA, the Servicer
may, at the expense of the Servicer, obtain an Opinion of Counsel experienced in
CERCLA matters, and shall be fully protected in relying on any such Opinion of
Counsel.
(b) The Servicer shall determine with respect to each defaulted Mortgage
Loan when it has recovered, whether through trustee's sale, foreclosure sale or
otherwise, all amounts (other than from deficiency judgments) it expects to
recover from or on account of such defaulted Mortgage Loan, whereupon such
Mortgage Loan shall become a "Liquidated Mortgage Loan". Any such determination
shall be evidenced by delivery of a Liquidation Report in substantially the form
of Exhibit I hereto to the Backup Servicer.
(c) The Servicer shall file reports of foreclosure and abandonment as
required by Section 6050J of the Code.
(d) The Servicer may at its option purchase from the Trust any Mortgage
Loan which is more than 60 days Delinquent, up to 20% by aggregate Principal
Balance of such
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Mortgage Loans as of the Cut-Off Date of the Original Aggregate Principal
Balance of all Mortgage Loans, and which the Servicer determines in good faith
will otherwise become subject to foreclosure proceedings at a price equal to the
Purchase Price (evidence of such determination to be delivered in writing to the
Trustee to purchase). The Purchase Price for any Mortgage Loan purchased
hereunder shall be deposited into the Principal and Interest Account and the
Trustee, upon (i) receipt of an Officer's Certificate of the Servicer as to the
making of such deposit and (ii) confirmation that such deposit has been made,
shall release or cause to be released to the Servicer the related Mortgage File
and shall execute and deliver such instruments of transfer or assignment as are
furnished by the Servicer, in each case without recourse, as shall be necessary
to vest in the Servicer title to any Mortgage Loan released pursuant hereto, and
the Trustee shall have no further responsibility or liability (except as to its
own acts) with regard to such Mortgage Loan.
Section 8.15. Servicing Compensation. As compensation for its activities
hereunder, the Servicer shall be entitled to the Servicing Fee from amounts
available therefor in the Principal and Interest Account, as provided in Section
7.4(a) hereof. The right to receive the Servicing Fee may not be transferred in
whole or in part except in connection with the transfer of all of the Servicer's
responsibilities and obligations under this Agreement or except as otherwise
provided herein.
Section 8.16. Records, Inspections. (a) The Servicer, during the period it
is servicer hereunder, shall, consistent with standard industry practices,
maintain such books of account and other records as will enable the Trustee
and/or the Backup Servicer (if either so elects, in its sole discretion) to
determine the status of each Mortgage Loan. Without limiting the generality of
the preceding sentence, the Servicer shall keep such records, consistent with
standard industry practices, in respect of Liquidation Expenses as will allow
the Backup Servicer to determine that the correct amount of Net Liquidation
Proceeds in respect of a Mortgage Loan has been deposited in the Principal and
Interest Account.
(b) The Servicer shall provide to representatives of the Trustee and the
Depositor, without charge, reasonable access on reasonable prior notice during
normal business hours and with reasonable frequency to the documentation
regarding the Mortgage Loans. The Servicer will permit, without charge, any
representative designated by the Depositor or the Trustee to visit and inspect
the servicing operations and its records relating to the Loans on reasonable
prior notice during normal business hours with reasonable frequency during the
term of the Class A Certificates, and make copies thereof or extracts therefrom
and to discuss the affairs, finances, and accounts of the Servicer with its
principal officers, as applicable, and its independent accountants. Any expense
incidental to the exercise by the Depositor of any right under this Section
8.16(b) shall be borne by such Person and, with respect to the Trustee, by the
Servicer. Nothing in this Section 8.16(b) shall derogate from the obligation of
the Servicer to observe any applicable law prohibiting disclosure of information
regarding the Mortgagors, and the failure of the Servicer to provide access as
provided in this Section 8.16(b) as a result of such obligation shall not
constitute a breach of this Section 8.16(b).
To the extent that such information is not otherwise available to the
public, none of the Trustee, the Depositor, the Backup Servicer, nor any
representative thereof shall disseminate any information relating to the
Servicer obtained pursuant to this Agreement without
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the Servicer's written consent, except to the extent provided for in this
Agreement or to the extent that it is necessary to do so (i) in working with
legal counsel, auditors, rating agencies, liquidity and credit providers, taxing
authorities, or other regulatory bodies or other governmental agencies or (ii)
pursuant to any law, rule, regulation, order, judgment, writ, injunction or
decree of any court or governmental authority having jurisdiction over the
Trustee, the Depositor, the Servicer, and the Trustee, and the Servicer shall
use all reasonable efforts to assure the confidentiality of any such
disseminated non-public information.
(c) Upon any change in the format of the computer tape maintained by the
Servicer in respect of the Mortgage Loans, the Servicer shall notify the Backup
Servicer and the Trustee in advance and shall deliver a copy of such new format
to the Backup Servicer and the Trustee; provided, that the Servicer agrees to
co-operate reasonably and in good faith with the Trustee and the Backup Servicer
with respect to any and all issues relating to such format change.
Section 8.17. Assignment of Agreement. The Servicer may not assign its
obligations under this Agreement, in whole or in part, unless it shall have
first obtained the written consent of the Trustee and the Backup Servicer.
Section 8.18. Removal of Servicer; Resignation of Servicer; Term of
Servicing. (a) If any of the following events (each, an "Event of Servicer
Default") shall occur and be continuing:
(i) Any failure by the Servicer (x) to deposit to the Principal and
Interest Account all Collections received by the Servicer directly within
one Business Day of the Servicer's receipt of such amount or (y) to deposit
to the Principal and Interest Account any amount required to be deposited
thereon pursuant to Section 8.11(a) or 8.11(c) hereof by the related
Remittance Date; or
(ii) Failure on the part of the Servicer or the Unaffiliated Seller to
observe or perform any term, covenant or agreement in this Agreement (other
than those covered by clause (i) above) or a failure to comply with the
provisions of the Servicing Standards, which failure materially adversely
affects the rights of the Owners of the Certificates and which continues
unremedied for 30 days after the date on which written notice of such
failure, requiring the same to be remedied, shall have been given to the
Servicer by the Unaffiliated Seller, the Depositor, the Trustee or Owners
who, in the aggregate, hold Certificates evidencing Percentage Interests of
10% or more; or
(iii) Any proceeding shall be instituted against the Servicer seeking
to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding
up, reorganization, arrangement, adjustment, protection, relief, or
composition of it or any of its Debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking the entry of
an order for relief or the appointment of a receiver, trustee, custodian or
other similar official for it or for any substantial part of its property,
or any of the actions sought in such proceeding (including, without
limitation, the entry of an order for relief against, or the appointment of
a receiver, trustee, custodian or other similar official for it or for any
substantial part of its property) shall occur; or
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(iv) The commencement by the Servicer of a voluntary case or
proceeding under any applicable Federal or state bankruptcy, insolvency,
reorganization or other similar law or of any other case or proceeding to
be adjudicated a bankrupt or insolvent, or the consent by it to the entry
of a decree or order for relief in respect of the Servicer in an
involuntary case or proceeding under any applicable Federal or state
bankruptcy, insolvency, reorganization or other similar law or to the
commencement of any bankruptcy or insolvency case or proceeding against it,
or the filing by it of a petition or answer or consent seeking
reorganization or relief under any applicable Federal or state law, or the
consent by it to the filing of such petition or to the appointment of or
taking possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator or similar official of the Servicer or of any substantial part
of its property, or the making by it of an assignment for the benefit of
creditors, or the admission by it in writing of its inability to pay its
Debts generally as they become due, or the taking of corporate action by
the Servicer in furtherance of any such action; or
(v) The Servicer shall fail to deliver a report expressly required by
this Agreement, and the continuance of such failure for a period of three
Business Days after the date upon which written notice of such failure
shall have been given to the Servicer by the Unaffiliated Seller, the
Depositor, or the Trustee (except that such three Business Day period shall
be deemed not to run as to any portion of such report during such time as
the Servicer's failure to provide such information is for cause or
inability beyond its control and the Servicer provides the Trustee and the
Depositor with an Officer's Certificate of the Servicer to such effect).
then the Trustee at the direction of the Majority Owners of the Offered
Certificates shall, in each case by delivery to the Servicer of a written notice
specifying the occurrence of any of the foregoing events terminate the servicing
responsibilities of the Servicer hereunder, without demand protest or further
notice of any kind, all of which are hereby waived by the Servicer, at which
such time the Backup Servicer shall become the successor servicer; provided,
that, in the event any of the events described in subsections (iii) or (iv)
shall have occurred, termination of the duties and responsibilities of the
Servicer shall automatically occur, without demand, protest, or further notice
of any kind, all of which are expressly waived by the Servicer; provided that in
the case of a proceeding described in subsection (iii) brought by a third party
and not consented to by the Servicer, an Event of Servicer Default shall not be
deemed to have occurred until the earliest to occur of (A) the failure of the
relevant court to grant the Servicer's motion to dismiss such proceeding within
60 days of the filing of such motion, (B) the denial of the Servicer's motion to
dismiss such proceeding by the relevant court, (C) the failure of the Servicer
to file such a motion within 60 days of the notice of the proceeding and (D) the
subsequent withdrawal by the Servicer of its motion to dismiss such proceeding.
The Trustee shall give notice of the occurrence of any Event of Servicer
Default to the Unaffiliated Seller, the Depositor, the Servicer, the Rating
Agencies, the Backup Servicer and each Owner.
In the event that the Backup Servicer becomes the successor servicer, the
parties hereby agree that there shall no longer be the requirement to have a
Backup Servicer.
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(b) The Servicer shall not resign from the obligations and duties hereby
imposed on it, except with the consent of the Trustee or upon determination that
its duties hereunder are no longer permissible under applicable law or are in
material conflict by reason of applicable law with any other activities carried
on by it, the other activities of the Servicer so causing such a conflict being
of a type and nature carried on by the Servicer at the date of this Agreement.
Any such determination permitting the resignation of the Servicer shall be
evidenced by an Opinion of Counsel (the cost of which shall be borne by the
Servicer) to such effect which shall be delivered to the Trustee and to the
Backup Servicer. Promptly upon any resignation pursuant to this clause (b), the
Unaffiliated Seller shall notify each Rating Agency, the Depositor and the
Trustee thereof.
(c) Except as may be required by law, no removal or resignation of the
Servicer shall become effective until the Backup Servicer or other successor
servicer shall have assumed all of the Servicer's responsibilities and
obligations hereunder.
(d) [RESERVED]
(e) Upon removal or resignation of the Servicer, the Servicer also shall
promptly (and in any event no later than 10 Business Days subsequent to such
removal or resignation) deliver or cause to be delivered to the Backup Servicer
all the books and records (including, without limitation, records kept in
electronic form) that the Servicer has maintained for the Mortgage Loans,
including all tax bills, assessment notices, insurance premium notices and all
other documents as well as all original documents then in the Servicer's
possession. The Servicer may retain copies of any such books and records.
(f) Any collections received by the Servicer after removal or resignation
shall be endorsed by it and remitted directly and immediately to the Backup
Servicer. The Servicer shall be entitled to receive the Servicing Fee through
the day on which it is terminated as Servicer (which may be pro rated for a
partial month).
To the extent that the Servicer, at the time of its removal or resignation,
has theretofore expended any amounts as Delinquency Advances or as Servicing
Advances with respect to any Mortgage Loan, which Delinquency Advances or
Servicing Advances remain unreimbursed as of such date ("Unrecovered Advances")
the Servicer shall thereafter be entitled to receive from the Backup Servicer,
monthly, such information as may be generated by the Backup Servicer as may be
reasonably necessary to enable the Servicer to monitor the recovery of, and
collection efforts undertaken with respect to, the Unrecovered Advances, which
information will include details of collection activities, payment records and
trial balances. To the extent that the Backup Servicer or other successor
servicer receives any amounts which relate to reimbursement for Unrecovered
Advances made by the prior Servicer, such amounts shall be remitted to the prior
Servicer on the related Distribution Date. To the extent that the Servicer,
based upon the information supplied by the Backup Servicer, believes that any
discrepancies exist between actual Unrecovered Advances received by the Backup
Servicer and the amounts forwarded to the Servicer as recovered Unrecovered
Advances, the Servicer and the Backup Servicer shall attempt in good faith to
reconcile such discrepancies.
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(g) The Backup Servicer shall take such action, consistent with this
Agreement, as shall be necessary to effectuate any succession to become the
successor servicer. The Servicer agrees to cooperate reasonably with the Backup
Servicer in effecting the termination of the Servicer's servicing
responsibilities and rights hereunder and shall promptly provide to the Backup
Servicer all documents and records reasonably requested by it to enable it to
assume the Servicer's functions hereunder and shall promptly also transfer to
the Backup Servicer all amounts which then have been or should have been
deposited in the Lockbox Account, or in the Principal and Interest Account, or
which are thereafter received with respect to the Mortgage Loans. The Backup
Servicer shall not be held liable by reason of any failure to make, or any delay
in making, any distribution hereunder or any portion thereof caused by (i) the
failure of the Servicer to deliver, or any delay in delivering, cash, documents
or records to it, or (ii) restrictions imposed by any regulatory authority
having jurisdiction over the Servicer.
(h) The Servicer which is being removed or is resigning shall give notice
to the Mortgagors of the transfer of the servicing to the Backup Servicer. Said
notice shall be a joint notice of servicing transfer in the form required by
applicable law.
Section 8.19. Errors and Omissions Insurance; Fidelity Bond. The Servicer
shall keep in force during the term of this Agreement a policy or policies of
insurance covering errors and omissions for failure in the performance of the
Servicer's obligations under this Agreement, which policy or policies shall be
in such form and amount that would meet the requirements of FNMA or FHLMC if it
were the purchaser of the Mortgage Loans. The Servicer shall also maintain a
fidelity bond in the form and amount that would meet the requirements of FNMA or
FHLMC if it were the purchaser of the Mortgage Loans. The Servicer shall be
deemed to have complied with this provision if an affiliate of the Servicer has
such errors and omissions and fidelity bond coverage and, by the terms of such
insurance policy or fidelity bond, the coverage afforded thereunder extends to
the Servicer. Any such errors and omissions policy and fidelity bond shall by
its terms not be cancelable (but may be transferred to a different carrier)
without thirty days prior written notice to the Trustee. Upon the request of the
Trustee, the Servicer shall furnish copies of all binders and policies or
certificates evidencing that such bonds and insurance policies are in full force
and effect. The Servicer shall also cause each Sub-Servicer to maintain a policy
of insurance covering errors and omissions and a fidelity bond which would meet
the requirements set forth above.
Section 8.20. Change in Business of the Servicer. The Unaffiliated Seller
has entered into this Agreement with the Servicer in reliance upon its ability
to perform the servicing duties without any delegation thereof; the adequacy of
its plant, personnel, records and procedures; its integrity, reputation and
financial standing and the continuance of each of the foregoing. The Servicer
shall not (a) make any material change in the character of its servicing
business; or (b) merge with or into or consolidate with or into, or convey,
transfer, lease or otherwise dispose of all or substantially all of its assets
(whether now owned or hereafter acquired), or acquire all or substantially all
of the assets or capital stock or other ownership interest of, any other
corporation, unless (x) the Servicer has notified each Rating Agency, and the
Trustee, at least 30 days prior to such action and (y) the Trustee and the
Rating Agencies have consented to such action (such consent not to be
unreasonably withheld).
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Section 8.21. Servicer Expenses. Unless otherwise provided or contemplated
herein, the Servicer shall be required to pay all expenses incurred by it in
connection with its obligations under this Agreement, including fees and
disbursements of independent accountants, taxes imposed on the Servicer,
expenses incurred in connection with distributions and reports to the Depositor,
the Backup Servicer and/or the Trustee, all costs and expenses of filing and
recording, including the costs of any searches deemed necessary or appropriate
by the Servicer from time to time to establish and determine the validity and
the continuing lien priority of the Trustee's security interest in the Trust
Assets, the ongoing fees and reasonable expenses of each Rating Agency, and
shall not be entitled to reimbursement therefor.
Section 8.22. The Backup Servicer. (a) Prior to assuming any of the
Servicer's rights and obligations hereunder the Backup Servicer shall only be
responsible to perform those duties specifically imposed upon it by the
provisions hereof. Such duties generally relate to following procedures which
would permit the Backup Servicer to assume some or all of the Servicer's rights
and obligations hereunder with reasonable dispatch, following notice.
The Backup Servicer, prior to assuming any of the Servicer's duties
hereunder may not resign hereunder unless it arranges for a successor Backup
Servicer reasonably acceptable to each Rating Agency with not less than 60 days'
notice delivered to the Servicer and the Depositor. Prior to its becoming
successor servicer, the Backup Servicer shall have only those duties and
obligations imposed by it under this Agreement, and shall have no obligations or
duties under any agreement to which it is not a party, including but not limited
to the various agreements named herein. In its capacity as successor servicer
and as Backup Servicer, Bankers Trust Company of California, N.A. shall in no
event be liable for any obligations of the Unaffiliated Seller or the Servicer
to any party, whether hereunder or under any other agreement, which are not
related to servicing functions, including, without limitation, any repurchase
obligations.
(b) The Backup Servicer agrees to indemnify the Trust, the Trustee, the
Depositor, each Owner of a Certificate, the Servicer and the Unaffiliated
Seller, and any of their respective directors, officers, employees or agents
from, and hold them harmless against, any and all costs, expenses (including
reasonable attorney fees and disbursements), losses, claims, damages and
liabilities to the extent that such cost, expense, loss, claim, damage or
liability arose out of, or was imposed upon the Trust, the Trustee, the
Depositor, the Owner of a Certificate, the Servicer, or the Unaffiliated Seller
and their respective directors, officers, employees and agents through the
Backup Servicer's acts or omissions in violation of this Agreement, except to
the extent such indemnified party's own bad faith, willful misconduct or gross
negligence contributes to the cost, expense, loss, claim, damage or liability.
The Backup Servicer (including the Backup Servicer in its capacity as
successor servicer) in addition agrees to indemnify the Servicer against any
losses, claims or damages whenever imposed or suffered resulting from the
performance or non-performance by the Backup Servicer of its duties hereunder
from the date on which it becomes the successor servicer, other than any loss,
claim or damage resulting from the Servicer's negligence, misconduct, bad faith
or failure to comply with this Agreement.
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(c) The Servicer shall have no liability, direct or indirect, to any party,
for the acts or omissions of the Backup Servicer, whenever such acts or
omissions occur whenever such liability is imposed.
(d) The Backup Servicer shall not be obligated to follow the WCC Servicing
Guide, but may instead follow the Servicing Standards set forth in clauses (ii)
through (iv) of such definition.
Section 8.23. Escrows for Taxes; Insurance, Assessments and Similar Items;
Taxes and Insurance Accounts . The Servicer shall establish and maintain one or
more taxes and insurance accounts ("T&I Accounts") as impound accounts and shall
deposit and retain therein all collections ;from the Mortgagors for the payment
of taxes, assessments, primary mortgage insurance premiums, if applicable, or
comparable items for the account of the Mortgagors as required by the terms of
the Mortgage Loans (collectively, "Escrow Amounts"). T&I Accounts shall be
maintained in banking or savings institutions whose accounts are insured by the
FDIC. Withdrawals of amounts so collected from the T&I Accounts may be made only
to effect timely payment of taxes, assessments, primary mortgage insurance
policy premiums, if applicable, or comparable items, to reimburse the Servicer
out of related collections for any payments made, to refund to any Mortgagors
any sums as may be determined to be overages, to pay interest to the Mortgagors
on balances in the T&I Accounts or to clear and terminate the T&I Accounts as of
their respective termination days. As part of its servicing duties, the Servicer
shall pay to the Mortgagors interest on funds in the T&I Accounts to the extent
required by law.
Section 8.24. Servicer to Give Notice of Certain Breaches. (a) The Servicer
shall deliver to the Trustee and the Depositor as soon as available, but in any
event within 120 days after the end of each of its fiscal years, a consolidated
balance sheet of it and its Affiliates, as of such last day of the fiscal year,
and a statement of income and retained earnings, for each such fiscal year, each
prepared in accordance with GAAP, in reasonable detail, and certified without
qualification by an Independent Public Accountant, who may also render other
services to the Servicer, or any of its Affiliates and certified by the chief
financial officer of the Servicer as fairly presenting the financial position
and the results of operations of the Servicer as of and for the year ending on
its date and as having been prepared in accordance with GAAP.
(b) The Servicer shall deliver to the Trustee, and the Depositor on or
before March 31 of each year, beginning with March 31, 1999 an Officer's
Certificate stating, as to each signer thereof, that (a) a review of the
activities of the Servicer or the Subservicer, as the case may be, during the
preceding calendar year and of performance under this Agreement has been made
under such officer's supervision and (b) to the best of such officer's
knowledge, based on such review, the Servicer or Subservicer, as the case may
be, has fulfilled all its respective obligations under this Agreement throughout
such year in all material respects, or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to such
officer and the nature and status thereof and remedies therefor being pursued.
(c) The Servicer shall promptly (but in any event within three Business
Days) notify the Trustee and the Depositor upon receiving actual knowledge of
any event which constitutes an Event of Servicer Default.
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(d) The Trustee shall promptly deliver to each Rating Agency a copy of any
report or certificate delivered to the Trustee pursuant to this Section 8.24 and
notify each Rating Agency and each Owner of a Certificate upon obtaining
knowledge of any event described in Section 8.24(c).
(e) On or before the last day of March of each year, commencing in 1999,
the Servicer, at its own expense, shall cause to be delivered to the Trustee,
and each Rating Agency a letter or letters of a firm of independent, nationally
recognized certified public accountants reasonably acceptable to the Trustee
stating that such firm has, with respect to the Servicer's overall servicing
operations examined such operations in accordance with the requirements of the
Uniform Single Attestation Program for Mortgage Bankers, and stating such firm's
conclusions relating thereto.
Section 8.25. The Designated Depository Institution. The Servicer shall
give the Unaffiliated Seller and the Trustee (a) at least thirty days' prior
written notice of any anticipated change of the Designated Depository
Institution at which any Account is maintained and (b) written notice of any
change in the ratings of such Designated Depository Institution of which the
Servicer is aware, within two Business Days after discovery.
Section 8.26. Appointment of Custodian. If the Servicer in good faith
determines that the Trustee is unable to deliver Loan Files to the Servicer as
required pursuant to Section 8.14 hereof, the Servicer shall so notify the
Unaffiliated Seller, the Rating Agencies and the Trustee, and make request that
a custodian acceptable to the Servicer be appointed to retain custody of the
Loan Files on behalf of the Trustee. The Trustee and the Unaffiliated Seller
agree to co-operate reasonably with the Servicer in connection with the
appointment of such custodian.
Section 8.27. Indemnification by the Unaffiliated Seller and the Servicer.
The Unaffiliated Seller and the Servicer each jointly and severally agrees to
indemnify and hold the Trust and the Trustee, harmless against any and all
claims, losses, penalties, fines, forfeitures, legal fees and related costs,
judgments and any other costs, fees and expenses that the Trust or the Trustee
may sustain in any way related to (i) the breach of any representation or
warranty made by the Unaffiliated Seller or the Servicer under this Agreement or
the Unaffiliated Seller Agreement or (ii) the failure of the Unaffiliated Seller
or the Servicer to perform their respective duties in compliance with the terms
of this Agreement or the Unaffiliated Seller's Agreement. The provisions of this
section shall survive the termination of this Agreement and the payment of the
outstanding Certificates.
Section 8.28. Eligibility Requirements of the Servicer.
The Servicer hereunder shall at all times be a corporation or a
state-chartered or national bank, organized and doing business under the laws of
any state or the United States of America having equity of at least $10,000,000
(or such lower level as may be acceptable to the Rating Agencies). In case at
any time the Servicer shall cease to be eligible in accordance with the
provisions of this Section, then (i) the Servicer shall notify the Trustee, the
Depositor, the Unaffiliated Seller and the Rating Agencies of such
ineligibility, (ii) the Rating Agencies shall provide letters indicating the
effect of such ineligibility on the Offered Certificates to the Servicer, the
Trustee, the Depositor and the Unaffiliated Seller and (iii) the Trustee shall
appoint a backup
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servicer (A) which is a corporation or a state-chartered or national bank,
organized and doing business under the laws of any state or the United States of
America having equity of at least $10,000,000, (B) which is in the business of
servicing mortgage loans similar to the Mortgage Loans held by the Trust and (C)
shall maintain servicing records and take such other actions so as to become a
"hot backup servicer".
ARTICLE IX
TERMINATION OF TRUST
Section 9.1. Termination of Trust. The Trust created hereunder and all
obligations created by this Agreement will terminate upon the earlier of (i) the
payment to the Owners of all Certificates of all amounts held by the Trustee and
required to be paid to such Owners pursuant to this Agreement upon the later to
occur of (a) the final payment or other liquidation (or any advance made with
respect thereto) of the last Mortgage Loan in the Trust Estate or (b) the
disposition of all property acquired in respect of any Mortgage Loan remaining
in the Trust Estate, (ii) at any time when a Qualified Liquidation of the Trust
is effected as described below or (iii) as described in Section 9.2, 9.3 and 9.4
hereof. To effect a termination of this Agreement pursuant to clause (ii) above,
the Owners of all Certificates then Outstanding shall (x) unanimously direct the
Trustee on behalf of the Trust to adopt a plan of complete liquidation for the
Trust, as contemplated by Section 860F(a)(4) of the Code and (y) provide to the
Trustee an opinion of counsel experienced in federal income tax matters to the
effect that such liquidation constitutes a Qualified Liquidation, and the
Trustee shall sell the Mortgage Loans and distribute the proceeds of the
liquidation of the Trust Estate so that the liquidation of the Trust Estate, the
distribution of any proceeds of the liquidation and the termination of this
Agreement occur no later than the close of the 90th day after the date of
adoption of the plan of liquidation and such liquidation qualifies as a
Qualified Liquidation. In no event, however, will the Trust created by this
Agreement continue beyond the expiration of twenty-one (21) years from the death
of the last survivor of the descendants of Joseph P. Kennedy, the late
Ambassador of the United States to the United Kingdom, living on the date
hereof. The Trustee shall give written notice of termination of the Agreement to
each Owner in the manner set forth in Section 11.5.
Section 9.2. Termination Upon Option of the Servicer. (a) On any Remittance
Date on or after the Clean-up Call Date, the Servicer, acting directly or
through one or more affiliates, may determine to purchase and may cause the
purchase from the Trust of all (but not fewer than all) Mortgage Loans in the
Trust Estate and all property theretofore acquired in respect of any such
Mortgage Loan by foreclosure, deed in lieu of foreclosure, or otherwise then
remaining in the Trust Estate at a price equal to 100% of the Aggregate Loan
Balances of the related Mortgage Loans and related accrued interest as of the
day of purchase minus the amount actually remitted by the Servicer representing
the related Monthly Remittance Amount on such Remittance Date for the related
Remittance Period (such amount, the "Termination Price"). In connection with
such purchase, the Servicer shall remit to the Trustee all amounts then on
deposit in the Principal and Interest Account for deposit to the Certificate
Account, which deposit shall be deemed to have occurred immediately preceding
such purchase.
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(b) In connection with any such purchase, the Servicer shall provide to the
Trustee an opinion of counsel, at the expense of the Servicer, experienced in
federal income tax matters to the effect that such purchase constitutes a
Qualified Liquidation of each REMIC.
(c) Promptly following any such purchase, the Trustee will release the Loan
Files to the Servicer, or otherwise upon its order, in a manner similar to that
described in Section 8.14 hereof.
Section 9.3. Termination Upon Loss of REMIC Status. (a) Following a final
determination by the Internal Revenue Service, or by a court of competent
jurisdiction, in either case from which no appeal is taken within the permitted
time for such appeal, or if any appeal is taken, following a final determination
of such appeal from which no further appeal can be taken, to the effect that the
Trust does not and will no longer qualify as a "REMIC" pursuant to Section 860D
of the Code (the "Final Determination"), on any Remittance Date on or after the
date which is 30 calendar days following such Final Determination, the Owners of
a majority in Percentage Interest represented by the Class A Certificates then
Outstanding may direct the Trustee to adopt a plan of complete liquidation with
respect to the Trust Estate. In connection with such purchase, the Servicer
shall remit to the Trustee all amounts then on deposit in the Principal and
Interest Account for deposit in the Certificate Account, which deposit shall be
deemed to have occurred immediately preceding such purchase.
(b) Upon receipt of such direction from the Owners of such Offered
Certificates, the Trustee shall notify the holders of the Class RL Certificates
of such election to liquidate or such determination to purchase, as the case may
be, (the "Termination Notice"). The Owners of a majority of the Percentage
Interest of the Class RL Certificates then Outstanding may, on any Remittance
Date, within 60 days from the date of receipt of the Termination Notice (the
"Purchase Option Period"), at their option, purchase from the Trust all (but not
fewer than all) Mortgage Loans in the Trust Estate, and all property theretofore
acquired by foreclosure, deed in lieu of foreclosure, or otherwise in respect of
any Mortgage Loan then remaining in the Trust Estate at a purchase price equal
to the Termination Price.
(c) If, during the Purchase Option Period, the Owners of the Class RL
Certificates have not exercised the option described in the immediately
preceding paragraph, then upon the expiration of the Purchase Option Period in
the event that the Owners of the Class A Certificates have given the Trustee the
direction described in clause (a) above, the Trustee shall sell the Mortgage
Loans and distribute the proceeds of the liquidation of the Trust Estate, such
that, if so directed, the liquidation of the Trust Estate and the distribution
of the proceeds of such liquidation occur no later than the close of the 60th
day, or such later day as the Owners of the Offered Certificates shall permit or
direct in writing, after the expiration of the Purchase Option Period. In
connection with such purchase, the Servicer shall remit to the Trustee all
amounts then on deposit in the Principal and Interest Account for deposit to the
Certificate Account, which deposit shall be deemed to have occurred immediately
preceding such purchase.
(d) Following a Final Determination, the Owners of a majority of the
Percentage Interest of the Class RL Certificates then Outstanding may, at their
option on any Remittance Date and upon delivery to the Owners of the Offered
Certificates of an opinion of counsel experienced in federal income tax matters
selected by the Owners of such Class RL
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Certificates which opinion shall be reasonably satisfactory in form and
substance to a majority of the Percentage Interests represented by the Offered
Certificates then Outstanding, to the effect that the effect of the Final
Determination is to increase substantially the probability that the gross income
of the Trust will be subject to federal taxation, purchase from the Trust all
(but not fewer than all) Mortgage Loans in the Trust Estate, and all property
theretofore acquired by foreclosure, deed in lieu of foreclosure, or otherwise
in respect of any Mortgage Loan then remaining in the Trust Estate at a purchase
price equal to the Termination Price. In connection with such purchase, the
Servicer shall remit to the Trustee all amounts then on deposit in the Principal
and Interest Account for deposit to the Certificate Account, which deposit shall
be deemed to have occurred immediately preceding such purchase. The foregoing
opinion shall be deemed satisfactory unless the Owners of a majority of the
Percentage Interest represented by the Offered Certificates then Outstanding
give the Owners of a majority of the Percentage Interest of the Class RL
Certificates notice that such opinion is not satisfactory within thirty days
after receipt of such opinion.
Section 9.4. Disposition of Proceeds. The Trustee shall, upon receipt
thereof, deposit the proceeds of any liquidation of the Trust Estate pursuant to
this Article IX to the Certificate Account; provided, however, that any amounts
representing Servicing Fees, unreimbursed Delinquency Advances or unreimbursed
Servicing Advances theretofore funded by the Servicer from the Servicer's own
funds shall be paid by the Trustee to the Servicer from such proceeds.
Section 9.5. Netting of Amounts. If any Person paying the Termination Price
would receive a portion of the amount so paid, such Person may net any such
amount against the Termination Price otherwise payable.
Section 9.6. Auction Sale. If the Servicer does not, by the ninetieth day
following the first Remittance Date on which such option may be exercised,
exercise the purchase option described in Section 9.2 hereof, then upon receipt
of written notice and direction from the Unaffiliated Seller, the Trustee will
solicit competitive bids for the purchase of the Mortgage Loans for fair market
value. Such solicitation shall be conducted substantially in the manner
described in Exhibit L hereto. In the event that satisfactory bids are received
as described below, the proceeds of the sale of such assets shall be deposited
into the Certificate Account. The Trustee will solicit, good-faith bids from no
fewer than two prospective purchasers that are considered at the time to be
competitive participants in the mortgage loan market. The Trustee will consult
with any securities brokerage houses identified by the Unaffiliated Seller as
then making a market in the Mortgage Loans to obtain a determination as to
whether the fair market value of such assets has been offered.
Any purchaser of such Mortgage Loans must agree to the continuation of the
Servicer or any successor servicer as servicer of the assets on terms
substantially similar to those in this Agreement.
If the highest good-faith bid received by the Trustee from a qualified
bidder is, in the judgment of the Underwriter, not less than the fair market
value of such Mortgage Loans and if such bid would equal the amount set forth in
the following sentence, the Trustee, following consultation with and written
direction from the Unaffiliated Seller, will sell and assign such
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Mortgage Loans without representation, warranty or recourse to such highest
bidder and will redeem the Certificates. For the Trustee to consummate the sale,
the bid must be at least equal to the greater of (i) the Termination Price set
forth in Section 9.2 hereof and (ii) the fair market value of the Mortgage Loans
(disregarding accrued interest). In addition, the bid must be in an amount
sufficient to pay the fees and expenses of the Trustee. If such conditions are
not met, the Trustee will, following consultation with the Seller, decline to
consummate such sale. In addition, the Trustee will decline to consummate such
sale unless it receives from the Unaffiliated Seller an opinion of counsel
addressed to it that such sale will not give rise either to any "prohibited
transaction" tax under section 860F(a)(1) of the Code or to any tax on
contributions to the REMIC after the "startup day" under section 860G(d)(1) of
the Code. In the event such sale is not consummated in accordance with the
foregoing, the Trustee will not be under any obligation to solicit any further
bids or otherwise to negotiate any further sale of the Mortgage Loans. In such
event, however, if directed by the Unaffiliated Seller, the Trustee may solicit
bids from time to time in the future for the purchase of the Mortgage Loans upon
the same terms described above. The Trustee may consult with the Unaffiliated
Seller and the advice of the Unaffiliated Seller shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder.
ARTICLE X
THE TRUSTEE
Section 10.1. Certain Duties and Responsibilities. (a) The Trustee (i)
except during the continuance of an Event of Servicer Default, undertakes to
perform such duties and only such duties as are specifically set forth in this
Agreement, and no implied covenants or obligations shall be read into this
Agreement against the Trustee and (ii) in the absence of bad faith on its part,
may conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished pursuant
to and conforming to the requirements of this Agreement; but in the case of any
such certificates or opinions which by any provision hereof are specifically
required to be furnished to the Trustee, shall be under a duty to examine the
same to determine whether or not they conform to the requirements of this
Agreement.
During the continuance of an Event of Servicer 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 with respect to such person's property
or affairs.
(b) Notwithstanding the appointment of the Servicer hereunder, the Trustee
is hereby empowered, but prior to the Trustee assuming the duties of the
Servicer pursuant to Section 8.20, shall not be obligated or otherwise
responsible to perform the duties of the Servicer. Specifically, and not in
limitation of the foregoing, the Trustee shall have the power (but not the
obligation if prior to the Trustee assuming the duties of the Servicer pursuant
to Section 8.20):
(i) to collect Mortgagor payments;
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(ii) to foreclose on defaulted Mortgage Loans;
(iii) to enforce due-on-sale clauses and to enter into assumption and
substitution agreements as permitted by Section 8.12 hereof;
(iv) to deliver instruments of satisfaction pursuant to Section 8.14
hereof;
(v) to make Delinquency Advances and Servicing Advances and to pay
Compensating Interest, all as provided in this Agreement; and
(vi) to enforce the Mortgage Loans.
(c) No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct, except that:
(i) this subsection shall not be construed to limit the effect of
subsection (a) of this Section;
(ii) the Trustee shall not be liable for any error of judgment made in
good faith by an Authorized Officer, unless it shall be proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action
taken, suffered or omitted to be taken by it in good faith in accordance
with the direction of the Unaffiliated Seller, or the Owners of a majority
in Percentage Interest of the Certificates of the affected Class or Classes
relating to the time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power conferred
upon the Trustee, under this Agreement relating to such Certificates;
(iv) the Trustee shall not be required to take notice or be deemed to
have notice or knowledge of any default by the Servicer unless the Trustee
shall have received written notice thereof. In the absence of actual
receipt of such notice, the Trustee may conclusively assume that there is
no such default; and
(v) subject to the other provisions of this Agreement and without
limiting the generality of this Section, the Trustee shall have no duty (A)
to see to any recording, filing, or depositing of this Agreement, any
Mortgage or any agreement referred to herein or any financing statement or
continuation statement evidencing a security interest, or to see to the
maintenance of any such recording or filing or depositing or to any
re-recording, refiling or redepositing of any thereof, (B) to see to any
insurance, (C) to see the payment or discharge of any tax, assessment, or
other governmental charge or any lien or encumbrance of any kind owing with
respect to, assessed or levied against, any property of the Trust, or (D)
to confirm or verify the contents of any reports or certificates of the
Servicer delivered to the Trustee pursuant to this Agreement believed by
the Trustee to be genuine and to have been signed or presented by the
proper party or parties.
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(d) Whether or not therein expressly so provided, every provision of this
Agreement relating to the conduct or affecting the liability of or affording
protection to the Trustee shall be subject to the provisions of this Section.
(e) No provision of this Agreement shall require the Trustee to expend or
risk its own funds or otherwise incur any financial liability in the performance
of any of its duties hereunder, or in the exercise of any of its rights or
powers, if it shall have reasonable grounds for believing that repayment of such
funds or adequate indemnity against such risk or liability is not reasonably
assured to it and none of the provisions contained in this Agreement shall in
any event require the Trustee to perform, or be responsible for the manner of
performance of, any of the obligations of the Servicer under this Agreement
except during such time, if any, as the Trustee shall be the successor to, and
be vested with the rights, duties and powers and privileges of, the Servicer in
accordance with the terms of this Agreement.
(f) The permissive right of the Trustee to take actions enumerated in this
Agreement shall not be construed as a duty and the Trustee shall not be
answerable for other than its own negligence or willful misconduct.
(g) The Trustee shall be under no obligation to institute any suit, or to
take any remedial proceeding under this Agreement, or to take any steps in the
execution of the trusts hereby created or in the enforcement of any rights and
powers hereunder until it shall be indemnified to its reasonable satisfaction
against any and all costs and expenses, outlays and counsel fees and other
reasonable disbursements and against all liability, except liability which is
adjudicated to have resulted from its negligence or willful misconduct, in
connection with any action so taken.
Section 10.2. Removal of Trustee for Cause. (a) The Trustee may be removed
pursuant to paragraph (b) hereof upon the occurrence of any of the following
events (whatever the reason for such event and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(i) the Trustee shall fail to distribute to the Owners entitled
thereto on any Distribution Date amounts available for distribution in
accordance with the terms hereof; or
(ii)the Trustee shall cease to be eligible in accordance with Section
10.8 hereof or fail in the performance of, or breach, any covenant or
agreement of the Trustee in this Agreement, or if any representation or
warranty of the Trustee made in this Agreement or in any certificate or
other writing delivered pursuant hereto or in connection herewith shall
prove to be incorrect in any material respect as of the time when the same
shall have been made, and such failure or breach shall continue or not be
cured for a period of 30 days after there shall have been given, by
registered or certified mail, to the Trustee by the Unaffiliated Seller or
by the Owners of at least 25% of the aggregate Percentage Interests
represented by any Class of Offered Certificates, or, if there are no
Offered Certificates then Outstanding, by such Percentage Interests
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represented by the Class B Certificates, a written notice specifying such
failure or breach and requiring it to be remedied; or
(iii) a decree or order of a court or agency or supervisory authority
having jurisdiction for the appointment of a conservator or receiver or
liquidator in any insolvency, readjustment of debt, marshalling of assets
and liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against the Trustee,
and such decree or order shall have remained in force undischarged or
unstayed for a period of 60 days; or
(iv) a conservator or receiver or liquidator or sequestrator or
custodian of the property of the Trustee is appointed in any insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings of or relating to the Trustee or relating to all or
substantially all of its property; or
(v) the Trustee shall become insolvent (however insolvency is
evidenced), generally fail to pay its debts as they come due, file or
consent to the filing of a petition to take advantage of any applicable
insolvency or reorganization statute, make an assignment for the benefit of
its creditors, voluntarily suspend payment of its obligations, or take
corporate action for the purpose of any of the foregoing.
(b) The Unaffiliated Seller and the Trustee shall give notice to the Rating
Agencies, to each other and to each Owner if either of them becomes aware that
an event described in subsection (a) has occurred and is continuing.
(c) If any event described in paragraph (a) occurs and is continuing, then
and in every such case, the Majority Owners of the Offered Certificates, or, if
there are no Offered Certificates then Outstanding, by a majority of the Class B
Certificates then Outstanding, may, whether or not the Trustee resigns pursuant
to Section 10.9 hereof, immediately, concurrently with the giving of notice to
the Trustee, and without delaying the 30 days required for notice therein,
appoint a successor trustee pursuant to the terms of Section 10.9 hereof.
Section 10.3. Certain Rights of the Trustee.
Except as otherwise provided in Section 10.1 hereof:
(a) the Trustee may rely and shall be protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, note or other paper or
document believed by it to be genuine and to have been signed or presented by
the proper party or parties;
(b) any request or direction of the Unaffiliated Seller, the Servicer or
the Owners of any Class of Certificates mentioned herein shall be sufficiently
evidenced in writing;
(c) whenever in the administration of this Agreement the Trustee shall deem
it desirable that a matter be proved or established prior to taking, suffering
or omitting any action hereunder, the Trustee (unless other evidence shall be
herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officer's Certificate;
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(d) the Trustee may consult with counsel, and the written advice of such
counsel shall be full and complete authorization and protection in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
reasonable reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Agreement at the request or direction of any of
the Owners pursuant to this Agreement, unless such Owners shall have offered to
the Trustee reasonable security or indemnity against the costs, expenses and
liabilities which might be incurred by it in compliance with such request or
direction;
(f) the Trustee shall not be bound to make any investigation into the facts
or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, note or other
paper or document, but the Trustee in its discretion may make such further
inquiry or investigation into such facts or matters as it may see fit;
(g) 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 the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder; and
(h) the Trustee shall not be liable for any action it takes or omits to
take in good faith which it reasonably believes to be authorized by the
Authorized Officer of any Person or within its rights or powers under this
Agreement other than as to the validity and the sufficiency of its
authentication of the Certificates. The Trustee shall at no time have any
responsibility for or with respect to (i) the legality, validity, sufficiency or
enforceability of any Mortgages and the Mortgage Loans, including the perfection
or priority thereof, (ii) the ability of the Mortgage Loans to pay any portion
of the Certificates, (iii) the validity of the assignment of any of the
Mortgages and the Mortgage Loans, (iv) the review of any Mortgage or Mortgage
Loan, except as provided herein, (v) the compliance by the Unaffiliated Seller
or any Mortgagor with any covenant contained hereunder or in the Mortgages and
the Mortgage Loans, (vi) the breach by the Unaffiliated Seller or the Servicer
of any warranty or representation made hereunder or the accuracy of any such
warranty or representation, (vii) the use or application by the Unaffiliated
Seller of the proceeds of the Certificates, (viii) any offering materials used
to sell the Certificates and (ix) the acts or omissions of the Servicer.
Section 10.4. Not Responsible for Recitals or Issuance of Certificates. The
recitals contained herein and in the Certificates, except any such recitals
relating to the Trustee, shall be taken as the statements of the Unaffiliated
Seller, and the Trustee assumes no responsibility for their correctness. The
Trustee makes no representation as to the validity or sufficiency of this
Agreement or of the Certificates other than as to the validity and the
sufficiency of its authentication of the Certificates.
Section 10.5. May Hold Certificates. The Trustee or any other agent of the
Trust, in its individual or any other capacity, may become an Owner or pledgee
of Certificates and may otherwise deal with the Trust with the same rights it
would have if it were not Trustee or such other agent.
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Section 10.6. Money Held in Trust. Money held by the Trustee in trust
hereunder need not be segregated from other trust funds except to the extent
required herein or required by law. The Trustee shall be under no liability for
interest on any money received by it hereunder except as otherwise agreed with
the Unaffiliated Seller and except to the extent of income or other gain on
investments which are deposits or certificates of deposit of the Trustee in its
commercial capacity and income or other gain actually received by the Trustee on
Eligible Investments.
Section 10.7. Compensation and Reimbursement; No Lien for Fees. The Trustee
shall receive compensation for fees and reimbursement pursuant to Section 2.5
hereof and Section 7.4 hereof. The Trustee shall have no lien on the Trust
Estate for the payment of any fees or expenses (prior to an Event of Servicer
Default).
Section 10.8. Corporate Trustee Required; Eligibility. There shall at all
times be a Trustee hereunder which shall be a corporation or association
organized and doing business under the laws of the United States of America or
of any State authorized under such laws to exercise corporate trust powers,
having a combined capital and surplus of at least $100,000,000, subject to
supervision or examination by the United States of America, having a long-term
deposit rating of at least BBB from Fitch (or such lower rating as may be
acceptable to Fitch) and Baa2 from Moody's (or such lower rating as may be
acceptable to Moody's). If such Trustee publishes reports of condition at least
annually, pursuant to law or to the requirements of the aforesaid supervising or
examining authority, then for the purposes of this Section, the combined capital
and surplus of such corporation or association shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published. If at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section, it shall, upon the request of
the Unaffiliated Seller, resign immediately in the manner and with the effect
hereinafter specified in this Article X.
Section 10.9. Resignation and Removal; Appointment of Successor. (a) No
resignation or removal of the Trustee and no appointment of a successor trustee
pursuant to this Article X shall become effective until the acceptance of
appointment by the successor trustee under Section 10.10 hereof.
(b) The Trustee, or any trustee or trustees hereafter appointed, may resign
at any time by giving written notice of resignation to the Unaffiliated Seller
and by mailing notice of resignation by first-class mail, postage prepaid, to
the Owners at their addresses appearing on the Register. A copy of such notice
shall be sent by the resigning Trustee to the Rating Agencies. Upon receiving
notice of resignation, the Unaffiliated Seller shall promptly appoint a
successor trustee or trustees satisfying the eligibility requirements of Section
10.8 by written instrument, in duplicate, executed on behalf of the Trust by an
Authorized Officer of the Unaffiliated Seller, one copy of which instrument
shall be delivered to the Trustee so resigning and one copy to the successor
trustee or trustees. If no successor trustee shall have been appointed and have
accepted appointment within 30 days after the giving of such notice of
resignation, the resigning trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee, or any Owner may, on
behalf of himself and all others similarly situated, petition any such court for
the appointment of a successor trustee. Such court may thereupon, after such
notice, if any, as it may deem proper, appoint a successor trustee.
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(c) The Majority Owners of the Offered Certificates, or, if there are no
Offered Certificates then Outstanding, by a majority of the Class B Certificates
then Outstanding, may at any time remove the Trustee and appoint a successor
trustee by delivering to the Trustee to be removed, to the successor trustee so
appointed and to the Unaffiliated Seller, copies of the record of the act taken
by the Owners, as provided for in Sections 11.3 and 11.4 hereof.
(d) If the Trustee fails to perform its duties in accordance with the terms
of this Agreement or becomes ineligible to serve as Trustee, the Depositor or
the Unaffiliated Seller may remove the Trustee and appoint a successor trustee
by written instrument, in triplicate, signed by the Depositor or the
Unaffiliated Seller duly authorized, one complete set of which instruments shall
be delivered to each of the Depositor, the Unaffiliated Seller and to the
Trustee so removed and one complete set to the successor trustee so appointed.
(e) If the Trustee shall resign, be removed or become incapable of acting,
or if a vacancy shall occur in the office of the Trustee for any cause, the
Unaffiliated Seller shall promptly appoint a successor trustee satisfying the
eligibility requirements of Section 10.8.
(f) The Unaffiliated Seller shall give notice of any removal of the Trustee
by mailing notice of such event by first-class mail, postage prepaid to the
Owners as their names and addresses appear in the Register. Each notice shall
include the name of the successor trustee and the address of its corporate trust
office.
Section 10.10. Acceptance of Appointment by Successor Trustee. Every
successor trustee appointed hereunder shall execute, acknowledge and deliver to
the Unaffiliated Seller on behalf of the Trust and to its predecessor Trustee an
instrument accepting such appointment hereunder and stating its eligibility to
serve as Trustee hereunder, and thereupon the resignation or removal of the
predecessor Trustee shall become effective and such successor trustee, without
any further act, deed or conveyance, shall become vested with all the rights,
powers, trusts, duties and obligations of its predecessor hereunder; but, on
request of the Unaffiliated Seller or the successor trustee, such predecessor
Trustee shall, upon payment of its charges then unpaid, execute and deliver an
instrument transferring to such successor trustee all of the rights, powers and
trusts of the Trustee so ceasing to act, and shall duly assign, transfer and
deliver to such successor trustee all property and money held by such Trustee so
ceasing to act hereunder. Upon request of any such successor trustee, the
Unaffiliated Seller on behalf of the Trust shall execute any and all instruments
for more fully and certainly vesting in and confirming to such successor trustee
all such rights, powers and trusts.
Upon acceptance of appointment by a successor trustee as provided in this
Section, the Unaffiliated Seller shall mail notice thereof by first-class mail,
postage prepaid, to the Owners at their last addresses appearing upon the
Register. The Unaffiliated Seller shall send a copy of such notice to the Rating
Agencies. If the Unaffiliated Seller fails to mail such notice within ten days
after acceptance of appointment by the successor trustee, the successor trustee
shall cause such notice to be mailed at the expense of the Unaffiliated Seller.
No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor shall be qualified and eligible under this
Article X.
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Section 10.11. Merger, Conversion, Consolidation or Succession to Business
of the Trustee . Any corporation or association into which the Trustee may be
merged or converted or with which it may be consolidated, or any corporation or
association resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any corporation or association succeeding to all or
substantially all of the corporate trust business of the Trustee, shall be the
successor of the Trustee hereunder, without the execution or filing of any paper
or any further act on the part of any of the parties hereto; provided, however,
that such corporation or association shall be otherwise qualified and eligible
under this Article X. In case any Certificates have been executed, but not
delivered, by the Trustee then in office, any successor by merger, conversion or
consolidation to such Trustee may adopt such execution and deliver the
Certificates so executed with the same effect as if such successor Trustee had
itself executed such Certificates.
Section 10.12. Reporting; Withholding. (a) The Trustee shall timely provide
to the Owners the Internal Revenue Service's Form 1099 and any other statement
required by applicable Treasury regulations as determined by the Unaffiliated
Seller, and shall withhold, as required by applicable law, federal, state or
local taxes, if any, applicable to distributions to the Owners, including but
not limited to backup withholding under Section 3406 of the Code and the
withholding tax on distributions to foreign investors under Sections 1441 and
1442 of the Code.
(b) The Trustee shall timely file all reports required to be filed by the
Trust with any federal, state or local governmental authority having
jurisdiction over the Trust, including other reports that must be filed with the
Owners, such as the Internal Revenue Service's Form 1066 and Schedule Q and the
form required under Section 6050K of the Code, if applicable. Furthermore, the
Trustee shall report to Owners, if required, with respect to the allocation of
expenses pursuant to Section 212 of the Code in accordance with the specific
instructions to the Trustee by the Unaffiliated Seller with respect to such
allocation of expenses. The Trustee shall collect any forms or reports from the
Owners determined by the Unaffiliated Seller to be required under applicable
federal, state and local tax laws.
(c) The Trustee shall provide to the Internal Revenue Service and to
persons described in section 860(e)(3) and (6) of the Code the information
described in Treasury Regulation section 1.860D-1(b)(5)(ii), or any successor
regulation thereto. Such information will be provided in the manner described in
Treasury Regulation section 1.860E-2(a)(5), or any successor regulation thereto.
(d) The Servicer and the Unaffiliated Seller covenant and agree that they
shall provide, or cause to be provided, to the Trustee any information necessary
to enable the Trustee to meet its obligations under subsections (a), (b) and (c)
above.
Section 10.13. Liability of the Trustee. Except during the continuance of
an Event of Servicer Default, the Trustee shall be liable in accordance herewith
only to the extent of the obligations specifically imposed upon and undertaken
by the Trustee herein. Neither the Trustee nor any of the directors, officers,
employees or agents of the Trustee shall be under any liability on any
Certificate or otherwise to any Account, the Unaffiliated Seller, the Servicer
or any Owner 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
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shall not protect the Trustee or any such Person against any liability which
would otherwise be imposed by reason of negligent action, negligent failure to
act or bad faith in the performance of duties or by reason of reckless disregard
of obligations and duties hereunder. Subject to the foregoing sentence, the
Trustee shall not be liable for losses on investments of amounts in any Account
(except for any losses on obligations on which the bank serving as Trustee is
the obligor). In addition, the Unaffiliated Seller and the Servicer covenant and
agree to indemnify the Trustee, and when the Trustee is acting as Servicer, the
Servicer, from, and hold it harmless against, any and all losses, liabilities,
damages, claims or expenses (including all reasonable and documented legal fees
and expenses) other than those resulting from the negligence or bad faith of the
Trustee. The Trustee and any director, officer, employee or agent of the Trustee
may rely and shall be protected in acting or refraining from acting in good
faith on any certificate, notice or other document of any kind prima facie
properly executed and submitted by the Authorized Officer of any Person
respecting any matters arising hereunder. The provisions of this Section 10.13
shall survive the termination of this Agreement and the payment of the
Outstanding Certificates.
Section 10.14. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust Estate or any Mortgaged Property may at the time be located, the
Servicer and the Trustee acting jointly shall have the power and shall execute
and deliver all instruments to appoint one or more Persons approved by the
Trustee to act as co-Trustee or co-Trustees, jointly with the Trustee, of all or
any part of the Trust Estate or separate Trustee or separate Trustees of any
part of the Trust Estate, and to vest in such Person or Persons, in such
capacity and for the benefit of the Owners, such title to the Trust Estate, or
any part thereof, and, subject to the other provisions of this Section 10.14,
such powers, duties, obligations, rights and trusts as the Servicer and the
Trustee may consider necessary or desirable. If the Servicer shall not have
joined in such appointment within 15 days after the receipt by it of a request
so to do, or in the case any event indicated in Sections 8.20(a) shall have
occurred and be continuing, the Trustee alone shall have the power to make such
appointment. No co-Trustee or separate Trustee hereunder shall be required to
meet the terms of eligibility as a successor Trustee under Section 10.8 and no
notice to Owners of the appointment of any co-Trustee or separate Trustee shall
be required under Section 10.8.
Every separate Trustee and co-Trustee shall, to the extent permitted, be
appointed and act subject to the following provisions and conditions:
(i) All rights, powers, duties and obligations conferred or imposed
upon the Trustee shall be conferred or imposed upon and exercised or
performed by the Trustee and such separate Trustee or co-Trustee jointly
(it being understood that such separate Trustee or co-Trustee is not
authorized to act separately without the Trustee joining in such act),
except to the extent that under any law of any jurisdiction in which any
particular act or acts are to be performed (whether as Trustee hereunder or
as successor to the Servicer hereunder), the Trustee shall be incompetent
or unqualified to perform such act or acts, in which event such rights,
powers, duties and obligations (including the holding of title to the Trust
Estate or any portion thereof in any such jurisdiction) shall be exercised
and performed singly by such separate Trustee or co-Trustee, but solely at
the direction of the Trustee;
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(ii) No co-Trustee hereunder shall be held personally liable by reason
of any act or omission of any other co-Trustee hereunder; and
(iii) The Servicer and the Trustee acting jointly may at any time
accept the resignation of or remove any separate Trustee or co-Trustee.
Any notice, request or other writing given to the Trustee shall be deemed
to have been given to each of the then separate Trustees and co-Trustees, as
effectively as if given to each of them. Every instrument appointing any
separate Trustee or co-Trustee shall refer to this Agreement and the conditions
of this Section 10.14. Each separate Trustee and co-Trustee, upon its acceptance
of the trusts conferred, shall be vested with the estates or property specified
in its instrument of appointment, either jointly with the Trustee or separately,
as may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee and a copy thereof given to the
Servicer.
Any separate Trustee or co-Trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate Trustee or co-Trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor Trustee.
The Trustee shall give to the Rating Agencies and the Unaffiliated Seller
notice of the appointment of any co-Trustee or separate Trustee.
ARTICLE XI
MISCELLANEOUS
Section 11.1. Compliance Certificates and Opinions. Upon any application or
request by the Unaffiliated Seller, the Servicer or the Owners to the Trustee to
take any action under any provision of this Agreement, the Unaffiliated Seller,
the Servicer or the Owners, as the case may be, shall furnish to the Trustee a
certificate stating that all conditions precedent, if any, provided for in this
Agreement relating to the proposed action have been complied with, except that
in the case of any such application or request as to which the furnishing of any
documents is specifically required by any provision of this Agreement relating
to such particular application or request, no additional certificate need be
furnished.
Except as otherwise specifically provided herein, each certificate or
opinion with respect to compliance with a condition or covenant provided for in
this Agreement shall include:
(a) a statement that each individual signing such certificate or opinion
has read such covenant or condition and the definitions herein relating thereto;
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(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based; and
(c) a statement as to whether, in the opinion of each such individual, such
condition or covenant has been complied with.
Section 11.2. Form of Documents Delivered to the Trustee. In any case where
several matters are required to be certified by, or covered by an opinion of,
any specified Person, it is not necessary that all such matters be certified by,
or covered by the opinion of, only one such Person, or that they be so certified
or covered by only one document, but one such Person may certify or give an
opinion with respect to some matters and one or more other such Persons as to
other matters, and any such Person may certify or give an opinion as to such
matters in one or several documents.
Any certificate of an Authorized Officer of the Unaffiliated Seller, the
Servicer or the Trustee may be based, insofar as it relates to legal matters,
upon an opinion of counsel, unless such Authorized Officer knows, or in the
exercise of reasonable care should know, that the opinion is erroneous. Any such
certificate of an Authorized Officer or any opinion of counsel may be based,
insofar as it relates to factual matters upon a certificate or opinion of, or
representations by, one or more Authorized Officers of the Unaffiliated Seller
or of the Servicer, stating that the information with respect to such factual
matters is in the possession of the Unaffiliated Seller or of the Servicer,
unless such Authorized Officer or counsel knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to such matters are erroneous. Any opinion of counsel may also be
based, insofar as it relates to factual matters, upon a certificate or opinion
of, or representations by, an Authorized Officer of the Unaffiliated Seller, the
Servicer or the Trustee, stating that the information with respect to such
matters is in the possession of such Person, unless such counsel knows, or in
the exercise of reasonable care should know, that the certificate or opinion or
representations with respect to such matters are erroneous. Any opinion of
counsel may be based on the written opinion of other counsel, in which event
such opinion of counsel shall be accompanied by a copy of such other counsel's
opinion and shall include a statement to the effect that such counsel believes
that such counsel and the addressee thereof may reasonably rely upon the opinion
of such other counsel.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Agreement, they may, but need not, be consolidated and
form one instrument.
Section 11.3. Acts of Owners. (a) Any request, demand, authorization,
direction, notice, consent, waiver or other action provided by this Agreement to
be given or taken by the Owners may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Owners in person or by
an agent duly appointed in writing; and, except as herein otherwise expressly
provided, such action shall become effective when such instrument or instruments
are delivered to the Trustee, and, where it is hereby expressly required, to the
Unaffiliated Seller. Such instrument or instruments (and the action embodied
therein and evidenced thereby) are herein sometimes referred to as the "act" of
the Owners signing such
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instrument or instruments. Proof of execution of any such instrument or of a
writing appointing any such agent shall be sufficient for any purpose of this
Agreement and conclusive in favor of the Trustee and the Trust, if made in the
manner provided in this Section.
(b) The fact and date of the execution by any Person of any such instrument
or writing may be proved by the affidavit of a witness of such execution or by
the certificate of any notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such instrument
or writing acknowledged to him the execution thereof. Whenever such execution is
by an officer of a corporation or a member of a partnership on behalf of such
corporation or partnership, such certificate or affidavit shall also constitute
sufficient proof of his authority.
(c) The ownership of Certificates shall be proved by the Register.
(d) Any request, demand, authorization, direction, notice, consent, waiver
or other action by the Owner of any Certificate shall bind the Owner of every
Certificate issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof, in respect of anything done, omitted or suffered to
be done by the Trustee or the Trust in reliance thereon, whether or not notation
of such action is made upon such Certificates.
Section 11.4. Notices, etc. to Trustee. Any request, demand, authorization,
direction, notice, consent, waiver or act of the Owners or other documents
provided or permitted by this Agreement to be made upon, given or furnished to,
or filed with the Trustee by any Owner or by the Unaffiliated Seller shall be
sufficient for every purpose hereunder if made, given, furnished or filed in
writing to or with and received by the Trustee at its corporate trust office as
set forth in Section 2.2 hereof.
Section 11.5. Notices and Reports to Owners; Waiver of Notices. Where this
Agreement provides for notice to Owners of any event or the mailing of any
report to Owners, such notice or report shall be sufficiently given (unless
otherwise herein expressly provided) if mailed, first-class postage prepaid, to
each Owner affected by such event or to whom such report is required to be
mailed, at the address of such Owner as it appears on the Register, not later
than the latest date, and not earlier than the earliest date, prescribed for the
giving of such notice or the mailing of such report. In any case where a notice
or report to Owners is mailed in the manner provided above, neither the failure
to mail such notice or report nor any defect in any notice or report so mailed
to any particular Owner shall affect the sufficiency of such notice or report
with respect to other Owners, and any notice or report which is mailed in the
manner herein provided shall be conclusively presumed to have been duly given or
provided.
Where this Agreement provides for notice in any manner, such notice may be
waived in writing by any Person entitled to receive such notice, either before
or after the event, and such waiver shall be the equivalent of such notice.
Waivers of notice by Owners shall be filed with the Trustee, but such filing
shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.
In case, by reason of the suspension of regular mail service as a result of
a strike, work stoppage or similar activity, it shall be impractical to mail
notice of any event to Owners
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when such notice is required to be given pursuant to any provision of this
Agreement, then any manner of giving such notice as shall be satisfactory to the
Trustee shall be deemed to be a sufficient giving of such notice.
Where this Agreement provides for notice to any rating agency that rated
any Certificates, failure to give such notice shall not affect any other rights
or obligations created hereunder.
Section 11.6. Rules by Trustee and the Depositor. The Trustee may make
reasonable rules for any meeting of Owners. The Depositor may make reasonable
rules and set reasonable requirements for its functions.
Section 11.7. Successors and Assigns. All covenants and agreements in this
Agreement by any party hereto shall bind its successors and assigns, whether so
expressed or not.
Section 11.8. Severability. In case any provision in this Agreement or in
the Certificates shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
Section 11.9. Benefits of Agreement. Nothing in this Agreement or in the
Certificates, expressed or implied, shall give to any Person, other than the
Owners and the parties hereto and their successors hereunder, any benefit or any
legal or equitable right, remedy or claim under this Agreement.
Section 11.10. Legal Holidays. In any case where the date of any Remittance
Date, any Distribution Date, any other date on which any distribution to any
Owner is proposed to be paid, or any date on which a notice is required to be
sent to any Person pursuant to the terms of this Agreement shall not be a
Business Day, then (notwithstanding any other provision of the Certificates or
this Agreement) payment or mailing need not be made on such date, but may be
made on the next succeeding Business Day with the same force and effect as if
made or mailed on the nominal date of any such Remittance Date, such
Distribution Date, or such other date for the payment of any distribution to any
Owner or the mailing of such notice, as the case may be, and no interest shall
accrue for the period from and after any such nominal date, provided such
payment is made in full on such next succeeding Business Day.
Section 11.11. Governing Law. In view of the fact that Owners are expected
to reside in many states and outside the United States and the desire to
establish with certainty that this Agreement will be governed by and construed
and interpreted in accordance with the law of a state having a well-developed
body of commercial and financial law relevant to transactions of the type
contemplated herein, this Agreement and each Certificate shall be construed in
accordance with and governed by the laws of the State of New York applicable to
agreements made and to be performed therein.
Section 11.12. Counterparts. This instrument may be executed in any number
of counterparts, each of which so executed shall be deemed to be an original,
but all such counterparts shall together constitute but one and the same
instrument.
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Section 11.13. Usury. The amount of interest payable or paid on any
Certificate under the terms of this Agreement shall be limited to an amount
which shall not exceed the maximum nonusurious rate of interest allowed by the
applicable laws of the State of New York or any applicable law of the United
States permitting a higher maximum nonusurious rate that preempts such
applicable New York laws, which could lawfully be contracted for, charged or
received (the "Highest Lawful Rate"). In the event any payment of interest on
any Certificate exceeds the Highest Lawful Rate, the Trust stipulates that such
excess amount will be deemed to have been paid to the Owner of such Certificate
as a result of an error and the Owner receiving such excess payment shall
promptly, upon discovery of such error or upon notice thereof from the Trustee
on behalf of the Trust, refund the amount of such excess or, at the option of
such Owner, apply the excess to the payment of principal of such Certificate, if
any, remaining unpaid. In addition, all sums paid or agreed to be paid to the
Trustee for the benefit of Owners of Certificates for the use, forbearance or
detention of money shall, to the extent permitted by applicable law, be
amortized, prorated, allocated and spread throughout the full term of such
Certificates.
Section 11.14. Amendment. (a) The Trustee, the Unaffiliated Seller, the
Depositor and the Servicer, may at any time and from time to time without the
giving of notice to or the receipt of the consent of the Owners, amend this
Agreement, and the Trustee shall consent to such amendment, for the purpose of
(i) curing any ambiguity, or correcting or supplementing any provision hereof
which may be inconsistent with any other provision hereof, or to add provisions
hereto which are not inconsistent with the provisions hereof, (ii) upon receipt
of an opinion of counsel, the cost of which shall be paid by the Servicer,
experienced in federal income tax matters to the effect that no entity-level tax
will be imposed on the Trust or upon the transferor of a Residual Certificate as
a result of the ownership of any Residual Certificate by a Disqualified
Organization, removing the restriction on transfer set forth in Section 5.8(a)
hereof or (iii) complying with the requirements of the Code and the regulations
proposed or promulgated thereunder; provided, however, that any such action
shall not, as evidenced by an opinion of counsel delivered to the Trustee,
materially and adversely affect the interests of any Owner (without its written
consent).
(b) This Agreement may also be amended by the Trustee, the Depositor, and
the Servicer at any time and from time to time, with the prior written approval
of not less than a majority of the Percentage Interest represented by each
affected Class of Certificates then Outstanding, for the purpose of adding any
provisions or changing in any manner or eliminating any of the provisions of
this Agreement or of modifying in any manner the rights of the Owners hereunder;
provided, however, that no such amendment shall (i) change in any manner the
amount of, or change the timing of, payments which are required to be
distributed to any Owner without the consent of the Owner of such Certificate or
(ii) reduce the aforesaid percentages of Percentage Interests which are required
to consent to any such amendments, without the consent of the Owners of all
Certificates of the Class or Classes affected then Outstanding.
(c) Each proposed amendment to this Agreement shall be accompanied by an
opinion of counsel nationally recognized in federal income tax matters, which
shall not be at the expense of the Trustee, addressed to the Trustee to the
effect that such amendment would not adversely affect the status of the Trust as
a REMIC.
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(d) The Depositor shall provide the Owners, and the Rating Agencies with
copies of any amendments to this Agreement, together with copies of any opinions
or other documents or instruments executed in connection therewith.
(e) The Trustee shall not be required to enter into any amendment which
affects its rights or obligations hereunder.
Section 11.15. REMIC Status; Taxes. (a) The Tax Matters Person, at its own
expense, shall prepare and file or cause to be filed with the Internal Revenue
Service Federal tax or information returns with respect to the Trust and the
Certificates containing such information and at the times and in such manner as
may be required by the Code or applicable Treasury regulations, and shall
furnish to Owners such statements or information at the times and in such manner
as may be required thereby. For this purpose, the Tax Matters Person may, but
need not, rely on any proposed regulations of the United States Department of
the Treasury. The Tax Matters Person shall indicate the election to treat each
of the Upper-Tier REMIC and the Lower-Tier REMIC as a REMIC (which election
shall apply to the taxable period ending December 31, 1997 and each calendar
year thereafter) in such manner as the Code or applicable Treasury regulations
may prescribe. The Trustee, as Tax Matters Person appointed pursuant to Section
11.17 hereof shall sign all tax information returns filed pursuant to this
Section 11.15. The Tax Matters Person shall provide information necessary for
the computation of tax imposed on the transfer of a Residual Certificate to a
Disqualified Organization, or an agent of a Disqualified Organization, or a
pass-through entity in which a Disqualified Organization is the record holder of
an interest. The Tax Matters Person shall provide the Trustee with copies of any
Federal tax or information returns filed, or caused to be filed, by the Tax
Matters Person with respect to the Trust or the Certificates.
(b) The Tax Matters Person, at its own expense, shall timely file all
reports required to be filed by the Trust with any federal, state or local
governmental authority having jurisdiction over the Trust, including other
reports that must be filed with the Owners, such as the Internal Revenue
Service's Form 1066 and Schedule Q and the form required under Section 6050K of
the Code, if applicable to REMICs. Furthermore, the Tax Matters Person shall
report to Owners, if required, with respect to the allocation of expenses
pursuant to Section 212 of the Code in accordance with the specific instructions
to the Tax Matters Person by the Depositor with respect to such allocation of
expenses. The Tax Matters Person shall collect any forms or reports from the
Owners determined by the Depositor to be required under applicable federal,
state and local tax laws.
(c) The Tax Matters Person, at its own expense, shall provide to the
Internal Revenue Service and to persons described in Section 860E(e)(3) and (6)
of the Code the information described in Proposed Treasury Regulation Section
1.860D-1(b)(5)(ii), or any successor regulation thereto. Such information will
be provided in the manner described in Proposed Treasury Regulation Section
1.860E(2)(a)(5), or any successor regulation thereto.
(d) The Depositor covenants and agrees that within ten Business Days after
the Startup Day it shall provide to the Trustee any information necessary to
enable the Trustee to meet its obligations under subsections (b) and (c) above.
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(e) The Trustee, the Depositor and the Servicer each covenants and agrees
for the benefit of the Owners (i) to take no action which would result in the
termination of "REMIC" status for the Trust, (ii) not to engage in any
"prohibited transaction", as such term is defined in Section 860F(a)(2) of the
Code and (iii) not to engage in any other action which may result in the
imposition on the REMIC Trust of any other taxes under the Code.
(f) The Trust shall, for federal income tax purposes, maintain books on a
calendar year basis and report income on an accrual basis.
(g) Except as otherwise permitted by Section 7.6(b), no Eligible Investment
shall be sold prior to its stated maturity (unless sold pursuant to a plan of
liquidation in accordance with Article IX hereof).
(h) Neither the Depositor nor the Trustee shall enter into any arrangement
by which the Trustee will receive a fee or other compensation for services
rendered pursuant to this Agreement, which fee or other compensation is paid
from the Trust Estate, other than as expressly contemplated by this Agreement.
(i) Notwithstanding the foregoing clauses (g) and (h), the Trustee or the
Unaffiliated Seller may engage in any of the transactions prohibited by such
clauses, provided that the Trustee shall have received (not at the expense of
the Trust or the Trustee) an opinion of counsel experienced in federal income
tax matters to the effect that such transaction does not result in a tax imposed
on the Trust or cause a termination of REMIC status for the Trust; provided,
however, that such transaction is otherwise permitted under this Agreement.
Section 11.16. Additional Limitation on Action and Imposition of Tax. (a)
Any provision of this Agreement to the contrary notwithstanding, the Trustee
shall not, without having obtained (not at the expense of the Trust or the
Trustee) an opinion of counsel experienced in federal income tax matters to the
effect that such transaction does not result in a tax imposed on the Trust or
cause a termination of REMIC status for the Trust, (i) sell any assets in the
Trust Estate, (ii) accept any contribution of assets after the Startup Day or
(iii) agree to any amendment of this Agreement under Section 11.14 hereof.
(b) In the event that any tax is imposed on "prohibited transactions" of
the Trust as defined in Section 860F(a)(2) of the Code, on the "net income from
foreclosure property" as defined in Section 860G(c) of the Code, on any
contribution to the Trust after the Startup Day pursuant to Section 860G(d) of
the Code, or any other tax is imposed, such tax shall be paid by (i) the
Trustee, if such tax arises out of or results from a material breach by the
Trustee of any of its obligations under this Agreement, (ii) the Servicer, if
such tax arises out of or results from a breach by the Servicer of any of its
obligations under this Agreement, or otherwise (iii) the Owners of the Class R
Certificates in proportion to their Percentage Interests. To the extent such tax
is chargeable against the Owners of the Class R Certificates, notwithstanding
anything to the contrary contained herein, the Trustee is hereby authorized to
retain from amounts otherwise distributable to the Owners of the Class R
Certificates on any Distribution Date sufficient funds to reimburse the Trustee
for the payment of such tax (to the extent that the Trustee has not been
previously reimbursed or indemnified therefor). The Trustee agrees to first seek
indemnification
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for any such tax payment from any indemnifying parties before reimbursing itself
from amounts otherwise distributable to the Owners of the Class R Certificates.
Section 11.17. Appointment of Tax Matters Person. A Tax Matters Person will
be appointed for the Trust for all purposes of the Code and such Tax Matters
Person will perform, or cause to be performed, without any right of
reimbursement, such duties and take, or cause to be taken, such actions as are
required to be performed or taken by the Tax Matters Person under the Code,
including, but not limited to, the representation of the Trust in any tax audit
(including any administrative or judicial proceedings with respect thereto that
involve the Internal Revenue Service or state tax authorities). The Owners of
the Class B Certificates hereby designate the Trustee, acting as their agent, to
be the Tax Matters Person for the Trust.
Section 11.18. [Reserved].
Section 11.19. Notices. All notices hereunder shall be given as follows,
until any superseding instructions are given to all other Persons listed below:
The Trustee and Backup Servicer: Bankers Trust Company of California, N.A.
Three Park Plaza, 16th Floor
Irvine, California 92614
Attention: Wilshire Mortgage
Loan Trust 1997-2
Tel:(714) 253-7575
Fax:(714) 253-7577
The Depositor: Prudential Securities Secured Financing
` Corporation
One New York Plaza
New York, New York 10292
Attention: Murray Weiss
Tel: (212) 778-1000
Fax: (212) 778-7401
The Unaffiliated Seller: WMFC 1997-2 Inc.
1776 S.W. Madison Street
Portland, Oregon 97205
Attention: Lawrence Mendelsohn
Tel: (503) 223-5600
Fax: (503) 223-8799
The Servicer: Wilshire Servicing Company
1776 S.W. Madison Street
Portland, Oregon 97205
Attention: Lawrence Mendelsohn
Tel: (503) 223-5600
Fax: (503) 223-8799
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Fitch: Fitch IBCA Inc.
One State Street Plaza, 31st floor
New York, New York 10004
Attention: Surveillance Dept.
Moody's: Moody's Investors Service
99 Church Street
New York, New York 10007
Attention: Surveillance Dept.
Underwriter: Prudential Securities Incorporated
One New York Plaza
New York, New York 10292
Attention: Asset Backed Securities Group
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IN WITNESS WHEREOF, the Depositor, the Unaffiliated Seller, the Servicer,
the Backup Servicer and the Trustee have caused this Agreement to be duly
executed by their respective officers thereunto duly authorized, all as of the
day and year first above written.
PRUDENTIAL SECURITIES SECURED
FINANCING CORPORATION,
as Depositor
By: /s/
------------------------------------
Name:
Title:
WMFC 1997-2, INC., as
Unaffiliated Seller
By: /s/
------------------------------------
Name: Lawrence Mendelsohn
Title:
WILSHIRE SERVICING CORPORATION,
as Servicer
By: /s/
------------------------------------
Name: Lawrence Mendelsohn
Title:
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A.,
as Trustee
By: /s/
------------------------------------
Name:
Title:
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A.,
as Backup Servicer
By: /s/
------------------------------------
Name:
Title:
[Signature Page to Pooling and Servicing Agreement]
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SCHEDULE 1
SCHEDULE OF MORTGAGE LOANS
<PAGE>
EXHIBIT A-1
WILSHIRE MORTGAGE LOAN TRUST 1997-2
MORTGAGE PASS-THROUGH CERTIFICATE
(Variable Rate Class A-1 Certificate)
Representing Certain Interests Relating to a Pool of
Mortgage Loans in the Wilshire Mortgage Loan Trust 1997-2
Formed by WMFC 1997-2 Inc., as Unaffiliated Seller, and
Prudential Securities Secured Financing Corporation, as Depositor,
and Serviced by
WILSHIRE SERVICING CORPORATION
Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation ("DTC"),
to the Issuer or its agent for registration of transfer, exchange, or payment,
and any certificate issued is registered in the name of Cede & Co. or in such
other name as is requested by an authorized representative of DTC (and any
payment is made to Cede & Co. or to such other entity as is requested by an
authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered
owner hereof, Cede & Co., has an interest herein.
This certificate does not represent an interest in, or an
obligation of, nor are the underlying Mortgage Loans insured or guaranteed by,
WMFC 1997-2 Inc., Prudential Securities Secured Financing Corporation, Wilshire
Servicing Corporation or any of their subsidiaries and affiliates. This
certificate represents a fractional ownership interest in the Trust Estate
described herein, moneys in certain Accounts created pursuant to the Pooling and
Servicing Agreement and certain other rights relating thereto and is payable
only from amounts received by the Trustee (i) relating to the Mortgage Loans
held by the Trust, and (ii) from moneys held in such Accounts.
No. A-1- 971885 AE 8
________________ ---------------------
Date CUSIP
$ January 25, 2013
- -------------------------------------- ---------------------------------
Original Certificate Principal Balance Final Scheduled Distribution Date
__________________
Registered Owner
The registered Owner named above is the registered Owner of a
fractional interest in (i) a pool of fixed- and adjustable-rate, closed-end
mortgage loans (the "Mortgage Loans") sold by WMFC 1997-2 Inc., (the
"Unaffiliated Seller") to Prudential Securities Secured Financing Corporation
(the "Depositor") pursuant to that certain Unaffiliated Seller's Agreement,
dated as of November 1, 1997 (the "Unaffiliated Seller's
A-1-1
<PAGE>
Agreement") among the Unaffiliated Seller, the Depositor and Wilshire Servicing
Corporation, (the "Servicer") and sold by the Depositor to Bankers Trust Company
of California, N.A., a national banking association, as trustee, (the "Trustee")
on behalf of Wilshire Mortgage Loan Trust 1997-2 (the "Trust") pursuant to that
certain Pooling and Servicing Agreement dated as of November 1, 1997 (the
"Pooling and Servicing Agreement") by and among the Unaffiliated Seller, the
Depositor, Bankers Trust Company of California, N.A. as both Trustee and as
backup servicer (the "Backup Servicer"), and the Servicer, (ii) such amounts,
including Eligible Investments, as from time to time may be held in the related
Accounts (except as otherwise provided in the Pooling and Servicing Agreement),
each created pursuant to the Pooling and Servicing Agreement, (iii) any
Mortgaged Property, the ownership of which has been effected in the name of the
Servicer on behalf of the Trust as a result of foreclosure or acceptance by the
Servicer of a deed in lieu of foreclosure and that has not been withdrawn from
the Trust Estate, (iv) any Insurance Policies and any rights of the Unaffiliated
Seller in any Insurance Policies and (v) Net Liquidation Proceeds. Such Mortgage
Loans and other amounts and property enumerated above are hereinafter referred
to as the "Trust Estate."
The Original Certificate Principal Balance set forth above is
equal to the product of (i) the Percentage Interest represented by this
Certificate and (ii) the aggregate original principal amount of the Class A-1
Certificates on December 11, 1997 (the "Startup Date"), which aggregate amount
was $36,217,000. The Owner hereof is entitled to principal payments on each
Distribution Date, as hereinafter described, which will fully amortize such
Original Certificate Principal Balance over the period from the date of initial
delivery hereof to the final Distribution Date of the Class A-1 Certificates.
Therefore, the actual outstanding principal amount of this Certificate, on any
date subsequent to December 26, 1997, (the first Distribution Date) will be less
than the Original Certificate Principal Balance set forth above.
Upon receiving the final distribution hereon, the Owner hereof
is required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement provides that, in any event, upon the making of the final distribution
due on this Certificate, this Certificate shall be deemed cancelled for all
purposes under the Pooling and Servicing Agreement.
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
REPRESENTS AN INTEREST IN A CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE
MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY,
IN SECTION 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE"), ASSUMING COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
A-1-2
<PAGE>
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
This Certificate is one of a Class of duly-authorized
Certificates designated as Wilshire Mortgage Loan Trust 1997-2, Mortgage
Pass-Through Certificates, Class A-1 Certificates (the "Class A-1 Certificates")
and issued under and subject to the terms, provisions and conditions of the
Pooling and Servicing Agreement, to which Pooling and Servicing Agreement the
Owner of this Certificate by virtue of acceptance hereof assents and by which
such Owner is bound. Also issued under the Pooling and Servicing Agreement are
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 M-1 Certificates, the Class M-2 Certificates, the
Class M-3 Certificates, (collectively, the "Offered Certificates"), the Class B
Certificates, the Class C Certificates, and the Class R Certificates; all such
Certificates are collectively referred to herein as the "Certificates."
Terms capitalized herein and not otherwise defined herein
shall have the respective meanings set forth in the Pooling and Servicing
Agreement.
On the 25th day of each month, or, if such day is not a
Business Day, then the next succeeding Business Day (each such day being a
"Distribution Date") commencing December 26, 1997, the Owners of the Class A-1
Certificates as of the close of business on the last business day of the
calendar month immediately preceding the calendar month in which such
Distribution Date occurs (or, with respect to the first Distribution Date, the
close of business on the Closing Date) (the "Record Date") will be entitled to
receive the Class A-1 Interest Distribution Amount and the Class A-1 Principal
Distribution Amount relating to such Distribution Date. Distributions will be
made in immediately available funds to such Owners, by wire transfer or
otherwise, to the account of an Owner at a domestic bank or other entity having
appropriate facilities therefor, if such Owner has so notified the Trustee at
least five business days prior to the related Record Date, or by check mailed to
the address of the person entitled thereto as it appears on the Register.
Each Owner of a Class A-1 Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts distributed on such
Distribution Date to the Owners of the Class A-1 Certificates. The Percentage
Interest of each Class A-1 Certificate as of any date of determination will be
equal to the percentage obtained by dividing the Original Certificate Principal
Balance set forth on such Class A-1 Certificate by $36,217,000.
The Trustee is required to duly and punctually pay
distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code or applicable to any Owner shall be considered as having been paid by
the Trustee to such Owner for all purposes of the Pooling and Servicing
Agreement.
A-1-3
<PAGE>
The Mortgage Loans will be serviced by the Wilshire Servicing
Corporation pursuant to the Pooling and Servicing Agreement. The Pooling and
Servicing Agreement permits the Servicer to enter into Sub-Servicing Agreements
with certain institutions eligible for appointment as Sub-Servicers for the
servicing and administration of certain Mortgage Loans. No appointment of any
Sub-Servicer shall release the Servicer from any of its obligations under the
Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other
obligation of, or an interest in, nor are the underlying Mortgage Loans insured
or guaranteed by, the Unaffiliated Seller, the Depositor, the Servicer, or any
of their subsidiaries and affiliates and are not insured or guaranteed by the
Federal Deposit Insurance Corporation, the Government National Mortgage
Association, or any other governmental agency. This Certificate is limited in
right of payment to certain collections and recoveries and amounts on deposit in
the Accounts, all as more specifically set forth hereinabove and in the Pooling
and Servicing Agreement.
No Owner shall have any right to institute any proceeding,
judicial or otherwise, with respect to the Pooling and Servicing Agreement, or
for the appointment of a receiver or trustee, or for any other remedy under the
Pooling and Servicing Agreement except in compliance with the terms hereof.
Notwithstanding any other provisions in the Pooling and
Servicing Agreement, the Owner of any Certificate shall have the right which is
absolute and unconditional to receive distributions to the extent provided in
the Pooling and Servicing Agreement with respect to such Certificate or to
institute suit for the enforcement of any such distribution, and such right
shall not be impaired without the consent of such Owner.
The Pooling and Servicing Agreement provides that the
obligations created thereby will terminate upon the earlier of (i) the payment
to the Owners of all Certificates of all amounts held by the Trustee and
required to be paid to such Owners pursuant to the Pooling and Servicing
Agreement upon the later to occur of (a) the final payment or other liquidation
(or any advance made with respect thereto) of the last Mortgage Loan in the
Trust Estate or (b) the disposition of all property acquired in respect of any
Mortgage Loan remaining in the Trust Estate or (ii) at any time when a Qualified
Liquidation of the Upper-Tier REMIC and the Lower-Tier REMIC is effected as
described in the Pooling and Servicing Agreement.
The Pooling and Servicing Agreement additionally provides that
(i) the Servicer may, at its option, purchase from the Trust all (but not fewer
than all) remaining Mortgage Loans and other property then constituting the
Trust Estate, and thereby effect early retirement of the Offered Certificates,
on any Remittance Date when the aggregate outstanding Loan Balances of the
Mortgage Loans in the Trust Estate is 10% or less of the sum of the Original
Aggregate Loan Balance of the Mortgage Loans in the Trust Estate, (ii) in the
event that the Servicer does not exercise the option described in clause (i),
the Trustee is required by the Pooling and Servicing Agreement to perform an
Auction Sale of the Mortgage Loans as provided therein, and (iii) under certain
A-1-4
<PAGE>
circumstancesrelating to the qualification of the Trust as a REMIC under the
Code the Mortgage Loans may be sold, thereby affecting the early retirement of
the Class A-1 Certificates.
The Trustee shall give written notice of termination of the
Pooling and Servicing Agreement to each Owner in the manner set forth therein.
The Owners of a majority of the Percentage Interests
represented by the Offered Certificates, upon compliance with the requirements
set forth in the Pooling and Servicing Agreement, have the right, to exercise
any trust or power set forth in the Pooling and Servicing Agreement with respect
to the Certificates or the Trust Estate.
As provided in the Pooling and Servicing Agreement and subject
to certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register, and thereupon one or more new Certificates of like
Class, tenor and a like Percentage Interest will be issued to the designated
transferee or transferees.
The Trustee is required to furnish certain information on each
Distribution Date to the Owner of this Certificate, as more fully described in
the Pooling and Servicing Agreement.
The Class A-1 Certificates are issuable only as registered
Certificates in denominations of $1,000 original principal amount and integral
multiples of $1,000. As provided in the Pooling and Servicing Agreement and
subject to certain limitations therein set forth, Class A-1 Certificates are
exchangeable for new Class A-1 Certificates of authorized denominations
evidencing the same aggregate principal amount.
The Trustee and any agent of the Trustee may treat the Person
in whose name this Certificate is registered as the owner hereof for all
purposes, and neither the Trustee nor any such agent shall be affected by notice
to the contrary.
A-1-5
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed on behalf of the Trust.
WILSHIRE MORTGAGE LOAN TRUST
1997-2
By: Bankers Trust Company of California,
N.A., as Trustee
By: ____________________________________
Name:
Title:
Trustee Authentication
BANKERS TRUST COMPANY OF CALIFORNIA,
N.A., as Trustee
By: _______________________________
Name:
Title:
Dated: December 11, 1997
A-1-6
<PAGE>
EXHIBIT A-2
WILSHIRE MORTGAGE LOAN TRUST 1997-2
MORTGAGE PASS-THROUGH CERTIFICATE
(6.650% Class A-2 Certificate)
Representing Certain Interests Relating to a Pool of
Mortgage Loans in the Wilshire Mortgage Loan Trust 1997-2
Formed by WMFC 1997-2 Inc., as Unaffiliated Seller, and
Prudential Securities Secured Financing Corporation, as Depositor,
and Serviced by
WILSHIRE SERVICING CORPORATION
Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation ("DTC"),
to the Issuer or its agent for registration of transfer, exchange, or payment,
and any certificate issued is registered in the name of Cede & Co. or in such
other name as is requested by an authorized representative of DTC (and any
payment is made to Cede & Co. or to such other entity as is requested by an
authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered
owner hereof, Cede & Co., has an interest herein.
This certificate does not represent an interest in, or an
obligation of, nor are the underlying Mortgage Loans insured or guaranteed by,
WMFC 1997-2 Inc., Prudential Securities Secured Financing Corporation, Wilshire
Servicing Corporation, or any of their subsidiaries and affiliates. This
certificate represents a fractional ownership interest in the Trust Estate
described herein, moneys in certain Accounts created pursuant to the Pooling and
Servicing Agreement and certain other rights relating thereto and is payable
only from amounts received by the Trustee (i) relating to the Mortgage Loans
held by the Trust, and (ii) from moneys held in such Accounts.
No. A-2- 971885 AF 5
______________________ ---------------
Date CUSIP
$ May 25, 2015
- -------------------------------------- ---------------------------------
Original Certificate Principal Balance Final Scheduled Distribution Date
____________________
Registered Owner
The registered Owner named above is the registered Owner of a
fractional interest in (i) a pool of fixed- and adjustable-rate, closed-end
mortgage loans (the "Mortgage Loans") sold by WMFC 1997-2 Inc., (the
"Unaffiliated Seller") to Prudential Securities Secured Financing Corporation
(the "Depositor") pursuant to that certain Unaffiliated Seller's Agreement,
dated as of November 1, 1997 (the "Unaffiliated Seller's Agreement") among the
Unaffiliated Seller, the Depositor and Wilshire Servicing
A-2-1
<PAGE>
Corporation, (the "Servicer") and sold by the Depositor to Bankers Trust Company
of California, N.A., a national banking association, as trustee (the "Trustee")
on behalf of Wilshire Mortgage Loan Trust 1997-2 (the "Trust") pursuant to that
certain Pooling and Servicing Agreement dated as of November 1, 1997 (the
"Pooling and Servicing Agreement") by and among the Unaffiliated Seller, the
Depositor, the Servicer, and Bankers Trust Company of California, N.A. asTrustee
and as backup servicer (the "Backup Servicer"), (ii) such amounts, including
Eligible Investments as from time to time may be held in the related Accounts
(except as otherwise provided in the Pooling and Servicing Agreement), each
created pursuant to the Pooling and Servicing Agreement, (iii) any Mortgaged
Property, the ownership of which has been effected in the name of the Servicer
on behalf of the Trust as a result of foreclosure or acceptance by the Servicer
of a deed in lieu of foreclosure and that has not been withdrawn from the Trust
Estate, (iv) any Insurance Policies and any rights of the Unaffiliated Seller in
any Insurance Policies and (v) Net Liquidation Proceeds. Such Mortgage Loans and
other amounts and property enumerated above are hereinafter referred to as the
"Trust Estate."
The Original Certificate Principal Balance set forth above is
equal to the product of (i) the Percentage Interest represented by this
Certificate and (ii) the aggregate original principal amount of the Class A-2
Certificates on December 11, 1997 (the "Startup Date"), which aggregate amount
was $10,000,000. The Owner hereof is entitled to principal payments on certain
Distribution Dates as specified in the Pooling and Servicing Agreement.
Therefore, the actual outstanding principal amount of this Certificate, on any
date subsequent to December 26, 1997 (the first Distribution Date) may be less
than the Original Certificate Principal Balance set forth above.
Upon receiving the final distribution hereon, the Owner hereof
is required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement provides that, in any event, upon the making of the final distribution
due on this Certificate, this Certificate shall be deemed cancelled for all
purposes under the Pooling and Servicing Agreement.
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
REPRESENTS AN INTEREST IN A CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE
MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY,
IN SECTION 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE"), ASSUMING COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
A-2-2
<PAGE>
This Certificate is one of a Class of duly-authorized
Certificates designated as Wilshire Mortgage Loan Trust 1997-2, Mortgage
Pass-Through Certificates, Class A-2 Certificates (the "Class A-2 Certificates")
and issued under and subject to the terms, provisions and conditions of the
Pooling and Servicing Agreement, to which Pooling and Servicing Agreement the
Owner of this Certificate by virtue of acceptance hereof assents and by which
such Owner is bound. Also issued under the Pooling and Servicing Agreement are
the Class A-1 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 M-1 Certificates, the Class M-2 Certificates, the
Class M-3 Certificates (collectively, the "Offered Certificates"), the Class B
Certificates, the Class C Certificates and the Class R Certificates; all such
Certificates are collectively referred to herein as the "Certificates."
Terms capitalized herein and not otherwise defined herein
shall have the respective meanings set forth in the Pooling and Servicing
Agreement.
On the 25th day of each month, or, if such day is not a
Business Day, then the next succeeding Business Day (each such day being a
"Distribution Date") commencing December 26, 1997, the Owners of the Class A-2
Certificates as of the close of business on the last business day of the
calendar month immediately preceding the calendar month in which such
Distribution Date occurs (or, with respect to the first Distribution Date, the
close of business on the Closing Date) (the "Record Date") will be entitled to
receive the Class A-2 Interest Distribution Amount relating to such Distribution
Date. Distributions will be made in immediately available funds to such Owners,
by wire transfer or otherwise, to the account of an Owner at a domestic bank or
other entity having appropriate facilities therefor, if such Owner has so
notified the Trustee at least five business days prior to the related Record
Date, or by check mailed to the address of the person entitled thereto as it
appears on the Register.
Each Owner of a Class A-2 Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts distributed on such
Distribution Date to the Owners of the Class A-2 Certificates. The Percentage
Interest of each Class A-2 Certificate as of any date of determination will be
equal to the percentage obtained by dividing the Original Certificate Principal
Balance set forth on such Class A-2 Certificate by $10,000,000.
The Trustee is required to duly and punctually pay
distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code or applicable to any Owner shall be considered as having been paid by
the Trustee to such Owner for all purposes of the Pooling and Servicing
Agreement.
The Mortgage Loans will be serviced by the Wilshire Servicing
Corporation pursuant to the Pooling and Servicing Agreement. The Pooling and
Servicing Agreement permits the Servicer to enter into Sub-Servicing Agreements
with certain institutions eligible for appointment as Sub-Servicers for the
servicing and administration of certain Mortgage Loans. No appointment of any
Sub-Servicer shall
A-2-3
<PAGE>
release the Servicer from any of its obligations under the Pooling and Servicing
Agreement.
This Certificate does not represent a deposit or other
obligation of, or an interest in, nor are the underlying Mortgage Loans insured
or guaranteed by, the Unaffiliated Seller, the Depositor, the Servicer, or any
of their subsidiaries and affiliates and are not insured or guaranteed by the
Federal Deposit Insurance Corporation, the Government National Mortgage
Association, or any other governmental agency. This Certificate is limited in
right of payment to certain collections and recoveries and amounts on deposit in
the Accounts, all as more specifically set forth hereinabove and in the Pooling
and Servicing Agreement.
No Owner shall have any right to institute any proceeding,
judicial or otherwise, with respect to the Pooling and Servicing Agreement, or
for the appointment of a receiver or trustee, or for any other remedy under the
Pooling and Servicing Agreement except in compliance with the terms hereof.
Notwithstanding any other provisions in the Pooling and
Servicing Agreement, the Owner of any Certificate shall have the right which is
absolute and unconditional to receive distributions to the extent provided in
the Pooling and Servicing Agreement with respect to such Certificate or to
institute suit for the enforcement of any such distribution, and such right
shall not be impaired without the consent of such Owner.
The Pooling and Servicing Agreement provides that the
obligations created thereby will terminate upon the earlier of (i) the payment
to the Owners of all Certificates of all amounts held by the Trustee and
required to be paid to such Owners pursuant to the Pooling and Servicing
Agreement upon the later to occur of (a) the final payment or other liquidation
(or any advance made with respect thereto) of the last Mortgage Loan in the
Trust Estate or (b) the disposition of all property acquired in respect of any
Mortgage Loan remaining in the Trust Estate or (ii) at any time when a Qualified
Liquidation of the Upper-Tier REMIC and the Lower-Tier REMIC is effected as
described in the Pooling and Servicing Agreement.
The Pooling and Servicing Agreement additionally provides that
(i) the Servicer may, at its option, purchase from the Trust all (but not fewer
than all) remaining Mortgage Loans and other property then constituting the
Trust Estate, and thereby effect early retirement of the Offered Certificates,
on any Remittance Date when the aggregate outstanding Loan Balances of the
Mortgage Loans in the Trust Estate is 10% or less of the sum of the Original
Aggregate Loan Balance of the Mortgage Loans in the Trust Estate, (ii) in the
event that the Servicer does not exercise the option described in clause (i),
the Trustee is required by the Pooling and Servicing Agreement to perform an
Auction Sale of the Mortgage Loans as provided therein, and (iii) under certain
circumstances relating to the qualification of the Trust as a REMIC under the
Code the Mortgage Loans may be sold, thereby affecting the early retirement of
the Class A-2 Certificates.
A-2-4
<PAGE>
The Trustee shall give written notice of termination of the
Pooling and Servicing Agreement to each Owner in the manner set forth therein.
The Owners of a majority of the Percentage Interests
represented by the Offered Certificates, upon compliance with the requirements
set forth in the Pooling and Servicing Agreement, have the right to exercise any
trust or power set forth in the Pooling and Servicing Agreement with respect to
the Certificates or the Trust Estate.
As provided in the Pooling and Servicing Agreement and subject
to certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register, and thereupon one or more new Certificates of like
Class, tenor and a like Percentage Interest will be issued to the designated
transferee or transferees.
The Trustee is required to furnish certain information on each
Distribution Date to the Owner of this Certificate, as more fully described in
the Pooling and Servicing Agreement.
The Class A-2 Certificates are issuable only as registered
Certificates in denominations of $1,000 original principal amount and integral
multiples of $1,000. As provided in the Pooling and Servicing Agreement and
subject to certain limitations therein set forth, Class A-2 Certificates are
exchangeable for new Class A-2 Certificates of authorized denominations
evidencing the same aggregate principal amount.
The Trustee and any agent of the Trustee may treat the Person
in whose name this Certificate is registered as the owner hereof for all
purposes, and neither the Trustee nor any such agent shall be affected by notice
to the contrary.
A-2-5
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed on behalf of the Trust.
WILSHIRE MORTGAGE LOAN TRUST
1997-2
By: Bankers Trust Company of California,
N.A., as Trustee
By: ____________________________________
Name:
Title:
Trustee Authentication
BANKERS TRUST COMPANY OF CALIFORNIA,
N.A., as Trustee
By: _______________________________
Name:
Title:
Dated: December 11, 1997
A-2-6
<PAGE>
EXHIBIT A-3
WILSHIRE MORTGAGE LOAN TRUST 1997-2
MORTGAGE PASS-THROUGH CERTIFICATE
(6.720% Class A-3 Certificate)
Representing Certain Interests Relating to a Pool of
Mortgage Loans in the Wilshire Mortgage Loan Trust 1997-2
Formed by WMFC 1997-2 Inc., as Unaffiliated Seller, and
Prudential Securities Secured Financing Corporation, as depositor,
and Serviced by
WILSHIRE SERVICING CORPORATION
Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation ("DTC"),
to the Issuer or its agent for registration of transfer, exchange, or payment,
and any certificate issued is registered in the name of Cede & Co. or in such
other name as is requested by an authorized representative of DTC (and any
payment is made to Cede & Co. or to such other entity as is requested by an
authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered
owner hereof, Cede & Co., has an interest herein.
This certificate does not represent an interest in, or an
obligation of, nor are the underlying Mortgage Loans insured or guaranteed by,
WMFC 1997-2 Inc., Prudential Securities Secured Financing Corporation, Wilshire
Servicing Corporation, or any of their subsidiaries and affiliates. This
certificate represents a fractional ownership interest in the Trust Estate
described herein, moneys in certain Accounts created pursuant to the Pooling and
Servicing Agreement and certain other rights relating thereto and is payable
only from amounts received by the Trustee (i) relating to the Mortgage Loans
held by the Trust, and (ii) from moneys held in such Accounts.
No. A-3- 971885 AG 3
_______________________ ---------------
Date CUSIP
$ October 25, 2018
- -------------------------------------- ---------------------------------
Original Certificate Principal Balance Final Scheduled Distribution Date
___________________
Registered Owner
The registered Owner named above is the registered Owner of a
fractional interest in (i) a pool of fixed- and adjustable-rate, closed-end
mortgage loans (the "Mortgage Loans") sold by WMFC 1997-2 Inc. (the
"Unaffiliated Seller") to Prudential Securities Secured Financing Corporation
(the "Depositor") pursuant to that certain Unaffiliated Seller's Agreement,
dated as of November 1, 1997 (the "Unaffiliated Seller's Agreement") among the
Unaffiliated Seller, the Depositor and Wilshire Servicing
A-3-1
<PAGE>
Corporation, (the "Servicer") and sold by the Depositor to Bankers Trust Company
of California, N.A., a national banking association, as trustee (the "Trustee")
on behalf of Wilshire Mortgage Loan Trust 1997-2 (the "Trust") pursuant to that
certain Pooling and Servicing Agreement dated as of November 1, 1997 (the
"Pooling and Servicing Agreement") by and among the Unaffiliated Seller, the
Depositor, the Servicer, and Bankers Trust Company of California, N.A. as
Trustee and as backup servicer (the "Backup Servicer"), (ii) such amounts,
including Eligible Investments as from time to time may be held in the related
Accounts (except as otherwise provided in the Pooling and Servicing Agreement),
each created pursuant to the Pooling and Servicing Agreement, (iii) any
Mortgaged Property, the ownership of which has been effected in the name of the
Servicer on behalf of the Trust as a result of foreclosure or acceptance by the
Servicer of a deed in lieu of foreclosure and that has not been withdrawn from
the Trust Estate, (iv) any Insurance Policies and any rights of the Unaffiliated
Seller in any Insurance Policies and (v) Net Liquidation Proceeds. Such Mortgage
Loans and other amounts and property enumerated above are hereinafter referred
to as the "Trust Estate."
The Original Certificate Principal Balance set forth above is
equal to the product of (i) the Percentage Interest represented by this
Certificate and (ii) the aggregate original principal amount of the Class A-3
Certificates on December 11, 1997 (the "Startup Date"), which aggregate amount
was $12,000,000. The Owner hereof is entitled to principal payments on certain
Distribution Dates as specified in the Pooling and Servicing Agreement.
Therefore, the actual outstanding principal amount of this Certificate, on any
date subsequent to December 26, 1997 (the first Distribution Date) may be less
than the Original Certificate Principal Balance set forth above.
Upon receiving the final distribution hereon, the Owner hereof
is required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement provides that, in any event, upon the making of the final distribution
due on this Certificate, this Certificate shall be deemed cancelled for all
purposes under the Pooling and Servicing Agreement.
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
REPRESENTS AN INTEREST IN A CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE
MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY,
IN SECTION 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE"), ASSUMING COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
A-3-2
<PAGE>
This Certificate is one of a Class of duly-authorized
Certificates designated as Wilshire Mortgage Loan Trust 1997-2, Mortgage
Pass-Through Certificates, Class A-3 Certificates (the "Class A-3 Certificates")
and issued under and subject to the terms, provisions and conditions of the
Pooling and Servicing Agreement, to which Pooling and Servicing Agreement the
Owner of this Certificate by virtue of acceptance hereof assents and by which
such Owner is bound. Also issued under the Pooling and Servicing Agreement are
the Class A-1 Certificates, the Class A-2 Certificates, the Class A-4
Certificates, the Class A-5 Certificates, the Class A-6 Certificates, the Class
A-7 Certificates, the Class M-1 Certificates, the Class M-2 Certificates, the
Class M-3 Certificates (collectively, the "Offered Certificates"), the Class B
Certificates, the Class C Certificates, and the Class R Certificates; all such
Certificates are collectively referred to herein as the "Certificates."
Terms capitalized herein and not otherwise defined herein
shall have the respective meanings set forth in the Pooling and Servicing
Agreement.
On the 25th day of each month, or, if such day is not a
Business Day, then the next succeeding Business Day (each such day being a
"Distribution Date") commencing December 26, 1997 the Owners of the Class A-3
Certificates as of the close of business on the last business day of the
calendar month immediately preceding the calendar month in which such
Distribution Date occurs (or, with respect to the first Distribution Date, the
close of business on the Record Date) (the "Record Date") will be entitled to
receive the Class A-3 Interest Distribution relating to such Distribution Date.
Distributions will be made in immediately available funds to such Owners, by
wire transfer or otherwise, to the account of an Owner at a domestic bank or
other entity having appropriate facilities therefor, if such Owner has so
notified the Trustee at least five business days prior to the related Record
Date, or by check mailed to the address of the person entitled thereto as it
appears on the Register.
Each Owner of a Class A-3 Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts distributed on such
Distribution Date to the Owners of the Class A-3 Certificates. The Percentage
Interest of each Class A-3 Certificate as of any date of determination will be
equal to the percentage obtained by dividing the Original Certificate Principal
Balance set forth on such Class A-3 Certificate by $12,000,000.
The Trustee is required to duly and punctually pay
distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code or applicable to any Owner shall be considered as having been paid by
the Trustee to such Owner for all purposes of the Pooling and Servicing
Agreement.
The Mortgage Loans will be serviced by the Wilshire Servicing
Corporation pursuant to the Pooling and Servicing Agreement. The Pooling and
Servicing Agreement permits the Servicer to enter into Sub-Servicing Agreements
with certain institutions eligible for appointment as Sub-Servicers for the
servicing and administration of certain Mortgage Loans. No appointment of any
Sub-Servicer shall
A-3-3
<PAGE>
release the Servicer from any of its obligations under the Pooling and Servicing
Agreement.
This Certificate does not represent a deposit or other
obligation of, or an interest in, nor are the underlying Mortgage Loans insured
or guaranteed by, the Unaffiliated Seller, the Depositor, the Servicer, or any
of their subsidiaries and affiliates and are not insured or guaranteed by the
Federal Deposit Insurance Corporation, the Government National Mortgage
Association, or any other governmental agency. This Certificate is limited in
right of payment to certain collections and recoveries and amounts on deposit in
the Accounts, all as more specifically set forth hereinabove and in the Pooling
and Servicing Agreement.
No Owner shall have any right to institute any proceeding,
judicial or otherwise, with respect to the Pooling and Servicing Agreement, or
for the appointment of a receiver or trustee, or for any other remedy under the
Pooling and Servicing Agreement except in compliance with the terms hereof.
Notwithstanding any other provisions in the Pooling and
Servicing Agreement, the Owner of any Certificate shall have the right which is
absolute and unconditional to receive distributions to the extent provided in
the Pooling and Servicing Agreement with respect to such Certificate or to
institute suit for the enforcement of any such distribution, and such right
shall not be impaired without the consent of such Owner.
The Pooling and Servicing Agreement provides that the
obligations created thereby will terminate upon the earlier of (i) the payment
to the Owners of all Certificates of all amounts held by the Trustee and
required to be paid to such Owners pursuant to the Pooling and Servicing
Agreement upon the later to occur of (a) the final payment or other liquidation
(or any advance made with respect thereto) of the last Mortgage Loan in the
Trust Estate or (b) the disposition of all property acquired in respect of any
Mortgage Loan remaining in the Trust Estate or (ii) at any time when a Qualified
Liquidation of the Upper-Tier REMIC and the Lower-Tier REMIC is effected as
described in the Pooling and Servicing Agreement
The Pooling and Servicing Agreement additionally provides that
(i) the Servicer may, at its option, purchase from the Trust all (but not fewer
than all) remaining Mortgage Loans and other property then constituting the
Trust Estate, and thereby effect early retirement of the Offered Certificates,
on any Remittance Date when the aggregate outstanding Loan Balances of the
Mortgage Loans in the Trust Estate is 10% or less of the sum of the Original
Aggregate Loan Balance of the Mortgage Loans in the Trust Estate, (ii) in the
event that the Servicer does not exercise the option described in clause (i),
the Trustee is required by the Pooling and Servicing Agreement to perform an
Auction Sale of the Mortgage Loans as provided therein, and (iii) under certain
circumstances relating to the qualification of the Trust as a REMIC under the
Code the Mortgage Loans may be sold, thereby affecting the early retirement of
the Class A-3 Certificates.
A-3-4
<PAGE>
The Trustee shall give written notice of termination of the
Pooling and Servicing Agreement to each Owner in the manner set forth therein.
The Owners of a majority of the Percentage Interests
represented by the Offered Certificates, upon compliance with the requirements
set forth in the Pooling and Servicing Agreement, have the right, to exercise
any trust or power set forth in the Pooling and Servicing Agreement with respect
to the Certificates or the Trust Estate.
As provided in the Pooling and Servicing Agreement and subject
to certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register, and thereupon one or more new Certificates of like
Class, tenor and a like Percentage Interest will be issued to the designated
transferee or transferees.
The Trustee is required to furnish certain information on each
Distribution Date to the Owner of this Certificate, as more fully described in
the Pooling and Servicing Agreement.
The Class A-3 Certificates are issuable only as registered
Certificates in denominations of $1,000 original principal amount and integral
multiples of $1,000. As provided in the Pooling and Servicing Agreement and
subject to certain limitations therein set forth, Class A-3 Certificates are
exchangeable for new Class A-3 Certificates of authorized denominations
evidencing the same aggregate principal amount.
The Trustee and any agent of the Trustee may treat the Person
in whose name this Certificate is registered as the owner hereof for all
purposes, and neither the Trustee nor any such agent shall be affected by notice
to the contrary.
A-3-5
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed on behalf of the Trust.
WILSHIRE MORTGAGE LOAN TRUST
1997-2
By: Bankers Trust Company of California,
N.A., as Trustee
By: ____________________________________
Name:
Title:
Trustee Authentication
BANKERS TRUST COMPANY OF CALIFORNIA,
N.A., as Trustee
By: ________________________________
Name:
Title:
Dated: December 11, 1997
A-3-6
<PAGE>
EXHIBIT A-4
WILSHIRE MORTGAGE LOAN TRUST 1997-2
MORTGAGE PASS-THROUGH CERTIFICATE
(6.865% Class A-4 Certificate)
Representing Certain Interests Relating to a Pool of
Mortgage Loans in the Wilshire Mortgage Loan Trust 1997-2
Formed by WMFC 1997-2 Inc., as Unaffiliated Seller, and
Prudential Securities Secured Financing Corporation, as Depositor,
and Serviced by
WILSHIRE SERVICING CORPORATION
Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation ("DTC"),
to the Issuer or its agent for registration of transfer, exchange, or payment,
and any certificate issued is registered in the name of Cede & Co. or in such
other name as is requested by an authorized representative of DTC (and any
payment is made to Cede & Co. or to such other entity as is requested by an
authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered
owner hereof, Cede & Co., has an interest herein.
This certificate does not represent an interest in, or an
obligation of, nor are the underlying Mortgage Loans insured or guaranteed by
WMFC 1997-2 Inc., Prudential Securities Secured Financing Corporation, Wilshire
Servicing Corporation, an Originator or any of their subsidiaries and
affiliates. This certificate represents a fractional ownership interest in the
Trust Estate described herein, moneys in certain Accounts created pursuant to
the Pooling and Servicing Agreement and certain other rights relating thereto
and is payable only from amounts received by the Trustee (i) relating to the
Mortgage Loans held by the Trust, and (ii) from moneys held in such Accounts.
No. A-4- 971885 AH 1
_________________ -------------
Date CUSIP
$ November 25, 2021
- -------------------------------------- ---------------------------------
Original Certificate Principal Balance Final Scheduled Distribution Date
____________________
Registered Owner
The registered Owner named above is the registered Owner of a
fractional interest in (i) a pool of fixed- and adjustable-rate, closed-end
mortgage loans (the "Mortgage Loans") sold by WMFC 1997-2 Inc., (the
"Unaffiliated Seller") to Prudential Securities Secured Financing Corporation
(the "Depositor") pursuant to that certain Unaffiliated Seller's Agreement,
dated as of November 1, 1997 (the "Unaffiliated Seller's Agreement") among the
Unaffiliated Seller, the Depositor and Wilshire Servicing
A-4-1
<PAGE>
Corporation, (the "Servicer") and sold by the Depositor to Bankers Trust Company
of California, N.A., a national banking association, as trustee (the "Trustee")
on behalf of Wilshire Mortgage Loan Trust 1997-2 (the "Trust") pursuant to that
certain Pooling and Servicing Agreement dated as of November 1, 1997 (the
"Pooling and Servicing Agreement") by and among the Unaffiliated Seller, the
Depositor, the Servicer, and Bankers Trust Company of California, N.A. as
Trustee as as backup servicer (the "Backup Servicer"), (ii) such amounts,
including Eligible Investments as from time to time may be held in the related
Accounts (except as otherwise provided in the Pooling and Servicing Agreement),
each created pursuant to the Pooling and Servicing Agreement, (iii) any
Mortgaged Property, the ownership of which has been effected in the name of the
Servicer on behalf of the Trust as a result of foreclosure or acceptance by the
Servicer of a deed in lieu of foreclosure and that has not been withdrawn from
the Trust Estate, (iv) any Insurance Policies and any rights of the Unaffiliated
Seller in any Insurance Policies and (v) Net Liquidation Proceeds. Such Mortgage
Loans and other amounts and property enumerated above are hereinafter referred
to as the "Trust Estate."
The Original Certificate Principal Balance set forth above is
equal to the product of (i) the Percentage Interest represented by this
Certificate and (ii) the aggregate original principal amount of the Class A-4
Certificates on December 11, 1997 (the "Startup Date"), which aggregate amount
was $12,000,000. The Owner hereof is entitled to principal payments on certain
Distribution Dates, as specified in the Pooling and Servicing Agreement.
Therefore, the actual outstanding principal amount of this Certificate, on any
date subsequent to December 26, 1997 (the first Distribution Date) may be less
than the Original Certificate Principal Balance set forth above.
Upon receiving the final distribution hereon, the Owner hereof
is required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement provides that, in any event, upon the making of the final distribution
due on this Certificate, this Certificate shall be deemed cancelled for all
purposes under the Pooling and Servicing Agreement.
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
REPRESENTS AN INTEREST IN A CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE
MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY,
IN SECTION 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE"), ASSUMING COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
A-4-2
<PAGE>
This Certificate is one of a Class of duly-authorized
Certificates designated as Wilshire Mortgage Loan Trust 1997-2, Mortgage
Pass-Through Certificates, Class A-4 Certificates (the "Class A-4 Certificates")
and issued under and subject to the terms, provisions and conditions of the
Pooling and Servicing Agreement, to which Pooling and Servicing Agreement the
Owner of this Certificate by virtue of acceptance hereof assents and by which
such Owner is bound. Also issued under the Pooling and Servicing Agreement are
the Class A-1 Certificates, the Class A-2 Certificates, the Class A-3
Certificates, the Class A-5 Certificates, the Class A-6 Certificates, the Class
A-7 Certificates, the Class M-1 Certificates, the Class M-2 Certificates, the
Class M-3 Certificates (collectively, the "Offered Certificates"), the Class B
Certificates, the Class C Certificates, and the Class R Certificates; all such
Certificates are collectively referred to herein as the "Certificates."
Terms capitalized herein and not otherwise defined herein
shall have the respective meanings set forth in the Pooling and Servicing
Agreement.
On the 25th day of each month, or, if such day is not a
Business Day, then the next succeeding Business Day (each such day being a
"Distribution Date") commencing December 26, the Owners of the Class A-4
Certificates as of the close of business on the last business day of the
calendar month immediately preceding the calendar month in which such
Distribution Date occurs (or, with respect to the first Distribution Date, the
close of business on the Closing Date) (the "Record Date") will be entitled to
receive the Class A-4 Interest Distribution Amount relating to such Distribution
Date. Distributions will be made in immediately available funds to such Owners,
by wire transfer or otherwise, to the account of an Owner at a domestic bank or
other entity having appropriate facilities therefor, if such Owner has so
notified the Trustee at least five business days prior to the related Record
Date, or by check mailed to the address of the person entitled thereto as it
appears on the Register.
Each Owner of a Class A-4 Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts distributed on such
Distribution Date to the Owners of the Class A-4 Certificates. The Percentage
Interest of each Class A-4 Certificate as of any date of determination will be
equal to the percentage obtained by dividing the Original Certificate Principal
Balance set forth on such Class A-4 Certificate by $12,000,000.
The Trustee is required to duly and punctually pay
distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code or applicable to any Owner shall be considered as having been paid by
the Trustee to such Owner for all purposes of the Pooling and Servicing
Agreement.
The Mortgage Loans will be serviced by the Wilshire Servicing
Corporation pursuant to the Pooling and Servicing Agreement. The Pooling and
Servicing Agreement permits the Servicer to enter into Sub-Servicing Agreements
with certain institutions eligible for appointment as Sub-Servicers for the
servicing and administration of certain Mortgage Loans. No appointment of any
Sub-Servicer shall
A-4-3
<PAGE>
release the Servicer from any of its obligations under the Pooling and Servicing
Agreement.
This Certificate does not represent a deposit or other
obligation of, or an interest in, nor are the underlying Mortgage Loans insured
or guaranteed by, the Unaffiliated Seller, the Depositor, the Servicer, or any
of their subsidiaries and affiliates and are not insured or guaranteed by the
Federal Deposit Insurance Corporation, the Government National Mortgage
Association, or any other governmental agency. This Certificate is limited in
right of payment to certain collections and recoveries and amounts on deposit in
the Accounts, all as more specifically set forth hereinabove and in the Pooling
and Servicing Agreement.
No Owner shall have any right to institute any proceeding,
judicial or otherwise, with respect to the Pooling and Servicing Agreement, or
for the appointment of a receiver or trustee, or for any other remedy under the
Pooling and Servicing Agreement except in compliance with the terms hereof.
Notwithstanding any other provisions in the Pooling and
Servicing Agreement, the Owner of any Certificate shall have the right which is
absolute and unconditional to receive distributions to the extent provided in
the Pooling and Servicing Agreement with respect to such Certificate or to
institute suit for the enforcement of any such distribution, and such right
shall not be impaired without the consent of such Owner.
The Pooling and Servicing Agreement provides that the
obligations created thereby will terminate upon the earlier of (i) the payment
to the Owners of all Certificates of all amounts held by the Trustee and
required to be paid to such Owners pursuant to the Pooling and Servicing
Agreement upon the later to occur of (a) the final payment or other liquidation
(or any advance made with respect thereto) of the last Mortgage Loan in the
Trust Estate or (b) the disposition of all property acquired in respect of any
Mortgage Loan remaining in the Trust Estate or (ii) at any time when a Qualified
Liquidation of the Upper-Tier REMIC and the Lower-Tier REMIC is effected as
described in the Pooling and Servicing Agreement.
The Pooling and Servicing Agreement additionally provides that
(i) the Servicer may, at its option, purchase from the Trust all (but not fewer
than all) remaining Mortgage Loans and other property then constituting the
Trust Estate, and thereby effect early retirement of the Offered Certificates,
on any Remittance Date when the aggregate outstanding Loan Balances of the
Mortgage Loans in the Trust Estate is 10% or less of the sum of the Original
Aggregate Loan Balance of the Mortgage Loans in the Trust Estate, (ii) in the
event that the Servicer does not exercise the option described in clause (i),
the Trustee is required by the Pooling and Servicing Agreement to perform an
Auction Sale of the Mortgage Loans as provided therein, and (iii) under certain
circumstances relating to the qualification of the Trust as a REMIC under the
Code the Mortgage Loans may be sold, thereby affecting the early retirement of
the Class A-4 Certificates.
A-4-4
<PAGE>
The Trustee shall give written notice of termination of the
Pooling and Servicing Agreement to each Owner in the manner set forth therein.
The Owners of a majority of the Percentage Interests
represented by the Offered Certificates, upon compliance with the requirements
set forth in the Pooling and Servicing Agreement, have the right to exercise any
trust or power set forth in the Pooling and Servicing Agreement with respect to
the Certificates or the Trust Estate.
As provided in the Pooling and Servicing Agreement and subject
to certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register, and thereupon one or more new Certificates of like
Class, tenor and a like Percentage Interest will be issued to the designated
transferee or transferees.
The Trustee is required to furnish certain information on each
Distribution Date to the Owner of this Certificate, as more fully described in
the Pooling and Servicing Agreement.
The Class A-4 Certificates are issuable only as registered
Certificates in denominations of $1,000 original principal amount and integral
multiples of $1,000. As provided in the Pooling and Servicing Agreement and
subject to certain limitations therein set forth, Class A-4 Certificates are
exchangeable for new Class A-4 Certificates of authorized denominations
evidencing the same aggregate principal amount.
The Trustee and any agent of the Trustee may treat the Person
in whose name this Certificate is registered as the owner hereof for all
purposes, and neither the Trustee nor any such agent shall be affected by notice
to the contrary.
A-4-5
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed on behalf of the Trust.
WILSHIRE MORTGAGE LOAN TRUST
1997-2
By: Bankers Trust Company of California,
N.A., as Trustee
By: ____________________________________
Name:
Title:
Trustee Authentication
BANKERS TRUST COMPANY OF CALIFORNIA,
N.A., as Trustee
By: ______________________________
Name:
Title:
Dated: December 11, 1997
A-4-6
<PAGE>
EXHIBIT A-5
WILSHIRE MORTGAGE LOAN TRUST 1997-2
MORTGAGE PASS-THROUGH CERTIFICATE
(7.255% Class A-5 Certificate)
Representing Certain Interests Relating to a Pool of
Mortgage Loans in the Wilshire Mortgage Loan Trust 1997-2
Formed by WMFC 1997-2 Inc., as Unaffiliated Seller, and
Prudential Securities Secured Financing Corporation, as Depositor,
and Serviced by
WILSHIRE SERVICING CORPORATION
Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation ("DTC"),
to the Issuer or its agent for registration of transfer, exchange, or payment,
and any certificate issued is registered in the name of Cede & Co. or in such
other name as is requested by an authorized representative of DTC (and any
payment is made to Cede & Co. or to such other entity as is requested by an
authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered
owner hereof, Cede & Co., has an interest herein.
This certificate does not represent an interest in, or an
obligation of, nor are the underlying Mortgage Loans insured or guaranteed by,
WMFC 1997-2 Inc., Prudential Securities Secured Financing Corporation, Wilshire
Servicing Corporation, or any of their subsidiaries and affiliates. This
certificate represents a fractional ownership interest in the Trust Estate
described herein, moneys in certain Accounts created pursuant to the Pooling and
Servicing Agreement and certain other rights relating thereto and is payable
only from amounts received by the Trustee (i) relating to the Mortgage Loans
held by the Trust, and (ii) from moneys held in such Accounts.
No. A-5- 971885 AJ 7
__________ -----------
Date CUSIP
$ May 25, 2028
- -------------------------------------- ---------------------------------
Original Certificate Principal Balance Final Scheduled Distribution Date
____________________
Registered Owner
The registered Owner named above is the registered Owner of a
fractional interest in (i) a pool of fixed- and adjustable-rate, closed-end
mortgage loans (the "Mortgage Loans") sold by WMFC 1997-2 Inc. (the
"Unaffiliated Seller") to Prudential Securities Secured Financing Corporation
(the "Depositor") pursuant to that certain Unaffiliated Seller's Agreement,
dated as of November 1, 1997 (the "Unaffiliated Seller's Agreement") among the
Unaffiliated Seller, the Depositor and Wilshire Servicing Corporation, (the
"Servicer") and sold by the Depositor to Bankers Trust Company of
A-5-1
<PAGE>
California, N.A., a national banking association, as trustee, (the "Trustee") on
behalf of Wilshire Mortgage Loan Trust 1997-2 (the "Trust") pursuant to that
certain Pooling and Servicing Agreement dated as of November 1, 1997 (the
"Pooling and Servicing Agreement") by and among the Unaffiliated Seller, the
Depositor, Bankers Trust Company of California, N.A. as both Trustee and as
backup servicer (the "Backup Servicer"), and the Servicer, (ii) such amounts,
including Eligible Investments as from time to time may be held in the related
Accounts (except as otherwise provided in the Pooling and Servicing Agreement),
each created pursuant to the Pooling and Servicing Agreement, (iii) any
Mortgaged Property, the ownership of which has been effected in the name of the
Servicer on behalf of the Trust as a result of foreclosure or acceptance by the
Servicer of a deed in lieu of foreclosure and that has not been withdrawn from
the Trust Estate, (iv) any Insurance Policies and any rights of the Unaffiliated
Seller in any Insurance Policies and (v) Net Liquidation Proceeds. Such Mortgage
Loans and other amounts and property enumerated above are hereinafter referred
to as the "Trust Estate."
The Original Certificate Principal Balance set forth above is
equal to the product of (i) the Percentage Interest represented by this
Certificate and (ii) the aggregate original principal amount of the Class A-5
Certificates on December 11, 1997 (the "Startup Date"), which aggregate amount
was $10,000,000. The Owner hereof is entitled to principal payments on certain
Distribution Dates as specified in the Pooling and Servicing Agreement.
Therefore, the actual outstanding principal amount of this Certificate, on any
date subsequent to December 26, 1997 (the first Distribution Date) may be less
than the Original Certificate Principal Balance set forth above.
Upon receiving the final distribution hereon, the Owner hereof
is required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement provides that, in any event, upon the making of the final distribution
due on this Certificate, this Certificate shall be deemed cancelled for all
purposes under the Pooling and Servicing Agreement.
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
REPRESENTS AN INTEREST IN A CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE
MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY,
IN SECTION 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE"), ASSUMING COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
A-5-2
<PAGE>
This Certificate is one of a Class of duly-authorized
Certificates designated as Wilshire Mortgage Loan Trust 1997-2, Mortgage
Pass-Through Certificates, Class A-5 Certificates (the "Class A-5 Certificates")
and issued under and subject to the terms, provisions and conditions of the
Pooling and Servicing Agreement, to which Pooling and Servicing Agreement the
Owner of this Certificate by virtue of acceptance hereof assents and by which
such Owner is bound. Also issued under the Pooling and Servicing Agreement are
the Class A-1 Certificates, the Class A-2 Certificates, the Class A-3
Certificates, the Class A-4 Certificates, the Class A-6 Certificates, the Class
A-7 Certificates, the Class M-1 Certificates, the Class M-2 Certificates, the
Class M-3 Certificates, (collectively, the "Offered Certificates"), the Class B
Certificates, the Class C Certificates and the Class R Certificates; all such
Certificates are collectively referred to herein as the "Certificates."
Terms capitalized herein and not otherwise defined herein
shall have the respective meanings set forth in the Pooling and Servicing
Agreement.
On the 25th day of each month, or, if such day is not a
Business Day, then the next succeeding Business Day (each such day being a
"Distribution Date") commencing December 26, 1997 the Owners of the Class A-5
Certificates as of the close of business on the last business day of the
calendar month immediately preceding the calendar month in which such
Distribution Date occurs (or, with respect to the first Distribution Date, the
close of business on the Closing Date) (the "Record Date") will be entitled to
receive the Class A-5 Interest Distribution Amount relating to such Distribution
Date. Distributions will be made in immediately available funds to such Owners,
by wire transfer or otherwise, to the account of an Owner at a domestic bank or
other entity having appropriate facilities therefor, if such Owner has so
notified the Trustee at least five business days prior to the related Record
Date, or by check mailed to the address of the person entitled thereto as it
appears on the Register.
Each Owner of a Class A-5 Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts distributed on such
Distribution Date to the Owners of the Class A-5 Certificates. The Percentage
Interest of each Class A-5 Certificate as of any date of determination will be
equal to the percentage obtained by dividing the Original Certificate Principal
Balance set forth on such Class A-5 Certificate by $10,000,000.
The Trustee is required to duly and punctually pay
distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code or applicable to any Owner shall be considered as having been paid by
the Trustee to such Owner for all purposes of the Pooling and Servicing
Agreement.
The Mortgage Loans will be serviced by the Wilshire Servicing
Corporation pursuant to the Pooling and Servicing Agreement. The Pooling and
Servicing Agreement permits the Servicer to enter into Sub-Servicing Agreements
with certain institutions eligible for appointment as Sub-Servicers for the
servicing and administration of certain Mortgage Loans. No appointment of any
Sub-Servicer shall
A-5-3
<PAGE>
release the Servicer from any of its obligations under the Pooling and Servicing
Agreement.
This Certificate does not represent a deposit or other
obligation of, or an interest in, nor are the underlying Mortgage Loans insured
or guaranteed by, the Unaffiliated Seller, the Depositor, the Servicer, or any
of their subsidiaries and affiliates and are not insured or guaranteed by the
Federal Deposit Insurance Corporation, the Government National Mortgage
Association, or any other governmental agency. This Certificate is limited in
right of payment to certain collections and recoveries and amounts on deposit in
the Accounts, all as more specifically set forth hereinabove and in the Pooling
and Servicing Agreement.
No Owner shall have any right to institute any proceeding,
judicial or otherwise, with respect to the Pooling and Servicing Agreement, or
for the appointment of a receiver or trustee, or for any other remedy under the
Pooling and Servicing Agreement except in compliance with the terms hereof.
Notwithstanding any other provisions in the Pooling and
Servicing Agreement, the Owner of any Certificate shall have the right which is
absolute and unconditional to receive distributions to the extent provided in
the Pooling and Servicing Agreement with respect to such Certificate or to
institute suit for the enforcement of any such distribution, and such right
shall not be impaired without the consent of such Owner.
The Pooling and Servicing Agreement provides that the
obligations created thereby will terminate upon the earlier of (i) the payment
to the Owners of all Certificates of all amounts held by the Trustee and
required to be paid to such Owners pursuant to the Pooling and Servicing
Agreement upon the later to occur of (a) the final payment or other liquidation
(or any advance made with respect thereto) of the last Mortgage Loan in the
Trust Estate or (b) the disposition of all property acquired in respect of any
Mortgage Loan remaining in the Trust Estate or (ii) at any time when a Qualified
Liquidation of the Upper-Tier REMIC and the Lower-Tier REMIC is effected as
described in the Pooling and Servicing Agreement
The Pooling and Servicing Agreement additionally provides that
(i) the Servicer may, at its option, purchase from the Trust all (but not fewer
than all) remaining Mortgage Loans and other property then constituting the
Trust Estate, and thereby effect early retirement of the Offered Certificates,
on any Remittance Date when the aggregate outstanding Loan Balances of the
Mortgage Loans in the Trust Estate is 10% or less of the sum of the Original
Aggregate Loan Balance of the Mortgage Loans in the Trust Estate, (ii) in the
event that the Servicer does not exercise the option described in clause (i),
the Trustee is required by the Pooling and Servicing Agreement to perform an
Auction Sale of the Mortgage Loans as provided therein, and (iii) under certain
circumstances relating to the qualification of the Trust as a REMIC under the
Code the Mortgage Loans may be sold, thereby affecting the early retirement of
the Class A-5 Certificates.
A-5-4
<PAGE>
The Trustee shall give written notice of termination of the
Pooling and Servicing Agreement to each Owner in the manner set forth therein.
The Owners of a majority of the Percentage Interests
represented by the Offered Certificates, upon compliance with the requirements
set forth in the Pooling and Servicing Agreement, have the right to exercise any
trust or power set forth in the Pooling and Servicing Agreement with respect to
the Certificates or the Trust Estate.
As provided in the Pooling and Servicing Agreement and subject
to certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register, and thereupon one or more new Certificates of like
Class, tenor and a like Percentage Interest will be issued to the designated
transferee or transferees.
The Trustee is required to furnish certain information on each
Distribution Date to the Owner of this Certificate, as more fully described in
the Pooling and Servicing Agreement.
The Class A-5 Certificates are issuable only as registered
Certificates in denominations of $1,000 original principal amount and integral
multiples of $1,000. As provided in the Pooling and Servicing Agreement and
subject to certain limitations therein set forth, Class A-5 Certificates are
exchangeable for new Class A-5 Certificates of authorized denominations
evidencing the same aggregate principal amount.
The Trustee and any agent of the Trustee may treat the Person
in whose name this Certificate is registered as the owner hereof for all
purposes, and neither the Trustee nor any such agent shall be affected by notice
to the contrary.
A-5-5
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed on behalf of the Trust.
WILSHIRE MORTGAGE LOAN TRUST
1997-2
By: Bankers Trust Company of California,
N.A., as Trustee
By: ___________________________________
Name:
Title:
Trustee Authentication
BANKERS TRUST COMPANY OF CALIFORNIA,
N.A., as Trustee
By: _______________________________
Name:
Title:
Dated: December 11, 1997
A-5-6
<PAGE>
EXHIBIT A-6
WILSHIRE MORTGAGE LOAN TRUST 1997-2
MORTGAGE PASS-THROUGH CERTIFICATE
(Variable Rate Class A-6 Certificate)
Representing Certain Interests Relating to a Pool of
Mortgage Loans in the Wilshire Mortgage Loan Trust 1997-2
Formed by WMFC 1997-2 Inc., as Unaffiliated Seller, and
Prudential Securities Secured Financing Corporation, as Depositor,
and Serviced by
WILSHIRE SERVICING CORPORATION
Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation ("DTC"),
to the Issuer or its agent for registration of transfer, exchange, or payment,
and any certificate issued is registered in the name of Cede & Co. or in such
other name as is requested by an authorized representative of DTC (and any
payment is made to Cede & Co. or to such other entity as is requested by an
authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered
owner hereof, Cede & Co., has an interest herein.
This certificate does not represent an interest in, or an
obligation of, nor are the underlying Mortgage Loans insured or guaranteed by,
WMFC 1997-2 Inc., Prudential Securities Secured Financing Corporation, Wilshire
Servicing Corporation, or any of their subsidiaries and affiliates. This
certificate represents a fractional ownership interest in the Trust Estate
described herein, moneys in certain Accounts created pursuant to the Pooling and
Servicing Agreement and certain other rights relating thereto and is payable
only from amounts received by the Trustee (i) relating to the Mortgage Loans
held by the Trust, and (ii) from moneys held in such Accounts.
No. A-6- 971885 AK 4
___________________ ------------------
Date CUSIP
$ May 25, 2028
- -------------------------------------- ---------------------------------
Original Certificate Principal Balance Final Scheduled Distribution Date
____________________
Registered Owner
The registered Owner named above is the registered Owner of a
fractional interest in (i) a pool of fixed- and adjustable-rate, closed-end
mortgage loans (the "Mortgage Loans") sold by WMFC 1997-2 Inc. (the
"Unaffiliated Seller") to Prudential Securities Secured Financing Corporation
(the "Depositor") pursuant to that certain Unaffiliated Seller's Agreement,
dated as of November 1, 1997 (the "Unaffiliated Seller's Agreement") among the
Unaffiliated Seller, the Depositor and Wilshire Servicing Corporation, (the
"Servicer") and sold by the Depositor to Bankers Trust Company of
A-6-1
<PAGE>
California, N.A., a national banking association, as trustee, (the "Trustee") on
behalf of Wilshire Mortgage Loan Trust 1997-2 (the "Trust") pursuant to that
certain Pooling and Servicing Agreement dated as of November 1, 1997 (the
"Pooling and Servicing Agreement") by and among the Unaffiliated Seller, the
Depositor, Bankers Trust Company of California, N.A. as both Trustee and as
backup servicer (the "Backup Servicer"), and the Servicer, (ii) such amounts,
including Eligible Investments, as from time to time may be held in the related
Accounts (except as otherwise provided in the Pooling and Servicing Agreement),
each created pursuant to the Pooling and Servicing Agreement, (iii) any
Mortgaged Property, the ownership of which has been effected in the name of the
Servicer on behalf of the Trust as a result of foreclosure or acceptance by the
Servicer of a deed in lieu of foreclosure and that has not been withdrawn from
the Trust Estate, (iv) any Insurance Policies and any rights of the Unaffiliated
Seller in any Insurance Policies and (v) Net Liquidation Proceeds. Such Mortgage
Loans and other amounts and property enumerated above are hereinafter referred
to as the "Trust Estate."
The Original Certificate Principal Balance set forth above is
equal to the product of (i) the Percentage Interest represented by this
Certificate and (ii) the aggregate original principal amount of the Class A-6
Certificates on December 11, 1997 (the "Startup Date"), which aggregate amount
was $16,302,000. The Owner hereof is entitled to principal payments on each
Distribution Date, which will fully amortize such Original Certificate Principal
Balance over the period from the date of initial delivery hereof to the final
Distribution Date of the Class A-6 Certificates. Therefore, the actual
outstanding principal amount of this Certificate, on any date subsequent to
December 26, 1997 (the first Distribution Date) may be less than the Original
Certificate Principal Balance set forth above.
Upon receiving the final distribution hereon, the Owner hereof
is required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement provides that, in any event, upon the making of the final distribution
due on this Certificate, this Certificate shall be deemed cancelled for all
purposes under the Pooling and Servicing Agreement.
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
REPRESENTS AN INTEREST IN A CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE
MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY,
IN SECTION 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE"), ASSUMING COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
INSURED OR GUARANTEED BY THE FEDERAL
A-6-2
<PAGE>
DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR
ANY OTHER GOVERNMENTAL AGENCY.
This Certificate is one of a Class of duly-authorized
Certificates designated as Wilshire Mortgage Loan Trust 1997-2, Mortgage
Pass-Through Certificates, Class A-6 Certificates (the "Class A-6 Certificates")
and issued under and subject to the terms, provisions and conditions of the
Pooling and Servicing Agreement, to which Pooling and Servicing Agreement the
Owner of this Certificate by virtue of acceptance hereof assents and by which
such Owner is bound. Also issued under the Pooling and Servicing Agreement are
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-7 Certificates, the Class M-1 Certificates, the Class M-2 Certificates, the
Class M-3 Certificates, (collectively, the "Offered Certificates"), the Class B
Certificates, the Class C Certificates and the Class R Certificates; all such
Certificates are collectively referred to herein as the "Certificates."
Terms capitalized herein and not otherwise defined herein
shall have the respective meanings set forth in the Pooling and Servicing
Agreement.
On the 25th day of each month, or, if such day is not a
Business Day, then the next succeeding Business Day (each such day being a
"Distribution Date") commencing December 26, 1997 the Owners of the Class A-6
Certificates as of the close of business on the last business day of the
calendar month immediately preceding the calendar month in which such
Distribution Date occurs (or, with respect to the first Distribution Date, the
close of business on the Closing Date) (the "Record Date") will be entitled to
receive the Class A-6 Interest Distribution Amount relating to such Distribution
Date. Distributions will be made in immediately available funds to such Owners,
by wire transfer or otherwise, to the account of an Owner at a domestic bank or
other entity having appropriate facilities therefor, if such Owner has so
notified the Trustee at least five business days prior to the related Record
Date, or by check mailed to the address of the person entitled thereto as it
appears on the Register.
Each Owner of a Class A-6 Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts distributed on such
Distribution Date to the Owners of the Class A-6 Certificates. The Percentage
Interest of each Class A-6 Certificate as of any date of determination will be
equal to the percentage obtained by dividing the Original Certificate Principal
Balance set forth on such Class A-6 Certificate by $16,302,000.
The Trustee is required to duly and punctually pay
distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code or applicable to any Owner shall be considered as having been paid by
the Trustee to such Owner for all purposes of the Pooling and Servicing
Agreement.
The Mortgage Loans will be serviced by the Wilshire Servicing
Corporation pursuant to the Pooling and
A-6-3
<PAGE>
Servicing Agreement. The Pooling and Servicing Agreement permits the Servicer to
enter into Sub-Servicing Agreements with certain institutions eligible for
appointment as Sub-Servicers for the servicing and administration of certain
Mortgage Loans. No appointment of any Sub-Servicer shall release the Servicer
from any of its obligations under the Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other
obligation of, or an interest in, nor are the underlying Mortgage Loans insured
or guaranteed by, the Unaffiliated Seller, the Depositor, the Servicer, or any
of their subsidiaries and affiliates and are not insured or guaranteed by the
Federal Deposit Insurance Corporation, the Government National Mortgage
Association, or any other governmental agency. This Certificate is limited in
right of payment to certain collections and recoveries and amounts on deposit in
the Accounts, all as more specifically set forth hereinabove and in the Pooling
and Servicing Agreement.
No Owner shall have any right to institute any proceeding,
judicial or otherwise, with respect to the Pooling and Servicing Agreement, or
for the appointment of a receiver or trustee, or for any other remedy under the
Pooling and Servicing Agreement except in compliance with the terms hereof.
Notwithstanding any other provisions in the Pooling and
Servicing Agreement, the Owner of any Certificate shall have the right which is
absolute and unconditional to receive distributions to the extent provided in
the Pooling and Servicing Agreement with respect to such Certificate or to
institute suit for the enforcement of any such distribution, and such right
shall not be impaired without the consent of such Owner.
The Pooling and Servicing Agreement provides that the
obligations created thereby will terminate upon the earlier of (i) the payment
to the Owners of all of all amounts held by the Trustee and required to be paid
to such Owners pursuant to the Pooling and Servicing Agreement upon the later to
occur of (a) the final payment or other liquidation (or any advance made with
respect thereto) of the last Mortgage Loan in the Trust Estate or (b) the
disposition of all property acquired in respect of any Mortgage Loan remaining
in the Trust Estate or (ii) at any time when a Qualified Liquidation of the
Upper-Tier REMIC and the Lower-Tier REMIC is effected as described in the
Pooling and Servicing Agreement.
The Pooling and Servicing Agreement additionally provides that
(i) the Servicer may, at its option, purchase from the Trust all (but not fewer
than all) remaining Mortgage Loans and other property then constituting the
Trust Estate, and thereby effect early retirement of the Offered Certificates,
on any Remittance Date when the aggregate outstanding Loan Balances of the
Mortgage Loans in the Trust Estate is 10% or less of the sum of the Original
Aggregate Loan Balance of the Mortgage Loans in the Trust Estate, (ii) in the
event that the Servicer does not exercise the option described in clause (i),
the Trustee is required by the Pooling and Servicing Agreement to perform an
Auction Sale of the Mortgage Loans as provided therein, and (iii) under certain
circumstances relating to the qualification of the Trust as a REMIC under the
Code the
A-6-4
<PAGE>
Mortgage Loans may be sold, thereby affecting the early retirement of
the Class A-6 Certificates.
The Trustee shall give written notice of termination of the
Pooling and Servicing Agreement to each Owner in the manner set forth therein.
The Owners of a majority of the Percentage Interests
represented by the Offered Certificates, upon compliance with the requirements
set forth in the Pooling and Servicing Agreement, have the right, to exercise
any trust or power set forth in the Pooling and Servicing Agreement with respect
to the Certificates or the Trust Estate.
As provided in the Pooling and Servicing Agreement and subject
to certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register, and thereupon one or more new Certificates of like
Class, tenor and a like Percentage Interest will be issued to the designated
transferee or transferees.
The Trustee is required to furnish certain information on each
Distribution Date to the Owner of this Certificate, as more fully described in
the Pooling and Servicing Agreement.
The Class A-6 Certificates are issuable only as registered
Certificates in denominations of $1,000 original principal amount and integral
multiples of $1,000. As provided in the Pooling and Servicing Agreement and
subject to certain limitations therein set forth, Class A-6 Certificates are
exchangeable for new Class A-6 Certificates of authorized denominations
evidencing the same aggregate principal amount.
The Trustee and any agent of the Trustee may treat the Person
in whose name this Certificate is registered as the owner hereof for all
purposes, and neither the Trustee nor any such agent shall be affected by notice
to the contrary.
A-6-5
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed on behalf of the Trust.
WILSHIRE MORTGAGE LOAN TRUST
1997-2
By: Bankers Trust Company of California,
N.A., as Trustee
By: ___________________________________
Name:
Title:
Trustee Authentication
BANKERS TRUST COMPANY OF CALIFORNIA,
N.A., as Trustee
By: _______________________________
Name:
Title:
Dated: December 11, 1997
A-6-6
<PAGE>
EXHIBIT A-7
WILSHIRE MORTGAGE LOAN TRUST 1997-2
MORTGAGE PASS-THROUGH CERTIFICATE
(6.835% Class A-7 Certificate)
Representing Certain Interests Relating to a Pool of
Mortgage Loans in the Wilshire Mortgage Loan Trust 1997-2
Formed by WMFC 1997-2 Inc., as Unaffiliated Seller, and
Prudential Securities Secured Financing Corporation, as Depositor,
and Serviced by
WILSHIRE SERVICING CORPORATION
Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation ("DTC"),
to the Issuer or its agent for registration of transfer, exchange, or payment,
and any certificate issued is registered in the name of Cede & Co. or in such
other name as is requested by an authorized representative of DTC (and any
payment is made to Cede & Co. or to such other entity as is requested by an
authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered
owner hereof, Cede & Co., has an interest herein.
This certificate does not represent an interest in, or an
obligation of, nor are the underlying Mortgage Loans insured or guaranteed by,
WMFC 1997-2 Inc., Prudential Securities Secured Financing Corporation, Wilshire
Servicing Corporation, or any of their subsidiaries and affiliates. This
certificate represents a fractional ownership interest in the Trust Estate
described herein, moneys in certain Accounts created pursuant to the Pooling and
Servicing Agreement and certain other rights relating thereto and is payable
only from amounts received by the Trustee (i) relating to the Mortgage Loans
held by the Trust, and (ii) from moneys held in such Accounts.
No. A-7- 971885 AL 2
________________ ---------------
Date CUSIP
$ March 25, 2028
- -------------------------------------- ---------------------------------
Original Certificate Principal Balance Final Scheduled Distribution Date
____________________
Registered Owner
The registered Owner named above is the registered Owner of a
fractional interest in (i) a pool of fixed- and adjustable-rate, closed-end
mortgage loans (the "Mortgage Loans") sold by WMFC 1997-2 Inc. (the
"Unaffiliated Seller") to Prudential Securities Secured Financing Corporation
(the "Depositor") pursuant to that certain Unaffiliated Seller's Agreement,
dated as of November 1, 1997 (the "Unaffiliated Seller's Agreement") among the
Unaffiliated Seller, the Depositor and Wilshire Servicing Corporation, (the
"Servicer") and sold by the Depositor to Bankers Trust Company of
A-7-1
<PAGE>
California, N.A., a national banking association, as trustee, (the "Trustee") on
behalf of Wilshire Mortgage Loan Trust 1997-2 (the "Trust") pursuant to that
certain Pooling and Servicing Agreement dated as of November 1, 1997 (the
"Pooling and Servicing Agreement") by and among the Unaffiliated Seller, the
Depositor, Bankers Trust Company of California, N.A. as both Trustee and as
backup servicer (the "Backup Servicer"), and the Servicer, (ii) such amounts,
including Eligible Investments, as from time to time may be held in the related
Accounts (except as otherwise provided in the Pooling and Servicing Agreement),
each created pursuant to the Pooling and Servicing Agreement, (iii) any
Mortgaged Property, the ownership of which has been effected in the name of the
Servicer on behalf of the Trust as a result of foreclosure or acceptance by the
Servicer of a deed in lieu of foreclosure and that has not been withdrawn from
the Trust Estate, (iv) any Insurance Policies and any rights of the Unaffiliated
Seller in any Insurance Policies and (v) Net Liquidation Proceeds. Such Mortgage
Loans and other amounts and property enumerated above are hereinafter referred
to as the "Trust Estate."
The Original Certificate Principal Balance set forth above is
equal to the product of (i) the Percentage Interest represented by this
Certificate and (ii) the aggregate original principal amount of the Class A-7
Certificates on December 11, 1997 (the "Startup Date"), which aggregate amount
was $8,912,000. The Owner hereof is entitled to principal payments on each
Distribution Date, on or after the Distribution Date determined in accordance
with the terms of the Pooling and Servicing Agreement, which will fully amortize
such Original Certificate Principal Balance over the period from such specified
Distribution Date to the final Distribution Date of the Class A-7 Certificates.
Therefore, the actual outstanding principal amount of this Certificate, on any
date subsequent to December 26, 1997 (the first Distribution Date) may be less
than the Original Certificate Principal Balance set forth above.
Upon receiving the final distribution hereon, the Owner hereof
is required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement provides that, in any event, upon the making of the final distribution
due on this Certificate, this Certificate shall be deemed cancelled for all
purposes under the Pooling and Servicing Agreement.
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
REPRESENTS AN INTEREST IN A CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE
MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY,
IN SECTION 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE"), ASSUMING COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
INSURED OR GUARANTEED BY THE FEDERAL
A-7-2
<PAGE>
DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR
ANY OTHER GOVERNMENTAL AGENCY.
This Certificate is one of a Class of duly-authorized
Certificates designated as Wilshire Mortgage Loan Trust 1997-2, Mortgage
Pass-Through Certificates, Class A-7 Certificates (the "Class A-7 Certificates")
and issued under and subject to the terms, provisions and conditions of the
Pooling and Servicing Agreement, to which Pooling and Servicing Agreement the
Owner of this Certificate by virtue of acceptance hereof assents and by which
such Owner is bound. Also issued under the Pooling and Servicing Agreement are
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 M-1 Certificates, the Class M-2 Certificates, the
Class M-3 Certificates, (collectively, the "Offered Certificates"), the Class B
Certificates, the Class C Certificates and the Class R Certificates; all such
Certificates are collectively referred to herein as the "Certificates."
Terms capitalized herein and not otherwise defined herein
shall have the respective meanings set forth in the Pooling and Servicing
Agreement.
On the 25th day of each month, or, if such day is not a
Business Day, then the next succeeding Business Day (each such day being a
"Distribution Date") commencing December 26, 1997 the Owners of the Class A-7
Certificates as of the close of business on the last business day of the
calendar month immediately preceding the calendar month in which such
Distribution Date occurs (or, with respect to the first Distribution Date, the
close of business on the Closing Date) (the "Record Date") will be entitled to
receive the Class A-7 Interest Distribution relating to such Distribution Date.
Distributions will be made in immediately available funds to such Owners, by
wire transfer or otherwise, to the account of an Owner at a domestic bank or
other entity having appropriate facilities therefor, if such Owner has so
notified the Trustee at least five business days prior to the related Record
Date, or by check mailed to the address of the person entitled thereto as it
appears on the Register.
Each Owner of a Class A-7 Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts distributed on such
Distribution Date to the Owners of the Class A-7 Certificates. The Percentage
Interest of each Class A-7 Certificate as of any date of determination will be
equal to the percentage obtained by dividing the Original Certificate Principal
Balance set forth on such Class A-7 Certificate by $8,912,000.
The Trustee is required to duly and punctually pay
distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code or applicable to any Owner shall be considered as having been paid by
the Trustee to such Owner for all purposes of the Pooling and Servicing
Agreement.
The Mortgage Loans will be serviced by the Wilshire Servicing
Corporation pursuant to the Pooling and
A-7-3
<PAGE>
Servicing Agreement. The Pooling and Servicing Agreement permits the Servicer to
enter into Sub-Servicing Agreements with certain institutions eligible for
appointment as Sub-Servicers for the servicing and administration of certain
Mortgage Loans. No appointment of any Sub-Servicer shall release the Servicer
from any of its obligations under the Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other
obligation of, or an interest in, nor are the underlying Mortgage Loans insured
or guaranteed by, the Unaffiliated Seller, the Depositor, the Servicer, or any
of their subsidiaries and affiliates and are not insured or guaranteed by the
Federal Deposit Insurance Corporation, the Government National Mortgage
Association, or any other governmental agency. This Certificate is limited in
right of payment to certain collections and recoveries and amounts on deposit in
the Accounts, all as more specifically set forth hereinabove and in the Pooling
and Servicing Agreement.
No Owner shall have any right to institute any proceeding,
judicial or otherwise, with respect to the Pooling and Servicing Agreement, or
for the appointment of a receiver or trustee, or for any other remedy under the
Pooling and Servicing Agreement except in compliance with the terms hereof.
Notwithstanding any other provisions in the Pooling and
Servicing Agreement, the Owner of any Certificate shall have the right which is
absolute and unconditional to receive distributions to the extent provided in
the Pooling and Servicing Agreement with respect to such Certificate or to
institute suit for the enforcement of any such distribution, and such right
shall not be impaired without the consent of such Owner.
The Pooling and Servicing Agreement provides that the
obligations created thereby will terminate upon the earlier of (i) the payment
to the Owners of all Certificates of all amounts held by the Trustee and
required to be paid to such Owners pursuant to the Pooling and Servicing
Agreement upon the later to occur of (a) the final payment or other liquidation
(or any advance made with respect thereto) of the last Mortgage Loan in the
Trust Estate or (b) the disposition of all property acquired in respect of any
Mortgage Loan remaining in the Trust Estate or (ii) at any time when a Qualified
Liquidation of the Upper-Tier REMIC and the Lower-Tier REMIC is effected as
described in the Pooling and Servicing Agreement.
The Pooling and Servicing Agreement additionally provides that
(i) the Servicer may, at its option, purchase from the Trust all (but not fewer
than all) remaining Mortgage Loans and other property then constituting the
Trust Estate, and thereby effect early retirement of the Offered Certificates,
on any Remittance Date when the aggregate outstanding Loan Balances of the
Mortgage Loans in the Trust Estate is 10% or less of the sum of the Original
Aggregate Loan Balance of the Mortgage Loans in the Trust Estate, (ii) in the
event that the Servicer does not exercise the option described in clause (i),
the Trustee is required by the Pooling and Servicing Agreement to perform an
Auction Sale of the Mortgage Loans as provided therein, and (iii) under certain
circumstances relating to the qualification of the Trust as a REMIC under the
Code the
A-7-4
<PAGE>
Mortgage Loans may be sold, thereby affecting the early retirement of the Class
A-7 Certificates.
The Trustee shall give written notice of termination of the
Pooling and Servicing Agreement to each Owner in the manner set forth therein.
The Owners of a majority of the Percentage Interests
represented by the Offered Certificates, upon compliance with the requirements
set forth in the Pooling and Servicing Agreement, have the right to exercise any
trust or power set forth in the Pooling and Servicing Agreement with respect to
the Certificates or the Trust Estate.
As provided in the Pooling and Servicing Agreement and subject
to certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register, and thereupon one or more new Certificates of like
Class, tenor and a like Percentage Interest will be issued to the designated
transferee or transferees.
The Trustee is required to furnish certain information on each
Distribution Date to the Owner of this Certificate, as more fully described in
the Pooling and Servicing Agreement.
The Class A-7 Certificates are issuable only as registered
Certificates in denominations of $1,000 original principal amount and integral
multiples of $1,000. As provided in the Pooling and Servicing Agreement and
subject to certain limitations therein set forth, Class A-7 Certificates are
exchangeable for new Class A-7 Certificates of authorized denominations
evidencing the same aggregate principal amount.
The Trustee and any agent of the Trustee may treat the Person
in whose name this Certificate is registered as the owner hereof for all
purposes, and neither the Trustee nor any such agent shall be affected by notice
to the contrary.
A-7-5
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed on behalf of the Trust.
WILSHIRE MORTGAGE LOAN TRUST
1997-2
By: Bankers Trust Company of California,
N.A., as Trustee
By: ____________________________________
Name:
Title:
Trustee Authentication
BANKERS TRUST COMPANY OF CALIFORNIA,
N.A., as Trustee
By: _______________________________
Name:
Title:
Dated: December 11, 1997
A-7-6
<PAGE>
EXHIBIT M-1
WILSHIRE MORTGAGE LOAN TRUST 1997-2
MORTGAGE PASS-THROUGH CERTIFICATE
(7.180% Class M-1 Certificate)
Representing Certain Interests Relating to a Pool of
Mortgage Loans in the Wilshire Mortgage Loan Trust 1997-2
Formed by WMFC 1997-2 Inc., as Unaffiliated Seller, and
Prudential Securities Secured Financing Corporation, as Depositor,
and Serviced by
WILSHIRE SERVICING CORPORATION
Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation ("DTC"),
to the Issuer or its agent for registration of transfer, exchange, or payment,
and any certificate issued is registered in the name of Cede & Co. or in such
other name as is requested by an authorized representative of DTC (and any
payment is made to Cede & Co. or to such other entity as is requested by an
authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered
owner hereof, Cede & Co., has an interest herein.
This certificate does not represent an interest in, or an
obligation of, nor are the underlying Mortgage Loans insured or guaranteed by,
WMFC 1997-2 Inc., Prudential Securities Secured Financing Corporation, Wilshire
Servicing Corporation, or any of their subsidiaries and affiliates. This
certificate represents a fractional ownership interest in the Trust Estate
described herein, moneys in certain Accounts created pursuant to the Pooling and
Servicing Agreement and certain other rights relating thereto and is payable
only from amounts received by the Trustee (i) relating to the Mortgage Loans
held by the Trust, and (ii) from moneys held in such Accounts.
No. M-1- 971885 AM 0
__________________ -------------------
Date CUSIP
May 25, 2028
______________________________________ ---------------------------------
Original Certificate Principal Balance Final Scheduled Distribution Date
____________________
Registered Owner
The registered Owner named above is the registered Owner of a
fractional interest in (i) a pool of fixed- and adjustable-rate, closed-end
mortgage loans (the "Mortgage Loans") sold by WMFC 1997-2 Inc. (the
"Unaffiliated Seller") to Prudential Securities Secured Financing Corporation
(the "Depositor") pursuant to that certain Unaffiliated Seller's Agreement,
dated as of November 1, 1997 (the "Unaffiliated Seller's Agreement") among the
Unaffiliated Seller, the Depositor and Wilshire Servicing Corporation, (the
"Servicer") and sold by the Depositor to Bankers Trust Company of
M-1-1
<PAGE>
California, N.A., a national banking association, as trustee, (the "Trustee") on
behalf of Wilshire Mortgage Loan Trust 1997-2 (the "Trust") pursuant to that
certain Pooling and Servicing Agreement dated as of November 1, 1997 (the
"Pooling and Servicing Agreement") by and among the Unaffiliated Seller, the
Depositor, Bankers Trust Company of California, N.A. as both Trustee and as
backup servicer (the "Backup Servicer"), and the Servicer, (ii) such amounts,
including Eligible Investments, as from time to time may be held in the related
Accounts (except as otherwise provided in the Pooling and Servicing Agreement),
each created pursuant to the Pooling and Servicing Agreement, (iii) any
Mortgaged Property, the ownership of which has been effected in the name of the
Servicer on behalf of the Trust as a result of foreclosure or acceptance by the
Servicer of a deed in lieu of foreclosure and that has not been withdrawn from
the Trust Estate, (iv) any Insurance Policies and any rights of the Unaffiliated
Seller in any Insurance Policies and (v) Net Liquidation Proceeds. Such Mortgage
Loans and other amounts and property enumerated above are hereinafter referred
to as the "Trust Estate."
The Original Certificate Principal Balance set forth above is
equal to the product of (i) the Percentage Interest represented by this
Certificate and (ii) the aggregate original principal amount of the Class M-1
Certificates on December 11, 1997 (the "Startup Date"), which aggregate amount
was $8,236,000. The Owner hereof is entitled to principal payments on certain
Distribution Dates, as described in the Pooling and Servicing Agreement, which
will fully amortize such Original Certificate Principal Balance over the period
from the date of initial delivery hereof to the final Distribution Date of the
Class M-1 Certificates. Distribution of principal to the Owners of the Class M-1
Certificates is subordinate as described in the Pooling and Servicing Agreement.
Therefore, the actual outstanding principal amount of this Certificate, on any
date subsequent to December 26, 1997 (the first Distribution Date) may be less
than the Original Certificate Principal Balance set forth above.
Upon receiving the final distribution hereon, the Owner hereof
is required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement provides that, in any event, upon the making of the final distribution
due on this Certificate, this Certificate shall be deemed cancelled for all
purposes under the Pooling and Servicing Agreement.
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
REPRESENTS AN INTEREST IN A CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE
MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY,
IN SECTION 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE"), ASSUMING COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
M-1-2
<PAGE>
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
This Certificate is one of a Class of duly-authorized
Certificates designated as Wilshire Mortgage Loan Trust 1997-2, Mortgage
Pass-Through Certificates, Class M-1 Certificates (the "Class M-1 Certificates")
and issued under and subject to the terms, provisions and conditions of the
Pooling and Servicing Agreement, to which Pooling and Servicing Agreement the
Owner of this Certificate by virtue of acceptance hereof assents and by which
such Owner is bound. Also issued under the Pooling and Servicing Agreement are
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 M-2 Certificates, the
Class M-3 Certificates, (collectively, the "Offered Certificates"), the Class B
Certificates, the Class C Certificates and the Class R Certificates; all such
Certificates are collectively referred to herein as the "Certificates."
Terms capitalized herein and not otherwise defined herein
shall have the respective meanings set forth in the Pooling and Servicing
Agreement.
On the 25th day of each month, or, if such day is not a
Business Day, then the next succeeding Business Day (each such day being a
"Distribution Date") commencing December 26, 1997 the Owners of the Class M-1
Certificates as of the close of business on the last business day of the
calendar month immediately preceding the calendar month in which such
Distribution Date occurs (or, with respect to the first Distribution Date, the
close of business on the Closing Date) (the "Record Date") will be entitled to
receive the Class M-1 Interest Distribution Amount relating to such Distribution
Date. Distributions will be made in immediately available funds to such Owners,
by wire transfer or otherwise, to the account of an Owner at a domestic bank or
other entity having appropriate facilities therefor, if such Owner has so
notified the Trustee at least five business days prior to the related Record
Date, or by check mailed to the address of the person entitled thereto as it
appears on the Register.
Each Owner of a Class M-1 Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts distributed on such
Distribution Date to the Owners of the Class M-1 Certificates. The Percentage
Interest of each Class M-1 Certificate as of any date of determination will be
equal to the percentage obtained by dividing the Original Certificate Principal
Balance set forth on such Class M-1 Certificate by $8,236,000.
The Trustee is required to duly and punctually pay
distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code or applicable to any Owner shall be considered as having been paid by
the Trustee to such Owner for all purposes of the Pooling and Servicing
Agreement.
M-1-3
<PAGE>
The Mortgage Loans will be serviced by the Wilshire Servicing
Corporation pursuant to the Pooling and Servicing Agreement. The Pooling and
Servicing Agreement permits the Servicer to enter into Sub-Servicing Agreements
with certain institutions eligible for appointment as Sub-Servicers for the
servicing and administration of certain Mortgage Loans. No appointment of any
Sub-Servicer shall release the Servicer from any of its obligations under the
Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other
obligation of, or an interest in, nor are the underlying Mortgage Loans insured
or guaranteed by, the Unaffiliated Seller, the Depositor, the Servicer, or any
of their subsidiaries and affiliates and are not insured or guaranteed by the
Federal Deposit Insurance Corporation, the Government National Mortgage
Association, or any other governmental agency. This Certificate is limited in
right of payment to certain collections and recoveries and amounts on deposit in
the Accounts, all as more specifically set forth hereinabove and in the Pooling
and Servicing Agreement.
No Owner shall have any right to institute any proceeding,
judicial or otherwise, with respect to the Pooling and Servicing Agreement, or
for the appointment of a receiver or trustee, or for any other remedy under the
Pooling and Servicing Agreement except in compliance with the terms hereof.
Notwithstanding any other provisions in the Pooling and
Servicing Agreement, the Owner of any Certificate shall have the right which is
absolute and unconditional to receive distributions to the extent provided in
the Pooling and Servicing Agreement with respect to such Certificate or to
institute suit for the enforcement of any such distribution, and such right
shall not be impaired without the consent of such Owner.
The Pooling and Servicing Agreement provides that the
obligations created thereby will terminate upon the earlier of (i) the payment
to the Owners of all Certificates of all amounts held by the Trustee and
required to be paid to such Owners pursuant to the Pooling and Servicing
Agreement upon the later to occur of (a) the final payment or other liquidation
(or any advance made with respect thereto) of the last Mortgage Loan in the
Trust Estate or (b) the disposition of all property acquired in respect of any
Mortgage Loan remaining in the Trust Estate or (ii) at any time when a Qualified
Liquidation of the Upper-Tier REMIC and the Lower-Tier REMIC is effected as
described in the Pooling and Servicing Agreement.
The Pooling and Servicing Agreement additionally provides that
(i) the Servicer may, at its option, purchase from the Trust all (but not fewer
than all) remaining Mortgage Loans and other property then constituting the
Trust Estate, and thereby effect early retirement of the Offered Certificates,
on any Remittance Date when the aggregate outstanding Loan Balances of the
Mortgage Loans in the Trust Estate is 10% or less of the sum of the Original
Aggregate Loan Balance of the Mortgage Loans in the Trust Estate, (ii) in the
event that the Servicer does not exercise the option described in clause (i),
the Trustee is required by the Pooling and Servicing Agreement to perform an
Auction Sale of the Mortgage Loans as provided therein, and (iii) under certain
M-1-4
<PAGE>
circumstances relating to the qualification of the Trust as a REMIC under the
Code the Mortgage Loans may be sold, thereby affecting the early retirement of
the Class M-1 Certificates.
The Trustee shall give written notice of termination of the
Pooling and Servicing Agreement to each Owner in the manner set forth therein.
The Owners of a majority of the Percentage Interests
represented by the Offered Certificates, upon compliance with the requirements
set forth in the Pooling and Servicing Agreement, have the right to exercise any
trust or power set forth in the Pooling and Servicing Agreement with respect to
the Certificates or the Trust Estate.
As provided in the Pooling and Servicing Agreement and subject
to certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register, and thereupon one or more new Certificates of like
Class, tenor and a like Percentage Interest will be issued to the designated
transferee or transferees.
The Trustee is required to furnish certain information on each
Distribution Date to the Owner of this Certificate, as more fully described in
the Pooling and Servicing Agreement.
The Class M-1 Certificates are issuable only as registered
Certificates in denominations of $1,000 original principal amount and integral
multiples of $1,000. As provided in the Pooling and Servicing Agreement and
subject to certain limitations therein set forth, Class M-1 Certificates are
exchangeable for new Class M-1 Certificates of authorized denominations
evidencing the same aggregate principal amount.
The Trustee and any agent of the Trustee may treat the Person
in whose name this Certificate is registered as the owner hereof for all
purposes, and neither the Trustee nor any such agent shall be affected by notice
to the contrary.
M-1-5
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed on behalf of the Trust.
WILSHIRE MORTGAGE LOAN TRUST
1997-2
By: Bankers Trust Company of California,
N.A., as Trustee
By: ____________________________________
Name:
Title:
Trustee Authentication
BANKERS TRUST COMPANY OF CALIFORNIA,
N.A., as Trustee
By: ______________________________
Name:
Title:
Dated: _______________
M-1-6
<PAGE>
EXHIBIT M-2
WILSHIRE MORTGAGE LOAN TRUST 1997-2
MORTGAGE PASS-THROUGH CERTIFICATE
(7.425% Class M-2 Certificate)
Representing Certain Interests Relating to a Pool of
Mortgage Loans in the Wilshire Mortgage Loan Trust 1997-2
Formed by WMFC 1997-2 Inc., as Unaffiliated Seller, and
Prudential Securities Secured Financing Corporation, as Depositor,
and Serviced by
WILSHIRE SERVICING CORPORATION
Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation ("DTC"),
to the Issuer or its agent for registration of transfer, exchange, or payment,
and any certificate issued is registered in the name of Cede & Co. or in such
other name as is requested by an authorized representative of DTC (and any
payment is made to Cede & Co. or to such other entity as is requested by an
authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered
owner hereof, Cede & Co., has an interest herein.
This certificate does not represent an interest in, or an
obligation of, nor are the underlying Mortgage Loans insured or guaranteed by,
WMFC 1997-2 Inc., Prudential Securities Secured Financing Corporation, Wilshire
Servicing Corporation, or any of their subsidiaries and affiliates. This
certificate represents a fractional ownership interest in the Trust Estate
described herein, moneys in certain Accounts created pursuant to the Pooling and
Servicing Agreement and certain other rights relating thereto and is payable
only from amounts received by the Trustee (i) relating to the Mortgage Loans
held by the Trust, and (ii) from moneys held in such Accounts.
No. M-2- 971885 AN 8
____________________ ---------------
Date CUSIP
May 25, 2028
______________________________________ ---------------------------------
Original Certificate Principal Balance Final Scheduled Distribution Date
____________________
Registered Owner
M-2-1
<PAGE>
The registered Owner named above is the registered Owner of a
fractional interest in (i) a pool of fixed- and adjustable-rate, closed-end
mortgage loans (the "Mortgage Loans") sold by WMFC 1997-2 Inc. (the
"Unaffiliated Seller") to Prudential Securities Secured Financing Corporation
(the "Depositor") pursuant to that certain Unaffiliated Seller's Agreement,
dated as of November 1, 1997 (the "Unaffiliated Seller's Agreement") among the
Unaffiliated Seller, the Depositor and Wilshire Serving Corporation, (the
"Servicer") and sold by the Depositor to Bankers Trust Company of California,
N.A., a national banking association, as trustee, (the "Trustee") on behalf of
Wilshire Mortgage Loan Trust 1997-2 (the "Trust") pursuant to that certain
Pooling and Servicing Agreement dated as of November 1, 1997 (the "Pooling and
Servicing Agreement") by and among the Unaffiliated Seller, the Depositor,
Bankers Trust Company of California, N.A. as both Trustee and as backup servicer
(the "Backup Servicer"), and the Servicer, (ii) such amounts, including Eligible
Investments, as from time to time may be held in the related Accounts (except as
otherwise provided in the Pooling and Servicing Agreement), each created
pursuant to the Pooling and Servicing Agreement, (iii) any Mortgaged Property,
the ownership of which has been effected in the name of the Servicer on behalf
of the Trust as a result of foreclosure or acceptance by the Servicer of a deed
in lieu of foreclosure and that has not been withdrawn from the Trust Estate,
(iv) any Insurance Policies and any rights of the Unaffiliated Seller in any
Insurance Policies and (v) Net Liquidation Proceeds. Such Mortgage Loans and
other amounts and property enumerated above are hereinafter referred to as the
"Trust Estate."
The Original Certificate Principal Balance set forth above is
equal to the product of (i) the Percentage Interest represented by this
Certificate and (ii) the aggregate original principal amount of the Class M-2
Certificates on December 11, 1997 (the "Startup Date"), which aggregate amount
was $7,578,000. The Owner hereof is entitled to principal payments on certain
Distribution Dates, as described in the Pooling and Servicing Agreement, which
will fully amortize such Original Certificate Principal Balance over the period
from the date of initial delivery hereof to the final Distribution Date of the
Class M-2 Certificates. Distribution of principal to the Owners of the Class M-2
Certificates is subordinate as described in the Pooling and Servicing Agreement.
Therefore, the actual outstanding principal amount of this Certificate, on any
date subsequent to December 26, 1997 (the first Distribution Date) will be less
than the Original Certificate Principal Balance set forth above.
Upon receiving the final distribution hereon, the Owner hereof
is required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement provides that, in any event, upon the making of the final distribution
due on this Certificate, this Certificate shall be deemed cancelled for all
purposes under the Pooling and Servicing Agreement.
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
REPRESENTS AN INTEREST IN A CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE
MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY,
IN SECTION 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED
M-2-2
<PAGE>
(THE "CODE"), ASSUMING COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
This Certificate is one of a Class of duly-authorized
Certificates designated as Wilshire Mortgage Loan Trust 1997-2, Mortgage
Pass-Through Certificates, Class M-2 Certificates (the "Class M-2 Certificates")
and issued under and subject to the terms, provisions and conditions of the
Pooling and Servicing Agreement, to which Pooling and Servicing Agreement the
Owner of this Certificate by virtue of acceptance hereof assents and by which
such Owner is bound. Also issued under the Pooling and Servicing Agreement are
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 M-1 Certificates, the
Class M-3 Certificates, (collectively, the "Offered Certificates"), the Class B
Certificates, the Class C Certificates and the Class R Certificates; all such
Certificates are collectively referred to herein as the "Certificates."
Terms capitalized herein and not otherwise defined herein
shall have the respective meanings set forth in the Pooling and Servicing
Agreement.
On the 25th day of each month, or, if such day is not a
Business Day, then the next succeeding Business Day (each such day being a
"Distribution Date") commencing December 26, 1997 the Owners of the Class M-2
Certificates as of the close of business on the last business day of the
calendar month immediately preceding the calendar month in which such
Distribution Date occurs (or, with respect to the first Distribution Date, the
close of business on the Closing Date) (the "Record Date") will be entitled to
receive the Class M-2 Interest Distribution Amount relating to such Distribution
Date. Distributions will be made in immediately available funds to such Owners,
by wire transfer or otherwise, to the account of an Owner at a domestic bank or
other entity having appropriate facilities therefor, if such Owner has so
notified the Trustee at least five business days prior to the related Record
Date, or by check mailed to the address of the person entitled thereto as it
appears on the Register.
Each Owner of a Class M-2 Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts distributed on such
Distribution Date to the Owners of the Class M-2 Certificates. The Percentage
Interest of each Class M-2 Certificate as of any date of determination will be
equal to the percentage obtained by dividing the Original Certificate Principal
Balance set forth on such Class A-1 Certificate by $7,578,000.
M-2-3
<PAGE>
The Trustee is required to duly and punctually pay
distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code or applicable to any Owner shall be considered as having been paid by
the Trustee to such Owner for all purposes of the Pooling and Servicing
Agreement.
The Mortgage Loans will be serviced by the Wilshire Servicing
Corporation pursuant to the Pooling and Servicing Agreement. The Pooling and
Servicing Agreement permits the Servicer to enter into Sub-Servicing Agreements
with certain institutions eligible for appointment as Sub-Servicers for the
servicing and administration of certain Mortgage Loans. No appointment of any
Sub-Servicer shall release the Servicer from any of its obligations under the
Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other
obligation of, or an interest in, nor are the underlying Mortgage Loans insured
or guaranteed by, the Unaffiliated Seller, the Depositor, the Servicer, or any
of their subsidiaries and affiliates and are not insured or guaranteed by the
Federal Deposit Insurance Corporation, the Government National Mortgage
Association, or any other governmental agency. This Certificate is limited in
right of payment to certain collections and recoveries and amounts on deposit in
the Accounts, all as more specifically set forth hereinabove and in the Pooling
and Servicing Agreement.
No Owner shall have any right to institute any proceeding,
judicial or otherwise, with respect to the Pooling and Servicing Agreement, or
for the appointment of a receiver or trustee, or for any other remedy under the
Pooling and Servicing Agreement except in compliance with the terms hereof.
Notwithstanding any other provisions in the Pooling and
Servicing Agreement, the Owner of any Certificate shall have the right which is
absolute and unconditional to receive distributions to the extent provided in
the Pooling and Servicing Agreement with respect to such Certificate or to
institute suit for the enforcement of any such distribution, and such right
shall not be impaired without the consent of such Owner.
The Pooling and Servicing Agreement provides that the
obligations created thereby will terminate upon the earlier of (i) the payment
to the Owners of all Certificates of all amounts held by the Trustee and
required to be paid to such Owners pursuant to the Pooling and Servicing
Agreement upon the later to occur of (a) the final payment or other liquidation
(or any advance made with respect thereto) of the last Mortgage Loan in the
Trust Estate or (b) the disposition of all property acquired in respect of any
Mortgage Loan remaining in the Trust Estate or (ii) at any time when a Qualified
Liquidation of the Upper-Tier REMIC and the Lower-Tier REMIC is effected as
described in the Pooling and Servicing Agreement.
The Pooling and Servicing Agreement additionally provides that
(i) the Servicer may, at its option, purchase from the Trust all (but not fewer
than all) remaining Mortgage Loans and other property then constituting the
Trust Estate, and thereby effect
M-2-4
<PAGE>
early retirement of the Offered Certificates, on any Remittance Date when the
aggregate outstanding Loan Balances of the Mortgage Loans in the Trust Estate is
10% or less of the sum of the Original Aggregate Loan Balance of the Mortgage
Loans in the Trust Estate, (ii) in the event that the Servicer does not exercise
the option described in clause (i), the Trustee is required by the Pooling and
Servicing Agreement to perform an Auction Sale of the Mortgage Loans as provided
therein, and (iii) under certain circumstances relating to the qualification of
the Trust as a REMIC under the Code the Mortgage Loans may be sold, thereby
affecting the early retirement of the Class M-2 Certificates.
The Trustee shall give written notice of termination of the
Pooling and Servicing Agreement to each Owner in the manner set forth therein.
The Owners of a majority of the Percentage Interests
represented by the Offered Certificates, upon compliance with the requirements
set forth in the Pooling and Servicing Agreement, have the right to exercise any
trust or power set forth in the Pooling and Servicing Agreement with respect to
the Certificates or the Trust Estate.
As provided in the Pooling and Servicing Agreement and subject
to certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register, and thereupon one or more new Certificates of like
Class, tenor and a like Percentage Interest will be issued to the designated
transferee or transferees.
The Trustee is required to furnish certain information on each
Distribution Date to the Owner of this Certificate, as more fully described in
the Pooling and Servicing Agreement.
The Class M-2 Certificates are issuable only as registered
Certificates in denominations of $1,000 original principal amount and integral
multiples of $1,000. As provided in the Pooling and Servicing Agreement and
subject to certain limitations therein set forth, Class M-2 Certificates are
exchangeable for new Class M-2 Certificates of authorized denominations
evidencing the same aggregate principal amount.
The Trustee and any agent of the Trustee may treat the Person
in whose name this Certificate is registered as the owner hereof for all
purposes, and neither the Trustee nor any such agent shall be affected by notice
to the contrary.
M-2-5
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed on behalf of the Trust.
WILSHIRE MORTGAGE LOAN TRUST
1997-2
By: Bankers Trust Company of California,
N.A., as Trustee
By: ___________________________________
Name:
Title:
Trustee Authentication
BANKERS TRUST COMPANY OF CALIFORNIA,
N.A., as Trustee
By: _______________________________
Name:
Title:
Dated: ________________
M-2-6
<PAGE>
EXHIBIT M-3
WILSHIRE MORTGAGE LOAN TRUST 1997-2
MORTGAGE PASS-THROUGH CERTIFICATE
(7.770% Class M-3 Certificate)
Representing Certain Interests Relating to a Pool of
Mortgage Loans in the Wilshire Mortgage Loan Trust 1997-2
Formed by WMFC 1997-2 Inc., as Unaffiliated Seller, and
Prudential Securities Secured Financing Corporation, as Depositor,
and Serviced by
WILSHIRE SERVICING CORPORATION
Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation ("DTC"),
to the Issuer or its agent for registration of transfer, exchange, or payment,
and any certificate issued is registered in the name of Cede & Co. or in such
other name as is requested by an authorized representative of DTC (and any
payment is made to Cede & Co. or to such other entity as is requested by an
authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered
owner hereof, Cede & Co., has an interest herein.
This certificate does not represent an interest in, or an
obligation of, nor are the underlying Mortgage Loans insured or guaranteed by,
WMFC 1997-2 Inc., Prudential Securities Secured Financing Corporation, Wilshire
Servicing Corporation, or any of their subsidiaries and affiliates. This
certificate represents a fractional ownership interest in the Trust Estate
described herein, moneys in certain Accounts created pursuant to the Pooling and
Servicing Agreement and certain other rights relating thereto and is payable
only from amounts received by the Trustee (i) relating to the Mortgage Loans
held by the Trust, and (ii) from moneys held in such Accounts.
No. M-3- 971885 AP 3
________________ -------------------
Date CUSIP
$ May 25, 2028
- -------------------------------------- ---------------------------------
Original Certificate Principal Balance Final Scheduled Distribution Date
____________________
Registered Owner
M-3-1
<PAGE>
The registered Owner named above is the registered Owner of a
fractional interest in (i) a pool of fixed- and adjustable-rate, closed-end
mortgage loans (the "Mortgage Loans") sold by WMFC 1997-2 Inc. (the
"Unaffiliated Seller") to Prudential Securities Secured Financing Corporation
(the "Depositor") pursuant to that certain Unaffiliated Seller's Agreement,
dated as of November 1, 1997 (the "Unaffiliated Seller's Agreement") among the
Unaffiliated Seller, the Depositor and Wilshire Servicing Corporation, (the
"Servicer") and sold by the Depositor to Bankers Trust Company of California,
N.A., a national banking association, as trustee, (the "Trustee") on behalf of
Wilshire Mortgage Loan Trust 1997-2 (the "Trust") pursuant to that certain
Pooling and Servicing Agreement dated as of November1, 1997 (the "Pooling and
Servicing Agreement") by and among the Unaffiliated Seller, the Depositor,
Bankers Trust Company of California, N.A. as both Trustee and as backup servicer
(the "Backup Servicer"), and the Servicer, (ii) such amounts, as from time to
time may be held in the related Accounts (except as otherwise provided in the
Pooling and Servicing Agreement), each created pursuant to the Pooling and
Servicing Agreement, (iii) any Mortgaged Property, the ownership of which has
been effected in the name of the Servicer on behalf of the Trust as a result of
foreclosure or acceptance by the Servicer of a deed in lieu of foreclosure and
that has not been withdrawn from the Trust Estate, (iv) any Insurance Policies
and any rights of the Unaffiliated Seller in any Insurance Policies and (v) Net
Liquidation Proceeds. Such Mortgage Loans and other amounts and property
enumerated above are hereinafter referred to as the "Trust Estate."
The Original Certificate Principal Balance set forth above is
equal to the product of (i) the Percentage Interest represented by this
Certificate and (ii) the aggregate original principal amount of the Class M-3
Certificates on December 11, 1997 (the "Startup Date"), which aggregate amount
was $6,260,000. The Owner hereof is entitled to principal payments on certain
Distribution Dates, as described in the Pooling and Servicing Agreement, which
will fully amortize such Original Certificate Principal Balance over the period
from the date of initial delivery hereof to the final Distribution Date of the
Class M-3 Certificates. Distribution of principal to the Owners of the Class M-3
Certificates is subordinate as described in the Pooling and Servicing Agreement.
Therefore, the actual outstanding principal amount of this Certificate, on any
date subsequent to December 26, 1997 (the first Distribution Date) will be less
than the Original Certificate Principal Balance set forth above.
Upon receiving the final distribution hereon, the Owner hereof
is required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement provides that, in any event, upon the making of the final distribution
due on this Certificate, this Certificate shall be deemed cancelled for all
purposes under the Pooling and Servicing Agreement.
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
REPRESENTS AN INTEREST IN A CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE
MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY,
IN SECTION 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED
M-3-2
<PAGE>
(THE "CODE"), ASSUMING COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
This Certificate is one of a Class of duly-authorized
Certificates designated as Wilshire Mortgage Loan Trust 1997-2, Mortgage
Pass-Through Certificates, Class M-3 Certificates (the "Class M-3 Certificates")
and issued under and subject to the terms, provisions and conditions of the
Pooling and Servicing Agreement, to which Pooling and Servicing Agreement the
Owner of this Certificate by virtue of acceptance hereof assents and by which
such Owner is bound. Also issued under the Pooling and Servicing Agreement are
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 M-1 Certificates, the
Class M-3 Certificates, (collectively, the "Offered Certificates"), the Class B
Certificates, the Class C Certificates and the Class R Certificates; all such
Certificates are collectively referred to herein as the "Certificates."
Terms capitalized herein and not otherwise defined herein
shall have the respective meanings set forth in the Pooling and Servicing
Agreement.
On the 25th day of each month, or, if such day is not a
Business Day, then the next succeeding Business Day (each such day being a
"Distribution Date") commencing December 26, 1997, the Owners of the Class M-3
Certificates as of the close of business on the last business day of the
calendar month immediately preceding the calendar month in which such
Distribution Date occurs (or, with respect to the first Distribution Date, the
close of business on the Closing Date) (the "Record Date") will be entitled to
receive the Class M-3 Interest Distribution Amount relating to such Distribution
Date. Distributions will be made in immediately available funds to such Owners,
by wire transfer or otherwise, to the account of an Owner at a domestic bank or
other entity having appropriate facilities therefor, if such Owner has so
notified the Trustee at least five business days prior to the related Record
Date, or by check mailed to the address of the person entitled thereto as it
appears on the Register.
Each Owner of a Class M-3 Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts distributed on such
Distribution Date to the Owners of the Class M-3 Certificates. The Percentage
Interest of each Class M-3 Certificate as of any date of determination will be
equal to the percentage obtained by dividing the Original Certificate Principal
Balance set forth on such Class M-3 Certificate by $6,260,000.
M-3-3
<PAGE>
The Trustee is required to duly and punctually pay
distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code or applicable to any Owner shall be considered as having been paid by
the Trustee to such Owner for all purposes of the Pooling and Servicing
Agreement.
The Mortgage Loans will be serviced by the Wilshire Servicing
Corporation pursuant to the Pooling and Servicing Agreement. The Pooling and
Servicing Agreement permits the Servicer to enter into Sub-Servicing Agreements
with certain institutions eligible for appointment as Sub-Servicers for the
servicing and administration of certain Mortgage Loans. No appointment of any
Sub-Servicer shall release the Servicer from any of its obligations under the
Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other
obligation of, or an interest in, nor are the underlying Mortgage Loans insured
or guaranteed by, the Unaffiliated Seller, the Depositor, the Servicer, or any
of their subsidiaries and affiliates and are not insured or guaranteed by the
Federal Deposit Insurance Corporation, the Government National Mortgage
Association, or any other governmental agency. This Certificate is limited in
right of payment to certain collections and recoveries and amounts on deposit in
the Accounts, all as more specifically set forth hereinabove and in the Pooling
and Servicing Agreement.
No Owner shall have any right to institute any proceeding,
judicial or otherwise, with respect to the Pooling and Servicing Agreement, or
for the appointment of a receiver or trustee, or for any other remedy under the
Pooling and Servicing Agreement except in compliance with the terms hereof.
Notwithstanding any other provisions in the Pooling and
Servicing Agreement, the Owner of any Certificate shall have the right which is
absolute and unconditional to receive distributions to the extent provided in
the Pooling and Servicing Agreement with respect to such Certificate or to
institute suit for the enforcement of any such distribution, and such right
shall not be impaired without the consent of such Owner.
The Pooling and Servicing Agreement provides that the
obligations created thereby will terminate upon the earlier of (i) the payment
to the Owners of all Certificates of all amounts held by the Trustee and
required to be paid to such Owners pursuant to the Pooling and Servicing
Agreement upon the later to occur of (a) the final payment or other liquidation
(or any advance made with respect thereto) of the last Mortgage Loan in the
Trust Estate or (b) the disposition of all property acquired in respect of any
Mortgage Loan remaining in the Trust Estate or (ii) at any time when a Qualified
Liquidation of the Upper-Tier REMIC and the Lower-Tier REMIC is effected as
described in the Pooling and Servicing Agreement.
The Pooling and Servicing Agreement additionally provides that
(i) the Servicer may, at its option, purchase from the Trust all (but not fewer
than all) remaining Mortgage Loans and other property then constituting the
Trust Estate, and thereby effect
M-3-4
<PAGE>
early retirement of the Offered Certificates, on any Remittance Date when the
aggregate outstanding Loan Balances of the Mortgage Loans in the Trust Estate is
10% or less of the sum of the Original Aggregate Loan Balance of the Mortgage
Loans in the Trust Estate, (ii) in the event that the Servicer does not exercise
the option described in clause (i), the Trustee is required by the Pooling and
Servicing Agreement to perform an Auction Sale of the Mortgage Loans as provided
therein, and (iii) under certain circumstances relating to the qualification of
the Trust as a REMIC under the Code the Mortgage Loans may be sold, thereby
affecting the early retirement of the Class M-3 Certificates.
The Trustee shall give written notice of termination of the
Pooling and Servicing Agreement to each Owner in the manner set forth therein.
The Owners of a majority of the Percentage Interests
represented by the Offered Certificates, upon compliance with the requirements
set forth in the Pooling and Servicing Agreement, have the right to exercise any
trust or power set forth in the Pooling and Servicing Agreement with respect to
the Certificates or the Trust Estate.
As provided in the Pooling and Servicing Agreement and subject
to certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register, and thereupon one or more new Certificates of like
Class, tenor and a like Percentage Interest will be issued to the designated
transferee or transferees.
The Trustee is required to furnish certain information on each
Distribution Date to the Owner of this Certificate, as more fully described in
the Pooling and Servicing Agreement.
The Class M-3 Certificates are issuable only as registered
Certificates in denominations of $1,000 original principal amount and integral
multiples of $1,000. As provided in the Pooling and Servicing Agreement and
subject to certain limitations therein set forth, Class M-3 Certificates are
exchangeable for new Class M-3 Certificates of authorized denominations
evidencing the same aggregate principal amount.
The Trustee and any agent of the Trustee may treat the Person
in whose name this Certificate is registered as the owner hereof for all
purposes, and neither the Trustee nor any such agent shall be affected by notice
to the contrary.
M-3-5
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed on behalf of the Trust.
WILSHIRE MORTGAGE LOAN TRUST
1997-2
By: Bankers Trust Company of California,
N.A., as Trustee
By: ___________________________________
Name:
Title:
Trustee Authentication
BANKERS TRUST COMPANY OF CALIFORNIA,
N.A., as Trustee
By: ______________________________
Name:
Title:
Dated: December 11, 1997
M-3-6
<PAGE>
EXHIBIT B-1
WILSHIRE MORTGAGE LOAN TRUST 1997-2
MORTGAGE PASS-THROUGH CERTIFICATE
(8.99% Class B Certificate)
Representing Certain Interests Relating to a Pool of
Mortgage Loans in the Wilshire Mortgage Loan Trust 1997-2
Formed by WMFC 1997-2 Inc., as Unaffiliated Seller, and
Prudential Securities Secured Financing Corporation, as Depositor,
and Serviced by
WILSHIRE SERVICING CORPORATION
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF CERTAIN PAYMENTS
TO THE OFFERED CERTIFICATES AS DESCRIBED IN THE POOLING AND SERVICING AGREEMENT
REFERRED TO HEREIN. DISTRIBUTIONS HEREON ARE SUBJECT TO THE PRIOR RIGHT OF THE
OWNERS OF THE OFFERED CERTIFICATES.
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY
STATE IN RELIANCE UPON EXEMPTIONS PROVIDED BY THE SECURITIES ACT AND SUCH STATE
SECURITIES LAWS. NO RESALE OR OTHER TRANSFER OF THIS CERTIFICATE MAY BE MADE
UNLESS SUCH RESALE OR TRANSFER (A) IS MADE IN ACCORDANCE WITH SECTION 5.8 OF THE
POOLING AND SERVICING AGREEMENT, (B) IS MADE (i) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, (ii) IN A TRANSACTION EXEMPT
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE
SECURITIES LAWS, (iii) TO THE UNAFFILIATED SELLER OR (iv) TO A PERSON WHO THE
UNAFFILIATED SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT THAT IS AWARE THAT THE
RESALE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A AND (C) UPON THE
SATISFACTION OF CERTAIN OTHER REQUIREMENTS SPECIFIED IN THE AGREEMENT. NONE OF
THE UNAFFILIATED SELLER, THE SERVICER, THE DEPOSITOR, THE TRUST OR THE TRUSTEE
IS OBLIGATED TO REGISTER THE CERTIFICATES UNDER THE SECURITIES ACT OR ANY
APPLICABLE STATE SECURITIES LAWS.
This certificate does not represent an interest in, or an
obligation of, nor are the underlying Mortgage Loans insured or guaranteed by,
WMFC 1997-2 Inc., Prudential Securities Secured Financing Corporation, Wilshire
Servicing Corporation, or any of their subsidiaries and affiliates. This
certificate represents a fractional ownership interest in the Trust Estate
described herein, moneys in certain Accounts created pursuant to the Pooling and
Servicing Agreement and certain other rights relating thereto and is payable
only from amounts received by the Trustee (i) relating to the Mortgage Loans
held by the Trust, and (ii) from moneys held in such Accounts.
B-1-1
<PAGE>
No. B-1-
____________
Date
$ May 25, 2028
- -------------------------------------- ---------------------------------
Original Certificate Principal Balance Final Scheduled Distribution Date
______________________
Registered Owner
The registered Owner named above is the registered Owner of a
fractional interest in (i) a pool of fixed- and adjustable-rate, closed-end
mortgage loans (the "Mortgage Loans") sold by WMFC 1997-2 Inc. (the
"Unaffiliated Seller") to Prudential Securities Secured Financing Corporation
(the "Depositor") pursuant to that certain Unaffiliated Seller's Agreement,
dated as of November 1, 1997 (the "Unaffiliated Seller's Agreement") among the
Unaffiliated Seller, the Depositor and Wilshire Servicing Corporation, (the
"Servicer") and sold by the Depositor to Bankers Trust Company of California,
N.A., a national banking association, as trustee (the "Trustee") on behalf of
Wilshire Mortgage Loan Trust 1997-2 (the "Trust") pursuant to that certain
Pooling and Servicing Agreement dated as of November 1, 1997 (the "Pooling and
Servicing Agreement") by and among the Unaffiliated Seller, the Depositor, the
Servicer, and Bankers Trust Company of California, N.A. as backup servicer (the
"Backup Servicer"), (ii) such amounts, including Eligible Investments, as from
time to time may be held in the related Accounts (except as otherwise provided
in the Pooling and Servicing Agreement), each created pursuant to the Pooling
and Servicing Agreement, (iii) any Mortgaged Property, the ownership of which
has been effected in the name of the Servicer on behalf of the Trust as a result
of foreclosure or acceptance by the Servicer of a deed in lieu of foreclosure
and that has not been withdrawn from the Trust Estate, (iv) any Insurance
Policies and any rights of the Unaffiliated Seller in any Insurance Policies and
(v) Net Liquidation Proceeds. Such Mortgage Loans and other amounts and property
enumerated above are hereinafter referred to as the "Trust Estate."
The Original Certificate Principal Balance set forth above is
equal to the product of (i) the Percentage Interest represented by this
Certificate and (ii) the aggregate original principal amount of the Class B
Certificates on December 11, 1997 (the "Startup Date"), which aggregate amount
was $ 4,284,104.39. The Owner hereof is entitled to principal payments on
certain Distribution Dates, as described in the Pooling and Servicing Agreement,
which will fully amortize such Original Certificate Principal Balance over the
period from the date of initial delivery hereof to the final Distribution Date
of the Class B Certificates. Therefore, the actual outstanding principal amount
of this Certificate, on any date subsequent to December 26, 1997 (the first
Distribution Date) may be less than the Original Certificate Principal Balance
set forth above.
Upon receiving the final distribution hereon, the Owner hereof
is required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement provides that, in any event, upon the making of the final distribution
due on this Certificate, this
B-1-2
<PAGE>
Certificate shall be deemed cancelled for all purposes under the Pooling and
Servicing Agreement.
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
REPRESENTS AN INTEREST IN A CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE
MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY,
IN SECTION 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE"), ASSUMING COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
This Certificate is one of a Class of duly-authorized
Certificates designated as Wilshire Mortgage Loan Trust 1997-2, Mortgage
Pass-Through Certificates, Class B Certificates (the "Class B Certificates") and
issued under and subject to the terms, provisions and conditions of the Pooling
and Servicing Agreement, to which Pooling and Servicing Agreement the Owner of
this Certificate by virtue of its acceptance hereof assents and by which such
Owner is bound. Also issued under the Pooling and Servicing Agreement are 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 M-1 Certificates, the Class
M-2 Certificates, the Class M-3 Certificates, (collectively, the "Offered
Certificates"), the Class C Certificates and the Class R Certificates; all such
Certificates are collectively referred to herein as the "Certificates."
Terms capitalized herein and not otherwise defined herein
shall have the respective meanings set forth in the Pooling and Servicing
Agreement.
On the 25th day of each month, or, if such day is not a
Business Day, then the next succeeding Business Day (each such day being a
"Distribution Date") commencing December 26, 1997, the Owners of the Class B
Certificates as of the close of business on the last Business Day of the
calendar month immediately preceding the calendar month in which such
Distribution Date occurs (or, with respect to the first Distribution Date, the
close of business on the Closing Date) (the "Record Date") will be entitled to
receive the Class B Distribution Amount relating to such Distribution Date.
Distributions will be made in immediately available funds to such Owners, by
wire transfer or otherwise, to the account of an Owner at a domestic bank or
other entity having appropriate facilities therefor, if such Owner has so
notified the Trustee at least
B-1-3
<PAGE>
five business days prior to the related Record Date, or by check mailed to the
address of the person entitled thereto as it appears on the Register.
Each Owner of a Class B Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts distributed on such
Distribution Date to the Owners of the Class B Certificates. The Percentage
Interest of each Class B Certificate as of any date of determination will be
equal to the percentage obtained by dividing the Original Certificate Principal
Balance set forth on such Class B Certificate by $4,284,104.39.
The Trustee is required to duly and punctually pay
distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code or applicable to any Owner shall be considered as having been paid by
the Trustee to such Owner for all purposes of the Pooling and Servicing
Agreement.
The Mortgage Loans will be serviced by the Wilshire Servicing
Corporation pursuant to the Pooling and Servicing Agreement. The Pooling and
Servicing Agreement permits the Servicer to enter into Sub-Servicing Agreements
with certain institutions eligible for appointment as Sub-Servicers for the
servicing and administration of certain Mortgage Loans. No appointment of any
Sub-Servicer shall release the Servicer from any of its obligations under the
Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other
obligation of, or an interest in, nor are the underlying Mortgage Loans insured
or guaranteed by, the Unaffiliated Seller, the Depositor, the Servicer, or any
of their subsidiaries and affiliates and are not insured or guaranteed by the
Federal Deposit Insurance Corporation, the Government National Mortgage
Association, or any other governmental agency. This Certificate is limited in
right of payment to certain collections and recoveries and amounts on deposit in
the Accounts, all as more specifically set forth hereinabove and in the Pooling
and Servicing Agreement.
No Owner shall have any right to institute any proceeding,
judicial or otherwise, with respect to the Pooling and Servicing Agreement, or
for the appointment of a receiver or trustee, or for any other remedy under the
Pooling and Servicing Agreement except in compliance with the terms hereof.
Notwithstanding any other provisions in the Pooling and
Servicing Agreement, the Owner of any Certificate shall have the right which is
absolute and unconditional to receive distributions to the extent provided in
the Pooling and Servicing Agreement with respect to such Certificate or to
institute suit for the enforcement of any such distribution, and such right
shall not be impaired without the consent of such Owner.
The Pooling and Servicing Agreement provides that the
obligations created thereby will terminate upon the earlier of (i) the payment
to the Owners of all amounts held by the Trustee and required to be paid to such
Owners pursuant to the
B-1-4
<PAGE>
Pooling and Servicing Agreement upon the later to occur of (a) the final payment
or other liquidation (or any advance made with respect thereto) of the last
Mortgage Loan in the Trust Estate or (b) the disposition of all property
acquired in respect of any Mortgage Loan remaining in the Trust Estate or (ii)
at any time when a Qualified Liquidation of the Upper-Tier REMIC and the
Lower-Tier REMIC is effected as described in the Pooling and Servicing
Agreement.
The Pooling and Servicing Agreement additionally provides that
(i) the Servicer may, at its option, purchase from the Trust all (but not fewer
than all) remaining Mortgage Loans and other property then constituting the
Trust Estate, and thereby effect early retirement of the Class B Certificates,
on any Remittance Date when the aggregate outstanding Loan Balances of the
Mortgage Loans in the Trust Estate is 10% or less of the sum of the Original
Aggregate Loan Balance of the Mortgage Loans in the Trust Estate, (ii) in the
event that the Servicer does not exercise the option described in clause (i),
the Trustee is required by the Pooling and Servicing Agreement to perform an
Auction Sale of the Mortgage Loans as provided therein, and (iii) under certain
circumstances relating to the qualification of the Trust as a REMIC under the
Code the Mortgage Loans may be sold, thereby affecting the early retirement of
the Class B Certificates.
The Trustee shall give written notice of termination of the
Pooling and Servicing Agreement to each Owner in the manner set forth therein.
The Owners of a majority of the Percentage Interests
represented by the Offered Certificates, upon compliance with the requirements
set forth in the Pooling and Servicing Agreement, have the right to exercise any
trust or power set forth in the Pooling and Servicing Agreement with respect to
the Certificates or the Trust Estate.
As provided in the Pooling and Servicing Agreement and subject
to certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register, and thereupon one or more new Certificates of like
Class, tenor and a like Percentage Interest will be issued to the designated
transferee or transferees.
The Trustee is required to furnish certain information on each
Distribution Date to the Owner of this Certificate, as more fully described in
the Pooling and Servicing Agreement.
The Class B Certificates are issuable only as registered
Certificates in denominations of $1,000 original principal amount and integral
multiples of $1,000. As provided in the Pooling and Servicing Agreement and
subject to certain limitations therein set forth, Class B Certificates are
exchangeable for new Class B Certificates of authorized denominations evidencing
the same aggregate principal amount.
B-1-5
<PAGE>
The Trustee and any agent of the Trustee may treat the Person
in whose name this Certificate is registered as the owner hereof for all
purposes, and neither the Trustee nor any such agent shall be affected by notice
to the contrary.
B-1-6
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed on behalf of the Trust.
WILSHIRE MORTGAGE LOAN TRUST
1997-2
By: Bankers Trust Company of California,
N.A., as Trustee
By: ____________________________________
Name:
Title:
Trustee Authentication
BANKERS TRUST COMPANY OF CALIFORNIA,
N.A., as Trustee
By: ______________________________
Name:
Title:
Dated: December 11, 1997
B-1-7
<PAGE>
EXHIBIT B-2
WILSHIRE MORTGAGE LOAN TRUST 1997-2
MORTGAGE PASS-THROUGH CERTIFICATE
(Class C Certificate)
Representing Certain Interests Relating to a Pool of
Mortgage Loans in the Wilshire Mortgage Loan Trust 1997-2
Formed by WMFC 1997-2 Inc., as Unaffiliated Seller, and
Prudential Securities Secured Financing Corporation, as Depositor,
and Serviced by
WILSHIRE SERVICING CORPORATION
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF CERTAIN PAYMENTS
TO THE OFFERED CERTIFICATES AND THE CLASS B CERTIFICATES AS DESCRIBED IN THE
POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN. DISTRIBUTIONS HEREON ARE
SUBJECT TO THE PRIOR RIGHT OF THE OWNERS OF THE OFFERED CERTIFICATES AND THE
CLASS B CERTIFICATES.
THIS CERTIFICATE REPRESENTS AN "INTEREST ONLY" CERTIFICATE,
AND THE HOLDER THEREOF WILL NOT BE ENTITLED TO RECEIVE DISTRIBUTIONS OF
PRINCIPAL.
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY
STATE IN RELIANCE UPON EXEMPTIONS PROVIDED BY THE SECURITIES ACT AND SUCH STATE
SECURITIES LAWS. NO RESALE OR OTHER TRANSFER OF THIS CERTIFICATE MAY BE MADE
UNLESS SUCH RESALE OR TRANSFER (A) IS MADE IN ACCORDANCE WITH SECTION 5.8 OF THE
POOLING AND SERVICING AGREEMENT, (B) IS MADE (i) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, (ii) IN A TRANSACTION EXEMPT
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE
SECURITIES LAWS, OR (iii) TO THE UNAFFILIATED SELLER AND (C) UPON THE
SATISFACTION OF CERTAIN OTHER REQUIREMENTS SPECIFIED IN THE AGREEMENT. NONE OF
THE UNAFFILIATED SELLER, THE SERVICER, THE TRUST OR THE TRUSTEE IS OBLIGATED TO
REGISTER THE CERTIFICATES UNDER THE SECURITIES ACT OR ANY APPLICABLE STATE
SECURITIES LAWS.
Series 1997-2 Original Notional Balance of the Class C
Certificates: $ 131,789,104.39
Percentage Interest: 100% Issue Date: December 11, 1997
B-2-1
<PAGE>
Cut-Off Date: October 31, 1997 First Distribution Date: December 26, 1997
Date of Pooling and Registered Owner: Prudential Securities
Servicing Agreement: November 1,1997 Incorporated
This certificate does not represent an interest in, or an
obligation of, nor are the underlying Mortgage Loans insured or guaranteed by,
WMFC 1997-2 Inc., Prudential Securities Secured Financing Corporation, Wilshire
Servicing Corporation, or any of their subsidiaries and affiliates. This
certificate represents a fractional ownership interest in the Trust Estate
described herein, moneys in certain Accounts created pursuant to the Pooling and
Servicing Agreement and certain other rights relating thereto and is payable
only from amounts received by the Trustee (i) relating to the Mortgage Loans
held by the Trust, and (ii) from moneys held in such Accounts.
The registered Owner named above is the registered Owner of a
fractional interest in (i) a pool of fixed- and adjustable-rate, closed-end
mortgage loans (the "Mortgage Loans") sold by WMFC 1997-2 Inc. (the
"Unaffiliated Seller") to Prudential Securities Secured Financing Corporation
(the "Depositor") pursuant to that certain Unaffiliated Seller's Agreement,
dated as of November 1, 1997 (the "Unaffiliated Seller's Agreement") among the
Unaffiliated Seller, the Depositor and Wilshire Servicing Corporation, (the
"Servicer") and sold by the Depositor to the Wilshire Mortgage Loan Trust 1997-2
(the "Trust") pursuant to that certain Pooling and Servicing Agreement dated as
of November 1, 1997 (the "Pooling and Servicing Agreement") by and among the
Unaffiliated Seller, the Depositor, the Servicer, and Bankers Trust Company of
California, N.A. as trustee (the "Trustee") and as backup servicer (the "Backup
Servicer"), (ii) such amounts, including Eligible Investments, as from time to
time may be held in the related Accounts (except as otherwise provided in the
Pooling and Servicing Agreement), each created pursuant to the Pooling and
Servicing Agreement, (iii) any Mortgaged Property, the ownership of which has
been effected in the name of the Servicer on behalf of the Trust as a result of
foreclosure or acceptance by the Servicer of a deed in lieu of foreclosure and
that has not been withdrawn from the Trust Estate, (iv) any Insurance Policies
and any rights of the Unaffiliated Seller in any Insurance Policies and (v) Net
Liquidation Proceeds. Such Mortgage Loans and other amounts and property
enumerated above are hereinafter referred to as the "Trust Estate."
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
REPRESENTS AN INTEREST IN A CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE
MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY,
IN SECTION 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE"), ASSUMING COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.
B-2-2
<PAGE>
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
[THE FOLLOWING INFORMATION IS PROVIDED FOR THE PURPOSE OF
APPLYING THE U.S. FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT (`OID") RULES TO
THIS CERTIFICATE. THE ISSUE DATE OF THIS CERTIFICATE IS December 11, 1997. THE
PER ANNUM INTEREST RATE ON THIS CERTIFICATE DURING THE INITIAL INTEREST ACCRUAL
PERIOD AND DURING SUBSEQUENT INTEREST ACCRUAL PERIODS WILL BE DETERMINED AS
DESCRIBED IN THE PROSPECTUS. ASSUMING THAT THE ISSUE PRICE OF THIS CERTIFICATE
IS 5.53915290174% OF ITS ORIGINAL NOTIONAL BALANCE, THIS CERTIFICATE HAS BEEN
ISSUED WITH AN AMOUNT OF OID EQUAL TO $7,300 PER $1000 OF INITIAL PRINCIPAL
AMOUNT PLUS ALL ACCRUALS OF INTEREST WITH RESPECT TO THE CERTIFICATE. PERIODIC
ACCRUALS OF OID WILL BE MADE ASSUMING THAT PRINCIPAL PAYMENTS ARE MADE ON THE
MORTGAGE LOANS UNDERLYING THE GNMA CERTIFICATES AT THE RATE THE ("PREPAYMENT
ASSUMPTION") DESCRIBED IN THE PROSPECTUS SUPPLEMENT. THE YIELD TO MATURITY IS
100%. NO REPRESENTATION IS MADE AS TO THE RATE AT WHICH PRINCIPAL PAYMENTS WILL
BE MADE ON THE MORTGAGE LOANS UNDERLYING THE GNMA SECURITIES.]
This Certificate is one of a Class of duly-authorized
Certificates designated as Wilshire Mortgage Loan Trust 1997-2, Mortgage
Pass-Through Certificates, Class C Certificates (the "Class C Certificates") and
issued under and subject to the terms, provisions and conditions of the Pooling
and Servicing Agreement, to which Pooling and Servicing Agreement the Owner of
this Certificate by virtue of acceptance hereof assents and by which such Owner
is bound. Also issued under the Pooling and Servicing Agreement are 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 M-1 Certificates, the Class M-2
Certificates, the Class M-3 Certificates, (together, the "Offered
Certificates"), the Class B Certificates, the Class C Certificates and the Class
R Certificates; all such Certificates are collectively referred to herein as the
"Certificates."
Terms capitalized herein and not otherwise defined herein
shall have the respective meanings set forth in the Pooling and Servicing
Agreement.
On the 25th day of each month, or, if such day is not a
Business Day, then the next succeeding Business Day (each such day being a
"Distribution Date") commencing December 26, 1997, the Owners of the Class C
Certificates as of the close
B-2-3
<PAGE>
of business on the last business day of the calendar month immediately preceding
the calendar month in which such Distribution Date occurs (or, with respect to
the first Distribution Date, the close of business on the Closing Date) (the
"Record Date") will be entitled to receive the Class C Distribution Amount
relating to such Distribution Date. Distributions will be made in immediately
available funds to such Owners, by wire transfer or otherwise, to the account of
an Owner at a domestic bank or other entity having appropriate facilities
therefor, if such Owner has so notified the Trustee at least five business days
prior to the related Record Date, or by check mailed to the address of the
person entitled thereto as it appears on the Register.
The Trustee is required to duly and punctually pay
distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code or applicable to any Owner shall be considered as having been paid by
the Trustee to such Owner for all purposes of the Pooling and Servicing
Agreement.
Upon receiving the final distribution hereon, the Owner hereof
is required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement provides that, in any event, upon the making of the final distribution
due on this Certificate, this Certificate shall be deemed cancelled for all
purposes under the Pooling and Servicing Agreement.
The Mortgage Loans will be serviced by the Wilshire Servicing
Corporation pursuant to the Pooling and Servicing Agreement. The Pooling and
Servicing Agreement permits the Servicer to enter into Sub-Servicing Agreements
with certain institutions eligible for appointment as Sub-Servicers for the
servicing and administration of certain Mortgage Loans. No appointment of any
Sub-Servicer shall release the Servicer from any of its obligations under the
Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other
obligation of, or an interest in, nor are the underlying Mortgage Loans insured
or guaranteed by, the Unaffiliated Seller, the Depositor, the Servicer, or any
of their subsidiaries and affiliates and are not insured or guaranteed by the
Federal Deposit Insurance Corporation, the Government National Mortgage
Association, or any other governmental agency. This Certificate is limited in
right of payment to certain collections and recoveries and amounts on deposit in
the Accounts (except as otherwise provided in the Pooling and Servicing
Agreement), all as more specifically set forth hereinabove and in the Pooling
and Servicing Agreement.
No Owner shall have any right to institute any proceeding,
judicial or otherwise, with respect to the Pooling and Servicing Agreement, or
for the appointment of a receiver or trustee, or for any other remedy under the
Pooling and Servicing Agreement except in compliance with the terms hereof.
Notwithstanding any other provisions in the Pooling and
Servicing Agreement, the Owner of any Certificate shall have the right which is
absolute and
B-2-4
<PAGE>
unconditional to receive distributions to the extent provided in the Pooling and
Servicing Agreement with respect to such Certificate or to institute suit for
the enforcement of any such distribution, and such right shall not be impaired
without the consent of such Owner.
The Pooling and Servicing Agreement provides that the
obligations created thereby will terminate upon the earlier of (i) the payment
to the Owners of all all amounts held by the Trustee and required to be paid to
such Owners pursuant to the Pooling and Servicing Agreement upon the later to
occur of (a) the final payment or other liquidation (or any advance made with
respect thereto) of the last Mortgage Loan in the Trust Estate or (b) the
disposition of all property acquired in respect of any Mortgage Loan remaining
in the Trust Estate or (ii) at any time when a Qualified Liquidation of the
Upper-Tier REMIC and the Lower-Tier REMIC is effected as described in the
Pooling and Servicing Agreement
The Pooling and Servicing Agreement additionally provides that
(i) the Servicer may, at its option, purchase from the Trust all (but not fewer
than all) remaining Mortgage Loans and other property then constituting the
Trust Estate, and thereby effect early retirement of the Class C Certificates,
on any Remittance Date when the aggregate outstanding Loan Balances of the
Mortgage Loans in the Trust Estate is 10% or less of the sum of the Original
Aggregate Loan Balance of the Mortgage Loans in the Trust Estate, (ii) in the
event that the Servicer does not exercise the option described in clause (i),
the Trustee is required by the Pooling and Servicing Agreement to perform an
Auction Sale of the Mortgage Loans as provided therein, and (iii) under certain
circumstances relating to the qualification of the Trust as a REMIC under the
Code the Mortgage Loans may be sold, thereby affecting the early retirement of
the Class C Certificates.
The Trustee shall give written notice of termination of the
Pooling and Servicing Agreement to each Owner in the manner set forth therein.
The Owners of a majority of the Percentage Interests
represented by the Offered Certificates, upon compliance with the requirements
set forth in the Pooling and Servicing Agreement, have the right to exercise any
trust or power set forth in the Pooling and Servicing Agreement with respect to
the Certificates or the Trust Estate.
As provided in the Pooling and Servicing Agreement and subject
to certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register, and thereupon one or more new Certificates of like
Class, tenor and a like Percentage Interest will be issued to the designated
transferee or transferees.
The Trustee is required to furnish certain information on each
Distribution Date to the Owner of this Certificate, as more fully described in
the Pooling and Servicing Agreement.
B-2-5
<PAGE>
The Class C Certificates are issuable only as registered
Certificates in denominations representing percentage interest. As provided in
the Pooling and Servicing Agreement and subject to certain limitations therein
set forth, Class C Certificates are exchangeable for new Class C Certificates of
authorized denominations evidencing the same aggregate principal amount.
The Trustee and any agent of the Trustee may treat the Person
in whose name this Certificate is registered as the owner hereof for all
purposes, and neither the Trustee or any such agent shall be affected by notice
to the contrary.
B-2-6
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed on behalf of the Trust.
WILSHIRE MORTGAGE LOAN TRUST
1997-2
By: Bankers Trust Company of California,
N.A., as Trustee
By: ___________________________________
Name:
Title:
Trustee Authentication
BANKERS TRUST COMPANY OF CALIFORNIA,
N.A., as Trustee
By: ______________________________
Name:
Title:
Dated: December 11, 1997
B-2-7
<PAGE>
EXHIBIT C
CLASS R CERTIFICATE
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE
WITHOUT REGISTRATION THEREOF UNDER THE ACT MAY BE MADE ONLY IN A TRANSACTION
EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 5.8 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
REPRESENTS AN INTEREST IN THE ONLY "RESIDUAL INTEREST" IN A "REAL ESTATE
MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY,
IN SECTION 860G and 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE"), ASSUMING COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.
TRANSFER OF THIS CLASS R CERTIFICATE IS RESTRICTED AS SET
FORTH IN THE POOLING AND SERVICING AGREEMENT. NO TRANSFER OF THIS CLASS R
CERTIFICATE MAY BE MADE TO A "DISQUALIFIED ORGANIZATION" AS DEFINED IN SECTION
860E(e)(5) OF THE CODE. SUCH TERM INCLUDES THE UNITED STATES, ANY STATE OR
POLITICAL SUBDIVISION THEREOF, ANY FOREIGN GOVERNMENT, ANY INTERNATIONAL
ORGANIZATION, ANY AGENCY OR INSTRUMENTALITY OF ANY OF THE FOREGOING (OTHER THAN
CERTAIN TAXABLE INSTRUMENTALITIES), ANY COOPERATIVE ORGANIZATION FURNISHING
ELECTRIC ENERGY OR PROVIDING TELEPHONE SERVICE TO PERSONS IN RURAL AREAS, OR ANY
ORGANIZATION (OTHER THAN A FARMERS' COOPERATIVE) THAT IS EXEMPT FROM FEDERAL
INCOME TAX UNLESS SUCH ORGANIZATION IS SUBJECT TO THE TAX ON UNRELATED BUSINESS
INCOME. NO TRANSFER OF THIS CLASS R CERTIFICATE WILL BE REGISTERED BY THE
TRUSTEE UNLESS THE PROPOSED TRANSFEREE HAS DELIVERED AN AFFIDAVIT AFFIRMING,
AMONG OTHER THINGS, THAT THE PROPOSED TRANSFEREE IS NOT A DISQUALIFIED
ORGANIZATION AND IS NOT ACQUIRING THE CLASS R CERTIFICATE FOR THE ACCOUNT OF A
DISQUALIFIED ORGANIZATION. A COPY OF THE FORM OF AFFIDAVIT REQUIRED OF EACH
PROPOSED TRANSFEREE IS ON FILE AND AVAILABLE FROM THE TRUSTEE.
C-1
<PAGE>
A TRANSFER IN VIOLATION OF THE APPLICABLE RESTRICTIONS MAY
GIVE RISE TO A SUBSTANTIAL TAX UPON THE UNAFFILIATED SELLER OR, IN CERTAIN
CASES, UPON AN AGENT ACTING FOR THE TRANSFEREE. A PASS-THROUGH ENTITY THAT HOLDS
THIS CLASS R CERTIFICATE AND THAT HAS A DISQUALIFIED ORGANIZATION AS A RECORD
OWNER IN ANY TAXABLE YEAR GENERALLY WILL BE SUBJECT TO A TAX FOR EACH SUCH YEAR
EQUAL TO THE PRODUCT OF (A) THE AMOUNT OF EXCESS INCLUSIONS WITH RESPECT TO THE
PORTION OF THIS CERTIFICATE OWNED THROUGH SUCH PASS-THROUGH ENTITY BY SUCH
DISQUALIFIED ORGANIZATION, AND (B) THE HIGHEST MARGINAL FEDERAL TAX RATE ON
CORPORATIONS. FOR PURPOSES OF THE PRECEDING SENTENCE, THE TERM "PASS-THROUGH"
ENTITY INCLUDES REGULATED INVESTMENT COMPANIES, REAL ESTATE INVESTMENT TRUSTS,
COMMON TRUST FUNDS, PARTNERSHIPS, TRUSTS, ESTATES, COOPERATIVES TO WHICH PART I
OF SUBCHAPTER I OF THE CODE APPLIES AND, EXCEPT AS PROVIDED IN REGULATIONS,
NOMINEES.
WILSHIRE MORTGAGE LOAN TRUST 1997-2
MORTGAGE PASS-THROUGH CERTIFICATE
CLASS R
Representing Certain Interests Relating to a Pool of Mortgage Loans Formed by
WMFC 1997-2 Inc., as Unaffiliated Seller, and Prudential Securities Secured
Financing Corporation, as Depositor, and Serviced by
WILSHIRE SERVICING CORPORATION
This Certificate does not represent an interest in, or an
obligation of, nor are the underlying Mortgage Loans insured or guaranteed by,
WMFC 1997-2 Inc., Wilshire Servicing Corporation, Prudential Securities Secured
Financing Corporation, or any of their subsidiaries and affiliates. This
Certificate represents a fractional residual ownership interest in the
Lower-Tier REMIC and in the Upper-Ties REMIC described in the Pooling and
Servicing Agreement.
Class R-1 Date:
________________________
Registered Owner
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
INSURED OR GUARANTEED BY THE FEDERAL
C-2
<PAGE>
DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR
ANY OTHER GOVERNMENTAL AGENCY.
This Certificate is one of a Class of duly-authorized
Certificates designated as Wilshire Mortgage Loan Trust 1997-2, Mortgage Loan
Pass-Through Certificates, Class R (the "Class R Certificates") and issued under
and subject to the terms, provisions and conditions of the Pooling and Servicing
Agreement, to which Pooling and Servicing Agreement the Owner of this
Certificate by virtue of acceptance hereof assents and by which such Owner is
bound. Also issued under the Pooling Agreement are Certificates designated as
Class A-1 Certificates, Class A-2 Certificates, Class A-3 Certificates, Class
A-4 Certificates, Class A-5 Certificates, Class A-6 Certificates, Class A-7
Certificates, Class M-1 Certifictes, Class M-2 Certificates, Class M-3
Certificates (collectively the "Offered Certifocates") Class B Certificates,
Class C Certificates (together with the Class R Certificates, the
"Certificates.")
Terms capitalized herein and not otherwise defined herein
shall have the respective meanings set forth in the Pooling Agreement.
On the 25th day of each month, or, if such day is not a
Business Day, then the next succeeding Business Day (each such day being a
"Distribution Date"), commencing December 26, 1997 to the Owners of the Class R
Certificates as of the close of business on the first Business Day of the
calendar month in which such Distribution Date occurs (the "Record Date"), the
Trustee will distribute to each Owner of the Class R Certificates such Owner's
Percentage Interest multiplied by the amounts then available to be distributed
to the Owners of the Class R Certificates. No significant distributions are
anticipated to be made.
Upon receiving the final distribution hereon, the Owner hereof
is required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement provides that, in any event, upon the making of the final distribution
due on this Certificate, this Certificate shall be deemed cancelled for all
purposes under the Pooling and Servicing Agreement.
The Trustee is required to duly and punctually pay
distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code or applicable state or local law by any Person from a distribution to
any Owner shall be considered as having been paid by the Trustee to such Owner
for all purposes of the Pooling and Servicing Agreement.
Wilshire Servicing Corporation, as Servicer, pursuant to the
Pooling and Servicing Agreement will service the Mortgage Loans. The Pooling and
Servicing Agreement permits the Servicer to enter into Sub-Servicing Agreements
with certain institutions eligible for appointment as Sub-Servicers for the
servicing and administration of the Mortgage Loans. No appointment of any
Sub-Servicer shall release the Servicer from any of its obligations under the
Pooling and Servicing Agreement.
C-3
<PAGE>
No Owner shall have any right to institute any proceeding,
judicial or otherwise, with respect to the Pooling and Servicing Agreement, or
for the appointment of a receiver or trustee, or for any other remedy under the
Pooling and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and
Servicing Agreement, the Owner of any Certificate shall have the right which is
absolute and unconditional to receive distributions to the extent provided in
the Pooling and Servicing Agreement with respect to such Certificate or to
institute suit for the enforcement of any such distribution, and such right
shall not be impaired without the consent of such Owner.
The Pooling and Servicing Agreement provides that the
obligations created thereby will terminate upon the earlier of (i) the payment
to the Owners of all Certificates of all amounts held by the Trustee and
required to be paid to such Owners pursuant to the Pooling and Servicing
Agreement upon the later to occur of (a) the final payment or other liquidation
(or any advance made with respect thereto) of the last Mortgage Loan in the
Trust Estate or (b) the disposition of all property acquired in respect of any
Mortgage Loan remaining in the Trust Estate or (ii) at any time when a Qualified
Liquidation of the Upper-Tier REMIC and the Lower-Tier REMIC is effected as
described in the Pooling and Servicing Agreement.
The Pooling and Servicing Agreement provides that (i) the
Servicer may, at their respective option, purchase from the Trust all (but not
fewer than all) remaining Mortgage Loans and other property then constituting
the Trust Estate, and thereby effect early retirement of the Certificates, on
any Remittance Date when the aggregate outstanding Loan Balance of the Mortgage
Loans is ten percent (10%) or less of the Original Aggregate Loan Balance, (ii)
in the event that the Servicer does not exercise the option described in clause
(i), the Trustee is required by the Pooling and Servicing Agreement to perform
an Auction Sale of the Mortgage Loans as provided therein, and (iii) under
certain circumstances relating to the qualification of the Trust as a REMIC
under the Code, the Mortgage Loans in the Trust Estate may be sold, thereby
effecting the early retirement of the Certificates.
The Trustee shall give written notice of termination of the
Pooling and Servicing Agreement to each Owner in the manner set forth therein.
As provided in the Pooling and Servicing Agreement and subject
to certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in the form set forth in the Pooling and Servicing
Agreement duly executed by, the Owner hereof or his attorney duly authorized in
writing, and thereupon one or more new Certificates of like Class, tenor and a
like Percentage Interest will be issued to the designated transferee or
transferees.
C-4
<PAGE>
The Trustee is required to furnish certain information on each
Distribution Date to the Owner of this Certificate, as more fully described in
the Pooling and Servicing Agreement.
The Class R Certificates are issuable only as registered
Certificates. As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth, Class R Certificates are exchangeable for
new Class R Certificates evidencing the same Percentage Interest as the Class R
Certificates exchanged.
No service charge will be made for any such registration of
transfer or exchange, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person
in whose name this Certificate is registered as the owner hereof for all
purposes, and neither the Trustee or any such agent shall be affected by notice
to the contrary.
C-5
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed on behalf of the Trust.
WILSHIRE MORTGAGE LOAN TRUST
1997-2
By: Bankers Trust Company of California,
N.A., as Trustee
By: _____________________________________
Name:
Title:
Trustee Authentication
BANKERS TRUST COMPANY OF CALIFORNIA,
N.A., as Trustee
By: ______________________________
Name:
Title:
Dated: ____________
C-6
<PAGE>
EXHIBIT D
FORM OF CERTIFICATE RE PREPAID LOANS
I, Lawrence Mendelsohn, President of WMFC 1997-2 Inc., a
Delaware corporation, as unaffiliated seller (the "Unaffiliated Seller"), hereby
certify that between the "Cut-Off Date" (as defined in the Pooling and Servicing
Agreement dated as of November 1, 1997 by and among the Unaffiliated Seller,
Prudential Securities Secured Financing Corporation as Depositor, Wilshire
Servicing Corporation as Servicer, and Bankers Trust Company of California, N.A.
as Trustee and as Backup Servicer) and the date hereof the following Mortgage
Loans (each as defined in said the Pooling and Servicing Agreement) have been
prepaid in full:
Dated: December 11, 1997
By:_____________________
Name:
Title:
<PAGE>
EXHIBIT E
FORM OF TRUSTEE'S ACKNOWLEDGMENT OF RECEIPT
-------------------------------------------
TRUSTEE'S RECEIPT
December 11, 1997
Prudential Securities Secured
Financing Corporation
One New York Plaza
New York, NY 10292
Wilshire Servicing Corporation
1776 S.W. Madison Street
Portland, Oregon 97205
Re: Pooling and Servicing Agreement, dated as of November 1, 1997
among Prudential Securities Secured Financing Corporation, as
Depositor, Wilshire Servicing Corporation, as Servicer, WMFC
1997-2 Inc., as Unaffiliated Seller, and Bankers Trust Company
of California, N.A., as Trustee and Backup Servicer, Mortgage
Pass-Through Certificates, Series 1997-2, Class A-1, Class
A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class A-7,
Class M-1, Class M-2, Class M-3, Class B, Class C and Class R.
Ladies and Gentlemen:
In accordance with Section 3.7 of the above-captioned Pooling
and Servicing Agreement, the undersigned, as Trustee, hereby acknowledges
receipt by it in good faith without notice of adverse claims, subject to the
provisions of Section 3.7 of the Pooling and Servicing Agreement, of the Notes
relating to the Mortgage Loans referred to in Section 3.6(b) of the Pooling and
Servicing Agreement, except with respect to the list of exceptions attached
hereto, and based on its examination and only as to the foregoing, acknowledges
that the information set forth in the Schedule of Mortgage Loans with respect to
the Loan Number, Mortgage Name, Property Address and Original Principal Balance
accurately reflects information set forth in the Mortgage File and declares that
it holds and will hold such documents and the other documents delivered to it
constituting the Loan Files, and that it holds or will hold all such assets and
such other assets included in the definition of "Trust Estate" that are
delivered to it, in trust for the exclusive use and benefit of all present and
future Owners of the Certificates.
The Trustee has made no independent examination of any such
documents beyond the review specifically required in the above-referenced
Pooling and Servicing Agreement. The Trustee makes no representations as to: (i)
the validity, legality, sufficiency, enforceability or genuineness of any such
documents or any of the Mortgage Loans identified on the Mortgage
E-1
<PAGE>
Loan Schedule, or (ii) the collectability, insurability, effectiveness or
suitability of any such Mortgage Loan.
The Schedule of Mortgage Loans is attached to this Receipt.
Capitalized words and phrases used herein shall have the
respective meanings assigned to them in the above-captioned Pooling and
Servicing Agreement.
Bankers Trust Company of California, N.A.,
as Trustee
By: ______________________________________
Name:
Title:
E-2
<PAGE>
ATTACHMENT A
[SEE SCHEDULE 1 TO POOLING AND SERVICING AGREEMENT
-SCHEDULE OF MORTGAGE LOANS]
E-3
<PAGE>
EXHIBIT F
FORM OF POOL CERTIFICATION
--------------------------
WHEREAS, the undersigned is an Authorized Officer of Bankers
Trust Company of California, N.A., a national banking association, acting in its
capacity as trustee (the "Trustee") of a certain pool of mortgage loans (the
"Pool") heretofore conveyed in trust to the Trustee, pursuant to that certain
Pooling and Servicing Agreement dated as of November 1, 1997 (the "Pooling and
Servicing Agreement") by and among WMFC 1997-2 Inc., a Delaware corporation, as
unaffiliated seller (the "Unaffiliated Seller"), Prudential Securities Secured
Financing Corporation, as depositor, Wilshire Servicing Corporation, a Delaware
corporation, as Servicer, and Bankers Trust Company of California as Trustee and
as backup servicer; and
WHEREAS, the Trustee is required, pursuant to Section 3.7(a)
of the Pooling and Servicing Agreement, to review the Loan Files relating to the
Pool within a specified period following the Startup Day and to notify the
Unaffiliated Seller promptly of any defects with respect to the Pool, and the
Unaffiliated Seller is required to remedy such defects or take certain other
action, all as set forth in Section 3.7(b) of the Pooling and Servicing
Agreement; and
WHEREAS, Section 3.7(a) of the Pooling and Servicing Agreement
requires the Trustee to deliver this Pool Certification upon the satisfaction of
certain conditions set forth therein.
NOW, THEREFORE, the Trustee hereby certifies that it has
determined that all required documents (or certified copies of documents listed
in Section 3.6 of the Pooling and Servicing Agreement) have been executed or
received, and that such documents relate to the Mortgage Loans identified in the
Schedule of Mortgage Loans pursuant to Section 3.6(a) of the Pooling and
Servicing Agreement or, in the event that such documents have not been executed
and received or do not so relate to such Mortgage Loans, any remedial action by
the Unaffiliated Seller pursuant to Section 3.7(b) of the Pooling and Servicing
Agreement has been completed, except as noted in the list of exceptions
attached. The Trustee makes no certification hereby, however, with respect to
any intervening assignments or assumption and modification agreements.
BANKERS TRUST COMPANY OF CALIFORNIA, N.A., as Trustee
By: ______________________________
Name:
Title:
Dated: _________________, 199__
F-1
<PAGE>
EXHIBIT G
ORDER TO AUTHENTICATE
December 11, 1997
Bankers Trust Company of
California, N.A.
3 Park Plaza, 16th Floor
Irvine, California 92614
Ladies and Gentlemen:
Pursuant to Section 5.3 of the Pooling and Servicing Agreement
dated as of November 1, 1997 among Prudential Securities Secured Financing
Corporation, WMFC 1997-2 Inc., Wilshire Servicing Corporation and Bankers Trust
Company of California, N.A., you are hereby ordered to authenticate 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 M-1 Certificates, the Class M-2
Certificates, the Class M-3 Certificates, the Class B Certificates, the Class C
Certificates and the Class R Certificates in the following denominations:
Class Number Registered Holder Denomination CUSIP Percentage
- ----- ------ ----------------- ------------ ----- ----------
A-1 A-1-1 Cede & Co. $36,217,000.00 971885 AE 8 100%
A-2 A-2-1 Cede & Co. $10,000,000.00 971885 AE 5 100%
A-3 A-3-1 Cede & Co. $12,000,000.00 971885 AG 3 100%
A-4 A-4-1 Cede & Co. $12,000,000.00 971885 AH 1 100%
A-5 A-5-1 Cede & Co. $10,000,000.00 971885 AJ 7 100%
A-6 A-6-1 Cede & Co. $16,302,000.00 971885 AK 4 100%
A-7 A-7-1 Cede & Co. $ 8,912,000.00 971885 AL 2 100%
M-1 M-1-1 Cede & Co. $ 8,236,000.00 971885 AM 0 100%
M-2 M-2-1 Cede & Co. $ 7,578,000.00 971885 AN 8 100%
M-3 M-3-1 Cede & Co. $ 6,260,000.00 971885 AP 3 100%
B B-1 Prudential Securities $ 4,284,104.39 N/A 100%
Incorporated
C C-1 Prudential Securities None N/A 100%
Incorporated
R R-1 WMFC 1997-2 Inc. None N/A 100%
G-1
<PAGE>
PRUDENTIAL SECURITIES SECURED
FINANCING CORPORATION
By:_____________________________________________
Name:
Title:
G-2
<PAGE>
EXHIBIT H
FORM OF CLASS R TAX MATTERS TRANSFER CERTIFICATE
AFFIDAVIT PURSUANT TO SECTION
860E(e) OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED
STATE OF )
) ss:
COUNTY OF )
[NAME OF OFFICER], being first duly sworn, deposes and says:
1. That [s/he] is [Title of Officer] of [Name of Investor]
(the "Investor"), a [savings institution] [corporation] duly organized and
existing under the laws of [the State of __________] [the United States], on
behalf of which [s/he] makes this affidavit.
2. That (i) the Investor is not a "disqualified organization"
and will not be a "disqualified organization" as of [date of transfer] (For this
purpose, a "disqualified organization" means the United States, any state or
political subdivision thereof, any foreign government, any international
organization, any agency or instrumentality of any of the foregoing (other than
certain taxable instrumentalities), any cooperative organization furnishing
electric energy or providing telephone service to persons in rural areas, or any
organization (other than a farmers' cooperative) that is exempt from federal
income tax unless such organization is subject to the tax on unrelated business
income); (ii) it is not acquiring the Class R Certificates for the account of a
disqualified organization; (iii) it consents to any amendment of the Pooling and
Servicing Agreement that shall be deemed necessary by the Trustee (upon advice
of counsel) to constitute a reasonable arrangement to ensure that the Class R
Certificates will not be owned directly or indirectly by a disqualified
organization; and (iv) it will not transfer any such Class R Certificate unless
(a) it has received from the transferee an affidavit in substantially the same
form as this affidavit containing these same four representations and (b) as of
the time of the transfer, it does not have actual knowledge that such affidavit
is false.
H-1
<PAGE>
IN WITNESS WHEREOF, the Investor has caused this instrument to
be executed on its behalf, pursuant to authority of its Board of Directors, by
its [Title of Officer] and its corporate seal to be hereunto attached, attested
by its [Assistant] Secretary, this __ day of __________, ____.
[NAME OF INVESTOR]
By:___________________________
[Name of Officer]
[Title of Officer]
[Corporate Seal]
Attest:
__________________________
[Assistant] Secretary
Personally appeared before me the above-named [Name of
Officer], known or proved to be the same person who executed the foregoing
instrument and to be the [Title of Officer] of the Investor, and acknowledged to
me that he executed the same as his free act and deed and the free act and deed
of the Investor.
Subscribed and sworn before me this ____ day of _______, ____.
__________________________
NOTARY PUBLIC
COUNTY OF ________________
STATE OF _________________
My commission expires the ____ day of _______________, ____.
H-2
<PAGE>
EXHIBIT I
Form of
Servicer's Monthly Report
Wilshire Mortgage Loan Trust 1997-2
Mortgage Pass-Through Certificates
Series 1997-2
Statement to Owners
<TABLE>
<CAPTION>
INTEREST
ORIGINAL BEGINNING CARRY ENDING
CERTIFICATE CERTIFICATE PRINCIPAL INTEREST TOTAL FORWARD CERTIFICATE
CLASS FACE VALUE BALANCE DISTRIBUTION DISTRIBUTION DISTRIBUTION AMOUNT BALANCE
- ----- ---------- ------- ------------ ------------ ------------ -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
A-1
A-2
A-3
A-4
A-5
A-6
A-7
M-1
M-2
M-3
B
C
RL
RU
TOTAL
</TABLE>
AMOUNT PER $1000 UNIT
<TABLE>
<CAPTION>
BEGINNING CURRENT ENDING
CERTIFICATE PRINCIPAL INTEREST TOTAL PRINCIPAL CERTIFICATE
CLASS CUSIP BALANCE DISTRIBUTION DISTRIBUTION DISTRIBUTION BALANCE BALANCE
- ----- ----- ------- ------------ ------------ ------------ ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
A-1
A-2
A-3
A-4
A-5
A-6
A-7
M-1
M-2
M-3
B
C
RU
</TABLE>
I-1
<PAGE>
PASS THROUGH RATES
<TABLE>
<CAPTION>
ORIGINAL PASS THROUGH CURRENT PASS THROUGH
CLASS RATE RATE CLASS RECORD DATE
<S> <C> <C> <C> <C>
A-1 % % A-1
A-2 % % A-2
A-3 % % A-3
A-4 % % A-4
A-5 % % A-5
A-6 % % A-6
A-7 % % A-7
M-1 % % M-1
M-2 % % M-2
M-3 % % M-3
B % % B
C % % C
RU % % RU
</TABLE>
UNAFFILIATED SELLER: WHFC 1997-2 Inc.
SERVICER: WILSHIRE SERVICING CORPORATION
SUB-SERVICER:
LEAD UNDERWRITER Prudential Securities Incorporated
RECORD DATE:
DISTRIBUTION DATE: FACTOR INFORMATION: __________________
PLEASE DIRECT ANY QUESTIONS OR COMMENTS TO THE FOLLOWING ADMINISTRATOR:
Trust Administrator
Bankers Trust Company of California, National Association
Three Park Plaza, 16th Floor
Irvine, California 92614
Attention: Wilshire Mortgage Loan Trust 1997-2
Tel: (714) 253-7575
Fax: (714) 253-7577
I-2
<PAGE>
Distribution Period:
Information pursuant to Section 7.8(a) of the
Pooling and Servicing Agreement dated as of November 1, 1997
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
(i) Distribution to
Certificates
(ii) Principal Class A-1 Class A-2 Class A-3 Class A-4 Class A-5 Class A-6 Class
Distributions to the
Certificates:
Scheduled Principal
Prepayments
Paid-in-Full Loans
Other Unscheduled
recoveries of
Principal
Substitution Amounts
Loan Repurchases
Principal Portion of
Liquidation Proceeds
Total Principal
(iii) Interest
distributions to the
Certificate Owners
(iv) Monthly Remittance
Amount
Principal
Remittance Amount
Interest Remittance
Amount
(v) Certificate Principal
Balances
(vi) Information furnished
by the Unaffiliated
Seller pursuant to
Section 6049(d)(7)(C)
(vii) Substitution Amounts
and Loan Purchase
Price Amounts
included in the
distribution
(viii) Overcollaterlization
Reduction Amount
(ix) Realized Losses
Cumulative Loss Amount
(x) Pool Factors
(i) Distribution to
Certificates
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
(ii) Principal Class A-7 Class M-1 Class M-2 Class M-3 Class B Class C Class R
Distributions to the
Certificates:
Scheduled Principal
Prepayments
Paid-in-Full Loans
Other Unscheduled
recoveries of
Principal
Substitution Amounts
Loan Repurchases
Principal Portion of
Liquidation Proceeds
Total Principal
(iii) Interest
distributions to the
Certificate Owners
(iv) Monthly Remittance
Amount
Principal
Remittance Amount
Interest Remittance
Amount
(v) Certificate Principal
Balances
(vi) Information furnished
by the Unaffiliated
Seller pursuant to
Section 6049(d)(7)(C)
(vii) Substitution Amounts
and Loan Purchase
Price Amounts
included in the
distribution
(viii) Overcollaterlization
Reduction Amount
(ix) Realized Losses
Cumulative Loss Amount
(x) Pool Factors
</TABLE>
I-3
<PAGE>
Distribution Period:
As to all Mortgage Loans
Delinquency Advances Made
Pain-In-Full Compensating Interest
Accrued Servicing Fees
Servicing Fees Retained
Trustee Fees
Premium Amount
Current Next
Distribution Distribution
Date Date
---- ----
Available Funds
Available Funds
Available Funds Shortfall
Amortized Subordinated Amount Requirement
Excess Subordinated Amount
Specified Subordinated Amount
Subordinated Amount
Subordination Deficiency Amount
Subordination Deficit
Subordination Increase Amount
Subordination Reduction Amount
Principal Carry Forward Amount
Principal Distribution Amount
Reimbursement Amount
Balance of Largest Loan
I-4
<PAGE>
Wilshire Servicing Corporation
Wilshire Credit Corporation
Monthly Delinquency Summary Report
Wilshire Mortgage Loan Trust 1997-2
Dates as of _______________________
Class A Certificates and
Class M Certificates
Ending Number of Loans:
Ending Principal Balance:
<TABLE>
<CAPTION>
DELINQUENT LOANS Count Percent Principal Balamce Percent
<S> <C> <C> <C> <C> <C>
CROSS Delinquent Loans -
Status
1. 30-59 Days
Delinquent
2. 60 - 89 Days
Delinquent
3. 90 or More Days
Delinquent
CROSS Total Delinquencies
Foreclosure Loans - Status Count Percent Principal Balance Percent
1. Current
2. 30 - 59 Days
Delinquent
3. 60 - 89 Days
Delinquent
4.. 90 or More Days
Delinquent
Total Foreclosures
Bankruptcy Loans - Status Count Percent Principal Balance. Percent
1. Current
2. 30 - 59 Days
Delinquent
3. 60 - 89 Days
Delinquent
4. 90 or More Days
Delinquent
Total Bankruptcies
REO Loans - Status from Count Percent Principal Balance Percent Book Value
Foreclosure
1. 30 - 59 Days
2. 60-89 Days
3. 90 or More Days
Total REO
NET DELINQUENCY (Gross Delinquent less Foreclosure Bankruptcy, REO)
Count Percent Principal Balance Percent
1. 30-59 Days
Delinquent
2. 60 - 89 Days
Delinquent
3. 90 or More Days
Delinquent
NET DELINQUENCY
TOTALS
</TABLE>
I-5
<PAGE>
EXHIBIT J
FORM OF SERVICER'S TRUST RECEIPT
To: Bankers Trust Company of California, N.A.
Three Park Plaza, 16th Floor
Irvine, California 92614
Attention: Wilshire Mortgage Loan Trust 1997-2
Date:
In connection with the administration of the mortgage loans
held by you as Trustee under that certain Pooling and Servicing Agreement dated
as of November 1, 1997, by and among Prudential Securities Secured Financing
Corporation, as Depositor, WMFC 1997-2 Inc., as Unaffiliated Seller, Wilshire
Servicing Corporation, as Servicer (the "Servicer"), and you, as Trustee and as
Backup Servicer (the "Agreement"), the Servicer hereby requests a release of the
Loan File held by you as Trustee with respect to the following described
Mortgage Loan for the reason indicated below:
Mortgagor's Name:
Loan No.:
Reason for requesting file:
_______ 1. Mortgage Loan paid in full.
(The Servicer hereby certifies that all
amounts received in connection with the loan
have been or will be credited to the
Certificate Account (whichever is
applicable) pursuant to the Agreement)
_______ 2. Mortgage Loan repurchased pursuant to Section 3.5 or 3.7(b)
of the Agreement.
(The Servicer hereby certifies that the Loan
Purchase Price has been or will be paid to
the Certificate Account pursuant to the
Agreement)
_______ 3. Mortgage Loan substituted.
(The Servicer hereby certifies that a
Qualified Replacement Mortgage has been or
will be assigned and delivered to you along
with the related Loan File pursuant to the
Agreement)
J-1
<PAGE>
_______ 4. The Mortgage Loan is being foreclosed.
_______ 5. Other. (Describe)
Total Number of Mortgage Loans currently held under the Agreement:______________
Total Number of Files now held by the Servicer:_________________________________
The undersigned (i) acknowledges that the above Loan File will
be held by the undersigned in accordance with the provisions of the Agreement
and will be returned to you, except if the Mortgage Loan has been paid in full,
foreclosed, repurchased or substituted for by a Qualified Replacement Mortgage
(in which case the Loan File will be retained by us permanently), and (ii)
certifies that all conditions precedent for delivery of the Loan File requested
by this Trust Receipt have been satisfied.
Capitalized terms used herein shall have the meanings ascribed
to them in the Agreement.
Wilshire Servicing Corporation
By:_________________________________
Name: __________________________
Title:__________________________
J-2
<PAGE>
EXHIBIT K
FORM OF LIQUIDATION REPORT
1. Type of Liquidation (REO disposition/charge-off/short pay-off)
- Date last paid
- Date of foreclosure
- Date of REO
- Date of REO Disposition
- Property Sale Price/Estimated Market Value at disposition
2. Liquidation Proceeds
Principal Prepayment $___________
Property Sale Proceeds ___________
Insurance Proceeds ___________
Other (itemize) ___________
Total Proceeds $___________
3. Liquidation Expenses
Servicing Advances $___________
Monthly Advances ___________
Contingency Fees ___________
Servicing Fees ___________
Annual Expense Escrow Amount ___________
Supplemental Fee (if any) ___________
Additional Interest (if any) ___________
4. Net Liquidation Proceeds $___________
(Item 2 minus Item 3)
5. Principal Balance of Mortgage Loan $___________
6. Loss, if any (Item 5 minus Item 4) $___________
K-1
<PAGE>
EXHIBIT L
AUCTION PROCEDURES
I. Pre-Auction Process
a. If by the ninetieth day following the Unaffiliated Seller's optional
termination date pursuant to Section 9.2 of the Pooling and Servicing
Agreement, the Unaffiliated Seller has not exercised such option, then
a plan of complete liquidation with respect to the Mortgage Loans will
be adopted by the Trustee in order to satisfy REMIC requirements, and
the Trustee will initiate its general auction procedures consisting of
the following: (i) with the assistance of the Unaffiliated Seller,
prepare a general solicitation package along with a confidentiality
agreement; (ii) prepare a list of qualified bidders, in a commercially
reasonable manner; (iii) initiate contact with all qualified bidders;
(iv) send a confidentiality agreement to all qualified bidders; (v)
upon receipt of a signed confidentiality agreement, send solicitation
packages to all interested bidders on behalf of the Trustee; and (vi)
notify the Unaffiliated Seller of all potential bidders and
anticipated timetable.
b. The general solicitation package will include: (i) the prospectus from
the public offering of the Class A Certificates (the "Prospectus");
(ii) a copy of all monthly servicing reports or a copy of all annual
servicing reports and, upon a written request, the prior years'
monthly servicing reports; (iii) a form of a purchase and sale
agreement and servicing agreement for such sale; (iv) a description of
the minimum purchase price required to cause the Trustee to sell the
Mortgage Loans as set forth in Section 9.6 of the Pooling and
Servicing Agreement; (v) a formal bidsheet; (vi) a detailed timetable;
and (vii) a preliminary data tape of the Mortgage Loans as of the most
recent Distribution Date reflecting the same data attributes used to
create the original Cut-Off Date tables for the Prospectus.
c. The Trustee will send solicitation packages to all bidders no later
than the Payment Date preceding the date of the auction, which date
shall be fifteen (15) Business Days before a Distribution Date (the
"Auction Date"). Bidders will be required to submit any due diligence
questions in writing to the Trustee, for determination of their
relevancy, no later than ten (10) Business Days before the Auction
Date. The Unaffiliated Seller and the Trustee will be required to
satisfy all relevant questions at least five (5) Business Days prior
to the Auction Date and distribute the questions and answers to all
bidders.
L-1
<PAGE>
II. Auction Process
a. The Trustee will be allowed to bid in the auction, but will not be
required to do so.
b. The Unaffiliated Seller will also be allowed to bid in the auction if
it deems appropriate, but will not be required to do so.
c. On the Auction Date, all bids will be due by facsimile to such office
as shall be designated by the Trustee by 1:00 p.m. EST; with the
winning bidder to be notified by 2:00 p.m. EST. All acceptable bids
(as described in Section 8.3 of the Pooling and Servicing Agreement)
will be due on a conforming basis on the bid sheet contained in the
solicitation package.
d. If the Trustee receives fewer than two market value bids from
competitive participants in the home equity loan market, the Trustee
may, following consultation with the Unaffiliated Seller, decline to
consummate the sale.
e. Upon notification to the winning bidder, a one percent (1%) good faith
deposit of the aggregate balance of the unpaid principal balances of
the Mortgage Loans as of the last day of the preceding Remittance
Period will be required to be wired to the Trustee upon acceptance of
the bid. This deposit, along with any interest income attributable to
it, will be credited to the purchase price, but will not be
refundable. The Trustee will establish a separate account for the
acceptance of the good faith deposit, until such time as the account
is fully funded and all monies are transferred into the Certificate
Account, such time not to exceed one (1) Business Day before the final
Distribution Date.
f. The winning bidder will receive on the Auction Date a copy of the
draft purchase and sale agreement and servicing agreement.
g. The Trustee will provide to the Unaffiliated Seller a letter
concluding whether or not the winning bid is a fair market value bid.
The Trustee will also provide this letter if it is the winning bidder.
In the case where the Trustee (or the Unaffiliated Seller) is the
winning bidder, it will provide in its letter for market comparables
and valuations.
L-2
<PAGE>
h. The auction will stipulate that the Servicer or a successor Servicer
be retained to service the Mortgage Loans sold pursuant to the terms
of the purchase and sale agreement and the servicing agreement.
L-3
<PAGE>
EXHIBIT M
[RESERVED]
<PAGE>
EXHIBIT N
FORM OF INVESTMENT LETTER
Accredited Investor
[date]
WMFC 1997-2 Inc.
1776 S.W. Madison Street
Portland, OR 97205
Attn: Lawrence Mendelsohn
Bankers Trust Company of California, N.A.
3 Park Plaza - 16th FL
Irvine, CA 92614
Attn: Wilshire Mortgage Loan Trust 1997-2
Ladies and Gentlemen:
In connection with the purchase by _________________ (the
"Purchaser") from ________________________________ of $___________ of Mortgage
Pass-Through Certificates, [B][C] Certificates (the "Certificates"), issued by
Wilshire Mortgage Loan Trust 1997-2 (the "Trust") pursuant to a Pooling and
Servicing Agreement (the "Pooling and Servicing Agreement") dated as of November
1, 1997 among WMFC 1997-2 Inc., as unaffiliated seller (the "Unaffiliated
Seller"), Prudential Securities Secured Financing Corporation, as depositor,
Wilshire Servicing Corporation, as servicer (the "Servicer") and Bankers Trust
Company of California, N.A., as trustee (the "Trustee") and backup servicer (the
"Backup Servicer"), we hereby represent and warrant to, and covenant with, you
that:
1. The Purchaser understands that the Certificates have not
been registered or qualified under the Securities Act of 1933, as amended (the
"1933 Act"), or the securities laws of any state, and therefore cannot be resold
unless they are registered or qualified thereunder or unless an exemption from
registration or qualification is available.
2. The Purchaser is acquiring the Certificates for its own
account or for resale to "qualified institutional buyers" in transactions in
accordance with Rule 144A promulgated under the 1933 Act and not with a view to
distribution of the Certificates in violation of the 1933 Act or for any other
purpose.
3. The Purchaser has such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of the purchase of the Certificates. The Purchaser is an "accredited
investor" within the meaning of Regulation D promulgated under the Securities
Act of 1933, as amended (the "1933 Act").
N-1
<PAGE>
4. The Purchaser will not sell or otherwise transfer any
Certificate, except in compliance with the provisions of Section 5.8 of the
Indenture.
5. The Purchaser understands that the Trust has not been
registered under the Investment Company Act of 1940, as amended.
6. The Purchaser agrees that in the event that at some future
time it wishes to dispose of or exchange its Certificate or Certificates, it
will not transfer or exchange its Certificate or Certificates unless (I) such
Certificate or Certificates are sold in a transaction that does not require
registration under the 1933 Act or registration by the Company under any
applicable State securities laws, and (ii) the Purchaser obtains from any
subsequent purchaser written representations to the same effect as those
contained in the foregoing paragraphs and this paragraph and delivers a copy of
the same to the Trustee.
7. The Purchaser understands that the Certificates bear a
legend to substantially the following effect:
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY
STATE IN RELIANCE UPON EXEMPTIONS PROVIDED BY THE SECURITIES ACT AND SUCH STATE
SECURITIES LAWS. NO RESALE OR OTHER TRANSFER OF THIS CERTIFICATE MAY BE MADE
UNLESS SUCH RESALE OR TRANSFER (A) IS MADE IN ACCORDANCE WITH SECTION 5.8 OF THE
POOLING AND SERVICING AGREEMENT, (B) IS MADE PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, (ii) IN A TRANSACTION EXEMPT
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE
SECURITIES LAWS, (iii) TO THE UNAFFILIATED SELLER OR (iv) TO A PERSON WHO THE
UNAFFILIATED SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT THAT IS AWARE THAT THE
RESALE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A AND (C) UPON THE
SATISFACTION OF CERTAIN OTHER REQUIREMENTS SPECIFIED IN THE AGREEMENT. NONE OF
THE UNAFFILIATED SELLER, THE SERVICER, THE TRUST OR THE TRUSTEE IS OBLIGATED TO
REGISTER THE CERTIFICATES UNDER THE SECURITIES ACT OR ANY APPLICABLE STATE
SECURITIES LAWS.
Very truly yours,
[PURCHASER]
By: _________________________
Name:________________________
Title:_______________________
N-2
<PAGE>
EXHIBIT O
FORM OF INVESTMENT LETTER
Qualified Institutional Buyer
WMFC 1997-2 Inc.
1776 S.W. Madison Street
Portland, Oregon 97205
Attn: Lawrence Mendelsohn
Bankers Trust Company of California, N.A.
3 Park Plaza, 16th Floor
Irvine, California 92614
Attn: Wilshire Mortgage Loan Trust 1997-2
[date]
Ladies and Gentlemen:
In connection with the purchase by ___________ (the
"Purchaser") from ___________________________________ (the "Seller") of
$___________ of Mortgage Pass-Through Certificates, Class [B][C] Certificates
(the "Certificates"), issued by Wilshire Mortgage Loan Trust 1997-2 (the
"Trust") pursuant to a Pooling and Servicing Agreement (the "Pooling and
Servicing Agreement") dated as of November 1, 1997 among WMFC 1997-2 Inc., as
unaffiliated seller (the "Unaffiliated Seller"), Prudential Securities Secured
Financing Corporation, as depositor, Wilshire Servicing Corporation, as servicer
(the "Servicer") and Bankers Trust Company of California, N.A., as trustee (the
"Trustee") and backup servicer (the "Backup Servicer"), we hereby represent and
warrant to, and covenant with, you that:
1. The Purchaser understands that the Certificates have not
been registered or qualified under the Securities Act of 1933, as amended (the
"1933 Act"), or the securities laws of any state, and therefore cannot be resold
unless they are registered or qualified thereunder or unless an exemption from
registration or qualification is available.
2. The Purchaser's intention is to acquire the Certificates
(a) for investment for the Purchaser's own account (or for the account of one or
more other institutional investors for which it is acting as duly authorized
fiduciary or agent, including, without limitation, an insurance company separate
account), or (b) for resale to "qualified institutional buyers" in transactions
under Rule 144A promulgated under the 1933 Act ("Rule 144A") and not in any
event with the view to, or for resale in connection with, any distribution
thereof. It understands that the Certificates have not been registered under the
1933 Act, by reason of a specified exemption from the registration provisions of
the 1933
O-1
<PAGE>
Act which depends upon, among other things, the bona fide nature of the
Purchaser's investment intent (or intent to resell only in Rule 144A
transactions) as expressed herein.
3. The Purchaser will not sell or otherwise transfer any
Certificate, except in compliance with the provision of Section 5.8 of the
Indenture.
4. The Purchaser is a "qualified institutional buyer" within
the meaning of Rule 144A.
5. The Purchaser understands that the Seller may rely on the
exemption from the provisions of Section 5 of the 1933 Act provided by Rule 144A
in connection with the resale.
6. [Version I: The chief financial officer, a person
fulfilling an equivalent function, or another executive
officer has specified in
a certificate substantially in the form attached as Appendix A hereto, the
amount of securities owned and invested on a discretionary basis by the
Purchaser as of [a specific date on or since the close of the Purchaser's most
recent fiscal year]].
[OR]
[Version II: The Purchaser is a member of a family of
investment companies for purposes of Rule 144A, and an executive officer of the
investment adviser has specified in a certificate substantially in the form
attached as Appendix A hereto the amount of securities owned by the family of
investment companies as of [a specific date on or since the close of the
Purchaser's most recent fiscal year]].
O-2
<PAGE>
7. The Purchaser acknowledges either (a) that it has not
requested from any person the information required to be received by the
Purchaser, upon request, pursuant to Rule 144A(d)(4)(i) (the "Required
Information"), or (b) that it has requested and received the Required
Information from the Seller or the Trustee.
Very truly yours,
[PURCHASER]
By:________________________
Name:______________________
Title:_____________________
O-3
<PAGE>
APPENDIX A - VERSION I
OFFICER'S CERTIFICATE OF PURCHASER
FOR PURPOSES OF RULE 144A
The undersigned, ___________________________, an officer of
____________________________ (the "Purchaser"), hereby certifies that the amount
of securities owned and invested on a discretionary basis by the Purchaser or by
the entity or entities that own all of its equity securities, acting for its own
account or the accounts of other "qualified institutional buyers" as defined in
Rule 144A promulgated under the Securities Act of 1933, as amended, as of
[insert a specific date on or since the close of the Purchaser's most recent
fiscal year], including securities owned and invested in by consolidated
subsidiaries thereof (to the extent permitted by Rule 144A(a)(4)), was not less
than $100,000,000. I understand that this Certificate is provided to WMFC 1997-2
Inc. and Bankers Trust Company of California, N.A., as trustee for the purpose
of establishing that the purchaser is a "qualified institutional buyer," and
that WMFC 1997-2 Inc. and Bankers Trust Company of California, N.A., as trustee,
intend to rely on this Certificate in connection therewith.
IN WITNESS WHEREOF, I have hereto signed my name as of _______
day of _____________________, ______.
By:________________________
Name:
Title:
O-4
<PAGE>
APPENDIX A - VERSION II
OFFICER'S CERTIFICATE OF PURCHASER
FOR PURPOSES OF RULE 144A
The undersigned, _________________________, hereby certifies
that he is an executive officer of ___________________, the investment advisor
to ____________________ (the "Purchaser") for purposes of Rule 144A ("Rule
144A") promulgated under the Securities Act of 1933, as amended, and the amount
of securities owned by the Purchaser was not less than $100,000,000 as of
[insert a specific date on or since the close of the Purchaser's most recent
fiscal year]. I understand that this Certificate is provided to WMFC 1997-2 Inc.
and Bankers Trust Company of California, N.A., as trustee, for the purpose of
establishing that the Purchaser is a "qualified institutional buyer" for
purposes of Rule 144A and that WMFC 1997-2 Inc. and Bankers Trust Company of
California, N.A., as trustee, intend to rely on this Certificate in connection
therewith.
IN WITNESS WHEREOF, I have hereto signed my name as of the
______ day of ______________, _____.
By:________________________
Name:
Title:
O-5
<PAGE>
EXHIBIT P
FORM OF ERISA REPRESENTATION LETTER
[Date of Purchase]
WMFC 1997-2 Inc.
1776 S.W. Madison Street
Portland, Oregon 97205
Attn: Lawrence Mendelsohn
Bankers Trust Company of California, N.A.
3 Park Plaza, 16th Floor
Irvine, California 92614
Attn: Wilshire Mortgage Loan Trust 1997-2
Ladies and Gentlemen:
_________________________________________________________________
(the "Purchaser") has today purchased in a private sale from ____________
$__________ Mortgage Pass-Through Certificates, Class [B][C] Certificates (the
"Certificates"), issued by Wilshire Mortgage Loan Trust 1997-2 (the "Trust")
pursuant to a Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement") dated as of November 1, 1997 among WMFC 1997-2 Inc., as unaffiliated
seller (the "Unaffiliated Seller"), Prudential Securities Secured Financing
Corporation, as depositor, Wilshire Servicing Corporation, as servicer (the
"Servicer") and Bankers Trust Company of California, N.A., as trustee (the
"Trustee") and backup servicer (the "Backup Servicer"). Capitalized terms used
but not defined herein shall have the meanings set forth in the Pooling and
Servicing Agreement. The undersigned hereby certifies and agrees on behalf of
the Purchaser:
1. The Purchaser represents that, with respect to the source
of funds to be used by the Purchaser to purchase the Certificates (the
"Source"), the Source is not an "employee benefit plan" (within the meaning of
Section 3(3) of ERISA), a "plan" (within the meaning of Section 4975(e)(1) of
the Code) or an entity whose underlying assets include plan assets by reason of
the investment in the entity by such an "employee benefit plan" or "plan".
2. If the Purchaser sells any of the Certificates, the
Purchaser will
P-1
<PAGE>
obtain from any subsequent purchaser the representation contained in the
foregoing paragraph 1.
Very truly yours,
PURCHASER
___________________________
Name of Purchaser
By:________________________
Name:______________________
Title:_____________________
P-2
EXHIBIT 4.2
UNAFFILIATED SELLER'S AGREEMENT
by and among
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION,
as Depositor,
WMFC 1997-2 INC.
as Unaffiliated Seller
and
WILSHIRE SERVICING CORPORATION,
as Servicer
Dated as of November 1, 1997
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE ONE DEFINITIONS .......................................................1
SECTION 1.01 DEFINITIONS...................................................1
ARTICLE TWO PURCHASE, SALE AND CONVEYANCE OF MORTGAGE LOANS....................1
SECTION 2.01 AGREEMENT TO PURCHASE.........................................1
SECTION 2.02 PURCHASE PRICE................................................1
SECTION 2.03 CONVEYANCE OF MORTGAGE LOANS; POSSESSION OF MORTGAGE FILES....1
SECTION 2.04 DELIVERY OF MORTGAGE LOAN DOCUMENTS...........................1
SECTION 2.05 TRANSFER OF MORTGAGE LOANS; ASSIGNMENT OF AGREEMENT...........1
SECTION 2.06 BOOKS AND RECORDS.............................................1
SECTION 2.07 COST OF DELIVERY OF DOCUMENTS.................................1
ARTICLE THREE REPRESENTATIONS AND WARRANTIES...................................1
SECTION 3.01 REPRESENTATIONS AND WARRANTIES AND COVENANTS
OF THE UNAFFILIATED SELLER....................................1
SECTION 3.02 BREACH OF REPRESENTATIONS AND WARRANTIES; REPURCHASE
OF PURCHASED LOANS............................................1
ARTICLE FOUR ..................................................................1
COVENANTS......................................................................1
ARTICLE FIVE MISCELLANEOUS.....................................................1
SECTION 5.01 CONDITIONS OF DEPOSITOR'S OBLIGATIONS.........................1
SECTION 5.02 CONDITIONS OF UNAFFILIATED SELLER'S OBLIGATIONS...............1
SECTION 5.03 TERMINATION OF DEPOSITOR'S OBLIGATIONS........................1
SECTION 5.04 NOTICES.......................................................1
SECTION 5.05 SEVERABILITY OF PROVISIONS....................................1
SECTION 5.06 AGREEMENT OF UNAFFILIATED SELLER..............................1
SECTION 5.07 SURVIVAL......................................................1
SECTION 5.08 EFFECT OF HEADINGS AND TABLE OF CONTENTS......................1
SECTION 5.09 SUCCESSORS AND ASSIGNS........................................1
SECTION 5.10 GOVERNING LAW.................................................1
SECTION 5.11 CONFIRMATION OF INTENT........................................1
SECTION 5.12 EXECUTION IN COUNTERPARTS.....................................1
SECTION 5.13 COSTS.........................................................1
SECTION 5.14 INDEMNIFICATION...............................................1
SECTION 5.15 MISCELLANEOUS.................................................1
Exhibit A - Schedule of Mortgage Loans
Exhibit B - Form of Officer's Certificate of a Member of the Unaffiliated Seller
Exhibit C - Form of Opinion of Counsel to the Unaffiliated Seller
<PAGE>
This Agreement, dated as of November 1, 1997 (the
"Unaffiliated Seller's Agreement") by and among Prudential Securities Secured
Financing Corporation, a Delaware corporation (the "Depositor"), WMFC 1997-2
Inc, a Delaware corporation (the "Unaffiliated Seller") and Wilshire Servicing
Corporation, a Delaware corporation (the "Servicer").
W I T N E S S E T H:
WHEREAS, Exhibit A attached hereto and made a part hereof
lists certain residential mortgage loans (the "Mortgage Loans") owned by the
Unaffiliated Seller that the Unaffiliated Seller desires to sell to the
Depositor, and that the Depositor desires to purchase from the Unaffiliated
Seller such Mortgage Loans;
WHEREAS, it is the intention of the Unaffiliated Seller and
the Depositor that simultaneously with the Unaffiliated Seller's conveyance of
the Mortgage Loans to the Depositor on the Closing Date, the Depositor shall
deposit the Mortgage Loans in trust pursuant to a Pooling and Servicing
Agreement to be dated as of November 1, 1997 (the "Pooling and Servicing
Agreement"), to be entered into by and among the Depositor, the Unaffiliated
Seller, the Servicer, and Bankers Trust Company of California, N.A., as trustee
(the "Trustee") and as backup servicer (the "Backup Servicer").
NOW, THEREFORE, in consideration of the premises and the
mutual agreements hereinafter set forth, the parties hereto agree as follows:
ARTICLE ONE
DEFINITIONS
Section 1.01 Definitions. Whenever used herein, the following
words and phrases, unless the context otherwise requires, shall have the
meanings specified in this Article:
"Agreement" means this Unaffiliated Seller's Agreement, as
amended or supplemented in accordance with the provisions hereof.
"Closing Date" shall have the meaning ascribed thereto in
Section 2.01(c).
"Schedule of Mortgage Loans" shall have the meaning ascribed
thereto in Section 2.01(b).
"Commission" means the United States Securities and Exchange
Commission.
"Cut-Off Date" means the close of business, October 31, 1997.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
<PAGE>
"Prospectus" means the Prospectus, dated June 10, 1997,
relating to the offering by the Depositor from time to time of its Mortgage
Pass-Through Certificates (Issuable in Series) in the form in which it was or
will be filed with the Commission pursuant to Rule 424(b) under the Securities
Act with respect to the offer and sale of the Certificates.
"Prospectus Supplement" means the Prospectus Supplement, dated
December 4, 1997, relating to the offering of the Certificates in the form in
which it was or will be filed with the Commission pursuant to Rule 424(b) under
the Securities Act with respect to the offer and sale of the Certificates.
"Purchased Assets" shall have the meaning ascribed thereto in
Section 2.03.
"Purchased Loans" shall have the meaning ascribed thereto in
Section 2.03.
"Registration Statement" means that certain registration
statement on Form S-3, as amended (Registration No. 333-27355) relating to the
offering by the Depositor from time to time of its Mortgage Pass-Through
Certificates (Issuable in Series) as heretofore declared effective by the
Commission.
"Securities Act" means the Securities Act of 1933, as amended.
Capitalized terms used herein that are not otherwise defined
shall have the respective meanings ascribed thereto in the Pooling and Servicing
Agreement.
ARTICLE TWO
PURCHASE, SALE AND CONVEYANCE OF MORTGAGE LOANS
Section 2.01 Agreement to Purchase. (a) Subject to the terms
and conditions of this Agreement, the Unaffiliated Seller agrees to sell, and
the Depositor agrees to purchase on the Closing Date, the Mortgage Loans.
(b) Subject to Section 2.07, the Depositor and the
Unaffiliated Seller have agreed upon which of the Unaffiliated Seller's loans
are to be purchased by the Depositor on the Closing Date pursuant to this
Agreement, and the Unaffiliated Seller has prepared a schedule (the "Schedule of
Mortgage Loans") setting forth all of the Mortgage Loans to be purchased under
this Agreement, which schedule is attached hereto as Exhibit A.
(c) The closing for the purchase and sale of the Mortgage
Loans shall take place at the offices of Dewey Ballantine LLP, New York, New
York, at 11.00 a.m., New York time, on December 11, 1997 or such other place and
time as the parties shall agree (such time being herein referred to as the
"Closing Date").
Section 2.02 Purchase Price. On the Closing Date, as full
consideration for the Unaffiliated Seller's sale of the Mortgage Loans to the
Depositor, the Depositor
2
<PAGE>
will deliver to the Unaffiliated Seller (i) an amount in cash equal to $
127,612,439.42, representing payment for the Class A Certificates and the Class
M Certificates, (collectively the "Offered Certificates") (including accrued
interest through but not including the Closing Date, and not including expenses
as described in Section 5.13 hereof), and $ 11,441,476.44, representing payment
for the Class B Certificates (including accrued interest through but not
including the Closing Date) and the Class C Certificates, all payable by wire
transfer of same day funds, and (ii) the Class R Certificates.
Section 2.03 Conveyance of Mortgage Loans; Possession of
Mortgage Files. On the Closing Date, the Unaffiliated Seller hereby sells,
transfers, assigns, sets over and conveys to the Depositor, without recourse but
subject to the terms of this Agreement, all right, title and interest in and to
(i) the Mortgage Loans listed on the Schedule of Mortgage Loans, attached hereto
as Exhibit A (the "Purchased Loans"), (ii) the Loan Files with respect to the
Purchased Loans, (iii) all of the Unaffiliated Seller's right, title and
interest in the Loan Collateral, including, without limitation, insurance
policies and (iv) all monies due or to become due and all amounts received with
respect thereto after the Cut-Off Date, including, without limitation, insurance
policies (collectively, the "Purchased Assets"). Upon payment of the purchase
price for such Mortgage Loans as provided in Section 2.02 of this Agreement, the
Unaffiliated Seller shall have hereby, and shall be deemed to have, sold,
transferred, assigned, set over and conveyed to the Depositor such Purchased
Loans and the other Purchased Assets from and after the Closing Date until such
time as the Certificates are paid in full or such Mortgage Loan is repurchased,
if ever, under the related Pooling and Servicing Agreement. Upon the sale of
such Purchased Loans, the ownership of each related Note, each related Mortgage
and the contents of the related Loan File shall immediately vest in the
Depositor and the ownership of all related records and documents with respect to
each Mortgage Loan prepared by or which come into the possession of the
Unaffiliated Seller shall immediately vest in the Depositor. The contents of any
Loan File in the possession of the Unaffiliated Seller at any time after such
sale, and any scheduled payments of principal and interest on the Mortgage Loans
due after the Cut-Off Date and received by the Unaffiliated Seller, shall be
held in trust by the Unaffiliated Seller for the benefit of the Depositor as the
owner thereof, and shall be promptly delivered by the Unaffiliated Seller to or
upon the order of the Depositor.
It is the intention of the parties hereto that the conveyance
by the Unaffiliated Seller of the Mortgage Loans to the Depositor shall
constitute a purchase and sale of such Mortgage Loans and not a loan. In the
event, however, that a court of competent jurisdiction were to hold that the
transaction evidenced hereby constitutes a loan and not a purchase and sale, it
is the intention of the parties hereto that this Agreement shall constitute a
security agreement under applicable law, and that the Unaffiliated Seller shall
be deemed to have granted to the Depositor, a first priority perfected security
interest in all of the Unaffiliated Seller's right, title and interest in, to
and under the Mortgage Loans. The conveyance by the Unaffiliated Seller of the
Mortgage Loans to the Depositor shall not constitute and is not intended to
result in an assumption by the Depositor of any obligation of the Originators.
3
<PAGE>
Pursuant to the Pooling and Servicing Agreement, the Depositor
shall, on the Closing Date, assign all of its right, title and interest in and
to the Purchased Loans and the other Purchased Assets to the Trustee for the
benefit of the Owners of the Certificates.
Section 2.04 Delivery of Mortgage Loan Documents. On or prior
to the Closing Date, the Unaffiliated Seller shall deliver to the Trustee (as
assignee of the Depositor pursuant to the Pooling and Servicing Agreement), the
Loan File documents, as described in the related Pooling and Servicing
Agreement.
All original documents relating to the Mortgage Loans that are
not delivered to the Trustee (as assignee of the Depositor pursuant to the
Pooling and Servicing Agreement) as required by this Section 2.04 are and shall
be held by the Unaffiliated Seller in trust for the benefit of the Trustee on
behalf of the related Owners of the Certificates. In the event that any such
original document is required pursuant to the terms of this Section 2.04 to be a
part of a Loan File, such document shall be delivered promptly to the Trustee
(as assignee of the Depositor pursuant to the Pooling and Servicing Agreement).
From and after the sale of the Mortgage Loans to the Depositor
pursuant hereto, to the extent that the Unaffiliated Seller retains legal title
of record to any Mortgage Loans prior to the vesting of legal title in the
Trustee (as assignee of the Depositor pursuant to the Pooling and Servicing
Agreement), such title shall be retained in trust for the Depositor as the owner
of the Mortgage Loans and the Trustee, as the Depositor's assignee.
Section 2.05 Transfer of Mortgage Loans; Assignment of
Agreement. The Depositor has the right to assign its interest under this
Agreement to the Trustee as may be required to effect the purposes of the
Pooling and Servicing Agreement, without further notice to, or consent of, the
Unaffiliated Seller, and the Trustee shall succeed to such of the rights and
obligations of the Depositor hereunder as shall be so assigned. The Depositor
shall, pursuant to the Pooling and Servicing Agreement, assign all of its right,
title and interest in and to the Purchased Loans and the other Purchased Assets,
together with all other rights relating to the foregoing, to the Trustee for the
benefit of the Owners of the Certificates. The Unaffiliated Seller agrees that,
upon such assignment to the Trustee, all rights of the Depositor with respect to
the Purchased Loans and the other Purchased Assets will run to and be for the
benefit of the Trustee and the Trustee may enforce diligently, without joinder
of the Depositor, any and all of such rights.
Section 2.06 Books and Records. The sale of each Mortgage Loan
shall be reflected on the Unaffiliated Seller's balance sheet and other
financial statements as a sale of assets by the Unaffiliated Seller for
accounting purposes and for tax purposes. The Unaffiliated Seller shall be
responsible for maintaining, and shall maintain, a complete set of books and
records for each Mortgage Loan which shall be clearly marked to reflect the
ownership of each Mortgage Loan by the Trustee for the benefit of the Owners of
the related Certificates.
4
<PAGE>
Section 2.07 Cost of Delivery of Documents. The costs relating
to the delivery of the documents specified in this Article Two in connection
with the Mortgage Loans shall be borne by the Unaffiliated Seller.
ARTICLE THREE
REPRESENTATIONS AND WARRANTIES
Section 3.01 Representations and Warranties and Covenants of
the Unaffiliated Seller. (a) Pursuant to this Agreement, the Unaffiliated
Seller, as of the Closing Date, makes the following representations and
warranties with respect to itself, to the Depositor:
(i) It is duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization, is duly
qualified to do business and is in good standing in every jurisdiction
in which the nature of its business requires it to be so qualified.
(ii) It has the power and authority to own and convey all of
its properties and assets and to execute and deliver this Agreement and
to perform the transactions contemplated hereby.
(iii) The execution, delivery and performance by it of this
Agreement and the transactions contemplated hereby, (A) have been duly
authorized by all necessary corporate or other action on its part, (B)
do not contravene or cause it to be in default under (1) its
organizational documents, (2) any contractual restriction with respect
to any of its debt or contained in any material indenture, loan or
credit agreement, lease, mortgage, security agreement, bond, note, or
other agreement or instrument binding on or affecting it or its
property or (3) any law, rule, regulation, order, writ, judgment,
award, injunction or decree applicable to, binding on or affecting it
or its property, and (C) do not result in or require the creation of
any Adverse Claim.
(iv) This Agreement has been duly executed and delivered on
its behalf and constitutes its legal, valid and binding obligation,
enforceable against it in accordance with its terms, subject to
bankruptcy laws and other similar laws of general application affecting
creditors, and subject to the application of rules of equity, including
those respecting the availability of specific performance.
(v) All material actions, approvals, consents, waivers,
exemptions, variances, franchises, orders, permits, authorizations,
rights and licenses required to be taken, given or obtained, as the
case may be, by or from any Governmental Authority, that are necessary
in connection with the performance by it of its obligations as a seller
under this Agreement have been obtained and are in full force and
effect and are not subject to any pending proceedings or appeals
(administrative, judicial or otherwise) which could have a material
adverse impact on its performance of its obligations under this
Agreement.
5
<PAGE>
(vi) There is no action, suit, proceeding or investigation
pending or, to the best of its knowledge, threatened, before any court,
administrative agency or tribunal against it which, either in any one
instance or in the aggregate, may result in any material adverse change
in its business, operations, financial condition, properties or assets
or in any material prohibition or impairment of its right or ability to
carry on its business substantially as now conducted, or which would
draw into question the validity or enforceability of this Agreement or
any of the Purchased Loans or of any material action taken or to be
taken in connection with its obligations contemplated herein, or which
would be likely to impair materially its ability to perform under the
terms of this Agreement or that might prohibit its entering into this
Agreement or the consummation of any of the transactions contemplated
hereby.
(vii) It is not in violation of or in default with respect to,
any order or decree of any court or any order or demand of any
Governmental Authority, which violation or default would materially and
adversely affect its condition (financial or other) or operations or
its properties or its performance hereunder.
(viii) No defaulted Debt exists under any instrument or
agreement evidencing, securing or providing for the issuance of its
Debt.
(ix) The principal place of business and chief executive
office of the Unaffiliated Seller is located at the address set forth
in Section 5.04 hereof and, except as set forth in Section 5.04 hereof,
there are now no, and during the past four months there have not been
any, other locations where the Unaffiliated Seller, has been located
(as that term is used in the Uniform Commercial Code in the state of
such location).
(x) The legal name of the Unaffiliated Seller is as set forth
at the beginning of this Agreement and the Unaffiliated Seller has not
changed its name in the last four years, and during such period, the
Unaffiliated Seller did not use, nor does the Unaffiliated Seller now
use, any tradenames, fictitious names, or assumed names.
(xi) It is solvent and will not become insolvent after giving
effect to the transactions contemplated by this Agreement; it is paying
its Debts as they mature; it has not sold any Mortgage Loan to the
Depositor with intent to hinder, delay or defraud any entity to which
it was, or became, after the date that such transfer was made,
indebted; its sales of the Mortgage Loans to the Depositor have been
and will be made for reasonably equivalent value and fair
consideration; it has not incurred Debts beyond its ability to pay as
they mature; and it, after giving effect to the transactions
contemplated by this Agreement, will have an adequate amount of capital
to conduct its business in the foreseeable future.
(xii) For federal income tax, reporting and accounting
purposes, it will treat the sale of each Mortgage Loan sold pursuant to
this Agreement as a sale, or
6
<PAGE>
absolute assignment, of its full right, title and ownership interest in
such Mortgage Loan to the Depositor, and it has not in any other
respect accounted for or treated the transactions contemplated by this
Sale Agreement.
(xiii) It, or one of its affiliates, has and maintains all
permits, licenses, authorizations, registrations, approvals and
consents of Governmental Authorities (including, without limitation,
sales finance company licenses, if any) necessary for (A) its
activities and business as currently conducted and as proposed to be
conducted, (B) the ownership, use, operation and maintenance of its
properties, facilities and assets and (C) the performance by it of this
Agreement.
(xiv) It has filed on a timely basis all tax returns (federal,
state, and local) required to be filed and has paid or made adequate
provisions for the payment of all taxes, assessments and other
governmental charges due from it.
(xv) Each pension plan or profit sharing plan to which the
Unaffiliated Seller is a party has been fully funded in accordance with
its obligations set forth in such plan.
(xvi) With respect to it, there has occurred no event which
has a material adverse effect on its ability to perform its obligations
under this Agreement.
(xvii) The consolidated balance sheet of its ultimate parent
of the date of its most recently completed fiscal year and its related
statements of income and shareholders' equity for the fiscal year then
ended together with all quarterly reports with respect to completed
fiscal quarters occurring after such fiscal year until the date of this
representation and warranty, copies of which have been furnished to the
Depositor, fairly present its financial condition, business and
operations as of such date and the results of its operations for the
period ended on such date, all in accordance with generally accepted
accounting principles consistently applied, and since such date of the
most recent financial statements there has been no material adverse
change in any such condition, business or operations.
(xviii) It has valid business reasons for selling its
interests in the Purchased Loans rather than obtaining a loan with the
Purchased Loans as collateral.
(b) With respect to each Purchased Loan sold by the
Unaffiliated Seller pursuant to this Agreement, the Unaffiliated Seller, as of
the Closing Date, makes the representations and warranties set forth in Section
3.4 of the Pooling and Servicing Agreement for the benefit of the Depositor.
Such representations and warranties are incorporated by reference in this
Section 3(b), and the Depositor may rely thereon as if such representations and
warranties were fully set forth herein.
(c) It is understood and agreed that the representations and
warranties in this Section 3 shall survive the sale of the Purchased Loans and
the other Purchased Assets to the Depositor and any sale or assignment of the
Purchased Loans and the other Purchased Assets by the Unaffiliated Seller to the
Depositor and by the Depositor to the
7
<PAGE>
Trustee, for the benefit of the Trust, as the case may be, and shall continue so
long as any Purchased Loan shall remain outstanding.
(d) The Unaffiliated Seller acknowledges that, pursuant to
this Agreement, it has assigned all of its right, title and interest in and to
the Purchased Loans and the other Purchased Assets and its right to exercise the
remedies created by Section 4 hereof to the Depositor and that, pursuant to the
Pooling and Servicing Agreement, the Depositor has assigned all of its right,
title and interest in and to the Purchased Loans and the other Purchased Assets
and its right to exercise the remedies created by Section 4 hereof to the
Trustee, on behalf of the Owners of the Certificates, as the case may be. The
Unaffiliated Seller agrees that the Trustee, on behalf of the Owners of the
Certificates, may enforce directly, without joinder of the Depositor, the
repurchase obligations of the Unaffiliated Seller, set forth in Section 4 hereof
with respect to breaches of the representations and warranties set forth in this
Section 3.
(e) The Unaffiliated Seller covenants and agrees, so long as
any of the Certificates are outstanding, as follows:
(i) Any change in the location of the principal place of
business or chief executive office (as such terms are used in the
Uniform Commercial Code in the state of such location) of the
Unaffiliated Seller occurring after the Closing Date shall be
specifically disclosed to the Depositor and the Trustee in writing.
(ii) Any change in the legal name of the Unaffiliated Seller
and any use by any thereof of any tradename, fictitious name, or
assumed name occurring after the Closing Date shall be specifically
disclosed to the Depositor and the Trustee in writing.
Section 3.02 Breach of Representations and Warranties;
Repurchase of Purchased Loans. Upon discovery by the Unaffiliated Seller, the
Depositor or upon an Authorized Officer of the Trustee obtaining actual
knowledge of a breach by the Unaffiliated Seller of any of the representations
and warranties set forth in Section 3 hereof, without regard to any limitation
set forth in such representation or warranty concerning the knowledge of the
Unaffiliated Seller as to the facts stated therein which materially and
adversely affects the value, or the interest of the Trust in, any Mortgage Loan,
as the case may be, the party discovering such breach shall give prompt written
notice to the other parties. Thereafter, the Unaffiliated Seller shall, if such
breach materially and adversely affects the value of, or the interests of the
Trust or any Owner of a Certificate, as the case may be, in any Purchased Loan,
on the Servicer's Remittance Date in the month following the expiration of a
60-day period since the date of notice of such breach (the "Repurchase Date"),
if such breach remains uncured, repurchase such Purchased Loan by remitting to
the Principal and Interest Account, the related Repurchase Price. Any such
repurchase shall be made without recourse against, or warranty, express or
implied, of such transferring party.
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ARTICLE FOUR
COVENANTS
Section 4.01 Covenants of the Unaffiliated Seller. The
Unaffiliated Seller covenants with the Depositor as follows:
(a) The Unaffiliated Seller shall cooperate with the Depositor
and the firm of independent certified public accountants retained with respect
to the issuance of the Certificates in making available all information and
taking all steps reasonably necessary to permit the accountants' letters
required hereunder to be delivered within the times set for delivery herein.
(b) The Unaffiliated Seller hereby agrees to do all acts,
transactions, and things and to execute and deliver all agreements, documents,
instruments, and papers by and on behalf of the Unaffiliated Seller as the
Depositor or its counsel may reasonably request in order to consummate the
transfer of the Mortgage Loans to the Depositor and the subsequent transfer
thereof to the Trustee, and the rating, issuance and sale of the Certificates.
(c) The Unaffiliated Seller hereby agrees to arrange
separately to pay to the Trustee all of the Trustee's fees and expenses in
connection with the transactions contemplated by the Pooling and Servicing
Agreement subject to existing agreements to which the Unaffiliated Seller
assented at an earlier date. For the avoidance of doubt, the parties hereto
acknowledge that it is the intention of the parties that the Depositor shall not
pay any of the Trustee's fees and expenses in connection with the transactions
contemplated by the Pooling and Servicing Agreement.
ARTICLE FIVE
MISCELLANEOUS
Section 5.01 Conditions of Depositor's Obligations. The
obligations of the Depositor to purchase the Mortgage Loans will be subject to
the satisfaction on the Closing Date of the following conditions. Upon payment
of the purchase price for the Mortgage Loans, such conditions shall be deemed
satisfied or waived.
(a) The obligations of the Unaffiliated Seller required to be
performed by it on or prior to the Closing Date pursuant to the terms of this
Agreement shall have been duly performed and complied with in all material
respects and all of the representations and warranties of the Unaffiliated
Seller under this Agreement shall be true and correct in all material respects
as of the Closing Date and no event shall have occurred which, with notice or
the passage of time, would constitute a default under this Agreement, and the
Depositor shall have received a certificate to the effect of the foregoing
signed by an authorized officer of the Unaffiliated Seller.
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(b) The Depositor shall have received a letter dated the date
of this Agreement, in form and substance reasonably acceptable to the Depositor
and its counsel, prepared by Arthur Andersen & Co., independent certified public
accountants, regarding the numerical information contained in the Prospectus
Supplement under the captions "Prepayment and Yield Considerations" and
"Description of the Mortgage Loans."
(c) The Mortgage Loans will be reasonably acceptable to the
Depositor, in its sole discretion.
(d) The Depositor shall have received the following additional
closing documents, in form and substance satisfactory to the Depositor and its
counsel:
(i) the Schedule of Mortgage Loans;
(ii) the Pooling and Servicing Agreement dated as of
November 1, 1997 and the Underwriting Agreement, dated as of December
4, 1997, (the "Underwriting Agreement"), between the Depositor and
Prudential Securities Incorporated (the "Underwriter"), and all
documents required thereunder, duly executed and delivered by each of
the parties thereto other than the Depositor;
(iii) officer's certificates of an officer of a member of
the Unaffiliated Seller, dated as of the Closing Date, in the form of
Exhibit B hereto, and attached thereto resolutions of the board of
directors of such member and a copy of the Unaffiliated Seller's
Articles of Incorporation and By-Laws and all amendments, revisions,
and supplements thereof, certified by an officer of a member of the
Unaffiliated Seller;
(iv) an opinion of the counsel for the Unaffiliated Seller
as to various corporate matters substantially in the form attached
hereto as Exhibit C (it being agreed that the opinion shall expressly
provide that the Trustee shall be entitled to rely on the opinion);
(v) letters from Fitch IBCA Inc. and Moody's Investors
Service Inc., that they have assigned ratings to the Offered
Certificates as described in the Prospectus Supplement, and ratings to
the Class B Certificates of at least "BB" and "Ba2" respectively;
(vi) an opinion of counsel for the Trustee in form and
substance acceptable to the Depositor, its counsel, and each Rating
Agency (it being agreed that the opinion shall expressly provide that
the Unaffiliated Seller shall be entitled to rely on the opinion); and
(vii) an opinion of counsel for the Servicer, in form and
substance acceptable to the Depositor, its counsel, and each Rating
Agency (it being agreed that the opinion shall expressly provide that
the Unaffiliated Seller shall be entitled to rely on the opinion); and
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(e) All documents contemplated by this Agreement shall be
satisfactory in form and substance to the Depositor and its counsel.
(f) The Unaffiliated Seller shall have furnished the Depositor
with such other certificates of their officers or others and such other
documents or opinions as the Depositor or its counsel may reasonably request.
Section 5.02 Conditions of Unaffiliated Seller's Obligations.
The obligations of the Unaffiliated Seller under this Agreement shall be subject
to the satisfaction, on the Closing Date, of the following conditions:
(a) Each of the obligations of the Depositor required to be
performed by it at or prior to the Closing Date pursuant to the terms of this
Agreement shall have been duly performed and complied with and all of the
representations and warranties of the Depositor contained in this Agreement
shall be true and correct as of the Closing Date.
(b) The Unaffiliated Seller shall have received the following
additional documents:
(i) the Pooling and Servicing Agreement, and all documents
required thereunder, in each case executed by the Depositor as
applicable;
(ii) an opinion of the counsel for the Depositor as to
securities and tax matters; and
(iii) an opinion of the counsel for the Depositor as to true
sale matters and confirmation of the rating of the Class B Certificates
of at least "BB"and "Ba2"by Fitch IBCA Inc. and Moody's Investors
Service Inc. respectively..
(c) The Depositor shall have furnished the Unaffiliated Seller with
such other certificates of its officers or others and such other documents to
evidence fulfillment of the conditions set forth in this Agreement as the
Unaffiliated Seller may reasonably request, and the Underwriting Agreement shall
have been duly performed and complied with.
Section 5.03 Termination of Depositor's Obligations. The
Depositor may terminate its obligations hereunder by notice to the Unaffiliated
Seller at any time before delivery of and payment of the purchase price for the
Mortgage Loans if: (i) any of the conditions described in Section 5.01 are not
satisfied when and as provided therein; (ii) there shall have been the entry of
a decree or order by a court or agency or supervisory authority having
jurisdiction in the premises for the appointment of a conservator, receiver or
liquidator in any insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings of or relating to the Unaffiliated Seller or
the Servicer, or for the winding up or liquidation of the affairs of the
Unaffiliated Seller or the Servicer; (iii) there shall have been the consent by
the Unaffiliated Seller or the Servicer to the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt, marshalling of
assets and liabilities or similar proceedings of or relating to the Unaffiliated
Seller or the Servicer or relating to substantially all of the
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property of the Unaffiliated Seller or the Servicer; or (iv) the Underwriter
terminates its obligations under the Underwriting Agreement (except as a result
of a failure solely due to a matter within the reasonable control of the
Depositor). The termination of the Depositor's obligations hereunder shall not
terminate the Depositor's rights hereunder or its right to exercise any remedy
available to it at law or in equity.
Section 5.04 Notices. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered to or mailed by registered mail, postage prepaid, or
transmitted by facsimile and confirmed by a similar mailed writing, if to the
Depositor, addressed to the Depositor at Prudential Securities Secured Financing
Corporation, One New York Plaza, New York, New York 10292, Attention: Len Blum,
or to such other address as the Depositor may designate in writing to the
Unaffiliated Seller and if to the Unaffiliated Seller, addressed to the
Unaffiliated Seller at Wilshire Servicing Corporation, 1776 S.W. Madison Street,
Portland, Oregon 97205, Attention: Lawrence Mendelsohn or to such other address
as the Unaffiliated Seller may designate in writing to the Depositor.
Section 5.05 Severability of Provisions. Any part, provision,
representation, warranty or covenant of this Agreement which is prohibited or
which is held to be void or unenforceable shall be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof. Any part, provision, representation, warranty or covenant of
this Agreement which is prohibited or unenforceable or is held to be void or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction as to any Mortgage Loan shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, the parties hereto waive any provision of law which prohibits
or renders void or unenforceable any provision hereof.
Section 5.06 Agreement of Unaffiliated Seller. The
Unaffiliated Seller agrees to execute and deliver such instruments and take such
actions as the Depositor may, from time to time, reasonably request in order to
effectuate the purpose and to carry out the terms of this Agreement.
Section 5.07 Survival. The parties to this Unaffiliated
Seller's Agreement agree that the representations, warranties and agreements
made by each of them herein and in any certificate or other instrument delivered
pursuant hereto shall be deemed to be relied upon by the other party hereto,
notwithstanding any investigation heretofore or hereafter made by such other
party or on such other party's behalf, and that the representations, warranties
and agreements made by the parties hereto in this Agreement or in any such
certificate or other instrument shall survive the delivery of and payment for
the Mortgage Loans.
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Section 5.08 Effect of Headings and Table of Contents. The
Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
Section 5.09 Successors and Assigns. This Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns. Except as expressly permitted by
the terms hereof, this Agreement may not be assigned, pledged or hypothecated by
any party hereto to a third party without the written consent of the other party
to this Agreement; provided, however, that the Depositor may assign its rights
hereunder to the Trustee on behalf of the Trust without the consent of the
Unaffiliated Seller.
Section 5.10 Governing Law. This Agreement shall be construed
in accordance with and governed by the laws of the State of New York (without
regard to conflicts of laws principles), and the obligations, rights and
remedies of the parties hereunder shall be determined in accordance with such
laws.
Section 5.11 Confirmation of Intent. It is the express intent
of the parties hereto that the conveyance of the Mortgage Loans by the
Unaffiliated Seller to the Depositor as contemplated by this Agreement be, and
be treated for all purposes as, a sale by the Unaffiliated Seller to the
Depositor of the Mortgage Loans. It is, further, not the intention of the
parties that such conveyance be deemed a pledge of the Mortgage Loans by the
Unaffiliated Seller to the Depositor to secure a debt or other obligation of the
Unaffiliated Seller. However, in the event that, notwithstanding the intent of
the parties, the Mortgage Loans are held to continue to be property of the
Unaffiliated Seller then (a) this Agreement shall also be deemed to be a
security agreement within the meaning of Articles 8 and 9 of the Uniform
Commercial Code; (b) the transfer of the Mortgage Loans provided for herein
shall be deemed to be a grant by the Unaffiliated Seller to the Depositor of a
security interest in all of the Unaffiliated Seller's right, title and interest
in and to the Mortgage Loans and all amounts payable on the Mortgage Loans in
accordance with the terms thereof and all proceeds of the conversion, voluntary
or involuntary, of the foregoing into cash, instruments, securities or other
property; (c) the possession by the Depositor of Notes and such other items of
property as constitute instruments, money, negotiable documents or chattel paper
shall be deemed to be "possession by the secured party" for purposes of
perfecting the security interest pursuant to Section 9-305 of the Uniform
Commercial Code; and (d) notifications to persons holding such property, and
acknowledgments, receipts or confirmations from persons holding such property,
shall be deemed notifications to, or acknowledgments, receipts or confirmations
from, financial intermediaries, bailees or agents (as applicable) of the
Depositor for the purpose of perfecting such security interest under applicable
law. Any assignment of the interest of the Depositor pursuant to any provision
hereof shall also be deemed to be an assignment of any security interest created
hereby. The Unaffiliated Seller and the Depositor shall, to the extent
consistent with this Agreement, take such actions as may be necessary to ensure
that, if this Agreement were deemed to create a security interest in the
Mortgage Loans, such security interest would be deemed to be a
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perfected security interest of first priority under applicable law and will be
maintained as such throughout the term of this Unaffiliated Seller's Agreement.
Section 5.12 Execution in Counterparts. This Agreement may be
executed in any number of counterparts, each of which so executed shall be
deemed to be an original, but all such counterparts shall together constitute
but one and the same instrument.
Section 5.13 Costs. In connection with the transactions
contemplated under this Agreement and the Pooling and Servicing Agreement, the
Unaffiliated Seller shall promptly pay (or shall promptly reimburse the
Depositor to the extent that the Depositor shall have paid or otherwise
incurred): (a) the fees and disbursements of the Depositor, including due
diligence fees, of $ 20,000.00 and fees of counsel (subject to an agreed expense
cap); (b) the fees of each Rating Agency, as separately agreed; (c) any of the
fees of the Trustee, as separately agreed, and the reasonable fees and
disbursements of the Trustee's counsel; (d) expenses incurred in connection with
printing the Prospectus, the Prospectus Supplement, any amendment or supplement
thereto, any preliminary prospectus and the Certificates; and (e) fees and
expenses relating to the filing of documents with the Commission relating to the
Class A Certificates (including, without limitation, periodic reports under the
Securities Exchange Act of 1934, as amended) and the shelf registration
amortization fee paid in connection with the issuance of Certificates, which
amount is equal to 0.05% of the aggregate Offered Certificate Principal Balance
on the Closing Date. For the avoidance of doubt, the parties hereto acknowledge
that it is the intention of the parties that the Depositor shall not pay any of
the Trustee's fees and expenses in connection with the transactions contemplated
by the Pooling and Servicing Agreement. All other costs and expenses in
connection with the transactions contemplated hereunder shall be borne by the
party incurring such expenses.
Section 5.14 Indemnification. (a) The Unaffiliated Seller
agrees to indemnify and hold harmless the Depositor, each of its directors, each
of its officers who have signed the Registration Statement, and each of its
directors and each person or entity who controls the Depositor or any such
person, within the meaning of Section 15 of the Securities Act, against any and
all losses, claims, damages or liabilities, joint and several, to which the
Depositor or any such person or entity may become subject, under the Securities
Act or otherwise, and will reimburse the Depositor and each such controlling
person for any legal or other expenses incurred by the Depositor or such
controlling person in connection with investigating or defending any such loss,
claim, damage, liability or action, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the Prospectus Supplement relating to the Certificates or any amendment or
supplement to the Prospectus Supplement relating to the Certificates or the
omission or the alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements in the Prospectus Supplement
relating to the Certificates or any amendment or supplement to the Prospectus
Supplement relating to the Certificates approved in writing by the Unaffiliated
Seller, in light of the circumstances under which they were made, not
misleading;
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provided, however, that the Unaffiliated Seller will not be liable in any such
case to the extent that any such loss, claim, damage or liability arises out of
or is based upon any untrue statement or alleged untrue statement or omission or
alleged omission made in the Prospectus Supplement or any amendment or
supplement thereto in reliance upon and in conformity with written information
furnished to the Unaffiliated Seller by the Underwriter or the Depositor
specifically for use therein. This indemnity agreement will be in addition to
any liability which the Unaffiliated Seller may otherwise have.
(b) The Depositor and the Underwriter agree to indemnify and
hold harmless the Unaffiliated Seller, each of its directors and each person or
entity who controls the Unaffiliated Seller or any such person, within the
meaning of Section 15 of the Securities Act, against any and all losses, claims,
damages or liabilities, joint and several, to which the Unaffiliated Seller or
any such person or entity may become subject, under the Securities Act or
otherwise, and will reimburse the Unaffiliated Seller and any such director or
controlling person for any legal or other expenses incurred by such party or any
such director or controlling person in connection with investigating or
defending any such loss, claim, damage, liability or action, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, the Prospectus, the
Prospectus Supplement, Computational Material, any amendment or supplement to
the Prospectus or the Prospectus Supplement or the omission or the alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, but only to the extent that such untrue
statement or alleged untrue statement or omission or alleged omission is other
than a statement or omission relating to the information furnished to the
Unaffiliated Seller by the Underwriter or the Depositor specifically for use
therein; provided, however, that in no event shall the Depositor be liable to
the Unaffiliated Seller under this paragraph (b) in an amount in excess of the
Depositor's resale profit or the underwriting fee on the sale of the
Certificates. This indemnity agreement will be in addition to any liability
which the Depositor may otherwise have.
(c) The Unaffiliated Seller shall in addition indemnify and
hold harmless the Depositor for any losses, claims, damages, or liabilities to
which they become subject in connection with the offering for resale of the
Certificates of any materials which would constitute "computational materials",
"collateral term sheets" or "structural term sheets" (collectively,
"Computational Materials") under the Commission's "no-action letter" definitions
of such terms as of the date hereof, except to the extent that any such losses,
claims, damages or liabilities result from the negligence of the Depositor in
the preparation of such Computational Materials. The Depositor shall indemnify
and hold harmless the Unaffiliated Seller for any losses, claims, damages or
liabilities which result from the negligence of the Depositor in the preparation
of such Computational Materials; provided, however, that in no event shall the
Depositor be liable to the Unaffiliated Seller under this paragraph (c) in an
amount in excess of the Depositor's resale profit or the underwriting fee on the
sale of the Certificates.
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(d) Promptly after receipt by an indemnified party under this
Section 5.14 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 5.14, notify the indemnifying party in writing of the
commencement thereof, but the omission to so notify the indemnifying party will
not relieve the indemnifying party from any liability which the indemnifying
party may have to any indemnified party hereunder except to the extent such
indemnifying party has been prejudiced thereby. In case any such action is
brought against any indemnified party, and it notifies the indemnifying party of
the commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent that it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party. After notice from the indemnifying party
to such indemnified party of its election to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Section 5.14 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation; provided, however, if the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it that are different from or additional to those
available to the indemnifying party and would raise a potential conflict, the
indemnified party or parties shall have the right to select separate counsel to
assert such legal defenses and to otherwise participate in the defense of such
action on behalf of such indemnified party or parties. The indemnifying party
shall not be liable for the expenses of more than one separate counsel.
(e) In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in the preceding
parts of this Section 5.14 is for any reason held to be unavailable to or
insufficient to hold harmless an indemnified party under subsection (a) or (b)
or (c) of this Section 5.14 in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, the
indemnifying party shall contribute to the amount paid or payable by the
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof); provided, however, that no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. In determining the amount of
contribution to which the respective parties are entitled, there shall be
considered (i) the relative benefits received by the Unaffiliated Seller on the
one hand, and the Depositor on the other, from the offering of the Certificates
or (ii) the relative benefits described in clause (i) as well as the relative
faults of the Unaffiliated Seller and the Depositor, taking into account the
Unaffiliated Seller's and the Depositor's relative knowledge and access to
information concerning the matter with respect to which the claim was asserted,
the opportunity to correct and prevent any statement or omission, and any other
equitable considerations appropriate in the circumstances. The Unaffiliated
Seller and the Depositor agree that it would not be equitable if the amount of
such contribution were determined by pro rata or per capita allocation. For
purposes of this Section 5.14, each director of the Depositor, each officer of
the Depositor who signed the Registration Statement, and each person, if any who
controls the Depositor within the
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meaning of Section 15 of the Securities Act, shall have the same rights to
contribution as the Depositor, and each director of the Unaffiliated Seller, and
each person, if any who controls the Unaffiliated Seller within the meaning of
Section 15 of the Securities Act, shall have the same rights to contribution as
the Unaffiliated Seller.
Section 5.15 Miscellaneous. (a) (i) This Agreement supersedes
all prior agreements and understandings relating to the subject matter hereof,
(ii) this Agreement may be amended from time to time by the Unaffiliated Seller
and the Depositor by written agreement, without notice to or consent of the
related Owners to cure any ambiguity, to correct or supplement any provisions
herein, to comply with any changes in the Code, or to make any other provisions
with respect to matters or questions arising under this Agreement which shall
not be inconsistent with the provisions of this Agreement; provided, however,
that such action shall not, as evidenced by an officer's certificate, at the
expense of the party requesting the change, delivered to the Trustee, adversely
affect in any material respect the interests of any Owner; and provided,
further, that no such amendment shall reduce in any manner the amount of, or
delay the timing of, payments received on Mortgage Loans which are required to
be distributed on any Certificate without the consent of the Owner of such
Certificate, or change the rights or obligations of any other party hereto
without the consent of such party, (iii) this Agreement may be amended from time
to time by the Unaffiliated Seller and the Depositor with the consent of the
Owners of the Certificates for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement or
of modifying in any manner the rights of the Owners; provided, however, that no
such amendment shall be made unless the Trustee receives an officer's
certificate, that such change will not reduce in any manner the amount of, or
delay the timing of, payments received on Mortgage Loans which are required to
be distributed on any Certificate without the consent of the Owner of such
Certificate, and (iv) it shall not be necessary for the consent of any Owner
under this Section 5.15(a) to approve the particular form of any proposed
amendment, but it shall be sufficient if such consent shall approve the
substance thereof.
(b) The Depositor and the Unaffiliated Seller intend the
conveyance by the Unaffiliated Seller to the Depositor of all of its right,
title and interest in and to the Mortgage Loans pursuant to this Unaffiliated
Seller's Agreement to constitute a purchase and sale and not a loan.
[Signatures Commence on Following Page]
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IN WITNESS WHEREOF, the parties hereto have caused their names
to be signed by their respective officers thereunto duly authorized as of the
date first above written.
PRUDENTIAL SECURITIES SECURED
FINANCING CORPORATION
By:/s/
---------------------------------
Name:
Title:
WILSHIRE SERVICING CORPORATION
By:/s/
---------------------------------
Name: Lawrence Mendelsohn
Title: President
WMFC 1997-2 INC.
By:/s/
---------------------------------
Name: Lawrence Mendelsohn
Title: President
[Signature Page to Unaffiliated Seller's Agreement]
<PAGE>
Exhibit A
SCHEDULE OF MORTGAGE LOANS
A-1
<PAGE>
Exhibit B
FORM OF OFFICER'S CERTIFICATE
OF THE UNAFFILIATED SELLER
[See Tab 11]
B-1
<PAGE>
Exhibit C
FORM OF OPINION OF COUNSEL
TO THE UNAFFILIATED SELLER
[See Tab 17]
C-1
EXHIBIT 20.1
December 11, 1997
The Addressees Listed
on Schedule I hereto
Re: Wilshire Mortgage Loan Trust 1997-2;
Mortgage Pass-Through Certificates
Series 1997-2
Ladies and Gentlemen:
We have acted as special tax counsel in connection with the
issuance and delivery of certain mortgage pass-through certificates denominated
Wilshire Mortgage Loan Trust 1997-2, Mortgage Pass-Through Certificates, Series
1997-2, Class A-1 Certificates, Class A-2 Certificates, Class A-3 Certificates,
Class A-4 Certificates, Class A-5 Certificates, Class A-6 Certificates, Class
A-7 Certificates, Class M-1 Certificates, Class M-2 Certificates, Class M-3
Certificates (collectively, the "Offered Certificates"), Class B Certificates,
Class C Certificates (together the "Subordinate Certificates"), and Class RU
Certificates and Class RL Certificates (together the "Class R Certificates", and
collectively with the Offered Certificates and the Subordinate Certificates, the
"Certificates"), pursuant to a Pooling and Servicing Agreement, dated as of
November 1, 1997 (the "Pooling and Servicing Agreement"), among WMFC 1997-2
Inc., as unaffiliated seller (the "Unaffiliated Seller"), Prudential Securities
Secured Financing Corporation, as depositor (the "Depositor"), Wilshire
Servicing Corporation, as servicer (the "Servicer"), and Bankers Trust Company
of California, N.A., as trustee (the "Trustee") and as Backup Servicer (the
"Backup Servicer").
As special tax counsel, we have examined such documents as we
deemed appropriate for the purposes of rendering the opinions set forth below,
including the following: (a) Prospectus dated June 10, 1997 and Prospectus
Supplement dated December 4, 1997 (together the "Prospectus") with respect to
the Offered Certificates, and (b) an executed copy of the Pooling and Servicing
Agreement and the exhibits attached thereto.
Terms capitalized herein and not otherwise defined herein
shall have their respective meanings as set forth in the Pooling and Servicing
Agreement.
Based upon the foregoing and upon the assumptions set forth
below, we are of the opinion, under the laws of the United States, New York
State and New York City in effect as of the date hereof, that:
<PAGE>
The Addressees Listed
on Schedule A Hereto
December 11, 1997
Page 2
1. Assuming that (a) the Upper-Tier REMIC and the Lower-Tier
REMIC both created under the Pooling and Servicing Agreement elect, as
they have covenanted to do in the Pooling and Servicing Agreement, to
be treated as "real estate mortgage investment conduits" ("REMICs"), as
such term is defined in the Internal Revenue Code of 1986, as amended
(the "Code") and (b) the parties to the Pooling and Servicing Agreement
comply with the terms thereof, the Upper-Tier REMIC and the Lower-Tier
REMIC will be treated as REMICs. Subject to the above, each Class of
Offered Certificates and each Class of Subordinate Certificates issued
pursuant to the Pooling and Servicing Agreement will be treated as
"regular interests" in the Upper-Tier REMIC, and the Class RU
Certificates will be treated as the sole "residual interest" in the
Upper-Tier REMIC and the Class RL Certificates will be treated as the
sole "residual interest" in the Lower-Tier REMIC.
2. The statements under the caption "Certain Federal Income
Tax Consequences" in the Prospectus Supplement are accurate and
complete in all material respects.
3. As a consequence of the qualification of the Upper-Tier
REMIC as a REMIC, each Class of Offered Certificates and each Class of
Subordinate Certificates will be treated as "regular . . . interest(s)
in a REMIC" under Section 7701(a)(19)(C) of the Code and "real estate
assets" under Section 856(c) of the Code in the same proportion that
the assets in the Upper-Tier REMIC consist of qualifying assets under
such Sections. In addition, as a consequence of the qualification of
the Upper-Tier REMIC as a REMIC, interest on each Class of Offered
Certificates and on each Class of Subordinate Certificates will be
treated as "interest on obligations secured by mortgages on real
property" under Section 856(c) of the Code to the extent that the
respective Class of Class A Certificates or Subordinate Certificates
are treated as "real estate assets" under Section 856(c) of the Code.
4. The Trust Estate will not be subject to tax upon its income
or assets by the taxing authority of New York State or New York City
Our opinions contained herein are rendered only as of the date
hereof, and we undertake no obligation to update this letter or the opinions
contained herein after the date hereof.
<PAGE>
The Addressees Listed
on Schedule A Hereto
December 11, 1997
Page 3
This opinion is furnished by us as counsel in connection with
the conveyance of the Mortgage Loans to the Trust as of the date hereof and is
solely for the benefit of the addressees hereto, and is not to be used,
circulated, quoted or otherwise referred to for any other purpose without our
express written permission.
Very truly yours,
/s/
Dewey Ballantine L.L.P
<PAGE>
SCHEDULE I
WMFC 1997-2 Inc. Prudential Securities Incorporated
1776 S.W. Madison Street One New York Plaza
Portland, Oregon 97205 New York, New York 10292
Bankers Trust Company of Prudential Securities Secured Financing
California, N.A. Corporation
3 Park Plaza, 16th Floor One New York Plaza
Irvine, California 92614 New York, New York 10292
Fitch IBCA Inc. Moody's Investors Service, Inc.
One State Street Plaza, 32nd Floor 99 Church Street
New York, New York 10004 New York, New York 10007
