SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: December 27, 1996
(Date of earliest event reported)
American Southwest Financial Securities Corporation
(Exact name of registrant as specified in its charter)
Arizona 33-92146 0742739
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(State or Other Juris- (Commission (I.R.S. Employer
diction of Incorporation) File Number) Identification No.)
2390 Camelback Road, Suite 225, Phoenix, Arizona 85016
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(Address of Principal Executive Office) (Zip Code)
Registrant's telephone number, including area code:(602) 381-8960
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Item 2. Acquisition or Disposition of Assets
Description of the Certificates and the Mortgage Pool
On December 27, 1996, a single series of certificates, entitled American
Southwest Financial Securities Corporation Commercial Mortgage Pass-Through
Certificates, Series 1996- FHA1 (the "Certificates"), was issued pursuant to a
pooling and servicing agreement (the "Pooling and Servicing Agreement") attached
hereto as Exhibit 4.1, dated as of December 1, 1996, among American Southwest
Financial Securities Corporation, as depositor (the "Depositor"), Greystone
Servicing Corporation, Inc., as master servicer, Greystone Funding Corporation,
as seller, Daiwa Finance Corp., as seller, and LaSalle National Bank, as
trustee. The Certificates consist of ten classes identified as the "Class A-1
Certificates," the "Class A-2 Certificates," the "Class A-3 Certificates," the
"Class A-4 Certificates," the "Class A-Z Certificates," the "Class S
Certificates," (collectively, the "Publicly Offered Certificates"), the "Class B
Certificates," the "Class R-I Certificates," the "Class R-II Certificates," and
the "Class R-III Certificates," respectively, and were issued in exchange for,
and evidence the entire beneficial ownership interest in, the assets of a trust
fund (the "Trust Fund") consisting primarily of a pool (the "Mortgage Pool") of
(i) fixed-rate, fully-amortizing mortgage loans (the "FHA Loans") insured by the
Federal Housing Administration (the "FHA") of the United States Department of
Housing and Urban Development ("HUD") under certain sections of the National
Housing Act of 1934, as amended (the "Housing Act"), and secured by liens on
multifamily rental housing developments (collectively, the "Multifamily
Properties") or nursing homes, intermediate care facilities, assisted living
facilities, board and care homes or other nursing facilities (collectively, the
"Nursing Facilities"); and (ii) securities (the "GNMA Certificates") guaranteed
by the Government National Mortgage Association that are backed by fixed rate,
level payment, fully-amortizing mortgage loans (the "Underlying Mortgage Loans";
and, collectively with the FHA Loans, the "Mortgage Loans"), that are likewise
so insured by the FHA and secured by liens on Multifamily Properties, having, as
of the close of business on December 1, 1996 (the "Cut-off Date"), an aggregate
principal balance of approximately $268,660,697 (the "Initial Pool Balance"),
after taking into account all payments of principal due on the Mortgage Loans on
or before such date, whether or not received. The Publicly Offered Certificates
were sold by the Depositor to Donaldson, Lufkin & Jenrette Securities
Corporation ("DLJ") pursuant to (i) an underwriting agreement (the "Underwriting
Agreement") dated December 19, 1996, among the Depositor, DLJ and Daiwa
Securities America Inc., and the Underwriting Agreement is attached hereto as
Exhibit 1.1.
The Class A-1 Certificates have an initial stated principal balance (a
"Certificate Principal Balance") of approximately $40,317,000. The Class A-2
Certificates have an initial Certificate Principal Balance of approximately
$38,978,000. The Class A-3 Certificates have an initial Certificate Principal
Balance of approximately $65,487,000. The Class A-4 Certificates have an initial
Certificate Principal Balance of approximately $58,824,000. The Class A-Z
Certificates have an initial Certificate Principal Balance of approximately
$67,712,000. The Class S Certificates will not have a Certificate Principle
Balance, but will represent the right to receive distributions of interest
accrued as provided in the Pooling and Servicing Agreement on a Notional Amount
equal to the Stated Principal Balance of the Mortgage Assets outstanding from
time to time. The Class B Certificates have an initial Certificate Principal
Balance of
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approximately $5,192,464. The Class R-I, Class R-II and Class R-III Certificates
each have an initial Certificate Principal Balance of $0.
Capitalized terms used herein and not otherwise defined shall have the
meanings assigned to them in the Pooling and Servicing Agreement.
Item 7. Financial Statements and Exhibits
(a) Not applicable
(b) Not applicable
(c) Exhibits
Exhibit No. Description
1.1 Underwriting Agreement dated December
19, 1996, among American Southwest
Financial Securities Corporation,
Donaldson, Lufkin & Jenrette Securities
Corporation and Daiwa Securities America
Inc.
4.1 Pooling and Servicing Agreement dated as
of December 1, 1996, by and among
American Southwest Financial Securities
Corporation, as depositor, Greystone
Servicing Corporation, Inc., as master
servicer, Greystone Funding Corporation,
as seller, Daiwa Finance Corp., as
seller, and LaSalle National Bank, as
trustee.
99.1 Mortgage Asset Purchase Agreement dated
as of December 19, 1996, among American
Southwest Financial Securities
Corporation, Greystone Funding
Corporation and Greystone Servicing
Corporation, Inc.
99.2 Mortgage Asset Purchase Agreement dated
December 19, 1996 between American
Southwest Financial Securities
Corporation and Daiwa Finance Corp, as
acknowledged and agreed to by Daiwa
Securities America Inc.
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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 thereunto duly authorized.
AMERICAN SOUTHWEST FINANCIAL
SECURITIES CORPORATION
By:/s/
------------------------------
Name:
Title:
Dated: December 27, 1996
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Index to Exhibits
Sequentially
Numbered
Exhibit No. Description Page
1.1 Underwriting Agreement dated December 19,
1996, among American Southwest Financial
Securities Corporation, Donaldson, Lufkin &
Jenrette Securities Corporation and Daiwa
Securities America Inc.
4.1 Pooling and Servicing Agreement, dated as of
December 1, 1996, among American Southwest Financial
Securities Corporation, as depositor, Greystone
Servicing Corporation, Inc., as master
servicer, Greystone Funding Corporation, as
seller, Daiwa Finance Corp., as seller, and
LaSalle National Bank, as trustee.
99.1 Mortgage Asset Purchase Agreement dated as of
December 19, 1996, among American Southwest
Financial Securities Corporation, Greystone
Funding Corporation and Greystone Servicing
Corporation, Inc.
99.2 Mortgage Asset Purchase Agreement dated as of
December 19, 1996, between American Southwest
Financial Securities Corporation and Daiwa
Finance Corp., as acknowledged and agreed to
by Daiwa Securities America Inc.
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UNDERWRITING AGREEMENT
American Southwest Financial Securities Corporation
Commercial Mortgage Pass-Through Certificates,
Series 1996-FHA1
Class S Certificates
Class A-1 Certificates
Class A-2 Certificates
Class A-3 Certificates
Class A-4 Certificates
Class A-Z Certificates
December 19, 1996
Donaldson, Lufkin & Jenrette
Securities Corporation
277 Park Avenue, 9th Floor
New York, New York 10172
Daiwa Securities America Inc.
Financial Square
32 Old Slip - 12th Floor
New York, New York 10005-3538
Ladies and Gentlemen:
American Southwest Financial Securities Corporation, a corporation
organized and existing under the laws of the State of Arizona (the "Depositor"),
proposes to sell to Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ")
and Daiwa Securities America Inc. ("Daiwa") (each an "Underwriter" and together,
the "Underwriters") six Classes of the Depositor's Commercial Mortgage
Pass-Through Certificates, Series 1996-FHA1. Such Classes have been designated
as the Class S Certificates, the Class A-1 Certificates, the Class A-2
Certificates, the Class A-3 Certificates, the Class A-4 Certificates and the
Class A-Z Certificates and are collectively referred to herein as the "Offered
Certificates". Only the Offered Certificates are being purchased by you
hereunder. The Offered Certificates are to be issued together with the
Depositor's Commercial Mortgage Pass-Through Certificates, Series 1996-FHA1,
Class B Certificates and Class R-I, Class R-II and Class R-III Certificates
(together with the Offered Certificates, the "Certificates").
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The Certificates will represent, in the aggregate, the entire
beneficial ownership interest in a trust fund (the "Trust Fund"), the assets of
which will consist primarily of (i) approximately $188,800,560 of fixed-rate,
fully-amortizing mortgage loans (the "FHA Loans") insured by the Federal Housing
Administration ("FHA") of the United States Department of Housing and Urban
Development and secured by liens on multifamily rental housing developments
(collectively, "Multifamily Properties") or nursing homes, intermediate care
facilities, board and care homes or other nursing facilities (collectively,
"Nursing Facilities"); and (ii) approximately $77,709,904 of securities (the
"GNMA Certificates") guaranteed by the Government National Mortgage Association
and backed by fixed-rate, level payment, fully-amortizing mortgage loans (the
"Underlying Loans" and collectively with the FHA Loans, the "Mortgage Loans")
that are likewise so insured by the FHA and are secured by liens on Multifamily
Properties or Nursing Facilities. All such FHA Loans and GNMA Certificates are
collectively referred to herein as the "Mortgage Assets". The initial Mortgage
Assets will have an aggregate outstanding principal balance as of December 1,
1996 (the "Cut-off Date") of approximately $266,510,464, after deducting all
payments of principal due on the Mortgage Loans on or before such date. The
Mortgage Assets are being purchased by the Depositor pursuant to a (i) Mortgage
Asset Purchase Agreement (the "Greystone Purchase Agreement"), dated as of
December 19, among the Depositor, as purchaser, Greystone Servicing Corporation,
Inc., as master servicer, and Greystone Funding Corporation, a Virginia
corporation, as seller ("Greystone Funding"), and a Mortgage Asset Purchase
Agreement (the "Daiwa Purchase Agreement"), each a "Purchase Agreement", and
together the "Purchase Agreements"), dated as of December 19, between the
Depositor, as purchaser, and Daiwa Finance Corp., a New York corporation, as
seller ("Daiwa Finance") (each a "Seller" and collectively, the "Sellers").
The Certificates will be issued pursuant to a Pooling and Servicing
Agreement dated as of December 1, 1996 (the "Pooling and Servicing Agreement"),
among the Depositor, LaSalle National
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Bank, as trustee (the "Trustee"), the Sellers, and Greystone Servicing
Corporation, Inc., as master servicer (the "Master Servicer").
1. Representations and Warranties. The Depositor represents and
warrants to and agrees with the Underwriters that:
(a) The Depositor has filed with the Securities and Exchange
Commission (the "Commission") a registration statement (including a
prospectus) on Form S-3 (No. 33-92146) for the registration under
the Securities Act of 1933, as amended (the "Act"), and the rules
and regulations (the "Regulations") of the Commission thereunder, of
mortgage securities issuable in series. Such registration statement
has been declared effective by the Commission under the Act. Such
registration statement, as amended to the date of this Agreement, is
hereinafter called the "Registration Statement," and such prospectus
(the "Base Prospectus"), in the form in which it was last filed with
the Commission, as supplemented by a prospectus supplement relating
to the Offered Certificates which will be filed by the Depositor
pursuant to Rule 424 under the Act (such prospectus supplement in
the form first filed after the date hereof pursuant to Rule 424 is
hereinafter called the "Prospectus Supplement"), is hereinafter
called the "Prospectus".
(b) The Registration Statement, at the time it became
effective, and the prospectus contained therein, and any amendments
thereof and supplements thereto filed prior to the date hereof,
conformed in all material respects to the requirements of the Act
and the Regulations of the Commission thereunder; and on the date of
this Agreement and on the Closing Date (as hereinafter defined), the
Registration Statement and the Prospectus, and any amendments
thereof and supplements thereto, will conform in all material
respects to the requirements of the Act and the Regulations of the
Commission thereunder. The Registration Statement, at the time it
became effective, did not contain
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an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the
statements therein not misleading; and the Prospectus, as of the
date of the Prospectus Supplement, did not contain an untrue
statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading;
provided, however, that the representations and warranties in this
subsection shall not apply to statements in, or omissions from, the
Registration Statement or the Prospectus made in reliance upon and
in conformity with information furnished to the Depositor by the
Underwriters or the Sellers expressly for use in the Prospectus. The
conditions to the use by the Depositor of a registration statement
on Form S-3 under the Act, as set forth in the General Instructions
to Form S-3, have been satisfied with respect to the Registration
Statement and the Prospectus. There are no contracts or documents of
the Depositor which are required to be filed as exhibits to the
Registration Statement pursuant to the Act or the Regulations of the
Commission thereunder which have not been so filed.
(c) The Certificates will conform to the description thereof
contained in the Prospectus, and will on the Closing Date be duly
and validly authorized; and, when validly executed, authenticated,
issued and delivered in accordance with the terms of the Pooling and
Servicing Agreement, the Certificates will be validly issued and
outstanding and entitled to the benefits of the Pooling and
Servicing Agreement. The Certificates will not constitute "mortgage
related securities" as such term is defined in Section 3(a)(41) of
the Securities Exchange Act of 1934, as amended (the "Exchange
Act").
(d) The Depositor has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, with
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power and authority to own, lease and operate its properties and to
conduct its business as described in the Prospectus and to enter
into and perform its obligations under this Agreement, the Purchase
Agreements, the Pooling and Servicing Agreement and the
Certificates.
(e) At or prior to the Closing Date, the Depositor will have
entered into the Purchase Agreements with respect to the Mortgage
Assets and, assuming the due authorization, execution and delivery
thereof by the Sellers, the Purchase Agreements on the Closing Date
will each constitute a valid and binding agreement of the Depositor
enforceable in accordance with their respective terms.
(f) At or prior to the Closing Date, the Depositor will have
entered into the Pooling and Servicing Agreement with respect to the
Certificates and, assuming the due authorization, execution and
delivery thereof by the other parties thereto, the Pooling and
Servicing Agreement on the Closing Date will constitute a valid and
binding agreement of the Depositor enforceable in accordance with
its terms.
(g) Neither the issuance, sale or delivery of the
Certificates, nor the consummation of any other of the transactions
contemplated herein or in the Purchase Agreements or in the Pooling
and Servicing Agreement, nor the fulfillment of the terms hereof or
of the Purchase Agreements, the Pooling and Servicing Agreement or
the Certificates, will conflict with or violate any term or
provision of the articles of incorporation or by-laws of the
Depositor or any statute, order or regulation applicable to the
Depositor of any court, regulatory body, administrative agency or
governmental body having jurisdiction over the Depositor, and will
not conflict with, result in breach or violation or the acceleration
of or constitute a default under, the terms of any indenture
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or other agreement or instrument to which the Depositor is a party
or by which it is bound.
(h) This Agreement has been duly authorized, executed and
delivered by the Depositor.
(i) Immediately prior to the transfer of the Mortgage Assets
to the Trustee as contemplated by the Pooling and Servicing
Agreement, the Depositor (i) will have good title to, and will be
the sole owner of, the Mortgage Assets (assuming that, immediately
prior to the conveyance of such Mortgage Assets to the Depositor,
the related Seller or its designated FHA-Approved Mortgagee had good
title to and was the sole owner and holder of the Mortgage Assets
and transferred such title to the Depositor pursuant to the
applicable Purchase Agreement), free and clear of any lien, pledge,
encumbrance or other security interest (collectively, "Liens"), (ii)
will not have assigned to any person any of its right, title or
interest in the Mortgage Assets or in the Pooling and Servicing
Agreement, and (iii) will have the power and authority to sell the
Mortgage Assets to the Trustee, and upon the execution and delivery
of the Pooling and Servicing Agreement by the Trustee, the Trustee
will have acquired all of the Depositor's right, title and interest
in and to the Mortgage Assets, and upon delivery to the Underwriters
of the Offered Certificates and payment by the Underwriters for the
Offered Certificates, the Offered Certificates will be free of Liens
created by the Depositor and entitled to the benefits of the Pooling
and Servicing Agreement.
(j) Neither the Depositor nor the trust created by the Pooling
and Servicing Agreement will conduct its operations while any of the
Certificates are outstanding in any manner that would constitute the
Depositor or the trust as an "investment company" under the
Investment Company Act of 1940, as amended (the "1940 Act").
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(k) Any taxes, fees and other governmental charges in
connection with the execution and delivery of this Agreement, the
Purchase Agreements and the Pooling and Servicing Agreement and the
execution, issuance, delivery and sale of the Certificates which
have become due or will be due at or prior to the Closing Date shall
have been or will be paid by the Depositor at or prior to the
Closing Date; provided, however, that this paragraph shall not apply
to any taxes owing by a Seller at or prior to the Closing Date as a
result of the sale of the Mortgage Assets to the Depositor or to any
taxes owing by the Underwriters as a result of the sale by it of any
Certificate.
(l) There are no actions, proceedings or investigations now
pending against the Depositor or, to the knowledge of the Depositor,
threatened against the Depositor, before any court, administrative
agency or other tribunal (i) asserting the invalidity of this
Agreement, the Purchase Agreements, the Pooling and Servicing
Agreement or the Certificates, (ii) seeking to prevent the issuance
of the Certificates or the consummation of any of the transactions
contemplated by this Agreement, the Purchase Agreements or the
Pooling and Servicing Agreement, (iii) which might materially and
adversely affect the performance by the Depositor of its obligations
under, or the validity or enforceability of, this Agreement, the
Purchase Agreements, the Pooling and Servicing Agreement or the
Certificates, or (iv) seeking to adversely affect the federal income
tax attributes of the Certificates described in the Prospectus.
(m) No filing or registration with, notice to or consent,
approval, authorization or order of any court or governmental
authority or agency is required for the consummation by the
Depositor of the transactions contemplated by this Agreement, the
Purchase Agreements or the Pooling and Servicing Agreement, except
such as may be
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required under the Act, the Regulations of the Commission under the
Act, or state securities or Blue Sky laws.
(n) The Depositor possesses all material licenses,
certificates, authorities and permits issued by the appropriate
state, federal or foreign regulatory agencies or bodies necessary to
conduct the business now operated by it and as described in the
Prospectus and the Depositor has received no notice of proceedings
relating to the revocation or modification of any such license,
certificate, authority or permit which, singly or in the aggregate,
if the subject of an unfavorable decision, ruling or finding, would
materially and adversely affect the conduct of the business,
operations, financial condition or income of the Depositor.
(o) As of the Closing Date, the security interest of the
Trustee (to the extent the transfer by the Depositor is deemed to be
a grant of a security interest and not a sale) in the Mortgage Loans
will be perfected upon delivery of the mortgage notes evidencing the
Mortgage Loans to the Trustee and will constitute a perfected first
priority security interest therein.
(p) On the Closing Date, the Class S Certificates shall be
rated "AAAr" by Standard & Poor's Rating Services ("S&P") and the
Class A-1 Certificates, the Class A-2 Certificates, the Class A-3
Certificates, the Class A-4 Certificates and the Class A-Z
Certificates shall be rated "AAA" by S&P.
2. Purchase and Sale. Subject to the terms and conditions and in
reliance upon the representations and warranties herein set forth, the Depositor
agrees to sell to DLJ, and DLJ agrees to purchase from the Depositor, all, but
not less than all, of the Offered Certificates at the purchase price set forth
in Schedule I hereto (the "Purchase Price"). Daiwa has agreed to purchase, at
the Purchase Price, any of the Offered Certificates allotted to them by DLJ.
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3. Delivery and Payment. Delivery of and payment for the Offered
Certificates shall be made at the offices of Thacher Proffitt & Wood, Two World
Trade Center, New York, New York, at 10:00 a.m., New York City time, on December
27, 1996, which date and time may be postponed by agreement between the
Underwriters and the Depositor (such date and time being herein called the
"Closing Date"). Delivery of the Offered Certificates shall be made to such of
the Underwriters purchasing such Offered Certificates against payment by such
Underwriter of the Purchase Price to or upon the order of the Depositor by
certified or official bank check or checks payable in federal or other
immediately available funds.
4. Offering by Underwriters. It is understood that the Underwriters
propose to offer the Offered Certificates for sale to the public as set forth in
the Prospectus.
5. Covenants of the Depositor. The Depositor agrees with the
Underwriters that:
(a) The Depositor will cause the Prospectus Supplement to be
filed pursuant to Rule 424 under the Act and will promptly advise
the Underwriters when the Prospectus Supplement has been so filed,
and prior to the termination of the offering of Offered Certificates
to which such Prospectus Supplement relates, the Depositor also will
promptly advise the Underwriters (i) when any amendment to the
Registration Statement specifically relating to the Offered
Certificates shall have become effective or any further supplement
to the Prospectus specifically relating to the Certificates has been
filed, (ii) of any request by the Commission for any amendment of
the Registration Statement or the Prospectus or for any additional
information, (iii) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or
the institution or threatening of
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any proceeding for that purpose, and (iv) of the receipt by the
Depositor of any written notification with respect to the suspension
of the qualification of the Offered Certificates for sale in any
jurisdiction or the initiation or threatening of any proceeding for
such purpose. During such time that the Prospectus is required by
the Act to be delivered in connection with the sale of the Offered
Certificates, the Depositor will not file any amendment of the
Registration Statement or supplement to the Prospectus (other than
any amendment or supplement specifically relating to a series of
mortgage securities other than the Certificates) unless the
Depositor has furnished the Underwriters with a copy for its review
prior to filing. The Depositor will use its best efforts to prevent
the issuance of any such stop order and, if issued, to obtain as
soon as possible the withdrawal thereof.
(b) If, at any time when a prospectus relating to the
Certificates is required to be delivered under the Act, any event
occurs as a result of which the Prospectus as then amended or
supplemented would include any untrue statement of a material fact
or omit to state any material fact necessary to make the statements
therein, in light of the circumstances under which they were made,
not misleading, or if it shall be necessary at any time to amend or
supplement the Prospectus to comply with the Act or the rules
thereunder, the Depositor promptly will prepare and file with the
Commission, subject to paragraph (a) of this Section 5, an amendment
or supplement which will correct such statement or omission or an
amendment which will effect such compliance and, if such amendment
or supplement is required to be contained in a post-effective
amendment to the Registration Statement, will cause such amendment
to be made effective as soon as possible.
(c) The Depositor will furnish to the Underwriters and counsel
for the Underwriters, without charge, as many conformed copies of
the Registration Statement (including exhibits thereto) and, so long
as delivery of a prospectus by the Underwriters
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or dealers may be required by the Act, as many copies of the
Prospectus and any supplements thereto as the Underwriters may
reasonably request.
(d) The Depositor will furnish such information, execute such
instruments and take such actions as may be reasonably requested by
the Underwriters to qualify the Offered Certificates for sale under
the laws of such jurisdictions as the Underwriters may designate, to
maintain such qualifications in effect so long as required for the
distribution of the Offered Certificates for purchase by
institutional investors; provided that the Depositor shall not be
required to qualify to do business in any jurisdiction where it is
not now qualified or to take any action which would subject it to
general or unlimited service of process in any jurisdiction in which
it is not now subject to such service of process. The Depositor will
make generally available to holders of the Offered Certificates, as
soon as practicable (but no later than 90 days after the close of
the period covered thereby), earnings statements (in form complying
with the provisions of Rule 158 under the Act) covering 12-month
periods beginning, in each case, not later than the Depositor's
fiscal quarter next following the "effective date" (as defined in
Rule 158) of the Registration Statement.
(e) DLJ will promptly pay for costs and expenses in connection
with the transactions contemplated hereby, whether or not the
transactions contemplated hereby are consummated, including, (i) the
costs and expenses of printing or otherwise reproducing the
Registration Statement and the Prospectus, this Agreement, the
Purchase Agreements, the Pooling and Servicing Agreement and the
Offered Certificates, (ii) the cost of delivering the Offered
Certificates to the Depository Trust Company, (iii) the cost of
rating the Offered Certificates, (iv) the agreed-upon legal and
accounting costs associated with preparing the Registration
Statement and the Prospectus, this Agreement, the
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Purchase Agreements, the Pooling and Servicing Agreement and the
Offered Certificates, and matters incident to the Closing of such
transaction, (v) fees to the Depositor and fees, other than those
(if any) the Depositor has agreed with a third party to pay (the
Depositor hereby representing that there are no such fees it has
agreed to pay), of the Master Servicer and the Trustee to the extent
not payable pursuant to the Pooling and Servicing Agreement, (vi)
legal costs of the Master Servicer and the Trustee and (vii)
reasonable fees of other parties, identified to the Underwriters
prior to the date hereof, providing services in connection with
issuing the Offered Certificates. Without limiting the foregoing, as
between DLJ and Daiwa, the foregoing costs and expenses shall be
allocated in accordance with the Letter Agreement dated December 19,
1996 among DLJ, Daiwa, each Seller and Greystone & Co. Inc.
(f) The Depositor will file with the Commission within 15 days
after the issuance of the Certificates a Current Report on Form 8-K.
6. Conditions to the Obligations of the Underwriters. The
obligations of the Underwriters to purchase the Offered Certificates shall be
subject to the accuracy in all respects of the representations and warranties on
the part of the Depositor contained herein as of the date hereof and as of the
Closing Date, to the accuracy of the statements of the Depositor made in any
officer's certificate pursuant to the provisions hereof, to the performance by
the Depositor of its obligations hereunder, to compliance by the Depositor with
its covenants and agreements herein contained, and to the following additional
conditions:
(a) No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for
that purpose shall have been instituted or threatened.
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(b) O'Connor, Cavanagh, Anderson, Killingsworth & Beshears
shall have furnished to the Underwriters a favorable opinion,
addressed to the Underwriters, dated the Closing Date and
satisfactory in form and substance to counsel for the Underwriters,
to the effect that:
(i) The Depositor has been duly incorporated and is
validly existing as a corporation in good standing under the laws of
the State of Arizona, with the power and authority to own, lease and
operate its properties, to conduct its business as described in the
Prospectus and to enter into and perform its obligations under this
Agreement, the Purchase Agreements, the Pooling and Servicing
Agreement and the Certificates;
(ii) To the best of such counsel's knowledge, no notice
to, consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation by the
Depositor of the transactions contemplated herein or in the Purchase
Agreements or in the Pooling and Servicing Agreement, except such as
may be required under the Blue Sky laws of any jurisdiction and such
other approvals as have been obtained;
(iii) Neither the issuance, sale or delivery of the
Certificates, nor the consummation of any other of the transactions
contemplated herein or in the Purchase Agreements or in the Pooling
and Servicing Agreement, nor the fulfillment of the terms of the
Certificates, the Purchase Agreements, the Pooling and Servicing
Agreement or this Agreement will conflict with or violate any term
or provision of the articles of incorporation or by-laws of the
Depositor or, to the best of such counsel's knowledge, any statute,
order or regulation applicable to the Depositor of any court,
regulatory body, administrative agency or governmental body having
jurisdiction over the Depositor, and will not conflict with, result
in breach or violation or the acceleration of or constitute a
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default under the terms of any indenture or other agreement or
instrument known to such counsel to which the Depositor is a party
or by which it is bound;
(iv) There are no actions. proceedings or investigations
pending or, to the best of such counsel's knowledge, threatened
before any court, administrative agency or other tribunal either (A)
asserting the invalidity of this Agreement, the Purchase Agreements,
the Pooling and Servicing Agreement or the Certificates or (B)
seeking to prevent the issuance of the Certificates or the
consummation by the Depositor of any of the transactions
contemplated by this Agreement, the Purchase Agreements or the
Pooling and Servicing Agreement, which, in each case, might
materially and adversely affect the performance by the Depositor of
its obligations under, or the validity or enforceability of, this
Agreement, the Purchase Agreements, the Pooling and Servicing
Agreement or the Certificates;
(v) This Agreement has been duly authorized, executed
and delivered by the Depositor and is a legal, valid and binding
obligation of the Depositor enforceable against the Depositor in
accordance with its terms except that (A) the enforceability thereof
may be subject to bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or thereafter in effect relating to
creditors' rights generally and (B) the remedy of specific
performance and injunctive and other forms of equitable relief may
be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought;
(vi) The Purchase Agreements have been duly authorized,
executed and delivered by the Depositor and is a legal, valid and
binding obligation of the Depositor enforceable against the
Depositor in accordance with its terms except that (A) the
enforceability thereof may be subject to bankruptcy, insolvency,
reorganization,
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moratoriums or other similar laws now or hereafter in effect
relating to creditors' rights generally and (B) the remedy of
specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought;
(vii) The Pooling and Servicing Agreement has been duly
authorized, executed and delivered by the Depositor and is a legal,
valid and binding agreement of the Depositor enforceable against the
Depositor in accordance with its terms except that (A) the
enforceability thereof may be subject to bankruptcy, insolvency,
reorganization, moratoriums or other similar laws now or hereafter
in effect relating to creditors' rights generally and (B) the remedy
of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought;
(viii) The creation of the Certificates has been duly
authorized by the Depositor and the Certificates, when duly executed
and authenticated by the Trustee in accordance with the terms of the
Pooling and Servicing Agreement, will be validly issued and
outstanding and entitled to the benefits of the Pooling and
Servicing Agreement;
(ix) The Pooling and Servicing Agreement is not required
to be qualified under the Trust Indenture Act of 1939, as amended,
and the Trust Fund created by the Pooling and Servicing Agreement is
not required to be registered under the 1940 Act;
(x) The Registration Statement has become effective
under the Act and, to the best of such counsel's knowledge, (A) no
stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have
been instituted or are pending or contemplated under the Act, (B)
the
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<PAGE>
Registration Statement and the Prospectus, and each amendment or
supplement thereto applicable to the Certificates and the
obligations of the Depositor relating thereto, as of their
respective effective or issue dates, complied in all material
respects to the requirements of the Act and the Regulations of the
Commission thereunder, and (C) such counsel has no reason to believe
that (1) the Registration Statement, as of the date it became
effective, contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or
necessary to make statements therein not misleading or (2) the
Prospectus or any amendment or supplement thereto, as of their
respective issue dates or on the Closing date, contained or contains
an untrue statement of a material fact or omitted or omits to state
a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading, it being understood that such counsel need express no
opinion as to financial statements or other financial or statistical
data contained in or omitted from the Prospectus or the information
contained in the Prospectus Supplement under (i) the heading
"Description of the Mortgage Pools"; (ii) the heading "Maturity and
Prepayment Considerations"; and (iii) the heading "Yield
Considerations";
(xi) The statements set forth under the headings
"Description of the Certificates" and "Description of the Mortgage
Pool" in the Prospectus Supplement, and "Description of the
Securities" in the Base Prospectus, insofar as such statements
purport to summarize certain provisions of the Pooling and Servicing
Agreement and the Offered Certificates, provide a fair and accurate
summary of such provisions; and
(xii) The statements in the Base Prospectus under the
headings "Certain Legal Aspects of Mortgage Loans", "Certain Federal
Income Tax Considerations" (insofar as they relate specifically to
the purchase, ownership and disposition of the Certificates),
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"State and Local Tax Considerations" and "ERISA Considerations" and
statements in the Prospectus Supplement under the headings "Federal
Income Tax Considerations" and "ERISA Considerations", to the extent
that they constitute matters of law or legal conclusions, provide a
fair and accurate summary of such law or conclusions.
Such opinion may express its reliance as to factual matters on the
representations and warranties made by and on certificates or other documents
furnished by officers of, the parties to this Agreement, the Purchase Agreements
or the Pooling and Servicing Agreement. Such opinion may assume the due
authorization, execution and delivery of the instruments and documents referred
to therein by the parties thereto other than the Depositor. Such opinion may be
qualified, insofar as it concerns the enforceability of the documents referred
to therein, to the extent that such enforceability may be limited by bankruptcy,
insolvency, reorganization or other similar laws affecting the enforcement of
creditors' rights in general and by general equity principles (regardless of
whether such enforcement is considered in a proceeding in equity or at law).
Such opinion may be further qualified as expressing no opinion as to the
statements in the Base Prospectus under the heading "Certain Legal Aspects of
Mortgage Loans" except insofar as such statements relate to the laws of the
State of Arizona and the laws of the United States, and further qualified as an
opinion only on the laws of the State of Arizona and the laws of the United
States.
(c) The Underwriters shall have received the respective
opinions of counsel to the Master Servicer, the Sellers and the
Trustee, each addressed to the Underwriters and dated the Closing
Date, in form and substance satisfactory to counsel for the
Underwriters.
(d) The Depositor shall have furnished to the Underwriters a
certificate of the Depositor, signed by the President or any Vice
President, dated the Closing Date and in form and substance
satisfactory to counsel for the Underwriters, to the effect that the
signer of such certificate has carefully examined the Registration
Statement, the Prospectus and this Agreement and that:
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(i) The representations and warranties of the Depositor
in this Agreement are true and correct in all material respects at
and as of the Closing Date with the same effect as if made on the
Closing Date, and the Depositor has complied with all the agreements
and satisfied all the conditions on its part to be performed or
satisfied at or prior to the Closing Date;
(ii) No stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
purpose have been instituted or, to such officer's knowledge,
threatened; and
(iii) Nothing has come to such officer's attention that
would lead such officer to believe that the Registration Statement,
as of the Closing Date, contains 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,
or that the Prospectus, as of the Closing Date, contains any untrue
statement of a material fact or omits to state 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.
(e) The Underwriters shall have received the opinion,
addressed to the Underwriters and dated as of the Closing Date, of
Thacher Proffitt & Wood, in form and substance satisfactory to the
Underwriters.
(f) Arthur Andersen, L.L.P., certified public accountants,
shall have furnished to the Underwriters letters, dated as of the
date hereof, in form and substance satisfactory to the Underwriters
and counsel for the Underwriters, to the effect that they have
performed certain specified procedures, all of which have been
agreed to by the Underwriters, as a result of which they have
determined that such information as the Underwriters may reasonably
request of an accounting, financial or statistical nature set
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<PAGE>
forth in the Prospectus Supplement under the heading "Description of
the Mortgage Pool" and elsewhere therein.
(g) The Class S Certificates shall be rated "AAAr" by Standard
& Poor's Rating Services ("S&P") and the Class A-1 Certificates, the
Class A-2 Certificates, the Class A-3 Certificates, the Class A-4
Certificates and the Class A-Z Certificates shall be rated "AAA" by
S&P.
(h) Prior to the Closing Date, the Depositor shall have
furnished to the Underwriters such further information, certificates
and documents as the Underwriters may reasonably request.
(i) Subsequent to the date hereof, there shall not have been
any change, or any development involving a prospective change, in or
affecting the business or properties of the Depositor, which the
Underwriters conclude in their judgment materially impairs the
investment quality of the Offered Certificates so as to make it
impractical or inadvisable to proceed with the public offering or
the delivery of the Offered Certificates as contemplated by the
Prospectus.
If any of the conditions specified in this Section 6 shall not have been
fulfilled in all material respects when and as provided in this Agreement, or if
any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to the Underwriters and its counsel, this Agreement and all
obligations of the Underwriters hereunder may be canceled at, or at any time
prior to the Closing Date by the Underwriters. Notice of such cancellation shall
be given to the Depositor in writing, or by telephone or telegraph confirmed in
writing.
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<PAGE>
7. Indemnification and Contribution.
(a) The Depositor will indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter
within the meaning of the Act, against any losses, claims, damages
or liabilities to which the Underwriters or such controlling person
may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the
Registration Statement, 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 the Underwriters and each such
controlling person for any legal or other expenses reasonably
incurred by the Underwriters and each such controlling person in
connection with investigating or defending against any such loss,
claim, damage, liability or action; provided, however, that the
Depositor will not be liable in any such case to the extent that any
such loss, claim, damage or liability arises out of or is based upon
any such untrue statement or alleged untrue statement in or omission
or alleged omission made in any such documents in reliance upon and
in conformity with information furnished by the Underwriters or the
Sellers specifically for use therein or arises out of or is based
upon any untrue statement or alleged untrue statement in or omission
or alleged omission made in any ABS Term Sheet or Computational
Materials distributed by an Underwriter. This indemnity agreement
will be in addition to any liability which the Depositor may
otherwise have.
(b) Each Underwriter, severally and not jointly, will
indemnify and hold harmless the Depositor, each of its directors,
each of its officers who have signed the
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<PAGE>
Registration Statement and each person, if any, who controls the
Depositor within the meaning of the Act, against any losses, claims,
damages or liabilities to which the Depositor or any such director,
officer or controlling person may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities
(or actions in 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 or any
amendment or supplement thereto, or arise out of or are based upon
the omission or the alleged omission to state therein a material
fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but
only to the extent that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon
and in conformity with information furnished to the Depositor by
such Underwriter specifically for use therein, and will reimburse
any legal or other expenses reasonably incurred by the Depositor or
any such director, officer or controlling person in connection with
investigating or defending against any such loss, claim, damage,
liability or action. This indemnity agreement will be in addition to
any liability that such Underwriter may otherwise have. The
Depositor acknowledges that the statements set forth in the last two
paragraphs of the cover page of the Prospectus Supplement and the
statements under the heading "Plan of Distribution" in the
Prospectus Supplement constitute the only information furnished by
or on behalf of the Underwriters for inclusion in the Prospectus.
The Depositor further acknowledges that the information in the
Prospectus Supplement for which the Sellers are providing
indemnification pursuant to Section 6(a) of each of their respective
Purchase Agreements constitutes the only information furnished by or
on behalf of the Sellers for inclusion in the Prospectus. In
addition, DLJ will indemnify and hold harmless the Depositor, each
of its directors, each
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of its officers who have signed the Registration Statement and each
person, if any, who controls the Depositor within the meaning of the
Act, against any losses, claims, damages or liabilities to which the
Depositor or any such director, officer or controlling person may
become subject under the Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in any ABS Term Sheet or
Computational Materials (each, as defined below) distributed by DLJ
or arise out of or are based upon (when read together with the
Prospectus) the omission or alleged omission to state therein a
material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading
provided, however, that DLJ will not be liable to the extent that
any such loss, claim, damage or liability (or action in respect
thereof) arises out of or is based upon any such untrue statement or
alleged untrue statement in or omission or alleged omission from any
such ABS Term Sheets or Computational Materials that is covered by
the indemnification provided by either Seller pursuant to Section
6(a) of its Purchase Agreement. For purposes hereof, "Computational
Materials" as used herein shall have the meaning given such term in
the No-Action Letter of May 20, 1994 issued by the Commission to
Kidder, Peabody Acceptance Corporation I, Kidder, Peabody & Co.
Incorporated and Kidder Structured Asset Corporation, as made
applicable to other issuers and underwriters by the Commission in
response to the request of the Public Securities Association dated
May 24, 1994. For purposes hereof, "ABS Term Sheets" as used herein
shall have the meaning given such term in the No-Action Letter of
February 17, 1995 issued by the Commission to the Public Securities
Association.
(c) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such
indemnified party will, if a claim in respect
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<PAGE>
thereof is to be made against the indemnifying party under this
Section, notify the indemnifying party of the commencement thereof;
but the omission so to notify the indemnifying party will not
relieve it from any liability which it may have to any indemnified
party otherwise than under this Section. In case any such action is
brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate therein, and to the extent
that the indemnifying party may, jointly with any other indemnifying
party similarly notified, elect to assume the defense thereof, with
counsel satisfactory to such indemnified party (who shall not,
except with the consent of the indemnified party, be counsel to the
indemnifying party), and after notice from the indemnifying party to
such indemnified party of its election so to assume the defense
thereof, the indemnifying party will not be liable to such
indemnified party under this Section for any legal or other expenses
subsequently incurred by such indemnified party in connection with
the defense thereof other than reasonable costs of investigation. In
no event shall the indemnifying parties be liable for the fees and
expenses of more than one counsel for all indemnified parties in
connection with any one action or separate but similar or related
actions in the same jurisdiction arising out of the same general
allegations or circumstances; provided, however, that there is no
conflict of interest or potential conflict of interest among such
indemnified parties.
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in this
Section 7 is for any reason held to be unenforceable by the
indemnified parties although applicable in accordance with its
terms, the Depositor, on the one hand, and the Underwriters, on the
other, taking into account the portion of the proceeds of such
offering realized by each Underwriter (as Underwriter only and in no
other capacity), shall contribute to the aggregate losses,
liabilities, claims, damages and expenses of the nature contemplated
by said indemnity
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<PAGE>
agreement incurred by the Depositor and the Underwriters (i) in such
proportions as is appropriate to reflect the relative benefits from
the offering of the Certificates received by the Depositor, on the
one hand, and the Underwriters, on the other, or (ii) if the
allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also
the relative fault of the Depositor, on the one hand, the
Underwriters, on the other, in connection with the statements or
omissions which resulted in such losses, claims, damages or
liabilities as well as any other relevant equitable considerations.
The relative benefits received by the Depositor, on the one hand,
and the Underwriters, on the other, shall be deemed to be in the
same proportion as the sum of (i) the aggregate amount of proceeds
from the offering (after deducting expenses and the purchase price
for the Mortgage Assets) received by the Depositor in connection
with the issuance of the Certificates and (ii) the aggregate amount
of the total underwriter discounts and commissions (after deducting
expenses) received by the Underwriters in respect thereof. The
relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact
relates to information supplied by the Depositor, on the one hand,
or by an Underwriter on the other hand, and the parties' relative
intent, knowledge, access to information and opportunity to correct
or prevent such untrue statement or omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. For purposes of
this Section, each person, if any, who controls an Underwriter
within the meaning of Section 15 of the Act shall have the same
rights to contribution as such Underwriter and each director of the
Depositor, each officer
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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 Act shall have the same rights to contribution as
the Depositor. Without in any way limiting the Depositor's right to
contribution otherwise provided for pursuant to this Section 7(d),
each Underwriter agrees with the other that in the event
contribution is obtained pursuant to this Section 7(d) from both
Underwriters, each Underwriter will pay their proportionate share of
such contribution based on the portion of the aggregate principal
amount of the Certificates purchased by such Underwriter under this
Agreement.
8. Termination. This Agreement shall be subject to termination in
the absolute discretion of the Underwriters, by notice given to the Depositor
prior to delivery of and payment for the Certificates, if prior to such time (i)
there has been, since the date hereof, any material adverse change in the
condition, financial or otherwise, of the Depositor, whether or not arising in
the ordinary course of business, or (ii) there shall have occurred any material
adverse change in the financial markets in the United States or any outbreak or
escalation of hostilities or other national or international calamity or crisis
the effect of which on the financial markets of the United States is such as to
make it, in the judgment of the Underwriters, impracticable to market the
Certificates or enforce contracts for the sale of the Certificates, or (iii)
trading generally on either the American Stock Exchange or the New York Stock
Exchange has been suspended, or minimum or maximum prices for trading have been
fixed, or maximum ranges for prices for securities have been required, by either
of said exchanges or by order of the Commission or any other governmental
authority, or a banking moratorium has been declared by either federal or New
York authorities. In the event that this Agreement is terminated by the
Underwriters for any reason other than the failure or refusal of the Depositor
to comply with or fulfill any of the conditions of this Agreement, or to perform
any of its obligations hereunder, or as a result of the occurrence of an event
described in clause (i) of this paragraph, DLJ will promptly reimburse the
Depositor for all out-of-
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pocket expenses (including but not limited to the reasonable fees and
disbursements of counsel) reasonably incurred by the Depositor in contemplation
of the performance by it of its obligations hereunder.
9. Representation and Indemnities To Survive Delivery. The
respective agreements, representations, warranties, indemnities and other
statements of the Depositor or its officers and of the Underwriters set forth in
or made pursuant to this Agreement will remain in full force and effect,
regardless of any termination of this Agreement or any investigation made by or
on behalf of the Underwriters or the Depositor or any of the officers, directors
or controlling persons referred to in Section 7 hereof, and will survive
delivery of and payment for the Certificates. The provisions of Section 7 hereof
shall survive the termination or cancellation of this Agreement.
10. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the
officers, directors and controlling persons referred to in Section 7 hereof, and
their successors and assigns, and no other person will have any right or
obligation hereunder. No purchaser of Certificates from the Underwriters shall
be deemed to be a successor by reason merely of such purchase.
11. Notices. All notices and other communications hereunder shall be
in writing and shall be deemed to have been duly given if mailed or transmitted
by any standard form of written telecommunication. Notices to the Depositor
shall be directed to its agent for service set forth on the cover page of the
Registration Statement, and notices to the Underwriters shall be directed to
Donaldson, Lufkin & Jenrette Securities Corporation, 277 Park Avenue, 9th Floor,
New York, New York, 10172, Attention: Robert Brennan, and to Daiwa Securities
America Inc., Financial Square, 32 Old Slip - 12th Floor, New York, New York
10005-3538, Attention: Steven M. Sherwyn and Richard Lerner.
12. Applicable Law. THIS AGREEMENT WILL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
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APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED THEREIN, WITHOUT REGARD TO THE
CONFLICT OF LAWS PROVISIONS THEREOF.
13. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall for all purposes be deemed an original and all
of which together shall constitute on and the same instrument.
14. Miscellaneous. This Agreement supersedes all prior and
contemporaneous agreements and understandings relating to the subject matter
hereof. This Agreement or any term hereof may not be changed, waived, discharged
or terminated except by an affirmative written agreement made by the party
against whom enforcement of the change, waiver, discharge or termination is
sought. The headings in this Agreement are for purposes of reference only and
shall not limit or otherwise affect the meaning hereof.
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<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the undersigned a counterpart hereof,
whereupon this letter and your acceptance shall represent a binding agreement
between the Depositor and the Underwriters.
Very truly yours,
AMERICAN SOUTHWEST FINANCIAL
SECURITIES CORPORATION
BY:_______________________________
Name: Jeffrey A. Newman
Title: President
The foregoing Underwriting Agreement
is hereby confirmed and accepted as of
the date first above written.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
BY:____________________________
Name:
Title:
DAIWA SECURITIES AMERICA INC.
BY:____________________________
Name:
Title:
<PAGE>
SCHEDULE 1
Underwriting Agreement dated December 19, 1996
Designation, Purchase Price and Description of Certificates:
Mortgage Pass-Through Certificates, Series 1996-FHA1, Class S,
Class A-1, Class A-2, Class A-3, Class A-4 and Class A-Z.
Initial Aggregate Stated Principal
Balance of the Mortgage Loans: $266,510,464 (approximate)
Purchase Price for the Offered
Certificates: $275,214,019.00 (less expenses payable by the
Depositor)
Designation Initial Class Principal Balance*
----------- --------------------------------
Class S $ (1)
Class A-1 $40,317,000
Class A-2 $38,978,000
Class A-3 $55,487,000
Class A-4 $58,824,000
Class A-Z $67,712,000
(1) Notional Amount as defined in the Prospectus
Supplement
* Subject to a permitted variance of plus or minus 5%.
Cut-Off Date: December 1, 1996.
Closing Date: December 27, 1996
Issuance of the
Offered Certificates: The Offered Certificates will be issued in
book-entry form. The Class A-1 Certificates, the Class
A-2 Certificates, the Class A-3 Certificates, the Class
A-4 Certificates and the Class A-Z Certificates will be
issued in denominations of $10,000 initial principal
balance and integral multiples of $1,000 in excess
thereof and the Class S Certificates will be issued in
denominations of $100,000 initial notional amount and
integral multiples of $1,000 in excess thereof.
<PAGE>
EXECUTION COPY
================================================================================
AMERICAN SOUTHWEST FINANCIAL SECURITIES CORPORATION,
Depositor,
GREYSTONE SERVICING CORPORATION, INC.,
Master Servicer,
GREYSTONE FUNDING CORPORATION,
Seller,
DAIWA FINANCE CORP.
Seller,
and
LASALLE NATIONAL BANK,
Trustee
-------------
POOLING AND SERVICING AGREEMENT
Dated as of December 1, 1996
relating to
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 1996-FHA1
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS; CERTAIN CALCULATIONS
SECTION 1.01. Definitions............................................. 4
SECTION 1.02. Certain Calculations Respecting the Mortgage Pool....... 39
ARTICLE II
CONVEYANCE OF TRUST FUND;
REPRESENTATIONS AND WARRANTIES;
ORIGINAL ISSUANCE OF CERTIFICATES
SECTION 2.01. Conveyance of Mortgage Assets........................... 41
SECTION 2.02. Acceptance of the Trust Fund by Trustee; Review of
Mortgage Loan Documentation............................. 45
SECTION 2.03. Representations, Warranties and Covenants of the
Depositor........................................ 47
SECTION 2.04. Representations, Warranties and Covenants of the Master
Servicer and each Seller................................ 48
SECTION 2.05. Execution, Authentication and Delivery of Class R-I
Certificates; Creation of REMIC I Regular Interests..... 57
SECTION 2.06. Conveyance of REMIC I Regular Interests; Acceptance of
REMIC II by Trustee..................................... 58
SECTION 2.07. Execution, Authentication and Delivery of Class R-II
Certificates; Creation of REMIC II Regular Interests.... 58
SECTION 2.08. Conveyance of REMIC II Regular Interests; Acceptance of
REMIC III by Trustee.................................... 58
SECTION 2.09. Execution, Authentication and Delivery of REMIC III
Certificates............................................ 58
SECTION 2.10. Retained Yield.......................................... 59
ARTICLE III
ADMINISTRATION AND SERVICING
OF TRUST FUND
SECTION 3.01. General Servicing Provisions............................ 61
SECTION 3.02. Administration of GNMA Certificates and FHA
Debentures.............................................. 63
SECTION 3.03. Collection of Mortgage Asset Payments................... 63
SECTION 3.04. Rights of the Depositor and the Trustee in Respect of the
Master Servicer and each Seller......................... 64
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SECTION 3.05. Sub-Servicers........................................... 64
SECTION 3.06. Collection of Taxes, Assessments and Similar Items;
Escrow Accounts......................................... 65
SECTION 3.07. Reserve Accounts........................................ 66
SECTION 3.08. Maintenance of the Custodial Account.................... 66
SECTION 3.09. Permitted Withdrawals from the Custodial Account........ 68
SECTION 3.10. Maintenance of Hazard Insurance and Other Insurance..... 70
SECTION 3.11. Enforcement of Due-On-Sale and Due-On-Encumbrance
Clauses; Assumption Agreements.......................... 70
SECTION 3.12. Maintenance of FHA Mortgage Insurance; Collection
Thereunder.............................................. 72
SECTION 3.13. Trustee to Cooperate; Release of Mortgage Files......... 74
SECTION 3.14. Documents, Records and Funds in Possession of Master
Servicer to be Held on Behalf of the Trustee for the
Benefit of the Certificateholders....................... 75
SECTION 3.15. Sale of Defaulted Mortgage Loans and FHA Debentures..... 76
SECTION 3.17. Reports to the Depositor; Account Statements............ 77
SECTION 3.18. Annual Statement as to Compliance....................... 78
SECTION 3.19. Annual Independent Public Accountants' Servicing
Report.................................................. 78
SECTION 3.20. Access to Certain Information........................... 79
ARTICLE IV
PAYMENTS AND STATEMENTS TO CERTIFICATEHOLDERS
SECTION 4.01. Collection Account...................................... 80
SECTION 4.02. Distributions........................................... 81
SECTION 4.03. Statements to Certificateholders; Collection Reports.... 86
SECTION 4.04. Allocation of Realized Losses and Certain Other Expenses
and Shortfalls.......................................... 91
SECTION 4.05. Prepayment Interest Shortfalls.......................... 92
SECTION 4.06. Calculations............................................ 92
SECTION 4.07. Use of Agents........................................... 94
ARTICLE V
ADVANCES
SECTION 5.01. Monthly Advances by the Master Servicer................. 95
SECTION 5.02. Monthly Advance Procedures.............................. 96
SECTION 5.03. Servicing Advances...................................... 97
SECTION 5.04. Nonrecoverable Advances................................. 97
SECTION 5.05. Interest on Advances.................................... 98
ARTICLE VI
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<PAGE>
THE CERTIFICATES
SECTION 6.01. The Certificates........................................ 99
SECTION 6.02. Registration of Transfer and Exchange of Certificates...100
SECTION 6.03. Mutilated, Destroyed, Lost or Stolen Certificates.......104
SECTION 6.04. Persons Deemed Owners...................................105
SECTION 6.05. Access to List of Certificateholders' Names and
Addresses...............................................105
SECTION 6.06. Maintenance of Office or Agency.........................105
SECTION 6.07. Book-Entry Certificates.................................106
SECTION 6.08. Notices to Clearing Agency..............................107
SECTION 6.09. Definitive Certificates.................................107
ARTICLE VII
THE DEPOSITOR, EACH SELLER AND THE MASTER SERVICER
SECTION 7.01. Liabilities of the Depositor, each Seller and the Master
Servicer................................................108
SECTION 7.02. Merger or Consolidation of the Depositor, each Seller or
the Master Servicer.....................................108
SECTION 7.03. Limitation on Liability of the Depositor, the Master
Servicer and Others.....................................109
SECTION 7.04. Master Servicer Not to Resign...........................109
SECTION 7.05. Errors and Omissions Insurance; Fidelity Bonds..........110
SECTION 7.06. Depositor, each Seller and Master Servicer May Own
Certificates............................................110
ARTICLE VIII
DEFAULT
SECTION 8.01. Events of Default.......................................111
SECTION 8.02. Trustee to Act; Appointment of Successor................113
SECTION 8.03. Notification to Certificateholders......................114
SECTION 8.04. Other Remedies of Trustee...............................114
ARTICLE IX
CONCERNING THE TRUSTEE
SECTION 9.01. Duties of Trustee.......................................116
SECTION 9.02. Certain Matters Affecting the Trustee...................118
SECTION 9.03. Trustee Not Liable for Certificates or Mortgage Loans...119
SECTION 9.04. Trustee May Own Certificates............................120
SECTION 9.05. Trustee's Fees and Expenses.............................120
SECTION 9.06. Eligibility Requirements for Trustee....................121
SECTION 9.07. Resignation and Removal of Trustee......................121
SECTION 9.08. Successor Trustee.......................................122
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SECTION 9.09. Merger or Consolidation of Trustee......................122
SECTION 9.10. Appointment of Co-Trustee or Separate Trustee...........122
SECTION 9.11. Representations and Warranties of the Trustee...........124
SECTION 9.12. Certain Reports by the Trustee..........................125
SECTION 9.13. Non-assignment of Putable Mortgage Loans................125
ARTICLE X
TERMINATION
SECTION 10.01. Termination upon Liquidation or Repurchase of all
Mortgage Loans..........................................126
SECTION 10.02. Procedure Upon Optional Termination.....................127
SECTION 10.03. Additional Termination Requirements.....................128
ARTICLE XI
MISCELLANEOUS PROVISIONS
SECTION 11.01. Amendment...............................................129
SECTION 11.02. Recordation of Agreement; Counterparts..................130
SECTION 11.03. Governing Law...........................................130
SECTION 11.04. Notices.................................................130
SECTION 11.05. Severability of Provisions..............................131
SECTION 11.06. Limitation on Rights of Certificateholders..............131
SECTION 11.07. Certificates Nonassessable and Fully Paid...............132
SECTION 11.08. HUD Regulations and Documents Control...................132
SECTION 11.09. Miscellaneous REMIC Provisions..........................132
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<PAGE>
EXHIBITS
Exhibit A-1: Form of Class A-1 Certificate........................A-1-1
Exhibit A-2: Form of Class A-2 Certificate........................A-2-1
Exhibit A-3: Form of Class A-3 Certificate........................A-3-1
Exhibit A-4: Form of Class A-4 Certificate........................A-4-1
Exhibit A-5: Form of Class A-Z Certificate........................A-5-1
Exhibit A-6: Form of Class S Certificate..........................A-6-1
Exhibit A-7: Form of Class B Certificate..........................A-7-1
Exhibit A-8: Form of Class R-I Certificate........................A-8-1
Exhibit A-9: Form of Class R-II Certificate.......................A-9-1
Exhibit A-10: Form of Class R-III Certificate.....................A-10-1
Exhibit B-1: Greystone Funding Schedule of Mortgage Assets........B-1-1
Exhibit B-2: Daiwa Finance Schedule of Mortgage Assets............B-2-1
Exhibit C: Form of Certification of Trustee.....................C-1-1
Exhibit D-1: Form of Transferor Representation Letter.............D-1-1
Exhibit D-2: Form of Transferee Representation Letter.............D-2-1
Exhibit E: Form of Investor Letter relating to ERISA..............E-1
Exhibit F-1: Form of Transfer Affidavit and Agreement.............F-1-1
Exhibit F-2: Form of Transfer Certificate.........................F-2-1
Exhibit G: Letter of Representations..............................G-1
Exhibit H-1: Form of Lost Note Affidavit and Indemnity for
Greystone Funding......................................H-1
Exhibit H-2: Form of Lost Note Affidavit and Indemnity for Daiwa
Finance................................................H-1
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<PAGE>
THIS POOLING AND SERVICING AGREEMENT, dated as of December 1, 1996,
is hereby executed by and among AMERICAN SOUTHWEST FINANCIAL SECURITIES
CORPORATION, as depositor (the "Depositor"), GREYSTONE SERVICING CORPORATION,
INC., as master servicer (the "Master Servicer"), GREYSTONE FUNDING CORPORATION,
as seller ("Greystone" or "Greystone Funding"), Daiwa Finance Corp., as seller
("Daiwa" or "Daiwa Finance"; Daiwa Finance and Greystone Funding, each a
"Seller" and together, the "Sellers"), and LASALLE NATIONAL BANK, as trustee
(the "Trustee"). Capitalized terms used in this Agreement and not otherwise
defined will have the meanings assigned to them in Article I below.
PRELIMINARY STATEMENT
The Depositor intends to sell commercial mortgage pass-through
certificates (collectively, the "Certificates"), to be issued hereunder in
multiple classes (each, a "Class"), which in the aggregate will evidence the
entire beneficial ownership interest in a trust fund (the "Trust Fund") to be
created hereunder.
As provided herein, the Trustee will elect to treat the segregated
pool of assets consisting of the Mortgage Assets (as defined herein), exclusive
of any Retained Yield (as defined herein) collected thereon, and certain other
related assets subject to this Agreement as a real estate mortgage investment
conduit (a "REMIC") for federal income tax purposes, and such segregated pool of
assets will be designated as "REMIC I." The Class R-I Certificates will
represent the sole class of "residual interests" in REMIC I for purposes of the
REMIC Provisions (as defined herein) under federal income tax law. With respect
to each Mortgage Asset, there shall be a corresponding "regular interest" in
REMIC I (each, a "REMIC I Regular Interest"). The designation for each such
REMIC I Regular Interest shall be the Mortgage Asset identifying number for the
related Mortgage Asset set forth on the Mortgage Asset Schedules attached hereto
as Exhibit B-1 and Exhibit B-2. The remittance rate (the "REMIC I Remittance
Rate") and initial stated principal amount (the initial "Uncertificated
Principal Balance") will equal the initial Net Asset Rate and Cut-off Date
Balance (each as defined herein), respectively, for the Mortgage Asset that
corresponds thereto as of the Closing Date. The "latest possible maturity date"
(determined solely for purposes of satisfying Treasury regulation Section
1.860G- 1(a)(4)(iii)) for each REMIC I Regular Interest shall be the first
Distribution Date (as defined herein) that follows the Stated Maturity Date (as
defined herein) for the Mortgage Asset that corresponds thereto as of the
Closing Date. None of the REMIC I Regular Interests will be certificated.
As provided herein, the Trustee will elect to treat the segregated
pool of assets consisting of the REMIC I Regular Interests as a REMIC for
federal income tax purposes, and such segregated pool of assets will be
designated as REMIC II. The Class R-II Certificates will represent the sole
class of "residual interests" in REMIC II for purposes of the REMIC Provisions
under federal income tax law. The following table irrevocably sets forth the
designation, remittance rate (the "REMIC II Remittance Rate") and initial
Uncertificated Principal Balance for each of the "regular interests" in REMIC II
(the "REMIC II Regular Interests"). The "latest possible maturity date"
(determined solely for purposes of satisfying Treasury regulation Section
1.860G-1(a)(4)(iii)) for each REMIC II Regular Interest shall be the first
Distribution Date that follows the Stated Maturity Date for the Mortgage Asset
included in the Trust Fund as of the
<PAGE>
Closing Date with the longest remaining term to stated maturity. None of the
REMIC II Regular Interests will be certificated.
REMIC II Initial Uncertificated
Designation Remittance Rate Principal Balance
----------- --------------- -----------------
A-1 Variable(1) $40,317,000
A-2 Variable(1) $38,978,000
A-3 Variable(1) $55,487,000
A-4 Variable(1) $58,824,000
A-Z Variable(1) $67,712,000
B Variable(1) $5,192,464
- ---------------
(1) Calculated in accordance with the definition of "REMIC II Remittance Rate".
As provided herein, the Trustee will elect to treat the segregated
pool of assets consisting of the REMIC II Regular Interests as a REMIC for
federal income tax purposes, and such segregated pool of assets will be
designated as REMIC III. The Class R-III Certificates will represent the sole
class of "residual interests" in REMIC III for purposes of the REMIC Provisions
under federal income tax law. The following table irrevocably sets forth the
class designation, pass-through rate (the "Pass-Through Rate") and initial
aggregate stated principal amount (the initial "Class Principal Balance") for
each of the Classes of Certificates representing "regular interests" in REMIC
III (the "REMIC III Regular Certificates"). The "latest possible maturity date"
(determined solely for purposes of satisfying Treasury Regulation Section
1.860G-1(a)(4)(iii)) for each Class of REMIC III Regular Certificates (or, in
the case of the Class S Certificates, for each "regular interest" in REMIC III
represented thereby) shall be the first Distribution Date that follows the
Stated Maturity Date for the Mortgage Asset included in the Trust Fund as of the
Closing Date with the longest remaining term to stated maturity.
Class Initial Class
Designation Pass-Through Rate Principal Balance
- ----------- ----------------- -----------------
Class S Variable(1) N/A(1)
Class A-1 6.675% per annum $40,317,000
Class A-2 7.000% per annum $38,978,000
Class A-3 7.125% per annum $55,487,000
Class A-4 7.290% per annum $58,824,000
Class A-Z 7.248% per annum $67,712,000
Class B 6.500% per annum $ 5,192,464
- ---------------------------------
(1) The Class S Certificates will not have a Class Principal Balance and will
accrue interest as provided herein at the related Pass-Through Rate in
effect from time to time on a hypothetical or notional principal amount (a
"Class Notional Amount") that is equal to the aggregate of the
Uncertificated Principal Balances of the REMIC
2
<PAGE>
II Regular Interests outstanding from time to time. The Class S
Certificates actually represent six separate "regular interests" in REMIC
III (the "Class S REMIC III Regular Interests"), each of which constitutes
an interest-only strip off one of the six REMIC II Regular Interests. Each
such Class S REMIC III Regular Interest accrues interest, as provided
herein, on a notional amount equal to the Uncertificated Principal Balance
of the related REMIC II Regular Interest outstanding from time to time at
a per annum rate equal to the excess, if any, of the REMIC II Remittance
Rate in effect from time to time for the related REMIC II Regular
Interest, over the fixed Pass-Through for the Class of REMIC III
Certificates with the same alphabetical and/or numerical Class designation
as the alphabetical and/or numerical designation for such REMIC II Regular
Interest. The Class Notional Amount for the Class S Certificates
represents an aggregation of the notional amounts on which the Class S
REMIC III Regular Interests accrue interest, and the Pass-Through Rate for
the Class S Certificates represents a weighted average of the per annum
rates at which the Class S REMIC III Regular Interests accrue interest.
Each of the Class S REMIC III Regular Interest shall have the designation
produced by combining the letter "S" with the alphabetical and/or
numerical designation for the related REMIC II Regular Interest (i.e.,
SA-1, SA-2, SA-3, SA-4, SA-Z and SB, respectively).
The Depositor is entering into this Agreement, and the Trustee is
accepting the trusts created hereby, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged. The aggregate of the
Cut-off Date Balances of the Mortgage Assets, the aggregate of the
Uncertificated Principal Balances of the REMIC I Regular Interests, the
aggregate of the Uncertificated Principal Balances of the REMIC II Regular
Interests and the aggregate of the Class Principal Balances of the respective
Classes of REMIC III Regular Certificates will in each case be $266,510,464.
WITNESSETH THAT:
In consideration of the mutual agreements herein contained, the
Depositor, the Master Servicer, Greystone Funding, Daiwa Finance and the Trustee
agree as follows:
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<PAGE>
ARTICLE I
DEFINITIONS; CERTAIN CALCULATIONS
SECTION 1.01. Definitions.
Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
Accrual Termination Date: With respect to the Class A-Z
Certificates, the Distribution Date that is the earliest of (i) the first
Distribution Date as of which the aggregate of the Class Principal Balances of
the Class A-1, Class A-2, Class A-3 and Class A-4 Certificates has been (or,
based upon the Principal Distribution Amount, will be) reduced to zero on or
prior thereto, (ii) the Class A Principal Distribution Cross-Over Date and (iii)
the final Distribution Date in connection with a termination of the Trust Fund.
Accrued Certificate Interest: With respect to any Class of REMIC III
Regular Certificates for any Distribution Date, one month's interest at the
Pass-Through Rate applicable to such Class of Certificates for such Distribution
Date, accrued on the related Class Principal Balance or Class Notional Amount,
as the case may be, outstanding immediately prior to such Distribution Date. The
Accrued Certificate Interest in respect of the Class S Certificates for any
Distribution Date shall represent the aggregation of the Accrued Certificate
Interest in respect of the respective Class S REMIC III Regular Interests for
such Distribution Date, which as to any Class S REMIC III Regular Interest shall
equal, with respect to any Distribution Date, one month's interest at the Class
S Strip Rate applicable to such Class S REMIC III Regular Interest for such
Distribution Date, accrued on a notional amount equal to the Uncertificated
Principal Balance of the related REMIC II Regular Interest outstanding
immediately prior to such Distribution Date. Accrued Certificate Interest shall
be calculated on the basis of a 360-day year consisting of twelve 30-day months.
Additional Trust Fund Expense: Any expense of the Trust Fund the
payment of which resulted in any Holders of REMIC III Regular Certificates
receiving less than the full amount of interest, principal or both to which they
are entitled.
Advance: Any Monthly Advance or Servicing Advance.
Advance Interest: Interest accrued on any Advance at the
Reimbursement Rate, limited by the Advance Interest Cap, and payable to the
Master Servicer or the Trustee, as the case may be, in accordance with Section
5.05.
Advance Interest Cap: $472,001, or at the request of the Master
Servicer or the Trustee, such greater amount as to which the Master Servicer or
the Trustee has obtained written confirmation from the Rating Agency that there
would be no resulting downgrade, withdrawal or qualification of the then-current
rating of any Class of Rated Certificates.
4
<PAGE>
Adverse REMIC Event: Either (i) the endangerment of the status of
any of REMIC I, REMIC II or REMIC III as a REMIC or (ii) the imposition of a tax
upon any of REMIC I, REMIC II or REMIC III or any of their respective
transactions (including, without limitation, the tax on prohibited transactions
as defined in Section 860F(a)(2) of the Code and the tax on prohibited
contributions set forth in Section 860G(d) of the Code).
Affiliate: With respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified Person.
For the purposes of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
Agreement: This Pooling and Servicing Agreement and any and all
amendments or supplements hereto.
Annual Debt Service: As defined in the Prospectus Supplement.
Assignment of Leases: With respect to any Mortgaged Property, any
assignment of leases, rents and profits or similar document or instrument
executed by the Mortgagor in connection with the origination of the related
Mortgage Loan.
Available Distribution Amount: With respect to any Distribution
Date, the sum of the following amounts: (a) the aggregate of all cash amounts
received on or in respect of the Mortgage Assets (including, without limitation,
all Monthly Payments received on the Mortgage Loans; scheduled payments received
on the GNMA Certificates and any FHA Debentures; any Principal Prepayments,
Insurance Proceeds, Condemnation Proceeds, Liquidation Proceeds (including,
without limitation, FHA Insurance Benefits received in the form of cash) and
Repurchase Proceeds received on the Mortgage Assets; and any other amounts
(exclusive of Monthly Advances and Compensating Interest Payments) required to
be deposited in the Collection Account and/or the Custodial Account hereunder),
in each case to the extent so received by the related Determination Date,
required to be deposited in the Collection Account or the Custodial Account and
not previously withdrawn from the Collection Account or Custodial Account for
distribution to Certificateholders or otherwise in accordance with this
Agreement prior to such date, exclusive of any portion thereof that represents
one or more of the following: (i) Monthly Payments collected on the Mortgage
Loans but due on a Due Date subsequent to the related Collection Period; (ii)
Prepayment Premiums; (iii) Retained Yield; (iv) amounts that are currently
payable or reimbursable to the Master Servicer, the Depositor, a Seller or the
Trustee pursuant to Section 3.09 and/or Section 4.01 hereof or to be used in
accordance with this Agreement to pay any other expenses of the Trust Fund not
previously reimbursed hereunder; (v) amounts received on Mortgage Assets
previously purchased by a Seller, the Master Servicer, the Trustee or a Majority
Class B Certificateholder or otherwise previously removed from the Trust Fund;
and (vi) amounts due on or before the Cut-off Date; and (b) all Monthly Advances
made by the Master Servicer or the Trustee and Compensating Interest Payments
made by the Master Servicer with respect to such Distribution Date. With respect
to the final Distribution
5
<PAGE>
Date, any Termination Price paid (exclusive of any portion thereof allocable to
the items described in clauses (a)(iii) and (a)(iv) above) will constitute part
of the related Available Distribution Amount.
Bankruptcy Code: The United States Bankruptcy Code, as amended from
time to time (11 U.S.C.).
Beneficial Holder: A Person holding a beneficial interest in any
Certificate through a Participant or an Indirect Participant or a Person holding
a beneficial interest in any Definitive Certificate, as defined in Section 6.07
hereof.
BIF: The Bank Insurance Fund, or any successor thereto.
Book-Entry Certificate: Any Class S, Class A-1, Class A-2, Class
A-3, Class A-4 or Class A-Z Certificate.
Book-Entry Custodian: The custodian appointed pursuant to Section
6.07.
Business Day: Any day other than (i) a Saturday or a Sunday, or (ii)
a day on which banking institutions in New York or the state in which the
Corporate Trust Office is located are authorized or obligated by law or
executive order to be closed.
CERCLA: The Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended.
Certificate: Any Class S, Class A-1, Class A-2, Class A-3, Class
A-4, Class A-Z, Class B, Class R-I, Class R-II or Class R-III Certificate
executed and authenticated by the Trustee for the benefit of the
Certificateholders in substantially the form or forms attached as Exhibits
hereto.
Certificate Factor: With respect to any Class of REMIC III Regular
Certificates, as of any date of determination, a fraction, expressed as a
decimal carried to six places, the numerator of which is the then related Class
Principal Balance or Class Notional Amount, as the case may be, and the
denominator of which is the related Initial Class Principal Balance or Initial
Class Notional Amount, as the case may be.
Certificateholder: The Person in whose name a Certificate is
registered in the Certificate Register, except that (i) neither a Disqualified
Organization nor a Non-United States Person shall be Holder of a Residual
Certificate for any purpose hereof and, (ii) except where herein specifically
stated otherwise, solely for the purposes of giving any consent, approval or
waiver pursuant to this Agreement that relates to any of the Depositor,
Greystone Funding, Daiwa Finance, the Master Servicer or the Trustee in its
respective capacity as such, any Certificate registered in the name of the
Depositor, Greystone Funding, Daiwa Finance, the Master Servicer or the Trustee,
as the case may be, or any Certificate registered in the name of any of its
Affiliates, shall be deemed not to be outstanding, and the Voting Rights to
which it is entitled
6
<PAGE>
shall not be taken into account in determining whether the requisite percentage
of Voting Rights necessary to effect any such consent, approval or waiver that
relates to it has been obtained. The Trustee shall be entitled to request and
rely upon a certificate of the Depositor, Greystone Funding, Daiwa Finance or
the Master Servicer, as the case may be, in determining whether a Certificate is
registered in the name of an Affiliate of such Person. All references herein to
"Holders" or "Certificateholders" shall reflect the rights of Beneficial Holders
as they may indirectly exercise such rights through DTC, the Participants and
the Indirect Participants, except as otherwise specified herein; provided,
however, that the parties hereto shall be required to recognize as a "Holder" or
"Certificateholder" only the Person in whose name a Certificate is registered in
the Certificate Register.
Certificate Notional Amount: With respect to any Class S
Certificate, as of any date of determination, the then hypothetical or notional
principal amount on which such Certificate accrues interest equal to the product
of (a) the Percentage Interest evidenced by such Certificate, multiplied by (b)
the then Class Notional Amount of the Class S Certificates.
Certificate Principal Balance: With respect to any Sequential Pay
Certificate, as of any date of determination, the then outstanding principal
amount of such Certificate equal to the product of (a) the Percentage Interest
evidenced by such Certificate in the related Class of Certificates, multiplied
by (b) the Class Principal Balance of such Class of Certificates then
outstanding.
Certificate Register: The register maintained pursuant to Section
6.02(a) hereof.
Class: Collectively, all of the Certificates bearing the same
alphabetical and, if applicable, numerical class designation.
Class A Certificate: Any Class A-1, Class A-2, Class A-3, Class A-4
or Class A-Z Certificate.
Class A Principal Distribution Cross-Over Date: The first
Distribution Date as of which the Class Principal Balance of the Class B
Certificates has been (or, based on the Principal Distribution Amount and the
expected allocation of Realized Losses and Additional Trust Fund Expenses, will
be) reduced to zero on or prior thereto as a result of the allocation of
Realized Losses and/or Additional Trust Fund Expenses as described herein.
Class A-1 Certificate: A Certificate executed and authenticated by
the Trustee in substantially the form set forth in Exhibit A-1 hereto and
designated as a Class A-1 Certificate.
Class A-2 Certificate: A Certificate executed and authenticated by
the Trustee in substantially the form set forth in Exhibit A-2 hereto and
designated as a Class A-2 Certificate.
Class A-3 Certificate: A Certificate executed and authenticated by
the Trustee in substantially the form set forth in Exhibit A-3 hereto and
designated as a Class A-3 Certificate.
7
<PAGE>
Class A-4 Certificate: A Certificate executed and authenticated by
the Trustee in substantially the form set forth in Exhibit A-4 hereto and
designated as a Class A-4 Certificate.
Class A-Z Certificate: A Certificate executed and authenticated by
the Trustee in substantially the form set forth in Exhibit A-5 hereto and
designated as a Class A-Z Certificate.
Class B Certificate: A Certificate executed and authenticated by the
Trustee in substantially the form set forth in Exhibit A-7 hereto and designated
as a Class B Certificate.
Class Notional Amount: The aggregate hypothetical or notional
principal amount on which the Class S Certificates accrues interest from time to
time. As of any date of determination, the Class Notional Amount of the Class S
Certificates shall equal the aggregate of the Uncertificated Principal Balances
of the REMIC II Regular Interests outstanding immediately prior to such date.
Class Principal Balance: The aggregate principal amount of any Class
of Sequential Pay Certificates outstanding as of any date of determination. As
of the Closing Date, the Class Principal Balance of each such Class of
Certificates shall equal the Initial Class Principal Balance thereof. On each
Distribution Date, the Class Principal Balance of each such Class of
Certificates shall be reduced by the amount of any distributions made thereon on
such Distribution Date pursuant to Section 4.02(a) and/or 10.02(d), as
applicable, and if and to the extent appropriate, shall be further reduced on
such Distribution Date as provided in Section 4.04(a). In addition, on each
Distribution Date on or prior to the Accrual Termination Date, the Class
Principal Balance of the Class A-Z Certificates shall be increased by an amount
equal to the Monthly Class A-Z Accrual Amount, if any, for such Distribution
Date. Neither the Class S Certificates nor the Residual Certificates shall have
Class Principal Balances.
Class R-I Certificate: A Certificate executed and authenticated by
the Trustee in substantially the form set forth in Exhibit A-8 hereto and
designated as a Class R-I Certificate.
Class R-II Certificate: A Certificate executed and authenticated by
the Trustee in substantially the form set forth in Exhibit A-9 hereto and
designated as a Class R-II Certificate.
Class R-III Certificate: A Certificate executed and authenticated by
the Trustee in substantially the form set forth in Exhibit A-10 hereto and
designated as a Class R-III Certificate.
Class S Certificate: A Certificate executed and authenticated by the
Trustee in substantially the form set forth in Exhibit A-6 hereto and designated
as a Class S Certificate.
Class S REMIC III Regular Interest: Any of the six "regular
interests" in REMIC III that are represented by the Class S Certificates and
that, in each case, constitute interest-only strips off one of the six REMIC II
Regular Interests. Set forth below is the designation for each such "regular
interest" in REMIC III and the related REMIC II Regular Interest:
8
<PAGE>
Class S REMIC III Related REMIC II
Regular Interest Regular Interest
---------------- ----------------
SA-1 A-1
SA-2 A-2
SA-3 A-3
SA-4 A-4
SA-Z A-Z
SB B
Class S Strip Rate: With respect to any Class S REMIC III Regular
Interest, for any Distribution Date, a per annum rate equal to the excess, if
any, of the REMIC II Remittance Rate for the related REMIC II Regular Interest
for such Distribution Date, over the fixed Pass-Through Rate for the Class of
Sequential Pay Certificates with the same alphabetical and/or numerical class
designation as the designation for the related REMIC II Regular Interest.
Clearing Agency: An organization registered as a "clearing agency"
pursuant to Section 17A of the Securities Exchange Act of 1934, as amended,
which initially shall be DTC.
Closing Date: December 27, 1996.
Code: The Internal Revenue Code of 1986, as amended.
Collection Account: The separate account or accounts created and
maintained by the Trustee pursuant to Section 4.01 hereof in the name of the
Trustee for the benefit of the Certificateholders, which account or accounts
must be an Eligible Account or Accounts.
Collection Period: With respect to any Distribution Date, the period
commencing immediately following the Determination Date in the calendar month
preceding the calendar month in which such Distribution Date occurs (or, in the
case of the initial Distribution Date, commencing immediately following the
Cut-off Date) to and including the Determination Date in the calendar month in
which such Distribution Date occurs.
Collection Report: As defined in Section 4.03(b) hereof.
Compensating Interest: As defined in Section 4.05 hereof.
Condemnation Proceeds: Amounts paid by the applicable governmental
authority in connection with the condemnation of any Mortgaged Property or the
taking of all or any portion thereof by right of eminent domain, which amounts
have not been applied to the restoration of the related property or released to
the related Mortgagor.
Corporate Trust Office: The designated office of the Trustee at
which at any particular time its corporate trust business with respect to the
Trust Fund shall be administered,
9
<PAGE>
which office at the date of the execution of this Agreement is located at 135
South LaSalle Street, Suite 1740, Chicago, Illinois 60674-4107, Attention:
Asset-Backed Securities Trust Services Department, ASW-FHA1.
CPR: As defined in the Prospectus Supplement.
Custodial Account: The deposit account or accounts created and
maintained by the Master Servicer pursuant to Section 3.08 hereof in the name of
the Master Servicer on behalf of the Trustee for the benefit of the
Certificateholders, which account or accounts must be an Eligible Account or
Accounts.
Cut-off Date: December 1, 1996.
Cut-off Date Balance: With respect to any Mortgage Loan, the unpaid
principal balance thereof as of the Cut-off Date, after application of the
payment of principal due thereon on such date, whether or not received; and,
with respect to any GNMA Certificate, the unpaid principal balance thereof as of
the Cut-off Date, exclusive of the payment of principal due on the related
Underlying Mortgage Loan on such date (to the extent distributable on such GNMA
Certificate), whether or not received.
Cut-off Date Debt Service Coverage Ratio: As defined in the
Prospectus Supplement.
Daiwa or Daiwa Finance: Daiwa Finance Corp. or its successor in
interest.
Daiwa GNMA Certificate: Any of the GNMA Certificates identified on
the Daiwa Mortgage Asset Schedule attached hereto as Exhibit B-2.
Daiwa Mortgage Asset: Any of the Mortgage Assets identified on the
Daiwa Mortgage Asset Schedule attached hereto as Exhibit B-2.
Daiwa Mortgage Asset Purchase Agreement: The mortgage asset purchase
agreement, dated as of December 19, 1996, between Daiwa Finance and the
Depositor (and acknowledged and agreed to by Daiwa Securities America Inc.).
Daiwa Mortgage Asset Schedule: The list of Mortgage Assets that are,
as of the Closing Date, transferred or caused to be transferred by Daiwa Finance
pursuant to the Daiwa Mortgage Asset Purchase Agreement and this Agreement,
which list is attached hereto as Exhibit B-2. The Daiwa Mortgage Asset Schedule
shall set forth, among other things, the following information with respect to
each Daiwa Mortgage Asset:
(i) the Mortgage Asset identifying number ("#") and Mortgage Asset
type;
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(ii) the type of real property securing the Daiwa Mortgage Loan or,
in the case of a Daiwa GNMA Certificate, the related
Underlying Mortgage Loan, as the case may be;
(iii) the Section of the Housing Act under which the Daiwa Mortgage
Loan or, in the case of a Daiwa GNMA Certificate, the related
Underlying Mortgage Loan, as the case may be, is insured;
(iv) in the case of each Daiwa Mortgage Loan, the FHA project
number and, in the case of each Daiwa GNMA Certificate, the
GNMA pool number;
(v) the original principal balance;
(vi) the Cut-off Date Balance;
(vii) in the case of each Daiwa Mortgage Loan, based solely on
Daiwa's review of the related lender's title insurance policy,
the lien position of the related Mortgage;
(viii) the Mortgage Rate of the Daiwa Mortgage Loan or, in the case
of a Daiwa GNMA Certificate, the related Underlying Mortgage
Loan, as the case may be;
(ix) the Net Asset Rate;
(x) in the case of each Daiwa Mortgage Loan, the Servicing Fee
Rate;
(xi) the first scheduled due date following the Cut-off Date for
the Daiwa Mortgage Loan or, in the case of a Daiwa GNMA
Certificate, the related Underlying Mortgage Loan, as the case
may be;
(xii) the Stated Maturity Date;
(xiii) the remaining term to stated maturity;
(xiv) in the case of each Daiwa Mortgage Loan, the applicable FHA
Debenture Rate;
(xv) in the case of each Daiwa Mortgage Loan, any applicable
Retained Yield Rate;
(xvi) the Cut-off Date prepayment provisions of the Daiwa Mortgage
Loan or, in the case of a Daiwa GNMA Certificate, the related
Underlying Mortgage Loan, as the case may be (including,
without limitation, any
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such provisions relating to a prepayment lock-out period
and/or the payment of a Prepayment Premium);
(xvii) the city and state of the real property securing the Daiwa
Mortgage Loan or, in the case of a Daiwa GNMA Certificate, the
related Underlying Mortgage Loan, as the case may be;
(xviii) the Annual Debt Service;
(xix) if available, the Cut-off Date Debt Service Coverage Ratio;
(xx) if available, the NOI for the real property securing the Daiwa
Mortgage Loan or, in the case of a Daiwa GNMA Certificate, the
related Underlying Loan, as the case may be; and
(xxi) the type of NOI described in clause (xx) above (within the
meaning of the Prospectus Supplement).
The Daiwa Mortgage Asset Schedule shall also set forth the aggregate Cut-off
Date Balance for all of the Daiwa Mortgage Assets. Such list may be in the form
of more than one list, collectively setting forth all of the information
required.
Daiwa Mortgage Loan: Any of the Mortgage Loans identified on the
Daiwa Mortgage Asset Schedule attached hereto as Exhibit B-2.
Daiwa Titleholders: With respect to the Daiwa GNMA Certificates,
Daiwa Securities America Inc.; and, with respect to the Daiwa Mortgage Loans,
the servicers of such Daiwa Mortgage Loans immediately prior to the Closing
Date.
Date of Default: With respect to any FHA Loan, the date on which the
failure of a borrower to make any payment due on such FHA Loan or to perform any
other covenant of such FHA Loan results in or permits an acceleration of such
loan.
Definitive Certificate: As defined in Section 6.07 hereof.
Depositor: American Southwest Financial Securities Corporation or
its successor in interest.
Depository Agreement: The Letter of Representation dated as of
December 26, 1996 by and among DTC, the Depositor and the Trustee.
Determination Date: With respect to any Distribution Date, the 20th
day (or, if such 20th day is not a Business Day, the Business Day immediately
succeeding such 20th day) of the calendar month in which such Distribution Date
occurs.
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Disqualified Organization: (i) The United States, any State or any
political subdivision thereof, or any agency or instrumentality of any of the
foregoing (other than an instrumentality which is a corporation if all of its
activities are subject to tax and, except for FHLMC, a majority of its board of
directors is not selected by any such governmental unit), (ii) a foreign
government, international organization or any agency or instrumentality of
either of the foregoing, (iii) an organization (except certain farmers'
cooperatives described in Section 521 of the Code) which is exempt from tax
imposed by Chapter 1 of the Code (unless such organization is subject to the tax
imposed by Section 511 of the Code on unrelated business taxable income), (iv)
rural electric and telephone cooperatives described in Section 1381 of the Code
and (v) any other Person so designated by the Trustee based upon an Opinion of
Counsel (which shall be at the expense of the Person providing such opinion to
the Trustee) that the holding of an Ownership Interest in a Residual Certificate
by such Person may cause any of the REMICs created hereunder or any Person
having an Ownership Interest in any Class of Certificates, other than such
Person, to incur a liability for any federal tax imposed under the Code that
would not otherwise be imposed but for the Transfer of an Ownership Interest in
a Residual Certificate to such Person. The terms "United States," "State" and
"international organization" shall have the meanings set forth in Section 7701
of the Code or successor provisions.
Distribution Date: The 25th day of each calendar month, or if such
25th day is not a Business Day, the next succeeding Business Day, commencing in
January 1997.
Distribution Date Statement: As defined in Section 4.03(a) hereof.
DTC: The Depository Trust Company.
Due Date: As the context requires, each date on which a payment,
whether of principal, interest or both, is due on a Mortgage Loan, an FHA
Debenture or a GNMA Certificate in accordance with the terms thereof.
Eligible Account: Either (i) an account or accounts maintained with
a federal or state-chartered depository institution or trust company (which may
be an affiliate of the Master Servicer or which may be the Trustee or an
affiliate of the Trustee) the short-term unsecured debt obligations of which
(or, in the case of a depository institution or trust company that is the
principal subsidiary of a holding company, the short-term unsecured debt
obligations of such holding company) are rated A-1+ by the Rating Agency, (ii)
an account or accounts the deposits in which are fully insured by the FDIC (the
BIF or the SAIF), provided that any such deposits not so insured shall be
otherwise maintained such that (as evidenced by an Opinion of Counsel delivered
to the Trustee and the Rating Agency) the Certificateholders have a claim with
respect to the funds in such account or a perfected first priority security
interest against any collateral (which shall be limited to Permitted
Investments) securing such funds that is superior to claims of any other
depositors or creditors of the depository institution or trust company with
which such account is maintained or (iii) a trust account or accounts maintained
with the trust department of a federal or state chartered depository institution
or trust company acting in its fiduciary capacity, provided that any such state
chartered depository institution is subject to
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regulation regarding funds on deposit substantially similar to the regulations
set forth in 12 C.F.R. ss. 9.10(b).
ERISA: The Employee Retirement Income Security Act of 1974, as
amended.
Escrow Account: As defined in Section 3.06 hereof.
Event of Default: As defined in Section 8.01 hereof.
Exchange Act: Securities Exchange Act of 1934, as amended.
Expected Recoveries due Certificateholders: For purposes of
determining the portion of Insurance Proceeds, Condemnation Proceeds,
Liquidation Proceeds, Repurchase Proceeds and payments received in respect of
any Mortgage Asset available to reimburse related Servicing Advances prior to
the occurrence of an FHA Insurance Nonexistence Event, an amount equal to: (i)
with respect to any Mortgage Loan (other than an FHA Assigned Mortgage Loan),
the aggregate of all unpaid interest (at the related Net Asset Rate) and
principal due and owing as of the date of receipt (net of any related
unreimbursed Monthly Advances); (ii) with respect to any FHA Assigned Mortgage
Loan, the aggregate of all unpaid interest (at the lesser of the Net Asset Rate
and the related Net FHA Debenture Rate) from the Date of Default to the date of
receipt and 99% of the unpaid principal balance of such FHA Assigned Mortgage
Loan (net of any related unreimbursed Monthly Advances); (iii) and, with respect
to any FHA Debenture, the aggregate of all unpaid interest (at the lesser of the
related Net Asset Rate and the related Net FHA Debenture Rate) from the Date of
Default in respect of the related FHA Assigned Mortgage Loan to the date of
receipt and 100% of the unpaid principal balance of such FHA Debenture (net of
related unreimbursed Monthly Advances).
FDIC: The Federal Deposit Insurance Corporation or any successor
thereto.
FHA: The Federal Housing Administration, which is a sub-division of
HUD, or any successor. The term "FHA" is used interchangeably in this Agreement
with the term "HUD".
FHA-Approved Mortgagee: A corporation or institution approved as a
mortgagee by the FHA under the Housing Act and applicable FHA Regulations, and
eligible to own and service project mortgage loans such as the Mortgage Loans.
FHA Assigned Mortgage Loan: Any Mortgage Loan that has been in
default for longer than the applicable FHA grace period and respecting which
written notice of an intention to assign has been filed with the FHA, whether or
not such Mortgage Loan has in fact been assigned to the FHA.
FHA Debenture Delivery Date: The date on which an FHA Debenture is
delivered by the FHA to the Trustee in respect of an FHA Assigned Mortgage Loan.
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FHA Debenture Rate: The rate per annum at which interest accrues in
respect of the outstanding principal balance of any FHA Debenture.
FHA Debentures: Debentures issued by the FHA pursuant to an FHA
Mortgage Insurance Contract.
FHA Insurance Benefits: The amount of insurance benefits, whether in
the form of cash or FHA Debentures or some combination thereof, payable by the
FHA in the event of a default with respect to a Mortgage Loan.
FHA Insurance Nonexistence Event: The date on which FHA Mortgage
Insurance is no longer available on any Mortgage Loan solely as a result of the
nonexistence of the FHA or any successor federal agency or official thereto with
respect to the functions and obligations thereof, including the obligation of
the FHA with respect to FHA Mortgage Insurance.
FHA Loan: A mortgage loan which is the subject of an FHA Mortgage
Insurance Contract.
FHA Loan Program: The program pursuant to which the FHA will insure
loans made to borrowers for construction and/or permanent financing of
multifamily rental housing developments or nursing homes, intermediate care
facilities, board and care homes or other nursing facilities. The FHA Loan
Program for each Mortgage Loan and Underlying Mortgage Loan is identified on the
Mortgage Asset Schedule with the applicable section number.
FHA Mortgage Insurance: Insurance granted by the FHA with respect to
any mortgage loan under the applicable section of the Housing Act.
FHA Mortgage Insurance Contract: The contractual obligation of the
FHA respecting the insurance of a mortgage loan.
FHA Regulations: Regulations promulgated by HUD under the Housing
Act, codified in 24 Code of Federal Regulation, and other HUD issuances relating
to FHA Loans, including, without limitation, the related handbooks, circulars,
notices and mortgagee letters.
FHLMC: The Federal Home Loan Mortgage Corporation or any successor
thereto.
FNMA: The Federal National Mortgage Association or any successor
thereto.
Final Recovery Determination: A determination by the Master Servicer
with respect to any defaulted Mortgage Loan (other than a Mortgage Loan that was
purchased by a Seller pursuant to Article II or by the Master Servicer pursuant
to Section 10.01) that there has been a recovery of all FHA Insurance Benefits
(including, without limitation, in the form of FHA Debentures), Insurance
Proceeds, Condemnation Proceeds, Liquidation Proceeds and other payments or
recoveries that the Master Servicer has determined, in its reasonable and good
faith judgment, will be ultimately recoverable.
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GNMA: The Government National Mortgage Association or any successor
thereof.
GNMA Certificate: Each of the mortgage pass-through certificates
transferred and assigned to the Trustee pursuant to the provisions hereof as
from time to time are held as part of the Trust Fund, guaranteed by GNMA and
backed by an FHA Loan, the mortgage pass-through certificates so held being
identified in the Mortgage Asset Schedule, as amended from time to time.
GNMA Certificate Rate: The rate per annum at which interest accrues
in respect of any GNMA Certificate.
Greystone or Greystone Funding: Greystone Funding Corporation or its
successor in interest.
Greystone GNMA Certificate: Any of the GNMA Certificates identified
on the Greystone Mortgage Asset Schedule attached hereto as Exhibit B-1.
Greystone Mortgage Asset: Any of the Mortgage Assets identified on
the Greystone Mortgage Asset Schedule attached hereto as Exhibit B-1.
Greystone Mortgage Asset Purchase Agreement: The mortgage asset
purchase agreement, dated as of December 19, 1996, among Greystone Funding, the
Depositor and the Master Servicer.
Greystone Mortgage Asset Schedule: The list of Mortgage Assets that
are, as of the Closing Date, transferred or caused to be transferred by
Greystone Finance pursuant to the Greystone Mortgage Asset Purchase Agreement
and this Agreement, which list is attached hereto as Exhibit B-1. The Greystone
Mortgage Asset Schedule shall set forth, among other things, the following
information with respect to each Greystone Mortgage Asset:
(i) the Mortgage Asset identifying number ("#") and Mortgage Asset
type;
(ii) the type of real property securing the Greystone Mortgage Loan
or, in the case of a Greystone GNMA Certificate, the related
Underlying Mortgage Loan, as the case may be;
(iii) the Section of the Housing Act under which the Greystone
Mortgage Loan or, in the case of a Greystone GNMA Certificate,
the related Underlying Mortgage Loan, as the case may be, is
insured;
(iv) in the case of each Greystone Mortgage Loan, the FHA project
number and, in the case of each Greystone GNMA Certificate,
the GNMA pool number;
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(v) the original principal balance;
(vi) the Cut-off Date Balance;
(vii) in the case of each Greystone Mortgage Loan, based solely on
Greystone's review of the related lender's title insurance
policy, the lien position of the related Mortgage;
(viii) the Mortgage Rate of the Greystone Mortgage Loan or, in the
case of a Greystone GNMA Certificate, the related Underlying
Mortgage Loan, as the case may be;
(ix) the Net Asset Rate;
(x) in the case of each Greystone Mortgage Loan, the Servicing Fee
Rate;
(xi) the first scheduled due date following the Cut-off Date for
the Greystone Mortgage Loan or, in the case of a Greystone
GNMA Certificate, the related Underlying Mortgage Loan, as the
case may be;
(xii) the Stated Maturity Date;
(xiii) the remaining term to stated maturity;
(xiv) in the case of each Greystone Mortgage Loan, the applicable
FHA Debenture Rate;
(xv) in the case of each Greystone Mortgage Loan, any applicable
Retained Yield Rate;
(xvi) the Cut-off Date prepayment provisions of the Greystone
Mortgage Loan or, in the case of a Greystone GNMA Certificate,
the related Underlying Mortgage Loan, as the case may be
(including, without limitation, any such provisions relating
to a prepayment lock-out period and/or the payment of a
Prepayment Premium);
(xvii) the city and state of the real property securing the Greystone
Mortgage Loan or, in the case of a Greystone GNMA Certificate,
the related Underlying Mortgage Loan, as the case may be;
(xviii) the Annual Debt Service;
(xix) if available, the Cut-off Date Debt Service Coverage Ratio;
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(xx) if available, the NOI for the real property securing the
Greystone Mortgage Loan or, in the case of a Greystone GNMA
Certificate, the related Underlying Loan, as the case may be;
and
(xxi) the type of NOI described in clause (xx) above (within the
meaning of the Prospectus Supplement).
The Greystone Mortgage Asset Schedule shall also set forth the aggregate Cut-off
Date Balance for all of the Greystone Mortgage Assets. Such list may be in the
form of more than one list, collectively setting forth all of the information
required.
Greystone Mortgage Loan: Any of the Mortgage Loans identified on the
Greystone Mortgage Asset Schedule attached hereto as Exhibit B-1.
Hazardous Materials: Any dangerous, toxic or hazardous pollutants,
chemicals, wastes, or substances, including, without limitation, those so
identified pursuant to CERCLA or any other federal, state or local environmental
related laws and regulations now existing or hereafter enacted, and specifically
including, without limitation, asbestos and asbestos-containing materials,
polychlorinated biphenyls ("PCBs"), radon gas, petroleum and petroleum products,
urea formaldehyde and any substances classified as being "in inventory", "usable
work in process" or similar classification which would, if classified as
unusable, be included in the foregoing definition.
Housing Act: The National Housing Act, as amended.
HUD: The United States Department of Housing and Urban Development,
or any federal agency or official thereof which may from time to time succeed to
the functions thereof with regard to FHA Mortgage Insurance. The term "HUD," for
purposes of this Agreement, is used interchangeably with the term "FHA".
HUD Indemnity: With respect to any Mortgage Loan that is to be
assigned to the FHA and as to which the original Mortgage Note has been
permanently lost or misplaced, an indemnity from the Trustee (not in its
individual capacity, but solely on behalf of the Trust Fund) in favor of HUD.
Independent: When used with respect to any specified Person, any
such Person who (i) is in fact independent of the Depositor, the Master
Servicer, Greystone Funding, Daiwa Finance, the Trustee and any and all
Affiliates thereof, (ii) does not have any direct financial interest in or any
material indirect financial interest in any of the Depositor, the Master
Servicer, Greystone Funding, Daiwa Finance, the Trustee or any Affiliate
thereof, and (iii) is not connected with the Depositor, the Master Servicer,
Greystone Funding, Daiwa Finance, the Trustee or any Affiliate thereof as an
officer, employee, promoter, underwriter, trustee, partner, director or Person
performing similar functions; provided, however, that a Person shall not fail to
be Independent of the Depositor, the Master Servicer, Greystone Funding, Daiwa
Finance, the Trustee or any Affiliate thereof merely because such Person is the
beneficial owner of 1% or less
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of any class of securities issued by the Depositor, the Master Servicer,
Greystone Funding, Daiwa Finance, the Trustee or any Affiliate thereof, as the
case may be.
Indirect Participants: Entities, such as banks, brokers, dealers and
trust companies, that clear through or maintain a custodial relationship with a
Participant, either directly or indirectly.
Initial Class Notional Amount: With respect to the Class S
Certificates, an amount equal to $266,510,464.
Initial Class Principal Balance: With respect to each Class of
Sequential Pay Certificates, the amount set forth below:
Class Initial Class Principal Balance
----- -------------------------------
A-1 $40,317,000
A-2 $38,978,000
A-3 $55,487,000
A-4 $58,824,000
A-Z $67,712,000
B $5,192,464
Insurance Proceeds: Amounts (other than FHA Insurance Benefits) paid
pursuant to any insurance policy with respect to a Mortgage Loan or related
Mortgaged Property that have not been used to restore the property.
Issue Price: With respect to each Class of Certificates, the "issue
price" as defined in the Code and Treasury Regulations promulgated thereunder.
Liquidated Loan: Any Mortgage Loan as to which the Master Servicer
has made a Final Recovery Determination.
Liquidation Proceeds: Cash amounts received in connection with the
liquidation or sale of a defaulted Mortgage Loan, whether through assignment of
the Mortgage Loan to HUD, acquisition of title to the related Mortgaged Property
and conveyance thereof to HUD, trustee's sale, foreclosure sale, sale of the
Mortgage Loan pursuant to Section 3.15(a), sale of any FHA Debentures received
as FHA Insurance Benefits in respect of the Mortgage Loan pursuant to Section
3.15(b), or otherwise.
Lost Note Affidavit and Indemnity: With respect to any Mortgage Loan
as to which Greystone Funding (with respect to a Greystone Mortgage Loan) or
Daiwa Finance (with respect to a Daiwa Mortgage Loan) is unable to deliver the
original Mortgage Note to the Trustee pursuant to Section 2.02 because the
original Mortgage Note has been permanently lost or misplaced, an affidavit from
such Seller certifying that the original Mortgage Note has been lost or
misplaced and an indemnity from such Seller in favor of, among others, the
Trustee on behalf
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of the Trust Fund and its successors and assigns in respect of such Mortgage
Loan, substantially in the form annexed hereto as Exhibit H.
Majority Class B Certificateholder: Any Holder or combination of
Holders of Class B Certificates representing in the aggregate a Percentage
Interest greater than 50% in such Class.
Master Servicer: Greystone Servicing Corporation, Inc. or any
successor under the terms of this Agreement.
Master Servicer Remittance Date: With respect to any Distribution
Date, the Business Day prior to such Distribution Date.
Monthly Advance: As to any Mortgage Loan or FHA Debenture, any
advance made by the Master Servicer or the Trustee with respect to any
Distribution Date pursuant to Section 5.01 or 5.02 hereof.
Monthly Advance Date: As defined in Section 5.02(a) hereof.
Monthly Class A-Z Accrual Amount: With respect to each Distribution
Date prior to the Accrual Termination Date, an amount equal to all Accrued
Certificate Interest in respect of the Class A-Z Certificates for such
Distribution Date; with respect to the Accrual Termination Date, provided that
the reason for its occurrence is based solely on the circumstances described in
clause (i) of the definition of "Accrual Termination Date", an amount equal to
the lesser of (i) all Accrued Certificate Interest in respect of the Class A-Z
Certificates for such date and (ii) the amount which when added to the Principal
Distribution Amount for such date (calculated without regard to the Monthly
Class A-Z Accrual Amount) will be sufficient to retire all Class A Certificates
(other than the Class A-Z Certificates) remaining; with respect to the Accrual
Termination Date, provided that the circumstances described in clause (ii) or
(iii) of the definition of "Accrual Termination Date" are applicable, zero; and,
with respect to any Distribution Date following the Accrual Termination Date,
zero. The Monthly Class A-Z Accrual Amount for any Distribution Date is to be
added to the Class Principal Balance of the Class A-Z Certificates on such
Distribution Date.
Monthly Payment: The scheduled monthly payment of principal and
interest on a Mortgage Loan.
Mortgage: The mortgage, deed of trust or other instrument creating a
first or second lien on a fee simple or leasehold estate in real property
securing a Mortgage Note.
Mortgage Asset: Any Mortgage Loan, any GNMA Certificate or, if
acquired as part of the Trust Fund, any FHA Debenture.
Mortgage Asset Purchase Agreement: Either of the Greystone Mortgage
Asset Purchase Agreement or the Daiwa Mortgage Asset Purchase Agreement.
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Mortgage Asset Schedule: The Daiwa Mortgage Asset Schedule and the
Greystone Mortgage Asset Schedule, together.
Mortgage File: For each Mortgage Loan, collectively the following
documents:
(i) The original Mortgage Note (bearing a final endorsement
evidencing the FHA Mortgage Insurance), endorsed in blank or to
"LaSalle National Bank, as trustee for American Southwest Financial
Securities Corporation Commercial Mortgage Pass-Through
Certificates, Series 1996-FHA1, without recourse," together with all
intervening endorsements showing an unbroken chain of endorsement
from the originator of the Mortgage Loan to the Person so endorsing
(or, a photocopy of the original Mortgage Note, together with a Lost
Note Affidavit and Indemnity);
(ii) The original Mortgage, with evidence of recording
thereon, and, if such Mortgage was executed pursuant to a power of
attorney, the original of such power of attorney, with evidence of
recording thereon, or (A) if such original Mortgage or power of
attorney has not been returned from the applicable public recording
office due to a delay caused by the public recording office, a true
and correct copy thereof, together with an Officer's Certificate of
Greystone Funding (with respect to a Greystone Mortgage Loan) or
Daiwa Finance (with respect to a Daiwa Mortgage Loan) stating that
such original Mortgage and/or power of attorney has been sent to the
appropriate public recording office for recordation, or (B) if such
original Mortgage or power of attorney has been lost after
recordation or has been retained by the public recording office, a
copy thereof, certified by the appropriate public recording office
where such document is recorded or by the related title insurance
company to be a true and complete copy of the recorded original of
such Mortgage or power of attorney, as the case may be;
(iii) The originals of all modification, consolidation and
extension agreements, if any, with evidence of recording thereon, or
(A) if any such original modification, consolidation or extension
agreement has not been returned from the applicable public recording
office due to a delay caused by the public recording office, a true
and correct copy thereof, together with an Officer's Certificate of
Greystone Funding (with respect to a Greystone Mortgage Loan) or
Daiwa Finance (with respect to a Daiwa Mortgage Loan) stating that
such original modification, consolidation or extension agreement has
been sent to the appropriate public recording office for
recordation, or (B) if any such original modification, consolidation
or extension agreement has been lost after recordation or has been
retained by the public recording office, a copy thereof, certified
by the appropriate public recording office where such document is
recorded or by the related title insurance company to be a true and
complete copy of the recorded original of such modification,
consolidation or extension agreement;
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(iv) An original assignment of the Mortgage, in recordable
form, signed by the holder of record as of the Closing Date, in
blank or in favor of "LaSalle National Bank, as trustee for American
Southwest Financial Securities Corporation, Commercial Mortgage
Pass-Through Certificates, Series 1996-FHA1";
(v) Originals of all intervening assignments of the Mortgage,
with evidence of recording thereon and showing a complete recorded
chain of assignment from the originator of the Mortgage Loan to the
holder of record as of the Closing Date, or (A) if any such original
intervening assignment of the Mortgage has not been returned from
the applicable public recording office due to a delay caused by the
public recording office, a true and correct copy thereof, together
with an Officer's Certificate of Greystone Funding (with respect to
a Greystone Mortgage Loan) or Daiwa Finance (with respect to a Daiwa
Mortgage Loan) stating that such original intervening assignment of
the Mortgage has been sent to the appropriate public recording
office for recordation, or (B) if any such original intervening
assignment of the Mortgage has been lost after recordation or has
been retained by the public recording office, a copy thereof,
certified by the appropriate public recording office where such
assignment is recorded or by the related title insurance company to
be a true and complete copy of the recorded original of such
intervening assignment of the Mortgage;
(vi) If any related Assignment of Leases is separate from the
Mortgage, the original version of such Assignment of Leases with
evidence of recording thereon, or (A) if such Assignment of Leases
has not been returned from the applicable public recording office
due to a delay caused by the public recording office, a true and
correct copy thereof, together with an Officer's Certificate of
Greystone Funding (with respect to a Greystone Mortgage Loan) or
Daiwa Finance (with respect to a Daiwa Mortgage Loan) stating that
such original Assignment of Leases has been sent to the appropriate
public recording office for recordation, or (B) if such original
Assignment of Leases has been lost after recordation or has been
retained by the public recording office, a copy thereof, certified
by the appropriate public recording office where such document is
recorded or by the related title insurance company to be a true and
complete copy of the recorded original of such Assignment of Leases;
(vii) If any related Assignment of Leases is separate from the
Mortgage, an original assignment of such Assignment of Leases, in
recordable form, signed by the holder of record as of the Closing
Date, in blank or in favor of "LaSalle National Bank, as trustee for
American Southwest Financial Securities Corporation, Commercial
Mortgage Pass-Through Certificates, Series 1996- FHA1", which
assignment may be effected in the related assignment of the Mortgage
referred to in clause (iv) above;
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(viii) If any related Assignment of Leases is separate from
the Mortgage, originals of all intervening assignments of such
Assignment of Leases (which in each case may be effected in the
related intervening assignment of the Mortgage referred to in clause
(v) above), with evidence of recording thereon and showing a
complete recorded chain of assignment from the originator of the
Mortgage Loan to the holder of record as of the Closing Date, or (A)
if any such original intervening assignment of such Assignment of
Leases has not been returned from the applicable public recording
office due to a delay caused by the public recording office, a true
and correct copy thereof, together with an Officer's Certificate of
Greystone Funding (with respect to a Greystone Mortgage Loan) or
Daiwa Finance (with respect to a Daiwa Mortgage Loan) stating that
such original intervening assignment of such Assignment of Leases
has been sent to the appropriate public recording office for
recordation, or (B) if any such original intervening assignment of
such Assignment of Leases has been lost after recordation or has
been retained by the public recording office, a copy thereof,
certified by the appropriate public recording office where such
assignment is recorded or by the related title insurance company to
be a true and complete copy of the recorded original of such
intervening assignment of such Assignment of Leases;
(ix) If any related Security Agreement is separate from the
Mortgage, the original version of such Security Agreement, or if the
original version of such Security Agreement has been lost, a copy
thereof, together with an Officer's Certificate of Greystone Funding
(with respect to a Greystone Mortgage Loan) or Daiwa Finance (with
respect to a Daiwa Mortgage Loan) stating that the original version
of the Security Agreement has been lost and such copy is a true and
complete copy of the original version of the Security Agreement
(Greystone Funding (with respect to a Greystone Mortgage Loan) or
Daiwa Finance (with respect to a Daiwa Mortgage Loan) shall identify
those Mortgage Files which should contain a separate Security
Agreement);
(x) If any related Security Agreement is separate from the
Mortgage, an original assignment of such Security Agreement, signed
by the holder of record as of the Closing Date, in blank or in favor
of "LaSalle National Bank, as trustee for American Southwest
Financial Securities Corporation, Commercial Mortgage Pass-Through
Certificates, Series 1996-FHA1", which assignment may be effected in
the related assignment of the Mortgage referred to in clause (iv)
above;
(xi) If any related Security Agreement is separate from the
Mortgage, originals of all intervening assignments of such Security
Agreement (which in each case may be effected in the related
intervening assignment of the Mortgage referred to in clause (v)
above), showing a complete recorded chain of assignment from the
originator of the Mortgage Loan to the holder of record as of the
Closing Date, or if any such original intervening assignment of such
Security Agreement has been lost, a copy thereof, together with an
Officer's Certificate of Greystone
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Funding (with respect to a Greystone Mortgage Loan) or Daiwa Finance
(with respect to a Daiwa Mortgage Loan) stating that such original
intervening assignment of the Security Agreement has been lost and
such copy is a true and complete copy of the original of such
intervening assignment of the Security Agreement;
(xii) The original lender's title insurance policy or in the
event such original lender's title insurance policy is unavailable,
any one of an original title binder, an original title commitment or
a copy of such policy certified to be a true and complete copy by
the title company or by Greystone Funding (with respect to a
Greystone Mortgage Loan) or Daiwa Finance (with respect to a Daiwa
Mortgage Loan);
(xiii) An original assignment of each recorded or filed
effective financing statement, in form and substance acceptable for
recording or filing, as appropriate, signed by the secured party
currently designated of record in blank or in favor of "LaSalle
National Bank, as trustee for American Southwest Financial
Securities Corporation, Commercial Mortgage Pass-Through
Certificates, Series 1996-FHA1" (Greystone Funding (with respect to
a Greystone Mortgage Loan) and Daiwa Finance (with respect to a
Daiwa Mortgage Loan) shall identify those Mortgage Files which
should contain financing statements, and the type of such financing
statements); and
(xiv) HUD form 92080, properly completed to reflect the
transactions contemplated by this Agreement in respect of such
Mortgage Loan;
provided that whenever the term "Mortgage File" is used to refer to documents
actually received by the Trustee, such term shall be deemed not to include such
documents required to be included therein unless they are actually so received.
Mortgage Loan: Each of the mortgage loans transferred and assigned
to the Trustee pursuant to the provisions hereof as from time to time are held
as a part of the Trust Fund, the mortgage loans originally so held being
identified in the Mortgage Asset Schedule. As used herein, the term "Mortgage
Loan" includes the related Mortgage Note, Mortgage and other security documents
contained in the related Mortgage File and all rights incident to ownership of
such documents. Unless the context otherwise requires, a "Mortgage Loan" shall
be deemed to remain outstanding for purposes hereof until its Stated Principal
Balance is reduced to zero.
Mortgage Note: The original executed note or other evidence of the
indebtedness of a Mortgagor under a Mortgage Loan.
Mortgage Pool: Collectively, all of the Mortgage Assets.
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Mortgage Rate: The fixed annual rate of interest borne by a Mortgage
Loan in the absence of a default thereunder, which is (subject to any change
therein in connection with a bankruptcy or similar proceeding involving the
related Mortgagor or a modification granted or agreed to by the Master Servicer
in accordance with the terms hereof) set forth in the related Mortgage Note.
Mortgaged Property: The underlying property securing a Mortgage
Loan.
Mortgagor: The obligor on a Mortgage Note.
Net Asset Rate: As to each Mortgage Loan, as of any date of
determination, a rate per annum equal to the related Mortgage Rate, minus the
sum of the applicable Servicing Fee Rate and the Trustee Fee Rate. As to each
FHA Debenture, as of any date of determination, a rate per annum equal to the
Net Asset Rate for the related FHA Assigned Mortgage Loan at the time of the
assignment thereof to the FHA. As to each GNMA Certificate, as of any date of
determination, the related GNMA Certificate Rate, minus the Trustee Fee Rate.
Net FHA Debenture Rate: As to each FHA Debenture, as of any date of
determination, a rate per annum equal to the related FHA Debenture Rate, minus
the sum of the Trustee Fee Rate and any applicable Retained Yield Rate.
NOI: As defined in the Prospectus Supplement.
Nonrecoverable Advance: Any Advance or portion thereof previously
made or proposed to be made by the Master Servicer or the Trustee that, in the
good faith and reasonable judgment of the Master Servicer or the Trustee, will
not or, if made, would not, as the case may be, ultimately be recoverable from
late payments, Insurance Proceeds, Liquidation Proceeds or any other amount with
respect to the related Mortgage Loan; provided that no Servicing Advance will
constitute a Nonrecoverable Advance unless it was incurred after an FHA
Insurance Nonexistence Event has occurred. The determination of whether an
Advance constitutes a Nonrecoverable Advance shall be made by the Master
Servicer or the Trustee in accordance with Section 5.04.
Non-Registered Certificate: Unless and until registered under the
Securities Act, any Class B or Residual Certificate.
Non-United States Person: Any person other than a United States
Person.
Officers' Certificate: A certificate signed by the Chairman of the
Board, the Vice Chairman of the Board, the President, a Vice President, a member
of the Executive Committee or other authorized officer, and by the Treasurer,
the Secretary, or one of the Assistant Treasurers or Assistant Secretaries of
the Depositor, the Master Servicer, Greystone Funding or Daiwa Finance or by a
Responsible Officer of the Trustee, as the case may be, and delivered to the
Depositor, the Master Servicer or the Trustee, as required by this Agreement.
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Opinion of Counsel: A written opinion of counsel, who may be counsel
for the Depositor, Greystone Funding, Daiwa Finance or the Master Servicer,
reasonably acceptable to the Trustee; provided that with respect to the opinion
referred to in the definition of Eligible Account in this Article I and Section
7.04 hereof and any opinion dealing with the qualification of the Trust Fund as
a REMIC or compliance with the REMIC Provisions, such counsel must in fact be
Independent.
Optional Termination: The purchase of all the Mortgage Assets by the
Master Servicer pursuant to Section 10.01.
Optional Termination Date: The final Distribution Date in connection
with any Optional Termination.
OTS: The Office of Thrift Supervision or any successor thereto.
Ownership Interest: As to any Certificate, any ownership or security
interest in such Certificate as the Holder thereof and any other interest
therein, whether direct or indirect, legal or beneficial, as owner or as pledgee
thereof.
Participant: A broker, dealer, bank, other financial institution or
other Person for whom DTC effects book-entry transfers and pledges of securities
deposited with DTC.
Pass-Through Entity: Either (a) a regulated investment company
described in Section 851 of the Code, a real estate investment trust described
in Section 856 of the Code, a common trust fund or an organization described in
Section 1381(a) of the Code, (b) any partnership, trust or estate or (c) any
person holding a Residual Certificate as nominee for another person.
Pass-Through Rate: With respect to:
(i) the Class A-1 Certificates, the Class A-2 Certificates, the
Class A-3 Certificates, the Class A-4 Certificates, the Class
A-Z Certificates and the Class B Certificates for any
Distribution Date, the respective fixed rates per annum
specified as such in the Preliminary Statement; and
(ii) the Class S Certificates for any Distribution Date, a rate per
annum equal to the weighted average, expressed as a percentage
and rounded to eight decimal places, of the Class S Strip
Rates for the respective Class S REMIC III Regular Interests
(weighted on the basis of the respective Uncertificated
Principal Balances of the related REMIC II Regular Interests
outstanding immediately prior to such Distribution Date).
Percentage Interest: The percentage interest in any Class evidenced
by any Certificate of such Class, which (a) in the case of a REMIC III Regular
Certificate, is equal to a fraction (expressed as a percentage), the numerator
of which is the initial Certificate Principal
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Balance or initial Certificate Notional Amount, as the case may be, of such
Certificate as of the Closing Date, as set forth on the face thereof, and the
denominator of which is equal to the Initial Class Principal Balance or Initial
Class Notional Amount, as the case may be, of the relevant Class, and (b) in the
case of a Residual Certificate, is set forth on the face thereof.
Permitted Investments: At any time, any one or more of the following
obligations, instruments and securities:
(i) direct obligations of, or guarantees as to timely payment of
principal and interest by, the United States or any agency or
instrumentality thereof, provided that such obligations are backed by the
full faith and credit of the United States;
(ii) direct obligations of, or guarantees as to timely payment of
principal and interest by, FHLMC, FNMA or the Federal Farm Credit System,
provided that any such obligation, at the time of purchase of such
obligations, are rated by the Rating Agency as high as the ratings
equivalent to the Rating Agency's highest initial rating of the Rated
Certificates;
(iii) demand and time deposits in or certificates of deposit of, or
bankers' acceptances issued by, any bank or trust company, savings and
loan association or savings bank, provided that, in the case of
obligations that are not deposits fully insured by the FDIC, the
commercial paper and/or long-term unsecured debt obligations of such
depository institution or trust company are rated by the Rating Agency as
high as the Rating Agency's highest initial rating of the Rated
Certificates;
(iv) general obligations of or obligations guaranteed by any state
of the United States or the District of Columbia which are rated by the
Rating Agency as high as the Rating Agency's highest initial rating of the
Rated Certificates;
(v) commercial or finance company paper (including both
non-interest-bearing discount obligations and interest-bearing obligations
payable on demand or on a specified date not more than one year after the
date of issuance thereof) that is rated by the Rating Agency as high as
its highest short-term unsecured debt rating at the time of such
investment or contractual commitment providing for such investment, and is
issued by a corporation the outstanding senior long-term unsecured debt
obligations of which are then rated by the Rating Agency in its highest
long-term unsecured debt rating;
(vi) guaranteed reinvestment agreements issued by any bank,
insurance company or other corporation and such bank, insurance company or
other corporation is rated by the Rating Agency as high as the Rating
Agency's highest initial rating of the Rated Certificates at the time of
such investment or contractual commitment providing for such investment,
provided that any such agreement must by its terms provide that it
is terminable by the purchaser without penalty in the event any such
rating is at any time lower than such level;
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(vii) repurchase obligations with respect to any security described
in clause (i) or (ii) above entered into with a depository institution or
trust company (acting as principal) meeting the rating standard described
in clause (iii) above;
(viii) securities bearing interest or sold at a discount issued by
any corporation incorporated under the laws of the United States or any
state thereof and rated by the Rating Agency as high as its highest
long-term unsecured debt rating at the time of such investment or
contractual commitment providing for such investment, provided that
securities issued by any such corporation will not be Permitted
Investments to the extent that investment therein would cause the then
outstanding principal amount of securities issued by such corporation and
held as part of the Custodial Account or the Collection Account to exceed
20% of the aggregate principal amount of all Permitted Investments held in
the Custodial Account and the Collection Account;
(ix) units of taxable money market funds which funds are regulated
investment companies, seek to maintain a constant net asset value per
share and invest solely in obligations backed by the full faith and credit
of the United States, and have been rated by the Rating Agency as high as
"AAAm" or "AAAm-G";
(x) if previously confirmed in writing to the Trustee, any other
demand, money market or time deposit, or any other obligation, security or
investment, as may be acceptable to the Rating Agency as an investment of
funds backing securities having ratings as high as the Rating Agency's
highest initial rating of the Rated Certificates; and
(xi) such other obligations as are acceptable as Permitted
Investments to the Rating Agency;
provided that, unless otherwise specified herein, (a) any such Permitted
Investments must be available for withdrawal without penalty, or must mature, no
later than the Business Day immediately preceding the first date on which the
funds invested therein would be subject to withdrawal from the relevant account
maintained hereunder (except that if such Permitted Investment is an obligation
of the institution that maintains such account, then such Permitted Investment
shall mature not later than such date of withdrawal), (b) no such obligation,
instrument or security set forth above shall constitute a Permitted Investment
unless it qualifies as a "cash flow investment" pursuant to the Code, (c) no
such obligation, instrument or security set forth above shall constitute a
Permitted Investment if such obligation, instrument or security evidences either
(1) a right to receive only interest payments with respect to the obligations
underlying such obligation, instrument or security or (2) a right to receive
both principal and interest payments derived from obligations underlying such
obligation, instrument or security and the principal and interest payments with
respect to such obligation, instrument or security provide for a yield to
maturity of greater than 120% of the yield to maturity at par of such underlying
obligations and (d) no such obligation, instrument or security set forth above
shall constitute a Permitted Investment if such obligation, instrument or
security has the "r" or "t" highlight attached to its rating, and provided
further that any such Permitted Investment shall have a predetermined fixed
dollar amount of principal due at maturity that shall not vary or change.
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Permitted Transferee: Any Transferee of a Residual Certificate other
than a Disqualified Organization or Non-United States Person.
Person: Any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization or government, or any agency or political subdivision thereof.
Phase I Environmental Assessment: A "Phase I assessment" as
described in and meeting the criteria of Chapter 5 of the FNMA Multifamily
Guide, as amended from time to time.
Plan: Any employee benefit plan or other retirement plan or
arrangement, including individual retirement accounts and annuities, and Keogh
plans, and bank collective investment funds and insurance company general or
separate accounts in which such plans, accounts or arrangements are invested,
that is subject to the prohibited transaction and fiduciary responsibility
provisions of ERISA and Section 4975 of the Code.
Prepayment Assumption: For purposes of determining the accrual of
original issue discount, market discount and premium, if any, on the Mortgage
Assets, the REMIC I Regular Interests, the REMIC II Regular Interests and the
Certificates for federal income tax purposes, a CPR of 40% applied to each
Mortgage Loan and Underlying Mortgage Loan from and after the first date such
loan may, in accordance with its terms, be voluntarily prepaid in full without
the payment of a Prepayment Premium, and a CPR of 0% prior thereto.
Prepayment Interest Excess: With respect to any Mortgage Loan that
was subject to a Principal Prepayment in full or in part during any Collection
Period, which Principal Prepayment was applied to such Mortgage Loan following
such Mortgage Loan's Due Date in such Collection Period, the amount of interest
(at the related Net Asset Rate) accrued on the amount of such Principal
Prepayment during the period from and after such Due Date, to the extent
collected (in excess of any Prepayment Premium collected).
Prepayment Interest Shortfall: With respect to any Mortgage Loan
that was subject to a Principal Prepayment in full or in part during any
Collection Period, which Principal Prepayment was applied to such Mortgage Loan
prior to such Mortgage Loan's Due Date in such Collection Period, the amount of
interest that would have accrued at the related Net Asset Rate plus the Trustee
Fee Rate on the amount of such Principal Prepayment during the period commencing
on the date as of which such Principal Prepayment was applied to such Mortgage
Loan and ending on the day immediately preceding such Due Date, inclusive, to
the extent such interest was not (without regard to any Prepayment Premium)
collected from the related Mortgagor.
Prepayment Premium: With respect to any Mortgage Loan, any premium,
penalty or fee paid or payable, as the context requires, by a Mortgagor in
connection with a Principal Prepayment on, or other early collection of
principal of, a Mortgage Loan. With respect to any
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GNMA Certificate, if and to the extent received or receivable, as the context
requires, thereon, any comparable premium, penalty or fee in respect of the
related Underlying Mortgage Loan.
Prime Rate: The "prime rate" published in the "Money Rates" section
of The Wall Street Journal, as such "prime rate" may change from time to time.
If The Wall Street Journal ceases to publish the "prime rate," then the Trustee
shall select an equivalent publication that publishes such "prime rate"; and if
such "prime rate" is no longer generally published or is limited, regulated or
administered by a governmental or quasi-governmental body, then the Trustee
shall select a comparable interest rate index. In either case, such selection
shall be made by the Trustee in its sole discretion, and the Trustee shall
notify the Master Servicer in writing of its selection.
Principal Distribution Amount: With respect to each Distribution
Date, an amount equal to the aggregate of (without duplication) the following:
(i) the aggregate of all payments of principal (other than Principal
Prepayments) received on the Mortgage Loans during the related Collection
Period, in each case net of any portion of the particular payment that
represents a late collection of principal due on or before the Cut-off
Date or for which a Monthly Advance was previously made for a prior
Distribution Date or that represents the principal portion of a Monthly
Payment due on a Due Date subsequent to the related Collection Period;
(ii) the aggregate of the principal portions of all Monthly Payments
due in respect of the Mortgage Loans for their respective Due Dates
occurring during the related Collection Period that were received prior to
the related Collection Period;
(iii) the aggregate of all Principal Prepayments made by the
respective Mortgagors on the Mortgage Loans during the related Collection
Period;
(iv) the aggregate of all Insurance Proceeds, Condemnation Proceeds,
Liquidation Proceeds (including, without limitation, FHA Insurance
Benefits received in the form of cash) and any other cash amounts
(exclusive of payments by Mortgagors and exclusive of proceeds received in
connection with any purchase or repurchase of a Mortgage Asset
contemplated by any of clauses (vi), (vii) and (x) below) that were
received on or in respect of the Mortgage Loans during the related
Collection Period and that were identified and applied by the Master
Servicer as recoveries of principal thereof in accordance with Section
1.02(b); in each case net of any portion thereof that represents a
recovery of principal for which a Monthly Advance was previously made for
a prior Distribution Date;
(v) the aggregate of all payments of principal that were received on
the GNMA Certificates and any FHA Debentures during the related Collection
Period (other than, in the case of a GNMA Certificate, any such payment of
principal that relates to principal due on the related Underlying Mortgage
Loan on or before the Cut-off Date);
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(vi) the Stated Principal Balance (calculated immediately prior to
such Distribution Date) of each Mortgage Asset, if any, that was
repurchased by a Seller during the related Collection Period pursuant to
Article II hereof;
(vii) the Stated Principal Balance (calculated immediately prior to
such Distribution Date) of each defaulted Mortgage Loan and FHA Debenture,
if any, that was purchased by the Majority Class B Certificateholder, the
Master Servicer and/or the Trustee during the related Collection Period
pursuant to Section 3.15;
(viii) the aggregate of the principal portions of all Monthly
Advances made in respect of the Mortgage Loans with respect to such
Distribution Date;
(ix) if such Distribution Date occurs on or prior to the Accrual
Termination Date, the Monthly Class A-Z Accrual Amount, if any, for such
Distribution Date; and
(x) if such Distribution Date is the Optional Termination Date, the
Stated Principal Balance (calculated immediately prior to such
Distribution Date) of each Mortgage Asset purchased as part of the
Optional Termination.
Principal Prepayment: Any Mortgagor payment on a Mortgage Loan that
is received in advance of its scheduled Due Date and is not accompanied by an
amount as to interest representing scheduled interest due on any date or dates
in any month or months subsequent to the month of prepayment.
Private Placement Memorandum: The Private Placement Memorandum dated
December 27, 1996, relating to the Class B and the Residual Certificates.
Prospectus: The prospectus dated July 25, 1995, as supplemented by
the Prospectus Supplement, relating to the Registered Certificates.
Prospectus Supplement: The prospectus supplement dated December 19,
1996 relating to the Registered Certificates.
Purchase Price: With respect to any Mortgage Loan, GNMA Certificate
or FHA Debenture, the sum of (i) 100% of the unpaid principal balance of such
Mortgage Asset on the date of such purchase, (ii) all accrued and unpaid
interest on such Mortgage Asset at a rate equal to the related Mortgage Rate,
GNMA Certificate Rate or FHA Debenture Rate, as applicable, to the later of (A)
the date of purchase and (B) the related Due Date (or, in the case of an FHA
Debenture, the date that had been the Due Date for the related FHA Assigned
Mortgage Loan) in the Collection Period of purchase and (iii) in the case of a
Mortgage Loan, the amount of any unreimbursed Servicing Advances made by and
reimbursable to the Master Servicer with respect to such Mortgage Loan
hereunder.
Putable Mortgage Loan: Any Mortgage Loan which, under the related
FHA Loan Program and the terms of the related FHA Mortgage Insurance Contract,
the related holder of
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record is entitled on a specified date or during a specified period to assign to
the FHA (notwithstanding that such loan is not in default).
Qualified Insurer: An insurance company or security or bonding
company duly qualified to write the insurance provided by the insurance policy
or bond issued by it, which is approved as an insurer by the FHA.
Rated Certificates: All Certificates as to which the Rating Agency
has assigned a rating.
Rating Agency: Standard & Poor's Ratings Services or its successor
in interest. If neither such rating agency nor any successor remains in
existence, "Rating Agency" shall be deemed to refer to such other nationally
recognized statistical rating agency or other comparable Person designated by
the Depositor, notice of which designation shall be given to the other parties
hereto, and specific ratings of Standard & Poor's Ratings Services herein
referenced shall be deemed to refer to the equivalent ratings of the party so
designated.
Realized Loss: Any loss which may result from, among other things,
the Master Servicer's failure to collect all amounts due and owing in respect of
a defaulted Mortgage Loan, including, in connection with the assignment of any
defaulted Mortgage Loan to the FHA, by reason of the payment of the required
assignment fee or by reason of the FHA Insurance Benefits not covering certain
items, including certain interest shortfalls arising out of the assignment of a
defaulted Mortgage Loan to the FHA.
Record Date: With respect to any Distribution Date, the last
Business Day of the month preceding the month in which the applicable
Distribution Date occurs.
Registered Certificate: Any Class S, Class A-1, Class A-2, Class
A-3, Class A-4 or Class A-Z Certificate.
Reimbursement Rate: The rate per annum applicable to the accrual of
interest on Advances in accordance with Section 5.05, which rate per annum is
equal to the Prime Rate.
Related Proceeds: As defined in Section 3.09(b) hereof.
REMIC: A "real estate mortgage investment conduit", within the
meaning of Section 860D of the Code.
REMIC I: The segregated pool of assets subject hereto, constituting
the primary trust created hereby and to be administered hereunder, with respect
to which a separate REMIC is to be made, consisting of: (i) the Mortgage Assets
as from time to time are subject to this Agreement and all payments under and
proceeds of such Mortgage Assets (other than Retained Yield) received after the
Cut-off Date (exclusive of any payments of or relating to principal and interest
due on the Mortgage Loans and the Underlying Mortgage Loans on or before the
Cut-off Date), together with all documents included in the related Mortgage
Files and Servicing Files for
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the Mortgage Loans; (ii) the FHA Mortgage Insurance in respect of the Mortgage
Loans, together with all FHA Insurance Benefits (other than Retained Yield)
derived therefrom; (iii) such funds or assets (other than Retained Yield) as
from time to time are deposited in the Collection Account and/or the Custodial
Account; (iv) any insurance policies with respect to the Mortgage Loans; and (v)
all proceeds of the conversion, voluntary or involuntary, of any of the
foregoing into cash or other liquid property.
REMIC I Regular Interest: With respect to each of the initial
Mortgage Assets (and, in the case of a Mortgage Loan, any FHA Debentures
acquired in respect thereof in connection with an assignment thereof to the
FHA), the separate non-certificated beneficial ownership interest in REMIC I
issued hereunder and designated as a "regular interest" in REMIC I. Each REMIC I
Regular Interest shall accrue interest at the related REMIC I Remittance Rate,
and shall be entitled to distributions of principal, subject to the terms and
conditions hereof, in an aggregate amount equal to its initial Uncertificated
Principal Balance. The designation for each REMIC I Regular Interest shall be
the identifying number for the related Mortgage Asset set forth in the related
Mortgage Asset Schedule.
REMIC I Remittance Rate: With respect to any REMIC I Regular
Interest for any Distribution Date, the Net Asset Rate in effect as of the
Closing Date for the related Mortgage Asset to which such REMIC I Regular
Interest corresponds as of the Closing Date.
REMIC II: The segregated pool of assets consisting of all of the
REMIC I Regular Interests, with respect to which a separate REMIC election is to
be made.
REMIC II Regular Interest: Any of the six separate non-certificated
beneficial ownership interests in REMIC II issued hereunder and designated as a
"regular interest" in REMIC II. Each REMIC II Regular Interest shall accrue
interest at the related REMIC II Remittance Rate in effect from time to time,
and shall be entitled to distributions of principal, subject to the terms and
conditions hereof, in an aggregate amount equal to its initial Uncertificated
Principal Balance. The designations for the respective REMIC II Regular
Interests are set forth in the Preliminary Statement hereto.
REMIC II Remittance Rate: With respect to any REMIC II Regular
Interest for any Distribution Date, the Weighted Average REMIC I Remittance Rate
for such Distribution Date.
REMIC III: The segregated pool of assets consisting of all of the
REMIC II Regular Interests, with respect to which a separate REMIC election is
to be made.
REMIC III Certificate: Any Certificate, other than a Class R-I or
Class R-II Certificate.
REMIC III Regular Certificate: Any REMIC III Certificate, other than
a Class R-III Certificate.
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REMIC Provisions: Provisions of the federal income tax law relating
to real estate mortgage investment conduits, which appear at Sections 860A
through 860G of Subchapter M of Chapter 1 of the Code, and related provisions,
and proposed, temporary and final Treasury regulations and any published
rulings, notices and announcements promulgated thereunder, as the foregoing may
be in effect from time to time.
Repurchase Proceeds: Cash amounts paid by or on behalf of the
related Seller in connection with the repurchase of any Mortgage Loan pursuant
to Article II hereof.
Required Insurance Policy: With respect to any Mortgage Loan or
related Mortgaged Property, any insurance policy that is required to be
maintained from time to time under this Agreement in respect of such Mortgage
Loan, including each standard hazard and, if applicable, flood insurance policy.
Reserve Account: The account or accounts created and maintained
pursuant to Section 3.07.
Reserve Funds: With respect to any Mortgage Loan, any amounts
delivered by the related Mortgagor to be held in escrow by or on behalf of the
related mortgagee representing reserves for replacements, repairs and/or capital
improvements to the related Mortgaged Property (including, without limitation,
any furniture, fixture and equipment reserves) and for any tenant improvement
and leasing concessions.
Residual Certificate: Any Class R-I, Class R-II or Class R-III
Certificate.
Responsible Officer: When used with respect to the Trustee, any
officer of the Asset-Backed Securities Trust Department of the Trustee assigned
to the Corporate Trust Office with direct responsibility for the administration
of this Agreement and also, with respect to a particular matter, any other
officer to whom such matter is referred because of such officer's knowledge of
and familiarity with the particular subject.
Retained Yield: With respect to any FHA Debenture for which the
related FHA Debenture Rate is greater than the Mortgage Rate for the related FHA
Assigned Mortgage Loan, that portion of the interest accrued in respect of such
FHA Debenture for so long as it is part of the Trust Fund that is calculated at
the related Retained Yield Rate. With respect to any FHA Assigned Mortgage Loan
for which the Mortgage Rate is lower than the applicable FHA Debenture Rate,
that portion of the related cash FHA Insurance Benefits that represents interest
accrued in respect of such FHA Assigned Mortgage Loan at the related Retained
Yield Rate.
Retained Yield Rate: With respect to any FHA Debenture, the excess,
if any, of the related FHA Debenture Rate over the Mortgage Rate for the related
FHA Assigned Mortgage Loan. With respect to any FHA Assigned Mortgage Loan, the
excess, if any, of the applicable FHA Debenture Rate over the related Mortgage
Rate.
Rule 144A: Rule 144A under the Securities Act, as in effect from
time to time.
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SAIF: The Savings Association Insurance Fund, or any successor
thereto.
Security Agreement: With respect to any Mortgage Loan, any security
agreement, chattel mortgage or similar document or instrument, whether contained
in the related Mortgage or executed separately, creating in favor of the holder
of such Mortgage a security interest in the personal property constituting
security for repayment of such Mortgage Loan.
Securities Act: The Securities Act of 1933, as amended.
Seller: Greystone Funding with respect to the Greystone Mortgage
Assets acquired by the Trust Fund and Daiwa Finance with respect to the Daiwa
Mortgage Assets acquired by the Trust Fund.
Sequential Pay Certificate: Any Class A-1, Class A-2, Class A-3,
Class A-4, Class A-Z or Class B Certificate.
Servicing Advances: All customary, reasonable and necessary "out of
pocket" costs and expenses incurred by the Master Servicer in connection with
the servicing of a Mortgage Loan after a default, delinquency or other
unanticipated event, including, but not limited to, the cost of (a) compliance
with the obligations of the Master Servicer set forth in Section 3.01(c), (b)
the preservation, insurance, restoration, protection and management of a
Mortgaged Property, (c) obtaining any Insurance Proceeds, Condemnation Proceeds
or Liquidation Proceeds and (d) any enforcement or judicial proceedings with
respect to a Mortgaged Property, including, without limitation, foreclosures.
Notwithstanding anything to the contrary, "Servicing Advances" shall not include
(x) allocable overhead of the Master Servicer, which shall include costs for
office space, office equipment, supplies and related expenses, employee salaries
and related expenses and similar internal costs and expenses, or (y) costs and
expenses associated with the assignment of any defaulted Mortgage Loan to the
FHA.
Servicing Compensation: For any time period, the aggregate of all
Servicing Fees in respect of the Mortgage Loans paid to the Master Servicer
during such time period, increased by (i) any Prepayment Interest Excesses, late
payment charges, assumption fees and other usual and customary fees collected
from the respective Mortgagors during such time period (other than Prepayment
Premiums) and (ii) any net income earned during such time period on Permitted
Investments of funds held in the Collection Account and the Custodial Account.
Servicing Fee: For each calendar month, commencing with January
1997, as to each Mortgage Loan, an amount equal to one month's interest accrued
on the basis of a 360-day year consisting of twelve 30-day months (or, in the
event of any payment of interest which accompanies a Principal Prepayment in
full made by the Mortgagor, interest for the number of days covered by such
payment of interest) at the applicable Servicing Fee Rate on the Stated
Principal Balance of such Mortgage Loan as of the commencement of such month. No
Servicing Fee shall accrue or be payable with respect to a GNMA Certificate or
an FHA Debenture.
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Servicing Fee Rate: As to each Mortgage Loan, the rate per annum set
forth on the related Mortgage Asset Schedule under the caption "Servicing Fee
Rate".
Servicing File: Any documents (other than documents required to be
part of the related Mortgage File) in the possession of the Master Servicer and
relating to the origination and servicing of any Mortgage Loan.
Servicing Officer: Any officer of the Master Servicer involved in,
or responsible for, the administration and servicing of the Mortgage Loans whose
name and specimen signature appear on a list of servicing officers furnished to
the Trustee on the Closing Date by the Master Servicer pursuant to this
Agreement, as such list may from time to time be amended.
Startup Day: With respect to each of REMIC I, REMIC II and REMIC
III, the day designated as such in Section 11.09(c).
Stated Maturity Date: With respect to: (a) any Mortgage Loan, the
Due Date on which the last payment of principal is due and payable under the
terms of the related Mortgage Note as in effect on the Closing Date, without
regard to any change in or modification of such terms in connection with a
bankruptcy or similar proceeding involving the related Mortgagor or a
modification, waiver or amendment of such Mortgage Loan granted or agreed to by
the Master Servicer; and (b) any GNMA Certificate or FHA Debenture, the Due Date
on which the last payment of principal is due or payable under the terms of such
security.
Stated Principal Balance: With respect to any Mortgage Loan, as of
any date of determination, a principal amount equal to the Cut-off Date Balance
of such Mortgage Loan, reduced on each Distribution Date (to not less than zero)
by: (a) without duplication, the aggregate of all payments (including, without
limitation, any Principal Prepayments), Insurance Proceeds, Condemnation
Proceeds, Liquidation Proceeds (including, without limitation, FHA Insurance
Benefits received in the form of cash) and Repurchase Proceeds, and any other
amounts that were received on or in respect of such Mortgage Loan during the
related Collection Period and that were identified and applied by the Master
Servicer as recoveries of principal thereof in accordance with Section 1.02(b),
in each case net of any portion of such amounts that represents a late
collection of principal due on or before the Cut-off Date or for which a Monthly
Advance was previously made for a prior Distribution Date or that represents the
principal portion of a Monthly Payment due on a Due Date subsequent to the
related Collection Period; (b) if and to the extent paid prior to the related
Collection Period (other than as part of a Principal Prepayment), the principal
portion of the Monthly Payment due in respect of such Mortgage Loan during the
related Collection Period; (c) the principal portion of any Monthly Advance made
by the Master Servicer or the Trustee with respect to such Mortgage Loan for
such Distribution Date; (d) the principal amount of any FHA Debentures received
during the related Collection Period as FHA Insurance Benefits in respect of
such Mortgage Loan; and (e) the principal portion of any Realized Loss incurred
in respect of such Mortgage Loan during the related Collection Period. With
respect to any GNMA Certificate, as of any date of determination coinciding with
or following the Cut-off Date, a principal amount equal to the Cut-off Date
Balance of such GNMA Certificate, reduced on each Distribution Date by all
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payments of principal received on such GNMA Certificate during the related
Collection Period (other than any such payment of principal that relates to
principal due on the related Underlying Mortgage Loan on or before the Cut-off
Date). With respect to any FHA Debenture, as of any date of determination
coinciding with or following the related FHA Debenture Delivery Date, a
principal amount equal to the unpaid principal balance of such FHA Debenture as
of the related FHA Debenture Delivery Date, reduced on each subsequent
Distribution Date by all payments of principal received on such FHA Debenture
during the related Collection Period. Notwithstanding the foregoing, if any
Mortgage Asset is paid in full, liquidated, purchased out of the Trust Fund or
otherwise disposed of by the Trust Fund, the Stated Principal Balance of such
Mortgage Asset will be zero commencing as of the Distribution Date relating to
the Collection Period in which such payment in full, liquidation, purchase or
other disposition occurred and as of each date thereafter.
Subordinate Certificates: Collectively, the Class B and Residual
Certificates.
Sub-Servicer: Any servicer to which to the Master Servicer delegates
any of its servicing responsibilities with respect to any of the Mortgage Loans.
Sub-Servicing Agreement: Any servicing agreement between the Master
Servicer and a Sub-Servicer pursuant to which the Master Servicer delegates any
of its servicing responsibilities with respect to any of the Mortgage Loans.
Tax Returns: The federal income tax return on Internal Revenue
Service Form 1066, U.S. Real Estate Mortgage Investment Conduit Income Tax
Return, including Schedule Q thereto, Quarterly Notice to Residual Interest
Holders of REMIC Taxable Income or Net Loss Allocation, or any successor forms,
to be filed on behalf of each of REMIC I, REMIC II and REMIC III due to its
classification as a REMIC under the REMIC Provisions, together with any and all
other information, reports or returns that may be required to be furnished to
the Certificateholders or filed with the Internal Revenue Service under any
applicable provisions of federal tax law or any other governmental taxing
authority under applicable state or local tax laws.
Termination Price: The price at which an Optional Termination is to
be effected as specified in Section 10.01.
Transfer: Any direct or indirect transfer, sale, pledge,
hypothecation, or other form of assignment of any Ownership Interest in a
Certificate.
Transferee: Any Person who is acquiring by Transfer any Ownership
Interest in a Certificate.
Transferee Affidavit and Agreement: As defined in Section 6.02(g)(i)
hereof.
Transferor: Any Person who is disposing by Transfer any Ownership
Interest in a Certificate.
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Trust Fund: Collectively, the assets of REMIC I, REMIC II and REMIC
III.
Trustee: LaSalle National Bank, not in its individual capacity, but
solely in its capacity as trustee for the benefit of the Certificateholders
under this Agreement, and any successor thereto, as provided herein.
Trustee Fee: The fee payable to the Trustee on each Distribution
Date for its services as Trustee hereunder, in an amount equal to one-twelfth of
the Trustee Fee Rate multiplied by the aggregate Stated Principal Balance of the
Mortgage Assets immediately prior to such Distribution Date.
Trustee Fee Rate: 0.02% per annum.
UCC: The Uniform Commercial Code in effect in the applicable
jurisdiction.
Uncertificated Accrued Interest: With respect to any REMIC I Regular
Interest, for any Distribution Date, one month's interest at the fixed REMIC I
Remittance Rate for such REMIC I Regular Interest, accrued on the Uncertificated
Principal Balance of such REMIC I Regular Interest outstanding immediately prior
to such Distribution Date. With respect to any REMIC II Regular Interest, for
any Distribution Date, one month's interest at the REMIC II Remittance Rate
applicable to such REMIC II Regular Interest for such Distribution Date, accrued
on the Uncertificated Principal Balance of such REMIC II Regular Interest
outstanding immediately prior to such Distribution Date. Uncertificated Accrued
Interest shall be calculated on the basis of a 360-day year consisting of twelve
30-day months.
Uncertificated Principal Balance: The principal amount of any REMIC
I Regular Interest or REMIC II Regular Interest outstanding as of any date of
determination. As of the Closing Date, the Uncertificated Principal Balance of
each REMIC I Regular Interest shall equal the Cut-off Date Balance of the
related Mortgage Loan or GNMA Certificate, as the case may be. On each
Distribution Date, the Uncertificated Principal Balance of each REMIC I Regular
Interest shall be reduced by all distributions of principal deemed to have been
made thereon on such Distribution Date pursuant to Section 4.02(j), and if and
to the extent appropriate, shall be further reduced on such Distribution Date as
provided in Section 4.04(c). As of the Closing Date, the Uncertificated
Principal Balance of each REMIC II Regular Interest shall equal the amount set
forth in the Preliminary Statement hereto as its initial Uncertificated
Principal Balance. On each Distribution Date, the Uncertificated Principal
Balance of each REMIC II Regular Interest shall be reduced by all distributions
of principal deemed to have been made thereon on such Distribution Date pursuant
to Section 4.02(i), and if and to the extent appropriate, shall be further
reduced on such Distribution Date as provided in Section 4.04(b). In addition,
on each Distribution Date on or prior to the Accrual Termination Date, the
Uncertificated Principal Balance of REMIC II Regular Interest A-Z shall be
increased by that portion of its Uncertificated Accrued Interest for such
Distribution Date equal to the Monthly Class A-Z Accrual Amount, if any, for
such Distribution Date (which portion will not be deemed payable on a current
basis).
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Underlying Mortgage Loan: The FHA Loan that backs a GNMA
Certificate.
United States Person: A citizen or resident of the United States, a
corporation, partnership or other entity created or organized in, or under the
laws of, the United States or any political subdivision thereof, or an estate or
trust whose income from sources without the United States is includible in gross
income for United States federal income tax purposes regardless of its
connection with the conduct of a trade or business within the United States.
Voting Rights: The portion of the aggregate voting rights of all the
Certificates evidenced by any particular Certificate. 99% of all Voting Rights
will be allocated among the various Classes of Sequential Pay Certificates in
proportion to their respective Class Principal Balances, and 1% of all Voting
Rights will be allocated to the Class S Certificates. All Voting Rights
allocated to a Class of Certificates shall be allocated among the Certificates
of such Class in proportion to the Percentage Interests evidenced thereby.
Weighted Average REMIC I Remittance Rate: With respect to any
Distribution Date, the rate per annum equal to the weighted average, expressed
as a percentage and rounded to eight decimal places, of the respective REMIC I
Remittance Rates for the REMIC I Regular Interests, weighted on the basis of the
respective Uncertificated Principal Balances of the REMIC I Regular Interests
outstanding immediately prior to such Distribution Date.
SECTION 1.02. Certain Calculations Respecting the Mortgage Pool.
(a) Calculations required to be made pursuant to this Agreement with
respect to any Mortgage Loan shall be made based upon current information as to
the terms of the Mortgage Loans and reports of payments and other collections
received from the Master Servicer with respect to the Mortgage Loans and
payments to be made to the Trustee as supplied to the Trustee by the Master
Servicer. The Trustee shall not be required to recompute, verify or recalculate
the information supplied to it by the Master Servicer. To the extent that it is
not patently incorrect on its face, such information or accounting may be
conclusively relied upon by the Trustee in making such calculations.
(b) All cash amounts collected on or in respect of any Mortgage
Loan, whether in the form of payments from Mortgagors, Insurance Proceeds,
Condemnation Proceeds, Liquidation Proceeds, Repurchase Proceeds, or otherwise,
shall be applied to amounts due and owing under the related Mortgage Loan
documents (including, without limitation, for principal and accrued and unpaid
interest) in accordance with the express provisions of such documents and/or
applicable FHA Regulations and, in the absence of such express provisions, shall
be applied by the Master Servicer (after reimbursement to the Master Servicer,
as and to the extent permitted by, and subject to the limitations set forth in,
Section 3.09, for any related Servicing Advances): first, if such Mortgage Loan
is still to be serviced and administered hereunder, as a recovery of amounts to
be currently applied to the payment of, or escrowed for the future payment of,
real estate taxes, assessments, insurance premiums and similar items; second, if
such Mortgage Loan is still to be serviced and administered hereunder, as a
recovery of Reserve Funds to the extent then required to be held in escrow;
third, as a recovery of accrued and unpaid
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interest on such Mortgage Loan at the related Mortgage Rate in effect from time
to time through the date of receipt (or, in the case of a full Monthly Payment
from any Mortgagor, through the related Due Date); fourth, as a recovery of
principal of such Mortgage Loan then due and owing, including, without
limitation, by reason of acceleration of the Mortgage Loan following a default
thereunder (if any Mortgage Asset is being prepaid in its entirety, purchased
out of the Trust Fund or otherwise liquidated, the entire principal balance
thereof shall be deemed to be due and owing); fifth, as a recovery of any
Prepayment Premiums due and owing under such Mortgage Loan; sixth, in accordance
with the Master Servicer's normal servicing practices, as a recovery of any
other amounts then due and owing under such Mortgage Loan, including, without
limitation, default interest and late payment charges; and seventh, as a
recovery of any remaining principal of such Mortgage Loan to the extent of its
entire remaining unpaid principal balance.
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ARTICLE II
CONVEYANCE OF TRUST FUND;
REPRESENTATIONS AND WARRANTIES;
ORIGINAL ISSUANCE OF CERTIFICATES
SECTION 2.01. Conveyance of Mortgage Assets.
(a) Concurrently with the execution and delivery hereof, and at the
direction and on behalf of the Depositor, Greystone Funding and the Master
Servicer do hereby assign, transfer and otherwise convey to the Trustee without
recourse, initially for the benefit of the Depositor and, immediately upon
issuance of the Certificates, exclusively for the benefit of the
Certificateholders, all the right, title and interest of Greystone Funding and
the Master Servicer, respectively, in and to the Mortgage Assets identified on
the Greystone Mortgage Asset Schedule (exclusive of any Retained Yield collected
with respect thereto) and all other assets included or to be included in the
Trust Fund. In addition, concurrently with the execution and delivery hereof,
and at the direction and on behalf of the Depositor, Daiwa Finance does hereby
assign, transfer and otherwise convey and shall cause the Daiwa Titleholders to
assign, transfer and otherwise convey (and to execute such instruments of
transfer as are necessary to effect such assignment, transfer and conveyance),
to the Trustee without recourse, initially for the benefit of the Depositor and,
immediately upon issuance of the Certificates, exclusively for the benefit of
the Certificateholders, all the right, title and interest of Daiwa Finance and
the Daiwa Titleholders, respectively, in and to the Mortgage Assets identified
on the Daiwa Mortgage Asset Schedule (exclusive of any Retained Yield collected
with respect thereto) and all other assets included or to be included in the
Trust Fund. In addition, concurrently with the execution and delivery hereof,
the Depositor does hereby assign, transfer and otherwise convey to the Trustee
without recourse exclusively for the benefit of the Certificateholders, all the
right, title and interest of the Depositor in and to the Mortgage Assets
identified on the Mortgage Asset Schedule (exclusive of any Retained Yield
collected with respect thereto) and all other assets included or to be included
in the Trust Fund. Such conveyances of the Mortgage Assets include all interest
and principal and proceeds received or receivable on or with respect to the
Mortgage Assets after the Cut-off Date (other than payments of or relating to
principal and interest due and payable on the Mortgage Loans and Underlying
Mortgage Loans on or before the Cut-off Date and other than any payments of
Retained Yield) and all amounts held in escrow for the payment of taxes or
insurance on or with respect to, or to effect repairs and replacements in
respect of, the Mortgaged Properties after the Cut-off Date.
It is intended that the conveyances of the Greystone Mortgage Assets
by Greystone Funding, the Master Servicer and the Depositor, and of the Daiwa
Mortgage Assets by Daiwa Finance, the Daiwa Titleholders and the Depositor, to
the Trustee (as provided in this Section 2.01(a)) be, and be construed as,
absolute sales of such Mortgage Assets by such parties to the Trustee for the
ultimate and exclusive benefit of the Certificateholders. It is, further, not
intended that such conveyances be deemed pledges of the Greystone Mortgage
Assets by Greystone Funding, the Master Servicer or the Depositor, or of the
Daiwa Mortgage Assets by Daiwa Finance, the Daiwa Titleholders or the Depositor,
to the Trustee to secure a debt or other
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obligation of the Depositor (with respect to any of the Mortgage Assets), of
Greystone Funding or the Master Servicer (with respect to the Greystone Mortgage
Assets) or of Daiwa Finance or the Daiwa Titleholders (with respect to the Daiwa
Mortgage Assets). However, in the event that either the Greystone Mortgage
Assets are held to be property of Greystone Funding, the Master Servicer or the
Depositor, or the Daiwa Mortgage Assets are held to be property of Daiwa
Finance, the Daiwa Titleholders or the Depositor, or if for any reason this
Agreement is held or deemed to create a security interest in any of the Mortgage
Assets, then it is intended that, (i) this Agreement shall also be deemed to be
a security agreement within the meaning of Articles 8 and 9 of the New York UCC
and the UCC of any other applicable jurisdiction; (ii) the conveyances provided
for in or contemplated by this Section 2.01(a) shall be deemed to be grants by
Greystone Funding, the Master Servicer and the Depositor (with respect to the
Greystone Mortgage Assets) and Daiwa Finance, the Daiwa Titleholders and the
Depositor (with respect to the Daiwa Mortgage Assets) to the Trustee of, in the
case of each such Person, a security interest in all of its respective right
(including the power to convey title thereto), title and interest, whether now
owned or hereafter acquired, in and to (A) Mortgage Assets and all related
documents, including, without limitation, in the case of the Mortgage Loans, the
Mortgage Notes, the Mortgages, any related insurance policies and all other
documents in the related Mortgage Files, (B) all amounts payable to the holders
of the Mortgage Assets in accordance with the terms thereof (other than payments
of principal and interest due and payable on the Mortgage Assets on or before
the Cut-off Date and other than payments of Retained Yield) and (C) all proceeds
of the conversion, voluntary or involuntary, of the foregoing into cash,
instruments, securities or other property, including without limitation all
amounts from time to time held or invested in the Collection Account or the
Custodial Account (other than payments of principal and interest due and payable
on the Mortgage Loans and the Underlying Mortgage Loans on or before the Cut-off
Date and other than payments of Retained Yield); 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 Trustee for the purpose of perfecting
such security interest under applicable law. The Depositor, Greystone Funding
and the Master Servicer (with respect to the Greystone Mortgage Assets), the
Depositor and Daiwa Finance (with respect to the Daiwa Mortgage Assets) and the
Trustee shall, to the extent consistent with this Agreement, and Daiwa Finance
shall cause the Daiwa Titleholders (with respect to the Daiwa Mortgage Assets)
to, take such actions as may be necessary to ensure that, if this Agreement were
deemed to create a security interest in the Mortgage Assets, such security
interest would be deemed to be a perfected security interest of first priority
under applicable law and will be maintained as such throughout the term of the
Agreement. The Master Servicer shall file, at its expense, all filings necessary
to maintain the effectiveness of any original filings necessary under the UCC as
in effect in any jurisdiction to perfect the Trustee's security interest in or
lien on the Trust Fund, including without limitation (A) continuation
statements, and (B) such other statements as may be occasioned by any transfer
of any interest of the Master Servicer, Trustee or the Depositor in the Trust
Fund. In connection herewith, the Trustee shall have all of the rights and
remedies of a secured party and creditor under the UCC as in force in the
relevant jurisdiction.
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(b) In connection with the sales and assignments by Greystone
Funding, the Master Servicer and the Depositor (with respect to the Greystone
Mortgage Assets) and by Daiwa Finance, the Daiwa Titleholders and the Depositor
(with respect to the Daiwa Mortgage Assets) pursuant to or as contemplated by
subsection (a) above, Greystone Funding and the Master Servicer shall with
respect to each Greystone Mortgage Loan, and Daiwa Finance shall (and shall
cause the Daiwa Titleholders to) with respect to each Daiwa Mortgage Loan,
deliver to and deposit with, or cause to be delivered to and deposited with, the
Trustee, on or before the Closing Date, the related Mortgage File; and, with
respect to each GNMA Certificate so assigned, cause such GNMA Certificate to be
registered in the name of the Trustee (in its capacity as such) on the books and
records of the appropriate "financial intermediary" (within the meaning of
Section 8-313(4) of the New York UCC) designated by the Trustee.
The Trustee, at the expense of Greystone Funding (with respect to
each Greystone Mortgage Loan) and Daiwa Finance (with respect to each Daiwa
Mortgage Loan), shall, if any of the following were delivered in blank, complete
the endorsement of the Mortgage Note referred to in clause (i) of the definition
of "Mortgage File", the assignment of Mortgage referred to in clause (iv) of the
definition of "Mortgage File", the assignment of Assignment of Leases referred
to in clause (vii) of the definition of "Mortgage File", and the assignment of
financing statements referred to in clause (xiii) of the definition of "Mortgage
File", in the name of the Trustee for the benefit of the Holders of the American
Southwest Financial Securities Corporation, Commercial Mortgage Pass-Through
Certificates, Series 1996-FHA1.
Also in connection with the sales and assignments by Greystone
Funding, the Master Servicer and the Depositor (with respect to the Greystone
Mortgage Assets) and Daiwa Funding, the Daiwa Titleholders and the Depositor
(with respect to the Daiwa Mortgage Assets) pursuant to or as contemplated in
subsection (a) above, Greystone Funding (with respect to each Greystone Mortgage
Loan so assigned) and Daiwa Finance (with respect to each Daiwa Mortgage Loan so
assigned) shall deliver to and deposit with, or cause to be delivered to and
deposited with, the Master Servicer, any and all funds held by or on behalf of
Greystone Funding or the Master Servicer (in the case of a Greystone Mortgage
Loan), or by or on behalf of Daiwa Finance or the Daiwa Titleholders (in the
case of a Daiwa Mortgage Loan), which, if collected after the Closing Date,
would be deposited by the Master Servicer in either of a Reserve Account or an
Escrow Account established in respect of such Mortgage Loan. The Master Servicer
shall deposit such funds in the Reserve Account or the Escrow Account, as
appropriate to be established in respect of such Mortgage Loan.
In the case of Mortgage Loans and Underlying Mortgage Loans that
have been prepaid after the Cut-off Date and prior to the Closing Date and, if
any such loan was prepaid in full, in lieu of delivering or causing the Master
Servicer to deliver the related Mortgage File to the Trustee or registering the
related GNMA Certificate in the name of the Trustee, as applicable, Greystone
Funding (with respect to a Greystone Mortgage Asset) and Daiwa Finance (with
respect to a Daiwa Mortgage Asset) will deposit, or cause to be deposited, in
the Custodial Account or, in the case of an Underlying Mortgage Loan, deliver,
or cause to be delivered, to the Trustee for deposit in the Collection Account
the amount of such prepayment and will provide the Trustee with written notice
of such prepayment.
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(c) Within 45 days after the Closing Date, the Trustee, at the
expense of Greystone Funding (with respect to each Greystone Mortgage Loan) and
Daiwa Finance (with respect to each Daiwa Mortgage Loan), shall cause the
following documents and instruments to be properly recorded or filed, as the
case may be, in the appropriate public office for real property records or UCC
financing statements, as appropriate: (i) each assignment of a Mortgage referred
to in clause (iv) of the definition of "Mortgage File"; (ii) each assignment of
an Assignment of Leases, if any, referred to in clause (vii) of the definition
of "Mortgage File"; and (iii) each assignment of a financing statement referred
to in clause (xiii) of the definition of "Mortgage File". If any such assignment
of a Mortgage, assignment of an Assignment of Leases or assignment of a
financing statement is lost or returned unrecorded because of a defect therein,
the Trustee, upon becoming aware of such loss or defect, shall promptly give
written notice of such loss or defect to Greystone Funding (if the affected
Mortgage Loan is a Greystone Mortgage Loan) or Daiwa Finance (if the affected
Mortgage Loan is a Daiwa Mortgage Loan), and the related Seller shall promptly
prepare a substitute therefor or use its best efforts to cure such defect, as
the case may be, and shall then return the same to the Trustee. The Trustee
shall cause the same to be duly recorded or filed at the related Seller's
expense. Greystone Funding (with respect to the Greystone Mortgage Assets) and
Daiwa Finance (with respect to the Daiwa Mortgage Assets) shall, promptly upon
receipt thereof, deliver or cause to be delivered to the Trustee the original
recorded Mortgage and, if applicable, Assignment of Leases and any original
recorded intervening assignments of such documents, in those instances where a
copy thereof was delivered to the Trustee. Within 45 days after the Closing
Date, the Trustee shall file with HUD each HUD Form 92080 referred to in clause
(xiv) of the definition of "Mortgage File".
(d) If, within one year after the Closing Date, any assignment of a
Mortgage referred to in clause (iv) of the definition of "Mortgage File" or, if
applicable, any assignment of an Assignment of Leases referred to in clause
(vii) of the definition of "Mortgage File", in each case with evidence of the
recording of the Trustee's interest thereon, or a copy (certified by the
applicable public recording office to be a true and correct copy) of such
recorded assignment of a Mortgage or assignment of an Assignment of Leases, is
not delivered to the Trustee, or if Greystone Funding or Daiwa Finance defaults
on its obligations pursuant to Section 2.01(c) with respect to any such
assignment that is lost or defective, Greystone Funding (if the affected
Mortgage Loan is a Greystone Mortgage Loan) or Daiwa Finance (if the affected
Mortgage Loan is a Daiwa Mortgage Loan) shall repurchase the affected Mortgage
Loan from the Trustee at the applicable Purchase Price therefor. The Purchase
Price for any such Mortgage Loan shall be deposited by Greystone Funding (with
respect to a Greystone Mortgage Loan) and Daiwa Finance (with respect to a Daiwa
Mortgage Loan) in the Custodial Account. Upon receipt by the Trustee of written
notification of such deposit signed by a Servicing Officer (which notification
shall include a statement as to the accuracy of the Purchase Price), the Trustee
shall release the related Mortgage File to or at the direction of the Seller
that effected such purchase and shall execute and deliver such instruments of
transfer or assignment (which shall be prepared by such Seller), in each case
without recourse, as shall be necessary to vest in such Seller, or its designee,
title (to the extent that such title was transferred to the Trustee) to such
Mortgage Loan being repurchased pursuant hereto. The repurchase obligation
pursuant to this Section 2.01(d) shall be effected solely at the cost and
expense of Greystone Funding (with respect to a Greystone Mortgage Loan) or
Daiwa Finance (with respect to a Daiwa Mortgage Loan) and shall
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constitute the sole recourse against the related Seller available to the
Trustee, the Depositor and the Certificateholders for failure of an assignment
of a Mortgage referred to in clause (iv) of the definition of "Mortgage File"
or, if applicable, any assignment of an Assignment of Leases referred to in
clause (vii) of the definition of "Mortgage File", to be recorded.
(e) In instances where a title commitment or binder is delivered to
the Trustee with respect to any Mortgage Loan, Greystone Funding (with respect
to a Greystone Mortgage Loan) and Daiwa Finance (with respect to a Daiwa
Mortgage Loan) shall provide an original of the related lender's title insurance
policy (or duplicate thereof) in accordance with the terms of such commitment or
binder to the Trustee as promptly as practicable after the execution and
delivery hereof but, in any event, within 180 days of the Closing Date. If
within 180 days after the Closing Date, Greystone Funding (with respect to a
Greystone Mortgage Loan) or Daiwa Finance (with respect to a Daiwa Mortgage
Loan) fails to provide to the Trustee the original lender's title insurance
policy (or duplicate thereof) with respect to any Mortgage Loan, Greystone
Funding (with respect to a Greystone Mortgage Loan) or Daiwa Finance (with
respect to a Daiwa Mortgage Loan) shall repurchase the related Mortgage Loan
from the Trustee at the applicable Purchase Price therefor. The Purchase Price
for any such Mortgage Loan shall be deposited by Greystone Funding (with respect
to a Greystone Mortgage Loan) and Daiwa Finance (with respect to a Daiwa
Mortgage Loan) in the Custodial Account. Upon receipt by the Trustee of written
notification of such deposit signed by a Servicing Officer (which notification
shall include a statement as to the accuracy of the Purchase Price), the Trustee
shall release the related Mortgage File to or at the direction of the Seller
that effected such purchase and shall execute and deliver such instruments of
transfer or assignment (which shall be prepared by such Seller), in each case
without recourse, as shall be necessary to vest in such Seller, or its designee,
title (to the extent that such title was transferred to the Trustee) to any
Mortgage Loan being repurchased pursuant hereto. The repurchase obligation
pursuant to this Section 2.01(e) shall be effected solely at the cost and
expense of Greystone Funding (with respect to a Greystone Mortgage Asset) or
Daiwa Finance (with respect to a Daiwa Mortgage Asset) and shall constitute the
sole recourse against the related Seller available to the Trustee, the Depositor
and the Certificateholders for failure to provide to the Trustee an original
lender's title insurance policy with respect to any Mortgage Loan.
SECTION 2.02. Acceptance of the Trust Fund by Trustee; Review of
Mortgage Loan Documentation.
The Trustee, by execution and delivery hereof, acknowledges receipt
of the Mortgage Files, in good faith and without actual notice or knowledge of
any adverse claim pertaining to the Mortgage Loans listed on the Mortgage Asset
Schedule, subject to its further review thereof under this Section 2.02. Upon
issuance of the Certificates, the Trustee will hold all documents constituting a
part of the Mortgage Files delivered to it, and all other assets constituting
part of the Trust Fund that come into its possession or under its control, in
trust for the use and benefit of all present and future Certificateholders. The
Trustee, upon its execution and delivery hereof, will deliver an initial
certification acknowledging, with respect to each Mortgage Loan specified on the
Mortgage Asset Schedule, its receipt of those items specified in clauses (i),
(ii) and (iv) of the definition of Mortgage File (any document not delivered to
be
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listed on an exception report attached thereto) and further acknowledging its
receipt of the GNMA Certificates listed on the Mortgage Asset Schedule.
Within 60 days after the execution and delivery of this Agreement,
the Trustee shall ascertain whether all documents required to be delivered to it
pursuant to Section 2.01 hereof are in its possession, and shall deliver to the
Depositor, each Seller and the Master Servicer a certification in the form set
forth as Exhibit C hereto to the effect that, as to each Mortgage Loan listed in
the Mortgage Asset Schedule, and subject to any exceptions noted on an
attachment to such certification: (a) all documents required to be delivered or
caused to be delivered to the Trustee by the related Seller pursuant to this
Agreement are in its possession, (b) such documents have been reviewed by it and
have not been mutilated, damaged, defaced, torn or otherwise physically altered,
and such documents relate to such Mortgage Loan, (c) based on its examination
and only as to the foregoing documents, the information set forth in items (v),
(viii), (xi), (xii), (xvi) and (xvii) of the second sentence of the definition
of the "Daiwa Mortgage Asset Schedule" (in the case of a Daiwa Mortgage Loan) or
"Greystone Mortgage Asset Schedule" (in the case of a Greystone Mortgage Loan),
as applicable, respecting such Mortgage Loan accurately reflects the information
contained in the documents in the related Mortgage File and (d) the related
Mortgage Note has a final endorsement from the FHA. If, in the course of such
review or at any time thereafter, the Trustee (through no negligence of its own)
finds any document or documents constituting a part of a Mortgage File which did
not meet the requirements of (a) through (d) above at the time of delivery, the
Trustee shall promptly notify the Master Servicer, the related Seller and the
Depositor in writing. Greystone Funding (with respect to a Greystone Mortgage
Loan) or Daiwa Finance (with respect to a Daiwa Mortgage Loan) shall use
reasonable efforts to correct or cure any such defect of which it has been so
notified within 60 days from the date the related Seller was notified of such
defect. If Greystone Funding (with respect to a Greystone Mortgage Loan) or
Daiwa Finance (with respect to a Daiwa Mortgage Loan) does not so correct or
cure such defect within the period set forth in the immediately preceding
sentence, the related Seller shall repurchase such Mortgage Loan from the Trust
Fund at the Purchase Price therefor. The Purchase Price for any such Mortgage
Loan shall be deposited by Greystone Funding (with respect to a Greystone
Mortgage Loan) or Daiwa Finance (with respect to a Daiwa Mortgage Loan) in the
Custodial Account. Upon receipt by the Trustee of written notification of such
deposit signed by a Servicing Officer (which notification shall include a
statement as to the accuracy of the Purchase Price), the Trustee shall release
the related Mortgage File to or at the direction of the Seller that effected
such purchase and shall execute and deliver such instruments of transfer or
assignment (which instruments shall be prepared and provided by such Seller), in
each case without recourse, as shall be necessary to vest in such Seller, or its
designee, title (to the extent that such title was transferred to the Trustee)
to any Mortgage Loan being repurchased pursuant hereto.
In reviewing any Mortgage File pursuant to this Section, the Trustee
shall have no responsibility to determine whether any document or opinion is
legal, valid, binding or enforceable, whether any assignment or endorsement is
in proper or recordable form (except, if applicable, to determine if the Trustee
is the assignee or endorsee), whether a blanket assignment is permitted in any
applicable jurisdiction, or whether any Person executing any document or
rendering any opinion is authorized to do so or whether any signature thereon is
genuine.
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The Trustee shall retain possession and custody of each Mortgage
File in accordance with and subject to the terms and conditions set forth
herein.
It is understood and agreed that the obligation of Greystone Funding
(with respect to a Greystone Mortgage Loan) and Daiwa Finance (with respect to
the Daiwa Mortgage Loan) to purchase any Mortgage Loan which does not meet the
requirements of (a) through (d) above shall constitute the sole and exclusive
recourse respecting such defect available to the Trustee, the Depositor and the
Certificateholders.
SECTION 2.03. Representations, Warranties and Covenants of the
Depositor.
The Depositor hereby represents and warrants to the Trustee, for the
benefit of the Certificateholders, as of the date hereof or such other date set
forth herein, that:
(a) the Depositor is a corporation, duly organized, validly
existing and in good standing under the laws of the State of Arizona and
is duly authorized and qualified to transact any and all business
contemplated by this Agreement in any state in which a Mortgaged Property
is located or is otherwise not required under applicable law to effect
such qualification and, in any event, is in compliance with the doing
business laws of any such State, to the extent necessary to ensure the
enforceability of each Mortgage Loan;
(b) the Depositor has the full corporate power and authority to
execute, deliver and perform, and to enter into and consummate the
transactions contemplated by this Agreement and has duly authorized by all
necessary corporate action on the part of the Depositor the execution,
delivery and performance of this Agreement; and this Agreement, assuming
the due authorization, execution and delivery thereof by the other parties
hereto, constitutes a legal, valid and binding obligation of the
Depositor, enforceable against the Depositor in accordance with its terms,
except that (A) the enforceability thereof may be limited by bankruptcy,
insolvency, moratorium, receivership and other similar laws relating to
creditors' rights generally and (B) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to the
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought;
(c) the execution and delivery of this Agreement by the
Depositor, the consummation of any other of the transactions herein
contemplated, and the fulfillment of or compliance with the terms hereof
are in the ordinary course of business of the Depositor and will not (A)
result in a material breach of any term or provision of the charter or
by-laws of the Depositor or (B) materially conflict with, result in a
material breach, violation or acceleration of, or result in a material
default under, the terms of any other material agreement or instrument to
which the Depositor is a party or by which it may be bound, or any
statute, order or regulation applicable to the Depositor of any court,
regulatory body, administrative agency or governmental body having
jurisdiction over the
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Depositor; and the Depositor is not a party to, bound by, or in breach
or violation of any indenture or other agreement or instrument, or subject
to or in violation of any statute, order or regulation of any court,
regulatory body, administrative agency or governmental body having
jurisdiction over it, which materially and adversely affects, or, to the
Depositor's knowledge would in the future materially and adversely affect,
(X) the ability of the Depositor to perform its obligations under this
Agreement or (Y) the business, operations, financial condition, properties
or assets of the Depositor;
(d) no litigation is pending or, to the best of the Depositor's
knowledge, threatened, against the Depositor that would adversely affect
the execution, delivery or enforceability of this Agreement or, in any
material respect, the ability of the Depositor to perform any of its other
obligations hereunder in accordance with the terms hereof;
(e) no written information, certificate of an officer, statement
furnished in writing or written report delivered to the Master Servicer or
the Trustee and prepared by the Depositor pursuant to this Agreement
contains any untrue statement of a material fact or omits to state a
material fact necessary to make the information, certificate, statement or
report not misleading; and
(f) except for permits and similar authorizations required under
the securities or "blue sky" laws no consent, approval, authorization or
order of any court or governmental agency or body is required for the
execution, delivery and performance by the Depositor of, or compliance by
the Depositor with, this Agreement or the consummation of the transactions
contemplated hereby, or if any such consent, approval, authorization or
order is required, the Depositor has obtained the same.
SECTION 2.04. Representations, Warranties and Covenants of the
Master Servicer and each Seller.
(a) The Master Servicer hereby represents and warrants to, and
covenants with, the other parties hereto and for the benefit of the
Certificateholders, as of the date hereof, that:
(i) the Master Servicer is a corporation, duly organized,
validly existing and in good standing under the laws of the State of
Georgia and is duly authorized and qualified to transact any and all
business contemplated by this Agreement in any state in which a Mortgaged
Property is located or is otherwise not required under applicable law to
effect such qualification and, in any event, is in compliance with the
doing business laws of any such State, to the extent necessary to ensure
the enforceability of each Mortgage Loan and the servicing of the Mortgage
Loans in accordance with the terms of this Agreement;
(ii) the Master Servicer has the full corporate power and
authority to service each Mortgage Loan, and to execute, deliver and
perform, and to enter into and consummate the transactions contemplated
by, this Agreement and has duly authorized by all necessary corporate
action on the part of the Master Servicer the execution,
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delivery and performance of this Agreement; and this Agreement, assuming
the due authorization, execution and delivery thereof by the other parties
hereto, constitutes a legal, valid and binding obligation of the Master
Servicer, enforceable against the Master Servicer in accordance with its
terms, except that (A) the enforceability thereof may be limited by
bankruptcy, insolvency, moratorium, receivership and other similar laws
relating to creditors' rights generally and (B) the remedy of specific
performance and injunctive and other forms of equitable relief may be
subject to the equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought;
(iii) the execution and delivery of this Agreement by the Master
Servicer, the servicing of the Mortgage Loans by the Master Servicer
hereunder, the consummation of any other of the transactions herein
contemplated, and the fulfillment of or compliance with the terms hereof
are in the ordinary course of business of the Master Servicer and will not
(A) result in a material breach of any term or provision of the charter or
by-laws of the Master Servicer or (B) materially conflict with, result in
a material breach, violation or acceleration of, or result in a material
default under, the terms of any other material agreement or instrument to
which the Master Servicer is a party or by which it may be bound, or any
statute, order or regulation applicable to the Master Servicer of any
court, regulatory body, administrative agency or governmental body having
jurisdiction over the Master Servicer; and the Master Servicer is not a
party to, bound by, or in breach or violation of any indenture or other
agreement or instrument, or subject to or in violation of any statute,
order or regulation of any court, regulatory body, administrative agency
or governmental body having jurisdiction over it, which materially and
adversely affects, or, to the Master Servicer's knowledge would in the
future materially and adversely affect, (X) the ability of the Master
Servicer to perform its obligations under this Agreement or (Y) the
business, operations, financial condition, properties or assets of the
Master Servicer;
(iv) the Master Servicer is, and will remain, subject to
supervision and examination by any state or federal authority as may be
applicable, in good standing and qualified to do business where so
required by applicable law and is, and will remain, an FHA-Approved
Mortgagee;
(v) no litigation is pending or, to the best of the Master
Servicer's knowledge, threatened, against the Master Servicer that would
adversely affect the execution, delivery or enforceability of this
Agreement or, in any material respect, the ability of the Master Servicer
to service the Mortgage Loans or to perform any of its other obligations
hereunder in accordance with the terms hereof;
(vi) no written information, certificate of an officer, statement
furnished in writing or written report delivered to the Depositor, any
affiliate of the Depositor or the Trustee and prepared by the Master
Servicer pursuant to this Agreement contains any untrue statement of a
material fact or omits to state a material fact necessary to make the
information, certificate, statement or report not misleading;
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(vii) except for permits and similar authorizations required under
the securities or "blue sky" laws no consent, approval, authorization or
order of any court or governmental agency or body is required for the
execution, delivery and performance by the Master Servicer of, or
compliance by the Master Servicer with, this Agreement or the consummation
of the transactions contemplated hereby, or if any such consent, approval,
authorization or order is required, the Master Servicer has obtained the
same; and
(viii) all Sub-Servicing Agreements substantially comply with
the provisions of this Agreement.
(b) Greystone Funding hereby represents and warrants to, and
covenants with, the other parties hereto and for the benefit of the
Certificateholders, as of the date hereof, that:
(i) Greystone Funding is a corporation, duly organized, validly
existing and in good standing under the laws of the Commonwealth of
Virginia and is duly authorized and qualified to transact any and all
business contemplated by this Agreement in any state in which a Mortgaged
Property is located or is otherwise not required under applicable law to
effect such qualification and, in any event, is in compliance with the
doing business laws of any such State, to the extent necessary to ensure
the enforceability of each Mortgage Loan;
(ii) Greystone Funding has the full corporate power and authority
to transfer the Mortgage Assets, and to execute, deliver and perform, and
to enter into and consummate the transactions contemplated by, this
Agreement and has duly authorized by all necessary corporate action on the
part of Greystone Funding the execution, delivery and performance of this
Agreement; and this Agreement, assuming the due authorization, execution
and delivery thereof by the other parties hereto, constitutes a legal,
valid and binding obligation of Greystone Funding, enforceable against
Greystone Funding in accordance with its terms, except that (A) the
enforceability thereof may be limited by bankruptcy, insolvency,
moratorium, receivership and other similar laws relating to creditors'
rights generally and (B) the remedy of specific performance and injunctive
and other forms of equitable relief may be subject to the equitable
defenses and to the discretion of the court before which any proceeding
therefor may be brought;
(iii) the execution and delivery of this Agreement by Greystone
Funding, the transfer of the Mortgage Assets by Greystone Funding
hereunder, the consummation of any other of the transactions herein
contemplated, and the fulfillment of or compliance with the terms hereof
are in the ordinary course of business of Greystone Funding and will not
(A) result in a material breach of any term or provision of the charter or
by-laws of Greystone Funding or (B) materially conflict with, result in a
material breach, violation or acceleration of, or result in a material
default under, the terms of any other material agreement or instrument to
which Greystone Funding is a party or by which it may be bound, or any
statute, order or regulation applicable to Greystone Funding of any court,
regulatory body, administrative agency or governmental body having
jurisdiction over Greystone Funding; and Greystone Funding is not a party
to, bound by, or in breach or
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violation of any indenture or other agreement or instrument, or subject to
or in violation of any statute, order or regulation of any court,
regulatory body, administrative agency or governmental body having
jurisdiction over it, which materially and adversely affects, or, to
Greystone Funding's knowledge would in the future materially and adversely
affect, (X) the ability of Greystone Funding to perform its obligations
under this Agreement or (Y) the business, operations, financial condition,
properties or assets of Greystone Funding;
(iv) no litigation is pending or, to the best of Greystone
Funding's knowledge, threatened, against Greystone Funding that would
adversely affect the execution, delivery or enforceability of this
Agreement or the ability of Greystone Funding to transfer the Mortgage
Assets or to perform in all material respects any of its other obligations
hereunder in accordance with the terms hereof;
(v) no written information, certificate of an officer, statement
furnished in writing or written report delivered to the Depositor, any
Affiliate of the Depositor or the Trustee and prepared by Greystone
Funding pursuant to this Agreement contains any untrue statement of a
material fact or omits to state a material fact necessary to make the
information, certificate, statement or report not misleading;
(vi) except for permits and similar authorizations required under
the securities or "blue sky" laws no consent, approval, authorization or
order of any court or governmental agency or body is required for the
execution, delivery and performance by Greystone Funding of, or compliance
by Greystone Funding with, this Agreement or the consummation of the
transactions contemplated hereby, or if any such consent, approval,
authorization or order is required, Greystone Funding has obtained the
same; and
(vii) the consummation of the transactions contemplated by this
Agreement are not subject to the bulk transfer provisions of the UCC.
(c) Daiwa Finance hereby represents and warrants to, and covenants
with, the other parties hereto and for the benefit of the Certificateholders, as
of the date hereof, that:
(i) Daiwa Finance is a corporation, duly organized, validly
existing and in good standing under the laws of the State of New York and
is duly authorized and qualified to transact any and all business
contemplated by this Agreement in any state in which a Mortgaged Property
is located or is otherwise not required under applicable law to effect
such qualification and, in any event, is in compliance with the doing
business laws of any such State, to the extent necessary to ensure the
enforceability of each Mortgage Loan that is a Daiwa Mortgage Asset;
(ii) Daiwa Finance has the full corporate power to execute,
deliver and perform, and to enter into and consummate the transactions
contemplated by, this Agreement and has duly authorized by all necessary
corporate action on the part of Daiwa Finance the execution, delivery and
performance of this Agreement; and this Agreement,
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assuming the due authorization, execution and delivery thereof by the
other parties hereto, constitutes a legal, valid and binding obligation of
Daiwa Finance, enforceable against Daiwa Finance in accordance with its
terms, except that (A) the enforceability thereof may be limited by
bankruptcy, insolvency, moratorium, receivership and other similar laws
relating to creditors' rights generally and (B) the remedy of specific
performance and injunctive and other forms of equitable relief may be
subject to the equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought;
(iii) the execution and delivery of this Agreement by Daiwa
Finance, the consummation of any other of the transactions herein
contemplated, and the fulfillment of or compliance with the terms hereof
are in the ordinary course of business of Daiwa Finance and will not (A)
result in a material breach of any term or provision of the charter or
by-laws of Daiwa Finance or (B) materially conflict with, result in a
material breach, violation or acceleration of, or result in a material
default under, the terms of any other material agreement or instrument to
which Daiwa Finance is a party or by which it may be bound, or any
statute, order or regulation applicable to Daiwa Finance of any court,
regulatory body, administrative agency or governmental body having
jurisdiction over Daiwa Finance; and Daiwa Finance is not a party to,
bound by, or in breach or violation of any indenture or other agreement or
instrument, or subject to or in violation of any statute, order or
regulation of any court, regulatory body, administrative agency or
governmental body having jurisdiction over it, which materially and
adversely affects, or, Daiwa Finance's knowledge would in the future
materially and adversely affect, (X) the ability of Daiwa Finance to
perform its obligations under this Agreement or (Y) the business,
operations, financial condition, properties or assets of Daiwa Finance;
(iv) no litigation is pending or, to the best of Daiwa Finance's
knowledge, threatened, against Daiwa Finance that would adversely affect
the execution, delivery or enforceability of this Agreement or the ability
of Daiwa Finance to perform in all material respects any of its other
obligations hereunder in accordance with the terms hereof;
(v) no written information, certificate of an officer, statement
furnished in writing or written report delivered to the Depositor, any
Affiliate of the Depositor or the Trustee and prepared by Daiwa Finance
pursuant to this Agreement contains any untrue statement of a material
fact or omits to state a material fact necessary to make the information,
certificate, statement or report not misleading;
(vi) except for permits and similar authorizations required
under the securities or "blue sky" laws no consent, approval,
authorization or order of any court or governmental agency or body is
required for the execution, delivery and performance by Daiwa Finance of,
or compliance by Daiwa Finance with, this Agreement or the consummation of
the transactions contemplated hereby, or if any such consent, approval,
authorization or order is required, Daiwa Finance has obtained the same;
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(vii) the consummation of the transactions contemplated by this
Agreement are not subject to the bulk transfer provisions of the UCC; and
(viii) the Daiwa Titleholders are, in each case, an FHA-Approved
Mortgagee.
(d) Greystone Funding hereby represents and warrants to, and
covenants with, the other parties hereto for the benefit of the
Certificateholders, as of the Closing Date or such other date specifically set
forth herein, solely with respect to the Greystone Mortgage Assets, as follows:
(i) the information set forth in the Greystone Mortgage Asset
Schedule is true and correct in all material respects at the date or dates
respecting which such information is provided;
(ii) as of the Closing Date, none of the Greystone Mortgage
Loans is:
(A) delinquent under the original or modified terms thereof to
the extent of more than one monthly installment of interest,
principal or escrow deposits or is otherwise in default; or
(B) subject to any outstanding advance or advances made by the
mortgagee to the Mortgagor;
(iii) the chain of title of each Greystone Mortgage Loan from
the originator thereof to the Trustee is unbroken and free from defect
and, except in the case of any Mortgage Loan as to which a lost note
affidavit was delivered to the Trustee, is duly endorsed on the related
Mortgage Note;
(iv) the terms of each Greystone Mortgage Loan and the related
Mortgage have not been impaired, waived, altered or modified in any
respect, except by written instruments, approved by the FHA. No Mortgagor
under any Greystone Mortgage Loan has been released in whole or in part
except in connection with an agreement approved by the FHA which agreement
is part of the related Mortgage File delivered to the Trustee;
(v) each Greystone Mortgage Loan is fully insured by the FHA,
and all necessary steps have been taken to make and keep such insurance
valid, binding and enforceable. No defect exists that would prevent
recovery in full or in part under any such FHA Mortgage Insurance
Contract. Such insurance is the binding, valid and enforceable obligation
of the FHA to the full extent thereof, without setoff, defense or
surcharge. Each document which is required in order to assign such
Greystone Mortgage Loan to the FHA and to collect the FHA Insurance
Benefits in full, without the imposition of any surcharge, is included in
the related Mortgage File, except for such items as may be required by the
FHA which are executed or assembled and delivered to
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the FHA to evidence the assignment of such Greystone Mortgage Loan from
the Trustee to the FHA;
(vi) Greystone Funding has reviewed the Mortgage File in respect
of each Greystone Mortgage Loan, and the related Mortgaged Property is
covered by a lender's title policy insuring that the related Mortgage is a
valid first (or, if identified on the Greystone Mortgage Asset Schedule as
such, a second) mortgage lien on such Mortgaged Property, subject only to
the exceptions stated therein. Such title insurance policy is in full
force and effect, no claims have been made thereunder, is freely
assignable and will inure to the benefit of the Trustee as mortgagee of
record;
(vii) with respect to each Greystone Mortgage Loan, all relevant
real estate tax and assessment obligations to date have been satisfied
prior to the assessment of any penalties;
(viii) the transfer of each Greystone Mortgage Loan to the Trustee,
and the transfers of Certificates evidencing interests therein, as
contemplated hereby is and will be in compliance with 24 CFR ss.207.261
or, if not, Greystone Funding has received the required written
authorization from the FHA to permit such transfer of each Greystone
Mortgage Loan and such transfers of Certificates, and any prior transfers
of each Greystone Mortgage Loan have been in compliance with 24 CFR
ss.207.261;
(ix) immediately prior to the transfer of the Greystone Mortgage
Assets to the Trustee, the Master Servicer and/or Greystone Funding had
good and marketable title to, and a 100% beneficial ownership interest in,
such Mortgage Assets, free and clear from all liens, charges, encumbrances
or rights of others (except the right of the Depositor to direct the
assignment of the Greystone Mortgage Assets to the Trustee); and all acts
necessary to effect the transfer of such title and beneficial ownership
interest to the Trustee have been taken;
(x) None of the Greystone Mortgage Loans is a Putable Mortgage
Loan, and none of the Greystone GNMA Certificates is a PN (non-level)
payment type (except if such Greystone GNMA Certificate is designated as a
PN (non-level) payment type solely because the first payment thereon
following origination was made up only of interest);
(xi) it is not necessary to notify the FHA of any past due or
unpaid taxes or assessment obligations with respect to any Greystone
Mortgage Loan; and
(xii) FHA Insurance Benefits in respect of each Greystone
Mortgage Loan will be payable in cash or FHA Debentures or both.
(e) Daiwa Finance hereby represents and warrants to, and covenants
with, the other parties hereto for the benefit of the Certificateholders, as of
the Closing Date or such other date specifically set forth herein, solely with
respect to the Daiwa Mortgage Assets, as follows:
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(i) the information set forth in the Daiwa Mortgage Asset
Schedule is true and correct in all material respects at the date or dates
respecting which such information is provided;
(ii) as of the Closing Date, none of the Daiwa Mortgage Loans
is:
(A) delinquent under the original or modified terms thereof to
the extent of more than one monthly installment of interest,
principal or escrow deposits or is otherwise in default; or
(B) subject to any outstanding advance or advances made by the
mortgagee to the Mortgagor;
(iii) the chain of title of each Daiwa Mortgage Loan from the
originator thereof to the Trustee is unbroken and free from defect and,
except in the case of any Mortgage Loan as to which a lost note affidavit
was delivered to the Trustee, is duly endorsed on the related Mortgage
Note;
(iv) the terms of each Daiwa Mortgage Loan and the related
Mortgage have not been impaired, waived, altered or modified in any
respect, except by written instruments, approved by the FHA. No Mortgagor
under any Daiwa Mortgage Loan has been released in whole or in part except
in connection with an agreement approved by the FHA which agreement is
part of the related Mortgage File delivered to the Trustee;
(v) each Daiwa Mortgage Loan is fully insured by the FHA, and
all necessary steps have been taken to make and keep such insurance valid,
binding and enforceable. No defect exists that would prevent recovery in
full or in part under any such FHA Mortgage Insurance Contract. Such
insurance is the binding, valid and enforceable obligation of the FHA to
the full extent thereof, without any setoff, defense or surcharge. Each
document which is required in order to assign such Daiwa Mortgage Loan to
the FHA and to collect the FHA Insurance Benefits in full, without the
imposition of any surcharge, is included in the related Mortgage File,
except for such items as may be required by the FHA which are executed or
assembled and delivered to the FHA to evidence the assignment of such
Daiwa Mortgage Loan from the Trustee to the FHA;
(vi) Daiwa Finance has reviewed the Mortgage File in respect of
each Daiwa Mortgage Loan, and the related Mortgaged Property is covered by
a lender's title policy insuring that the related Mortgage is a valid
first (or, if identified on the Daiwa Finance Mortgage Asset Schedule as
such, a second) mortgage lien on such Mortgaged Property, subject only to
the exceptions stated therein. Such title insurance policy is in full
force and effect, no claims have been made thereunder, is freely
assignable and will inure to the benefit of the Trustee as mortgagee of
record;
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(vii) with respect to each Daiwa Mortgage Loan, all relevant
real estate tax and assessment obligations to date have been satisfied
prior to the assessment of any penalties;
(viii) the transfer of each Daiwa Mortgage Loan to the Trustee
and the transfers of Certificates evidencing interests therein, as
contemplated hereby, is and will be in compliance with 24 CFR ss.207.261
or, if not, Daiwa Finance received the required written authorization from
the FHA to permit such transfer of each such Daiwa Mortgage Loan and such
transfers of Certificates, and any prior transfers of each Daiwa Mortgage
Loan have been in compliance with 24 CFR ss.207.261;
(ix) immediately prior to the transfer of the Daiwa GNMA
Certificates to the Trustee, Daiwa Securities America Inc. had good and
marketable title to, and a 100% beneficial ownership interest in, such
GNMA Certificates, free and clear from all liens, charges, encumbrances or
rights of others (except the right of the Depositor to direct the
assignment of the Daiwa GNMA Certificates to the Trustee), and all acts
necessary to effect the transfer of such title and beneficial ownership
interest to the Trustee have been taken;
(x) immediately prior to the transfer of the Daiwa Mortgage
Loans to the Trustee, the Daiwa Titleholders had good and marketable title
to, and Daiwa Finance had a 100% beneficial ownership interest in, such
Mortgage Loans, free and clear from all liens, charges, encumbrances or
rights of others (except the right of the Depositor to direct the
assignment of the Daiwa Mortgage Loans to the Trustee); and all acts
necessary to effect the transfer of such title and beneficial ownership to
the Trustee have been taken;
(xi) none of the Daiwa Mortgage Loans is a Putable Mortgage Loan
and none of the Daiwa GNMA Certificates is a PN (non-level) payment type
(except if such Daiwa GNMA Certificate is designated as a PN (non-level)
payment type solely because the first payment thereon following
origination was made up only of interest);
(xii) it is not necessary to notify the FHA of any past due or
unpaid taxes or assessment obligations in respect of any Daiwa Mortgage
Loan; and
(xiii) FHA Insurance Benefits in respect of each Daiwa Mortgage
Loan will be payable in cash or FHA Debentures or both.
(f) Upon the discovery by any party hereto (or upon notice thereof
in writing from a Certificateholder) of a breach or breaches of any
representation or warranty of the Master Servicer, Greystone Funding or Daiwa
Finance set forth in any of the foregoing subsections of this Section 2.04,
which breach materially and adversely affects the interests of the
Certificateholders, the party discovering such breach shall give prompt written
notice to the other parties hereto. The Trustee shall promptly notify the
Depositor, the Master Servicer, Greystone Funding or Daiwa Finance (whichever
made the breached representation and warranty) of such
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breach and request that such party cure such breach within 60 days from the date
of such notice. If such breach is a breach of a representation and warranty set
forth in Section 2.04(d) or 2.04(e) and Greystone Funding (with respect to a
breach of any representation or warranty contained in Section 2.04(d)) or Daiwa
Finance (with respect to a breach of any representation or warranty contained in
Section 2.04(e)) does not cure such breach in all material respects, within such
60-day period, then it shall, prior to the end of such 60-day period, repurchase
the affected Mortgage Asset from the Trustee at the applicable Purchase Price.
The Purchase Price for any such Mortgage Asset shall be deposited in the
Custodial Account. Upon receipt by the Trustee of written notification (which
notification shall include a statement as to the accuracy of such Purchase
Price) of the deposit of the Purchase Price signed by a Servicing Officer, the
Trustee shall: (i) in the case of a Mortgage Loan, release the related Mortgage
File to or at the direction of Greystone Funding (with respect to a Greystone
Mortgage Loan) or Daiwa Finance (with respect to a Daiwa Mortgage Loan) and
shall execute and deliver such instruments of transfer or assignment (which
instruments shall be prepared and provided by the Greystone Funding or Daiwa
Finance, as applicable), in each case without recourse, as shall be necessary to
vest in Greystone Funding (with respect to a Greystone Mortgage Loan) or Daiwa
Finance (with respect to a Daiwa Mortgage Loan), or in either case its designee,
title (to the extent that such title was transferred to the Trustee) to any
Mortgage Loan purchased pursuant to this Section 2.04(f); and (ii) in the case
of a GNMA Certificate, cause the re-registration thereof in the name of
Greystone Funding (with respect to a Greystone GNMA Certificate) or Daiwa
Finance (with respect to a Daiwa GNMA Certificate), or in either case its
designee, on the books of the appropriate "financial intermediary" (within the
meaning of Section (8-313(4) of the New York UCC) designated by Greystone
Funding or Daiwa Finance, as applicable. It is understood and agreed that the
obligation of Greystone Funding or Daiwa Finance to purchase any Mortgage Asset
as to which any such breach (or breaches) of a representation and warranty
contained in Section 2.04(d) or 2.04(e) has occurred and is continuing shall
constitute the sole recourse respecting such breach or breaches available to the
Depositor, the Trustee or the Certificateholders.
SECTION 2.05. Execution, Authentication and Delivery of Class R-I
Certificates; Creation of REMIC I Regular Interests.
The Trustee hereby acknowledges the assignment to it of the assets
included in REMIC I. Concurrently with such assignment and in exchange therefor,
the Trustee, pursuant to the written request of the Depositor executed by an
officer of the Depositor, has executed, authenticated and delivered to or upon
the order of the Depositor, the Class R-I Certificates in authorized
denominations. The interests evidenced by the Class R-I Certificates, together
with the REMIC I Regular Interests, constitute the entire beneficial ownership
of REMIC I. The rights of the Class R-I Certificateholders and REMIC II (as
holder of the REMIC I Regular Interests) to receive distributions from the
proceeds of REMIC I in respect of the Class R-I Certificates and the REMIC I
Regular Interests, respectively, and all ownership interests in such
distributions evidenced or constituted by the Class R-I Certificates and the
REMIC I Regular Interests, respectively, shall be as set forth in this
Agreement.
SECTION 2.06. Conveyance of REMIC I Regular Interests;
Acceptance of REMIC II by Trustee.
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The Depositor, as of the Closing Date, and concurrently with the
execution and delivery of this Agreement, does hereby assign without recourse
all the right, title and interest of the Depositor in and to the REMIC I Regular
Interests to the Trustee for the benefit of the Holders of the Class R-II
Certificates and the REMIC III Certificates. The Trustee acknowledges the
assignment to it of the REMIC I Regular Interests and declares that it holds and
will hold the same in trust for the exclusive use and benefit of all present and
future Holders of Class R-II Certificates and the REMIC III Certificates.
SECTION 2.07. Execution, Authentication and Delivery of Class R-II
Certificates; Creation of REMIC II Regular Interests.
The Trustee hereby acknowledges the assignment to it of the REMIC I
Regular Interests. Concurrently with such assignment and in exchange therefor,
the Trustee, pursuant to the written request of the Depositor executed by an
officer of the Depositor, has executed, authenticated and delivered to or upon
the order of the Depositor, the Class R-II Certificates in authorized
denominations. The interests evidenced by the Class R-II Certificates, together
with the REMIC II Regular Interests, constitute the entire beneficial ownership
of REMIC II. The rights of the Class R-II Certificateholders and REMIC III (as
holder of the REMIC II Regular Interests) to receive distributions from the
proceeds of REMIC II in respect of the Class R-II Certificates and the REMIC II
Regular Interests, respectively, and all ownership interests in such
distributions evidenced or constituted by the Class R-II Certificates and the
REMIC II Regular Interests, respectively, shall be as set forth in this
Agreement.
SECTION 2.08. Conveyance of REMIC II Regular Interests;
Acceptance of REMIC III by Trustee.
The Depositor, as of the Closing Date, and concurrently with the
execution and delivery of this Agreement, does hereby assign without recourse
all the right, title and interest of the Depositor in and to the REMIC II
Regular Interests to the Trustee for the benefit of the Holders of the REMIC III
Certificates. The Trustee acknowledges the assignment to it of the REMIC II
Regular Interests and declares that it holds and will hold the same in trust for
the exclusive use and benefit of all present and future Holders of the REMIC III
Certificates.
SECTION 2.09. Execution, Authentication and Delivery of REMIC III
Certificates.
Concurrently with the assignment to it of the REMIC II Regular
Interests and in exchange therefor, the Trustee has executed, authenticated and
delivered to or upon the order of the Depositor, the REMIC III Certificates in
authorized denominations evidencing the entire beneficial ownership of REMIC
III. The rights of the Holders of the respective Classes of REMIC III
Certificates to receive distributions from the proceeds of REMIC III in respect
of their REMIC III Certificates, and all ownership interests in such
distributions evidenced by the respective Classes of REMIC III Certificates,
shall be as set forth in this Agreement.
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SECTION 2.10. Retained Yield.
(a) Greystone Funding's (if the related FHA Assigned Mortgage Loan
is a Greystone Mortgage Asset) and Daiwa Finance's (if the related FHA Assigned
Mortgage Loan is a Daiwa Mortgage Asset) right to receive the Retained Yield
with respect to any FHA Debenture shall be absolute and unconditional, but shall
last only for so long as such FHA Debenture is part of the Trust Fund. Greystone
Funding's (if the related FHA Assigned Mortgage Loan is a Greystone Mortgage
Asset) and Daiwa Finance's (if the related FHA Assigned Mortgage Loan is a Daiwa
Mortgage Asset) right to receive the Retained Yield with respect to an FHA
Assigned Mortgage Loan shall also be absolute and unconditional, but shall last
only until a Final Recovery Determination has been made with respect to such FHA
Assigned Mortgage Loan. Greystone Funding's (if the related FHA Assigned
Mortgage Loan is a Greystone Mortgage Asset) and Daiwa Finance's (if the related
FHA Assigned Mortgage Loan is a Daiwa Mortgage Asset) right to receive the
Retained Yield shall not be subject to offset or counterclaim, notwithstanding
any breach of any representation or warranty of Greystone Funding or Daiwa
Finance, respectively, under this Agreement or any default by Greystone Funding
or Daiwa Finance, respectively, of any of its obligations or covenants under
this Agreement.
(b) The Master Servicer shall remit any Retained Yield received with
respect to any FHA Debenture or FHA Assigned Mortgage Loan to Greystone Funding
(if the related FHA Assigned Mortgage Loan is a Greystone Mortgage Asset) or
Daiwa Finance (if the related FHA Assigned Mortgage Loan is a Daiwa Mortgage
Asset) pursuant to such reasonable arrangements as may be entered into between
the Master Servicer and each Seller.
(c) Retained Yield in respect of any FHA Debenture shall be payable
solely from payments of interest received on such FHA Debenture and from the
interest portion of any proceeds received in connection with the sale of such
FHA Debenture pursuant to Section 3.15 or 10.01. Any Retained Yield with respect
to any FHA Debenture shall cease to accrue at such time as the FHA Debenture is
paid in full or otherwise removed from the Trust Fund. Retained Yield in respect
of any FHA Assigned Mortgage Loan shall be payable solely from payments of
interest received from the FHA with respect to such FHA Assigned Mortgage Loan.
Any Retained Yield with respect to any FHA Assigned Mortgage Loan shall cease to
accrue at such time as a Final Recovery Determination has been made with respect
to such FHA Assigned Mortgage Loan.
(d) If any FHA Debenture or Mortgage Loan as to which there is
Retained Yield is purchased out of the Trust Fund pursuant to any section
hereof, the related Purchase Price received in connection with such purchase
(net of all amounts payable or reimbursable therefrom with respect to related
Advances, Advance Interest, Servicing Compensation, Trustee Fees and previously
accrued Retained Yield through the date of receipt) shall be deemed allocated
between the Trust Fund and the Seller entitled to such Retained Yield in
proportion to the relative values of such Mortgage Asset (net of the Retained
Yield) and the Retained Yield, respectively; provided that such Seller hereby
subordinates its right to receive such amount so allocated to it, to the right
of the Certificateholders to receive an amount equal to the Stated Principal
Balance of such Mortgage Asset, together with all accrued interest thereon at
the related
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Net Asset Rate from the Due Date to which interest was last paid or advanced to
the date to which the interest was paid as part of such Purchase Price.
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ARTICLE III
ADMINISTRATION AND SERVICING
OF TRUST FUND
SECTION 3.01. General Servicing Provisions.
(a) For and on behalf of the Trust Fund and solely in the best
interests of and for the benefit of the Trustee (as trustee for the
Certificateholders) and the Certificateholders, the Master Servicer shall
service and administer the Mortgage Loans in accordance with the applicable
provisions of the Housing Act and the FHA Regulations, the terms of this
Agreement and the respective Mortgage Loans and, to the extent consistent with
the foregoing, the normal and usual standards of practice of prudent servicers
of FHA-insured project mortgage loans in the respective states where the
Mortgaged Properties are located.
(b) Subject to the foregoing, the Master Servicer shall have full
power and authority, acting alone and/or through any Sub-Servicer, to do or
cause to be done any and all things that it may deem necessary or desirable in
connection with such servicing and administration; provided that the Master
Servicer shall take no action that is materially inconsistent with or materially
prejudices the interest of the Trustee or the Certificateholders in any Mortgage
Loan or under the related FHA Mortgage Insurance or the rights and interest of
the Depositor, the Trustee or the Certificateholders under the terms of this
Agreement unless such action is specifically called for by the terms hereof; and
provided further that, without the consent of the FHA (if required under FHA
Regulations), the Master Servicer shall not: (i) modify or extend any Mortgage
Loan (and any such modification or extension that is permitted shall be subject
to Section 3.01(d) hereof); (ii) make or consent to any material amendment,
change, modification or alteration of any Mortgage Loan; (iii) consent to any
release, substitution or exchange of the collateral given for any Mortgage Loan;
(iv) waive any claim or right against the Mortgagor or any guarantor, standby
creditor or obligor of a Mortgage Loan; or (v) consent to any transfer of or
subordinate financing on any Mortgaged Property unless such transfer or
subordinate financing is permitted under the loan documents relating thereto.
The Master Servicer shall notify the Rating Agency in writing in connection with
any action taken contemplated by Section 3.01(b)(iv).
To the extent consistent with the foregoing, and subject to Section
3.01(d) and any other specific provisions hereof that may be applicable to any
particular matter, the Master Servicer, in its own name or in the name of the
Depositor and the Trustee, is hereby authorized and empowered by the Depositor
and the Trustee, when the Master Servicer believes it appropriate in its best
judgment, to execute and deliver, on behalf of the Trustee, the Depositor, the
Certificateholders or any of them, any and all instruments of modification,
satisfaction, cancellation or assignment, or of partial or full release or
discharge and all other comparable instruments, with respect to the Mortgage
Loans, and with respect to the Mortgaged Properties held for the benefit of the
Certificateholders. The Master Servicer shall promptly notify the Trustee of any
such execution and delivery. Subject to Section 3.13, the Depositor and the
Trustee for the benefit of the Certificateholders shall furnish the Master
Servicer with any powers
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of attorney and other documents necessary or appropriate to enable the Master
Servicer to service and administer the Mortgage Loans.
(c) In accordance with the standards of the preceding subsections,
but subject to any applicable limitations set forth in Section 5.03, the Master
Servicer shall advance or cause to be advanced funds, as and when necessary, for
the purpose of effecting the timely payment of taxes, assessments and ground
rents (if any) on each Mortgaged Property, FHA Mortgage Insurance premiums in
respect of the Mortgage Loans or any other related unpaid insurance premiums
that are not timely paid by the Mortgagors and no or insufficient amounts have
been escrowed for the payment thereof. Any such advances shall be reimbursable
in the first instance from related collections from the Mortgagors pursuant to
Section 3.06 hereof, and may be withdrawn from the Custodial Account as a
Servicing Advance, as and to the extent permitted by Section 3.09 hereof. All
costs incurred by the Master Servicer in effecting the timely payments of taxes,
assessments and ground rents (if any) on the Mortgaged Properties, FHA Mortgage
Insurance premiums in respect of the Mortgage Loans and any other related
insurance premiums shall not, for the purpose of calculating any amounts which
affect monthly distributions to the Certificateholders, be added to the
principal balance under the related Mortgage Loans, notwithstanding that the
terms of such Mortgage Loans so permit.
(d) Notwithstanding anything in this Agreement to the contrary, the
Master Servicer shall not (unless (i) the related Mortgagor is in default with
respect to the Mortgage Loan or such default is, in the good faith and
reasonable judgment of the Master Servicer, reasonably foreseeable, (ii) the
Master Servicer has obtained the written consent of the FHA if required under
FHA Regulations and (iii) the Master Servicer has obtained written confirmation
from the Rating Agency that there would be no resulting downgrade, withdrawal or
qualification of the then-current rating of any Class of Rated Certificates)
permit any modification with respect to any Mortgage Loan that would affect the
amount or timing of any related payment of principal, interest or other amount
payable thereunder or, in the Master Servicer's good faith and reasonable
judgment, would materially impair the security for such Mortgage Loan or reduce
the likelihood of timely payment of amounts due thereon.
In addition, the Master Servicer shall not make or permit any
modification, waiver or amendment of any term of, or take any other action with
respect to, any Mortgage Loan that would (A) result in an Adverse REMIC Event
with respect to any of REMIC I, REMIC II or REMIC III or (B) cause any Mortgage
Loan to cease to be a "qualified mortgage" within the meaning of Section
860G(a)(3) of the Code. Any modification, waiver or amendment of any term of any
Mortgage Loan shall be consistent with the servicing standard set forth in the
first paragraph of this Section 3.01.
(e) At no time prior to six months before the Stated Maturity Date
of any Mortgage Loan shall any Seller, the Master Servicer, the Depositor or any
of their respective Affiliates solicit the related Mortgagor, directly or
indirectly, for purposes of providing such Mortgagor with financing to prepay
such Mortgage Loan.
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(f) The relationship of the Master Servicer to the Trustee under
this Agreement is intended by the parties to be that of an independent
contractor and not that of a joint venturer, partner or agent.
(g) The Master Servicer shall maintain accurate records, certified
by a Servicing Officer, of each Final Recovery Determination in respect of any
Mortgage Loan and the basis thereof. Each Final Recovery Determination shall be
evidenced by an Officer's Certificate delivered to the Trustee no later than the
tenth Business Day following such Final Recovery Determination.
SECTION 3.02. Administration of GNMA Certificates and FHA
Debentures.
If at any time the Trustee, as the registered holder of a GNMA
Certificate or an FHA Debenture, is requested in such capacity, by any Person
whatsoever to take any action (other than the disposition thereof) or to give
any consent, approval or waiver, then the Trustee shall promptly notify all of
the Certificateholders of such request in writing and shall, in its capacity as
the registered holder of such GNMA Certificate or FHA Debenture, as the case may
be, take such action in connection with the exercise and/or enforcement of any
rights and/or remedies available to it in such capacity with respect to such
request only as Holders entitled to at least 51% of the Voting Rights allocated
to the Classes affected thereby shall direct in writing. If the Trustee does not
receive written instructions from Holders entitled to at least 51% of such
Voting Rights within 30 days of their receipt of such notification from the
Trustee, the Trustee may (i) take such course of action as it determines, in its
reasonable and good faith judgment, is in the best interests of the
Certificateholders or (ii) refuse to take such requested action or to give any
such requested consent, approval or waiver.
SECTION 3.03. Collection of Mortgage Asset Payments.
(a) The Master Servicer shall proceed diligently, using all
reasonably practicable methods, to collect all payments called for under the
terms and provisions of the Mortgage Loans, when and as they become due and
payable, and shall, to the extent such procedures shall be consistent with this
Agreement and the terms and provisions of the FHA Mortgage Insurance, follow
such collection procedures as it follows with respect to mortgage loans
comparable to the Mortgage Loans and serviced by it for others. The Master
Servicer shall not accept any prepayment of the principal of any Mortgage Loan
unless the prepayment is permitted by the terms of the Mortgage Loan and FHA
Regulations.
(b) The Trustee shall deposit or cause to be deposited in the
Collection Account all distributions actually received on the GNMA Certificates
and any FHA Debentures (except those amounts which constitute (i) Retained Yield
with respect to any FHA Debentures and (ii) payments of interest on any FHA
Debenture with respect to which the Master Servicer has previously made a
Monthly Advance). If such distributions are to be made by wire transfer, the
Trustee shall direct that such wire transfer be made to the Collection Account.
The Trustee shall remit to the Master Servicer by wire transfer any amounts
received by it constituting (i) Retained Yield on any FHA Debentures and (ii)
payments of interest on any FHA Debenture with
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respect to which the Master Servicer has previously made a Monthly Advance,
which amounts shall, upon receipt thereby, be deposited by the Master Servicer
in the Custodial Account. If the full amount of any distribution on any GNMA
Certificate or FHA Debenture shall not have been received by the Trustee by the
close of business on the date on which such distribution was due to be received
thereon, the Trustee shall notify the Master Servicer and the party required to
make such distribution. If the full amount of such distribution shall not have
been received by the Trustee or the Master Servicer one Business Day following
such notice, the Trustee shall promptly notify the Certificateholders, and such
parties shall proceed in accordance with Section 3.02.
Neither the Trustee nor the Master Servicer shall accept a second
payment on any GNMA Certificate in any calendar month after the Due Date for
such GNMA Certificate in such month.
SECTION 3.04. Rights of the Depositor and the Trustee in Respect
of the Master Servicer and each Seller.
The Master Servicer, Greystone Funding and Daiwa Finance each shall
afford the Depositor and the Trustee, without charge but only upon reasonable
notice and during normal business hours, access to all records and documentation
in the Master Servicer's, Greystone Funding's or Daiwa Finance's, as the case
may be, possession regarding the Mortgage Loans and to all accounts, insurance
policies and other matters in the Master Servicer's, Greystone Funding's or
Daiwa Finance's, as the case may be, possession relating to this Agreement and
access to officers of the Master Servicer responsible for its obligations
hereunder. The Depositor may, but is not obligated to, enforce the obligations
of the Master Servicer, Greystone Funding and/or Daiwa Finance hereunder. The
Depositor shall not have any responsibility or liability for any action or
failure to act by the Master Servicer, Greystone Funding or Daiwa Finance and is
not obligated to supervise the performance of the Master Servicer, Greystone
Funding or Daiwa Finance hereunder or otherwise.
SECTION 3.05. Sub-Servicers.
(a) It is understood that the Master Servicer may perform its
servicing obligations under this Agreement through Sub-Servicers, provided that
each such Sub-Servicer, at all times it is servicing any Mortgage Loan, is an
established and approved servicer of FHA-insured project mortgage loans. For
purposes of this Agreement, the Master Servicer shall be deemed to have received
payments on Mortgage Loans upon receipt thereof by a Sub-Servicer. The Master
Servicer shall pay all fees and expenses of each Sub-Servicer out of the
Servicing Compensation or out of the Master Servicer's own funds. Any agreement
that may be entered into by the Master Servicer and any transactions or services
relating to the Mortgage Loans involving a Sub-Servicer in its capacity as such
shall be deemed to be between the Sub-Servicer and the Master Servicer alone,
and except to the extent that the Trustee (or any other successor master
servicer) succeeds to the rights and obligations of the Master Servicer
hereunder as provided in subsection (b) below, neither the Trustee (or any other
successor master servicer) nor any Certificateholder shall be deemed to be a
party thereto or have any claims, rights, obligations,
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duties or liabilities with respect to the Sub-Servicer or for the payment of the
fees and expenses of any Sub-Servicer. Any such Sub-Servicing Agreement shall
conform in all material respects with this Agreement. Notwithstanding the fact
that the Master Servicer may perform its servicing obligations under this
Agreement through another entity, the Master Servicer shall at all times remain
obligated and liable to the Trustee and the Certificate-holders without
diminution by virtue of such servicing being performed by such other entity and
to the same extent and under the same terms and conditions as if the Master
Servicer alone were performing its obligations under this Agreement.
(b) If the Master Servicer shall for any reason no longer be the
Master Servicer (including by reason of any Event of Default), the Trustee (or
any other successor master servicer) shall succeed to any rights and obligations
of the Master Servicer under any Sub-Servicing Agreement and shall be deemed to
have assumed the Master Servicer's interest therein; provided, however, that the
Master Servicer shall not thereby be relieved of any liability or obligations
under any Sub-Servicing Agreement arising prior to the date of such succession.
The Master Servicer shall, upon request of the Trustee, but at the expense of
the Master Servicer, deliver to the assuming party all documents and records
relating to the Mortgage Loans then being serviced thereunder and an accounting
of collected amounts held by or on behalf of it and otherwise use its best
efforts to effect the orderly and efficient transfer of servicing to the
assuming party.
SECTION 3.06. Collection of Taxes, Assessments and Similar Items;
Escrow Accounts.
The Master Servicer shall establish and maintain one or more
custodial accounts (each, an "Escrow Account") and deposit and retain therein
all collections from the Mortgagors for the payment of taxes, assessments, FHA
Mortgage Insurance premiums, hazard and other insurance premiums and comparable
items for the account of the Mortgagors. The Master Servicer shall deposit all
such funds and maintain such accounts in accordance with applicable FHA
Regulations. All Escrow Accounts shall be Eligible Accounts.
Subject to the terms of the related Mortgage Loans and the
applicable FHA Regulations, withdrawals of amounts so collected from the Escrow
Accounts may be made to effect timely payment of taxes, assessments, FHA
Mortgage Insurance premiums, hazard and other insurance premiums and comparable
items, to reimburse the Master Servicer for prior advances of such items, to
refund to any Mortgagors any sums as may be determined to be overages, to pay
interest, if required, to Mortgagors on balances in the Escrow Account or to
clear and terminate the Escrow Account at the termination of this Agreement in
accordance with Section 10.01 hereof. As part of its servicing duties, the
Master Servicer, without right of reimbursement, shall pay to the Mortgagors
interest on funds in the Escrow Account, to the extent required by law.
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SECTION 3.07. Reserve Accounts.
The Master Servicer shall establish and maintain, as applicable, one
or more accounts (the "Reserve Accounts"), into which all Reserve Funds, if any,
shall be deposited and retained. Withdrawals of amounts so deposited may be made
(i) to pay for, or to reimburse the related Mortgagor in connection with,
replacements, repairs and/or capital improvements at the related Mortgaged
Property if the replacements have been effected or the repairs or capital
improvements have been completed, and such withdrawals are made, in accordance
with the servicing standard set forth in Section 3.01(a), FHA Regulations and
the terms of the related Mortgage Note, Mortgage and any agreement with the
related Mortgagor governing such Reserve Funds, and (ii) to distribute interest
earned on such amounts to the related Mortgagor pursuant to the FHA Regulations.
All Reserve Accounts shall be Eligible Accounts.
SECTION 3.08. Maintenance of the Custodial Account.
The Master Servicer shall establish and maintain, in its name on
behalf of the Trustee for the benefit of the Certificateholders, the Custodial
Account. The Master Servicer shall deposit into the Custodial Account on a daily
basis, except as otherwise specifically provided herein, the following payments
and collections received or made by it (without duplication) subsequent to the
Cut-off Date (other than in respect of principal of and interest and any other
payments on the Mortgage Loans due on or before the Cut-off Date):
(i) all payments on account of principal, including Principal
Prepayments, on the Mortgage Loans;
(ii) all payments on account of interest on the Mortgage Loans;
(iii) all Insurance Proceeds, Condemnation Proceeds and
Liquidation Proceeds collected on or in respect of the Mortgage Loans,
other than proceeds to be applied to the restoration or repair of the
Mortgaged Property or released to the Mortgagor in accordance with the
Master Servicer's normal servicing procedures and the terms of the
applicable FHA Mortgage Insurance Contract;
(iv) all Prepayment Premiums collected with respect to the
Mortgage Loans;
(v) the amount of any losses required to be deposited by the
Master Servicer pursuant to the third succeeding paragraph of this Section
3.08 in connection with any losses on Permitted Investments;
(vi) all amounts constituting Retained Yield with respect to any
FHA Debentures or interest on any FHA Debentures with respect to which the
Master Servicer has previously made a Monthly Advance;
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(vii) all proceeds of any purchase by Greystone Funding, Daiwa
Finance, the Majority Class B Certificateholder, the Master Servicer or
the Trustee, as the case may be, of any Mortgage Asset pursuant to Article
II, Section 3.15 or Section 10.01 hereof; and
(viii) any other amounts specifically required to be deposited
in the Custodial Account pursuant to this Agreement.
Notwithstanding the foregoing, to the extent that any amounts
constituting Retained Yield required to be deposited by the Master Servicer into
the Custodial Account pursuant to clause (vi) above are identifiable, such
amounts may be transferred directly to Greystone Funding (with respect to the
Greystone Mortgage Assets) and Daiwa Finance (with respect to the Daiwa Mortgage
Assets).
The foregoing requirements for remittance by the Master Servicer
shall be exclusive, it being understood and agreed that, without limiting the
generality of the foregoing, amounts to be deposited in the Escrow Accounts
and/or the Reserve Accounts and payments in the nature of late payment charges,
assumption fees and modification fees in respect of the Mortgage Loans, if
collected, need not be remitted or deposited into the Custodial Account by the
Master Servicer. In the event that the Master Servicer shall deposit any amount
not required to be so deposited, it may at any time withdraw such amount from
the Custodial Account, any provision herein to the contrary notwithstanding. All
funds deposited in the Custodial Account shall be held by the Master Servicer in
trust on behalf of the Trustee for the benefit of the Certificateholders until
disbursed in accordance with this Agreement or withdrawn in accordance with
Section 3.09. In no event shall the Trustee incur liability for withdrawals from
the Custodial Account made by the Master Servicer.
The Master Servicer may invest the funds in the Custodial Account in
Permitted Investments, which shall mature not later than the Business Day
preceding the Master Servicer Remittance Date next following the date of such
investment (except that if such Permitted Investment is an obligation of the
institution that maintains the Custodial Account, then such Permitted Investment
shall mature not later than such Master Servicer Remittance Date). All such
Permitted Investments shall be made in the name of the Trustee for the benefit
of the Certificateholders (in its capacity as such) or its nominee. All income
and gain net of any losses realized from any such investment shall be for the
benefit of the Master Servicer and shall be subject to withdrawal from time to
time. The amount of any losses net of any gains not paid to the Master Servicer
incurred in respect of any such investments shall be remitted to the Trustee or
deposited in the Custodial Account out of the Master Servicer's own funds
promptly following the date that same are realized.
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The Master Servicer shall promptly give notice to the Trustee, the
Rating Agency and the Depositor of the location of the Custodial Account and of
any change thereof.
SECTION 3.09. Permitted Withdrawals from the Custodial Account.
The Master Servicer may, from time to time, make withdrawals from
the Custodial Account for the following purposes:
(a) to pay to the Master Servicer, as Servicing Compensation,
that portion of any payment or other collection of interest (including any
Prepayment Interest Excesses) on or in respect of any Mortgage Loan that
represents Servicing Fees with respect to such Mortgage Loan accrued for
the period with respect to which such payment or other collection of
interest applies (to the extent that such amount was not previously paid
to or retained by the Master Servicer), and to pay to the Master Servicer,
as additional Servicing Compensation, earnings on or investment income
with respect to funds credited to the Custodial Account and any other
amounts on deposit in the Custodial Account that constitute Servicing
Compensation;
(b) to reimburse the Master Servicer or Trustee for Advances
made in respect of any Mortgage Loan, such right of reimbursement pursuant
to this subclause (b) being limited to amounts received in respect of such
Mortgage Loan ("Related Proceeds") (including, for this purpose, late
payments, Insurance Proceeds, Condemnation Proceeds, Liquidation Proceeds
and Repurchase Proceeds) and amounts received in connection with the sale
pursuant to Section 3.15 or 10.01 of any FHA Debentures that constitute
related FHA Insurance Benefits, provided, however, that unless an FHA
Insurance Nonexistence Event has occurred, reimbursement of Servicing
Advances pursuant to this subclause (b) shall be limited to that portion,
if any, of such Related Proceeds remaining after the payment/reimbursement
therefrom of all Expected Recoveries due Certificateholders, unreimbursed
Monthly Advances, unpaid Servicing Fees, unpaid Trustee Fees and unpaid
Retained Yield in respect of the related Mortgage Loan or any FHA
Debentures that constitute related FHA Insurance Benefits in respect of
the related Mortgage Loan;
(c) to reimburse the Master Servicer or the Trustee for
Monthly Advances made in respect of any FHA Debenture, such right of
reimbursement pursuant to this subclause (c) being limited to amounts
received in respect of such FHA Debenture (including, without limitation,
from the sale thereof pursuant to Section 3.15 or 10.01) that represents a
payment or other collection of interest (net of any portion thereof that
constitutes Retained Yield);
(d) to reimburse the Master Servicer or the Trustee for any
Nonrecoverable Advances; provided that no Servicing Advance shall be
reimbursable pursuant to this subclause (d) unless it was incurred after
an FHA Insurance Nonexistence Event shall have occurred;
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(e) at such time as any Advance is reimbursed pursuant to any
of the preceding clauses (b), (c) or (d), to pay the Master Servicer or
the Trustee all related unpaid Advance Interest, provided, however, that
if such reimbursement, together with all Advance Interest previously paid
to the Master Servicer and the Trustee, would exceed the Advance Interest
Cap, reimbursement pursuant to this subclause (e) shall be permitted only
to the extent that such payment, together with the aggregate of all prior
payments of Advance Interest, does not exceed the Advance Interest Cap;
(f) [Reserved.]
(g) to pay to Greystone Funding, Daiwa Finance, the Master
Servicer or the Trustee, as the case may be, all amounts received
subsequent to the date of purchase in respect of any Mortgage Asset that
has been purchased thereby pursuant to any of Sections 2.01, 2.02, 2.04,
3.15 or 10.01 hereof;
(h) to reimburse the Master Servicer, the Depositor and/or
certain related Persons for expenses incurred thereby and reimbursable
thereto pursuant to Section 7.03 hereof;
(i) to withdraw any amount deposited in the Custodial Account
pursuant to Section 3.08 and not required to be deposited therein;
(j) to pay to Greystone Funding (with respect to a Greystone
Mortgage Asset) or Daiwa Finance (with respect to a Daiwa Mortgage Asset)
any amounts deposited in the Custodial Account which constitute Retained
Yield in respect of any FHA Debenture or FHA Assigned Mortgage Loan;
(k) to pay any and all taxes imposed on the Trust Fund by
federal, state or local governmental authorities to the extent such taxes
are to be paid by the Trust Fund pursuant to Section 11.09(h)(iv); and
(l) to clear and terminate the Custodial Account upon
termination of this Agreement pursuant to Section 10.01 hereof.
The Master Servicer shall keep and maintain separate accounting, on
a Mortgage Asset-by-Mortgage Asset basis, for the purpose of justifying any
withdrawal from the Custodial Account pursuant to any of the foregoing clauses.
On or prior to each Master Servicer Remittance Date, after payment
of items (a) through (k) above (to the extent necessary and without regard to
the withdrawal contemplated by this paragraph), the Master Servicer shall
withdraw from the Custodial Account and remit to the Trustee, in immediately
available funds, and the Trustee, upon receipt thereof, shall deposit in the
Collection Account, all amounts then on deposit in the Custodial Account that
represent Prepayment Premiums or any part of the Available Distribution Amount
for the next succeeding
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Distribution Date or which, if they were on deposit in the Collection Account,
would be applied to pay an expense of the Trust Fund withdrawable therefrom.
SECTION 3.10. Maintenance of Hazard Insurance and Other Insurance.
Pursuant to the Housing Act or as may be stipulated by the
Commissioner of the FHA, and specifically in compliance with 24 CFR ss.207.260
and any superseding or supplemental regulation, the Master Servicer shall
arrange that at all times during the existence of this Agreement all buildings
and improvements on the Mortgaged Properties are, in each case, insured by
Qualified Insurers in accordance with the related Mortgage and applicable FHA
Regulations against insurable loss by fire and other hazards, casualties, floods
and contingencies to the extent that such insurance is available at a reasonably
competitive price, and where such insurance is for any reason not so available,
the Master Servicer shall so notify the FHA as required to ensure that no
payment of FHA Insurance Benefits is diminished by the absence of such
insurance. Such policies, with copies of all notices thereunder to be given to
the Master Servicer, shall be endorsed with standard mortgagee clauses with loss
payable to the Trustee. All proceeds paid under any such policies shall, after
receipt by the Trustee of a direction from a Servicing Officer of the Master
Servicer, be delivered by the Trustee to the Master Servicer for application to
the restoration or repair of the Mortgaged Property or for release by the Master
Servicer to the related Mortgagor, in accordance with the Master Servicer's
normal servicing procedures and the terms of the applicable FHA Mortgage
Insurance Contract, and any such proceeds remaining after such application or
release shall be deposited in the Custodial Account pursuant to Section 3.08.
Any cost incurred by or on behalf of the Master Servicer in maintaining any such
insurance shall not, for the purpose of calculating any amounts which affect
monthly distributions to the Certificateholders or remittances to the Trustee
for their benefit, be added to the principal balance of the Mortgage Loan,
notwithstanding the terms of the Mortgage Loan so permit.
SECTION 3.11. Enforcement of Due-On-Sale and Due-On-Encumbrance
Clauses; Assumption Agreements.
(a) Except as otherwise provided in this Section 3.11(a), when any
Mortgaged Property has been conveyed by the related Mortgagor, the Master
Servicer shall, to the extent that it has knowledge of such conveyance, enforce
any due-on-sale clause contained in the related Mortgage Note or Mortgage, to
the extent permitted under applicable law and governmental regulations, but only
to the extent that such enforcement will not adversely affect or jeopardize
coverage under the related FHA Mortgage Insurance Contract or any Required
Insurance Policy. In the event that the Master Servicer is prohibited by law
from enforcing any such due-on-sale clause, or if coverage under the related FHA
Mortgage Insurance Contract or any Required Insurance Policy would be adversely
affected, the Master Servicer is authorized, subject to Section 3.11(b), to take
or enter into an assumption and modification agreement from or with the person
to whom such property has been or is about to be conveyed, pursuant to which
such person becomes liable under the Mortgage Note and, unless prohibited by
applicable state law, the Mortgagor remains liable thereon, provided that the
Mortgage Loan shall continue to be covered (if so covered before the Master
Servicer enters such agreement) by the related FHA Mortgage Insurance Contract
and the applicable Required Insurance Policies. The Master
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Servicer, subject to Section 3.11(b), is also authorized with the prior approval
of the FHA and, if necessary and appropriate, the insurers under any Required
Insurance Policies to enter into a substitution of liability agreement with such
person, pursuant to which the original Mortgagor is released from liability and
such person is substituted as Mortgagor and becomes liable under the Mortgage
Note. Notwithstanding the foregoing, the Master Servicer shall not be deemed to
be in default under this Section 3.11(a) by reason of any transfer or assumption
which the Master Servicer is restricted by law from preventing, for any reason
whatsoever.
(b) Subject to the Master Servicer's duty to enforce any due-on-sale
clause to the extent set forth in Section 3.11(a) hereof, in any case in which a
Mortgaged Property has been conveyed by the related Mortgagor, if an assumption
is permitted under Section 3.11(a) and the Person to whom the Mortgaged Property
is to be conveyed is to enter into an assumption agreement or modification
agreement or supplement to the Mortgage Note or Mortgage held for the benefit of
the Certificateholders that requires the signature of the Trustee, or if an
instrument of release signed by the Trustee is required releasing the Mortgagor
from liability on the Mortgage Loan, the Master Servicer shall deliver or cause
to be delivered to the Trustee for signature the assumption agreement with the
Person to whom the Mortgaged Property is to be conveyed and such modification
agreement or supplement to the Mortgage Note or Mortgage or other instruments as
are reasonable or necessary to carry out the terms of the Mortgage Note or
Mortgage or otherwise to comply with any applicable laws regarding assumptions
or the transfer of the Mortgaged Property to such Person. The Master Servicer
shall also deliver or cause to be delivered to the Trustee with the foregoing
documents a letter explaining the nature of such documents and the reason or
reasons why the Trustee's signature is required.
With such letter, the Master Servicer shall deliver to the Trustee a
certificate of a Servicing Officer certifying that: (i) a Servicing Officer has
examined and approved such documents as to form and substance, (ii) the
Trustee's execution and delivery thereof will not conflict with or violate any
terms of this Agreement or cause the unpaid principal balance and interest on
the Mortgage Loan to be uncollectible in whole or in part, (iii) any required
consents of the FHA and insurers under any Required Insurance Policies have been
obtained and (iv) subsequent to the closing of the transaction involving the
assumption or transfer (A) the Mortgage Loan will continue to be secured by a
first (or, if so reflected on the Mortgage Asset Schedule, a second) mortgage
lien pursuant to the terms of the Mortgage, (B) such transaction will not
adversely affect the coverage under the related FHA Mortgage Insurance or any
Required Insurance Policies, (C) the Mortgage Loan will fully amortize over the
remaining term thereof, (D) the Mortgage Rate on the Mortgage Loan will not be
altered nor will the term of the Mortgage Loan be increased as a result of such
assumption or transfer and (E) if the seller/transferor of the Mortgaged
Property is to be released from liability on the Mortgage Loan, the Master
Servicer used underwriting standards of prudent underwriters of FHA-insured
project mortgage loans in the state where the related Mortgaged Property is
located in evaluating the creditworthiness of the purchaser/transferee, and such
release will not (based on the Master Servicer's good faith and reasonable
determination) adversely affect the collectibility of the Mortgage Loan. Upon
receipt of such certificate, the Trustee for the benefit of the
Certificateholders shall execute any necessary instruments for such assumption
or substitution of liability. Upon the closing of the transactions contemplated
by such documents, the Master
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Servicer shall cause the originals of the assumption agreement, the release (if
any), or the modification or supplement to the Mortgage Note or Mortgage to be
delivered to the Trustee for the benefit of the Certificateholders and deposited
in the Mortgage File for such Mortgage Loan. Any fee collected by the Master
Servicer for entering into an assumption or substitution of liability agreement
will be retained by the Master Servicer as additional servicing compensation.
(c) When any Mortgaged Property has been further encumbered by the
related Mortgagor, the Master Servicer shall, to the extent it has knowledge of
such encumbrance, enforce any due-on-encumbrance clause contained in the related
Mortgage Note or Mortgage, to the extent permitted under applicable law and
governmental regulations, but only to the extent that such enforcement will not
adversely affect or jeopardize coverage under the related FHA Mortgage Insurance
Contract or any Required Insurance Policy.
SECTION 3.12. Maintenance of FHA Mortgage Insurance; Collection
Thereunder.
(a) The Master Servicer covenants and agrees not to act, or fail to
act, in any such manner as to impair the full force and effect of the FHA
Mortgage Insurance in respect of any Mortgage Loan throughout the term of this
Agreement and also covenants and agrees to exercise its best reasonable efforts
to discharge its obligations arising out of the FHA Mortgage Insurance Contract
in respect of each Mortgage Loan. The Master Servicer hereby agrees that it
shall be liable to the Trustee and the Trust Fund for any loss, liability or
expense incurred by the Trustee, any Certificateholder and/or the Trust Fund by
reason of any FHA Mortgage Insurance being voided, reduced, released or
adversely affected by reason of the failure by the Master Servicer to perform
its obligations hereunder in strict compliance with the terms and conditions of
this Agreement. The Master Servicer shall service and administer the Mortgage
Loans in accordance with the servicing standard set forth in Section 3.01(a),
shall discharge all obligations of the mortgagee under each Mortgage Loan and,
subject to the right to assign the Mortgage Loan to the FHA, shall take all
action reasonably necessary to preserve the lien of the related Mortgage,
including, without limitation, the defense of actions to challenge or foreclose
such lien. In particular, the Master Servicer shall:
(i) ensure the payment, on a timely basis, of the premiums on
the FHA Mortgage Insurance in respect of each Mortgage Loan;
(ii) make or cause to be made an annual physical inspection of
the property subject to each Mortgage Loan, and furnish an inspection
report to the FHA and the Trustee; and
(iii) maintain insurance in accordance with Section 3.10 in
respect of, and pay ground rents, if any, taxes and other assessments on,
any Mortgaged Property if the related Mortgagor fails to do so.
(b) If a Mortgagor shall fail to make any payment due on any
Mortgage Loan or fail to perform any other covenant under the provisions of any
Mortgage Loan which could
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result in the acceleration of the debt, and such failure continues for a period
of thirty (30) days, the Master Servicer shall, by written instructions signed
by a Servicing Officer, promptly direct the Trustee to, and the Trustee shall,
promptly notify the FHA and the Class B Certificateholders of the default and
(unless such defaulted Mortgage Loan is purchased by the Majority Class B
Certificateholder pursuant to Section 3.15(a) hereof) shall, in accordance with
such instructions within forty-five (45) days after the expiration of the 30-day
grace period (or such other period as permitted or required by the FHA), notify
the FHA of its intention to file an insurance claim and of its election to
assign the Mortgage Loan to the FHA. The Master Servicer and, in accordance with
such instructions, the Trustee shall thereafter take such reasonable action as
is necessary to perfect the claim under the FHA Mortgage Insurance. With respect
to any defaulted Mortgage Loan as to which the Trustee is unable to deliver the
original Mortgage Note to the FHA because the original Mortgage Note has been
permanently lost or misplaced, the Trustee shall, on behalf of the Trust Fund,
deliver to the FHA a HUD Indemnity. The Master Servicer shall, as a condition to
the taking by the Trustee of any action under this paragraph, complete and
provide to the Trustee all forms and other documentation needed to notify the
FHA of, file and perfect such an insurance claim on a timely basis. In any such
connection, the Master Servicer shall be obligated to advance from its own funds
all amounts necessary to preserve rights under the related FHA Mortgage
Insurance Contract and, subject to any applicable limitations set forth in
Section 5.03, to preserve and protect the related Mortgaged Property and title
thereto, including, but not limited to, FHA Mortgage Insurance premiums, hazard
and other insurance premiums, taxes, special assessments and other costs
associated with providing security for such premises. The Master Servicer shall
not be entitled to reimbursement for any cost or advance relating to the
assignment of a defaulted Mortgage Loan to the FHA. Any cash amounts collected
from or on behalf of the FHA under or in connection with the FHA Mortgage
Insurance shall be deposited in the Custodial Account pursuant to Section 3.08.
If the FHA allows the Trustee or the Master Servicer to decide the form in which
FHA Insurance Benefits will be paid (e.g., cash, FHA Debentures or some
combination thereof), the Trustee and the Master Servicer shall in each case
request that such FHA Insurance Benefits be paid in cash.
(c) Notwithstanding the foregoing, the Master Servicer shall, in
servicing a defaulted Mortgage Loan that is subject to HUD Mortgagee Letter
87-9, alter the procedures set forth in Section 3.12(b) as necessary to comply
with such HUD Mortgagee Letter 87-9.
(d) Notwithstanding the foregoing, if for any reason a defaulted
Mortgage Loan cannot be assigned to the FHA (including, without limitation, by
reason of any change in the FHA Regulations), then the Master Servicer may
foreclose upon such Mortgage Loan or acquire a deed in lieu thereof (and may
direct the Trustee to provide the appropriate notices to the FHA), but only if
the Master Servicer receives (and delivers to the Trustee) written confirmation
from the Rating Agency that such foreclosure or such other acquisition of title,
in and of itself, will not result in a withdrawal, qualification or downgrade of
the rating assigned by the Rating Agency to any Class of Rated Certificates. The
Trustee shall cooperate with all reasonable requests of the Master Servicer in
connection with the foregoing.
(e) If the Master Servicer forecloses upon a Mortgage Loan or
accepts a deed in lieu thereof in accordance with Section 3.12(d), then
following such foreclosure or such other
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acquisition of title to the related Mortgaged Property, title thereto shall be
taken in the name of the Trustee or its designee. Immediately upon acquiring
title to any Mortgaged Property, the Trustee shall convey or cause the
conveyance of such Mortgaged Property to the FHA or, alternatively, the Master
Servicer shall, subject to Section 11.09, take such other action in respect of
such Mortgaged Property as is in the best interests of the Certificateholders
and as will not, as confirmed in writing by the Rating Agency, result in a
withdrawal, qualification or downgrade of the rating assigned by the Rating
Agency to any Class of Rated Certificates.
(f) No Certificateholder shall have any rights with respect to the
FHA Mortgage Insurance in respect of any Mortgage Loan except as provided for
herein. The Trustee shall be the "principal mortgagee" (as such term is used in
the FHA Regulations) with respect to each Mortgage Loan for purposes of the FHA
Regulations and the FHA Mortgage Insurance, and the Trustee shall retain legal
title to the Mortgage Loan and remain the mortgagee of record under the FHA
Mortgage Insurance. Without diminishing the obligations of the Master Servicer
hereunder with respect to any FHA Mortgage Insurance Contract or Mortgage Loan,
and without increasing the duties or liabilities of the Trustee hereunder, the
FHA shall have no obligation to recognize or deal with anyone other than the
principal mortgagee with respect to the rights, benefits and obligations of the
mortgagee under the FHA Mortgage Insurance Contract in respect of any Mortgage
Loan. The Mortgagor under each Mortgage Loan shall have no obligation to
recognize or do business with anyone other than the principal mortgagee or the
Master Servicer with respect to the rights, benefits and obligations of the
Mortgagor or the mortgagee under the related Mortgage. Except as provided in
Section 3.13, the Mortgage File shall remain in the custody of the principal
mortgagee, which shall be an FHA Approved Mortgagee.
SECTION 3.13. Trustee to Cooperate; Release of Mortgage Files.
Upon the payment in full of any Mortgage Loan, the Master Servicer
shall immediately notify the Trustee of such payment by a certification of a
Servicing Officer (a "Master Servicer Release Certificate") (which certification
shall include a statement to the effect that all amounts received or to be
received in connection with such payment which are required to be deposited in
the Custodial Account pursuant to Section 3.08 hereof have been so deposited)
and shall request delivery to it of the Mortgage File. Upon receipt of such
certification and request, the Trustee shall, and is hereby authorized by the
Certificateholders to, release promptly the related Mortgage File to the Master
Servicer. Upon any such payment in full, and the delivery by the Master Servicer
to the Trustee of such certification, the Master Servicer shall prepare for
execution by the Trustee a release of the related Mortgage and a deed of
reconveyance of the property encumbered by such Mortgage or such other document
which is required by the law of the jurisdiction in which the Mortgaged Property
is located to effect a release of the lien of the Mortgage, and the Trustee
shall promptly execute and deliver such release and deed of reconveyance or
other document, which release and deed of reconveyance or other document shall
be without representation by or recourse to the Trustee and delivered by the
Master Servicer to the Person or Persons entitled thereto.
From time to time and as appropriate for the servicing or
foreclosure of any Mortgage Loan, including, for this purpose, collection under
the FHA Mortgage Insurance
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Contract in respect thereof, the Trustee shall, upon request of the Master
Servicer and delivery to the Trustee of a trust receipt signed by a Servicing
Officer, promptly release the related Mortgage File to the Master Servicer and
shall execute such documents as shall be necessary to prosecution of any such
proceedings. Such trust receipt shall obligate the Master Servicer to return the
Mortgage File to the Trustee when the Master Servicer no longer needs the
Mortgage File or at the request of the Trustee, unless the Mortgage Loan shall
be assigned to the FHA or otherwise liquidated, in which case, upon receipt of a
certification of a Servicing Officer similar to that hereinabove specified
relating to the Liquidation Proceeds or other FHA Insurance Benefits (with
appropriate modifications in connection with the receipt of FHA Debentures), the
trust receipt shall be released by the Trustee to the Master Servicer.
SECTION 3.14. Documents, Records and Funds in Possession
of Master Servicer to be Held on Behalf of the
Trustee for the Benefit of the Certificateholders.
Notwithstanding any other provisions of this Agreement, the Master
Servicer shall transmit to the Trustee to the extent required by this Agreement
all documents and instruments coming into the possession of the Master Servicer
or any Sub-Servicer from time to time and shall account fully to the Trustee for
the benefit of the Certificateholders for any funds received by or on behalf of
the Master Servicer or which otherwise are collected by or on behalf the Master
Servicer as Liquidation Proceeds, Condemnation Proceeds or Insurance Proceeds in
respect of any Mortgage Loan. All Servicing Files and Mortgage Files in the
possession of the Master Servicer, and all funds collected or held by, or under
the control of, the Master Servicer in respect of any Mortgage Loans, whether
from the collection of principal, interest and other payments on the Mortgage
Assets or from Repurchase Proceeds, Liquidation Proceeds, Condemnation Proceeds
or Insurance Proceeds or otherwise, including but not limited to, any funds on
deposit in the Custodial Account, shall be held by the Master Servicer for and
on behalf of the Trustee for the benefit of the Certificateholders and, to the
extent of any Retained Yield, for and on behalf of Greystone Funding (with
respect to a Greystone Mortgage Asset) or Daiwa Finance (with respect to a Daiwa
Mortgage Asset), and shall be and remain the sole and exclusive property of the
Trustee and, to the extent of any Retained Yield, Greystone Funding (with
respect to a Greystone Mortgage Asset) or Daiwa Finance (with respect to a Daiwa
Mortgage Asset), subject to the applicable provisions of this Agreement. The
Master Servicer also agrees that it shall not create, incur or subject any
Servicing File or Mortgage File or any funds that are deposited in the Custodial
Account or any Reserve Account or Escrow Account, or any funds that otherwise
are or may become due or payable to the Trustee for the benefit of the
Certificateholders, to any claim, lien, security interest, judgment, levy, writ
of attachment or other encumbrance, or assert by legal action or otherwise any
claim or right of setoff against any Servicing File or Mortgage File or any
funds collected on, or in connection with, a Mortgage Loan, except, however,
that the Master Servicer shall be entitled to set off against and deduct from
any such funds any amounts that are properly due and payable to the Master
Servicer under this Agreement.
SECTION 3.15. Sale of Defaulted Mortgage Loans and FHA Debentures.
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(a) If the Trustee has notified the Class B Certificateholders of
its intention to file an insurance claim with respect to a defaulted Mortgage
Loan pursuant to Section 3.12, the Majority Class B Certificateholder may, at
its option, purchase such Mortgage Loan at the applicable Purchase Price by
delivering cash in an amount equal to the applicable Purchase Price to the
Master Servicer for deposit in the Custodial Account at any time before the
related insurance claim process is complete. Upon receipt by the Trustee of
written notification (by facsimile transmission, with a confirmation by mail) of
such deposit signed by a Servicing Officer (which notification shall be made by
the Master Servicer immediately following such deposit and shall include a
statement as to the accuracy of the Purchase Price), the Trustee shall release
the related Mortgage File to or at the direction of the Majority Class B
Certificateholder, and shall execute and deliver such instruments of transfer or
assignment (which instruments shall be prepared and provided by the Majority
Class B Certificateholder), in each case without recourse, as shall be necessary
to vest in the Majority Class B Certificateholder, or its designee, title (to
the extent that such title was transferred to the Trustee) to any defaulted
Mortgage Loan. Any purchase of a defaulted Mortgage Loan pursuant to this
Section 3.15(a) shall be subject to any related Sub-Servicer's right to continue
servicing such Mortgage Loan under the terms of the related Sub-Servicing
Agreement; provided that such Sub-Servicing Agreement was in effect as of the
Closing Date. The Master Servicer, simultaneously with the purchase of a
defaulted FHA Loan by the Majority Class B Certificateholder, shall assign to
such Certificateholder its entire right, title and interest in and to any such
Sub-Servicing Agreement, all in accordance with the terms thereof. Within five
Business Days after the written request therefor, the Master Servicer shall
provide the Majority Class B Certificateholder with a copy of the related
Sub-Servicing Agreement, if any, applicable to a defaulted FHA Loan.
(b) If the Trustee receives FHA Debentures as part of the FHA
Insurance Benefits in respect of any FHA Assigned Mortgage Loan, then the
Trustee shall promptly so notify in writing the other parties hereto, the Rating
Agency and the Holders of the Class B Certificates. The Majority Class B
Certificateholder may, at its option, purchase such FHA Debentures at the
applicable Purchase Price by so notifying the Trustee in writing of its
intention to do so within ten days of its receipt of the notice contemplated by
the preceding sentence and by delivering cash in an amount equal to the
applicable Purchase Price to the Master Servicer for deposit in the Custodial
Account within fifteen days of its receipt of the notice contemplated by the
preceding sentence. If (i) the Majority Class B Certificateholder fails to
notify the Trustee within the applicable ten-day period of its intention to
purchase such FHA Debentures, or (ii) the Majority Class B Certificateholder has
notified the Trustee of its intention to purchase such FHA Debentures within the
applicable ten-day period but fails to purchase such FHA Debentures within the
fifteen-day period applicable to its purchase thereof, the Trustee shall
promptly so notify the Master Servicer. Upon receiving such notice from the
Trustee, the Master Servicer shall, no later than the tenth day following such
notice, purchase such FHA Debentures by depositing a cash amount equal to the
applicable Purchase Price in the Custodial Account. If the Master Servicer is
required but fails to purchase such FHA Debentures within the applicable ten-day
period, then the Trustee shall, no later than the third Business Day following
the end of the ten-day period during which the Master Servicer is required to
purchase such FHA Debentures as provided above, purchase such FHA Debentures by
delivering to the Master
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Servicer for deposit in the Custodial Account a cash amount equal to the
applicable Purchase Price.
Upon receipt of an Officer's Certificate from a Servicing Officer to
the effect that the sale proceeds for any FHA Debenture have been deposited in
the Custodial Account (or, if such purchase is being effected by the Trustee,
upon delivery to the Master Servicer of a cash amount equal to the applicable
Purchase Price), the Trustee shall cause such FHA Debenture to be re-registered
in the name of the purchaser or its designee. The Trustee shall not be liable
for any costs associated with the sale of any FHA Debentures, including, but not
limited to, any brokerage fees associated with any such sale.
SECTION 3.16. Servicing Compensation.
As compensation for its activities hereunder, the Master Servicer
shall be entitled to retain or to withdraw from the Custodial Account the
amounts specified in clause (a) of Section 3.09 hereof as payable to it.
Additional servicing compensation in the form of assumption fees,
modification fees and late payment charges actually collected in respect of any
Mortgage Loan shall be retained by the Master Servicer to the extent not
required to be deposited in the Custodial Account pursuant to Section 3.08
hereof. The Master Servicer shall be required to pay all expenses incurred by it
in connection with its servicing activities hereunder (including, without
limitation, to the extent such premiums are not required to be paid or have not
been paid by the related Mortgagor, the payment of FHA Mortgage Insurance
premiums, as required by Section 3.12 hereof, and premiums for hazard insurance,
as required by Section 3.10 hereof, and the costs associated with the
maintenance of the other forms of insurance coverage, as required by Section
3.10 hereof, and the payment of servicing compensation to any Sub-Servicer
pursuant to any Sub-Servicing Agreement), and shall not be entitled to
reimbursement therefor except as specifically provided in Section 3.09 hereof.
SECTION 3.17. Reports to the Depositor; Account Statements.
Within five Business Days following each Distribution Date, the
Master Servicer shall deliver to the Trustee, the Depositor, each Seller and the
Rating Agency a statement setting forth the status of the Custodial Account as
of the close of business on the most recent Master Servicer Remittance Date
showing, for the period to such Master Servicer Remittance Date from the second
preceding Master Servicer Remittance Date (or, in the case of the initial Master
Servicer Remittance Date, from the Cut-off Date), the aggregate of deposits in
and withdrawals from the Custodial Account, if any, for each category of deposit
specified in Section 3.08 hereof and each category of withdrawal specified in
Section 3.09 hereof. Within fifteen Business Days following each Distribution
Date, the Trustee shall deliver to the Depositor and the Rating Agency a
statement setting forth the status of the Collection Account as of the close of
business on such Distribution Date showing, for the period to such Distribution
Date from the second preceding Distribution Date (or, in the case of the initial
Distribution Date, from the Cut-off
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Date), the aggregate of deposits in or withdrawals from the Collection Account,
if any, for each category of deposit and withdrawal specified in Section 4.01.
SECTION 3.18. Annual Statement as to Compliance.
The Master Servicer shall deliver to the Depositor and the Trustee
on or before March 15 of each year, commencing in 1997: (a) an Officers'
Certificate stating, as to each signer thereof, that (i) a review of the
activities of the Master Servicer during the preceding calendar year and of the
performance of the Master Servicer under this Agreement has been made under such
officer's supervision, (ii) to the best of such officer's knowledge, based on
such review, the Master Servicer has fulfilled all of its obligations under this
Agreement in all material respects throughout such year, 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, (iii) a Servicing
Officer has conducted a review of the activities of each Sub-Servicer during the
immediately preceding year and its performance under the related Sub-Servicing
Agreement, and (iv) to the best of such Servicing Officer's knowledge, based on
such review, each Sub-Servicer has performed and fulfilled its duties,
responsibilities and obligations under the related Sub-Servicing Agreement in
all material respects throughout such year, or if there has been a default in
the performance or fulfillment of any such duties, responsibilities or
obligations, specifying each such default known to such Servicing Officer and
the nature and status thereof; and (b) a certification to the effect that the
servicing of the Mortgage Loans by the Master Servicer during the prior calendar
year has been in compliance with the minimum servicing standards set forth in
the Uniform Single Attestation Program for Mortgage Bankers. The Master Servicer
shall forward a copy of each such Officer's Certificate and certificate of the
Master Servicer to the Rating Agency. Copies of such Officers' Certificates and
certificates of the Master Servicer shall be provided by the Trustee to any
Certificateholder upon request at the Master Servicer's expense, provided such
statement is delivered by the Master Servicer to the Trustee.
SECTION 3.19. Annual Independent Public Accountants' Servicing
Report.
On or before March 15 of each year, commencing in 1997, the Master
Servicer, at its expense, shall furnish to the Depositor and the Trustee for the
benefit of the Certificateholders (i) an opinion by a firm of independent
certified public accountants on the financial position of the Master Servicer at
the end of its fiscal year and the results of operations and changes in
financial position of the Master Servicer for such year then ended on the basis
of an examination conducted in accordance with generally accepted auditing
standards, and (ii) a report from such independent certified public accountants
to the effect that, based on an examination conducted substantially in
accordance with standards established by the American Institute of Certified
Public Accountants, such firm is of the opinion that the assertion made pursuant
to Section 3.18 regarding compliance with the minimum servicing standards set
forth in the Uniform Single Attestation Program for Mortgage Bankers during the
preceding fiscal year is fairly stated in all material respects, subject to such
exceptions and other qualifications that, in the opinion of such firm, such
accounting standards require it to report. In rendering such statement, such
firm may rely, as to matters relating to direct servicing of mortgage loans by
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Sub-Servicers, upon comparable reports for examinations conducted substantially
in accordance with such accounting standards (rendered within one year of such
statement) of independent public accountants with respect to the related
Sub-Servicer. The Master Servicer shall forward a copy of each such report to
the Rating Agency. Copies of such report shall be provided by the Trustee to any
Certificateholder upon request at the Master Servicer's expense, provided such
statement is delivered by the Master Servicer to the Trustee.
SECTION 3.20. Access to Certain Information.
The Master Servicer shall afford to the Trustee and the Depositor,
and to the OTS, the FDIC and any other banking or insurance regulatory authority
that may exercise authority over any Certificateholder and to the FHA, access to
any records regarding the Mortgage Loans and its servicing thereof within its
control, except to the extent it is prohibited from doing so by applicable law
or contract or to the extent such information is subject to a privilege under
applicable law to be asserted on behalf of the Certificateholders. Such access
shall be afforded without charge but only upon reasonable prior written request
and during normal business hours at the offices of the Master Servicer
designated by it. Upon request, the Master Servicer shall furnish to the Trustee
its most recent financial statements and such other information in its
possession regarding its business, affairs, property and condition, financial or
otherwise as the party requesting such information, in its reasonable judgment,
determines to be relevant to the performance of the obligations hereunder of the
Master Servicer. The Trustee shall have no responsibility or liability for any
action or failure to act by the Master Servicer and the Trustee is not obligated
to supervise the performance of the Master Servicer under this Agreement or
otherwise.
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ARTICLE IV
PAYMENTS AND STATEMENTS TO CERTIFICATEHOLDERS
SECTION 4.01. Collection Account.
The Trustee shall establish, prior to the Closing Date, and shall
maintain, in the name of the Trustee on behalf of the Certificateholders, the
Collection Account, which shall be an Eligible Account, into which the Trustee
shall deposit upon receipt all payments received on the GNMA Certificates and
any FHA Debentures (net of any Retained Yield and any payments of interest on
the FHA Debentures with respect to which the Master Servicer has previously made
Monthly Advances), all payments remitted by the Master Servicer in respect of
Compensating Interest and Monthly Advances, all amounts remitted by the Master
Servicer pursuant to the last paragraph of Section 3.09, any amounts required to
be remitted by the Depositor to the Trust Fund pursuant to Section 11.09(o), any
amounts required to be remitted by the Trustee to the Trust Fund pursuant to
Section 11.09(n) and any amounts required to be remitted by the Master Servicer
to the Trust Fund pursuant to Section 3.12 or Section 11.09(n). All
distributions to be made from time to time to the Certificateholders out of
funds in the Collection Account shall be made by or on behalf of the Trustee.
The Trustee will give notice to the Master Servicer, the Rating Agency and the
Depositor of the location of the Collection Account and of any change thereof,
prior to the use thereof. Funds held in the Collection Account and delivered to
the Trustee earlier than one Business Day prior to the next Distribution Date
shall be invested by the Trustee, to the extent practicable, in Permitted
Investments which mature no later than one Business Day prior to the next
Distribution Date as directed in writing by the Master Servicer. All income and
gain net of any losses realized from any such investment shall be for the
benefit of the Master Servicer and shall be subject to withdrawal at the Master
Servicer's direction from time to time. The amount of any losses net of any
gains not paid to the Master Servicer incurred in respect of any such
investments shall be deposited in the Collection Account by the Master Servicer
out of its own funds immediately as realized.
The Trustee shall make, to the extent required or authorized
hereunder, withdrawals from the Collection Account for the following purposes:
(a) to withdraw any amount deposited in the Collection Account
and not required to be deposited therein;
(b) to make required distributions to the Certificateholders
pursuant to Section 4.02(a) and Section 4.02(b);
(c) to pay itself on each Distribution Date the Trustee Fee
for such Distribution Date and, to the extent not previously paid, for all
prior Distribution Dates;
(d) reimburse itself for unreimbursed expenses incurred by it
to the extent expressly reimbursable under this Agreement;
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(e) to pay for any Opinion of Counsel the expense of which
this Agreement explicitly assigns to the Trust Fund;
(f) to pay to the Master Servicer, as additional servicing
compensation, earnings on or investment income with respect to funds
credited to the Collection Account;
(g) to the extent not paid out of the Custodial Account
pursuant to Section 3.09(k), to pay any and all taxes imposed on the Trust
Fund by federal, state or local governmental authorities to the extent
such taxes are to be paid by the Trust Fund pursuant to Section
11.09(h)(iv); and
(h) to clear and terminate the Collection Account upon
termination of this Agreement pursuant to Article X hereof.
It is understood and agreed that, in the case of any payment or
reimbursement to the Trustee (in its capacity as such) payable or reimbursed by
the Trust Fund pursuant to this Agreement, the Trustee's right thereto shall be
prior to the right of the Certificateholders to payment on any Distribution
Date.
SECTION 4.02. Distributions.
(a) On each Distribution Date, the Trustee shall apply amounts on
deposit in the Collection Account, in each case to the extent of the remaining
portion of the Available Distribution Amount for such Distribution Date, in the
following order of priority:
(i) to distributions of interest to the Holders of the Class S
Certificates, the Holders of the Class A-1 Certificates, the Holders
of the Class A-2 Certificates, the Holders of the Class A-3
Certificates, the Holders of the Class A-4 Certificates and,
commencing on the Accrual Termination Date, the Holders of the Class
A-Z Certificates, in an amount equal to, and pro rata in accordance
with, all Accrued Certificate Interest in respect of each such Class
of Certificates (A) for such Distribution Date (net, in the case of
the Class A-Z Certificates, of any Monthly Class A-Z Accrual Amount
for such Distribution Date) and, (B) to the extent not previously
paid or, in the case of the Class A-Z Certificates, added to the
Class Principal Balance thereof, for all prior Distribution Dates;
(ii) to distributions of principal to the Holders of the Class
A-1 Certificates, the Holders of the Class A-2 Certificates, the
Holders of the Class A-3 Certificates, the Holders of the Class A-4
Certificates and the Holders of the Class A-Z Certificates
(allocable among such Classes of Certificateholders as provided
below) in an amount (not to exceed the then aggregate of the Class
Principal Balances of such Classes of Certificates) equal to the
Principal Distribution Amount for such Distribution Date (such
distributions to be made on
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each Distribution Date until the Class Principal Balances of the
respective Classes of Class A Certificates are reduced to zero);
(iii) to distributions of interest to the Holders of the Class B
Certificates, in an amount equal to all Accrued Certificate Interest
in respect of such Class of Certificates for such Distribution Date
and, to the extent not previously paid, for all prior Distribution
Dates;
(iv) if the aggregate of the Class Principal Balances of the
Class A Certificates has been reduced to zero, to distributions of
principal to the Holders of the Class B Certificates, in an amount
(not to exceed the then Class Principal Balance of the Class B
Certificates) equal to the Principal Distribution Amount for such
Distribution Date (net of any portion thereof applied to retire the
Class A Certificates) (such distributions to be made on each
Distribution Date until the Class Principal Balance of the Class B
Certificates is reduced to zero); and
(v) if any portion of the Available Distribution Amount for such
Distribution Date remains, to distributions of such portion to the
Holders of the Class R-I Certificates.
Distributions of principal (including, in the case of the Class A-1,
Class A-2, Class A-3 and Class A-4 Certificates, distributions of the Monthly
Class A-Z Accrual Amount) made on any Distribution Date in respect of the Class
A-1, Class A-2, Class A-3 and Class A-4 and Class A-Z Certificates pursuant to
clause (ii) above shall be paid: first, to the Holders of the Class A-1
Certificates, until the Class Principal Balance of such Class of Certificates is
reduced to zero; second, to the Holders of the Class A-2 Certificates, until the
Class Principal Balance of such Class of Certificates is reduced to zero; third,
to the Holders of the Class A-3 Certificates, until the Class Principal Balance
of such Class of Certificates is reduced to zero; fourth, to the Holders of the
Class A-4 Certificates, until the Class Principal Balance of such Class of
Certificates is reduced to zero; and last, to the Holders of the Class A-Z
Certificates, until the Class Principal Balance of such Class of Certificates
(as the same shall have been increased by additions thereto of the Monthly Class
A-Z Accrual Amounts) is reduced to zero; provided that, notwithstanding the
foregoing, on and after any Class A Principal Distribution Cross-Over Date, and
in any event on the final Distribution Date in connection with a termination of
the Trust Fund as contemplated by Article X, such sequential distributions of
principal shall be disregarded, and the Trustee shall make the distributions of
principal on the respective Classes of Class A Certificates, on a pro rata
basis, in accordance with the respective Class Principal Balances of such
Classes of Class A Certificates outstanding immediately prior to such
Distribution Date, until the Class Principal Balance of each such Class has been
reduced to zero.
All distributions of interest made in respect of the Class S
Certificates on any Distribution Date pursuant to this Section 4.02(a), shall be
deemed to have been made in respect of the respective Class S REMIC III Regular
Interests, in an amount equal to, and pro rata in accordance with, the Accrued
Certificate Interest in respect of each such Class S REMIC III
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Regular Interest for such Distribution Date and, to the extent not previously
deemed paid, for all prior Distribution Dates.
(b) On each Distribution Date, the Trustee shall withdraw any
amounts then on deposit in the Collection Account that represent Prepayment
Premiums collected during or prior to the related Collection Period and shall
distribute such amounts separate from the Available Distribution Amount as
additional interest as follows: (i) 75% of such Prepayment Premiums shall be
distributed to the Holders of the Class S Certificates and (ii) 25% of such
Prepayment Premiums shall be distributed to the Holders of the Class(es) of the
Sequential Pay Certificates entitled to distributions in reduction of its
(their) Class Principal Balance(s) on such Distribution Date (pro rata based on
the relative amounts of such distributions of principal if there is more than
one such Class of Sequential Pay Certificates then entitled thereto).
All distributions of additional interest (in the form of Prepayment
Premiums) made in respect of the Class S Certificates on any Distribution Date
pursuant to this Section 4.02(b), shall be deemed to have been made in respect
of the respective Class S REMIC III Regular Interests, pro rata in accordance
with the respective amounts of Accrued Certificate Interest in respect of such
Class S REMIC III Regular Interest for such Distribution Date.
(c) On each Distribution Date on or prior to the Accrual Termination
Date, prior to any distributions being made on such Distribution Date, an amount
equal to the Monthly Class A-Z Accrual Amount for such Distribution Date shall
be added to the Class Principal Balance of the Class A-Z Certificates, to the
extent provided by operation of the definition of Class Principal Balance. No
Accrued Certificate Interest in respect of the Class A-Z Certificates that is so
added to the Class Principal Balance thereof shall thereafter be considered
payable as interest in respect of such Class of Certificates or otherwise be
considered unpaid for purposes of this Agreement.
(d) All distributions made with respect to each Class on each
Distribution Date shall be allocated pro rata among the outstanding Certificates
in such Class based on their respective Percentage Interests. Except as
otherwise provided below, all such distributions with respect to each Class on
each Distribution Date shall be made to the Certificateholders of the respective
Class of record at the close of business on the related Record Date and shall be
made by wire transfer of immediately available funds to the account of any such
Certificateholder at a bank or other entity having appropriate facilities
therefor, if such Certificateholder shall have provided the Trustee with wiring
instructions no less than five Business Days prior to the related Record Date
(which wiring instructions may be in the form of a standing order applicable to
all subsequent Distribution Dates) and is the registered owner of Certificates
the aggregate initial Certificate Principal Balance of which is at least
$2,500,000 or the initial Certificate Notional Amount of which is at least
$10,000,000, or otherwise by check mailed to the address of such
Certificateholder as it appears in the Certificate Register. The final
distribution on each Certificate will be made in like manner, but only upon
presentation and surrender of such Certificate at the offices of the Trustee or
such other location specified in the notice to Certificateholders of such final
distribution.
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(e) Each distribution with respect to a Book-Entry Certificate shall
be paid to DTC, as Holder thereof, and DTC shall be responsible for crediting
the amount of such distribution to the accounts of its Participants in
accordance with its normal procedures. Each Participant shall be responsible for
disbursing such distribution to the related Beneficial Holders that it
represents and to each Indirect Participant for which it acts as agent. Each
Indirect Participant shall be responsible for disbursing funds to the related
Beneficial Holders that it represents. None of the parties hereto shall have any
responsibility therefor except as otherwise provided by this Agreement or
applicable law. The Trustee and the Depositor shall perform their respective
obligations under the Letter of Representations among the Depositor, the Trustee
and the initial Clearing Agency, a copy of which Letter of Representations is
attached hereto as Exhibit G.
(f) The rights of the Certificateholders to receive distributions
from the proceeds of the Trust Fund in respect of their Certificates, and all
rights and interests of the Certificateholders in and to such distributions,
shall be as set forth in this Agreement. Neither the Holders of any Class of
Certificates nor any party hereto shall in any way be responsible or liable to
the Holders of any other Class of Certificates in respect of amounts properly
previously distributed on the Certificates.
(g) Except as otherwise provided in Sections 10.01 and 10.02,
whenever the Trustee expects that the final distribution with respect to any
Class of Certificates will be made on the next Distribution Date, the Trustee
shall, no later than five days after the related Determination Date, mail to
each Holder of record on such date of such Class of Certificates a notice to the
effect that:
(i) the Trustee expects that the final distribution with respect
to such Class of Certificates will be made on such Distribution Date
but only upon presentation and surrender of such Certificates at the
office of the Certificate Registrar or at such other location
therein specified, and
(ii) no interest shall accrue on such Certificates from and
after such Distribution Date.
Any funds not distributed to any Holder or Holders of Certificates of such Class
on such Distribution Date because of the failure of such Holder or Holders to
tender their Certificates shall, on such date, be set aside and held uninvested
in trust and credited to the account or accounts of the appropriate
non-tendering Holder or Holders. If any Certificates as to which notice has been
given pursuant to this Section 4.02(g) shall not have been surrendered for
cancellation within six months after the time specified in such notice, the
Trustee shall mail a second notice to the remaining non-tendering
Certificateholders to surrender their Certificates for cancellation in order to
receive the final distribution with respect thereto. If within one year after
the second notice all such Certificates shall not have been surrendered for
cancellation, the Trustee, directly or through an agent, shall take such steps
to contact the remaining non-tendering Certificateholders concerning the
surrender of their Certificates as it shall deem appropriate. The costs and
expenses of holding such funds in trust and of contacting such
Certificateholders
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following the first anniversary of the delivery of such second notice to the
non-tendering Certificateholders shall be paid out of such funds. No interest
shall accrue or be payable to any former Holder on any amount held in trust
pursuant to this paragraph. If all of the Certificates shall not have been
surrendered for cancellation by the second anniversary of the delivery of such
second notice, the Trustee shall distribute to the Class R-I Certificateholders
all unclaimed funds and other assets which remain subject hereto and shall have
no further liability for such funds or other unclaimed assets.
(h) Notwithstanding any other provision of this Agreement, the
Trustee shall comply with all federal withholding requirements respecting
payments to Certificateholders of interest or original issue discount that the
Trustee reasonably believes are applicable under the Code. The consent of
Certificateholders shall not be required for such withholding. If the Trustee
does withhold any amount from interest or original issue discount payments or
advances thereof to any Certificateholder pursuant to federal withholding
requirements, the Trustee shall indicate the amount withheld to such
Certificateholders.
(i) All distributions of Accrued Certificate Interest, principal and
additional interest (in the form of Prepayment Premiums) made in respect of each
Class of Sequential Pay Certificates on each Distribution Date pursuant to
Section 4.02(a) and/or Section 4.02(b) shall be deemed to have first been
distributed from REMIC II to REMIC III in respect of the REMIC II Regular
Interest with the same alphabetical and/or numerical designation as such Class
of Certificates; all distributions of Accrued Certificate Interest and
additional interest (in the form of Prepayment Premiums) made in respect of the
Class S Certificates on each Distribution Date pursuant to Section 4.02(a)
and/or Section 4.02(b), and allocable to Class S REMIC III Regular Interest
SA-1, shall be deemed to have first been distributed from REMIC II to REMIC III
in respect of REMIC II Regular Interest A-1; all distributions of Accrued
Certificate Interest and additional interest (in the form of Prepayment
Premiums) made in respect of the Class S Certificates on each Distribution Date
pursuant to Section 4.02(a) and/or Section 4.02(b), and allocable to Class S
REMIC III Regular Interest SA-2, shall be deemed to have first been distributed
from REMIC II to REMIC III in respect of REMIC II Regular Interest A-2; all
distributions of Accrued Certificate Interest and additional interest (in the
form of Prepayment Premiums) made in respect of the Class S Certificates on each
Distribution Date pursuant to Section 4.02(a) and/or Section 4.02(b), and
allocable to Class S REMIC III Regular Interest SA-3, shall be deemed to have
first been distributed from REMIC II to REMIC III in respect of REMIC II Regular
Interest A-3; all distributions of Accrued Certificate Interest and additional
interest (in the form of Prepayment Premiums) made in respect of the Class S
Certificates on each Distribution Date pursuant to Section 4.02(a) and/or
Section 4.02(b), and allocable to Class S REMIC III Regular Interest SA-4, shall
be deemed to have first been distributed from REMIC II to REMIC III in respect
of REMIC II Regular Interest A-4; all distributions of Accrued Certificate
Interest and additional interest (in the form of Prepayment Premiums) made in
respect of the Class S Certificates on each Distribution Date pursuant to
Section 4.02(a) and/or Section 4.02(b), and allocable to Class S REMIC III
Regular Interest SA-Z, shall be deemed to have first been distributed from REMIC
II to REMIC III in respect of REMIC II Regular Interest A-Z; and all
distributions of Accrued Certificate Interest and additional interest (in the
form of Prepayment Premiums) made in respect of the Class S Certificates on each
Distribution Date pursuant to
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Section 4.02(a) and/or Section 4.02(b), and allocable to Class S REMIC III
Regular Interest SB, shall be deemed to have first been distributed from REMIC
II to REMIC III in respect of REMIC II Regular Interest B. The actual
distributions made by the Trustee on each Distribution Date in respect of the
REMIC III Certificates pursuant to Section 4.02(a) or 4.02(b), as applicable,
shall be deemed to have been so made from the amounts deemed distributed in
respect of the REMIC II Regular Interests on such Distribution Date pursuant to
this Section 4.02(i). Notwithstanding the deemed distributions on the REMIC II
Regular Interests described in this Section 4.02(i), actual distributions of
funds from the Certificate Account shall be made only in accordance with Section
4.02(a) or 4.02(b), as applicable. On each Distribution Date on or prior to the
Accrual Termination Date, a portion of the Uncertificated Accrued Interest in
respect of REMIC II Regular Interest A-Z equal to the Monthly Class A-Z Accrual
Amount, if any, for such Distribution Date shall be added to the Uncertificated
Principal Balance of REMIC II Regular Interest A-Z in accordance with the
definition of "Uncertificated Principal Balance".
(j) All distributions: (i) of Uncertificated Accrued Interest deemed
to have been made in respect of the REMIC II Regular Interests on each
Distribution Date pursuant to Section 4.02(i) shall be deemed to have first been
distributed from REMIC I to REMIC II in respect of the various REMIC I Regular
Interests, in an amount equal to, and pro rata in accordance with, all
Uncertificated Accrued Interest in respect of each such REMIC I Regular Interest
for such Distribution Date and, to the extent not previously deemed paid, for
all prior Distribution Dates; (ii) of principal deemed to have been made in
respect of the REMIC II Regular Interests on each Distribution Date pursuant to
Section 4.02(i) shall be deemed to have first been distributed from REMIC I to
REMIC II in respect of the various REMIC I Regular Interests, pro rata in
accordance with, and to the extent of, with respect to each such REMIC I Regular
Interest, an amount equal to the excess, if any, of the Uncertificated Principal
Balance of such REMIC I Regular Interest outstanding immediately prior to such
Distribution Date, over the Stated Principal Balance of the related Mortgage
Asset that will be outstanding immediately following such Distribution Date; and
(iii) of additional interest (in the form of Prepayment Premiums) deemed to have
been made in respect of the REMIC II Regular Interests on such Distribution Date
pursuant to Section 4.02(i) shall be deemed to have first been distributed from
REMIC I to REMIC II, in the case of each such Prepayment Premium, in respect of
the REMIC I Regular Interest corresponding to the Mortgage Asset as to which
such Prepayment Premium was received.
SECTION 4.03. Statements to Certificateholders; Collection
Reports.
(a) On each Distribution Date, the Trustee shall forward by mail to
all of the Holders of each Class of REMIC III Regular Certificates a statement
(a "Distribution Date Statement") as to the distributions made on such
Distribution Date, based on information provided to it by the Master Servicer,
setting forth:
(i) the amount of the distribution, if any, on such Distribution
Date to the Holders of such Class of REMIC III Regular Certificates
in reduction of the Class Principal Balance thereof;
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(ii) the amount of the distribution, if any, on such
Distribution Date to the Holders of such Class of REMIC III Regular
Certificates allocable to Accrued Certificate Interest;
(iii) the amount of the distribution, if any, on such
Distribution Date to the Holders of such Class of REMIC III Regular
Certificates allocable to Prepayment Premiums;
(iv) the Available Distribution Amount for such Distribution
Date;
(v) the aggregate amount of Monthly Advances made in respect of
such Distribution Date, the aggregate amount of unreimbursed Monthly
Advances that had been outstanding at the close of business on the
related Determination Date and the aggregate amount of unpaid
Advance Interest in respect of such unreimbursed Monthly Advances at
the close of business on the related Determination Date;
(vi) the aggregate Stated Principal Balance of the Mortgage Pool
outstanding immediately before and immediately after such
Distribution Date, and the Stated Principal Balance of each Mortgage
Loan outstanding immediately before and immediately after such
Distribution Date;
(vii) the number, aggregate principal balance, weighted average
remaining term to maturity and weighted average Mortgage Rate of the
Mortgage Loans, collectively, and the principal balance, remaining
term to maturity and Mortgage Rate of each Mortgage Loan, in each
case as of the close of business on the related Determination Date;
(viii) the number, aggregate principal balance, weighted average
remaining term to maturity and weighted average GNMA Certificate
Rate of the GNMA Certificates, collectively, and the principal
balance, remaining term to maturity and GNMA Certificate Rate of
each GNMA Certificate, in each case as of the close of business on
the related Determination Date;
(ix) the number, aggregate principal balance, weighted average
remaining term to maturity and weighted average FHA Debenture Rate
of any FHA Debentures, collectively, and the principal balance,
remaining term to maturity and FHA Debenture Rate of each FHA
Debenture, if any, in each case as of the close of business on the
related Determination Date;
(x)(A) the number of Mortgage Loans and the aggregate amount of
Monthly Payments which were due but delinquent as of the Due Date in
(1) the month of the distribution, (2) the first month preceding
distribution and (3) the second month preceding distribution and (B)
the identity and outstanding principal
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balance of any Mortgage Loan assigned to the FHA for which final
settlement with the FHA has not been made, if any;
(xi) the status of any claims under the FHA Mortgage Insurance,
if any;
(xii) if applicable, the amount of such distribution allocable
to the proceeds of the purchase of a defaulted Mortgage Loan or the
purchase of FHA Debentures by the Majority Class B
Certificateholder, the Master Servicer or the Trustee pursuant to
Section 3.15;
(xiii) with respect to any Mortgage Loan that became a
Liquidated Loan during the related Collection Period (other than by
reason of a payment in full), (A) the related FHA project number,
(B) a brief description of the basis for the relevant Final Recovery
Determination, (C) the aggregate of all FHA Insurance Benefits
and/or Liquidation Proceeds and other amounts received in connection
with such liquidation (separately identifying the portion thereof
allocable to distributions on the Certificates), and (D) the amount
of any Realized Loss in connection with such liquidation;
(xiv) the Accrued Certificate Interest in respect of such Class
of REMIC III Regular Certificates for such Distribution Date and, in
the case of the Class A-Z Certificates, the Monthly Class A-Z
Accrual Amount, if any, for such Distribution Date;
(xv) any unpaid Accrued Certificate Interest in respect of such
Class of REMIC III Regular Certificates (other than, in the case of
the Class A-Z Certificates, the Monthly Class A-Z Accrual Amount)
after giving effect to the distributions made on such Distribution
Date;
(xvi) the Pass-Through Rate for such Class of REMIC III Regular
Certificates for such Distribution Date;
(xvii) any Principal Prepayment or other unscheduled collection
of principal received during the related Collection Period, the FHA
project number for the related Mortgage Loan or the GNMA pool number
for the related GNMA Certificate, as applicable, and the amount of
such prepayment or other collection of principal;
(xviii) the aggregate of all Realized Losses and Additional
Trust Fund Expenses, if any, incurred during the related Collection
Period;
(xix) the Class Principal Balance or Class Notional Amount, as
applicable, of each Class of REMIC III Regular Certificates
outstanding immediately before and immediately after such
Distribution Date, separately identifying any reduction therein
pursuant to Section 4.04;
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(xx) the Certificate Factor for each Class of REMIC III Regular
Certificates immediately following such Distribution Date;
(xxi) the aggregate amount of Advance Interest paid to the
Master Servicer or the Trustee during the related Collection Period;
and
(xxii) (A) the aggregate amount of servicing compensation paid
to the Master Servicer and, if payable directly out of the Trust
Fund without a reduction in the servicing compensation otherwise
payable to the Master Servicer, to each Sub-Servicer, during the
most recently ended calendar month, and (B) such other information
as the Trustee is required by the Code or other applicable law to
furnish to enable Certificateholders to prepare their tax returns.
Each Distribution Date Statement shall be accompanied by the corresponding
Collection Report delivered to the Trustee by the Master Servicer and, insofar
as any of the information to be provided pursuant to clauses (i) through (xxii)
above is adequately reflected in such Collection Report, such information need
not be repeated in the Distribution Date Statement; provided that the Trustee
shall only be obligated to deliver such Distribution Date Statement and the
corresponding Collection Report to the extent such Collection Report is
delivered to it by the Master Servicer in accordance with Section 4.03(b).
In the case of information to be furnished pursuant to clauses (i)
through (iii) above, the amounts shall be expressed as a dollar amount in the
aggregate for all Certificates of each applicable Class and per $1,000
denomination.
Within a reasonable period of time after the end of each calendar
year, the Trustee shall furnish to each Person who at any time during the
calendar year was a Holder of a REMIC III Regular Certificate a statement
containing the information set forth in clauses (i) through (iii) above as to
the applicable Class, aggregated for the portion of such calendar year that such
Person was a Holder. Such obligation of the Trustee shall be deemed to have been
satisfied to the extent that substantially comparable information shall be
provided by the Trustee pursuant to any requirements of the Code as from time to
time are in force.
On each Distribution Date, the Trustee shall forward to the
Depositor, to the Rating Agency, to each Seller, to each Holder of a Residual
Certificate and, in the case of reports regarding the respective Classes of
Book-Entry Certificates, to The Trepp Group (at 477 Madison Avenue, 18th Floor,
New York, New York 10022, or such other address as The Trepp Group may hereafter
designate), a copy of the reports forwarded to the Holders of the REMIC III
Regular Certificates on such Distribution Date and a statement setting forth the
amounts, if any, actually distributed with respect to each Class of Residual
Certificates on such Distribution Date.
Within a reasonable period of time after the end of each calendar
year, the Trustee shall furnish to each Person who at any time during the
calendar year was a Holder of a Residual Certificate a statement containing the
information provided pursuant to the previous paragraph in respect of
distributions on each Class of Residual Certificates and pursuant to clauses (i)
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through (iii) above in respect of distributions on each Class of REMIC III
Regular Certificates, aggregated for the portion of such calendar year that such
Person was a Holder. Such obligation of the Trustee shall be deemed to have been
satisfied to the extent that substantially comparable information shall be
provided by the Trustee pursuant to any requirements of the Code as from time to
time are in force.
If any Beneficial Holder of a Book-Entry Certificate does not
receive through the Clearing Agency Participants any of the statements, reports
and/or other written information described above in this Section 4.03(a) that it
would otherwise be entitled to if it were the Holder of a Definitive Certificate
evidencing its Ownership Interest in the related Class of Book-Entry
Certificates, then the Trustee shall mail or cause the mailing of such
statements, reports and/or other written information to such Beneficial Holder
upon such Beneficial Holder's request made in writing to the Corporate Trust
Office (accompanied by verification of such Beneficial Holder's Ownership
Interest, which may be in the form of a certification by such Beneficial
Holder). Such portion of such information as may be agreed upon by the Depositor
and the Trustee shall be available to any Person via facsimile transmission from
the Trustee. Any such Person may obtain an account number on the Trustee's
automated facsimile system and/or request a statement to be delivered to such
Person's facsimile number by calling (312) 904-2200 or such other number as the
Trustee may specify to the Depositor and Certificateholders.
(b) Not later than the close of business on each Determination Date,
the Master Servicer shall furnish to the Trustee and the Depositor (for receipt
by each not later than such second Business Day following each Determination
Date), by electronic transmission (or in such other form to which the Trustee or
the Depositor, as the case may be, and the Master Servicer may agree), with a
hard copy of such transmitted information to follow not later than the third
Business Day following such Determination Date, an accurate and complete report
(the "Collection Report") with respect to the related Distribution Date
containing the following information:
(i) with respect to each Mortgage Loan that was included in the
Trust Fund as of the commencement of the most recently ended
Collection Period, (A) the related project number, (B) the related
Mortgage Rate and Net Asset Rate, (C) the Stated Principal Balance
outstanding immediately before and to be outstanding immediately
after the related Distribution Date, (D) the date on which the final
payment is scheduled to be due, (E) the amount of the Monthly
Payment due on the Due Date in the most recently ended Collection
Period, (F) all related payment and/or collection activity since the
preceding Collection Report (or, in the case of the initial
Collection Report, since the Cut-off Date) relevant to the Trustee's
calculations of amounts to be distributed on the Certificates on the
related Distribution Date and the application of such amounts in
accordance with Section 1.02(b), (G) the delinquency status as of
such Determination Date and (H) whether such Mortgage Loan became a
Liquidated Loan during the most recently ended Collection Period
and, if so, a brief description thereof, and the amount of any
Realized Loss incurred in connection therewith;
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(ii) the information to be provided to Certificateholders on the
related Distribution Date pursuant to clauses (v), (vii), (x), (xi),
(xiii) and (xxii)(A) of Section 4.03(a);
(iii) the aggregate amount of the Prepayment Premiums received
during the most recently ended Collection Period;
(iv) such other information regarding the Mortgage Loans as the
Trustee may reasonably request to perform its duties hereunder; and
(v) to the extent the Depositor requests additional information
not required pursuant to the terms of this Agreement, the Trustee
may request such information in order to deliver the same to the
Depositor on the Distribution Date following the Depositor's
reasonable request therefor, to the extent such information is
readily available to the Master Servicer without material additional
cost or expense for which the Master Servicer will not be
reimbursed.
The Trustee may conclusively rely on the Collection Reports provided
to it by the Master Servicer. The Trustee shall not be responsible to recompute,
recalculate or verify the information provided to it by the Master Servicer,
unless such information is erroneous on its face, the Trustee has actual
knowledge that such information is erroneous or the Trustee is requested to do
so by the Depositor or a Certificateholder.
SECTION 4.04. Allocation of Realized Losses and Certain Other
Expenses and Shortfalls.
(a) If, following the distributions to be made in respect of the
Certificates pursuant to Section 4.02(a) on any Distribution Date, the aggregate
of the Stated Principal Balances of the Mortgage Assets that will be outstanding
immediately following such Distribution Date is less than the aggregate of the
Class Principal Balances of the respective Classes of Sequential Pay
Certificates, the Class Principal Balance of the Class B Certificates will be
reduced until such deficit (or such Class Principal Balance) is reduced to zero
(whichever occurs first). If any portion of such deficit remains at such time as
the Class Principal Balance of the Class B Certificates is reduced to zero, then
the respective Class Principal Balances of the remaining Classes of Sequential
Pay Certificates shall be reduced, pro rata in accordance with the relative
sizes of the then respective Class Principal Balances of such remaining Classes
of Sequential Pay Certificates, until such deficit (or each such Class Principal
Balance) is reduced to zero. Such reductions shall be deemed to be an allocation
of Realized Losses and Additional Trust Fund Expenses experienced by the Trust
Fund.
(b) If, following the distributions deemed to be made in respect of
the REMIC II Regular Interests pursuant to Section 4.02(i) on any Distribution
Date, the aggregate of the Stated Principal Balances of the Mortgage Assets that
will be outstanding immediately following such Distribution Date is less than
the aggregate of the Uncertificated Principal Balances of the respective REMIC
II Regular Interests, the Uncertificated Principal Balance of REMIC II Regular
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Interest B will be reduced until such deficit (or such Uncertificated Principal
Balance) is reduced to zero (whichever occurs first). If any portion of such
deficit remains at such time as the Uncertificated Principal Balance of REMIC II
Regular Interest B is reduced to zero, then the respective Uncertificated
Principal Balances of the remaining REMIC II Regular Interests shall be reduced,
pro rata in accordance with the relative sizes of the then respective
Uncertificated Principal Balances of such remaining REMIC II Regular Interests,
until such deficit (or each such Uncertificated Principal Balance) is reduced to
zero. Such reductions shall be deemed to be an allocation of the Realized Losses
and Additional Trust Fund Expenses experienced by the Trust Fund.
(c) On each Distribution Date, following the distributions deemed to
be made in respect of the REMIC I Regular Interests pursuant to Section 4.02(j),
the Uncertificated Principal Balance of each REMIC I Regular Interest shall be
reduced to equal the Stated Principal Balance of the related Mortgage Asset that
will be outstanding immediately following such Distribution Date. Such
reductions shall be deemed to be an allocation of the Realized Losses and
Additional Trust Fund Expenses experienced by the Trust Fund.
SECTION 4.05. Prepayment Interest Shortfalls.
In the event that any Mortgage Loan is the subject of a full or
partial Principal Prepayment prior to the Due Date for such Mortgage Loan in any
Collection Period and such full or partial Principal Prepayment is not
accompanied by a payment of interest on the amount thereof to such Due Date,
then, to the extent that such interest is not paid by the Mortgagor and
deposited in the Collection Account by the end of the Collection Period during
which such full or partial Principal Prepayment was made, the Master Servicer
shall deposit into the Collection Account, on or before the close of business on
the Business Day immediately preceding the related Distribution Date, out of its
own funds without any right of reimbursement, additional interest ("Compensating
Interest") in an amount equal to the resulting Prepayment Interest Shortfall.
Such payment of Compensating Interest shall be made regardless of whether the
Mortgage Note or Mortgage requires the payment of such interest or whether such
amount is recoverable from Liquidation Proceeds, Insurance Proceeds,
Condemnation Proceeds or otherwise; and the Master Servicer shall not be
entitled to any recovery or reimbursement from the Depositor, the Trustee, the
Trust Fund or the Certificateholders with respect to any payment of Compensating
Interest.
SECTION 4.06. Calculations.
The Trustee shall, provided it receives the necessary information
from the Master Servicer, be responsible for performing all calculations
necessary in connection with the actual and deemed distributions to be made
pursuant to Section 4.02 and Article X and the actual and deemed allocations of
losses and other shortfalls to be made pursuant to Section 4.04. The Trustee
shall calculate the Available Distribution Amount for each Distribution Date and
shall allocate such amount among Certificateholders in accordance with this
Agreement.
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SECTION 4.07. Use of Agents.
Each of the Master Servicer and the Trustee may at its own expense
utilize agents or attorneys-in-fact in performing any of its respective
obligations under this Article IV, but no such utilization shall relieve the
Master Servicer or the Trustee, as the case may be, from any of such
obligations, and the Master Servicer or the Trustee, as the case may be, shall
remain responsible for all acts and omissions of any such agent or
attorney-in-fact. The Master Servicer or the Trustee, as the case may be, shall
have all the limitations upon liability and all the indemnities for the actions
and omissions of any such agent or attorney-in-fact utilized thereby that it has
for its own actions hereunder pursuant to Article VII or VIII, as applicable,
hereof, and any such agent or attorney-in-fact shall have the benefit of all the
limitations upon liability and all the indemnities provided to the Master
Servicer under Section 7.03 or to the Trustee under Sections 9.01, 9.02 and
9.05, as the case may be.
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ARTICLE V
ADVANCES
SECTION 5.01. Monthly Advances by the Master Servicer.
(a) Subject to the conditions of this Article V, the Master
Servicer, as required below, shall, with respect to each Distribution Date, make
Monthly Advances to the Collection Account maintained by the Trustee, in an
amount (calculated as of the related Determination Date) equal to the aggregate
of the following: (i) all Monthly Payments (after adjustment of the interest
portion of each such Monthly Payment to the related Mortgage Rate less the
applicable Servicing Fee Rate) that were due on the Mortgage Loans (other than
FHA Assigned Mortgage Loans) on their respective Due Dates during the related
Collection Period but that were not received on or before the related
Determination Date; (ii) with respect to each FHA Assigned Mortgage Loan as to
which all reasonably expected FHA Insurance Benefits had not been received as of
the related Determination Date, an amount equal to the excess, if any, of (A)
one month's interest on the Stated Principal Balance of such Mortgage Loan
outstanding as of the related Determination Date (accrued at the lesser of (1)
the related Mortgage Rate less the applicable Servicing Fee Rate and (2) the
applicable FHA Debenture Rate less the applicable Servicing Fee Rate, and
calculated on the basis of a 360-day year consisting of twelve 30-day months),
over (B) any and all payments and other amounts received in respect of such
Mortgage Loan during the related Collection Period that represent previously
unadvanced interest (net of any portion thereof constituting Servicing Fees);
and (iii) with respect to each FHA Debenture as to which no Due Date occurred
during the related Collection Period, one month's interest on the Stated
Principal Balance of such FHA Debenture outstanding as of the related
Determination Date (accrued at the lesser of (1) the related Net Asset Rate plus
the Trustee Fee Rate and (2) the related FHA Debenture Rate less any applicable
Retained Yield Rate, and calculated on the basis of a 360-day year consisting of
twelve 30-day months).
(b) The Master Servicer shall be obligated to make any such Monthly
Advance only to the extent that such advance, in the reasonable and good faith
judgment of the Master Servicer would not, if made, constitute a Nonrecoverable
Advance. If the Master Servicer shall have determined that it is not obligated
to make the entire amount of any Monthly Advance because all or a lesser portion
of such Monthly Advance would, if made, constitute a Nonrecoverable Advance, the
Master Servicer shall deliver to the Trustee, not less than three Business Days
prior to the related Distribution Date, an Officers' Certificate setting forth
the reasons for such determination.
(c) In lieu of making all or a portion of the Monthly Advances for
any Distribution Date, the Master Servicer may utilize any such funds in the
Custodial Account that will constitute part of the Available Distribution Amount
for a future Distribution Date in discharge of its obligation to make any such
Monthly Advance and shall cause to be made in its records relating to the
Custodial Account an appropriate entry reflecting such use of funds. Any funds
so applied shall be replaced by the Master Servicer by deposit in the Custodial
Account no later than the Master Servicer Remittance Date for the applicable
future Distribution Date.
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The Master Servicer shall be entitled to be reimbursed from the Custodial
Account for all Monthly Advances of its own funds made pursuant to this Section
5.01 as and to the extent provided in Section 3.09.
SECTION 5.02. Monthly Advance Procedures.
(a) If, with respect to any Distribution Date, the Master Servicer
is required to make one or more Monthly Advances in accordance with Section
5.01, it shall make such Monthly Advances on or before 8 a.m., New York City
time, on the Business Day prior to the related Distribution Date (the "Monthly
Advance Date"). The Master Servicer shall notify the Trustee of the aggregate
amount of Monthly Advances for a Distribution Date on or before the third (but
in no event later than 12:00 noon New York City time on the second) Business Day
prior to such Distribution Date. Any such Monthly Advance shall be included with
the distribution to the Certificateholders on the related Distribution Date.
(b) In the event that the Master Servicer fails to make a Monthly
Advance required to be made pursuant to Section 5.01 on or before 3 p.m., New
York City time, on the Monthly Advance Date, the Trustee shall on or before 12
noon, New York City time, on the next succeeding Business Day provide to the
Master Servicer, by telecopy, written notice of such failure and the amount of
such failure and that continuance of such failure as of 5:00 p.m., New York City
time, on the related Distribution Date will be an Event of Default.
(c) If the Trustee does not receive, or there is not deposited in
the Collection Account, on or before 12 noon, New York City time, on the related
Distribution Date, the full amount of all Monthly Advances, if any, required to
be made in respect of such Distribution Date, then the Trustee shall (except to
the extent that it determines that any such Monthly Advance would, if made, be a
Nonrecoverable Advance) make the portion of such Monthly Advances that was
required to be, but not, made by the Master Servicer.
(d) If the Trustee is required to make any Monthly Advance pursuant
to Section 5.02(c), the Master Servicer shall promptly (and in any event, by
5:00 p.m., New York City time, on the related Distribution Date) reimburse the
Trustee for such Monthly Advance, at which time such Monthly Advance shall be
deemed to have been made by the Master Servicer; provided that, if the Master
Servicer shall not have so reimbursed the Trustee by 5:00 p.m., New York City
time, on the related Distribution Date, then without limiting the rights of the
Trustee or the Certificateholders pursuant to Section 8.02, the Trustee shall
terminate the Master Servicer in accordance with Section 8.02, in which case
such Monthly Advance shall be deemed to have been made by the Trustee in its
capacity as successor master servicer.
(e) In the event that the Master Servicer and the Trustee, in its
capacity as successor master servicer, have both made Advances which are
outstanding, repayment of the Advances made by the Trustee, in its capacity as
successor master servicer, shall have priority over repayment of the Advances
made by the Master Servicer.
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SECTION 5.03. Servicing Advances.
The Master Servicer shall make Servicing Advances as provided in
this Agreement; provided that, notwithstanding anything herein to the contrary,
the Master Servicer shall not make any particular Servicing Advance if and to
the extent that (i) the Master Servicer determines, in its good faith and
reasonable judgment, that such Servicing Advance would, if made, not be
specifically covered by the FHA Insurance Benefits with respect to the related
Mortgage Loan and (ii) the failure to make such Servicing Advance would not
adversely affect the ability to recover the full amount of FHA Insurance
Benefits in respect of the related Mortgage Loan; and provided further that,
following the occurrence of an FHA Insurance Nonexistence Event, the Master
Servicer shall not be required to make any Servicing Advance that the Master
Servicer determines, in its reasonable and good faith judgment, would, if made,
constitute a Nonrecoverable Advance. The Master Servicer will be entitled to be
reimbursed from the Custodial Account for Servicing Advances of its own funds
made pursuant to this Agreement pursuant to and subject to the limitations in
Section 3.09.
SECTION 5.04. Nonrecoverable Advances.
If the Master Servicer determines at any time that any Advance
previously made by it constitutes, or any proposed Advance, if made, would
constitute, a Nonrecoverable Advance, such determination shall be evidenced by
an Officer's Certificate of a Servicing Officer delivered to the Trustee and the
Depositor by the third Business Day following the next succeeding Determination
Date, but in no event (in the case of a Monthly Advance) later than three
Business Days preceding the Distribution Date on which such Advance would
otherwise be paid to Holders of the Certificates. Such Officer's Certificate
shall set forth such determination of nonrecoverability and the procedure and
considerations of the Master Servicer forming the basis of such determination
(which shall include, but not be limited to, an opinion of counsel with respect
to the occurrence of an FHA Insurance Nonexistence Event (in the case of a
Servicing Advance) and, with respect to any Mortgage Loan, financial or
non-financial information such as related income and expense statements, rent
rolls, occupancy status, property inspections, Master Servicer inquiries, an
appraisal performed by an MAI appraiser in accordance with MAI standards and
methodologies (the cost of which appraisal, if done externally, to be
recoverable as a Servicing Advance, subject to the limitations in Section 3.09)
or notification of material environmental concern). The Master Servicer shall
withdraw funds from the Custodial Account pursuant to and subject to the
limitations in Section 3.09 to reimburse itself for any Nonrecoverable Advance
it has made.
If the Trustee determines at any time that any Monthly Advance
previously made by it constitutes, or any proposed Monthly Advance, if made,
would constitute, a Nonrecoverable Advance, such determination shall be
evidenced by an Officer's Certificate of a Responsible Officer delivered to the
Depositor no later than the Distribution Date on which such Monthly Advance
would otherwise be paid to Holders of the Certificates. If the Trustee
determines that a proposed Monthly Advance, if made, would constitute a
Nonrecoverable Advance despite the fact that the Master Servicer had not
previously made any such determination, such Officer's Certificate shall set
forth such determination of nonrecoverability and the procedure
and consider-
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ations of the Trustee forming the basis of such determination (which shall
include, but not be limited to, with respect to any Mortgage Loan, an MAI
appraisal performed by a MAI appraiser in accordance with MAI standards and
methodologies (the cost of which appraisal, if done externally, to be
recoverable as a Servicing Advance, subject to the limitations in Section 3.09).
The Trustee, in determining whether or not a proposed Monthly Advance would be a
Nonrecoverable Advance, shall be subject to the standards for such a
determination which are applicable to the Master Servicer hereunder.
Notwithstanding the foregoing, and unless the circumstances under
which such a determination was made have materially changed or the basis for
such a determination has been proven to be erroneous, the Trustee shall be
entitled to conclusively rely upon any determination by the Master Servicer that
an Advance previously made or proposed to be made constitutes a Nonrecoverable
Advance.
SECTION 5.05. Interest on Advances.
Prior to the date on which Advance Interest in an aggregate amount
equal to the Advance Interest Cap has accrued (whether or not previously paid),
any unreimbursed Advance funded from the Master Servicer's or the Trustee's own
funds shall accrue interest on a daily basis, at a per annum rate equal to the
Reimbursement Rate in effect from time to time, from the date such Advance was
made until the date on which such Advance has been reimbursed (or, if earlier,
until Advance Interest in an aggregate amount equal to the Advance Interest Cap
has accrued, whether or not previously paid). Advance Interest accrued in
respect of any Advance shall be payable to the Master Servicer or the Trustee,
subject to the Advance Interest Cap, out of general collections on the Mortgage
Pool at any time on or after the date such Advance is reimbursed to the Master
Servicer or the Trustee.
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ARTICLE VI
THE CERTIFICATES
SECTION 6.01. The Certificates.
The Certificates shall be in substantially the forms set forth in
Exhibits A-1, A-2, A-3, A-4, A-5, A-6, A-7, A-8, A-9 and A-10 hereto, with such
appropriate insertions, omissions, substitutions and other variations as are
required or permitted by this Agreement or as may in the reasonable judgment of
the Trustee or the Depositor 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 securities exchange
on which any of the Certificates may be listed, or as may, consistent herewith,
be determined by the officers executing such Certificates, as evidenced by their
execution thereof.
The definitive Certificates shall be printed, typewritten,
lithographed or engraved or produced by any combination of these methods or may
be produced in any other manner permitted by the rules of any securities
exchange on which any of the Certificates may be listed, all as determined by
the officers executing such Certificates, as evidenced by their execution
thereof.
Each of the Class A-1, Class A-2, Class A-3, Class A-4 and Class A-Z
Certificates will be issued in fully-registered form only in minimum initial
Certificate Principal Balances as of the Closing Date of $10,000 and integral
multiples of $1,000 in excess thereof. Each of the Class S Certificates will be
issued in fully-registered form only in minimum initial Certificate Notional
Amounts as of the Closing Date of $100,000 and in integral multiples of $1,000
in excess thereof, except for one Class S Certificate evidencing the sum of an
authorized denomination thereof and the remainder of the Initial Class Notional
Amount of such Class of Certificates. Each of the Class B Certificates will be
issued in fully-registered form only in minimum initial Certificate Principal
Balances of $250,000 and integral multiples of $1,000 in excess thereof, except
that one Class B Certificate may be issued in an amount (whether greater or less
than the minimum denomination) such that the denomination of such Class B
Certificate and the aggregate denomination of all other outstanding Class B
Certificates equal the Initial Class Principal Balance of the Class B
Certificates. Each of the Residual Certificates will be issued in
fully-registered form only in minimum Percentage Interests of no less than 20%.
The Certificates shall be executed by manual or facsimile signature
on behalf of the Trustee by a Responsible Officer. Certificates bearing the
manual or facsimile signatures of individuals who were, at the time when such
signatures were affixed, authorized to sign on behalf of the Trustee shall bind
the Trustee, notwithstanding that such individuals or any of them have ceased to
be so authorized prior to the authentication and delivery of such Certificates
or did not hold such offices at the date of such Certificate. No Certificate
shall be entitled to any benefit under this Agreement, or be valid for any
purpose, unless there appears on such Certificate a certificate of
authentication executed by the Trustee by manual signature, and such certificate
of
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authentication upon any Certificate shall be conclusive evidence, and the only
evidence, that such Certificate has been duly authenticated and delivered
hereunder. All Certificates shall be dated the date of their authentication.
SECTION 6.02. Registration of Transfer and Exchange of
Certificates.
(a) The Trustee shall maintain, or cause to be maintained, a
Certificate Register in which, subject to such reasonable regulations as it may
prescribe, the Trustee shall provide for the registration of Certificates and of
transfers and exchanges of Certificates as herein provided. Upon surrender for
registration of transfer of any Certificate, subject to the other subsections of
this Section 6.02, the Trustee shall execute, authenticate and deliver, in the
name of the designated Transferee or Transferees, one or more new Certificates
of the same Class in authorized denominations and evidencing a like aggregate
Percentage Interest.
(b) At the option of a Certificateholder, Certificates may be
exchanged for other Certificates of the same Class in authorized denominations
and evidencing a like aggregate Percentage Interest, upon surrender of the
Certificates to be exchanged at the office or agency of the Trustee set forth in
Section 9.11. Whenever any Certificates are so surrendered for exchange, the
Trustee shall execute, authenticate and deliver the Certificates which the
Certificateholder making the exchange is entitled to receive. Every Certificate
presented or surrendered for registration of transfer or exchange shall be
accompanied by a written instrument of transfer in form satisfactory to the
Trustee duly executed by the Holder thereof or his attorney duly authorized in
writing.
(c) No service charge to the Certificateholders shall be made for
any registration of transfer or exchange of Certificates, but payment of a sum
sufficient to cover any tax or governmental charge may be imposed in connection
with any transfer or exchange of Certificates.
(d) All Certificates surrendered for registration of transfer and
exchange shall be canceled and subsequently destroyed by the Trustee in
accordance with the Trustee's customary procedures.
(e) No transfer of any Non-Registered Certificate shall be made
unless that transfer is made pursuant to an effective registration statement
under the Securities Act and effective registration or qualification under
applicable state securities laws, or is made in a transaction which does not
require such registration or qualification. In the event that a transfer of any
Non-Registered Certificate (other than a transfer by the Depositor or any
Affiliate thereof) is to be made without registration under the Securities Act,
the Trustee shall require, in order to assure compliance with such laws: (i) if
such transfer is purportedly being made based on Rule 144A, that the
Certificateholder desiring to effect the transfer and such Certificateholder's
prospective Transferee each certify to the Trustee in writing, substantially in
the forms attached hereto as Exhibit D-1 and Exhibit D-2, respectively, the
facts surrounding the transfer; and (ii) in all other cases, that it and the
Depositor receive an Opinion of Counsel reasonably satisfactory to the Trustee
and the Depositor that such transfer may be made without such registration,
which
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Opinion of Counsel shall not be required to be an expense of the Depositor, the
Trustee or the Trust Fund. Neither the Depositor nor the Trustee is obligated to
register or qualify any Non-Registered Certificate under the Securities Act or
any other securities law or to take any action not otherwise required under this
Agreement to permit the transfer of such Certificate without registration or
qualification. Any Holder desiring to effect a transfer of a Non-Registered
Certificate shall, and does hereby agree to, indemnify the Trustee and the
Depositor against any liability that may result if the transfer is not so
exempt, or is not made in accordance with federal and state laws.
(f) No transfer of a Subordinate Certificate or any interest therein
shall be made to any Plan, any Person acting, directly or indirectly, on behalf
of any such Plan or any Person acquiring such Certificates or interests therein
with "plan assets" of a Plan within the meaning of the Department of Labor
regulation promulgated at 29 C.F.R. ss.2510.3-101, unless the prospective
Transferee provides the Trustee, the Depositor and the Master Servicer with
either (i) an Opinion of Counsel acceptable to and in form and substance
satisfactory to the Trustee, the Depositor and the Master Servicer to the effect
that the purchase of Subordinate Certificates or interests therein is
permissible under applicable law, will not constitute or result in any
prohibited transaction under ERISA or Section 4975 of the Code and will not
subject the Trustee, the Depositor or the Master Servicer to any obligation or
liability (including obligations or liabilities under ERISA or Section 4975 of
the Code) in addition to those undertaken in this Agreement, which Opinion of
Counsel shall not be an expense of the Trustee, the Depositor, the Master
Servicer or the Trust Fund or (ii) in lieu of such Opinion of Counsel, a
certification in the form of Exhibit E to this Agreement, on which the Trustee,
the Depositor and the Master Servicer may rely upon without further inquiry or
investigation.
(g) Additional restrictions on transfers of the Residual
Certificates to Disqualified Organizations are set forth below:
(i) Each Person who has or who acquires any Ownership Interest
in a Residual Certificate shall be deemed by the acceptance or acquisition
of such Ownership Interest to have agreed to be bound by the following
provisions and to have irrevocably authorized the Trustee or its designee
under clause (iii)(A) below to deliver payments to a Person other than
such Person and to negotiate the terms of any mandatory sale under clause
(iii)(B) below and to execute all instruments of transfer and to do all
other things necessary in connection with any such sale. The rights of
each Person acquiring any Ownership Interest in a Residual Certificate are
expressly subject to the following provisions:
(A) Each Person holding or acquiring any Ownership
Interest in a Residual Certificate shall be other than a
Disqualified Organization and shall promptly notify the Trustee of
any change or impending change in its status as other than a
Disqualified Organization.
(B) In connection with any proposed transfer of any
Ownership Interest in a Residual Certificate to a U.S. Person, the
Trustee shall require
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delivery to it, and shall not register the Transfer of a Residual
Certificate until its receipt of (1) an affidavit and agreement (a
"Transferee Affidavit and Agreement") from the proposed Transferee,
substantially in the form attached hereto as Exhibit F-1,
representing and warranting, among other things, that it is not a
non-U.S. Person, that such Transferee is other than a Disqualified
Organization, that it is not acquiring its Ownership Interest in a
Residual Certificate that is the subject of the proposed Transfer as
a nominee, trustee or agent for any Person who is not other than a
Disqualified Organization, that for so long as it retains its
Ownership Interest in a Residual Certificate, it will endeavor to
remain a Permitted Transferee, and that it has reviewed the
provisions of this Section 6.02(g) and agrees to be bound by them,
and (2) a certificate from the Holder wishing to transfer a Residual
Certificate, substantially in the form attached hereto as Exhibit
F-2, representing and warranting, among other things, that no
purpose of the proposed Transfer is to allow such Holder to impede
the assessment or collection of tax.
(C) Notwithstanding the delivery of a Transferee
Affidavit and Agreement by a proposed Transferee under clause (B)
above, if a Responsible Officer of the Trustee has actual knowledge
that the proposed Transferee is not a Permitted Transferee, no
Transfer of an Ownership Interest in a Residual Certificate to such
proposed Transferee shall be effected.
(D) Each Person holding or acquiring any Ownership
Interest in a Residual Certificate agrees, by holding or acquiring
such Ownership Interest, (1) to require a Transferee Affidavit and
Agreement from any other Person to whom such Person attempts to
Transfer its Ownership Interest and to provide to the Trustee a
certificate substantially in the form attached hereto as Exhibit
F-2, and (2) to obtain the express written consent of the Depositor
prior to any Transfer of such Ownership Interest, which consent may
be withheld in the Depositor's sole discretion.
(ii) The Trustee shall register the Transfer of any Residual
Certificate only if it shall have received the Transferee Affidavit and
Agreement, a certificate of the Holder effecting such Transfer
substantially in the form attached hereto as Exhibit F-2 and all of such
other documents as shall have been reasonably required by the Trustee as a
condition to such registration.
(iii) (A) If any Disqualified Organization shall become a
Holder of a Residual Certificate, then the last preceding Holder
that was other than a Disqualified Organization shall be restored,
to the extent permitted by law, to all rights and obligations as
Holder thereof retroactive to the date of registration of such
transfer of such Residual Certificate. If any non-U.S. Person shall
become a Holder of a Residual Certificate, then the last preceding
Holder that is a U.S. Person shall be restored, to the extent
permitted by law, to all rights and obligations as Holder thereof
retroactive to the date of registration of the transfer
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to such non-U.S. Person of such Residual Certificate. If a transfer
of a Residual Certificate is disregarded pursuant to the provisions
of Treasury Regulations Section 1.860E-1 or Section 1.860G-3, then
the last preceding Holder that was other than a Disqualified
Organization shall be restored, to the extent permitted by law, to
all rights and obligations as Holder thereof retroactive to the date
of registration of such transfer of such Residual Certificate. The
Trustee shall be under no liability to any Person for any
registration of transfer of a Residual Certificate that is in fact
not permitted by this Section 6.02(g) or for making any payments due
on such Certificate to the Holder thereof or for taking any other
action with respect to such Holder under the provisions of this
Agreement.
(B) If any purported Transferee of a Residual
Certificate shall become a Holder of a Residual Certificate in
violation of the restrictions in this Section 6.02(g) and to the
extent that the retroactive restoration of the rights of the Holder
of such Residual Certificate as described in clause (iii)(A) above
shall be invalid, illegal or unenforceable, then the Trustee shall
have the right, without notice to the Holder or any prior Holder of
such Residual Certificate, to sell such Residual Certificate to a
purchaser selected by the Trustee on such terms as the Trustee may
choose. Such purported Transferee shall promptly endorse and deliver
a Residual Certificate in accordance with the instructions of the
Trustee. Such purchaser may be the Trustee itself or any affiliate
of the Trustee. The proceeds of such sale, net of the commissions
(which may include commissions payable to the Trustee or its
affiliates), expenses and taxes due, if any, shall be remitted by
the Trustee to such purported Transferee. The terms and conditions
of any sale under this clause (iii)(B) shall be determined in the
sole discretion of the Trustee, and the Trustee shall not be liable
to any Person having an Ownership Interest or a purported Ownership
Interest in a Residual Certificate as a result of its exercise of
such discretion.
(iv) The Trustee shall make available all information
reasonably available to it that is necessary to compute any tax imposed
(A) as a result of the transfer of an Ownership Interest in a Residual
Certificate to any Person who is a Disqualified Organization, including
the information regarding "excess inclusions" of such Residual Certificate
required to be provided to the Internal Revenue Service and certain
Persons as described in Treasury Regulation Section 1.860D-1(b)(5), and
(B) as a result of any regulated investment company, real estate
investment trust, common trust fund, partnership, trust, estate or
organizations described in Section 1381 of the Code having as among its
record holders at any time any Person who is a Disqualified Organization.
Reasonable compensation for providing such information may be required by
the Trustee from such Person.
(v) The provisions of this Section 6.02(g) set forth prior to
this Section (v) may be modified, added to or eliminated by the Trustee,
provided that there shall have been delivered to the Trustee the
following:
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(A) written notification from the Rating Agency to the
effect that the modification, addition to or elimination of such
provisions will not cause the Rating Agency to downgrade any of its
then-current ratings of the Rated Certificates; and
(B) an Opinion of Counsel (the cost of which shall be an
expense of the Person requesting such modification, addition or
elimination), in form and substance satisfactory to the Trustee, to
the effect that such modification, addition to or elimination of
such provisions will not cause any of REMIC I, REMIC II or REMIC III
to cease to qualify as a REMIC and will not create a risk that (1)
any such REMIC may be subject to an entity-level tax caused by the
transfer of a Residual Certificate to a Person which is a
Disqualified Organization or (2) a Certificateholder or another
Person will be subject to a REMIC-related tax caused by the transfer
of the applicable Residual Certificate to a Person which is a
Disqualified Organization.
(h) The Trustee shall have no liability to the Trust Fund arising
from a transfer of any Certificate in reliance upon a certification, ruling or
Opinion of Counsel described in this Section 6.02; provided, however, that the
Trustee shall not register the transfer of any Residual Certificate if it has
actual knowledge that the proposed Transferee does not meet the qualifications
of a permitted Holder of a Residual Certificate as set forth in this Section
6.02.
(i) In order to preserve the exemption for resales and transfers
provided by Rule 144A, the Depositor shall provide (and the Master Servicer and
the Trustee shall use their reasonable efforts to cooperate with the Depositor
in providing) to any Holder of a Non-Registered Certificate and any prospective
purchaser designated by such Holder, upon request of such Holder or such
prospective purchaser, such information required by Rule 144A as will enable the
resale of such Certificate to be made pursuant to Rule 144A. However, the
Depositor shall not be required to provide with respect to any Certificate more
information than is required by Rule 144A as of the date such Certificate is
issued but may elect to do so if necessary under subsequent revisions of Rule
144A. In addition, the Depositor may from time to time modify the foregoing
restrictions on resale and other transfers, without the consent but upon notice
to the Holders of the Certificates, in order to reflect any amendment to Rule
144A or change in the interpretation thereof or practices thereunder if the
Depositor shall have received an Opinion of Counsel to the effect that such
amendment or supplement is necessary or appropriate.
SECTION 6.03. Mutilated, Destroyed, Lost or Stolen Certificates.
If (a) any mutilated Certificate is surrendered to the Trustee, or
the Trustee receives evidence to its satisfaction of the destruction, loss or
theft of any Certificate, and (b) there is delivered to the Master Servicer and
the Trustee such security or indemnity as may be required by them to save each
of them harmless, 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
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Certificate, a new Certificate of like tenor and interest in the Trust
Fund. In connection with the issuance of any new Certificate under this Section
6.03, the Trustee may require the payment of a sum sufficient to cover any tax
or other governmental charge that may be imposed in relation thereto and any
other expenses (including the fees and expenses of the Trustee) connected
therewith. Any replacement Certificate issued pursuant to this Section 6.03
shall constitute complete and indefeasible evidence of ownership in the Trust
Fund, as if originally issued, whether or not the lost, stolen or destroyed
Certificate shall be found at any time.
SECTION 6.04. Persons Deemed Owners.
Prior to due presentment of a Certificate for registration of
transfer, the Depositor, the Master Servicer, the Trustee and any agent of the
Depositor, the Master Servicer, or the Trustee may treat the person in whose
name any Certificate is registered as the owner of such Certificate for the
purpose of receiving distributions as provided in this Agreement and for all
other purposes whatsoever, and none of the Depositor, the Master Servicer, the
Trustee or any agent of the Depositor, the Master Servicer, or the Trustee shall
be affected by any notice to the contrary.
SECTION 6.05. Access to List of Certificateholders' Names and
Addresses.
(a) If three or more Certificateholders (i) request in writing from
the Trustee a list of the names and addresses of Certificateholders, (ii) state
that such Certificateholders desire to communicate with other Certificateholders
with respect to their rights under this Agreement or under the Certificates and
(iii) provide a copy of the communication which such Certificateholders propose
to transmit, then the Trustee shall, within ten Business Days after the receipt
of such request, afford such Certificateholders access during normal business
hours to a current list of the Certificateholders. The expense of providing any
such information requested by a Certificateholder shall be borne by the
Certificateholders requesting such information and shall not be borne by the
Trustee or the Trust Fund. Every Certificateholder, by receiving and holding a
Certificate, agrees that the Trustee shall not be held accountable by reason of
the disclosure of any such information as to the list of the Certificateholders
hereunder, regardless of the source from which such information was derived.
(b) The Master Servicer, so long as it is the master servicer
hereunder, and the Depositor shall have unlimited access to a list of the names
and addresses of the Certificateholders, which list shall be provided by the
Trustee promptly upon the request of the Master Servicer.
SECTION 6.06. Maintenance of Office or Agency.
In addition to its Corporate Trust Office, the Trustee will maintain
or cause to be maintained at its expense a presenting office in New York, New
York where Certificates may be surrendered for registration of transfer or
exchange and where notices and demands to or upon the Trustee in respect of the
Certificates and this Agreement may be served. The Trustee initially designates
IBJ Schroeder Trust Bank, Stock Transfer Department, One State Street Plaza, New
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York, New York 10015, for such purpose. The Trustee will give prompt written
notice to the Certificateholders of any change in the location of any such
office or agency.
SECTION 6.07. Book-Entry Certificates.
Notwithstanding the foregoing, upon original issuance, each Class of
Book-Entry Certificates shall be issued in the form of one or more typewritten
Certificates representing such Certificates, to be held by DTC or any successor
Clearing Agency or, if appointed to hold such Certificates as provided below,
the Book-Entry Custodian. Each Class of Book-Entry Certificates shall initially
be registered on the Certificate Register in the name of Cede & Co., the nominee
of DTC, as the initial Clearing Agency, and no Beneficial Holder will receive a
definitive certificate representing such Beneficial Holder's interest in the
Book-Entry Certificates, except as provided in Section 6.09. The Trustee is
hereby initially appointed as the Book-Entry Custodian and hereby agrees to act
as such in accordance herewith and in accordance with the agreement that it has
with DTC authorizing it to act as such. Unless and until definitive, fully
registered Certificates ("Definitive Certificates") have been issued to the
Beneficial Holders pursuant to Section 6.09:
(a) the provisions of this Section 6.07 shall be in full force
and effect with respect to the Book-Entry Certificates;
(b) the Depositor may deal with the Book-Entry Custodian and
the Clearing Agency for all purposes with respect to the Book-Entry
Certificates (including the making of distributions on such Certificates);
(c) to the extent that the provisions of this Section 6.07
conflict with any other provisions of this Agreement, the provisions of
this Section 6.07 shall control; and
(d) the rights of the Beneficial Holders of the Book-Entry
Certificates shall be exercised only through the Clearing Agency and the
Participants and shall be limited to those established by law and
agreements between such Beneficial Holders and the Clearing Agency and/or
the Participants. Pursuant to the Depository Agreement, unless and until
Definitive Certificates are issued pursuant to Section 6.09, the initial
Clearing Agency will make book-entry transfers among the Participants and
receive and transmit distributions of principal and interest on the
related Certificates to such Participants.
For purposes of any provision of this Agreement requiring or
permitting actions with the consent of, or at the direction of, Holders of the
Book-Entry Certificates entitled to a specified percentage of the aggregate
Voting Rights allocated to such Certificates, such direction or consent may be
given by the Clearing Agency at the direction of Beneficial Holders owning such
Certificates entitled to the requisite aggregate percentage of Voting Rights
allocated to such Certificates. The Clearing Agency may take conflicting actions
with respect to the Book-Entry Certificates to the extent that such actions are
taken on behalf of the Beneficial Holders.
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SECTION 6.08. Notices to Clearing Agency.
Whenever notice or other communication to the Holders of the
Book-Entry Certificates is required under this Agreement, unless and until
Definitive Certificates shall have been issued to the related Beneficial Holders
pursuant to Section 6.09, the Trustee shall give all such notices and
communications specified herein to be given to Holders of the Book-Entry
Certificates to the Clearing Agency which shall give such notices and
communications to the related Participants in accordance with its applicable
rules, regulations and procedures.
SECTION 6.09. Definitive Certificates.
If (a) the Depositor advises the Trustee in writing that the
Clearing Agency is no longer willing or able to properly discharge its
responsibilities under the Depository Agreement with respect to the Book-Entry
Certificates and the Trustee or the Depositor is unable to locate a qualified
successor, (b) the Depositor, at its option, advises the Trustee in writing that
it elects to terminate the book-entry system with respect to the Book-Entry
Certificates through the Clearing Agency or (c) after the occurrence of an Event
of Default, Beneficial Owners of Book-Entry Certificates entitled to a majority
of the Voting Rights allocated to each Class of the Book-Entry Certificates
advise the Clearing Agency through its Participants in writing (and the Clearing
Agency in turn advises the Trustee) that the continuation of a book-entry system
with respect to such Certificates through the Clearing Agency is no longer in
the best interests of the Beneficial Holders of such Certificates, the Trustee
shall notify all Holders of such Certificates of the occurrence of any such
event and the availability of Definitive Certificates. Upon surrender to the
Trustee of such Certificates by the Clearing Agency, accompanied by registration
instructions from the Clearing Agency for registration, the Trustee shall
authenticate and deliver the Definitive Certificates in respect thereof. Neither
the Depositor nor the Trustee shall be liable for any delay in delivery of such
instructions and may conclusively rely on, and shall be protected in relying on,
such instructions. Upon the issuance of Definitive Certificates, all references
herein to obligations imposed upon or to be performed by the Clearing Agency
shall be deemed to be imposed upon and performed by the Trustee, to the extent
applicable with respect to such Definitive Certificates, and the Trustee shall
recognize the Holders of such Definitive Certificates as Certificateholders
hereunder.
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ARTICLE VII
THE DEPOSITOR, EACH SELLER AND THE MASTER SERVICER
SECTION 7.01. Liabilities of the Depositor, each Seller and the
Master Servicer.
The Depositor, Greystone Funding, Daiwa Finance and the Master
Servicer shall each be liable in accordance herewith only to the extent of the
obligations specifically and respectively imposed upon and undertaken by them
herein.
SECTION 7.02. Merger or Consolidation of the Depositor, each
Seller or the Master Servicer.
The Depositor, Greystone Funding, Daiwa Finance and the Master
Servicer will each do or cause to be done all things necessary to preserve and
keep in full force and effect its existence, rights and franchises (charter and
statutory) and will each obtain and preserve its qualification to do business as
a foreign corporation in each jurisdiction in which such qualification is or
shall be necessary to protect the validity and enforceability of this Agreement,
or any of the Mortgage Assets and to perform its respective duties under this
Agreement.
Any Person into which the Depositor, Greystone Funding, Daiwa
Finance or the Master Servicer may be merged or consolidated, or any Person
resulting from any merger or consolidation to which the Depositor, Greystone
Funding, Daiwa Finance or the Master Servicer shall be a party, or any Person
succeeding to the business of the Depositor, Greystone Funding, Daiwa Finance or
the Master Servicer, shall be the successor of the Depositor, Greystone Funding,
Daiwa Finance or the Master Servicer, as the case may be, hereunder, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding; provided,
however, that the successor or surviving Person to the Master Servicer shall be
an FHA-Approved Mortgagee.
Notwithstanding anything else in this Section 7.02 or in Section
7.04 hereof to the contrary, the Master Servicer may assign its rights and
delegate its duties and obligations under this Agreement; provided, however,
that the Master Servicer gives the Depositor and the Trustee notice of such
assignment; and provided further, that such purchaser or transferee accepting
such assignment and delegation shall be an institution that is an FHA-Approved
Mortgagee in good standing, which has a net worth of at least $5,000,000, and
which is willing to service the Mortgage Loans and executes and delivers to the
Depositor, Greystone Funding, Daiwa Finance and the Trustee an agreement
accepting such delegation and assignment, which contains an assumption by such
Person of the rights, powers, duties, responsibilities, obligations and
liabilities of the Master Servicer, with like effect as if originally named as a
party to this Agreement; and provided further, that the Rating Agency
acknowledges that its ratings of the Rated Certificates in effect immediately
prior to such assignment and delegation will not be qualified, withdrawn or
reduced as a result of such assignment and delegation. In the case of any such
assignment and delegation, the Master Servicer shall be released from its
obligations under this Agreement,
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except that the Master Servicer shall remain liable for all liabilities and
obligations incurred by it as Master Servicer hereunder prior to the
satisfaction of the conditions to such assignment and delegation set forth in
the preceding sentence.
SECTION 7.03. Limitation on Liability of the Depositor, the
Master Servicer and Others.
None of the Depositor, the Master Servicer or any of the directors,
officers, employees or agents of the Depositor or the Master Servicer shall be
under any liability to the Certificateholders for any action taken or for
refraining from the taking of any action in good faith pursuant to this
Agreement, or for errors in judgment; provided, however, that this provision
shall not protect the Depositor or the Master Servicer against any breach of
representations or warranties made by it herein or protect the Depositor or the
Master Servicer or any such person from any liability which would otherwise be
imposed by reasons of willful misfeasance, bad faith or negligence in the
performance of its duties hereunder or by reason of reckless disregard of
obligations and duties hereunder. The Depositor, the Master Servicer and any
director, officer, employee or agent of the Depositor or the Master Servicer may
rely in good faith on any document of any kind prima facie properly executed and
submitted by any Person respecting any matters arising hereunder and, in the
case of any questions arising with respect to the REMIC status of any of REMIC
I, REMIC II or REMIC III, on an Opinion of Counsel from Independent Counsel with
substantial experience in such matters. The Depositor, the Master Servicer and
any director, officer, employee or agent of the Depositor or the Master Servicer
shall be indemnified by the Trust Fund and held harmless against any loss,
liability or expense incurred in connection with any legal action relating to
this Agreement or the Certificates, other than any loss, liability or expense
incurred by reason of a breach of any representations, warranties or covenants
of any such party hereto or by reason of willful misfeasance, bad faith or
negligence in the performance of duties hereunder or by reason of reckless
disregard of obligations and duties hereunder. Neither the Depositor nor the
Master Servicer shall be under any obligation to appear in, prosecute or defend
any legal action that is not incidental to their respective duties hereunder and
which in its opinion may involve it in any expense or liability; provided,
however, that each of the Depositor and the Master Servicer may in its
discretion undertake any such action that it may deem necessary or desirable in
respect of this Agreement and the rights and duties of the parties hereto and
interests of the Trustee and the Certificateholders hereunder. In such event,
the legal expenses and costs of such action and any liability resulting
therefrom shall be expenses, costs and liabilities of the Trust Fund, and the
Depositor or the Master Servicer, as the case may be, shall be entitled to be
reimbursed therefor out of the Custodial Account.
SECTION 7.04. Master Servicer Not to Resign.
The Master Servicer shall not resign from the obligations and duties
imposed upon it hereunder except upon determination that such obligations and
duties hereunder are no longer permissible under applicable law. Any such
determination permitting the resignation of the Master Servicer under this
Section 7.04 shall be evidenced by an Opinion of Counsel to such effect
delivered to the Trustee. The Master Servicer shall give notice of any proposed
resignation to the Trustee, the Depositor, the Certificateholders and the Rating
Agency. No such resignation
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by the Master Servicer shall become effective until the Trustee or a successor
servicer shall have assumed the Master Servicer's responsibilities and
obligations in accordance with Section 8.02 hereof.
SECTION 7.05. Errors and Omissions Insurance; Fidelity Bonds.
The Master Servicer shall maintain with responsible companies, and
at its own expense, a fidelity bond and an errors and omissions insurance policy
with broad coverage on all officers, employees or other persons acting in any
capacity enabling such persons to handle funds, money, documents or papers
relating to the Mortgage Loans ("Master Servicer Employees"). Any such fidelity
bond and errors and omissions insurance shall be in the form of the Banker's
Blanket Bond and shall protect and insure the Master Servicer against losses,
including forgery, theft, embezzlement, fraud, errors and omissions and
negligent acts of such Master Servicer Employees. The Master Servicer is
self-insured for losses in connection with the release or satisfaction of a
Mortgage Loan without having obtained payment in full of the indebtedness
secured thereby by Master Servicer Employees. No provision of this Section 7.05
requiring such fidelity bond and errors and omissions insurance shall diminish
or relieve the Master Servicer from its duties and obligations as set forth in
this Agreement. The minimum amount of coverage under any such bond and insurance
policy shall be $1,000,000. Upon request of any Certificateholder, the Master
Servicer shall cause to be delivered to such Certificateholder a certified true
copy of such fidelity bond and insurance policy and a statement from the surety
and the insurer that such fidelity bond and insurance policy shall in no event
be terminated without 15 days' prior written notice to the Trustee.
SECTION 7.06. Depositor, each Seller and Master Servicer May Own
Certificates.
Each of the Depositor, Greystone Funding, Daiwa Finance and the
Master Servicer in its individual or any other capacity may become the owner or
pledgee of Certificates with the same rights as it would have if it were not the
Depositor, a Seller or the Master Servicer.
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ARTICLE VIII
DEFAULT
SECTION 8.01. Events of Default.
"Event of Default", wherever used herein, means any one of the
following events (whatever reason for such Event of Default and whether it shall
be voluntary or involuntary or be effected by operation of law or pursuant to
any judgment, decree or order of any court or any order, rule or regulation of
any administrative or governmental body):
(a) any failure by the Master Servicer to deposit in the
Collection Account or the Custodial Account, or to remit to the Trustee
for deposit in the Collection Account, any deposit or payment required to
be so made by the Master Servicer under the terms of this Agreement, which
failure shall continue unremedied for a period of one Business Day (or, in
the case of a failure to make a Monthly Advance required to be made
pursuant to Section 5.01, shall continue through the end of the cure
period specified in Section 5.02(b)); or
(b) any failure by the Master Servicer to observe or perform
in any material respect any other of the covenants or agreements on the
part of the Master Servicer contained in this Agreement (except as set
forth in (c) below) which failure (i) materially affects the rights of the
Certificateholders and (ii) shall continue unremedied for a period of 60
days (except that such number of days shall be 15 in the case of a failure
to pay the premium for any FHA Mortgage Insurance or Required Insurance
Policy in respect of any Mortgage Loan) after the date on which written
notice of such failure shall have been given to the Master Servicer by the
Trustee or the Depositor, or to the Master Servicer, the Depositor and the
Trustee by the Holders of Certificates entitled to not less than 25% of
the Voting Rights evidenced by the Certificates; or
(c) if a representation or warranty set forth in Section
2.04(a) hereof shall prove to be materially incorrect as of the time made
in any respect that materially and adversely affects interests of the
Certificateholders, and the circumstances or condition in respect of which
such representation or warranty was incorrect shall not have been
eliminated or cured within 120 days after the date on which written notice
thereof shall have been given to the Master Servicer by the Trustee for
the benefit of the Certificateholders or by the Depositor; or
(d) a decree or order of a court or agency or supervisory
authority having jurisdiction in the premises 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 Master Servicer and such decree or order shall have remained
in force undischarged or unstayed for a period of 60 days; or
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(e) the Master Servicer shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment of
debt, marshalling of assets and liabilities or similar proceedings of or
relating to the Master Servicer or all or substantially all of the
property of the Master Servicer; or
(f) the Master Servicer shall admit in writing its inability
to pay its debts generally as they become due, file a petition to take
advantage of, or commence a voluntary case under, any applicable
insolvency or reorganization statute, make an assignment for the benefit
of its creditors, or voluntarily suspend payment of its obligations; or
(g) the Master Servicer shall fail to purchase any FHA
Debenture as required in Section 3.15; or
(h) the Rating Agency shall provide written notice of its
intention to reduce, withdraw or qualify any of the then-current ratings
of the Rated Certificates because the existing or prospective financial
condition or mortgage loan servicing capability of the Master Servicer is
insufficient to maintain such outstanding rating; or
(i) the Master Servicer shall cease to be duly qualified as an
FHA-Approved Mortgagee with power and authority to service the Mortgage
Loans and make claims on the FHA under any FHA Mortgage Insurance as
contemplated herein.
If an Event of Default due to the actions or inaction of the Master
Servicer shall occur, then, and in each and every such case, so long as such
Event of Default shall not have been remedied, the Trustee may, and (i) in the
case of an Event of Default described in clause (a) above, if so directed by the
Holders of Certificates entitled to not less than 25% of the Voting Rights
allocated to any Class of REMIC III Regular Certificates, (ii) in the case of an
Event of Default described in either clause (b) or clause (c) above, if so
directed by the Holders of Certificates entitled to not less than 51% of all the
Voting Rights, and (iii) in the case of any other Event of Default, under all
circumstances, the Trustee shall, by notice in writing to the Master Servicer
(with a copy to the Depositor and the Rating Agency), terminate all of the
rights and obligations of the Master Servicer under this Agreement (other than
rights to reimbursement for Advances previously made, as provided in Section
3.09). On or after the receipt by the Master Servicer of such written notice,
all of its authority and power under this Agreement shall pass to and be vested
in the Trustee, as acting master servicer, pursuant to and under this Section
and, without limitation, the Trustee is hereby authorized and empowered to
execute and deliver, on behalf of and at the expense of the Master Servicer, as
attorney-in-fact or otherwise, any and all documents and other instruments, and
to do or accomplish all other acts or things, necessary or appropriate to effect
such termination, whether to complete the transfer and endorsement or assignment
of the Mortgage Assets and related documents, or otherwise. In the event it is
terminated under this Section, the Master Servicer agrees that it shall be
subject to the duties and obligations set forth in Section 8.02.
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SECTION 8.02. Trustee to Act; Appointment of Successor.
On and after the time the Master Servicer receives a notice of
termination pursuant to Section 8.01 hereof or resigns pursuant to Section 7.04
hereof, the Trustee shall be the successor master servicer in all respects to
the Master Servicer in its capacity as servicer under this Agreement and with
respect to the transactions set forth or provided for herein and shall
thereafter be subject to all the responsibilities, duties and liabilities
relating thereto placed on the Master Servicer by the terms and provisions
hereof; provided, however, that the Trustee shall have no responsibilities,
duties, liabilities or obligations with respect to any act or omission of the
Master Servicer incurred prior to its resignation or termination. The Trustee,
as acting or successor master servicer, shall be indemnified to the full extent
provided the Master Servicer under this Agreement prior to the Master Servicer's
termination. The Trustee, as acting or successor master servicer, or any other
successor master servicer, as applicable, shall succeed to any rights and
obligations of the Master Servicer under any Sub-Servicing Agreement and shall
be deemed to have assumed the Master Servicer's interest therein, subject to
Section 3.05; provided, however, that the Master Servicer shall not thereby be
relieved of any liability or obligations under any Sub-Servicing Agreement
arising prior to the date of such succession. Neither the Trustee nor any
successor master servicer shall be responsible for any of the representations
and warranties of the terminated Master Servicer herein or in any related
document or agreement, for any acts or omissions of the terminated Master
Servicer or for any losses incurred in respect of any Permitted Investments
selected by the terminated Master Servicer pursuant to this Agreement. The
Trustee shall not be required to purchase any Mortgage Loan hereunder. The
Master Servicer agrees to promptly (and in any event no later than ten Business
Days subsequent to the notice of termination or resignation) provide, at its own
expense, the Trustee with all documents and records requested hereunder, and to
cooperate hereunder in effecting the termination of its responsibilities and
rights hereunder, including, without limitation, the transfer to the successor
master servicer or to the Trustee, as applicable, for administration by it of
all cash amounts which shall at the time be or should have been credited by the
Master Servicer to the Custodial Account or any Escrow Account or Reserve
Account or should thereafter be received with respect to the Mortgage Assets,
and shall promptly provide the Trustee or such successor master servicer, as
applicable, all documents and records reasonably requested by it, such documents
to be provided in such form as the Trustee or such successor master servicer
shall reasonably request (including electronic form), to enable it to assume the
Master Servicer's functions hereunder. The terminated Master Servicer shall
reimburse the assuming party for any reasonable expenses incurred by the
assuming party in connection with the assumption of the duties and obligations
of the Master Servicer hereunder. If the Master Servicer does not reimburse the
assuming party for such expenses within a reasonable time, such expenses shall
be reimbursed from the Trust Fund. As compensation for being successor master
servicer, such successor master servicer shall be entitled to all funds relating
to the Mortgage Loans that the Master Servicer would have been entitled to
receive from the Custodial Account if the Master Servicer had continued to act
hereunder (except that the terminated Master Servicer shall retain the right to
be reimbursed for Advances (including, without limitation, Monthly Advances)
theretofore made by the Master Servicer with respect to which it would be
entitled to be reimbursed if it had not been so terminated as Master Servicer).
Notwithstanding the foregoing, if the Trustee has become the successor to the
Master Servicer in accordance with this
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Section 8.02, the Trustee may, if it shall be unwilling to so act, or shall, if
it is unable to so act, appoint, or petition a court of competent jurisdiction
to appoint, any FHA-Approved Mortgagee with a net worth of at least $15,000,000,
the appointment of which does not adversely affect any of the then-current
ratings of the Rated Certificates, as the successor to the Master Servicer
hereunder in the assumption of all or any part of the responsibilities, duties
or liabilities of the Master Servicer. Pending appointment of a successor to the
Master Servicer hereunder, the Trustee, unless the Trustee is prohibited by law
from so acting, shall act in such capacity as provided herein. In connection
with such appointment and assumption, the Trustee may make such arrangements for
the compensation of such successor out of payments on Mortgage Loans as it and
such successor shall agree; provided, however, that no such compensation shall
be in excess of that permitted the Master Servicer hereunder. The Trustee and
such successor shall take such action, consistent with this Agreement, as shall
be necessary to effectuate any such succession. Neither the Trustee nor any
other successor servicer shall be deemed to be in default hereunder by reason of
any failure to make, or any delay in making, any distribution hereunder or any
portion thereof caused by the failure of the Master Servicer to deliver, or any
delay in delivering, cash, documents or records in any form to it.
Any successor to the Master Servicer as servicer shall during the
term of its service as servicer maintain in force the policy or policies that
the Master Servicer is required to maintain pursuant to Section 7.05 hereof.
SECTION 8.03. Notification to Certificateholders.
(a) Upon any termination or appointment of a successor to the Master
Servicer, the Trustee shall give prompt written notice thereof to
Certificateholders at their respective addresses appearing in the Certificate
Register and to the Rating Agency.
(b) Within 60 days after the occurrence of any Event of Default, the
Trustee shall transmit by mail to all Certificateholders and the Rating Agency
notice of each such Event of Default hereunder known to the Trustee, unless such
Event of Default shall have been cured or waived.
SECTION 8.04. Other Remedies of Trustee.
During the continuance of any Event of Default, so long as such
Event of Default shall not have been remedied, the Trustee, in addition to the
rights specified in Section 8.01, shall have the right, in its own name as
trustee of an express trust, to take all actions now or hereafter existing at
law, in equity or by statute to enforce its rights and remedies and to protect
the interests, and enforce the rights and remedies, of the Certificateholders
(including the institution and prosecution of all judicial, administrative and
other proceedings and the filing of proofs of claim and debt in connection
therewith). In such event, the legal fees, expenses and costs of such action and
any liability resulting therefrom, to the extent that any such fees, expenses
and costs were not recovered by the Trustee as a result of such action, shall be
expenses, costs and liabilities of the Trust Fund, and the Trustee shall be
entitled to be reimbursed therefor from the Collection Account as provided in
Section 4.01(d). Except as otherwise expressly provided in
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this Agreement, no remedy provided for by this Agreement shall be exclusive of
any other remedy, and each and every remedy shall be cumulative and in addition
to any other remedy and no delay or omission to exercise any right or remedy
shall impair any such right or remedy or shall be deemed to be a waiver of any
Event of Default.
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ARTICLE IX
CONCERNING THE TRUSTEE
SECTION 9.01. Duties of Trustee.
The Trustee, prior to the occurrence of an Event of Default and
after the curing of all Events of Default that may have occurred, undertakes
with respect to the Trust Fund to perform such duties and only such duties as
are specifically set forth in this Agreement. In case an Event of Default has
occurred and remains uncured and a Responsible Officer of the Trustee has actual
knowledge thereof, the Trustee shall exercise such of the rights and powers
vested in it by this Agreement, and use the same degree of care and skill in
their exercise, as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs. Any permissive right
of the Trustee set forth in this Agreement shall not be construed as a duty.
The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee that are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform to the requirements of this Agreement; provided, however, that the
Trustee shall not be responsible for the accuracy or content of any such
resolution, certificate, statement, opinion, report, document, order or other
instrument provided to it hereunder by the Master Servicer. If any such
instrument is found not to conform on its face to the requirements of this
Agreement in a material manner, the Trustee shall take action as it deems
appropriate to have the instrument corrected, and if the instrument is not
corrected to the Trustee's reasonable satisfaction, the Trustee will provide
notice thereof to the Certificateholders.
The Trustee may conclusively rely on information provided in any
resolution, certificate, statement, opinion, report, document, order or other
instrument so furnished to it, and the Trustee shall not be responsible to
recompute, recalculate or verify the information provided in any such
resolution, certificate, statement, opinion, report, document, order or other
instrument so furnished to it, in any event unless such information is erroneous
on its face, the Trustee has actual knowledge that such information is erroneous
or, in the case of recomputing, recalculating or verifying any such information,
the Trustee is requested to do so by the Depositor or a Certificateholder.
No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own misconduct, its negligent failure to perform its obligations
in compliance with this Agreement, or any liability which would be imposed by
reason of its willful misfeasance or bad faith; provided, however, that:
(a) prior to the occurrence of an Event of Default of which a
Responsible Officer of the Trustee has actual knowledge, and after the
curing or waiver of all such Events of Default that may have occurred, the
duties and obligations of the
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Trustee shall be determined solely by the express provisions of this
Agreement, the Trustee shall not be personally liable except for the
performance of such duties and obligations as are specifically set forth
in this Agreement, no implied covenants or obligations shall be read into
this Agreement against the Trustee and the Trustee may conclusively rely,
as to the truth of the statements and the correctness of the opinions
expressed therein, upon any certificates, resolutions, reports,
statements, documents, orders, opinions or other instruments furnished to
the Trustee and conforming on their face to the requirements of this
Agreement which it reasonably believed in good faith to be genuine and to
have been duly executed by the proper authorities respecting any matters
arising hereunder, without responsibility for investigating the contents
thereof;
(b) the Trustee shall not be personally liable for an error of
judgment made in good faith by a Responsible Officer or Responsible
Officers of the Trustee unless the Trustee was negligent or acted in bad
faith or with willful misfeasance;
(c) the Trustee shall not be personally liable with respect to
any action taken, suffered or omitted to be taken by it in good faith in
accordance with the direction of Holders of Certificates entitled to not
less than 25% of the Voting Rights allocated to each Class of Certificates
relating to the time, method and place of conducting any proceeding for
any remedy available to the Trustee, or exercising any trust or power
conferred upon the Trustee, under this Agreement; and
(d) except as provided in Section 3.15 or as otherwise
specifically provided in this Agreement, 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.
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 Master Servicer under this
Agreement, except (a) the obligation of the Trustee to make Monthly Advances
pursuant to Section 5.02 and (b) during such time, if any, as the Trustee shall
be the successor to, and be vested with the rights, duties, powers and
privileges of, the Master Servicer in accordance with the terms of this
Agreement. The Trustee shall not be required to post any surety or bond of any
kind in connection with its performance of its obligations under this Agreement.
Except with respect to an Event of Default described in clause (a)
of Section 8.01, the Trustee shall not be deemed to have knowledge of any Event
of Default or event which, with notice or lapse of time, or both, would become
an Event of Default, unless a Responsible Officer of the Trustee shall have
received written notice thereof from the Master Servicer, the Depositor, the
Rating Agency or a Certificateholder, or a Responsible Officer of the Trustee
has actual notice thereof, and in the absence of such notice no provision hereof
requiring the taking of any action or the assumption of any duties or
responsibility by the Trustee following the occurrence
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of any Event of Default or event which, with notice or
lapse of time or both, would become an Event of Default, shall be effective as
to the Trustee.
SECTION 9.02. Certain Matters Affecting the Trustee.
(a) Except as otherwise provided in Section 9.01:
(i) the Trustee may request and rely upon and shall be
protected in acting or refraining from acting upon any resolution,
Officers' Certificate, certificate of auditors or any other certificate,
statement, instrument, opinion, report, notice, request, consent, order,
appraisal, bond or other paper or document believed by it to be genuine
and to have been signed or presented by the proper party or parties and
the Trustee shall have no responsibility to ascertain or confirm the
genuineness of any such party or parties;
(ii) the Trustee may consult with counsel and any Opinion of
Counsel shall be full and complete authorization and protection in respect
of any action taken or suffered or omitted by it hereunder in good faith
and in accordance with such Opinion of Counsel;
(iii) the Trustee shall be under no obligation to exercise any
of the trusts or powers vested in it by this Agreement or to institute,
conduct or defend any litigation hereunder or in relation hereto at the
request, order or direction of any of the Certificateholders, pursuant to
the provisions of this Agreement, unless such Certificateholders shall
have offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which may be incurred therein or thereby;
nothing contained herein shall, however, relieve the Trustee of the
obligation, upon the occurrence of an Event of Default (which has not been
cured or waived) of which a Responsible Officer of the Trustee has actual
knowledge, to exercise such of the rights and powers vested in it by this
Agreement, and to use the same degree of care and skill in their exercise
as a prudent person would exercise or use under the circumstances in the
conduct of such person's own affairs;
(iv) none of the Trustee, any of its Affiliates, or any
officer, director, employee or agent of the Trustee or any of its
Affiliates shall be personally liable for any action taken, suffered or
omitted by it in good faith and believed by it to be authorized or within
the discretion or rights or powers conferred upon it by this Agreement;
(v) prior to the occurrence of an Event of Default hereunder
and after the curing of all Events of Default that may have occurred, the
Trustee shall not be bound to make any investigation into the facts or
matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, bond or other
paper or document, unless requested in writing so to do by Holders of
Certificates entitled to not less than 25% of the Voting Rights allocated
to each Class of Certificates; provided, however, that if the payment
within a reasonable time to the Trustee of the
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costs, expenses or liabilities likely to be incurred by it in the making
of such investigation is, in the opinion of the Trustee, not reasonably
assured to the Trustee by the security afforded to it by the terms of this
Agreement, the Trustee may require reasonable indemnity against such
expense or liability as a condition to taking any such action; the
reasonable expense of every such investigation shall be paid by the Master
Servicer in the event that such investigation relates to an Event of
Default by the Master Servicer, if an Event of Default by the Master
Servicer shall have occurred and is continuing, and otherwise by the
Certificateholders requesting the investigation;
(vi) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys;
(vii) except as provided in Section 3.15 or as otherwise
specifically provided in this Agreement, the Trustee shall not be required
to expend its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder if it shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity
against such liability is not assured to it; and
(viii) the Trustee shall not be liable for any loss on any
investment of funds pursuant to this Agreement.
(b) All rights of action under this Agreement or under any of the
Certificates, enforceable by the Trustee, may be enforced by it without the
possession of any of the Certificates, or the production thereof at the trial or
other proceeding relating thereto, and any such suit, action or proceeding
instituted by the Trustee shall be brought in its name for the benefit of all
the Holders of such Certificates, subject to the provisions of this Agreement.
SECTION 9.03. Trustee Not Liable for Certificates or Mortgage
Loans.
Except as specifically set forth in Section 9.11 and the
acknowledgements of the Trustee set forth in Section 2.02, the recitals
contained herein, in the Mortgage Asset Purchase Agreements, in the Certificates
(other than its signature and authentication) and in the Prospectus, the
Prospectus Supplement or the Private Placement Memorandum (other than
information provided by the Trustee specifically for inclusion therein) shall be
taken as the statements of the Depositor, Greystone Funding, Daiwa Finance or
the Master Servicer, as the case may be, as such statements are attributed to
Greystone Funding, Daiwa Finance or the Master Servicer by the Mortgage Asset
Purchase Agreements, the Trustee assumes no responsibility for their
correctness, and the Trustee makes no representations as to the validity or
sufficiency of this Agreement, the Certificates or of any Mortgage Asset, FHA
Mortgage Insurance Contract or related documents. Without limiting the
obligation of the Trustee to act hereunder in respect of an Event of Default on
the part of the Master Servicer, the Trustee shall not be liable for any act or
omission of the Master Servicer except to the extent the Trustee is acting in
such capacity. The Trustee shall not be accountable for the use or application
by the Depositor, Greystone Funding, Daiwa Finance or the Master Servicer of any
funds paid to the Depositor, Greystone Funding, Daiwa Finance or the Master
Servicer in respect of the Mortgage Assets or deposited in or withdrawn from the
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Collection Account by the Depositor, Greystone Funding, Daiwa Finance or the
Master Servicer. The Trustee assumes no liability for or with respect to the
perfection or priority of the security interest in any Mortgage Asset or the
maintenance of any such perfection and priority, or for or with respect to the
sufficiency of the Trust Fund or its ability to generate the payments to be
distributed to Certificateholders under this Agreement (other than its failure
to perform its duties in accordance with the terms of this Agreement).
SECTION 9.04. Trustee May Own Certificates.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Certificates with the same rights as it would have if it
were not the Trustee.
SECTION 9.05. Trustee's Fees and Expenses.
The Trustee shall pay to itself on each Distribution Date from
amounts on deposit in the Collection Account, an amount equal to the Trustee Fee
for such Distribution Date and, to the extent not previously paid, for all prior
Distribution Dates.
The Trustee shall reimburse itself from amounts on deposit in the
Collection Account for all reasonable expenses, disbursements and advances
incurred or made by the Trustee in accordance with any of the provisions of this
Agreement (including the reasonable compensation and the reasonable expenses and
disbursements of its counsel and of all persons not regularly in its employ) as
set forth in Section 4.01 to the extent such payments are "unanticipated
expenses incurred by the REMIC" within the meaning of Treasury Regulations
Section 1.860G-1(b)(ii), and provided that the subject expense, disbursement or
advance was not incurred or made as a result of a breach of any representation,
warranty or covenant on the part of the Trustee or by reason of willful
misconduct, bad faith or negligence in the performance of any of the Trustee's
duties hereunder or by reason of reckless disregard of the Trustee's obligations
and duties hereunder, and the subject expense, disbursement or advance was not
specifically required to be borne by the Trustee hereunder. The Trustee shall
pay all expenses incurred by it in connection with its routine activities
hereunder.
The Trustee and any director, officer, employee or agent of the
Trustee shall be indemnified by the Trust Fund and held harmless against any
claim, damage, penalty, fine, loss, liability or expense (including any
attorney's fees and expenses): (a) incurred in connection with any legal action
relating to this Agreement or the Certificates or the performance of any of the
Trustee's duties hereunder (other than any loss, liability or expense incurred
as a result of a breach of any representation, warranty or covenant on the part
of the Trustee, or by reason of willful misfeasance, bad faith or negligence in
the performance of any of the Trustee's duties hereunder, or by reason of
reckless disregard of the Trustee's obligations and duties hereunder and other
than expenses incurred by the Trustee in connection with its routine activities
hereunder and expenses specifically required to be borne by the Trustee
hereunder); and (b) resulting from the exercise of any power of attorney granted
by the Trustee in accordance with this Agreement. Such indemnity shall survive
the termination of this Agreement or the resignation or removal of the Trustee
hereunder.
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SECTION 9.06. Eligibility Requirements for Trustee.
The Trustee hereunder shall at all times be a corporation or
association having its principal office in a state and city acceptable to the
Depositor and organized and doing business under the laws of such state or the
United States of America, authorized under such laws to exercise corporate trust
powers, having a rating on its long-term unsecured debt obligations at least
equal to "AA-" from the Rating Agency or such lower rating as will not cause the
Rating Agency to reduce, withdraw or qualify its then-current ratings of the
Rated Certificates, having a combined capital and surplus of at least
$50,000,000 and subject to supervision or examination by federal or state
authority, and that is an FHA-Approved Mortgagee. If such corporation or
association 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 9.06 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. In
case at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section 9.06, the Trustee shall resign immediately in the
manner and with the effect specified in Section 9.07 hereof.
SECTION 9.07. Resignation and Removal of Trustee.
The Trustee may at any time resign and be discharged from the trusts
hereby created by (a) giving written notice of resignation to the Depositor and
by mailing notice of resignation by first class mail, postage prepaid, to the
Certificateholders at their addresses appearing on the Certificate Register, and
to the Rating Agency, not less than 60 days before the date specified in such
notice when, subject to Section 9.08, such resignation is to take effect, and
(b) acceptance by such successor trustee in accordance with Section 9.08 meeting
the qualifications set forth in Section 9.06. If no successor trustee shall have
been so appointed and have accepted appointment within 30 days after the giving
of such notice of resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor trustee.
If at any time the Trustee shall cease to be eligible in accordance
with the provisions of Section 9.06 hereof and shall fail to resign after
written request thereto by the Depositor, or if at any time the Trustee shall
become incapable of acting, or shall be adjudged a bankrupt or insolvent, or a
receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then the
Depositor may remove the Trustee and appoint a successor trustee by written
instrument, in duplicate, one copy of which instrument shall be delivered to the
Trustee and one copy to the successor trustee. The Trustee may also be removed
at any time by the Holders of Certificates evidencing not less than 50% of the
Voting Rights evidenced by the Certificates. Notice of any removal of the
Trustee and acceptance of appointment by the successor trustee shall be given to
the Rating Agency.
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Any resignation or removal of the Trustee and appointment of a
successor thereto pursuant to any of the provisions of this Section 9.07 shall
become effective upon acceptance of such appointment by the successor trustee as
provided in Section 9.08 hereof.
SECTION 9.08. Successor Trustee.
Any successor trustee appointed as provided in Section 9.07 hereof
shall execute, acknowledge and deliver to the Depositor and to its predecessor
trustee an instrument accepting such appointment hereunder and thereupon the
resignation or removal of the predecessor trustee shall become effective and
such successor trustee, without any further act, deed or conveyance, shall
become fully vested with all the rights, powers, duties and obligations of its
predecessor hereunder, with the like effect as if originally named as trustee
herein. The Depositor and the predecessor trustee shall execute and deliver such
instruments and do such other things as may reasonably be required (including,
without limitation, by HUD) for more fully and certainly vesting and confirming
in the successor trustee all such rights, powers, duties, and obligations.
No successor trustee shall accept appointment as provided in this
Section 9.08 unless at the time of such acceptance such successor trustee shall
be eligible under the provisions of Section 9.06 hereof and its appointment
shall not adversely affect the then-current rating of any Class of the Rated
Certificates.
Upon acceptance of appointment by a successor trustee as provided in
this Section 9.08, the Master Servicer shall mail notice of the succession of
such trustee hereunder to all Holders of Certificates at their addresses as
shown in the Certificate Register. If the Master Servicer fails to mail such
notice within ten days after acceptance of appointment by the successor trustee,
the successor trustee shall cause such notice to be mailed at the expense of the
Master Servicer.
SECTION 9.09. Merger or Consolidation of Trustee.
Any Person into which the Trustee may be merged or converted or with
which it may be consolidated or any Person resulting from any merger, conversion
or consolidation to which the Trustee shall be a party, or any Person succeeding
to the business of the Trustee, shall be the successor of the Trustee hereunder,
provided that such Person shall be eligible under the provisions of Section 9.06
hereof, without the execution or filing of any paper or further act on the part
of any of the parties hereto, anything herein to the contrary notwithstanding.
SECTION 9.10. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time,
for the purpose of meeting any legal requirements of any jurisdiction in which
any part of the Trust Fund or property securing any Mortgage Note may at the
time be located, the Master Servicer and the Trustee acting jointly shall have
the power and shall execute and deliver all instruments to appoint one or more
Persons approved by the Trustee to act as co-trustee or co-trustees jointly with
the Trustee, or separate trustee or separate trustees, of all or any part of the
Trust Fund, and
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to vest in such Person or Persons, in such capacity and for the benefit of
the applicable Certificateholders, such title to the Trust Fund, or any part
thereof, and, subject to the other provisions of this Section 9.10, such powers,
duties, obligations, rights and trusts as the Master Servicer and the Trustee
may consider necessary or desirable. If the Master Servicer shall not have
joined in such appointment within fifteen days after the receipt by it of a
request to do so, or in the case an Event of Default shall have occurred and be
continuing, the Trustee alone shall have the power to make such appointment. No
co-trustee or separate trustee hereunder shall be required to meet the terms of
eligibility as a successor trustee under Section 9.06 and no notice to
Certificateholders of the appointment of any co-trustee or separate trustee
shall be required under Section 9.08, except that, to the extent necessary to
keep in full force and effect the FHA Mortgage Insurance in respect of any
Mortgage Loan, such co-trustee or separate trustee shall be an FHA-Approved
Mortgagee.
Every separate trustee and co-trustee shall, to the extent permitted
by law, be appointed and act subject to the following provisions and conditions:
(a) all rights, powers, duties and obligations conferred or
imposed upon the Trustee, except for any obligation of the Trustee under
this Agreement to make a required Advance in the event the Master Servicer
fails to make such Advance, 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 by the Trustee
(whether as Trustee hereunder or as successor to the Master Servicer), the
Trustee shall be incompetent or unqualified to perform such act or acts,
in which event such rights, powers, duties and obligations (including the
holding of title to the Trust Fund or any portion thereof in any such
jurisdiction) shall be exercised and performed singly by such separate
trustee or co-trustee, but solely at the direction of the Trustee;
(b) no trustee hereunder shall be held personally liable by
reason of any act or omission of any other trustee hereunder; and
(c) the Master 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 Article IX. 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,
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the Trustee. Every such instrument shall be filed with the Trustee and a copy
thereof given to the Master Servicer and the Depositor.
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 Trust Fund shall pay the reasonable compensation of the
co-trustees or separate trustees appointed pursuant to this Section 9.10.
SECTION 9.11. Representations and Warranties of the Trustee.
The Trustee hereby represents and warrants to the Depositor and for
the benefit of the Certificateholders, as of the date hereof, that:
(i) The Trustee is a nationally chartered bank duly organized,
validly existing, and in good standing under the laws of the United States
and has full power, authority and legal right to own its properties and
conduct its business as presently conducted and to execute, deliver and
perform the terms of the Agreement.
(ii) The Agreement has been duly authorized, executed and
delivered by the Trustee and, assuming due authorization, execution and
delivering by the other parties hereto, constitutes a legal, valid and
binding instrument enforceable against the Trustee in accordance with its
terms, except as such enforcement may be limited by bankruptcy,
insolvency, reorganization or other similar laws affecting the enforcement
of creditors' rights in general and by general equity principles
(regardless of whether such enforcement is considered in a proceeding in
equity or at law).
(iii) Neither the execution and delivery of this Agreement by
the Trustee nor the consummation by the Trustee of the transactions herein
contemplated to be performed by the Trustee, nor compliance by the Trustee
with the provisions hereof, will conflict with or result in a breach of,
or constitute a default under, any of the provisions of any applicable law
(subject to the appointment in accordance with such applicable law of any
co-trustee or separate trustee required pursuant to this Agreement),
governmental rule, regulation, judgment, decree or order binding on the
Trustee or its properties or the organizational documents of the Trustee
or the terms of any material agreement, instrument or indenture to which
the Trustee is a party or by which it is bound.
(iv) The Trustee is duly qualified as an FHA-Approved
Mortgagee and, if the Trustee becomes the successor master servicer
pursuant to Section 8.02, the Trustee will comply with the provisions of
the Housing Act, as amended from time to time, and
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all regulations issued thereunder in order that the Certificateholders'
rights under the FHA Mortgage Insurance will be fully protected.
SECTION 9.12. Certain Reports by the Trustee.
Based upon the various reports, documents and other information
provided to the Trustee pursuant to this Agreement, the Trustee shall file with
the Securities and Exchange Commission, in respect of the Trust and the
Certificates, copies of the annual reports and of the information, documents and
other reports (or copies of such portions of any of the foregoing as the
Securities and Exchange Commission may from time to time by rules and
regulations prescribe) required to be filed with the Securities and Exchange
Commission pursuant to Section 13 or 15(d) of the Exchange Act.
SECTION 9.13. Non-assignment of Putable Mortgage Loans.
The Trustee, as the FHA-Approved Mortgagee of the Mortgage Loans,
shall not at any time assign any Putable Mortgage Loans to the FHA.
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ARTICLE X
TERMINATION
SECTION 10.01. Termination upon Liquidation or Repurchase of all
Mortgage Loans.
The obligations and responsibilities of the Master Servicer, the
Depositor, Greystone Funding, Daiwa Finance and the Trustee with respect to the
Trust Fund created hereby (other than the obligation to make certain payments
and to send certain notices to Certificateholders as hereinafter set forth)
shall terminate upon the last action required to be taken by the Trustee with
respect to the earliest of:
(a) the purchase by the Master Servicer, at its election, of
all the Mortgage Assets remaining in the Trust Fund and the corresponding
distribution to Certificateholders of all amounts required to be
distributed to them pursuant to this Agreement (the applicable
Distribution Date being herein referred to as the "Optional Termination
Date"), which repurchase right the Master Servicer may exercise at its
sole and exclusive election if the aggregate Stated Principal Balance of
the Mortgage Pool at the time of the repurchase is less than 5% of the
aggregate Cut-off Date Balance of the Mortgage Pool;
(b) the maturity or other liquidation (or any advance with
respect thereto) of the last Mortgage Asset remaining in the Trust Fund
and the corresponding distribution to Certificateholders of all amounts
required to be distributed to them pursuant to this Agreement; and
(c) the mutual agreement of the parties hereto and the
Certificateholders as to such termination;
provided that, in no event shall the trust created hereby continue beyond the
expiration of 21 years from the death of the last survivor of the descendants of
Mr. Joseph P. Kennedy, former Ambassador of the United States to Great Britain,
living on the date of execution of this Agreement.
The purchase price for any such Optional Termination of the Trust
Fund (the "Termination Price") shall be equal to (A) the aggregate of the
Purchase Prices of all the Mortgage Assets remaining in the Trust Fund, minus
(B) the aggregate amount of unreimbursed Advances made by the Master Servicer,
together with any related unpaid Advance Interest and any unpaid Servicing Fees,
remaining outstanding (which items shall be deemed to have been paid or
reimbursed to the Master Servicer in connection with the Optional Termination).
The Termination Price shall be calculated by the Master Servicer and the Trustee
as of the last Business Day in the Collection Period for the Optional
Termination Date and as if the purchase was to occur on such Business Day. The
Trustee shall give notice to the Rating Agency of the
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Master Servicer's election to purchase the Mortgage Assets remaining in the
Trust Fund pursuant to this Section 10.01 and of the Optional Termination Date.
SECTION 10.02. Procedure Upon Optional Termination.
(a) In case of any Optional Termination pursuant to Section 10.01,
the Master Servicer shall, at least thirty days prior to the date notice is to
be mailed to the affected Certificateholders notify the Trustee of the Optional
Termination Date and of the applicable repurchase price of the Mortgage Loans to
be repurchased.
(b) Any repurchase of the Mortgage Loans by the Master Servicer
shall be made on the Master Servicer Remittance Date in the same month as the
Optional Termination Date by deposit of the Termination Price into the Custodial
Account. Upon receipt by the Trustee of an Officers' Certificate of the Master
Servicer certifying as to the deposit of such Termination Price into the
Custodial Account, the Trustee and each co-trustee and separate trustee, if any,
then acting as such under this Agreement, shall, upon request and at the expense
of the Master Servicer, execute and deliver all such instruments of transfer or
assignment, in each case without recourse, as shall be reasonably requested by
the Master Servicer, to vest title in the Master Servicer to the Mortgage Assets
so repurchased and shall transfer or deliver to the Master Servicer the
purchased Mortgage Assets. Any collections on the Mortgage Assets received by
the Trustee subsequent to (or with respect to any period subsequent to)
calculation of the Termination Price shall be promptly remitted by it to the
Master Servicer.
(c) Notice of the Distribution Date on which the Master Servicer
anticipates that the final distribution shall be made (whether upon Optional
Termination or otherwise), shall be given promptly by the Master Servicer to the
Trustee and by the Trustee by first class mail to Holders of the affected
Certificates. Such notice shall be mailed as soon as practicable. Such notice
shall specify (i) the Distribution Date upon which final distribution on the
affected Certificates will be made upon presentation and surrender of such
Certificates at the office or agency therein designated, (ii) the amount of such
final distribution and (iii) that the Record Date otherwise applicable to such
Distribution Date is not applicable, such distribution being made only upon
presentation and surrender of such Certificates at the office or agency
maintained for such purposes (the address of which shall be set forth in such
notice).
(d) Upon presentation and surrender of the Certificates by the
Certificateholders on the final Distribution Date, the Trustee shall distribute
to each Certificateholder so presenting and surrendering its Certificates such
Certificateholder's Percentage Interest of that portion of the amounts then on
deposit in the Collection Account that are allocable in accordance with Sections
4.02(a) and 4.02(b) to payments on the Class of Certificates to which such
Certificates being so presented and surrendered belong.
(e) In the event that any Certificateholders shall not surrender
Certificates for cancellation within six months after the date specified in the
above mentioned written notice, the Trustee shall give a second written notice
to the remaining such Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If within
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six months after the second notice all the Certificates shall not have been
surrendered for cancellation, the Trustee may take appropriate steps, or may
appoint an agent to take appropriate steps, to contact the remaining
Certificateholders concerning surrender of their Certificates, and the cost
thereof shall be paid out of the funds and other assets which remain subject to
the Trust Fund.
SECTION 10.03. Additional Termination Requirements.
(a) In the event the Master Servicer exercises its purchase option
pursuant to Section 10.01, the REMICs created hereby shall be terminated in
accordance with the following additional requirements, unless the Trustee has
received an Opinion of Counsel to the effect that the failure of any of the
REMICs to comply with the requirements of this Section 10.03 will not (i) result
in the imposition of taxes on a "prohibited transaction" of any of the REMICs
created hereby as described in Section 860F of the Code, or (ii) cause any of
the REMICs created hereby to fail to qualify as a REMIC at any time that any
Certificates are outstanding:
(i) the Trustee shall specify the first day in the 90-day
liquidation period in a statement attached to the final Tax Return for
each of REMIC I, REMIC II and REMIC III pursuant to Treasury regulation
Section 1.860F-1 and shall satisfy all requirements of a qualified
liquidation under Section 860F of the Code and any regulations thereunder
as such requirements are set forth in an Opinion of Counsel delivered to
the Trustee by and at the expense of the Master Servicer;
(ii) during such 90-day liquidation period and at or prior to the
time of making of the final payment on the Certificates, the Trustee shall
sell or otherwise dispose of all of the assets of REMIC I to the Master
Servicer for cash; and
(iii) immediately following the making of the final payment on the
Certificates, the Trustee shall distribute or credit, or cause to be
distributed or credited, to the Holders of the applicable Class of
Residual Certificates all cash on hand (other than cash retained to meet
claims), and each of REMIC I, REMIC II and REMIC III shall terminate at
that time.
(b) By their acceptance of Certificates, the Holders thereof hereby
agree to authorize the Trustee to adopt a plan of complete liquidation of each
of REMIC I, REMIC II and REMIC III in accordance with the terms and conditions
of this Agreement, which authorization shall be binding upon all successor
Certificateholders.
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ARTICLE XI
MISCELLANEOUS PROVISIONS
SECTION 11.01. Amendment.
(a) This Agreement may be amended from time to time by the parties
hereto, without notice to or the consent of any of the Certificateholders, (i)
to cure any ambiguity, (ii) to correct or supplement any provisions herein which
may be inconsistent with any other provisions herein or in the Prospectus
Supplement, (iii) to make other provisions with respect to matters or questions
arising under this Agreement or (iv) to comply with any requirements imposed by
the Code; provided that any such amendment pursuant to clause (iii) above will
not, as evidenced by a written confirmation from the Rating Agency stating that
such amendment will not cause the Rating Agency to qualify, reduce or withdraw
any of the then current ratings of the Rated Certificates, adversely affect in
any material respect the interests of any Certificateholder. In addition, this
Agreement may be amended from time to time by the parties hereto, without the
consent of any of the Certificateholders, to modify, eliminate or add to any of
its provisions to such extent as shall be necessary to maintain the
qualification the Trust Fund as a REMIC at all times that any of the
Certificates are outstanding; provided, however, that such action, as evidenced
by an Opinion of Counsel acceptable to the Trustee, is necessary or helpful to
maintain such qualification, and would not adversely affect in any material
respect the interest of any Certificateholder.
(b) This Agreement may be amended from time to time by the parties
hereto, with the consent of the Holders of Certificates entitled to not less
than 66-2/3% of the Voting Rights allocated to each Class of Certificates
affected by any such amendments, for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement or
for the purpose of modifying in any manner the rights of the Holders of the
Certificates; provided, however, that no such amendment may (i) reduce in any
manner the amount of, delay the timing of or change the manner in which payments
received on or with respect to Mortgage Assets are required to be distributed
with respect to any Certificate without the consent of the Holder of such
Certificate, (ii) reduce the aforesaid percentage of aggregate Voting Rights
allocated to Certificates of each Class, the Holders of which are required to
consent to any such amendment, without the consent of the Holders of
Certificates entitled to 100% of the Voting Rights allocated to each Class of
Certificates affected thereby, (iii) modify the provisions of this Section 11.01
without the consent of all of the Certificateholders or (iv) alter the servicing
standard set forth in Section 3.01(a).
It shall not be necessary for the consent of Certificateholders
under this Section 11.01 to approve the particular form of any proposed
amendment, but it shall be sufficient if such consent shall approve the
substance thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Certificateholders shall be subject to
such reasonable regulations as the Trustee may prescribe.
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(c) Promptly after the execution of any amendment to this Agreement,
the Trustee shall furnish written notification of the substance of such
amendment to each Certificateholder and the Rating Agency.
SECTION 11.02. Recordation of Agreement; Counterparts.
(a) This Agreement is subject to recordation in all appropriate
public offices for real property records in all the counties or other comparable
jurisdictions in which any or all of the Mortgaged Properties are situated, and
in any other appropriate public recording office or elsewhere. Such recordation,
if any, shall be effected by the Master Servicer at its expense on direction of
the Trustee, but only upon direction of the Trustee accompanied by an Opinion of
Counsel (which shall be an expense of the Trust Fund payable out of the
Collection Account) to the effect that such recordation materially and
beneficially affects the interests of the Certificateholders of the Trust Fund.
(b) For the purpose of facilitating the recordation of this
Agreement as herein provided and for other purposes, this Agreement may be
executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and such counterparts shall
constitute but one and the same instrument.
SECTION 11.03. Governing Law.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND
TO BE PERFORMED IN THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HERETO AND THE CERTIFICATEHOLDERS SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
SECTION 11.04. Notices.
In addition to other notices provided under this Agreement, the
Trustee shall notify the Rating Agency in writing: (a) of any repurchase of a
Mortgage Asset pursuant to Article II; (b) of any payment or draw on any
insurance policy applicable to the Mortgage Loans; (c) of the final payment of
any amounts owing to a Class of Certificates; and (d) of any Event of Default
under this Agreement.
All directions, demands and notices hereunder shall be in writing
and shall be deemed to have been duly given when received (i) in the case of the
Depositor, at American Southwest Financial Securities Corporation, 2390 East
Camelback Road, Suite 290, Phoenix, Arizona 85016, Attention: Jeffrey Newman;
(ii) in the case of the Trustee, at LaSalle National Bank, 135 South LaSalle
Street, Suite 1740, Chicago, Illinois 60674-4107, Attention: Asset-Backed
Securities Trust Services Department, ASW-FHA1; (iii) in the case of the Master
Servicer, at Greystone Servicing Corporation, Inc., 98 Alexandria Pike,
Warrenton, Virginia 22186 Attention: Ms. Julie J. DeLimba; (iv) in the case of
Greystone Funding, at Greystone
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Funding Corporation, 98 Alexandria Pike, Warrenton, Virginia 22186, Attention:
Ms. Julie J. DeLimba with a copy to Greystone & Co., Inc., 152 West 57th Street,
60th Floor, New York, New York 10019, Attention: Mr. Mark R. Jarrell; (v) in the
case of Daiwa Finance, at Daiwa Finance Corp., 32 Old Slip, 12th Floor, New
York, New York 10005, Attention: Steve Sherwyn, Esq., with a copy to Daiwa
Finance Corp., 32 Old Slip, 12th Floor, New York, New York 10005, Attention:
Takkai Wang; and (vi) in the case of the Rating Agency, at Standard & Poor's
Ratings Services, 25 Broadway, New York, New York 10004, Attention: Commercial
Mortgage Surveillance; or, in each such case, at such other address as may
hereafter be furnished to each of the parties hereto in writing. Notices to
Certificateholders shall be deemed given when mailed, first class postage
prepaid.
SECTION 11.05. Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms
of this Agreement shall be for any reason whatsoever held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement or of the Certificates or the rights of the Holders thereof.
SECTION 11.06. Limitation on Rights of Certificateholders.
The death or incapacity of any Certificateholder shall not operate
to terminate this Agreement or the Trust Fund, nor entitle such
Certificateholder's legal representative or heirs to claim an accounting or to
take any action or commence any proceeding in any court for a petition or
winding up of the Trust Fund, or otherwise affect the rights, obligations and
liabilities of the parties hereto or any of them.
No Certificateholder shall have any right to vote (except as
provided herein) or in any manner otherwise control the operation and management
of the Trust Fund, or the obligations of the parties hereto, nor shall anything
herein set forth or contained in the terms of the Certificates be construed so
as to constitute the Certificateholders from time to time as partners or members
of an association; nor shall any Certificateholder be under any liability to any
third party by reason of any action taken by the parties to this Agreement
pursuant to any provision hereof.
No Certificateholder shall have any right by virtue or by availing
itself of any provisions of this Agreement to institute any suit, action or
proceeding in equity or at law upon or under or with respect to this Agreement,
unless such Holder previously shall have given to the Trustee a written notice
of a default hereunder and of the continuance thereof, as provided herein, and
(except in the case of any such default on the part of the Trustee) unless the
Holders of Certificates entitled to not less than 25% of the Voting Rights
evidenced by the Certificates shall also have made written request upon the
Trustee to institute such action, suit or proceeding in its own name as Trustee
hereunder and shall have offered to the Trustee such reasonable indemnity as it
may require against the costs, expenses, and liabilities to be incurred therein
or
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thereby, and the Trustee, for 60 days after its receipt of such notice, request
and offer of indemnity, shall have neglected or refused to institute any such
action, suit or proceeding; it being understood and intended, and being
expressly covenanted by each Certificateholder with every other
Certificateholder and the Trustee, that no one or more Holders of Certificates
shall have any right in any manner whatever by virtue or by availing itself or
themselves of any provisions of this Agreement to affect, disturb or prejudice
the rights of the Holders of any other of the Certificates, or to obtain or seek
to obtain priority over or preference to any other such Holder or to enforce any
right under this Agreement, except in the manner herein provided and for the
common benefit of all Certificateholders. For the protection and enforcement of
the provisions of this Section 11.06, each and every Certificateholder and the
Trustee shall be entitled to such relief as can be given either at law or in
equity.
SECTION 11.07. Certificates Nonassessable and Fully Paid.
It is the intention of the Depositor that Certificateholders shall
not be personally liable for obligations of the Trust Fund, that the interests
in the Trust Fund represented by the Certificates shall be nonassessable for any
reason whatsoever, and that the Certificates, upon due authentication thereof by
the Trustee pursuant to this Agreement, are and shall be deemed fully paid.
SECTION 11.08. HUD Regulations and Documents Control.
Notwithstanding any other provision of this Agreement or of the
Certificates, in the event of any conflict between the provisions of this
Agreement or of the Certificates on the one hand and the provisions of the
Housing Act, the applicable FHA Regulations, the Mortgages, Mortgage Notes or
any other HUD-prescribed document relating to the Mortgage Loans on the other
hand, the provisions of the latter shall control.
SECTION 11.09. Miscellaneous REMIC Provisions.
(a) The Trustee shall, to the extent permitted by applicable law,
act as agent, and is hereby appointed to act as agent, of the Trust Fund, and
shall elect to treat each of REMIC I, REMIC II and REMIC III as a REMIC under
the Code and, if necessary, under applicable state law. Each such election will
be made on Form 1066 or other appropriate federal or state Tax Returns for the
taxable year ending on the last day of the calendar year in which the
Certificates are issued.
(b) The REMIC I Regular Interests are hereby designated as "regular
interests" (within the meaning of Section 860G(a)(1) of the Code), and the Class
R-I Certificates are hereby designated as the single class of "residual
interests" (within the meaning of Section 860G(a)(2) of the Code), in REMIC I.
The REMIC II Regular Interests are hereby designated as "regular interests"
(within the meaning of Section 860G(a)(1) of the Code), and the Class R-II
Certificates are hereby designated as the single class of "residual interests"
(within the meaning of Section 860G(a)(2) of the Code), in REMIC II. The
Sequential Pay Certificates and the Class S REMIC III Regular Interests are
hereby designated as "regular interests" (within the meaning of Section
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860G(a)(1) of the Code), and the Class R-III Certificates are hereby designated
as the single class of "residual interests" (within the meaning of Section
860G(a)(2) of the Code), in REMIC III. No party hereto shall, to the extent
within the control of any such Person, create or permit the creation of any
other "interests" in REMIC I, REMIC II or REMIC III (within the meaning of
Treasury regulation Section 1.860D-1(b)(1)).
(c) The Closing Date is hereby designated as the "startup day" of
each of REMIC I, REMIC II and REMIC III within the meaning of Section 860G(a)(9)
of the Code.
(d) The Trustee shall pay any and all expenses relating to any tax
audit of REMIC I, REMIC II or REMIC III (including, but not limited to, any
professional fees or any administrative or judicial proceedings with respect
thereto that involved the Internal Revenue Service or state tax authorities),
including the expense of obtaining any tax-related Opinion of Counsel in
connection with such an audit and other taxes; provided, however, that if such
audit resulted from the negligence of the Master Servicer or the Depositor, then
the Master Servicer or the Depositor, as the case may be, shall pay such
expenses. The Certificateholder with the largest Percentage Interest of the
related Class of Residual Certificates shall be designated as the tax matters
person with respect to each of REMIC I, REMIC II and REMIC III in the manner
provided under Treasury Regulations Section 1.860F-4(d) and Temporary Treasury
Regulations Section 301.6231(a)(7)-1T. The tax matters person of each REMIC
created hereunder hereby irrevocably appoints and authorizes the Trustee to act
as its attorney-in-fact and agent to perform the duties of the tax matters
person with respect to such REMIC. The Trustee, as attorney-in-fact and agent of
the tax matters person of each REMIC created hereunder, shall (i) act on behalf
of such REMIC in relation to any tax matter or controversy involving such REMIC
and (ii) represent such REMIC in any administrative or judicial proceeding
relating to an examination or audit by any governmental taxing authority with
respect thereto. To the extent authorized under the Code and the regulations
promulgated thereunder, each Holder of a Residual Certificate, hereby
irrevocably appoints and authorizes the Trustee to be its attorney-in-fact for
purposes of signing any Tax Returns required to be filed on behalf of REMIC I,
REMIC II or REMIC III, as the case may be. The legal expenses and costs of any
such action described in this subsection and any liability resulting therefrom
shall be borne by the Trust Fund or other appropriate Person in accordance with
Section 11.09(h).
(e) The Trustee shall prepare, file and sign all of the Tax Returns
in respect of each of REMIC I, REMIC II and REMIC III. The expenses of preparing
and filing such returns shall be borne by the Trustee without any right of
reimbursement therefor.
(f) The Trustee shall perform on behalf of each of REMIC I, REMIC II
and REMIC III all reporting and other tax compliance duties that are the
responsibility of each such REMIC under the Code, the REMIC Provisions or other
compliance guidance issued by the Internal Revenue Service or any state or local
taxing authority. Included among such duties, the Trustee shall provide to: (i)
any Transferror of a Residual Certificate, such information as is necessary for
the application of any tax relating to the transfer of a Residual Certificate to
any Person who is not a Permitted Transferee; (ii) the Certificateholders, such
information or reports as are required by the Code or the REMIC Provisions,
including, without limitation, reports
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relating to interest, original issue discount and market discount or premium
(using the Prepayment Assumption as required); and (iii) the Internal Revenue
Service, the name, title, address and telephone number of the Person who will
serve as the representative of each of REMIC I, REMIC II and REMIC III.
(g) The Trustee shall take such action and shall cause each of REMIC
I, REMIC II and REMIC III to take such action as shall be necessary to create
the status thereof as a REMIC under the REMIC Provisions (and the Master
Servicer shall assist it, to the extent reasonably requested by it). Each of the
Trustee and the Master Servicer shall exercise reasonable care to the extent
within its control and the scope of its express duties under this Agreement, to
maintain the status of each of REMIC I, REMIC II and REMIC III as a REMIC.
Neither the Trustee nor the Master Servicer shall take any action, cause REMIC
I, REMIC II or REMIC III to take any action or fail to take (or fail to cause to
be taken) any action that, under the REMIC Provisions, if taken or not taken, as
the case may be, could result in an Adverse REMIC Event in respect of any of
REMIC I, REMIC II or REMIC III, unless the Trustee has received an Opinion of
Counsel to the effect that the contemplated action will not result in an Adverse
REMIC Event. None of the other parties hereto shall take or fail to take any
action (whether or not authorized hereunder) as to which the Trustee has advised
it in writing that it has received an Opinion of Counsel to the effect that an
Adverse REMIC Event could occur with respect to such action. In addition, prior
to taking any action with respect to REMIC I, REMIC II or REMIC III or the
assets of any of them, or causing REMIC I, REMIC II or REMIC III to take any
action, which is not expressly permitted under the terms of this Agreement, each
of the other parties hereto will consult with the Trustee, in writing, with
respect to whether such action could cause an Adverse REMIC Event to occur, and
no such other party shall take any such action or cause REMIC I, REMIC II or
REMIC III to take any such action as to which the Trustee has advised it in
writing that an Adverse REMIC Event could occur. The Trustee may consult with
counsel to make such written advice, and the cost of same shall be borne by the
party seeking to take the action not permitted by this Agreement.
(h) In the event that any tax is imposed on REMIC I, REMIC II or
REMIC III, including, without limitation, "prohibited transactions" taxes as
defined in Section 860F(a)(2) of the Code, any tax on "net income from
foreclosure property" as defined in Section 860G(c) of the Code, any taxes on
contributions to REMIC I, REMIC II or REMIC III after the Startup Day pursuant
to Section 860G(d) of the Code, and any other tax imposed by the Code or any
applicable provisions of state or local tax laws, such tax, together with all
incidental costs and expenses (including, without limitation, penalties or
assessments and reasonable attorneys' fees) not required to be borne by the
Trustee pursuant to Section 11.09(d), shall be charged to and paid by: (i) the
Trustee, if such tax arises out of or results from a breach by the Trustee of
any of its obligations under this Article XI; (ii) the Master Servicer, if such
tax arises out of or results from a breach by the Master Servicer of any of its
obligations under Article III or this Article XI; (iii) the Depositor, if such
tax arises out of or results from a breach by the Depositor of any of its
obligations under this Article XI; or (iv) the Trust Fund in all other
instances. Any such amounts payable by the Trust Fund in respect of taxes shall
be paid by the Master Servicer at the direction of the Trustee out of amounts on
deposit in the Custodial Account or by the Trustee out of amounts on deposit in
the Collection Account. The Trustee is hereby authorized to and shall
133
<PAGE>
retain or cause to be retained from available funds sufficient funds to pay or
provide for the payment of, and to actually pay, such tax as is legally owed by
the Trust Fund. Such authorization (i) shall not prevent the Trustee from
contesting any such tax in appropriate law pending the outcome of such
proceedings and (ii) is subject to Section 11.09(n) and Section 11.09(o). The
costs of contesting any such tax shall be an expense of the Trust Fund unless
indemnification for such a tax is provided for hereunder.
(i) The Trustee and, to the extent that records are maintained
thereby in the normal course of its business, each of the other parties hereto
shall, for federal income tax purposes, maintain books and records with respect
to each of REMIC I, REMIC II and REMIC III on a calendar year and on an accrual
basis.
(j) Following the Startup Day therefor, the Trustee shall not accept
any contributions of assets to REMIC I, REMIC II or REMIC III unless it shall
have received an Opinion of Counsel (at the expense of the party seeking to
cause such contribution) to the effect that the inclusion of such assets in such
REMIC will not cause an Adverse REMIC Event in respect of such REMIC.
(k) Neither the Master Servicer nor the Trustee shall consent to or,
to the extent of their respective control, permit: (i) the sale or disposition
of any Mortgage Asset (except in connection with (A) a breach of any
representation or warranty of the related Seller regarding a Mortgage Asset, (B)
the foreclosure, default or imminent default of a Mortgage Loan, including but
not limited to, an assignment to HUD or the sale or other disposition of a
Mortgaged Property acquired by deed in lieu of foreclosure, (C) the bankruptcy
of REMIC I, REMIC II or REMIC III, or (D) the termination of the Trust Fund
pursuant to Article X of this Agreement); (ii) the sale or disposition of any
investments in the Custodial Account or the Collection Account for gain; or
(iii) the acquisition of any assets for the Trust Fund (other than a Mortgaged
Property acquired through foreclosure, deed in lieu of foreclosure or otherwise
in respect of a defaulted Mortgage Loan and other than Permitted Investments
acquired in connection with the investment of funds in the Custodial Account or
the Collection Account); in any event unless it has received an Opinion of
Counsel (at the expense of the party seeking to cause such sale, disposition, or
acquisition) to the effect that such sale, disposition, or acquisition will not
cause: (x) REMIC I, REMIC II or REMIC III to fail to qualify as a REMIC at any
time that any Certificates are outstanding or (y) the imposition of any tax on
REMIC I, REMIC II or REMIC III under the REMIC Provisions or other applicable
provisions of federal, state and local law or ordinances.
(l) Neither the Master Servicer nor the Trustee shall enter into any
arrangement by which REMIC I, REMIC II or REMIC III will receive a fee or other
compensation for services or, to the extent it is within the control of such
Person, permit REMIC I, REMIC II or REMIC III to receive any income from assets
other than "qualified mortgages" as defined in Section 860G(a)(3) of the Code or
"permitted investments" as defined in Section 860G(a)(5) of the Code. At all
times as may be required by the Code, the Trustee shall ensure that
substantially all of the assets of REMIC I, REMIC II and REMIC III will consist
of "qualified
134
<PAGE>
mortgages" as defined in Section 860G(a)(3) of the Code and "permitted
investments" as defined in Section 860G(a)(5) of the Code.
(m) The Depositor shall provide or cause to be provided to the
Trustee, within ten days after the Closing Date, all information or data that
the Trustee reasonably determines to be relevant for tax purposes as to the
valuations and issue prices of the Certificates, including, without limitation,
the price, yield, prepayment assumption and projected cash flow of the
Certificates. The Master Servicer shall furnish such reports, certifications and
information, and access to such books and records maintained thereby, as may
relate to the Certificates or the Trust Fund and as shall be reasonably
requested by the Trustee in order to enable it to perform its duties hereunder.
(n) The Trustee agrees to indemnify the Trust Fund, the Depositor
and the Master Servicer for any taxes and costs including, without limitation,
any reasonable attorneys fees imposed on or incurred by the Trust Fund, the
Depositor or the Master Servicer, as a result of a breach by the Trustee with
respect to the covenants set forth in this Section 11.09. All such amounts paid
by the Trustee to indemnify the Trust Fund shall be deposited by the Trustee
into the Collection Account. The Master Servicer agrees to indemnify the Trust
Fund, the Depositor and the Trustee for any taxes and costs (including, without
limitation, any reasonable attorneys' fees) imposed on or incurred by the Trust
Fund, the Depositor or the Trustee, as a result of a breach of the Master
Servicer's covenants set forth in this Section 11.09 or in Article III with
respect to compliance with the REMIC Provisions. All such amounts paid by the
Master Servicer to indemnify the Trust Fund shall be delivered to the Trustee
and deposited by the Trustee into the Collection Account.
(o) The Depositor agrees to indemnify the Trust Fund, the Trustee
and the Master Servicer for any taxes and costs (including, without limitation,
any reasonable attorney's fees) imposed on or incurred by the Trust Fund, the
Trustee or the Master Servicer as a result of a breach of the Depositor's
covenants set forth in this Section 11.09 or Article III with respect to
compliance with the REMIC Provisions. All such amounts paid by the Depositor to
indemnify the Trust Fund shall be delivered to the Trustee and deposited by the
Trustee into the Collection Account.
135
<PAGE>
IN WITNESS WHEREOF, the Depositor, the Master Servicer, Greystone
Funding, Daiwa Finance and the Trustee have caused their names to be signed
hereto by their respective officers thereunto duly authorized all as of the
first day of December, 1996.
AMERICAN SOUTHWEST FINANCIAL
SECURITIES CORPORATION,
as Depositor
By:_______________________________
Name:
Title:
GREYSTONE SERVICING CORPORATION, INC.,
as Master Servicer
By:_______________________________
Name:
Title:
GREYSTONE FUNDING CORPORATION,
as Seller
By:_______________________________
Name:
Title:
DAIWA FINANCE CORP.,
as Seller
By:_______________________________
Name:
Title:
LASALLE NATIONAL BANK,
as Trustee
By:_______________________________
Name:
Title:
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the ______ of __________, 1996 before me, personally appeared
_______________________ known to me to be _______________________ of American
Southwest Financial Securities Corporation, one of the corporations that
executed the within instrument and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
______________________________
Notary Public
[NOTARIAL SEAL]
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On this ______ day of __________, 1996, before me, personally
appeared _______________________________, known to me to be a
____________________________ of Greystone Servicing Corporation, Inc. and one of
the corporations that executed the within instrument and also known to me to be
the person who executed it on behalf of said corporation, and acknowledged to me
that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
______________________________
Notary Public
[NOTARIAL SEAL]
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the _____ of __________, 1996 before me, a Notary Public in and
for said State, personally appeared ____________________________ known to me to
be a ___________________________ of Greystone Funding Corporation, one of the
corporations that executed the within instrument and also known to me to be the
person who executed it on behalf of said corporation, and acknowledged to me
that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
______________________________
Notary Public
[NOTARIAL SEAL]
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the _____ of __________, 1996 before me, a Notary Public in and
for said State, personally appeared ____________________________ known to me to
be a ___________________________ of Daiwa Finance Corp., one of the corporations
that executed the within instrument and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
______________________________
Notary Public
[NOTARIAL SEAL]
<PAGE>
STATE OF _________ )
: ss.:
COUNTY ___________ )
On the _____ of __________, 1996 before me, a Notary Public in and
for said State, personally appeared ____________________________ known to me to
be a ______________________________ of LaSalle National Bank, one of the banks
that executed the within instrument and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
______________________________
Notary Public
[NOTARIAL SEAL]
<PAGE>
EXHIBIT A-1
FORM OF CLASS A-1 CERTIFICATE
AMERICAN SOUTHWEST FINANCIAL SECURITIES CORPORATION
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 1996-FHA1, CLASS A-1
Evidencing an undivided interest in a trust fund (the "Trust Fund") whose assets
consist primarily of a pool (the "Mortgage Pool") of (i) fixed-rate,
fully-amortizing mortgage loans (the "FHA Loans") insured by the Federal Housing
Administration (the "FHA") of the United States Department of Housing and Urban
Development ("HUD") under certain sections of the National Housing Act of 1934,
as amended (the "Housing Act") and secured by liens on multifamily rental
housing developments (collectively, "Multifamily Properties") or nursing homes,
intermediate care facilities, assisted living facilities, board and care homes
or other nursing facilities (collectively, "Nursing Facilities"); and (ii)
securities (the "GNMA Certificates") guaranteed by the Government National
Mortgage Association ("GNMA") and backed by fixed-rate, level payment,
fully-amortizing mortgage loans (the "Underlying Mortgage Loans" and
collectively, with the FHA Loans, the "Mortgage Loans") that are likewise so
insured by the FHA and are secured by liens on Multifamily Properties or Nursing
Facilities. The Trust Fund was formed and the Mortgage Loans and the GNMA
Certificates were transferred thereto at the direction of
AMERICAN SOUTHWEST FINANCIAL SECURITIES CORPORATION
Certificate Interest Initial Class Principal
Rate: ____% per annum Balance of the Class A-1
Certificates: $_____________
Cut-off Date:
December 1, 1996 Initial Certificate Principal
Balance of this Certificate:
Closing Date: $____________
December __, 1996
First Distribution Date:
January 27, 1997
Cusip No. ___________
Certificate No. A-1-______
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST CORPORATION, A NEW YORK CORPORATION ("DTC"), TO THE DEPOSITOR,
THE MASTER SERVICER, THE TRUSTEE OR ANY AGENT
<PAGE>
THEREOF FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").
THIS CERTIFICATE DOES NOT REPRESENT AN INTEREST IN OR OBLIGATION OF AMERICAN
SOUTHWEST FINANCIAL SECURITIES CORPORATION, GREYSTONE SERVICING CORPORATION,
INC., GREYSTONE FUNDING CORPORATION, DAIWA FINANCE CORP. OR THE TRUSTEE REFERRED
TO BELOW, OR OF ANY OF THEIR AFFILIATES. THIS CERTIFICATE IS NOT GUARANTEED OR
INSURED BY ANY GOVERNMENT AGENCY OR INSTRUMENTALITY.
THIS CERTIFIES THAT _____________ is the registered owner of a
beneficial interest in the Trust Fund, which was created pursuant to the
Pooling and Servicing Agreement, dated as of December 1, 1996 (the
"Agreement"), among American Southwest Financial Securities Corporation,
as depositor (the "Depositor," which term includes any successor entity
under the Agreement), Greystone Servicing Corporation, Inc., as master
servicer (the "Master Servicer," which term includes any successor
entity under the Agreement), Greystone Funding Corporation, as seller
("Greystone Funding"), Daiwa Finance Corp., as seller ("Daiwa Finance";
Daiwa Finance and Greystone Funding, each a "Seller" and, together the
"Sellers," which terms include any successor entities under the
Agreement), and LaSalle National Bank, as trustee (the "Trustee," which
term includes any successor entity under the Agreement). This
Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this
Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound. Any term used herein that is defined in the Agreement
shall have the meaning assigned in the Agreement, and nothing herein
shall be deemed inconsistent with that meaning. If the terms hereof are
inconsistent with the Agreement, the Agreement shall control.
This Certificate is one of a duly authorized issue of certificates
of American Southwest Financial Securities Corporation, designated as its
Commercial Mortgage Pass-Through Certificates, Series 1996-FHA1 (the
"Certificates"), which is comprised of the following ten classes (each, a
"Class"): the Class A-1, Class A-2, Class A-3, Class A-4, Class A-Z, Class S,
Class B, Class R-I, Class R-II and Class R-III Certificates. Reference is hereby
made to the Agreement for a statement of the respective rights thereunder of the
Depositor, the Sellers, the Master Servicer, the Trustee and the Holders of each
Class of the Certificates and the terms upon which the Certificates are
authenticated and delivered. This Certificate represents an interest in the
Trust Fund, which Trust Fund consists of, among other things, (i) the Mortgage
Assets and
<PAGE>
all payments under and proceeds of such Mortgage Assets (other than any Retained
Yield) received after the Cut-off Date (exclusive of any payments of or relating
to principal and interest due on the FHA Loans on or before the Cut-off Date),
together with all documents included in the related Mortgage Files and Servicing
Files for the Mortgage Loans; (ii) the FHA Mortgage Insurance in respect of the
Mortgage Loans, together with all FHA Insurance Benefits (other than any
Retained Yield) derived therefrom; (iii) such funds or assets (other than any
Retained Yield) as from time to time are deposited in the Distribution Account
and/or the Collection Account; (iv) any insurance policies with respect to the
Mortgage Loans; and (v) all proceeds of the conversion, voluntary or
involuntary, of any of the foregoing into cash or other liquid property.
This Class A-1 Certificate represents a Percentage Interest in the
related class equal to the initial Certificate Principal Balance hereof divided
by the Initial Class Principal Balance of the Class A-1 Certificates, both as
set forth above.
The Trustee shall distribute from the Distribution Account, to the
extent of available funds, on the 25th day of each calendar month or, if such
25th day is not a Business Day, the Business Day immediately following such 25th
day (each, a "Distribution Date"), commencing in January, 1997, to the Person in
whose name this Certificate is registered at the close of business on the last
Business Day of the month immediately preceding the month of such distribution
(each, a "Record Date"), interest and principal (including any Prepayment
Premiums) in an amount equal to the product of the Percentage Interest evidenced
by this Certificate and that portion of the Available Distribution Amount that
is allocated to distributions on the related Class of Certificates on such
Distribution Date.
Not later than each Distribution Date, the Trustee will send to each
Certificateholder a statement containing information relating to the Mortgage
Assets and payments made to Certificateholders.
Distributions on this Certificate will be made by the Trustee by
check mailed to the address of the Holder hereof entitled thereto as such
address appears in the Certificate Register or, if such Holder holds one or more
Certificates with an aggregate initial Certificate Principal Balance of at least
$2,500,000, by wire transfer in immediately available funds to the account of
such Certificateholder designated in writing to the Trustee at least five
Business Days prior to the applicable Record Date. Notwithstanding the above,
the final distribution on this Certificate will be made after due notice of the
pendency of such final distribution and only upon presentation and surrender of
this Certificate at the office or agency designated in such notice.
Notwithstanding the foregoing, for so long as this Certificate is
registered in the name of Cede & Co. or in such other name as is requested by an
authorized representative of DTC, transfers of interests in this Certificate
shall be made through the book-entry facilities of DTC.
The Agreement permits, with certain exceptions as therein provided,
the amendment thereof by the Depositor, the Master Servicer, the Seller and the
Trustee with the consent of the Holders of Certificates entitled to, in the
aggregate, not less than 66-2/3% of the
A-1-3
<PAGE>
Voting Rights of all the Certificates affected by any such amendments, for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of the Agreement or for the purpose of modifying in any manner
the rights of the Holders of the Certificates; provided, however, that no such
amendment may (i) reduce in any manner the amount of, delay the timing of or
change the manner in which payments received on Mortgage Assets are required to
be distributed in respect of any Certificate without the consent of the Holder
of such Certificate; (ii) reduce the aforesaid percentage of aggregate Voting
Rights allocated to Certificates of each Class, the Holders of which are
required to consent to any such amendment, without the consent of the Holders of
Certificates entitled to 100% of the Voting Rights allocated to each Class of
Certificates affected thereby, (iii) modify the provisions of this Section 11.01
of the Agreement without the consent of all of the Certificateholders or (iv)
alter the servicing standard set forth in Section 3.01(a) of the Agreement. Any
such consent by the Holder of this Certificate shall be conclusive and binding
on such Holder and upon all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange herefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
Under certain limited circumstances set forth therein, the Agreement may be
amended by the parties thereto without the consent of any Holder.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable on the
Certificate Register upon surrender of this Certificate for registration of
transfer at the office or agency of the Trustee designated therefor, duly
endorsed by, or accompanied by a written instrument of transfer in a form
satisfactory to the Trustee duly executed by the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations and evidencing the same aggregate
interest in the Trust Fund, will be issued to the designated transferee or
transferees.
The Class A-1 Certificates will be issued in fully registered form
in minimum denominations of $10,000 initial Certificate Principal Balance and in
integral multiples of $1,000 in excess of such amount. As provided in the
Agreement and subject to certain limitations therein set forth, this Certificate
is exchangeable for one or more new Certificates of the same Class and of
authorized denominations and evidencing a like aggregate Certificate Principal
Balance, as requested by the Holder surrendering the same.
No service charge will be made for such registrations of transfers
or exchanges, 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 nor any such agent thereof shall be affected by notice to the contrary.
The obligations and responsibilities of the Depositor, the Master
Servicer, the Sellers and the Trustee created by the Agreement will terminate
upon the earliest of (i) the purchase by the Master Servicer, at its election,
of all the Mortgage Assets remaining in the Trust Fund and the corresponding
distribution to Certificateholders of all amounts required to be distributed to
them, which repurchase right the Master Servicer may exercise at its sole and
A-1-4
<PAGE>
exclusive election if the aggregate Stated Principal Balance of the Mortgage
Pool at the time of the repurchase is less than 5% of the aggregate Cut-off Date
Balance of the Mortgage Pool; (ii) the maturity or other liquidation (or any
advance with respect thereto) of the last Mortgage Asset remaining in the Trust
Fund and the corresponding distribution to Certificateholders of all amounts
required to be distributed to them; or (iii) the mutual agreement of the parties
to the Agreement and the Certificateholders as to such termination.
Unless the certificate of authentication hereon has been executed by
or on behalf of the Trustee by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid or obligatory for any
purpose.
A-1-5
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed under its corporate seal.
LASALLE NATIONAL BANK,
as Trustee
By:__________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class A-1 Certificates referred to in the within-mentioned
Agreement.
Date:
LASALLE NATIONAL BANK,
as Trustee
By:______________________________
Authorized Officer
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sell(s), assign(s) and
transfer(s) unto ______________________________________________________________
__________________________________________________ (Please print or typewrite
name and address, including postal zip code, of assignee) the undivided interest
in the Trust Fund evidenced by the within Certificate and hereby authorize(s)
the transfer of registration of such interest to the assignee on the Certificate
Register.
I (we) further direct the Trustee to issue a new Certificate of the same
Class and of a like initial Certificate Principal Balance and undivided interest
in the Trust Fund to the above-named assignee and to deliver such Certificate to
the following address __________________________________________________________
________________________________________________________________________________
Dated: __________, ____
Social Security or ______________________________
other Tax Identification Signature by or on behalf of
No. of Assignee: assignor (signature must be signed as
registered)
____________________________ ______________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for the information of the
Trustee:
Distribution shall be made by check mailed to ____________________
______________________________________________________________________________,
or if the aggregate initial Certificate Principal Balance of all Certificates
held by the Holder is at least $2,500,000 and the Trustee shall have received
appropriate wiring instructions in accordance with the Agreement, by wire
transfer in immediately available funds to _______________ for the account of
________________, account number ______________. This information is provided by
the assignee named above, or its agent.
<PAGE>
EXHIBIT A-2
FORM OF CLASS A-2 CERTIFICATE
AMERICAN SOUTHWEST FINANCIAL SECURITIES CORPORATION
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 1996-FHA1, CLASS A-2
Evidencing an undivided interest in a trust fund (the "Trust Fund") whose assets
consist primarily of a pool (the "Mortgage Pool") of (i) fixed-rate,
fully-amortizing mortgage loans (the "FHA Loans") insured by the Federal Housing
Administration (the "FHA") of the United States Department of Housing and Urban
Development ("HUD") under certain sections of the National Housing Act of 1934,
as amended (the "Housing Act") and secured by liens on multifamily rental
housing developments (collectively, "Multifamily Properties") or nursing homes,
intermediate care facilities, assisted living facilities, board and care homes
or other nursing facilities (collectively, "Nursing Facilities"); and (ii)
securities (the "GNMA Certificates") guaranteed by the Government National
Mortgage Association ("GNMA") and backed by fixed-rate, level payment,
fully-amortizing mortgage loans (the "Underlying Mortgage Loans" and
collectively, with the FHA Loans, the "Mortgage Loans") that are likewise so
insured by the FHA and are secured by liens on Multifamily Properties or Nursing
Facilities. The Trust Fund was formed and the Mortgage Loans and the GNMA
Certificates were transferred thereto at the direction of
AMERICAN SOUTHWEST FINANCIAL SECURITIES CORPORATION
Certificate Interest Initial Class Principal
Rate: ____% per annum Balance of the Class A-2
Certificates: $_____________
Cut-off Date:
December 1, 1997 Initial Certificate Principal
Balance of this Certificate:
Closing Date: $____________
December __, 1996
First Distribution Date:
January 27, 1996
Cusip No. ___________
Certificate No. A-2-______
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST CORPORATION, A NEW YORK CORPORATION ("DTC"),
<PAGE>
TO THE DEPOSITOR, THE MASTER SERVICER, THE TRUSTEE OR ANY AGENT THEREOF FOR
REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").
THIS CERTIFICATE DOES NOT REPRESENT AN INTEREST IN OR OBLIGATION OF AMERICAN
SOUTHWEST FINANCIAL SECURITIES CORPORATION, GREYSTONE SERVICING CORPORATION,
INC., GREYSTONE FUNDING CORPORATION, DAIWA FINANCE CORP. OR THE TRUSTEE REFERRED
TO BELOW, OR OF ANY OF THEIR AFFILIATES. THIS CERTIFICATE IS NOT GUARANTEED OR
INSURED BY ANY GOVERNMENT AGENCY OR INSTRUMENTALITY.
THIS CERTIFIES THAT ______________ is the registered owner of a
beneficial interest in the Trust Fund, which was created pursuant to the
Pooling and Servicing Agreement, dated as of December 1, 1996 (the
"Agreement"), among American Southwest Financial Securities Corporation,
as depositor (the "Depositor," which term includes any successor entity
under the Agreement), Greystone Servicing Corporation, Inc., as master
servicer (the "Master Servicer," which term includes any successor
entity under the Agreement), Greystone Funding Corporation, as seller
("Greystone Funding"), Daiwa Finance Corp., as seller ("Daiwa Finance";
Daiwa Finance and Greystone Funding, each a "Seller" and, together the
"Sellers," which terms include any successor entities under the
Agreement), and LaSalle National Bank, as trustee (the "Trustee," which
term includes any successor entity under the Agreement). This
Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this
Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound. Any term used herein that is defined in the Agreement
shall have the meaning assigned in the Agreement, and nothing herein
shall be deemed inconsistent with that meaning. If the terms hereof are
inconsistent with the Agreement, the Agreement shall control.
This Certificate is one of a duly authorized issue of certificates
of American Southwest Financial Securities Corporation, designated as its
Commercial Mortgage Pass-Through Certificates, Series 1996-FHA1 (the
"Certificates"), which is comprised of the following ten classes (each, a
"Class"): the Class A-1, Class A-2, Class A-3, Class A-4, Class A-Z, Class S,
Class B, Class R-I, Class R-II and Class R-III Certificates. Reference is hereby
made to the Agreement for a statement of the respective rights thereunder of the
Depositor, the Sellers, the Master Servicer, the Trustee and the Holders of each
Class of the Certificates and the terms upon
A-2-2
<PAGE>
which the Certificates are authenticated and delivered. This Certificate
represents an interest in the Trust Fund, which Trust Fund consists of, among
other things, (i) the Mortgage Assets and all payments under and proceeds of
such Mortgage Assets (other than any Retained Yield) received after the Cut-off
Date (exclusive of any payments of or relating to principal and interest due on
the FHA Loans on or before the Cut-off Date), together with all documents
included in the related Mortgage Files and Servicing Files for the Mortgage
Loans; (ii) the FHA Mortgage Insurance in respect of the Mortgage Loans,
together with all FHA Insurance Benefits (other than any Retained Yield) derived
therefrom; (iii) such funds or assets (other than any Retained Yield) as from
time to time are deposited in the Distribution Account and/or the Collection
Account; (iv) any insurance policies with respect to the Mortgage Loans; and (v)
all proceeds of the conversion, voluntary or involuntary, of any of the
foregoing into cash or other liquid property.
This Class A-2 Certificate represents a Percentage Interest in the
related class equal to the initial Certificate Principal Balance hereof divided
by the Initial Class Principal Balance of the Class A-2 Certificates, both as
set forth above.
The Trustee shall distribute from the Distribution Account, to the
extent of available funds, on the 25th day of each calendar month or, if such
25th day is not a Business Day, the Business Day immediately following such 25th
day (each, a "Distribution Date"), commencing in January, 1997, to the Person in
whose name this Certificate is registered at the close of business on the last
Business Day of the month immediately preceding the month of such distribution
(each, a "Record Date"), interest and principal (including any Prepayment
Premiums) in an amount equal to the product of the Percentage Interest evidenced
by this Certificate and that portion of the Available Distribution Amount that
is allocated to distributions on the related Class of Certificates on such
Distribution Date.
Not later than each Distribution Date, the Trustee will send to each
Certificateholder a statement containing information relating to the Mortgage
Assets and payments made to Certificateholders.
Distributions on this Certificate will be made by the Trustee by
check mailed to the address of the Holder hereof entitled thereto as such
address appears in the Certificate Register or, if such Holder holds one or more
Certificates with an aggregate initial Certificate Principal Balance of at least
$2,500,000, by wire transfer in immediately available funds to the account of
such Certificateholder designated in writing to the Trustee at least five
Business Days prior to the applicable Record Date. Notwithstanding the above,
the final distribution on this Certificate will be made after due notice of the
pendency of such final distribution and only upon presentation and surrender of
this Certificate at the office or agency designated in such notice.
Notwithstanding the foregoing, for so long as this Certificate is
registered in the name of Cede & Co. or in such other name as is requested by an
authorized representative of DTC, transfers of interests in this Certificate
shall be made through the book-entry facilities of DTC.
A-2-3
<PAGE>
The Agreement permits, with certain exceptions as therein provided,
the amendment thereof by the Depositor, the Master Servicer, the Seller and the
Trustee with the consent of the Holders of Certificates entitled to, in the
aggregate, not less than 66-2/3% of the Voting Rights of all the Certificates
affected by any such amendments, for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of the Agreement or
for the purpose of modifying in any manner the rights of the Holders of the
Certificates; provided, however, that no such amendment may (i) reduce in any
manner the amount of, delay the timing of or change the manner in which payments
received on Mortgage Assets are required to be distributed in respect of any
Certificate without the consent of the Holder of such Certificate; (ii) reduce
the aforesaid percentage of aggregate Voting Rights allocated to Certificates of
each Class, the Holders of which are required to consent to any such amendment,
without the consent of the Holders of Certificates entitled to 100% of the
Voting Rights allocated to each Class of Certificates affected thereby, (iii)
modify the provisions of this Section 11.01 of the Agreement without the consent
of all of the Certificateholders or (iv) alter the servicing standard set forth
in Section 3.01(a) of the Agreement. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate. Under certain limited circumstances set
forth therein, the Agreement may be amended by the parties thereto without the
consent of any Holder.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable on the
Certificate Register upon surrender of this Certificate for registration of
transfer at the office or agency of the Trustee designated therefor, duly
endorsed by, or accompanied by a written instrument of transfer in a form
satisfactory to the Trustee duly executed by the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations and evidencing the same aggregate
interest in the Trust Fund, will be issued to the designated transferee or
transferees.
The Class A-2 Certificates will be issued in fully registered form
in minimum denominations of $10,000 initial Certificate Principal Balance and in
integral multiples of $1,000 in excess of such amount. As provided in the
Agreement and subject to certain limitations therein set forth, this Certificate
is exchangeable for one or more new Certificates of the same Class and of
authorized denominations and evidencing a like aggregate Certificate Principal
Balance, as requested by the Holder surrendering the same.
No service charge will be made for such registrations of transfers
or exchanges, 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 nor any such agent thereof shall be affected by notice to the contrary.
The obligations and responsibilities of the Depositor, the Master
Servicer, the Sellers and the Trustee created by the Agreement will terminate
upon the earliest of (i) the
A-2-4
<PAGE>
purchase by the Master Servicer, at its election, of all the Mortgage Assets
remaining in the Trust Fund and the corresponding distribution to
Certificateholders of all amounts required to be distributed to them, which
repurchase right the Master Servicer may exercise at its sole and exclusive
election if the aggregate Stated Principal Balance of the Mortgage Pool at the
time of the repurchase is less than 5% of the aggregate Cut-off Date Balance of
the Mortgage Pool; (ii) the maturity or other liquidation (or any advance with
respect thereto) of the last Mortgage Asset remaining in the Trust Fund and the
corresponding distribution to Certificateholders of all amounts required to be
distributed to them; or (iii) the mutual agreement of the parties to the
Agreement and the Certificateholders as to such termination.
Unless the certificate of authentication hereon has been executed by
or on behalf of the Trustee by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid or obligatory for any
purpose.
A-2-5
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed under its corporate seal.
LASALLE NATIONAL BANK,
as Trustee
By:__________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class A-2 Certificates referred to in the within-mentioned
Agreement.
Date:
LASALLE NATIONAL BANK,
as Trustee
By:______________________________
Authorized Officer
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
__________________________________________________ (Please print or typewrite
name and address, including postal zip code, of assignee) the undivided interest
in the Trust Fund evidenced by the within Certificate and hereby authorize(s)
the transfer of registration of such interest to the assignee on the Certificate
Register.
I (we) further direct the Trustee to issue a new Certificate of the same
Class and of a like initial Certificate Principal Balance and undivided interest
in the Trust Fund to the above-named assignee and to deliver such Certificate to
the following address __________________________________________________________
________________________________________________________________________________
Dated: __________, ____
Social Security or ______________________________
other Tax Identification Signature by or on behalf of
No. of Assignee: assignor (signature must be signed as
registered)
____________________________ ______________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for the information of the
Trustee:
Distribution shall be made by check mailed to ___________________
______________________________________________________________________________,
or if the aggregate initial Certificate Principal Balance of all Certificates
held by the Holder is at least $2,500,000 and the Trustee shall have received
appropriate wiring instructions in accordance with the Agreement, by wire
transfer in immediately available funds to _______________ for the account of
________________, account number ______________. This information is provided by
the assignee named above, or its agent.
<PAGE>
EXHIBIT A-3
FORM OF CLASS A-3 CERTIFICATE
AMERICAN SOUTHWEST FINANCIAL SECURITIES CORPORATION
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 1996-FHA1, CLASS A-3
Evidencing an undivided interest in a trust fund (the "Trust Fund") whose assets
consist primarily of a pool (the "Mortgage Pool") of (i) fixed-rate,
fully-amortizing mortgage loans (the "FHA Loans") insured by the Federal Housing
Administration (the "FHA") of the United States Department of Housing and Urban
Development ("HUD") under certain sections of the National Housing Act of 1934,
as amended (the "Housing Act") and secured by liens on multifamily rental
housing developments (collectively, "Multifamily Properties") or nursing homes,
intermediate care facilities, assisted living facilities, board and care homes
or other nursing facilities (collectively, "Nursing Facilities"); and (ii)
securities (the "GNMA Certificates") guaranteed by the Government National
Mortgage Association ("GNMA") and backed by fixed-rate, level payment,
fully-amortizing mortgage loans (the "Underlying Mortgage Loans" and
collectively, with the FHA Loans, the "Mortgage Loans") that are likewise so
insured by the FHA and are secured by liens on Multifamily Properties or Nursing
Facilities. The Trust Fund was formed and the Mortgage Loans and the GNMA
Certificates were transferred thereto at the direction of
AMERICAN SOUTHWEST FINANCIAL SECURITIES CORPORATION
Certificate Interest Initial Class Principal
Rate: ____% per annum Balance of the Class A-3
Certificates: $_____________
Cut-off Date:
December 1, 1996 Initial Certificate Principal
Balance of this Certificate:
Closing Date: $____________
December __, 1996
First Distribution Date:
January 27, 1997
Cusip No. ___________
Certificate No. A-3-______
<PAGE>
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST CORPORATION, A NEW YORK CORPORATION ("DTC"), TO THE DEPOSITOR,
THE MASTER SERVICER, THE TRUSTEE OR ANY AGENT THEREOF FOR REGISTRATION OF
TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").
THIS CERTIFICATE DOES NOT REPRESENT AN INTEREST IN OR OBLIGATION OF AMERICAN
SOUTHWEST FINANCIAL SECURITIES CORPORATION, GREYSTONE SERVICING CORPORATION,
INC., GREYSTONE FUNDING CORPORATION, DAIWA FINANCE CORP. OR THE TRUSTEE REFERRED
TO BELOW, OR OF ANY OF THEIR AFFILIATES. THIS CERTIFICATE IS NOT GUARANTEED OR
INSURED BY ANY GOVERNMENT AGENCY OR INSTRUMENTALITY.
THIS CERTIFIES THAT __________ is the registered owner of a
beneficial interest in the Trust Fund, which was created pursuant to the Pooling
and Servicing Agreement, dated as of December 1, 1996 (the "Agreement"), among
American Southwest Financial Securities Corporation, as depositor (the
"Depositor," which term includes any successor entity under the Agreement),
Greystone Servicing Corporation, Inc., as master servicer (the "Master
Servicer," which term includes any successor entity under the Agreement),
Greystone Funding Corporation, as seller ("Greystone Funding"), Daiwa Finance
Corp., as seller ("Daiwa Finance"; Daiwa Finance and Greystone Funding, each a
"Seller" and, together the "Sellers," which terms include any successor entities
under the Agreement), and LaSalle National Bank, as trustee (the "Trustee,"
which term includes any successor entity under the Agreement). This Certificate
is issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound. Any term used
herein that is defined in the Agreement shall have the meaning assigned in the
Agreement, and nothing herein shall be deemed inconsistent with that meaning. If
the terms hereof are inconsistent with the Agreement, the Agreement shall
control.
This Certificate is one of a duly authorized issue of certificates
of American Southwest Financial Securities Corporation, designated as its
Commercial Mortgage Pass-Through Certificates, Series 1996-FHA1 (the
"Certificates"), which is comprised of the following ten classes (each, a
"Class"): the Class A-1, Class A-2, Class A-3, Class A-4, Class A-Z, Class S,
Class B, Class R-I, Class R-II and Class R-III Certificates. Reference is hereby
made to the
A-3-2
<PAGE>
Agreement for a statement of the respective rights thereunder of the Depositor,
the Sellers, the Master Servicer, the Trustee and the Holders of each Class of
the Certificates and the terms upon which the Certificates are authenticated and
delivered. This Certificate represents an interest in the Trust Fund, which
Trust Fund consists of, among other things, (i) the Mortgage Assets and all
payments under and proceeds of such Mortgage Assets (other than any Retained
Yield) received after the Cut-off Date (exclusive of any payments of or relating
to principal and interest due on the FHA Loans on or before the Cut-off Date),
together with all documents included in the related Mortgage Files and Servicing
Files for the Mortgage Loans; (ii) the FHA Mortgage Insurance in respect of the
Mortgage Loans, together with all FHA Insurance Benefits (other than any
Retained Yield) derived therefrom; (iii) such funds or assets (other than any
Retained Yield) as from time to time are deposited in the Distribution Account
and/or the Collection Account; (iv) any insurance policies with respect to the
Mortgage Loans; and (v) all proceeds of the conversion, voluntary or
involuntary, of any of the foregoing into cash or other liquid property.
This Class A-3 Certificate represents a Percentage Interest in the
related class equal to the initial Certificate Principal Balance hereof divided
by the Initial Class Principal Balance of the Class A-3 Certificates, both as
set forth above.
The Trustee shall distribute from the Distribution Account, to the
extent of available funds, on the 25th day of each calendar month or, if such
25th day is not a Business Day, the Business Day immediately following such 25th
day (each, a "Distribution Date"), commencing in January, 1997, to the Person in
whose name this Certificate is registered at the close of business on the last
Business Day of the month immediately preceding the month of such distribution
(each, a "Record Date"), interest and principal (including any Prepayment
Premiums) in an amount equal to the product of the Percentage Interest evidenced
by this Certificate and that portion of the Available Distribution Amount that
is allocated to distributions on the related Class of Certificates on such
Distribution Date.
Not later than each Distribution Date, the Trustee will send to each
Certificateholder a statement containing information relating to the Mortgage
Assets and payments made to Certificateholders.
Distributions on this Certificate will be made by the Trustee by
check mailed to the address of the Holder hereof entitled thereto as such
address appears in the Certificate Register or, if such Holder holds one or more
Certificates with an aggregate initial Certificate Principal Balance of at least
$2,500,000, by wire transfer in immediately available funds to the account of
such Certificateholder designated in writing to the Trustee at least five
Business Days prior to the applicable Record Date. Notwithstanding the above,
the final distribution on this Certificate will be made after due notice of the
pendency of such final distribution and only upon presentation and surrender of
this Certificate at the office or agency designated in such notice.
Notwithstanding the foregoing, for so long as this Certificate is
registered in the name of Cede & Co. or in such other name as is requested by an
authorized representative of DTC, transfers of interests in this Certificate
shall be made through the book-entry facilities of DTC.
A-3-3
<PAGE>
The Agreement permits, with certain exceptions as therein provided,
the amendment thereof by the Depositor, the Master Servicer, the Seller and the
Trustee with the consent of the Holders of Certificates entitled to, in the
aggregate, not less than 66-2/3% of the Voting Rights of all the Certificates
affected by any such amendments, for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of the Agreement or
for the purpose of modifying in any manner the rights of the Holders of the
Certificates; provided, however, that no such amendment may (i) reduce in any
manner the amount of, delay the timing of or change the manner in which payments
received on Mortgage Assets are required to be distributed in respect of any
Certificate without the consent of the Holder of such Certificate; (ii) reduce
the aforesaid percentage of aggregate Voting Rights allocated to Certificates of
each Class, the Holders of which are required to consent to any such amendment,
without the consent of the Holders of Certificates entitled to 100% of the
Voting Rights allocated to each Class of Certificates affected thereby, (iii)
modify the provisions of this Section 11.01 of the Agreement without the consent
of all of the Certificateholders or (iv) alter the servicing standard set forth
in Section 3.01(a) of the Agreement. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate. Under certain limited circumstances set
forth therein, the Agreement may be amended by the parties thereto without the
consent of any Holder.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable on the
Certificate Register upon surrender of this Certificate for registration of
transfer at the office or agency of the Trustee designated therefor, duly
endorsed by, or accompanied by a written instrument of transfer in a form
satisfactory to the Trustee duly executed by the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations and evidencing the same aggregate
interest in the Trust Fund, will be issued to the designated transferee or
transferees.
The Class A-3 Certificates will be issued in fully registered form
in minimum denominations of $10,000 initial Certificate Principal Balance and in
integral multiples of $1,000 in excess of such amount. As provided in the
Agreement and subject to certain limitations therein set forth, this Certificate
is exchangeable for one or more new Certificates of the same Class and of
authorized denominations and evidencing a like aggregate Certificate Principal
Balance, as requested by the Holder surrendering the same.
No service charge will be made for such registrations of transfers
or exchanges, 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 nor any such agent thereof shall be affected by notice to the contrary.
The obligations and responsibilities of the Depositor, the Master
Servicer, the Sellers and the Trustee created by the Agreement will terminate
upon the earliest of (i) the
A-3-4
<PAGE>
purchase by the Master Servicer, at its election, of all the Mortgage Assets
remaining in the Trust Fund and the corresponding distribution to
Certificateholders of all amounts required to be distributed to them, which
repurchase right the Master Servicer may exercise at its sole and exclusive
election if the aggregate Stated Principal Balance of the Mortgage Pool at the
time of the repurchase is less than 5% of the aggregate Cut-off Date Balance of
the Mortgage Pool; (ii) the maturity or other liquidation (or any advance with
respect thereto) of the last Mortgage Asset remaining in the Trust Fund and the
corresponding distribution to Certificateholders of all amounts required to be
distributed to them; or (iii) the mutual agreement of the parties to the
Agreement and the Certificateholders as to such termination.
Unless the certificate of authentication hereon has been executed by
or on behalf of the Trustee by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid or obligatory for any
purpose.
A-3-5
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed under its corporate seal.
LASALLE NATIONAL BANK,
as Trustee
By:__________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class A-3 Certificates referred to in the within-mentioned
Agreement.
Date:
LASALLE NATIONAL BANK,
as Trustee
By:______________________________
Authorized Officer
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
__________________________________________________ (Please print or typewrite
name and address, including postal zip code, of assignee) the undivided interest
in the Trust Fund evidenced by the within Certificate and hereby authorize(s)
the transfer of registration of such interest to the assignee on the Certificate
Register.
I (we) further direct the Trustee to issue a new Certificate of the same
Class and of a like initial Certificate Principal Balance and undivided interest
in the Trust Fund to the above-named assignee and to deliver such Certificate to
the following address __________________________________________________________
________________________________________________________________________________
Dated: __________, ____
Social Security or ______________________________
other Tax Identification Signature by or on behalf of
No. of Assignee: assignor (signature must be signed as
registered)
____________________________ ______________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for the information of the
Trustee:
Distribution shall be made by check mailed to ____________________
______________________________________________________________________________,
or if the aggregate initial Certificate Principal Balance of all Certificates
held by the Holder is at least $2,500,000 and the Trustee shall have received
appropriate wiring instructions in accordance with the Agreement, by wire
transfer in immediately available funds to _______________ for the account of
________________, account number ______________. This information is provided by
the assignee named above, or its agent.
<PAGE>
EXHIBIT A-4
FORM OF CLASS A-4 CERTIFICATE
AMERICAN SOUTHWEST FINANCIAL SECURITIES CORPORATION
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 1996-FHA1, CLASS A-4
Evidencing an undivided interest in a trust fund (the "Trust Fund") whose assets
consist primarily of a pool (the "Mortgage Pool") of (i) fixed-rate,
fully-amortizing mortgage loans (the "FHA Loans") insured by the Federal Housing
Administration (the "FHA") of the United States Department of Housing and Urban
Development ("HUD") under certain sections of the National Housing Act of 1934,
as amended (the "Housing Act") and secured by liens on multifamily rental
housing developments (collectively, "Multifamily Properties") or nursing homes,
intermediate care facilities, assisted living facilities, board and care homes
or other nursing facilities (collectively, "Nursing Facilities"); and (ii)
securities (the "GNMA Certificates") guaranteed by the Government National
Mortgage Association ("GNMA") and backed by fixed-rate, level payment,
fully-amortizing mortgage loans (the "Underlying Mortgage Loans" and
collectively, with the FHA Loans, the "Mortgage Loans") that are likewise so
insured by the FHA and are secured by liens on Multifamily Properties or Nursing
Facilities. The Trust Fund was formed and the Mortgage Loans and the GNMA
Certificates were transferred thereto at the direction of
AMERICAN SOUTHWEST FINANCIAL SECURITIES CORPORATION
Certificate Interest Initial Class Principal
Rate: ____% per annum Balance of the Class A-4
Certificates: $_____________
Cut-off Date:
December 1, 1996 Initial Certificate Principal
Balance of this Certificate:
Closing Date: $____________
December __, 1996
First Distribution Date:
January 27, 1997
Cusip No. ___________
Certificate No. A-4-______
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST CORPORATION, A NEW YORK CORPORATION ("DTC"),
<PAGE>
TO THE DEPOSITOR, THE MASTER SERVICER, THE TRUSTEE OR ANY AGENT THEREOF FOR
REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").
THIS CERTIFICATE DOES NOT REPRESENT AN INTEREST IN OR OBLIGATION OF AMERICAN
SOUTHWEST FINANCIAL SECURITIES CORPORATION, GREYSTONE SERVICING CORPORATION,
INC., GREYSTONE FUNDING CORPORATION, DAIWA FINANCE CORP. OR THE TRUSTEE REFERRED
TO BELOW, OR OF ANY OF THEIR AFFILIATES. THIS CERTIFICATE IS NOT GUARANTEED OR
INSURED BY ANY GOVERNMENT AGENCY OR INSTRUMENTALITY.
THIS CERTIFIES THAT __________ is the registered owner of a
beneficial interest in the Trust Fund, which was created pursuant to the Pooling
and Servicing Agreement, dated as of December 1, 1996 (the "Agreement"), among
American Southwest Financial Securities Corporation, as depositor (the
"Depositor," which term includes any successor entity under the Agreement),
Greystone Servicing Corporation, Inc., as master servicer (the "Master
Servicer," which term includes any successor entity under the Agreement),
Greystone Funding Corporation, as seller ("Greystone Funding"), Daiwa Finance
Corp., as seller ("Daiwa Finance"; Daiwa Finance and Greystone Funding, each a
"Seller" and, together the "Sellers," which terms include any successor entities
under the Agreement), and LaSalle National Bank, as trustee (the "Trustee,"
which term includes any successor entity under the Agreement). This Certificate
is issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound. Any term used
herein that is defined in the Agreement shall have the meaning assigned in the
Agreement, and nothing herein shall be deemed inconsistent with that meaning. If
the terms hereof are inconsistent with the Agreement, the Agreement shall
control.
This Certificate is one of a duly authorized issue of certificates
of American Southwest Financial Securities Corporation, designated as its
Commercial Mortgage Pass-Through Certificates, Series 1996-FHA1 (the
"Certificates"), which is comprised of the following ten classes (each, a
"Class"): the Class A-1, Class A-2, Class A-3, Class A-4, Class A-Z, Class S,
Class B, Class R-I, Class R-II and Class R-III Certificates. Reference is hereby
made to the Agreement for a statement of the respective rights thereunder of the
Depositor, the Sellers, the Master Servicer, the Trustee and the Holders of each
Class of the Certificates and the terms upon
A-3-2
<PAGE>
which the Certificates are authenticated and delivered. This Certificate
represents an interest in the Trust Fund, which Trust Fund consists of, among
other things, (i) the Mortgage Assets and all payments under and proceeds of
such Mortgage Assets (other than any Retained Yield) received after the Cut-off
Date (exclusive of any payments of or relating to principal and interest due on
the FHA Loans on or before the Cut-off Date), together with all documents
included in the related Mortgage Files and Servicing Files for the Mortgage
Loans; (ii) the FHA Mortgage Insurance in respect of the Mortgage Loans,
together with all FHA Insurance Benefits (other than any Retained Yield) derived
therefrom; (iii) such funds or assets (other than any Retained Yield) as from
time to time are deposited in the Distribution Account and/or the Collection
Account; (iv) any insurance policies with respect to the Mortgage Loans; and (v)
all proceeds of the conversion, voluntary or involuntary, of any of the
foregoing into cash or other liquid property.
This Class A-4 Certificate represents a Percentage Interest in the
related class equal to the initial Certificate Principal Balance hereof divided
by the Initial Class Principal Balance of the Class A-4 Certificates, both as
set forth above.
The Trustee shall distribute from the Distribution Account, to the
extent of available funds, on the 25th day of each calendar month or, if such
25th day is not a Business Day, the Business Day immediately following such 25th
day (each, a "Distribution Date"), commencing in January, 1997, to the Person in
whose name this Certificate is registered at the close of business on the last
Business Day of the month immediately preceding the month of such distribution
(each, a "Record Date"), interest and principal (including any Prepayment
Premiums) in an amount equal to the product of the Percentage Interest evidenced
by this Certificate and that portion of the Available Distribution Amount that
is allocated to distributions on the related Class of Certificates on such
Distribution Date.
Not later than each Distribution Date, the Trustee will send to each
Certificateholder a statement containing information relating to the Mortgage
Assets and payments made to Certificateholders.
Distributions on this Certificate will be made by the Trustee by
check mailed to the address of the Holder hereof entitled thereto as such
address appears in the Certificate Register or, if such Holder holds one or more
Certificates with an aggregate initial Certificate Principal Balance of at least
$2,500,000, by wire transfer in immediately available funds to the account of
such Certificateholder designated in writing to the Trustee at least five
Business Days prior to the applicable Record Date. Notwithstanding the above,
the final distribution on this Certificate will be made after due notice of the
pendency of such final distribution and only upon presentation and surrender of
this Certificate at the office or agency designated in such notice.
Notwithstanding the foregoing, for so long as this Certificate is
registered in the name of Cede & Co. or in such other name as is requested by an
authorized representative of DTC, transfers of interests in this Certificate
shall be made through the book-entry facilities of DTC.
A-3-3
<PAGE>
The Agreement permits, with certain exceptions as therein provided,
the amendment thereof by the Depositor, the Master Servicer, the Seller and the
Trustee with the consent of the Holders of Certificates entitled to, in the
aggregate, not less than 66-2/3% of the Voting Rights of all the Certificates
affected by any such amendments, for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of the Agreement or
for the purpose of modifying in any manner the rights of the Holders of the
Certificates; provided, however, that no such amendment may (i) reduce in any
manner the amount of, delay the timing of or change the manner in which payments
received on Mortgage Assets are required to be distributed in respect of any
Certificate without the consent of the Holder of such Certificate; (ii) reduce
the aforesaid percentage of aggregate Voting Rights allocated to Certificates of
each Class, the Holders of which are required to consent to any such amendment,
without the consent of the Holders of Certificates entitled to 100% of the
Voting Rights allocated to each Class of Certificates affected thereby, (iii)
modify the provisions of this Section 11.01 of the Agreement without the consent
of all of the Certificateholders or (iv) alter the servicing standard set forth
in Section 3.01(a) of the Agreement. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate. Under certain limited circumstances set
forth therein, the Agreement may be amended by the parties thereto without the
consent of any Holder.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable on the
Certificate Register upon surrender of this Certificate for registration of
transfer at the office or agency of the Trustee designated therefor, duly
endorsed by, or accompanied by a written instrument of transfer in a form
satisfactory to the Trustee duly executed by the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations and evidencing the same aggregate
interest in the Trust Fund, will be issued to the designated transferee or
transferees.
The Class A-4 Certificates will be issued in fully registered form
in minimum denominations of $10,000 initial Certificate Principal Balance and in
integral multiples of $1,000 in excess of such amount. As provided in the
Agreement and subject to certain limitations therein set forth, this Certificate
is exchangeable for one or more new Certificates of the same Class and of
authorized denominations and evidencing a like aggregate Certificate Principal
Balance, as requested by the Holder surrendering the same.
No service charge will be made for such registrations of transfers
or exchanges, 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 nor any such agent thereof shall be affected by notice to the contrary.
The obligations and responsibilities of the Depositor, the Master
Servicer, the Sellers and the Trustee created by the Agreement will terminate
upon the earliest of (i) the
A-3-4
<PAGE>
purchase by the Master Servicer, at its election, of all the Mortgage Assets
remaining in the Trust Fund and the corresponding distribution to
Certificateholders of all amounts required to be distributed to them, which
repurchase right the Master Servicer may exercise at its sole and exclusive
election if the aggregate Stated Principal Balance of the Mortgage Pool at the
time of the repurchase is less than 5% of the aggregate Cut-off Date Balance of
the Mortgage Pool; (ii) the maturity or other liquidation (or any advance with
respect thereto) of the last Mortgage Asset remaining in the Trust Fund and the
corresponding distribution to Certificateholders of all amounts required to be
distributed to them; or (iii) the mutual agreement of the parties to the
Agreement and the Certificateholders as to such termination.
Unless the certificate of authentication hereon has been executed by
or on behalf of the Trustee by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid or obligatory for any
purpose.
A-3-5
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed under its corporate seal.
LASALLE NATIONAL BANK,
as Trustee
By:__________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class A-4 Certificates referred to in the within-mentioned
Agreement.
Date:
LASALLE NATIONAL BANK,
as Trustee
By:______________________________
Authorized Officer
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sell(s), assign(s) and
transfer(s) unto _____________________________________________________________
__________________________________________________ (Please print or typewrite
name and address, including postal zip code, of assignee) the undivided interest
in the Trust Fund evidenced by the within Certificate and hereby authorize(s)
the transfer of registration of such interest to the assignee on the Certificate
Register.
I (we) further direct the Trustee to issue a new Certificate of the same
Class and of a like initial Certificate Principal Balance and undivided interest
in the Trust Fund to the above-named assignee and to deliver such Certificate to
the following address _________________________________________________________
________________________________________________________________________________
Dated: __________, ____
Social Security or ______________________________
other Tax Identification Signature by or on behalf of
No. of Assignee: assignor (signature must be signed as
registered)
____________________________ ______________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for the information of the
Trustee:
Distribution shall be made by check mailed to _____________________
________________________________________________________________________________
or if the aggregate initial Certificate Principal Balance of all Certificates
held by the Holder is at least $2,500,000 and the Trustee shall have received
appropriate wiring instructions in accordance with the Agreement, by wire
transfer in immediately available funds to _______________ for the account of
________________, account number ______________. This information is provided by
the assignee named above, or its agent.
<PAGE>
EXHIBIT A-5
FORM OF CLASS A-Z CERTIFICATE
AMERICAN SOUTHWEST FINANCIAL SECURITIES CORPORATION
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 1996-FHA1, CLASS A-Z
Evidencing an undivided interest in a trust fund (the "Trust Fund") whose assets
consist primarily of a pool (the "Mortgage Pool") of (i) fixed-rate,
fully-amortizing mortgage loans (the "FHA Loans") insured by the Federal Housing
Administration (the "FHA") of the United States Department of Housing and Urban
Development ("HUD") under certain sections of the National Housing Act of 1934,
as amended (the "Housing Act") and secured by liens on multifamily rental
housing developments (collectively, "Multifamily Properties") or nursing homes,
intermediate care facilities, assisted living facilities, board and care homes
or other nursing facilities (collectively, "Nursing Facilities"); and (ii)
securities (the "GNMA Certificates") guaranteed by the Government National
Mortgage Association ("GNMA") and backed by fixed-rate, level payment,
fully-amortizing mortgage loans (the "Underlying Mortgage Loans" and
collectively, with the FHA Loans, the "Mortgage Loans") that are likewise so
insured by the FHA and are secured by liens on Multifamily Properties or Nursing
Facilities. The Trust Fund was formed and the Mortgage Loans and the GNMA
Certificates were transferred thereto at the direction of
AMERICAN SOUTHWEST FINANCIAL SECURITIES CORPORATION
Certificate Interest Initial Class Principal
Rate: ____% per annum Balance of the Class A-Z
Certificates: $_____________
Cut-off Date:
December 1, 1996 Initial Certificate Principal
Balance of this Certificate:
Closing Date: $____________
December __, 1996
First Distribution Date:
January 27, 1997
Cusip No. ___________
Certificate No. A-Z-______
A-3-8
<PAGE>
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST CORPORATION, A NEW YORK CORPORATION ("DTC"), TO THE DEPOSITOR,
THE MASTER SERVICER, THE TRUSTEE OR ANY AGENT THEREOF FOR REGISTRATION OF
TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE"). THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR
THE PURPOSES OF APPLYING THE U.S. FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT
("OID") RULES TO THIS CERTIFICATE. THE ISSUE DATE OF THIS CERTIFICATE IS
DECEMBER 27, 1996. ASSUMING THAT THE MORTGAGE LOANS PREPAY AT AN ASSUMED RATE OF
PREPAYMENT USED SOLELY FOR THE PURPOSES OF APPLYING THE OID RULES TO THE
CERTIFICATES EQUAL TO A CPR (AS DEFINED IN THE PROSPECTUS DATED JULY 25, 1995
AND THE PROSPECTUS SUPPLEMENT DATED DECEMBER 19, 1996 RELATING TO THIS
CERTIFICATE) OF 40%, BEGINNING WITH THE FIRST MONTH IN WHICH A VOLUNTARY
PREPAYMENT IN FULL MAY BE MADE UNDER THE TERMS OF THE MORTGAGE LOAN WITHOUT A
PREPAYMENT PREMIUM AND NO APPLICABLE LOCK-OUT PERIOD EXISTS. (THE "PREPAYMENT
ASSUMPTION"), THIS CERTIFICATE HAS BEEN ISSUED WITH NO MORE THAN $_________ OF
OID PER $__________ OF INITIAL CERTIFICATE NOTIONAL AMOUNT, THE YIELD TO
MATURITY IS ____% PER ANNUM, AND THE AMOUNT OF OID ATTRIBUTABLE TO THE INITIAL
ACCRUAL PERIOD IS NO MORE THAN $_________ PER $__________ OF INITIAL CERTIFICATE
NOTIONAL AMOUNT, COMPUTED UNDER THE EXACT METHOD. NO REPRESENTATION IS MADE THAT
THE MORTGAGE LOANS WILL PREPAY AT A RATE BASED ON THE PREPAYMENT ASSUMPTION OR
AT ANY OTHER RATE.
THIS CERTIFICATE DOES NOT REPRESENT AN INTEREST IN OR OBLIGATION OF AMERICAN
SOUTHWEST FINANCIAL SECURITIES CORPORATION, GREYSTONE SERVICING CORPORATION,
INC., GREYSTONE FUNDING CORPORATION, DAIWA FINANCE CORP. OR THE TRUSTEE REFERRED
TO BELOW, OR OF ANY OF THEIR AFFILIATES. THIS CERTIFICATE IS NOT GUARANTEED OR
INSURED BY ANY GOVERNMENT AGENCY OR INSTRUMENTALITY.
THIS CERTIFIES THAT _________ is the registered owner of a
beneficial interest in the Trust Fund, which was created pursuant to the Pooling
and Servicing Agreement,
A-3-9
<PAGE>
dated as of December 1, 1996 (the "Agreement"), among American Southwest
Financial Securities Corporation, as depositor (the "Depositor," which term
includes any successor entity under the Agreement), Greystone Servicing
Corporation, Inc., as master servicer (the "Master Servicer," which term
includes any successor entity under the Agreement), Greystone Funding
Corporation, as seller ("Greystone Funding"), Daiwa Finance Corp., as seller
("Daiwa Finance"; Daiwa Finance and Greystone Funding, each a "Seller" and,
together the "Sellers," which terms include any successor entities under the
Agreement), and LaSalle National Bank, as trustee (the "Trustee," which term
includes any successor entity under the Agreement). This Certificate is issued
under and is subject to the terms, provisions and conditions of the Agreement,
to which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound. Any term used herein that is
defined in the Agreement shall have the meaning assigned in the Agreement, and
nothing herein shall be deemed inconsistent with that meaning. If the terms
hereof are inconsistent with the Agreement, the Agreement shall control.
This Certificate is one of a duly authorized issue of certificates
of American Southwest Financial Securities Corporation, designated as its
Commercial Mortgage Pass-Through Certificates, Series 1996-FHA1 (the
"Certificates"), which is comprised of the following ten classes (each, a
"Class"): the Class A-1, Class A-2, Class A-3, Class A-4, Class A-Z, Class S,
Class B, Class R-I, Class R-II and Class R-III Certificates. Reference is hereby
made to the Agreement for a statement of the respective rights thereunder of the
Depositor, the Sellers, the Master Servicer, the Trustee and the Holders of each
Class of the Certificates and the terms upon which the Certificates are
authenticated and delivered. This Certificate represents an interest in the
Trust Fund, which Trust Fund consists of, among other things, (i) the Mortgage
Assets and all payments under and proceeds of such Mortgage Assets (other than
any Retained Yield) received after the Cut-off Date (exclusive of any payments
of or relating to principal and interest due on the FHA Loans on or before the
Cut-off Date), together with all documents included in the related Mortgage
Files and Servicing Files for the Mortgage Loans; (ii) the FHA Mortgage
Insurance in respect of the Mortgage Loans, together with all FHA Insurance
Benefits (other than any Retained Yield) derived therefrom; (iii) such funds or
assets (other than any Retained Yield) as from time to time are deposited in the
Distribution Account and/or the Collection Account; (iv) any insurance policies
with respect to the Mortgage Loans; and (v) all proceeds of the conversion,
voluntary or involuntary, of any of the foregoing into cash or other liquid
property.
This Class A-Z Certificate represents a Percentage Interest in the
related class equal to the initial Certificate Principal Balance hereof divided
by the Initial Class Principal Balance of the Class A-Z Certificates, both as
set forth above.
The Trustee shall distribute from the Distribution Account, to the
extent of available funds, on the 25th day of each calendar month or, if such
25th day is not a Business Day, the Business Day immediately following such 25th
day (each, a "Distribution Date"), commencing in January, 1997, to the Person in
whose name this Certificate is registered at the close of business on the last
Business Day of the month immediately preceding the month of such distribution
(each, a "Record Date"), interest and principal (including any Prepayment
Premiums) in an amount equal to the product of the Percentage Interest evidenced
by this
A-3-10
<PAGE>
Certificate and that portion of the Available Distribution Amount that is
allocated to distributions on the related Class of Certificates on such
Distribution Date.
Not later than each Distribution Date, the Trustee will send to each
Certificateholder a statement containing information relating to the Mortgage
Assets and payments made to Certificateholders.
Distributions on this Certificate will be made by the Trustee by
check mailed to the address of the Holder hereof entitled thereto as such
address appears in the Certificate Register or, if such Holder holds one or more
Certificates with an aggregate initial Certificate Principal Balance of at least
$2,500,000, by wire transfer in immediately available funds to the account of
such Certificateholder designated in writing to the Trustee at least five
Business Days prior to the applicable Record Date. Notwithstanding the above,
the final distribution on this Certificate will be made after due notice of the
pendency of such final distribution and only upon presentation and surrender of
this Certificate at the office or agency designated in such notice.
Notwithstanding the foregoing, for so long as this Certificate is
registered in the name of Cede & Co. or in such other name as is requested by an
authorized representative of DTC, transfers of interests in this Certificate
shall be made through the book-entry facilities of DTC.
The Agreement permits, with certain exceptions as therein provided,
the amendment thereof by the Depositor, the Master Servicer, the Seller and the
Trustee with the consent of the Holders of Certificates entitled to, in the
aggregate, not less than 66-2/3% of the Voting Rights of all the Certificates
affected by any such amendments, for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of the Agreement or
for the purpose of modifying in any manner the rights of the Holders of the
Certificates; provided, however, that no such amendment may (i) reduce in any
manner the amount of, delay the timing of or change the manner in which payments
received on Mortgage Assets are required to be distributed in respect of any
Certificate without the consent of the Holder of such Certificate; (ii) reduce
the aforesaid percentage of aggregate Voting Rights allocated to Certificates of
each Class, the Holders of which are required to consent to any such amendment,
without the consent of the Holders of Certificates entitled to 100% of the
Voting Rights allocated to each Class of Certificates affected thereby, (iii)
modify the provisions of this Section 11.01 of the Agreement without the consent
of all of the Certificateholders or (iv) alter the servicing standard set forth
in Section 3.01(a) of the Agreement. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate. Under certain limited circumstances set
forth therein, the Agreement may be amended by the parties thereto without the
consent of any Holder.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable on the
Certificate Register upon surrender of this Certificate for registration of
transfer at the office or agency of the Trustee designated therefor,
A-3-11
<PAGE>
duly endorsed by, or accompanied by a written instrument of transfer in a form
satisfactory to the Trustee duly executed by the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations and evidencing the same aggregate
interest in the Trust Fund, will be issued to the designated transferee or
transferees.
The Class A-Z Certificates will be issued in fully registered form
in minimum denominations of $10,000 initial Certificate Principal Balance and in
integral multiples of $1,000 in excess of such amount. As provided in the
Agreement and subject to certain limitations therein set forth, this Certificate
is exchangeable for one or more new Certificates of the same Class and of
authorized denominations and evidencing a like aggregate Certificate Principal
Balance, as requested by the Holder surrendering the same.
No service charge will be made for such registrations of transfers
or exchanges, 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 nor any such agent thereof shall be affected by notice to the contrary.
The obligations and responsibilities of the Depositor, the Master
Servicer, the Sellers and the Trustee created by the Agreement will terminate
upon the earliest of (i) the purchase by the Master Servicer, at its election,
of all the Mortgage Assets remaining in the Trust Fund and the corresponding
distribution to Certificateholders of all amounts required to be distributed to
them, which repurchase right the Master Servicer may exercise at its sole and
exclusive election if the aggregate Stated Principal Balance of the Mortgage
Pool at the time of the repurchase is less than 5% of the aggregate Cut-off Date
Balance of the Mortgage Pool; (ii) the maturity or other liquidation (or any
advance with respect thereto) of the last Mortgage Asset remaining in the Trust
Fund and the corresponding distribution to Certificateholders of all amounts
required to be distributed to them; or (iii) the mutual agreement of the parties
to the Agreement and the Certificateholders as to such termination.
Unless the certificate of authentication hereon has been executed by
or on behalf of the Trustee by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid or obligatory for any
purpose.
A-3-12
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed under its corporate seal.
LASALLE NATIONAL BANK,
as Trustee
By:__________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class A-Z Certificates referred to in the within-mentioned
Agreement.
Date:
LASALLE NATIONAL BANK,
as Trustee
By:______________________________
Authorized Officer
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sell(s), assign(s) and
transfer(s) unto ___________________________________________________________
__________________________________________________ (Please print or typewrite
name and address, including postal zip code, of assignee) the undivided interest
in the Trust Fund evidenced by the within Certificate and hereby authorize(s)
the transfer of registration of such interest to the assignee on the Certificate
Register.
I (we) further direct the Trustee to issue a new Certificate of the same
Class and of a like initial Certificate Principal Balance and undivided interest
in the Trust Fund to the above-named assignee and to deliver such Certificate to
the following address _________________________________________________________
________________________________________________________________________________
Dated: __________, ____
Social Security or ______________________________
other Tax Identification Signature by or on behalf of
No. of Assignee: assignor (signature must be signed as
registered)
____________________________ ______________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for the information of the
Trustee:
Distribution shall be made by check mailed to ____________________
______________________________________________________________________________,
or if the aggregate initial Certificate Principal Balance of all Certificates
held by the Holder is at least $2,500,000 and the Trustee shall have received
appropriate wiring instructions in accordance with the Agreement, by wire
transfer in immediately available funds to _______________ for the account of
________________, account number ______________. This information is provided by
the assignee named above, or its agent.
<PAGE>
EXHIBIT A-6
FORM OF CLASS S CERTIFICATE
AMERICAN SOUTHWEST FINANCIAL SECURITIES CORPORATION
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 1996-FHA1, CLASS S
Evidencing an undivided interest in a trust fund (the "Trust Fund") whose assets
consist primarily of a pool (the "Mortgage Pool") of (i) fixed-rate,
fully-amortizing mortgage loans (the "FHA Loans") insured by the Federal Housing
Administration (the "FHA") of the United States Department of Housing and Urban
Development ("HUD") under certain sections of the National Housing Act of 1934,
as amended (the "Housing Act") and secured by liens on multifamily rental
housing developments (collectively, "Multifamily Properties") or nursing homes,
intermediate care facilities, assisted living facilities, board and care homes
or other nursing facilities (collectively, "Nursing Facilities"); and (ii)
securities (the "GNMA Certificates") guaranteed by the Government National
Mortgage Association ("GNMA") and backed by fixed-rate, level payment,
fully-amortizing mortgage loans (the "Underlying Mortgage Loans" and
collectively, with the FHA Loans, the "Mortgage Loans") that are likewise so
insured by the FHA and are secured by liens on Multifamily Properties or Nursing
Facilities. The Trust Fund was formed and the Mortgage Loans and the GNMA
Certificates were transferred thereto at the direction of
AMERICAN SOUTHWEST FINANCIAL SECURITIES CORPORATION
Certificate Interest Initial Class Notional
Rate: Variable Amount of the Class S
Certificates: $_____________
Cut-off Date:
December 1, 1996 Initial Certificate Notional
Amount of this Certificate:
Closing Date: $____________
December __, 1996
First Distribution Date:
January 27, 1997
Cusip No. ___________
Certificate No. S-1-______
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST CORPORATION, A NEW YORK CORPORATION ("DTC"),
<PAGE>
TO THE DEPOSITOR, THE MASTER SERVICER, THE TRUSTEE OR ANY AGENT THEREOF FOR
REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE"). THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR
THE PURPOSES OF APPLYING THE U.S. FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT
("OID") RULES TO THIS CERTIFICATE. THE ISSUE DATE OF THIS CERTIFICATE IS
DECEMBER 27, 1996. ASSUMING THAT THE MORTGAGE LOANS PREPAY AT AN ASSUMED RATE OF
PREPAYMENT USED SOLELY FOR THE PURPOSES OF APPLYING THE OID RULES TO THE
CERTIFICATES EQUAL TO A CPR (AS DEFINED IN THE PROSPECTUS DATED JULY 25, 1995
AND THE PROSPECTUS SUPPLEMENT DATED DECEMBER 19, 1996 RELATING TO THIS
CERTIFICATE) OF 40%, BEGINNING WITH THE FIRST MONTH IN WHICH A VOLUNTARY
PREPAYMENT IN FULL MAY BE MADE UNDER THE TERMS OF THE MORTGAGE LOAN WITHOUT A
PREPAYMENT PREMIUM AND NO APPLICABLE LOCK-OUT PERIOD EXISTS. (THE "PREPAYMENT
ASSUMPTION"), THIS CERTIFICATE HAS BEEN ISSUED WITH NO MORE THAN $_________ OF
OID PER $__________ OF INITIAL CERTIFICATE NOTIONAL AMOUNT, THE YIELD TO
MATURITY IS ____% PER ANNUM, AND THE AMOUNT OF OID ATTRIBUTABLE TO THE INITIAL
ACCRUAL PERIOD IS NO MORE THAN $_________ PER $__________ OF INITIAL CERTIFICATE
NOTIONAL AMOUNT, COMPUTED UNDER THE EXACT METHOD. NO REPRESENTATION IS MADE THAT
THE MORTGAGE LOANS WILL PREPAY AT A RATE BASED ON THE PREPAYMENT ASSUMPTION OR
AT ANY OTHER RATE.
THIS CERTIFICATE DOES NOT REPRESENT AN INTEREST IN OR OBLIGATION OF AMERICAN
SOUTHWEST FINANCIAL SECURITIES CORPORATION, GREYSTONE SERVICING CORPORATION,
INC., GREYSTONE FUNDING CORPORATION, DAIWA FINANCE CORP. OR THE TRUSTEE REFERRED
TO BELOW, OR OF ANY OF THEIR AFFILIATES. THIS CERTIFICATE IS NOT GUARANTEED OR
INSURED BY ANY GOVERNMENT AGENCY OR INSTRUMENTALITY.
THIS CERTIFIES THAT ___________ is the registered owner of a
beneficial interest in the Trust Fund, which was created pursuant to the Pooling
and Servicing Agreement, dated as of December 1, 1996 (the "Agreement"), among
American Southwest Financial Securities Corporation, as depositor (the
"Depositor," which term includes any successor entity
A-5-2
<PAGE>
under the Agreement), Greystone Servicing Corporation, Inc., as master servicer
(the "Master Servicer," which term includes any successor entity under the
Agreement), Greystone Funding Corporation, as seller ("Greystone Funding"),
Daiwa Finance Corp., as seller ("Daiwa Finance"; Daiwa Finance and Greystone
Funding, each a "Seller" and, together the "Sellers," which terms include any
successor entities under the Agreement), and LaSalle National Bank, as trustee
(the "Trustee," which term includes any successor entity under the Agreement).
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.
Any term used herein that is defined in the Agreement shall have the meaning
assigned in the Agreement, and nothing herein shall be deemed inconsistent with
that meaning. If the terms hereof are inconsistent with the Agreement, the
Agreement shall control.
This Certificate is one of a duly authorized issue of certificates
of American Southwest Financial Securities Corporation, designated as its
Commercial Mortgage Pass-Through Certificates, Series 1996-FHA1 (the
"Certificates"), which is comprised of the following ten classes (each, a
"Class"): the Class A-1, Class A-2, Class A-3, Class A-4, Class A-Z, Class S,
Class B, Class R-I, Class R-II and Class R-III Certificates. Reference is hereby
made to the Agreement for a statement of the respective rights thereunder of the
Depositor, the Sellers, the Master Servicer, the Trustee and the Holders of each
Class of the Certificates and the terms upon which the Certificates are
authenticated and delivered. This Certificate represents an interest in the
Trust Fund, which Trust Fund consists of, among other things, (i) the Mortgage
Assets and all payments under and proceeds of such Mortgage Assets (other than
any Retained Yield) received after the Cut-off Date (exclusive of any payments
of or relating to principal and interest due on the FHA Loans on or before the
Cut-off Date), together with all documents included in the related Mortgage
Files and Servicing Files for the Mortgage Loans; (ii) the FHA Mortgage
Insurance in respect of the Mortgage Loans, together with all FHA Insurance
Benefits (other than any Retained Yield) derived therefrom; (iii) such funds or
assets (other than any Retained Yield) as from time to time are deposited in the
Distribution Account and/or the Collection Account; (iv) any insurance policies
with respect to the Mortgage Loans; and (v) all proceeds of the conversion,
voluntary or involuntary, of any of the foregoing into cash or other liquid
property.
This Class S Certificate represents a Percentage Interest in the
related Class equal to the initial Certificate Notional Amount hereof divided by
the Initial Class Notional Amount of the Class S Certificates, both as set forth
above.
The Trustee shall distribute from the Distribution Account, to the
extent of available funds, on the 25th day of each calendar month or, if such
25th day is not a Business Day, the Business Day immediately following such 25th
day (each, a "Distribution Date"), commencing in January, 1997, to the Person in
whose name this Certificate is registered at the close of business on the last
Business Day of the month immediately preceding the month of such distribution
(each, a "Record Date"), interest and Prepayment Premiums in an amount equal to
the product of the Percentage Interest evidenced by this Certificate and that
portion of the Available Distribution Amount and Prepayment Premiums that are
allocated to distributions on the related Class of Certificates on such
Distribution Date.
A-5-3
<PAGE>
Not later than each Distribution Date, the Trustee will send to each
Certificateholder a statement containing information relating to the Mortgage
Assets and payments made to Certificateholders.
Distributions on this Certificate will be made by the Trustee by
check mailed to the address of the Holder hereof entitled thereto as such
address appears in the Certificate Register or, if such Holder holds one or more
Interest-Only Certificates with an initial Certificate Notional Amount of at
least $10,000,000, by wire transfer in immediately available funds to the
account of such Certificateholder designated in writing to the Trustee at least
five Business Days prior to the applicable Record Date. Notwithstanding the
above, the final distribution on this Certificate will be made after due notice
of the pendency of such final distribution and only upon presentation and
surrender of this Certificate at the office or agency designated in such notice.
Notwithstanding the foregoing, for so long as this Certificate is
registered in the name of Cede & Co. or in such other name as is requested by an
authorized representative of DTC, transfers of interests in this Certificate
shall be made through the book-entry facilities of DTC.
The Agreement permits, with certain exceptions as therein provided,
the amendment thereof by the Depositor, the Master Servicer, the Seller and the
Trustee with the consent of the Holders of Certificates entitled to, in the
aggregate, not less than 66-2/3% of the Voting Rights of all the Certificates
affected by any such amendments, for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of the Agreement or
for the purpose of modifying in any manner the rights of the Holders of the
Certificates; provided, however, that no such amendment may (i) reduce in any
manner the amount of, delay the timing of or change the manner in which payments
received on Mortgage Assets are required to be distributed in respect of any
Certificate without the consent of the Holder of such Certificate; (ii) reduce
the aforesaid percentage of aggregate Voting Rights allocated to Certificates of
each Class, the Holders of which are required to consent to any such amendment,
without the consent of the Holders of Certificates entitled to 100% of the
Voting Rights allocated to each Class of Certificates affected thereby, (iii)
modify the provisions of this Section 11.01 of the Agreement without the consent
of all of the Certificateholders or (iv) alter the servicing standard set forth
in Section 3.01(a) of the Agreement. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate. Under certain limited circumstances set
forth therein, the Agreement may be amended by the parties thereto without the
consent of any Holder.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable on the
Certificate Register upon surrender of this Certificate for registration of
transfer at the office or agency of the Trustee designated therefor, duly
endorsed by, or accompanied by a written instrument of transfer in a form
satisfactory to the Trustee duly executed by the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized
A-5-4
<PAGE>
denominations and evidencing the same aggregate interest in the Trust Fund, will
be issued to the designated transferee or transferees.
The Class S Certificates will be issued in fully registered form in
minimum denominations of $100,000 initial Certificate Notional Amount and in
integral multiples of $1,000 in excess of such amount, except for one Class S
Certificate evidencing the sum of an authorized denomination thereof and the
remainder of the initial notional amount of such Class of Certificates. As
provided in the Agreement and subject to certain limitations therein set forth,
this Certificate is exchangeable for one or more new Certificates of the same
Class in authorized denominations and evidencing a like aggregate Certificate
Notional Balance, as requested by the Holder surrendering the same.
No service charge will be made for such registrations of transfers
or exchanges, 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 nor any such agent thereof shall be affected by notice to the contrary.
The obligations and responsibilities of the Depositor, the Master
Servicer, the Sellers and the Trustee created by the Agreement will terminate
upon the earliest of (i) the purchase by the Master Servicer, at its election,
of all the Mortgage Assets remaining in the Trust Fund and the corresponding
distribution to Certificateholders of all amounts required to be distributed to
them, which repurchase right the Master Servicer may exercise at its sole and
exclusive election if the aggregate Stated Principal Balance of the Mortgage
Pool at the time of the repurchase is less than 5% of the aggregate Cut-off Date
Balance of the Mortgage Pool; (ii) the maturity or other liquidation (or any
advance with respect thereto) of the last Mortgage Asset remaining in the Trust
Fund and the corresponding distribution to Certificateholders of all amounts
required to be distributed to them; or (iii) the mutual agreement of the parties
to the Agreement and the Certificateholders as to such termination.
Unless the certificate of authentication hereon has been executed by
or on behalf of the Trustee by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid or obligatory for any
purpose.
A-5-5
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed under its corporate seal.
LASALLE NATIONAL BANK,
as Trustee
By:__________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class S Certificates referred to in the within-mentioned
Agreement.
Date:
LASALLE NATIONAL BANK,
as Trustee
By:______________________________
Authorized Officer
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sell(s), assign(s) and
transfer(s) unto ____________________________________________________________
__________________________________________________ (Please print or typewrite
name and address, including postal zip code, of assignee) the undivided interest
in the Trust Fund evidenced by the within Certificate and hereby authorize(s)
the transfer of registration of such interest to the assignee on the Certificate
Register.
I (we) further direct the Trustee to issue a new Certificate of the same
Class and of a like initial Certificate Notional Amount and undivided interest
in the Trust Fund to the above-named assignee and to deliver such Certificate to
the following address _________________________________________________________
_______________________________________________________________________________
Dated: __________, ____
Social Security or ______________________________
other Tax Identification Signature by or on behalf of
No. of Assignee: assignor (signature must be signed as
registered)
____________________________ ______________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for the information of the
Trustee:
Distribution shall be made by check mailed to ____________________
______________________________________________________________________________,
or if the aggregate initial Certificate Notional Amount of Interest-Only
Certificates held by the Holder is at least $10,000,000 and the Trustee shall
have received appropriate wiring instructions in accordance with the Agreement,
by wire transfer in immediately available funds to _______________ for the
account of ________________, account number ______________. This information is
provided by the assignee named above, or its agent.
<PAGE>
EXHIBIT A-7
FORM OF CLASS B CERTIFICATE
AMERICAN SOUTHWEST FINANCIAL SECURITIES CORPORATION
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 1996-FHA1, CLASS B
Evidencing an undivided interest in a trust fund (the "Trust Fund") whose assets
consist primarily of a pool (the "Mortgage Pool") of (i) fixed-rate,
fully-amortizing mortgage loans (the "FHA Loans") insured by the Federal Housing
Administration (the "FHA") of the United States Department of Housing and Urban
Development ("HUD") under certain sections of the National Housing Act of 1934,
as amended (the "Housing Act") and secured by liens on multifamily rental
housing developments (collectively, "Multifamily Properties") or nursing homes,
intermediate care facilities, assisted living facilities, board and care homes
or other nursing facilities (collectively, "Nursing Facilities"); and (ii)
securities (the "GNMA Certificates") guaranteed by the Government National
Mortgage Association ("GNMA") and backed by fixed-rate, level payment,
fully-amortizing mortgage loans (the "Underlying Mortgage Loans" and
collectively, with the FHA Loans, the "Mortgage Loans") that are likewise so
insured by the FHA and are secured by liens on Multifamily Properties or Nursing
Facilities. The Trust Fund was formed and the Mortgage Loans and the GNMA
Certificates were transferred thereto at the direction of
AMERICAN SOUTHWEST FINANCIAL SECURITIES CORPORATION
Certificate Interest Initial Class Principal
Rate: _____% per annum Balance of the Class B
Certificates: $_____________
Cut-off Date:
December 1, 1996 Initial Certificate Principal
Balance of this Certificate:
Closing Date: $____________
December __, 1996
First Distribution Date:
January 27, 1997
Cusip No. ___________
Certificate No. B-______
<PAGE>
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE CODE. THE FOLLOWING
INFORMATION IS PROVIDED SOLELY FOR THE PURPOSES OF APPLYING THE U.S. FEDERAL
INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES TO THIS CERTIFICATE. THE ISSUE
DATE OF THIS CERTIFICATE IS DECEMBER __, 1996. ASSUMING THAT THE LOANS
PREPAY AT AN ASSUMED RATE OF PREPAYMENT USED SOLELY FOR THE PURPOSES OF
APPLYING THE OID RULES TO THE CERTIFICATES EQUAL TO A CPR, BEGINNING
WITH THE FIRST MONTH IN WHICH A VOLUNTARY PREPAYMENT IN FULL MAY BE MADE
UNDER THE TERMS OF THE MORTGAGE LOAN WITHOUT A PREPAYMENT PREMIUM AND NO
APPLICABLE LOCK-OUT PERIOD EXISTS. (AS DEFINED IN THE PROSPECTUS DATED
JULY 25, 1995 AND THE PROSPECTUS SUPPLEMENT DATED DECEMBER __, 1996
RELATING TO THIS CERTIFICATE) OF 40%, BEGINNING WITH THE FIRST MONTH IN
WHICH A VOLUNTARY PREPAYMENT IN FULL MAY BE MADE UNDER THE TERMS OF THE
MORTGAGE LOAN WITHOUT A PREPAYMENT PREMIUM AND NO APPLICABLE LOCK-OUT
PERIOD EXISTS (THE "PREPAYMENT ASSUMPTION"), THIS CERTIFICATE HAS BEEN
ISSUED WITH NO MORE THAN $_________ OF OID PER $__________ OF INITIAL
CERTIFICATE NOTIONAL AMOUNT, THE YIELD TO MATURITY IS ____% PER ANNUM,
AND THE AMOUNT OF OID ATTRIBUTABLE TO THE INITIAL ACCRUAL PERIOD IS NO
MORE THAN $_________ PER $__________ OF INITIAL CERTIFICATE NOTIONAL
AMOUNT, COMPUTED UNDER THE EXACT METHOD. NO REPRESENTATION IS MADE THAT
THE LOANS WILL PREPAY AT A RATE BASED ON THE PREPAYMENT ASSUMPTION OR AT
ANY OTHER RATE.
THIS CLASS B CERTIFICATE IS SUBORDINATED TO THE OTHER CLASSES OF CERTIFICATES OF
THE SAME SERIES TO THE EXTENT PROVIDED IN THE POOLING AND SERVICING AGREEMENT
DESCRIBED HEREIN.
NO TRANSFER OF THIS CERTIFICATE MAY BE MADE TO AN EMPLOYEE BENEFIT PLAN OR OTHER
RETIREMENT ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED ("ERISA"), OR THE CODE, OR TO ANY PERSON WHO IS DIRECTLY OR
INDIRECTLY PURCHASING THIS CERTIFICATE ON BEHALF OF, AS NAMED FIDUCIARY OF, AS
TRUSTEE OF, OR WITH ASSETS OF ANY SUCH EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT
ARRANGEMENT, WILL BE REGISTERED EXCEPT IN COMPLIANCE WITH THE PROCEDURES
DESCRIBED HEREIN.
THIS CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT
OF 1933 AS AMENDED (THE "SECURITIES ACT") OR THE SECURITIES LAWS OF ANY STATE.
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE WITHOUT SUCH
REGISTRATION OR QUALIFICATION MAY BE MADE ONLY IN A TRANSACTION WHICH DOES NOT
REQUIRE SUCH REGISTRATION OR QUALIFICATION AND IN ACCORDANCE WITH THE PROVISIONS
OF SECTION 6.02 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
A-6-2
<PAGE>
THIS CERTIFICATE DOES NOT REPRESENT AN INTEREST IN OR OBLIGATION OF AMERICAN
SOUTHWEST FINANCIAL SECURITIES CORPORATION, GREYSTONE SERVICING CORPORATION,
INC., GREYSTONE FUNDING CORPORATION, DAIWA FINANCE CORP. OR THE TRUSTEE REFERRED
TO BELOW, OR OF ANY OF THEIR AFFILIATES. THIS CERTIFICATE IS NOT GUARANTEED OR
INSURED BY ANY GOVERNMENT AGENCY OR INSTRUMENTALITY.
THIS CERTIFIES THAT __________ is the registered owner of a
beneficial interest in the Trust Fund, which was created pursuant to the Pooling
and Servicing Agreement, dated as of December 1, 1996 (the "Agreement"), among
American Southwest Financial Securities Corporation, as depositor (the
"Depositor," which term includes any successor entity under the Agreement),
Greystone Servicing Corporation, Inc., as master servicer (the "Master
Servicer," which term includes any successor entity under the Agreement),
Greystone Funding Corporation, as seller ("Greystone Funding"), Daiwa Finance
Corp., as seller ("Daiwa Finance"; Daiwa Finance and Greystone Funding, each a
"Seller" and, together the "Sellers," which terms include any successor entities
under the Agreement), and LaSalle National Bank, as trustee (the "Trustee,"
which term includes any successor entity under the Agreement). This Certificate
is issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound. Any term used
herein that is defined in the Agreement shall have the meaning assigned in the
Agreement, and nothing herein shall be deemed inconsistent with that meaning. If
the terms hereof are inconsistent with the Agreement, the Agreement shall
control.
This Certificate is one of a duly authorized issue of certificates
of American Southwest Financial Securities Corporation, designated as its
Commercial Mortgage Pass-Through Certificates, Series 1996-FHA1 (the
"Certificates"), which is comprised of the following ten classes (each, a
"Class"): the Class A-1, Class A-2, Class A-3, Class A-4, Class A-Z, Class S,
Class B, Class R-I, Class R-II and Class R-III Certificates. Reference is hereby
made to the Agreement for a statement of the respective rights thereunder of the
Depositor, the Sellers, the Master Servicer, the Trustee and the Holders of each
Class of the Certificates and the terms upon which the Certificates are
authenticated and delivered. This Certificate represents an interest in the
Trust Fund, which Trust Fund consists of, among other things, (i) the Mortgage
Assets and all payments under and proceeds of such Mortgage Assets (other than
any Retained Yield) received after the Cut-off Date (exclusive of any payments
of or relating to principal and interest due on the FHA Loans on or before the
Cut-off Date), together with all documents included in the related Mortgage
Files and Servicing Files for the Mortgage Loans; (ii) the FHA Mortgage
Insurance in respect of the Mortgage Loans, together with all FHA Insurance
Benefits (other than any Retained Yield) derived therefrom; (iii) such funds or
assets (other than any Retained Yield) as from time to time are deposited in the
Distribution Account and/or the Collection Account; (iv) any insurance policies
with respect to the Mortgage Loans; and (v) all proceeds of the conversion,
voluntary or involuntary, of any of the foregoing into cash or other liquid
property.
A-6-3
<PAGE>
This Class B Certificate represents a Percentage Interest in the
related class equal to the initial Certificate Principal Balance hereof divided
by the Initial Class Principal Balance of the Class B Certificates, both as set
forth above.
The Trustee shall distribute from the Distribution Account, to the
extent of available funds, on the 25th day of each calendar month or, if such
25th day is not a Business Day, the Business Day immediately following such 25th
day (each, a "Distribution Date"), commencing in January, 1997, to the Person in
whose name this Certificate is registered at the close of business on the last
Business Day of the month immediately preceding the month of such distribution
(each, a "Record Date"), interest and principal (including any Prepayment
Premiums) in an amount equal to the product of the Percentage Interest evidenced
by this Certificate and that portion of the Available Distribution Amount and
Prepayment Premiums that are allocated to distributions on the related Class of
Certificates on such Distribution Date.
Not later than each Distribution Date, the Trustee will send to each
Certificateholder a statement containing information relating to the Mortgage
Assets and payments made to Certificateholders.
Distributions on this Certificate will be made by the Trustee by
check mailed to the address of the Holder hereof entitled thereto as such
address appears in the Certificate Register or, if such Holder holds one or more
Certificates with an aggregate initial Certificate Principal Balance of at least
$2,500,000, by wire transfer in immediately available funds to the account of
such Certificateholder designated in writing to the Trustee at least five
Business Days prior to the applicable Record Date. Notwithstanding the above,
the final distribution on this Certificate will be made after due notice of the
pendency of such final distribution and only upon presentation and surrender of
this Certificate at the office or agency designated in such notice.
The Agreement permits, with certain exceptions as therein provided,
the amendment thereof by the Depositor, the Master Servicer, the Seller and the
Trustee with the consent of the Holders of Certificates entitled to, in the
aggregate, not less than 66-2/3% of the Voting Rights of all the Certificates
affected by any such amendments, for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of the Agreement or
for the purpose of modifying in any manner the rights of the Holders of the
Certificates; provided, however, that no such amendment may (i) reduce in any
manner the amount of, delay the timing of or change the manner in which payments
received on Mortgage Assets are required to be distributed in respect of any
Certificate without the consent of the Holder of such Certificate; (ii) reduce
the aforesaid percentage of aggregate Voting Rights allocated to Certificates of
each Class, the Holders of which are required to consent to any such amendment,
without the consent of the Holders of Certificates entitled to 100% of the
Voting Rights allocated to each Class of Certificates affected thereby, (iii)
modify the provisions of this Section 11.01 of the Agreement without the consent
of all of the Certificateholders or (iv) alter the servicing standard set forth
in Section 3.01(a) of the Agreement. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate.
A-6-4
<PAGE>
Under certain limited circumstances set forth therein, the Agreement may be
amended by the parties thereto without the consent of any Holder.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable on the
Certificate Register upon surrender of this Certificate for registration of
transfer at the office or agency of the Trustee designated therefor, duly
endorsed by, or accompanied by a written instrument of transfer in a form
satisfactory to the Trustee duly executed by the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations and evidencing the same aggregate
interest in the Trust Fund, will be issued to the designated transferee or
transferees.
No transfer of this Certificate or any interest herein shall be made
to any employee benefit plan that is subject to ERISA or the Code, or a trustee
of such plan, unless the prospective Transferee provides the Trustee with a
certification in the form attached to the Agreement as Exhibit E or an Opinion
of Counsel which establishes to the reasonable satisfaction of the Depositor and
the Trustee that the purchase and holding of this Certificate or any interest
herein by or on behalf of such employee benefit plan would not result in the
assets of the Trust Fund being deemed "plan assets" and subject to the fiduciary
responsibility provisions of ERISA or the prohibited transaction provisions of
the Code (or comparable provisions of any subsequent enactments), would not
constitute or result in a prohibited transaction under Section 406 of ERISA or
Section 4975 of the Code, and would not subject the Depositor or the Trustee to
any obligation or liability (including liabilities under ERISA or Section 4975
of the Code) in addition to those undertaken in the Agreement or any other
liability. If no such certification in the form attached to the Agreement as
Exhibit E and no such Opinion of Counsel are so delivered, the Trustee shall
require that such prospective Transferee certify to the Trustee in writing the
facts establishing that such Transferee is not such an employee benefit plan.
No transfer of this Certificate shall be made unless that transfer
is made pursuant to an effective registration statement under the Securities Act
and effective registration or qualification under applicable state securities
laws, or is made in a transaction which does not require such registration or
qualification. In the event that a transfer of this Certificate is to be made
without registration under the Securities Act, the Trustee shall require, in
order to assure compliance with such laws: (i) if such transfer is purportedly
being made based on Rule 144A, that the Certificateholder desiring to effect the
transfer and the prospective Transferee each certify to the Trustee in writing
in the forms attached to the Agreement as Exhibit D-1 and Exhibit D-2,
respectively, the facts surrounding the transfer; and (ii) in all other cases,
that it and the Depositor receive an Opinion of Counsel reasonably satisfactory
to the Trustee and the Depositor that such transfer may be made without such
registration, which Opinion of Counsel shall not be an expense of the Depositor,
the Trustee or the Trust Fund. Neither the Depositor nor the Trustee is
obligated to register or qualify this Certificate under the Securities Act or
any other securities law or to take any action not otherwise required under the
Agreement to permit the transfer of this Certificate without registration or
qualification. Any Holder hereof desiring to effect a transfer hereof shall
indemnify the Trustee and the Depositor against any liability that
A-6-5
<PAGE>
may result if the transfer is not so exempt, or is not made in accordance with
federal and state laws.
The Class B Certificates will be issued in fully registered form in
minimum denominations of $250,000 initial Certificate Principal Balance and in
integral multiples of $1,000 in excess of such amount. As provided in the
Agreement and subject to certain limitations therein set forth, this Certificate
is exchangeable for one or more new Certificates of the same Class in authorized
denominations and evidencing a like aggregate Certificate Principal Balance, as
requested by the Holder surrendering the same.
No service charge will be made for such registrations of transfers
or exchanges, 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 nor any such agent thereof shall be affected by notice to the contrary.
The obligations and responsibilities of the Depositor, the Master
Servicer, the Sellers and the Trustee created by the Agreement will terminate
upon the earliest of (i) the purchase by the Master Servicer, at its election,
of all the Mortgage Assets remaining in the Trust Fund and the corresponding
distribution to Certificateholders of all amounts required to be distributed to
them, which repurchase right the Master Servicer may exercise at its sole and
exclusive election if the aggregate Stated Principal Balance of the Mortgage
Pool at the time of the repurchase is less than 5% of the aggregate Cut-off Date
Balance of the Mortgage Pool; (ii) the maturity or other liquidation (or any
advance with respect thereto) of the last Mortgage Asset remaining in the Trust
Fund and the corresponding distribution to Certificateholders of all amounts
required to be distributed to them; or (iii) the mutual agreement of the parties
to the Agreement and the Certificateholders as to such termination.
Unless the certificate of authentication hereon has been executed by
or on behalf of the Trustee by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid or obligatory for any
purpose.
A-6-6
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed under its corporate seal.
LASALLE NATIONAL BANK,
as Trustee
By:__________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class B Certificates referred to in the within-mentioned
Agreement.
Date:
LASALLE NATIONAL BANK,
as Trustee
By:______________________________
Authorized Officer
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sell(s), assign(s) and
transfer(s) unto _________________________________________________________
__________________________________________________ (Please print or typewrite
name and address, including postal zip code, of assignee) the undivided interest
in the Trust Fund evidenced by the within Certificate and hereby authorize(s)
the transfer of registration of such interest to the assignee on the Certificate
Register.
I (we) further direct the Trustee to issue a new Certificate of the same
Class and of a like initial Certificate Principal Balance and undivided interest
in the Trust Fund to the above-named assignee and to deliver such Certificate to
the following address __________________________________________________________
________________________________________________________________________________
Dated: __________, ____
Social Security or ______________________________
other Tax Identification Signature by or on behalf of
No. of Assignee: assignor (signature must be signed as
registered)
____________________________ ______________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for the information of the
Trustee:
Distribution shall be made by check mailed to _____________________
______________________________________________________________________________,
or if the aggregate initial Certificate Principal Balance of all Certificates
held by the Holder is at least $2,000,000 and the Trustee shall have received
appropriate wiring instructions in accordance with the Agreement, by wire
transfer in immediately available funds to _______________ for the account of
________________, account number ______________. This information is provided by
the assignee named above, or its agent.
<PAGE>
EXHIBIT A-8
FORM OF CLASS R-I CERTIFICATE
AMERICAN SOUTHWEST FINANCIAL SECURITIES CORPORATION
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 1996-FHA1, CLASS R-I
Evidencing an undivided interest in a trust fund (the "Trust Fund") whose assets
consist primarily of a pool (the "Mortgage Pool") of (i) fixed-rate,
fully-amortizing mortgage loans (the "FHA Loans") insured by the Federal Housing
Administration (the "FHA") of the United States Department of Housing and Urban
Development ("HUD") under certain sections of the National Housing Act of 1934,
as amended (the "Housing Act") and secured by liens on multifamily rental
housing developments (collectively, "Multifamily Properties") or nursing homes,
intermediate care facilities, assisted living facilities, board and care homes
or other nursing facilities (collectively, "Nursing Facilities"); and (ii)
securities (the "GNMA Certificates") guaranteed by the Government National
Mortgage Association ("GNMA") and backed by fixed-rate, level payment,
fully-amortizing mortgage loans (the "Underlying Mortgage Loans" and
collectively, with the FHA Loans, the "Mortgage Loans") that are likewise so
insured by the FHA and are secured by liens on Multifamily Properties or Nursing
Facilities. The Trust Fund was formed and the Mortgage Loans and the GNMA
Certificates were transferred thereto at the direction of
AMERICAN SOUTHWEST FINANCIAL SECURITIES CORPORATION
Certificate Interest Percentage Interest in
Rate: N/A the Class R-I Certificates
evidenced by this Certificate
Cut-off Date: ______%
December 1, 1996
Initial Certificate Principal
Closing Date: Principal Balance of this
December __, 1996 Certificate: $0
First Distribution Date:
January 27, 1997
Cusip No. ___________
Certificate No. R-I-______
<PAGE>
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "RESIDUAL
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986 (THE "CODE"). CONSEQUENTLY, TRANSFER OF THIS CERTIFICATE IS SUBJECT TO THE
TAX RELATED TRANSFER RESTRICTIONS DESCRIBED HEREIN.
THIS CLASS R-I CERTIFICATE IS SUBORDINATED TO THE OTHER CLASSES OF
CERTIFICATES OF THE SAME SERIES TO THE EXTENT PROVIDED IN THE POOLING
AND SERVICING AGREEMENT DESCRIBED HEREIN.
NO TRANSFER OF THIS CERTIFICATE MAY BE MADE TO AN EMPLOYEE BENEFIT PLAN OR OTHER
RETIREMENT ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED ("ERISA"), OR THE CODE, OR TO ANY PERSON WHO IS DIRECTLY OR
INDIRECTLY PURCHASING THIS CERTIFICATE ON BEHALF OF, AS NAMED FIDUCIARY OF, AS
TRUSTEE OF, OR WITH ASSETS OF ANY SUCH EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT
ARRANGEMENT, WILL BE REGISTERED EXCEPT IN COMPLIANCE WITH THE PROCEDURES
DESCRIBED HEREIN.
THIS CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT
OF 1933 AS AMENDED (THE "SECURITIES ACT") OR THE SECURITIES LAWS OF ANY STATE.
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE WITHOUT SUCH
REGISTRATION OR QUALIFICATION MAY BE MADE ONLY IN A TRANSACTION WHICH DOES NOT
REQUIRE SUCH REGISTRATION OR QUALIFICATION AND IN ACCORDANCE WITH THE PROVISIONS
OF SECTION 6.02 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE DOES NOT REPRESENT AN INTEREST IN OR OBLIGATION OF AMERICAN
SOUTHWEST FINANCIAL SECURITIES CORPORATION, GREYSTONE SERVICING CORPORATION,
INC., GREYSTONE FUNDING CORPORATION, DAIWA FINANCE CORP. OR THE TRUSTEE REFERRED
TO BELOW, OR OF ANY OF THEIR AFFILIATES. THIS CERTIFICATE IS NOT GUARANTEED OR
INSURED BY ANY GOVERNMENT AGENCY OR INSTRUMENTALITY.
THIS CERTIFIES THAT DLJ Mortgage Capital, Inc. is the registered owner of
a beneficial interest in the Trust Fund, which was created pursuant to the
Pooling and Servicing Agreement, dated as of December 1, 1996 (the "Agreement"),
among American Southwest Financial Securities Corporation, as depositor (the
"Depositor," which term includes any successor entity under the Agreement),
Greystone Servicing Corporation, Inc., as master servicer (the "Master
Servicer," which term includes any successor entity under the Agreement),
Greystone Funding Corporation, as seller ("Greystone Funding"), Daiwa Finance
Corp., as seller ("Daiwa Finance"; Daiwa Finance and Greystone Funding, each a
"Seller" and, together the "Sellers," which terms include any successor entities
under the Agreement), and LaSalle National Bank,
A-7-2
<PAGE>
as trustee (the "Trustee," which term includes any successor entity under the
Agreement). This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound. Any term used herein that is defined in the Agreement shall
have the meaning assigned in the Agreement, and nothing herein shall be deemed
inconsistent with that meaning. If the terms hereof are inconsistent with the
Agreement, the Agreement shall control.
This Certificate is one of a duly authorized issue of certificates of
American Southwest Financial Securities Corporation, designated as its
Commercial Mortgage Pass-Through Certificates, Series 1996-FHA1 (the
"Certificates"), which is comprised of the following ten classes (each, a
"Class"): the Class A-1, Class A-2, Class A-3, Class A-4, Class A-Z, Class S,
Class B, Class R-I, Class R-II and Class R-III Certificates. Reference is hereby
made to the Agreement for a statement of the respective rights thereunder of the
Depositor, the Sellers, the Master Servicer, the Trustee and the Holders of each
Class of the Certificates and the terms upon which the Certificates are
authenticated and delivered. This Certificate represents an interest in the
Trust Fund, which Trust Fund consists of, among other things, (i) the Mortgage
Assets and all payments under and proceeds of such Mortgage Assets (other than
any Retained Yield) received after the Cut-off Date (exclusive of any payments
of or relating to principal and interest due on the FHA Loans on or before the
Cut-off Date), together with all documents included in the related Mortgage
Files and Servicing Files for the Mortgage Loans; (ii) the FHA Mortgage
Insurance in respect of the Mortgage Loans, together with all FHA Insurance
Benefits (other than any Retained Yield) derived therefrom; (iii) such funds or
assets (other than any Retained Yield) as from time to time are deposited in the
Distribution Account and/or the Collection Account; (iv) any insurance policies
with respect to the Mortgage Loans; and (v) all proceeds of the conversion,
voluntary or involuntary, of any of the foregoing into cash or other liquid
property.
The Trustee shall distribute from the Distribution Account, to the extent
of available funds, on the 25th day of each calendar month or, if such 25th day
is not a Business Day, the Business Day immediately following such 25th day
(each, a "Distribution Date"), commencing in January, 1997, to the Person in
whose name this Certificate is registered at the close of business on the last
Business Day of the month immediately preceding the month of such distribution
(each, a "Record Date"), a distribution in an amount equal to the product of the
Percentage Interest evidenced by this Certificate (as set forth above) and that
portion of the Available Distribution Amount, if any, that is allocated to
distributions on the related Class of Certificates on such Distribution Date.
Not later than each Distribution Date, the Trustee will send to each
Certificateholder a statement containing information relating to the Mortgage
Assets and payments made to Certificateholders.
Distributions on this Certificate will be made by the Trustee by check
mailed to the address of the Holder hereof entitled thereto as such address
appears in the Certificate Register. Notwithstanding the above, the final
distribution on this Certificate will be made after due notice
A-7-3
<PAGE>
of the pendency of such final distribution and only upon presentation and
surrender of this Certificate at the office or agency designated in such notice.
The Agreement permits, with certain exceptions as therein provided, the
amendment thereof by the Depositor, the Master Servicer, the Seller and the
Trustee with the consent of the Holders of Certificates entitled to, in the
aggregate, not less than 66-2/3% of the Voting Rights of all the Certificates
affected by any such amendments, for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of the Agreement or
for the purpose of modifying in any manner the rights of the Holders of the
Certificates; provided, however, that no such amendment may (i) reduce in any
manner the amount of, delay the timing of or change the manner in which payments
received on Mortgage Assets are required to be distributed in respect of any
Certificate without the consent of the Holder of such Certificate; (ii) reduce
the aforesaid percentage of aggregate Voting Rights allocated to Certificates of
each Class, the Holders of which are required to consent to any such amendment,
without the consent of the Holders of Certificates entitled to 100% of the
Voting Rights allocated to each Class of Certificates affected thereby, (iii)
modify the provisions of this Section 11.01 of the Agreement without the consent
of all of the Certificateholders or (iv) alter the servicing standard set forth
in Section 3.01(a) of the Agreement. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate. Under certain limited circumstances set
forth therein, the Agreement may be amended by the parties thereto without the
consent of any Holder.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable on the Certificate
Register upon surrender of this Certificate for registration of transfer at the
office or agency of the Trustee designated therefor, duly endorsed by, or
accompanied by a written instrument of transfer in a form satisfactory to the
Trustee duly executed by the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations and evidencing the same aggregate interest in
the Trust Fund will be issued to the designated transferee or transferees.
No transfer of this Certificate or any interest herein shall be made to
any employee benefit plan that is subject to ERISA or the Code, or a trustee of
such plan, unless the prospective Transferee provides the Trustee with a
certification in the form attached to the Agreement as Exhibit E or an Opinion
of Counsel which establishes to the reasonable satisfaction of the Depositor and
the Trustee that the purchase and holding of this Certificate or any interest
herein by or on behalf of such employee benefit plan would not result in the
assets of the Trust Fund being deemed "plan assets" and subject to the fiduciary
responsibility provisions of ERISA or the prohibited transaction provisions of
the Code (or comparable provisions of any subsequent enactments), would not
constitute or result in a prohibited transaction under Section 406 of ERISA or
Section 4975 of the Code, and would not subject the Depositor or the Trustee to
any obligation or liability (including liabilities under ERISA or Section 4975
of the Code) in addition to those undertaken in the Agreement or any other
liability. If no such certification in the form
A-7-4
<PAGE>
attached to the Agreement as Exhibit E and no such Opinion of Counsel are so
delivered, the Trustee shall require that such prospective Transferee certify to
the Trustee in writing the facts establishing that such Transferee is not such
an employee benefit plan.
No transfer of this Certificate shall be made unless that transfer is made
pursuant to an effective registration statement under the Securities Act and
effective registration or qualification under applicable state securities laws,
or is made in a transaction which does not require such registration or
qualification. In the event that a transfer of this Certificate is to be made
without registration under the Securities Act, the Trustee shall require, in
order to assure compliance with such laws: (i) if such transfer is purportedly
being made based on Rule 144A, that the Certificateholder desiring to effect the
transfer and the prospective Transferee each certify to the Trustee in writing
in the forms attached to the Agreement as Exhibit D-1 and Exhibit D-2,
respectively, the facts surrounding the transfer; and (ii) in all other cases,
that it and the Depositor receive an Opinion of Counsel reasonably satisfactory
to the Trustee and the Depositor that such transfer may be made without such
registration, which Opinion of Counsel shall not be an expense of the Depositor,
the Trustee or the Trust Fund. Neither the Depositor nor the Trustee is
obligated to register or qualify this Certificate under the Securities Act or
any other securities law or to take any action not otherwise required under the
Agreement to permit the transfer of this Certificate without registration or
qualification. Any Holder hereof desiring to effect a transfer hereof shall
indemnify the Trustee and the Depositor against any liability that may result if
the transfer is not so exempt, or is not made in accordance with federal and
state laws.
In addition to the foregoing and notwithstanding anything to the contrary
contained herein or in the Agreement, this Certificate may not be owned, pledged
or Transferred, directly or indirectly, by or to a Disqualified Organization.
Prior to and as a condition of the registration of any Transfer, sale or
other disposition of this Certificate, (i) the proposed Transferee, including
the initial Holder of this Certificate, shall deliver to the Trustee a
Transferee Affidavit and Agreement, in substantially the form attached to the
Agreement as Exhibit F-1, representing and warranting, among other things, that
such Transferee is not a non-U.S. Person, that such Transferee is other than a
Disqualified Organization, that it is not acquiring its Ownership Interest in
this Certificate as a nominee, trustee or agent for any Person who is not other
than a Disqualified Organization, that for so long as it retains its Ownership
Interest in this Certificate, it will endeavor to remain a Permitted Transferee,
and that it has reviewed the provisions of Section 6.02(g) of the Agreement and
agrees to be bound by them, and (ii) the proposed Transferor shall deliver to
the Trustee a certificate, in substantially the form attached to the Agreement
as Exhibit F-2, representing and warranting, among other things, that no purpose
of the proposed Transfer is to allow such Holder to impede the assessment or
collection of tax. Notwithstanding the delivery of a Transferee Affidavit and
Agreement, if the Trustee has actual knowledge that the proposed Transferee is
not a Permitted Transferee, no Transfer of an Ownership Interest in this
Certificate to such proposed Transferee shall be effected. Each Person holding
or acquiring any Ownership Interest in this Certificate agrees, by holding or
acquiring such Ownership Interest, to require a Transferee Affidavit and
Agreement from any other Person to whom such Person attempts to Transfer its
A-7-5
<PAGE>
Ownership Interest and to provide a certificate in the form attached to the
Agreement as Exhibit F-2 and to obtain the express written consent of the
Depositor prior to any Transfer of such Ownership Interest, which consent may be
withheld in the Depositor's sole discretion.
The Class R-I Certificates will be issued in fully registered form only,
without coupons, in minimum denominations representing percentage interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, this Certificate is exchangeable for one or more
new Certificates of the same Class in authorized denominations and evidencing a
like aggregate Certificate Principal Balance, as requested by the Holder
surrendering the same.
No service charge will be made for such registrations of transfers or
exchanges, 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 nor
any such agent thereof shall be affected by notice to the contrary.
The obligations and responsibilities of the Depositor, the Master
Servicer, the Sellers and the Trustee created by the Agreement will terminate
upon the earliest of (i) the purchase by the Master Servicer, at its election,
of all the Mortgage Assets remaining in the Trust Fund and the corresponding
distribution to Certificateholders of all amounts required to be distributed to
them, which repurchase right the Master Servicer may exercise at its sole and
exclusive election if the aggregate Stated Principal Balance of the Mortgage
Pool at the time of the repurchase is less than 5% of the aggregate Cut-off Date
Balance of the Mortgage Pool; (ii) the maturity or other liquidation (or any
advance with respect thereto) of the last Mortgage Asset remaining in the Trust
Fund and the corresponding distribution to Certificateholders of all amounts
required to be distributed to them; or (iii) the mutual agreement of the parties
to the Agreement and the Certificateholders as to such termination.
Unless the certificate of authentication hereon has been executed by or on
behalf of the Trustee by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid or obligatory for any
purpose.
A-7-6
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed under its corporate seal.
LASALLE NATIONAL BANK,
as Trustee
By:__________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class R-I Certificates referred to in the within-mentioned
Agreement.
Date:
LASALLE NATIONAL BANK,
as Trustee
By:______________________________
Authorized Officer
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sell(s), assign(s) and
transfer(s) unto ___________________________________________________________
__________________________________________________ (Please print or typewrite
name and address, including postal zip code, of assignee) the undivided interest
in the Trust Fund evidenced by the within Certificate and hereby authorize(s)
the transfer of registration of such interest to the assignee on the Certificate
Register.
I (we) further direct the Trustee to issue a new Certificate of the same
Class and of a like Percentage Interest and undivided interest in the Trust Fund
to the above-named assignee and to deliver such Certificate to the following
address _______________________________________________________________________
_______________________________________________________________________________
Dated: __________, ____
Social Security or ______________________________
other Tax Identification Signature by or on behalf of
No. of Assignee: assignor (signature must be signed as
registered)
____________________________ ______________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for the information of the
Trustee:
Distribution shall be made by check mailed to _____________________
______________________________________________________________________________.
This information is provided by the assignee named above, or its agent.
<PAGE>
EXHIBIT A-9
FORM OF CLASS R-II CERTIFICATE
AMERICAN SOUTHWEST FINANCIAL SECURITIES CORPORATION
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 1996-FHA1, CLASS R-II
Evidencing an undivided interest in a trust fund (the "Trust Fund") whose assets
consist primarily of a pool (the "Mortgage Pool") of (i) fixed-rate,
fully-amortizing mortgage loans (the "FHA Loans") insured by the Federal Housing
Administration (the "FHA") of the United States Department of Housing and Urban
Development ("HUD") under certain sections of the National Housing Act of 1934,
as amended (the "Housing Act") and secured by liens on multifamily rental
housing developments (collectively, "Multifamily Properties") or nursing homes,
intermediate care facilities, assisted living facilities, board and care homes
or other nursing facilities (collectively, "Nursing Facilities"); and (ii)
securities (the "GNMA Certificates") guaranteed by the Government National
Mortgage Association ("GNMA") and backed by fixed-rate, level payment,
fully-amortizing mortgage loans (the "Underlying Mortgage Loans" and
collectively, with the FHA Loans, the "Mortgage Loans") that are likewise so
insured by the FHA and are secured by liens on Multifamily Properties or Nursing
Facilities. The Trust Fund was formed and the Mortgage Loans and the GNMA
Certificates were transferred thereto at the direction of
AMERICAN SOUTHWEST FINANCIAL SECURITIES CORPORATION
Certificate Interest Percentage Interest in
Rate: N/A the Class R-II Certificates
evidenced by this Certificate
Cut-off Date: ______%
December 1, 1996
Initial Certificate Principal
Closing Date: Principal Balance of this
December __, 1996 Certificate: $0
First Distribution Date:
January 27, 1997
Cusip No. ___________
Certificate No. R-II-______
A-7-9
<PAGE>
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "RESIDUAL
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986 (THE "CODE"). CONSEQUENTLY, TRANSFER OF THIS CERTIFICATE IS SUBJECT TO THE
TAX RELATED TRANSFER RESTRICTIONS DESCRIBED HEREIN.
THIS CLASS R-II CERTIFICATE IS SUBORDINATED TO THE OTHER CLASSES OF
CERTIFICATES OF THE SAME SERIES TO THE EXTENT PROVIDED IN THE POOLING
AND SERVICING AGREEMENT DESCRIBED HEREIN.
NO TRANSFER OF THIS CERTIFICATE MAY BE MADE TO AN EMPLOYEE BENEFIT PLAN OR OTHER
RETIREMENT ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED ("ERISA"), OR THE CODE, OR TO ANY PERSON WHO IS DIRECTLY OR
INDIRECTLY PURCHASING THIS CERTIFICATE ON BEHALF OF, AS NAMED FIDUCIARY OF, AS
TRUSTEE OF, OR WITH ASSETS OF ANY SUCH EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT
ARRANGEMENT, WILL BE REGISTERED EXCEPT IN COMPLIANCE WITH THE PROCEDURES
DESCRIBED HEREIN.
THIS CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT
OF 1933 AS AMENDED (THE "SECURITIES ACT") OR THE SECURITIES LAWS OF ANY STATE.
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE WITHOUT SUCH
REGISTRATION OR QUALIFICATION MAY BE MADE ONLY IN A TRANSACTION WHICH DOES NOT
REQUIRE SUCH REGISTRATION OR QUALIFICATION AND IN ACCORDANCE WITH THE PROVISIONS
OF SECTION 6.02 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE DOES NOT REPRESENT AN INTEREST IN OR OBLIGATION OF AMERICAN
SOUTHWEST FINANCIAL SECURITIES CORPORATION, GREYSTONE SERVICING CORPORATION,
INC., GREYSTONE FUNDING CORPORATION, DAIWA FINANCE CORP. OR THE TRUSTEE REFERRED
TO BELOW, OR OF ANY OF THEIR AFFILIATES. THIS CERTIFICATE IS NOT GUARANTEED OR
INSURED BY ANY GOVERNMENT AGENCY OR INSTRUMENTALITY.
THIS CERTIFIES THAT DLJ Mortgage Capital Inc. is the registered owner of a
beneficial interest in the Trust Fund, which was created pursuant to the Pooling
and Servicing Agreement, dated as of December 1, 1996 (the "Agreement"), among
American Southwest Financial Securities Corporation, as depositor (the
"Depositor," which term includes any successor entity under the Agreement),
Greystone Servicing Corporation, Inc., as master servicer (the "Master
Servicer," which term includes any successor entity under the Agreement),
Greystone Funding Corporation, as seller ("Greystone Funding"), Daiwa Finance
Corp., as seller ("Daiwa Finance"; Daiwa Finance and Greystone Funding, each a
"Seller" and, together the "Sellers," which terms include any successor entities
under the Agreement), and LaSalle National Bank,
A-7-10
<PAGE>
as trustee (the "Trustee," which term includes any successor entity under the
Agreement). This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound. Any term used herein that is defined in the Agreement shall
have the meaning assigned in the Agreement, and nothing herein shall be deemed
inconsistent with that meaning. If the terms hereof are inconsistent with the
Agreement, the Agreement shall control.
This Certificate is one of a duly authorized issue of certificates of
American Southwest Financial Securities Corporation, designated as its
Commercial Mortgage Pass-Through Certificates, Series 1996-FHA1 (the
"Certificates"), which is comprised of the following ten classes (each, a
"Class"): the Class A-1, Class A-2, Class A-3, Class A-4, Class A-Z, Class S,
Class B, Class R-I, Class R-II and Class R-III Certificates. Reference is hereby
made to the Agreement for a statement of the respective rights thereunder of the
Depositor, the Sellers, the Master Servicer, the Trustee and the Holders of each
Class of the Certificates and the terms upon which the Certificates are
authenticated and delivered. This Certificate represents an interest in the
Trust Fund, which Trust Fund consists of, among other things, (i) the Mortgage
Assets and all payments under and proceeds of such Mortgage Assets (other than
any Retained Yield) received after the Cut-off Date (exclusive of any payments
of or relating to principal and interest due on the FHA Loans on or before the
Cut-off Date), together with all documents included in the related Mortgage
Files and Servicing Files for the Mortgage Loans; (ii) the FHA Mortgage
Insurance in respect of the Mortgage Loans, together with all FHA Insurance
Benefits (other than any Retained Yield) derived therefrom; (iii) such funds or
assets (other than any Retained Yield) as from time to time are deposited in the
Distribution Account and/or the Collection Account; (iv) any insurance policies
with respect to the Mortgage Loans; and (v) all proceeds of the conversion,
voluntary or involuntary, of any of the foregoing into cash or other liquid
property.
The Trustee shall distribute from the Distribution Account, to the extent
of available funds, on the 25th day of each calendar month or, if such 25th day
is not a Business Day, the Business Day immediately following such 25th day
(each, a "Distribution Date"), commencing in January, 1997, to the Person in
whose name this Certificate is registered at the close of business on the last
Business Day of the month immediately preceding the month of such distribution
(each, a "Record Date"), a distribution in an amount equal to the product of the
Percentage Interest evidenced by this Certificate (as set forth above) and that
portion of the Available Distribution Amount, if any, that is allocated to
distributions on the related Class of Certificates on such Distribution Date.
Not later than each Distribution Date, the Trustee will send to each
Certificateholder a statement containing information relating to the Mortgage
Assets and payments made to Certificateholders.
Distributions on this Certificate will be made by the Trustee by check
mailed to the address of the Holder hereof entitled thereto as such address
appears in the Certificate Register. Notwithstanding the above, the final
distribution on this Certificate will be made after due notice
A-7-11
<PAGE>
of the pendency of such final distribution and only upon presentation and
surrender of this Certificate at the office or agency designated in such notice.
The Agreement permits, with certain exceptions as therein provided, the
amendment thereof by the Depositor, the Master Servicer, the Seller and the
Trustee with the consent of the Holders of Certificates entitled to, in the
aggregate, not less than 66-2/3% of the Voting Rights of all the Certificates
affected by any such amendments, for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of the Agreement or
for the purpose of modifying in any manner the rights of the Holders of the
Certificates; provided, however, that no such amendment may (i) reduce in any
manner the amount of, delay the timing of or change the manner in which payments
received on Mortgage Assets are required to be distributed in respect of any
Certificate without the consent of the Holder of such Certificate; (ii) reduce
the aforesaid percentage of aggregate Voting Rights allocated to Certificates of
each Class, the Holders of which are required to consent to any such amendment,
without the consent of the Holders of Certificates entitled to 100% of the
Voting Rights allocated to each Class of Certificates affected thereby, (iii)
modify the provisions of this Section 11.01 of the Agreement without the consent
of all of the Certificateholders or (iv) alter the servicing standard set forth
in Section 3.01(a) of the Agreement. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate. Under certain limited circumstances set
forth therein, the Agreement may be amended by the parties thereto without the
consent of any Holder.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable on the Certificate
Register upon surrender of this Certificate for registration of transfer at the
office or agency of the Trustee designated therefor, duly endorsed by, or
accompanied by a written instrument of transfer in a form satisfactory to the
Trustee duly executed by the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations and evidencing the same aggregate interest in
the Trust Fund will be issued to the designated transferee or transferees.
No transfer of this Certificate or any interest herein shall be made to
any employee benefit plan that is subject to ERISA or the Code, or a trustee of
such plan, unless the prospective Transferee provides the Trustee with a
certification in the form attached to the Agreement as Exhibit E or an Opinion
of Counsel which establishes to the reasonable satisfaction of the Depositor and
the Trustee that the purchase and holding of this Certificate or any interest
herein by or on behalf of such employee benefit plan would not result in the
assets of the Trust Fund being deemed "plan assets" and subject to the fiduciary
responsibility provisions of ERISA or the prohibited transaction provisions of
the Code (or comparable provisions of any subsequent enactments), would not
constitute or result in a prohibited transaction under Section 406 of ERISA or
Section 4975 of the Code, and would not subject the Depositor or the Trustee to
any obligation or liability (including liabilities under ERISA or Section 4975
of the Code) in addition to those undertaken in the Agreement or any other
liability. If no such certification in the form
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<PAGE>
attached to the Agreement as Exhibit E and no such Opinion of Counsel are so
delivered, the Trustee shall require that such prospective Transferee certify to
the Trustee in writing the facts establishing that such Transferee is not such
an employee benefit plan.
No transfer of this Certificate shall be made unless that transfer is made
pursuant to an effective registration statement under the Securities Act and
effective registration or qualification under applicable state securities laws,
or is made in a transaction which does not require such registration or
qualification. In the event that a transfer of this Certificate is to be made
without registration under the Securities Act, the Trustee shall require, in
order to assure compliance with such laws: (i) if such transfer is purportedly
being made based on Rule 144A, that the Certificateholder desiring to effect the
transfer and the prospective Transferee each certify to the Trustee in writing
in the forms attached to the Agreement as Exhibit D-1 and Exhibit D-2,
respectively, the facts surrounding the transfer; and (ii) in all other cases,
that it and the Depositor receive an Opinion of Counsel reasonably satisfactory
to the Trustee and the Depositor that such transfer may be made without such
registration, which Opinion of Counsel shall not be an expense of the Depositor,
the Trustee or the Trust Fund. Neither the Depositor nor the Trustee is
obligated to register or qualify this Certificate under the Securities Act or
any other securities law or to take any action not otherwise required under the
Agreement to permit the transfer of this Certificate without registration or
qualification. Any Holder hereof desiring to effect a transfer hereof shall
indemnify the Trustee and the Depositor against any liability that may result if
the transfer is not so exempt, or is not made in accordance with federal and
state laws.
In addition to the foregoing and notwithstanding anything to the contrary
contained herein or in the Agreement, this Certificate may not be owned, pledged
or Transferred, directly or indirectly, by or to a Disqualified Organization.
Prior to and as a condition of the registration of any Transfer, sale or
other disposition of this Certificate, (i) the proposed Transferee, including
the initial Holder of this Certificate, shall deliver to the Trustee a
Transferee Affidavit and Agreement, in substantially the form attached to the
Agreement as Exhibit F-1, representing and warranting, among other things, that
such Transferee is not a non-U.S. Person, that such Transferee is other than a
Disqualified Organization, that it is not acquiring its Ownership Interest in
this Certificate as a nominee, trustee or agent for any Person who is not other
than a Disqualified Organization, that for so long as it retains its Ownership
Interest in this Certificate, it will endeavor to remain a Permitted Transferee,
and that it has reviewed the provisions of Section 6.02(g) of the Agreement and
agrees to be bound by them, and (ii) the proposed Transferor shall deliver to
the Trustee a certificate, in substantially the form attached to the Agreement
as Exhibit F-2, representing and warranting, among other things, that no purpose
of the proposed Transfer is to allow such Holder to impede the assessment or
collection of tax. Notwithstanding the delivery of a Transferee Affidavit and
Agreement, if the Trustee has actual knowledge that the proposed Transferee is
not a Permitted Transferee, no Transfer of an Ownership Interest in this
Certificate to such proposed Transferee shall be effected. Each Person holding
or acquiring any Ownership Interest in this Certificate agrees, by holding or
acquiring such Ownership Interest, to require a Transferee Affidavit and
Agreement from any other Person to whom such Person attempts to Transfer its
A-7-13
<PAGE>
Ownership Interest and to provide a certificate in the form attached to the
Agreement as Exhibit F-2 and to obtain the express written consent of the
Depositor prior to any Transfer of such Ownership Interest, which consent may be
withheld in the Depositor's sole discretion.
The Class R-II Certificates will be issued in fully registered form only,
without coupons, in minimum denominations representing percentage interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, this Certificate is exchangeable for one or more
new Certificates of the same Class in authorized denominations and evidencing a
like aggregate Certificate Principal Balance, as requested by the Holder
surrendering the same.
No service charge will be made for such registrations of transfers or
exchanges, 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 nor
any such agent thereof shall be affected by notice to the contrary.
The obligations and responsibilities of the Depositor, the Master
Servicer, the Sellers and the Trustee created by the Agreement will terminate
upon the earliest of (i) the purchase by the Master Servicer, at its election,
of all the Mortgage Assets remaining in the Trust Fund and the corresponding
distribution to Certificateholders of all amounts required to be distributed to
them, which repurchase right the Master Servicer may exercise at its sole and
exclusive election if the aggregate Stated Principal Balance of the Mortgage
Pool at the time of the repurchase is less than 5% of the aggregate Cut-off Date
Balance of the Mortgage Pool; (ii) the maturity or other liquidation (or any
advance with respect thereto) of the last Mortgage Asset remaining in the Trust
Fund and the corresponding distribution to Certificateholders of all amounts
required to be distributed to them; or (iii) the mutual agreement of the parties
to the Agreement and the Certificateholders as to such termination.
Unless the certificate of authentication hereon has been executed by or on
behalf of the Trustee by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid or obligatory for any
purpose.
A-7-14
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed under its corporate seal.
LASALLE NATIONAL BANK,
as Trustee
By:__________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class R-II Certificates referred to in the within-mentioned
Agreement.
Date:
LASALLE NATIONAL BANK,
as Trustee
By:______________________________
Authorized Officer
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sell(s), assign(s) and
transfer(s) unto ___________________________________________________________
__________________________________________________ (Please print or typewrite
name and address, including postal zip code, of assignee) the undivided interest
in the Trust Fund evidenced by the within Certificate and hereby authorize(s)
the transfer of registration of such interest to the assignee on the Certificate
Register.
I (we) further direct the Trustee to issue a new Certificate of the same
Class and of a like Percentage Interest and undivided interest in the Trust Fund
to the above-named assignee and to deliver such Certificate to the following
address _______________________________________________________________________
_______________________________________________________________________________
Dated: __________, ____
Social Security or ______________________________
other Tax Identification Signature by or on behalf of
No. of Assignee: assignor (signature must be signed as
registered)
____________________________ ______________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for the information of the
Trustee:
Distribution shall be made by check mailed to _____________________
______________________________________________________________________________.
This information is provided by the assignee named above, or its agent.
<PAGE>
EXHIBIT A-10
FORM OF CLASS R-III CERTIFICATE
AMERICAN SOUTHWEST FINANCIAL SECURITIES CORPORATION
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 1996-FHA1, CLASS R-III
Evidencing an undivided interest in a trust fund (the "Trust Fund") whose assets
consist primarily of a pool (the "Mortgage Pool") of (i) fixed-rate,
fully-amortizing mortgage loans (the "FHA Loans") insured by the Federal Housing
Administration (the "FHA") of the United States Department of Housing and Urban
Development ("HUD") under certain sections of the National Housing Act of 1934,
as amended (the "Housing Act") and secured by liens on multifamily rental
housing developments (collectively, "Multifamily Properties") or nursing homes,
intermediate care facilities, assisted living facilities, board and care homes
or other nursing facilities (collectively, "Nursing Facilities"); and (ii)
securities (the "GNMA Certificates") guaranteed by the Government National
Mortgage Association ("GNMA") and backed by fixed-rate, level payment,
fully-amortizing mortgage loans (the "Underlying Mortgage Loans" and
collectively, with the FHA Loans, the "Mortgage Loans") that are likewise so
insured by the FHA and are secured by liens on Multifamily Properties or Nursing
Facilities. The Trust Fund was formed and the Mortgage Loans and the GNMA
Certificates were transferred thereto at the direction of
AMERICAN SOUTHWEST FINANCIAL SECURITIES CORPORATION
Certificate Interest Percentage Interest in
Rate: N/A the Class R-III Certificates
evidenced by this Certificate
Cut-off Date: ______%
December 1, 1996
Initial Certificate Principal
Closing Date: Principal Balance of this
December __, 1996 Certificate: $0
First Distribution Date:
January 27, 1997
Cusip No. ___________
Certificate No. R-III-______
A-7-17
<PAGE>
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "RESIDUAL
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986 (THE "CODE"). CONSEQUENTLY, TRANSFER OF THIS CERTIFICATE IS SUBJECT TO THE
TAX RELATED TRANSFER RESTRICTIONS DESCRIBED HEREIN.
THIS CLASS R-III CERTIFICATE IS SUBORDINATED TO THE OTHER CLASSES OF
CERTIFICATES OF THE SAME SERIES TO THE EXTENT PROVIDED IN THE POOLING
AND SERVICING AGREEMENT DESCRIBED HEREIN.
NO TRANSFER OF THIS CERTIFICATE MAY BE MADE TO AN EMPLOYEE BENEFIT PLAN OR OTHER
RETIREMENT ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED ("ERISA"), OR THE CODE, OR TO ANY PERSON WHO IS DIRECTLY OR
INDIRECTLY PURCHASING THIS CERTIFICATE ON BEHALF OF, AS NAMED FIDUCIARY OF, AS
TRUSTEE OF, OR WITH ASSETS OF ANY SUCH EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT
ARRANGEMENT, WILL BE REGISTERED EXCEPT IN COMPLIANCE WITH THE PROCEDURES
DESCRIBED HEREIN.
THIS CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT
OF 1933 AS AMENDED (THE "SECURITIES ACT") OR THE SECURITIES LAWS OF ANY STATE.
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE WITHOUT SUCH
REGISTRATION OR QUALIFICATION MAY BE MADE ONLY IN A TRANSACTION WHICH DOES NOT
REQUIRE SUCH REGISTRATION OR QUALIFICATION AND IN ACCORDANCE WITH THE PROVISIONS
OF SECTION 6.02 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE DOES NOT REPRESENT AN INTEREST IN OR OBLIGATION OF AMERICAN
SOUTHWEST FINANCIAL SECURITIES CORPORATION, GREYSTONE SERVICING CORPORATION,
INC., GREYSTONE FUNDING CORPORATION, DAIWA FINANCE CORP. OR THE TRUSTEE REFERRED
TO BELOW, OR OF ANY OF THEIR AFFILIATES. THIS CERTIFICATE IS NOT GUARANTEED OR
INSURED BY ANY GOVERNMENT AGENCY OR INSTRUMENTALITY.
THIS CERTIFIES THAT ___________________ is the registered owner of a
beneficial interest in the Trust Fund, which was created pursuant to the
Pooling and Servicing Agreement, dated as of December 1, 1996 (the
"Agreement"), among American Southwest Financial Securities Corporation,
as depositor (the "Depositor," which term includes any successor entity
under the Agreement), Greystone Servicing Corporation, Inc., as master
servicer (the "Master Servicer," which term includes any successor
entity under the Agreement), Greystone Funding Corporation, as seller
("Greystone Funding"), Daiwa Finance Corp., as seller ("Daiwa Finance";
Daiwa Finance and Greystone Funding, each a "Seller" and, together the
"Sellers," which terms include any successor entities under the
Agreement), and LaSalle National Bank, as trustee (the
A-7-18
<PAGE>
"Trustee," which term includes any successor entity under the Agreement). This
Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.
Any term used herein that is defined in the Agreement shall have the meaning
assigned in the Agreement, and nothing herein shall be deemed inconsistent with
that meaning. If the terms hereof are inconsistent with the Agreement, the
Agreement shall control.
This Certificate is one of a duly authorized issue of certificates of
American Southwest Financial Securities Corporation, designated as its
Commercial Mortgage Pass-Through Certificates, Series 1996-FHA1 (the
"Certificates"), which is comprised of the following ten classes (each, a
"Class"): the Class A-1, Class A-2, Class A-3, Class A-4, Class A-Z, Class S,
Class B, Class R-I, Class R-II and Class R-III Certificates. Reference is hereby
made to the Agreement for a statement of the respective rights thereunder of the
Depositor, the Sellers, the Master Servicer, the Trustee and the Holders of each
Class of the Certificates and the terms upon which the Certificates are
authenticated and delivered. This Certificate represents an interest in the
Trust Fund, which Trust Fund consists of, among other things, (i) the Mortgage
Assets and all payments under and proceeds of such Mortgage Assets (other than
any Retained Yield) received after the Cut-off Date (exclusive of any payments
of or relating to principal and interest due on the FHA Loans on or before the
Cut-off Date), together with all documents included in the related Mortgage
Files and Servicing Files for the Mortgage Loans; (ii) the FHA Mortgage
Insurance in respect of the Mortgage Loans, together with all FHA Insurance
Benefits (other than any Retained Yield) derived therefrom; (iii) such funds or
assets (other than any Retained Yield) as from time to time are deposited in the
Distribution Account and/or the Collection Account; (iv) any insurance policies
with respect to the Mortgage Loans; and (v) all proceeds of the conversion,
voluntary or involuntary, of any of the foregoing into cash or other liquid
property.
The Trustee shall distribute from the Distribution Account, to the extent
of available funds, on the 25th day of each calendar month or, if such 25th day
is not a Business Day, the Business Day immediately following such 25th day
(each, a "Distribution Date"), commencing in January, 1997, to the Person in
whose name this Certificate is registered at the close of business on the last
Business Day of the month immediately preceding the month of such distribution
(each, a "Record Date"), a distribution in an amount equal to the product of the
Percentage Interest evidenced by this Certificate (as set forth above) and that
portion of the Available Distribution Amount, if any, that is allocated to
distributions on the related Class of Certificates on such Distribution Date.
Not later than each Distribution Date, the Trustee will send to each
Certificateholder a statement containing information relating to the Mortgage
Assets and payments made to Certificateholders.
Distributions on this Certificate will be made by the Trustee by check
mailed to the address of the Holder hereof entitled thereto as such address
appears in the Certificate Register. Notwithstanding the above, the final
distribution on this Certificate will be made after due notice of the pendency
of such final distribution and only upon presentation and surrender of this
Certificate at the office or agency designated in such notice.
A-7-19
<PAGE>
The Agreement permits, with certain exceptions as therein provided, the
amendment thereof by the Depositor, the Master Servicer, the Seller and the
Trustee with the consent of the Holders of Certificates entitled to, in the
aggregate, not less than 66-2/3% of the Voting Rights of all the Certificates
affected by any such amendments, for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of the Agreement or
for the purpose of modifying in any manner the rights of the Holders of the
Certificates; provided, however, that no such amendment may (i) reduce in any
manner the amount of, delay the timing of or change the manner in which payments
received on Mortgage Assets are required to be distributed in respect of any
Certificate without the consent of the Holder of such Certificate; (ii) reduce
the aforesaid percentage of aggregate Voting Rights allocated to Certificates of
each Class, the Holders of which are required to consent to any such amendment,
without the consent of the Holders of Certificates entitled to 100% of the
Voting Rights allocated to each Class of Certificates affected thereby, (iii)
modify the provisions of this Section 11.01 of the Agreement without the consent
of all of the Certificateholders or (iv) alter the servicing standard set forth
in Section 3.01(a) of the Agreement. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate. Under certain limited circumstances set
forth therein, the Agreement may be amended by the parties thereto without the
consent of any Holder.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable on the Certificate
Register upon surrender of this Certificate for registration of transfer at the
office or agency of the Trustee designated therefor, duly endorsed by, or
accompanied by a written instrument of transfer in a form satisfactory to the
Trustee duly executed by the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations and evidencing the same aggregate interest in
the Trust Fund will be issued to the designated transferee or transferees.
No transfer of this Certificate or any interest herein shall be made to
any employee benefit plan that is subject to ERISA or the Code, or a trustee of
such plan, unless the prospective Transferee provides the Trustee with a
certification in the form attached to the Agreement as Exhibit E or an Opinion
of Counsel which establishes to the reasonable satisfaction of the Depositor and
the Trustee that the purchase and holding of this Certificate or any interest
herein by or on behalf of such employee benefit plan would not result in the
assets of the Trust Fund being deemed "plan assets" and subject to the fiduciary
responsibility provisions of ERISA or the prohibited transaction provisions of
the Code (or comparable provisions of any subsequent enactments), would not
constitute or result in a prohibited transaction under Section 406 of ERISA or
Section 4975 of the Code, and would not subject the Depositor or the Trustee to
any obligation or liability (including liabilities under ERISA or Section 4975
of the Code) in addition to those undertaken in the Agreement or any other
liability. If no such certification in the form attached to the Agreement as
Exhibit E and no such Opinion of Counsel are so delivered, the Trustee shall
require that such prospective Transferee certify to the Trustee in writing the
facts establishing that such Transferee is not such an employee benefit plan.
A-7-20
<PAGE>
No transfer of this Certificate shall be made unless that transfer is made
pursuant to an effective registration statement under the Securities Act and
effective registration or qualification under applicable state securities laws,
or is made in a transaction which does not require such registration or
qualification. In the event that a transfer of this Certificate is to be made
without registration under the Securities Act, the Trustee shall require, in
order to assure compliance with such laws: (i) if such transfer is purportedly
being made based on Rule 144A, that the Certificateholder desiring to effect the
transfer and the prospective Transferee each certify to the Trustee in writing
in the forms attached to the Agreement as Exhibit D-1 and Exhibit D-2,
respectively, the facts surrounding the transfer; and (ii) in all other cases,
that it and the Depositor receive an Opinion of Counsel reasonably satisfactory
to the Trustee and the Depositor that such transfer may be made without such
registration, which Opinion of Counsel shall not be an expense of the Depositor,
the Trustee or the Trust Fund. Neither the Depositor nor the Trustee is
obligated to register or qualify this Certificate under the Securities Act or
any other securities law or to take any action not otherwise required under the
Agreement to permit the transfer of this Certificate without registration or
qualification. Any Holder hereof desiring to effect a transfer hereof shall
indemnify the Trustee and the Depositor against any liability that may result if
the transfer is not so exempt, or is not made in accordance with federal and
state laws.
In addition to the foregoing and notwithstanding anything to the contrary
contained herein or in the Agreement, this Certificate may not be owned, pledged
or Transferred, directly or indirectly, by or to a Disqualified Organization.
Prior to and as a condition of the registration of any Transfer, sale or
other disposition of this Certificate, (i) the proposed Transferee, including
the initial Holder of this Certificate, shall deliver to the Trustee a
Transferee Affidavit and Agreement, in substantially the form attached to the
Agreement as Exhibit F-1, representing and warranting, among other things, that
such Transferee is not a non-U.S. Person, that such Transferee is other than a
Disqualified Organization, that it is not acquiring its Ownership Interest in
this Certificate as a nominee, trustee or agent for any Person who is not other
than a Disqualified Organization, that for so long as it retains its Ownership
Interest in this Certificate, it will endeavor to remain a Permitted Transferee,
and that it has reviewed the provisions of Section 6.02(g) of the Agreement and
agrees to be bound by them, and (ii) the proposed Transferor shall deliver to
the Trustee a certificate, in substantially the form attached to the Agreement
as Exhibit F-2, representing and warranting, among other things, that no purpose
of the proposed Transfer is to allow such Holder to impede the assessment or
collection of tax. Notwithstanding the delivery of a Transferee Affidavit and
Agreement, if the Trustee has actual knowledge that the proposed Transferee is
not a Permitted Transferee, no Transfer of an Ownership Interest in this
Certificate to such proposed Transferee shall be effected. Each Person holding
or acquiring any Ownership Interest in this Certificate agrees, by holding or
acquiring such Ownership Interest, to require a Transferee Affidavit and
Agreement from any other Person to whom such Person attempts to Transfer its
Ownership Interest and to provide a certificate in the form attached to the
Agreement as Exhibit F-2 and to obtain the express written consent of the
Depositor prior to any Transfer of such Ownership Interest, which consent may be
withheld in the Depositor's sole discretion.
A-7-21
<PAGE>
The Class R-III Certificates will be issued in fully registered form only,
without coupons, in minimum denominations representing percentage interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, this Certificate is exchangeable for one or more
new Certificates of the same Class in authorized denominations and evidencing a
like aggregate Certificate Principal Balance, as requested by the Holder
surrendering the same.
No service charge will be made for such registrations of transfers or
exchanges, 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 nor
any such agent thereof shall be affected by notice to the contrary.
The obligations and responsibilities of the Depositor, the Master
Servicer, the Sellers and the Trustee created by the Agreement will terminate
upon the earliest of (i) the purchase by the Master Servicer, at its election,
of all the Mortgage Assets remaining in the Trust Fund and the corresponding
distribution to Certificateholders of all amounts required to be distributed to
them, which repurchase right the Master Servicer may exercise at its sole and
exclusive election if the aggregate Stated Principal Balance of the Mortgage
Pool at the time of the repurchase is less than 5% of the aggregate Cut-off Date
Balance of the Mortgage Pool; (ii) the maturity or other liquidation (or any
advance with respect thereto) of the last Mortgage Asset remaining in the Trust
Fund and the corresponding distribution to Certificateholders of all amounts
required to be distributed to them; or (iii) the mutual agreement of the parties
to the Agreement and the Certificateholders as to such termination.
Unless the certificate of authentication hereon has been executed by or on
behalf of the Trustee by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid or obligatory for any
purpose.
A-7-22
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed under its corporate seal.
LASALLE NATIONAL BANK,
as Trustee
By:__________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class R-III Certificates referred to in the within-mentioned
Agreement.
Date:
LASALLE NATIONAL BANK,
as Trustee
By:______________________________
Authorized Officer
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sell(s), assign(s) and
transfer(s) unto ______________________________________________________________
__________________________________________________ (Please print or typewrite
name and address, including postal zip code, of assignee) the undivided interest
in the Trust Fund evidenced by the within Certificate and hereby authorize(s)
the transfer of registration of such interest to the assignee on the Certificate
Register.
I (we) further direct the Trustee to issue a new Certificate of the same
Class and of a like Percentage Interest and undivided interest in the Trust Fund
to the above-named assignee and to deliver such Certificate to the following
address _______________________________________________________________________
_______________________________________________________________________________
Dated: __________, ____
Social Security or ______________________________
other Tax Identification Signature by or on behalf of
No. of Assignee: assignor (signature must be signed as
registered)
____________________________ ______________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for the information of the
Trustee:
Distribution shall be made by check mailed to _____________________
______________________________________________________________________________.
This information is provided by the assignee named above, or its agent.
<PAGE>
EXHIBIT B
SCHEDULES OF MORTGAGE ASSETS
Daiwa Finance Corp.
MORTGAGE ASSET SCHEDULE
<TABLE>
<CAPTION>
Loan Number Mortgage Mortgage Section of Original
(corresponding Asset Property Housing GNMA Pool Principal Cut-Off Date Lien
to Prospectus) Type Type Act Number Balance Balance Position
-------------- -------- -------- ---------- --------- --------- ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
1* GNMA Multifamily 223f 402308PL $12,583,228.00 $12,441,203.24 First
3 GNMA Nursing 223a7 436933PL $11,040,700.00 $11,030,669.86 First
7 FHA Nursing 223a7 N/A $7,942,900.00 $7,938,262.27 First
9 FHA Multifamily 223f N/A $7,800,100.00 $7,790,441.85 First
11 FHA Nursing 223f N/A $7,402,500.00 $7,396,846.53 First
15 GNMA Multifamily 223f 429325PL $5,450,000.00 $5,442,661.96 First
18 FHA Multifamily 221d4 N/A $4,943,000.00 $4,937,835.39 First
20 FHA Nursing 232 N/A $4,549,445.00 $4,483,182.91 First
21 FHA Multifamily 223f N/A $4,505,000.00 $4,458,246.24 First
22 FHA Nursing 223f N/A $3,995,000.00 $3,990,142.49 First
25 FHA Multifamily 221d4 N/A $3,813,200.00 $3,808,907.19 First
26 GNMA Multifamily 223f 372752PL $3,758,600.00 $3,755,508.03 First
29 FHA Nursing 223f N/A $3,478,200.00 $3,475,510.39 First
33 GNMA Multifamily 223f 420201PN $2,919,000.00 $2,916,367.21 First
34 FHA Multifamily 223f N/A $2,899,500.00 $2,899,500.00 First
39 FHA Nursing 223f N/A $2,701,300.00 $2,698,015.51 First
42 GNMA Multifamily 241f 378387PN $2,392,800.00 $2,377,104.74 Second
43 FHA Nursing 232 N/A $2,212,800.00 $2,208,574.32 First
44 FHA Multifamily 221d4 N/A $2,205,000.00 $2,195,585.18 First
45 FHA Nursing 232 N/A $2,187,200.00 $2,181,057.78 First
46 FHA Nursing 232 N/A $2,160,000.00 $2,149,274.05 First
47 FHA Nursing 223f N/A $2,125,000.00 $2,122,416.20 First
50 GNMA Multifamily 223f 414001PL $1,755,200.00 $1,754,051.85 First
51 FHA Multifamily 221d4 N/A $1,738,900.00 $1,724,783.37 First
53 FHA Nursing 232 N/A $1,709,100.00 $1,706,846.35 First
55 GNMA Multifamily 241f 378389PN $1,707,700.00 $1,685,622.50 Second
56 FHA Nursing 223d N/A $1,655,000.00 $1,654,033.67 Second
57 GNMA Multifamily 223a7 420200PN $1,624,500.00 $1,621,888.79 First
58 FHA Multifamily 223f N/A $1,568,500.00 $1,548,123.01 First
60 FHA Nursing 223f N/A $1,421,600.00 $1,419,871.50 First
61 GNMA Multifamily 223f 432832PL $1,348,600.00 $1,347,420.26 First
63 FHA Multifamily 241 N/A $1,302,400.00 $1,296,916.66 Second
FHA Multifamily 223f N/A $1,139,700.00 $1,129,714.75 First
64
65 GNMA Multifamily 221d4 373433PN $1,053,900.00 $1,044,232.69 First
</TABLE>
<TABLE>
<CAPTION>
Loan Number
(corresponding Mortgage Net Asset Servicing First Due Stated
to Prospectus) Rate Ratio Fee Rate Date Maturity Date
-------------- ---- ----- -------- ---- -------------
<S> <C> <C> <C> <C> <C>
1* 8.375% 8.105% 0.270% 11/01/94 10/15/29
3 8.450% 8.180% 0.270% 11/01/96 02/15/30
7 8.500% 8.305% 0.195% 11/01/96 12/01/34
9 8.250% 8.045% 0.205% 10/01/96 09/01/31
11 8.550% 8.355% 0.195% 11/01/96 10/01/31
15 8.000% 7.730% 0.270% 11/01/96 10/15/26
18 9.125% 8.910% 0.215% 08/01/96 07/01/36
20 9.000% 8.820% 0.180% 09/01/94 03/01/26
21 8.900% 8.680% 0.220% 10/01/94 09/01/29
22 8.500% 8.305% 0.195% 11/01/96 10/01/26
25 9.500% 9.305% 0.195% 07/01/96 06/01/36
26 8.250% 7.980% 0.270% 11/01/96 10/15/31
29 8.500% 8.305% 0.195% 11/01/96 10/01/31
33 7.875% 7.605% 0.270% 10/01/96 10/15/31
34 8.125% 7.785% 0.340% 12/01/96 12/01/31
39 8.500% 8.305% 0.195% 11/01/96 10/01/26
42 8.750% 8.355% 0.395% 11/01/94 10/15/34
43 9.125% 8.930% 0.195% 04/01/96 03/01/36
44 9.250% 9.055% 0.195% 05/01/95 04/01/35
45 10.000% 9.180% 0.820% 05/01/96 10/01/28
46 9.750% 9.555% 0.195% 03/01/96 11/01/25
47 8.500% 8.305% 0.195% 11/01/96 10/01/26
50 8.125% 7.855% 0.270% 11/01/96 11/15/26
51 9.500% 8.910% 0.590% 11/01/93 10/01/33
53 9.500% 9.230% 0.270% 06/01/96 05/01/36
55 9.000% 8.605% 0.395% 05/01/95 04/15/24
56 8.500% 8.305% 0.195% 11/01/96 12/01/34
57 7.750% 7.480% 0.270% 10/01/96 01/15/30
58 9.250% 9.055% 0.195% 02/01/95 01/01/25
60 8.500% 8.305% 0.195% 11/01/96 10/01/26
61 8.000% 7.730% 0.270% 10/01/96 10/15/31
63 10.000% 9.805% 0.195% 01/01/96 08/01/28
9.250% 8.930% 0.320% 12/01/94 11/01/29
64
65 8.950% 8.680% 0.270% 09/01/94 07/15/30
</TABLE>
<PAGE>
Daiwa Finance Corp.
MORTGAGE ASSET SCHEDULE
<TABLE>
<CAPTION>
Loan Number Mortgage Mortgage Section of Original
(corresponding Asset Property Housing GNMA Pool Principal Cut-Off Date Lien
to Prospectus) Type Type Act Number Balance Balance Position
-------------- -------- -------- ---------- --------- --------- ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
66 FHA Multifamily 223f N/A $1,020,000.00 $1,012,990.69 First
67 FHA Multifamily 223f N/A $907,600.00 $901,698.13 First
68 FHA Nursing 232 N/A $859,700.00 $857,717.45 First
70 FHA Nursing 232 N/A $798,300.00 $796,134.95 First
72 FHA Nursing 223f N/A $765,000.00 $760,678.31 First
73 FHA Nursing 241 N/A $700,000.00 $699,826.43 Second
75 GNMA Multifamily 241f 394108PL $627,000.00 $623,332.08 Second
76 FHA Nursing 223d N/A $584,400.00 $581,345.23 Second
77 FHA Multifamily 241f N/A $557,500.00 $550,974.33 Second
78 FHA Multifamily 241f N/A $484,000.00 $482,682.61 Second
79 FHA Multifamily 223f N/A $480,800.00 $476,358.02 First
80 FHA Multifamily 241f N/A $310,000.00 $307,793.06 Second
81 FHA Multifamily 241f N/A $175,600.00 $174,827.00 Second
----------------------------------------
$129,359,473.00 $128,857,177.03
========================================
</TABLE>
<TABLE>
<CAPTION>
Loan Number
(corresponding Mortgage Net Asset Servicing First Due Stated
to Prospectus) Rate Ratio Fee Rate Date Maturity Date
-------------- ---- ----- -------- ---- -------------
<S> <C> <C> <C> <C> <C>
66 9.250% 9.055% 0.195% 05/01/95 04/01/30
67 9.250% 8.930% 0.320% 06/01/95 05/01/30
68 9.500% 9.180% 0.320% 01/01/96 12/01/35
70 9.500% 9.180% 0.320% 11/01/95 10/01/35
72 8.500% 8.180% 0.320% 11/01/95 10/01/30
73 8.750% 8.545% 0.205% 12/01/96 01/01/36
75 9.000% 8.480% 0.520% 12/01/94 11/15/34
76 8.500% 7.920% 0.580% 12/01/95 11/01/30
77 9.250% 9.055% 0.195% 12/01/94 11/01/26
78 8.625% 8.430% 0.195% 02/01/96 01/01/36
79 8.500% 8.160% 0.340% 11/01/96 10/01/07
80 8.750% 8.555% 0.195% 09/01/94 08/01/34
81 9.500% 9.305% 0.195% 03/01/95 02/01/35
</TABLE>
Total Number of Loans = 47
Definitions
- -----------
FHA - FHA Project Loan
GNMA = GNMA Pool
Nursing = Nursing Facility
N/A = Not Applicable
N/AV = Not Available
U/W = Underwriting Report
Lockout Date = In accordance with Mortgage Note and HUD regulations, loan is
locked out prior to this date.
Lockout Penalties of 5, 4, 3, 2, 1 = 5% declining 1% per year until zero.
Date of NOI = Last day of fiscal year for which NOI was being calculated. If
financial statements were not available, HUD underwriting reports were utilized.
* The original and current principal balance for Loan No. 1 represents
approximately 46% of GNMA pool with an original balance or $27,538,200.00. All
numbers relating to debt service and NOI were calculated based on entire loan.
<PAGE>
Daiwa Finance Corp.
MORTGAGE ASSET SCHEDULE
<TABLE>
<CAPTION>
Loan Number Prepayment Provisions
(corresponding Remaining Term to -----------------------------
to Stated Maturity Debenture Retained Lockout Penalties
Prospectus) (in Months) Rate Yield Rate Date (thereafter) City
----------- ----------- ---- ---------- ---- ------------ ----
<S> <C> <C> <C> <C> <C> <C>
1* 394 N/A 0.00% 10/01/99 5,4,3,2,1 Virginia Beach
3 398 N/A 0.00% None 7% till 11-1-01 Voorhees
then 5,4,3,2,1
7 456 7.250% 0.00% 11/01/01 None Brighton
9 417 7.250% 0.00% 08/31/06 None Erwin
11 418 7.250% 0.00% 09/26/06 None Mt. Vernon
15 358 N/A 0.00% 10/01/96 5,4,3,2,1 Lafayette
18 475 8.375% 0.00% 11/01/01 5,4,3,2,1 Killeen
20 351 11.500% 2.50% 07/01/94 10% declining Westfield
1/2% per year
21 393 7.750% 0.00% 09/01/99 None Sierra Vista
22 358 7.250% 0.00% 10/01/01 5,4,3,2,1 Greenville
25 474 7.750% 0.00% 02/08/01 5,4,3,2,1 La Porte
26 418 N/A 0.00% 11/01/06 None Texas City
29 418 7.250% 0.00% 10/01/01 5,4,3,2,1 Big Rapids
33 418 N/A 0.00% 11/01/01 5,4,3,2,1 East Haven
34 419 7.250% 0.00% 01/01/02 5,4,3,2,1 San Bernardino
39 358 7.250% 0.00% 10/01/01 5,4,3,2,1 E. Lansing
42 454 N/A 0.00% 09/30/04 None Naugatuck
43 471 8.375% 0.00% 01/01/01 5,4,3,2,1 Montrose
44 460 8.375% 0.00% 03/08/00 5,4,3,2,1 Chicago
45 382 7.750% 0.00% 07/28/00 5,4,3,2,1 Keysville
46 347 8.375% 0.00% 12/01/00 5,4,3,2,1 Muskegon
47 358 7.250% 0.00% 10/01/01 5,4,3,2,1 Litchfield
50 359 N/A 0.00% 10/01/01 5,4,3,2,1 Spring Valley
51 442 8.000% 0.00% 11/01/03 None Duluth
53 473 8.375% 0.00% 06/01/01 5,4,3,2,1 Lancaster
55 328 N/A 0.00% 05/01/00 5,4,3,2,1 Cumberland
56 456 7.250% 0.00% 11/01/01 None Brighton
57 397 N/A 0.00% 10/01/01 5,4,3,2,1 Miami Twnshp.
58 337 7.750% 0.00% 01/01/00 5,4,3,2,1 Waterbury
60 358 7.250% 0.00% 10/01/01 5,4,3,2,1 Zeeland
61 418 N/A 0.00% 10/01/06 None Burnsville
63 380 8.375% 0.00% 11/01/00 5,4,3,2,1 Lexington
64 395 7.750% 0.00% 11/01/99 5,4,3,2,1 Reynoldsburg
65 403 N/A 0.00% 11/01/04 None New Hope
66 400 8.375% 0.00% 04/01/00 5,4,3,2,1 Biddeford
</TABLE>
<TABLE>
<CAPTION>
Loan Number Cut-Off Debt
(corresponding Service
to Annual Debt Coverage
Prospectus) State Service Ratio NOI Date of NOI
----------- ----- ------- ----- --- -----------
<S> <C> <C> <C> <C> <C>
1* VA $2,437,655.00 1.17 $2,854,403.00 12/31/95
3 NJ $992,909.00 1.34 $1,330,613.00 12/31/95
7 MA $1,011,163.00 1.19 $1,011,163.00 U/W 1996
9 NY $681,876.00 1.53 $1,045,944.00 U/W 1996
11 IL $666,714.00 1.23 $822,500.00 U/W 1996
15 IN $479,882.00 1.30 $625,472.00 U/W 1996
18 TX $463,257.00 1.17 $542,367.00 U/W 1995
20 NY $435,077.00 1.90 $826,616.00 U/W 1994
21 AZ $419,790.00 1.33 $556,900.00 U/W 1994
22 MI $368,617.00 1.36 $500,520.00 U/W 1996
25 TX $370,671.00 1.17 $433,060.00 U/W 1994
26 TX $328,573.00 1.40 $459,304.00 U/W 1996
29 MI $311,728.00 1.55 $483,120.00 U/W 1996
33 CT $245,507.00 1.62 $397,369.00 U/W 1996
34 CA $250,294.00 1.32 $330,891.00 U/W 1996
39 MI $249,248.00 1.78 $444,866.00 U/W 1996
42 CT $215,975.00 N/AV N/AV N/AV
43 MI $207,383.00 1.27 $264,120.00 U/W 1995
44 IL $209,209.00 1.17 $244,714.00 U/W 1995
45 GA $227,667.00 1.20 $273,087.00 U/W 1994
46 MI $223,007.00 1.40 $312,225.00 U/W 1994
47 MI $196,073.00 1.28 $250,047.00 U/W 1996
50 CA $156,185.00 1.25 $195,120.00 U/W 1996
51 MN $169,034.00 1.17 $197,486.00 U/W 1992
53 OH $166,137.00 1.29 $213,635.00 U/W 1995
55 MD $164,197.00 N/AV N/AV N/AV
56 MA $146,452.00 N/AV $1,011,163.00 U/W 1996
57 OH $136,276.00 1.44 $196,129.00 U/W 1996
58 CT $154,844.00 1.24 $191,401.00 U/W 1994
60 MI $131,170.00 1.32 $172,480.00 U/W 1996
61 MN $114,893.00 1.32 $151,891.00 U/W 1996
63 KY $135,477.00 N/AV N/AV N/AV
64 OH $109,787.00 1.24 $135,876.00 U/W 1994
65 AL $98,352.00 1.33 $130,878.00 U/W 1994
66 ME $98,256.00 1.37 $134,338.00 U/W 1995
</TABLE>
<PAGE>
Daiwa Finance Corp.
MORTGAGE ASSET SCHEDULE
<TABLE>
<CAPTION>
Loan Number Prepayment Provisions
(corresponding Remaining Term to -----------------------------
to Stated Maturity Debenture Retained Lockout Penalties
Prospectus) (in Months) Rate Yield Rate Date (thereafter) City
----------- ----------- ---- ---------- ---- ------------ ----
<S> <C> <C> <C> <C> <C> <C>
67 401 8.375% 0.00% 05/01/00 5,4,3,2,1 Cuyahoga Falls
68 468 7.750% 0.00% 01/01/01 5,4,3,2,1 Wash. Crthse.
70 466 7.750% 0.00% 11/01/00 5,4,3,2,1 Marysville
72 406 7.250% 0.00% 11/01/00 5,4,3,2,1 Marysville
73 469 7.250% 0.00% 11/01/06 None Stamford
75 455 N/A 0.00% 11/01/04 None Excelsior
76 407 7.250% 0.00% 11/01/05 None Topsham
77 359 7.750% 0.00% 11/30/99 5,4,3,2,1 Grand Island
78 469 7.250% 0.00% 12/12/00 5,4,3,2,1 Los Angeles
79 130 7.250% 0.00% 11/01/01 None Irving
80 452 7.750% 0.00% 07/23/99 5,4,3,2,1 Ashland
81 458 8.375% 0.00% 01/27/05 None Ashland
</TABLE>
<TABLE>
<CAPTION>
Loan Number Cut-Off Debt
(corresponding Service
to Annual Debt Coverage
Prospectus) State Service Ratio NOI Date of NOI
----------- ----- ------- ----- --- -----------
<S> <C> <C> <C> <C> <C>
67 OH $87,428.00 1.24 $108,204.00 U/W 1995
68 OH $83,569.00 1.27 $106,132.00 U/W 1994
70 OH $77,601.00 1.19 $92,559.00 U/W 1994
72 OH $68,562.00 1.31 $89,709.00 U/W 1995
73 NY $63,333.00 N/AV N/AV N/AV
75 MO $56,593.00 N/AV N/AV N/AV
76 ME $52,376.00 N/AV N/AV N/AV
77 NE $54,421.00 N/AV N/AV N/AV
78 CA $43,131.00 N/AV N/AV N/AV
79 TX $67,426.00 1.08 $72,541.00 U/W 1996
80 OR $27,981.00 N/AV N/AV N/AV
81 OR $17,070.00 N/AV N/AV N/AV
</TABLE>
Total Number of Loans = 47
Definitions
- -----------
FHA = FHA Project Loan
GNMA = GNMA Pool
Nursing = Nursing Facility
N/A = Not Applicable
N/AV = Not Available
U/W = Underwriting Report
Lockout Date = In accordance with Mortgage Note and HUD regulations, loan is
locked out prior to this date.
Lockout Penalties of 5,4,3,2,1 = 5% declining 1% per year until zero.
Date of NOI = Last day of fiscal year for which NOI was being calculated. If
financial statements were not available, HUD underwriting reports were utilized.
*The original and current principal balance for Loan No. 1 represents
approximately 46% of a GNMA pool with an original balance of $27,538,200.00. All
numbers relating to debt service and NOI were calculated based on entire loan.
<PAGE>
Greystone Loan Schedule
<TABLE>
<CAPTION>
(I) (II) (III) (IV) (V) (VI) (VII) (VIII)
--- ---- ----- ---- --- ---- ----- ------
Property Section of GNMA Original Cut-Off Lien Mortgage
# Type Type Housing Act Pool Number Balance Balance Position Rate
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
2 FHA Multifamily 207 101-11023 11,503,900.00 11,238,870.62 First 8.600%
4 FHA Multifamily 221(d)4 012-35203 9,879,400.00 9,021,896.41 First 9.500%
5 FHA Multifamily 223(e) 012-57014 9,236,700.00 8,187,273.54 First 8.500%
6 FHA Multifamily 220 017-32023 8,116,378.00 8,075,289.33 First 7.500%
8 FHA Multifamily 220 012-32188 8,734,900.00 7,879,950.96 First 9.000%
10 GNMA Multifamily 223(f) 413874 7,609,700.00 7,577,130.35 First 7.750%
12 GNMA Nursing Facility 232 157013 6,559,300.00 6,557,351.99 First 7.875%
13 FHA Nursing Facility 223(f) 024-43059 5,943,500.00 5,924,426.63 First 7.875%
14 GNMA Multifamily 223(f) 382270 5,649,100.00 5,511,712.40 First 8.375%
16 GNMA Multifamily 223(f) 419430 5,047,300.00 5,047,300.00 First 7.875%
17 FHA Multifamily 223(f) 133-11012 5,015,000.00 5,002,528.51 First 8.275%
19 FHA Nursing Facility 223(f) 024-43060 4,734,200.00 4,758,879.05 First 7.875%
23 FHA Nursing Facility 223(f) 042-43122 4,004,700.00 3,980,953.75 First 8.300%
24 FHA Multifamily 2223(f) 067-11058 3,867,500.00 3,838,016.35 First 8.825%
27 FHA Multifamily 221(d)4 114-35324 3,850,000.00 3,687,868.23 First 9.750%
28 FHA Multifamily 221(d)4 012-35281 4,459,300.00 3,485,858.44 First 9.500%
30 FHA Nursing Facility 232 042-43084 3,434,200.00 3,398,410.30 First 10.500%
31 FHA Multifamily 223(f) 000-94033 3,337,680.79 3,313,791.33 First 8.250%
32 FHA Multifamily 223(a)7 012-35639 2,990,100.00 2,930,412.99 First 8.500%
35 GNMA Multifamily 223(a)7 181119 2,892,800.00 2,856,635.08 First 8.450%
36 FHA Nursing Facility 223(f) 091-22001 2,837,900.00 2,836,736.71 First 8.250%
37 FHA Nursing Facility 223(f) 091-22003 2,779,800.00 2,778,660.53 First 8.250%
38 FHA Nursing Facility 223(f) 091-22002 2,750,400.00 2,749,272.58 First 8.250%
40 FHA Multifamily 223(f) 133-11010 2,465,000.00 2,458,869.91 First 8.275%
41 FHA Nursing Facility 232 047-43062 2,562,400.00 2,441,713.46 First 9.750%
48 GNMA Nursing Facility 223(f) 436930 1,829,800.00 1,826,768.71 First 8.250%
49 FHA Nursing Facility 232 042-43086 1,806,200.00 1,792,587.20 First 10.500%
52 FHA Multifamily 223(f) 044-94005 1,725,000.00 1,709,275.94 First 8.875%
54 FHA Nursing Facility 232 042-43087 1,715,600.00 1,702,543.25 First 10.500%
59 GNMA Multifamily 223(a)7 427643 1,506,400.00 1,500,220.30 First 8.250%
62 FHA Multifamily 221(d)4 053-35553 1,354,300.00 1,304,408.10 First 8.000%
69 FHA Multifamily 223(f) 133-11011 844,000.00 841,901.08 First 8.275%
71 GNMA Multifamily 223(f) 285711 819,796.00 792,721.81 First 7.900%
74 FHA Multifamily 241 051-10004 660,100.00 643,050.76 Second 10.250%
</TABLE>
<TABLE>
<CAPTION>
(IX) (X) (XI) (XII) (XIII) (XIV) (XV)
---- --- ---- ----- ------ ----- ----
Remaining
Servicing First Stated Term to FHA Retained
Net Asset Fee Scheduled Maturity Stated Debenture Yield
# Rate Rate Due Date Date Maturity Rate Rate
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
2 8.405% 0.175% 1/1/97 9/1/27 369 8.500%
4 9.305% 0.175% 1/1/97 3/1/21 291 7.750%
5 8.360% 0.120% 1/1/97 2/1/21 290 7.125%
6 7.380% 0.100% 1/1/97 11/1/29 395 11.625% 4.125%
8 8.805% 0.175% 1/1/97 6/1/20 282 7.250%
10 7.355% 0.000% 1/1/97 3/1/31 411 N/A
12 7.605% 0.000% 1/1/97 11/1/36 479 N/A
13 7.680% 0.175% 1/1/97 5/1/31 413 6.500%
14 7.980% 0.000% 1/1/97 4/1/23 316 N/A
16 7.605% 0.000% 1/1/97 12/1/31 420 N/A
17 8.055% 0.200% 1/1/97 6/1/31 414 6.500%
19 7.680% 0.175% 1/1/97 5/1/31 413 6.500%
23 7.930% 0.350% 1/1/97 8/1/30 404 8.375% 0.075%
24 8.630% 0.175% 1/1/97 4/1/30 400 8.375%
27 9.610% 0.120% 1/1/97 6/1/25 342 10.125% 0.375%
28 9.305% 0.175% 1/1/97 12/1/20 288 7.750%
30 10.330% 0.150% 1/1/97 12/1/31 420 9.000%
31 8.130% 0.100% 1/1/97 6/1/21 294 10.250% 2.000%
32 8.180% 0.300% 1/1/97 10/1/23 322 7.250%
35 8.180% 0.000% 1/1/97 7/15/29 391 N/A
36 7.930% 0.300% 1/1/97 11/1/31 419 7.250%
37 7.930% 0.300% 1/1/97 11/1/31 419 7.250%
38 7.930% 0.300% 1/1/97 11/1/31 419 7.250%
40 8.055% 0.200% 1/1/97 6/1/31 414 6.500%
41 9.055% 0.675% 1/1/97 11/1/17 251 8.000%
48 7.980% 0.000% 1/1/97 8/15/31 416 N/A
49 10.305% 0.175% 1/1/97 6/1/32 426 9.000%
52 8.555% 0.300% 1/1/97 5/1/22 305 8.000%
54 10.305% 0.175% 1/1/97 5/1/32 425 9.000%
59 7.980% 0.000% 1/1/97 11/1/25 347 N/A
62 7.805% 0.175% 1/1/97 9/1/27 369 10.250% 2.250%
69 8.055% 0.200% 1/1/97 6/1/31 414 6.500%
71 7.630% 0.000% 1/1/97 12/1/21 300 N/A
74 9.930% 0.300% 1/1/97 12/1/27 372 10.250%
</TABLE>
<PAGE>
Greystone Loan Schedule
<TABLE>
<CAPTION>
(XVI) (XVII) (XVIII) (XIX) (XX) (XXI)
Annual Cut-Off NOI
# Prepayment Provision City State Debt Service DSCR NOI Date
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
2 L(0.67) Aurora CO 1,041,212 1.79 1,865,539 FY'96
4 0.750%(.75)...0.125%(1) New York NY 960,351 1.07 1,029,957 FY'94
5 0.750%(0.5)...0.125%(1) New York NY 812,564 1.33 1,076,996 FY'95
6 L(9.25) Hartford CT 662,158 0.99 657,598 FY'95
8 0.75%(0.17)...0.125%(1) New York NY 808,532 1.60 1,290,361 FY'95
10 L(4.25),5%(1),4%(1),3%(1),2%(1),1%(1) Atlanta GA 673,601 1.60 1,076,744 FY'95
12 L(9.92) Atlanta PA 539,921 1.41 760,000 U/W
13 L(4.33),5%(1),4%(1),3%(1),2%(1),1%(1) Dover NH 500,110 1.67 835,232 U/W
14 L(2.33),5%(1),4%(1),3%(1),2%(1),1%(1) Austintown OH N/A N/A N/A N/A
16 L(5),5%(1),4%(1),3%(1),2%(1),1%(1) Blacksburg VA N/A N/A N/A N/A
17 L(4.42),5%(1),4%(1),3%(1),2%(1),1%(1) Lubbock TX N/A N/A N/A N/A
19 L(4.33),5%(1),4%(1),3%(1),2%(1),1%(1) Exeter NH 401,720 1.67 670,912 U/W
23 L(3.67),5%(1),4%(1),3%(1),2%(1),1%(1) Tallonadge OH 351,847 1.59 559,357 FY'95
24 L(3.25),5%(1),4%(1),3%(1),2%(1),1%(1) Merritt Island FL 357,793 1.32 473,165 U/W
27 1.375%(1.0)...0.125%(1) Port Arthur TX N/A N/A N/A N/A
28 0.750%(1)...0.125%(1) New York NY 449,721 1.75 788,156 FY'95
30 L(5) Navarre OH 366,183 1.61 590,711 FY'95
31 L(9.42) Suitland MD 315,475 0.44 137,247 FY'96
32 L(4.00) Brooklyn NY 311,556 1.50 468,370 FY'95
35 L(2.58),5%(1),4%(1),3%(1),2%(1),1%(1) Laurel MD N/A N/A N/A N/A
36 L(4.83),5%(1),4%(1),3%(1),2%(1),1%(1) Rapid City SD 248,086 2.68 663,956 U/W
37 L(4.83),5%(1),4%(1),3%(1),2%(1),1%(1) Pierre SD 243,007 2.43 590,151 U/W
38 L(4.83),5%(1),4%(1),3%(1),2%(1),1%(1) Rapid City SD 240,437 2.19 526,511 U/W
40 L(4.42),5%(1),4%(1),3%(1),2%(1),1%(1) Lubbock TX N/A N/A N/A N/A
41 L(0.58),5%(1),4%(1),3%(1),2%(1),1%(1) Manistee MI 274,014 1.39 381,959 FY'94
48 L(4.58),5%(1),4%(1),3%(1),2%(1),1%(1) Lonacering MD 159,959 2.00 320,223 U/W
49 L(5.5) Wadsworth OH 192,981 1.37 264,706 FY'95
52 L(0.08),3%(1),2%(1),1%(1) Detroit MI 169,622 0.97 164,239 FY'94
54 L(5.42) Plain Township OH 183,329 1.16 212,135 FY'95
59 L(4.42),5%(1),4%(1),3%(1),2%(1),1%(1) Amherst MA 136,427 1.42 194,328 FY'95
62 L(7) Clayton NC 114,199 1.25 142,222 FY'95
69 L(4.42),5%(1),4%(1),3%(1),2%(1),1%(1) Lubbock TX 73,967 1.37 101,609 U/W
71 2%(1),1%(1) Philadelphia PA 72,791 1.27 92,115 FY'95
74 1.0%(0.83) Roanoke VA 240,145 1.84 442,210 FY'95
</TABLE>
<PAGE>
EXHIBIT C
FORM OF CERTIFICATION OF TRUSTEE
___________ ___, 19__
American Southwest Financial
Securities Corporation
2390 East Camelback Road, Suite 225
Phoenix, Arizona 85016
Daiwa Securities America Inc.
32 Old Slip-12th Floor
New York, New York 10005
Greystone Funding Corporation
98 Alexandria Pike
Warrenton, Virginia 22186
Greystone Servicing Corporation, Inc.
98 Alexandria Pike
Warrenton, Virginia 22186
Re: Pooling and Servicing Agreement ("Pooling and Servicing
Agreement") relating to American Southwest Financial
Securities Corporation Commercial Mortgage Pass-Through
Certificates, Series 1996-FHA1
---------------------------------------------------------
Ladies and Gentlemen:
In accordance with the provisions of Section 2.02 of the above-referenced
Pooling and Servicing Agreement the undersigned, as Trustee, hereby certifies
that, as to each Mortgage Loan listed in the related Mortgage Asset Schedule, it
has reviewed the Mortgage File and has determined that (i) those items specified
in clauses (i), (ii) and (iv) of the definition of Mortgage File (subject to
those exceptions listed in the Schedule of Exceptions) are in its possession,
(ii) such documents have been reviewed by it and have not been mutilated,
damaged, defaced, torn or otherwise physically altered and such documents relate
to such Mortgage Loan, (iii) further acknowledges receipt of the GNMA
Certificates listed on the Mortgage Asset Schedule. The Trustee has made no
independent examination of any documents contained in each Mortgage File beyond
the review specifically required in the above-referenced Pooling and Servicing
Agreement. The Trustee makes no representations as to: (i) the validity,
legality, sufficiency, enforceability or genuineness of any of the documents
contained in each Mortgage File, or (ii) the collectibility, insurability,
effectiveness or suitability of any such Mortgage Loan.
<PAGE>
Capitalized terms used herein without definition have the meanings
ascribed to them in the Pooling and Servicing Agreement.
LASALLE NATIONAL BANK, as Trustee
By:________________________________
Name:
Title:
<PAGE>
EXHIBIT D-1
FORM OF TRANSFEROR REPRESENTATION LETTER
__________ ___, 19__
American Southwest Financial
Securities Corporation
__________________________
__________________________
__________________________
LaSalle National Bank
135 South LaSalle Street
Suite 200
Chicago, Illinois 60603-4107
Re: American Southwest Financial Securities Corporation Commercial
Mortgage Pass-Through Certificates, Series 1996-FHA1 Class [B]
[R-I] [R-II] [R-III] [, having an initial Certificate
Principal Balance as of December __, 1996 (the "Closing Date")
of $___________] [evidencing a ____% Percentage Interest in
the related Class]
--------------------------------------------------------------
Ladies and Gentlemen:
Reference is made to the sale by __________ (the "Transferor") to
_____________ (the "Transferee") of the captioned mortgage pass-through
certificates (the "Certificates"), issued pursuant to the Pooling and Servicing
Agreement (the "Pooling and Servicing Agreement"), dated as of December 1, 1996
among American Southwest Financial Securities Corporation, as depositor (the
"Depositor"), Greystone Funding Corporation, as seller ("Greystone Funding"),
Daiwa Finance Corp., as seller ("Daiwa Finance"; Daiwa Finance and Greystone
Funding, each a "Seller" and, together the "Sellers"), Greystone Servicing
Corporation, Inc., as master servicer (the "Master Servicer"), and LaSalle
National Bank, as trustee (the "Trustee"). All terms used herein and not
otherwise defined shall have the meanings set forth in the Pooling and Servicing
Agreement. The Transferor hereby certifies, represents and warrants to, and
covenants with, the Depositor and the Trustee that:
1. The Transferor is the lawful owner of the Certificates with the
full right to transfer such Certificates free from any and all claims and
encumbrances whatsoever.
2. Neither the Transferor nor anyone acting on its behalf has (a)
offered, pledged, sold, disposed of or otherwise transferred any Certificate,
any interest in any Certificate or any other similar security to any person in
any manner, (b) has solicited any offer to buy or
<PAGE>
to accept a pledge, disposition or other transfer of any Certificate, any
interest in any Certificate or any other similar security from any person in any
manner, (c) has otherwise approached or negotiated with respect to any
Certificate, any interest in any Certificate or any other similar security with
any person in any manner, (d) has made any general solicitation by means of
general advertising or in any other manner, or (e) has taken any other action,
that (as to any of (a) through (e) above) would constitute a distribution of the
Certificates under the Securities Act of 1933 (the "Act"), would render the
disposition of any Certificate a violation of Section 5 of the Act or any state
securities law, or would require registration or qualification pursuant thereto.
Very truly yours,
______________________________
(Transferor)
By:
Name:
Title:
D-1-2
<PAGE>
EXHIBIT D-2
FORM OF TRANSFEREE REPRESENTATION LETTER
__________ ____, 19____
American Southwest Financial
Securities Corporation
__________________________
__________________________
__________________________
LaSalle National Bank
135 South LaSalle Street
Suite 200
Chicago, Illinois 60603-4107
Re: American Southwest Financial Securities Corporation
Commercial Mortgage Pass-Through Certificate, Series
1996-FHA1, Class [B] [R-I] [R-II] [R-III], [having an
initial principal amount as of December __, 1996 (the
"Issue Date") of $__________] [evidencing a ____%
percentage interest in the Class to which it belongs]
------------------------------------------------------
Dear Sirs:
This letter is delivered to you in connection with the transfer by
_________________ (the "Transferor") to _________________ (the "Transferee") of
the captioned Certificate (the "Certificate"), issued pursuant to a Pooling and
Servicing Agreement (the "Pooling and Servicing Agreement"), dated as of
December 1, 1996, among American Southwest Financial Securities Corporation, as
depositor (the "Depositor"), Greystone Servicing Corporation, Inc., as master
servicer (the "Master Servicer"), Greystone Funding Corporation and Daiwa
Finance Corp., as sellers (the "Sellers"), and LaSalle National Bank, as trustee
(the "Trustee"). All terms used herein and not otherwise defined shall have the
respective meanings set forth in the Pooling and Servicing Agreement. The
Transferor hereby represents and warrants to, and covenants with, the Depositor,
the Trustee and the Transferor, that:
1. The Transferee is a "qualified institutional buyer" as that term
is defined in Rule 144A ("Rule 144A") under the Securities Act of 1933
(the "Securities Act") and has completed one of the forms of certification
to that effect attached hereto as Annex 1 and Annex 2. The Transferee is
aware that the sale to it is being made in reliance on Rule 144A. The
Transferee is acquiring the Certificate for its own account or for the
account of a qualified institutional buyer, and understands that such
Certificate may be resold, pledged or transferred only (a) to a person
reasonably believed to be a qualified
<PAGE>
institutional buyer that purchases for its own account or for the account
of a qualified institutional buyer to whom notice is given that the
resale, pledge or transfer is being made in reliance on Rule 144A, or (b)
pursuant to another exemption from registration under the Securities Act.
2. The Transferee understands that it may not sell or otherwise
transfer the Certificate or any interest therein, except in compliance
with the provisions of Section 6.02 of the Pooling and Servicing
Agreement, which provisions it has carefully reviewed.
3. The Transferee has been furnished with all information regarding
(a) the Certificate and distributions thereon, (b) the nature, performance
and servicing of the Mortgage Loans, (c) the Pooling and Servicing
Agreement and (d) any credit enhancement mechanism associated with the
Certificate, that it has requested.
Very truly yours,
______________________________
(Transferee)
By:
Name:
Title:
D-2-2
<PAGE>
ANNEX 1 TO EXHIBIT D-2
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Transferees Other Than Registered Investment Companies]
The undersigned hereby certifies as follows to [name of Transferor]
(the "Transferor"), [name of Trustee], as Trustee, and American Southwest
Financial Securities Corporation, as Depositor, with respect to the commercial
mortgage pass-through certificate (the "Certificate") described in the
Transferee Certificate to which this certification relates and to which this
certification is an Annex:
1. As indicated below, the undersigned is the chief financial
officer, a person fulfilling an equivalent function, or other executive officer
of the entity purchasing the Certificate (the "Transferee").
2. The Transferee is a "qualified institutional buyer" as that term
is defined in Rule 144A under the Securities Act of 1933 ("Rule 144A") because
(i) the Transferee owned and/or invested on a discretionary basis
$______________________(1) in securities (other than the excluded securities
referred to below) as of the end of the Transferee's most recent fiscal year
(such amount being calculated in accordance with Rule 144A) and (ii) the
Transferee satisfies the criteria in the category marked below.
___ Corporation, etc. The Transferee is a corporation (other than a
bank, savings and loan association or similar institution),
Massachusetts or similar business trust, partnership, or any
organization described in Section 501(c)(3) of the Internal
Revenue Code of 1986.
___ Bank. The Transferee (a) is a national bank or a banking
institution organized under the laws of any State, U.S. territory
or the District of Columbia, the business of which is
substantially confined to banking and is supervised by the State
or territorial banking commission or similar official or is a
foreign bank or equivalent institution, and (b) has an audited net
worth of at least $25,000,000 as demonstrated in its latest annual
financial statements, a copy of which is attached hereto, as of a
date not more than 16 months preceding the date of sale of the
Certificate in the case of a U.S. bank, and not more than 18
months preceding such date of sale for a foreign bank or
equivalent institution.
- --------
(1) Transferee must own and/or invest on a discretionary basis at least
$100,000,000 in securities unless Transferee is a dealer, and, in that case,
Transferee must own and/or invest on a discretionary basis at least $10,000,000
in securities.
<PAGE>
___ Savings and Loan. The Transferee (a) is a savings and loan
association, building and loan association, cooperative bank,
homestead association or similar institution, which is supervised
and examined by a State or Federal authority having supervision
over any such institutions, or is a foreign savings and loan
association or equivalent institution and (b) has an audited net
worth of at least $25,000,000 as demonstrated in its latest annual
financial statements, a copy of which is attached hereto, as of a
date not more than 16 months preceding the date of sale of the
Certificate in the case of a U.S. savings and loan association,
and not more than 18 months preceding such date of sale for a
foreign savings and loan association or equivalent institution.
___ Broker-dealer. The Transferee is a dealer registered pursuant to
Section 15 of the Securities Exchange Act of 1934.
___ Insurance Company. The Transferee is an insurance company whose
primary and predominant business activity is the writing of
insurance or the reinsuring of risks underwritten by insurance
companies and which is subject to supervision by the insurance
commissioner or a similar official or agency of a State, U.S.
territory or the District of Columbia.
___ State or Local Plan. The Transferee is a plan established and
maintained by a State, its political subdivisions, or any agency
or instrumentality of the State or its political subdivisions,
for the benefit of its employees.
___ ERISA Plan. The Transferee is an employee benefit plan within the
meaning of Title I of the Employee Retirement Income Security Act
of 1974.
___ Investment Adviser. The Transferee is an investment advisor
registered under the Investment Advisers Act of 1940.
___ Other. (Please supply a brief description of the entity and a
cross-reference to the paragraph and subparagraph under subsection
(a)(1) of Rule 144A pursuant to which it qualifies. Note that
registered investment companies should complete Annex 2 rather
than this Annex 1.)
3. The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Transferee, (ii) securities
that are part of an unsold allotment to or subscription by the Transferee, if
the Transferee is a dealer, (iii) bank deposit notes and certificates of
deposit, (iv) loan participations, (v) repurchase agreements, (vi) securities
owned but subject to a repurchase agreement and (vii) currency, interest rate
and commodity swaps. For purposes of determining the aggregate amount of
securities owned and/or invested on a
2
<PAGE>
discretionary basis by the Transferee, the Transferee did not include any of the
securities referred to in this paragraph.
4. For purposes of determining the aggregate amount of securities
owned and/or invested on a discretionary basis by the Transferee, the Transferee
used the cost of such securities to the Transferee, unless the Transferee
reports its securities holdings in its financial statements on the basis of
their market value, and no current information with respect to the cost of those
securities has been published, in which case the securities were valued at
market. Further, in determining such aggregate amount, the Transferee may have
included securities owned by subsidiaries of the Transferee, but only if such
subsidiaries are consolidated with the Transferee in its financial statements
prepared in accordance with generally accepted accounting principles and if the
investments of such subsidiaries are managed under the Transferee's direction.
However, such securities were not included if the Transferee is a
majority-owned, consolidated subsidiary of another enterprise and the Transferee
is not itself a reporting company under the Securities Exchange Act of 1934.
5. The Transferee acknowledges that it is familiar with Rule 144A
and understands that the Transferor and other parties related to the Certificate
are relying and will continue to rely on the statements made herein because one
or more sales to the Transferee may be in reliance on Rule 144A.
___ ___ Will the Transferee be purchasing the Certificate
Yes No only for the Transferee's own account?
6. If the answer to the foregoing question is "no", then in each
case where the Transferee is purchasing for an account other than its own, such
account belongs to a third party that is itself a "qualified institutional
buyer" within the meaning of Rule 144A, and the "qualified institutional buyer"
status of such third party has been established by the Transferee through one or
more of the appropriate methods contemplated by Rule 144A.
7. The Transferee will notify each of the parties to which this
certification is made of any changes in the information and conclusions herein.
Until such notice is given, the Transferee's purchase of the Certificate will
constitute a reaffirmation of this certification as of the date of such
purchase. In addition, if the Transferee is a bank or savings and loan as
provided above, the Transferee agrees that it will furnish to such parties any
updated annual financial statements that become available on or before the date
of such purchase, promptly after they become available.
Print Name of Transferee
By:
Name:
Title:
Date:
3
<PAGE>
ANNEX 2 TO EXHIBIT D-2
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Transferees That Are Registered Investment Companies]
The undersigned hereby certifies as follows to [name of Transferor]
(the "Transferor"), [name of Trustee], as Trustee, and American Southwest
Financial Securities Corporation, as Depositor, with respect to the commercial
mortgage pass-through certificate (the "Certificate") described in the
Transferee Certificate to which this certification relates and to which this
certification is an Annex:
1. As indicated below, the undersigned is the chief financial
officer, a person fulfilling an equivalent function, or other executive officer
of the entity purchasing the Certificate (the "Transferee") or, if the
Transferee is a "qualified institutional buyer" as that term is defined in Rule
144A under the Securities Act of 1933 ("Rule 144A") because the Transferee is
part of a Family of Investment Companies (as defined below), is an executive
officer of the investment adviser (the "Adviser").
2. The Transferee is a "qualified institutional buyer" as defined in
Rule 144A because (i) the Transferee is an investment company registered under
the Investment Company Act of 1940, and (ii) as marked below, the Transferee
alone owned and/or invested on a discretionary basis, or the Transferee's Family
of Investment Companies owned, at least $100,000,000 in securities (other than
the excluded securities referred to below) as of the end of the Transferee's
most recent fiscal year. For purposes of determining the amount of securities
owned by the Transferee or the Transferee's Family of Investment Companies, the
cost of such securities was used, unless the Transferee or any member of the
Transferee's Family of Investment Companies, as the case may be, reports its
securities holdings in its financial statements on the basis of their market
value, and no current information with respect to the cost of those securities
has been published, in which case the securities of such entity were valued at
market.
____ The Transferee owned and/or invested on a discretionary basis
$___________________ in securities (other than the excluded
securities referred to below) as of the end of the Transferee's
most recent fiscal year (such amount being calculated in
accordance with Rule 144A).
____ The Transferee is part of a Family of Investment Companies which
owned in the aggregate $______________ in securities (other than
the excluded securities referred to below) as of the end of the
Transferee's most recent fiscal year (such amount being calculated
in accordance with Rule 144A).
3. The term "Family of Investment Companies" as used herein means
two or more registered investment companies (or series thereof) that have the
same investment adviser
<PAGE>
or investment advisers that are affiliated (by virtue of being majority owned
subsidiaries of the same parent or because one investment adviser is a majority
owned subsidiary of the other).
4. The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Transferee or are part of the
Transferee's Family of Investment Companies, (ii) bank deposit notes and
certificates of deposit, (iii) loan participations, (iv) repurchase agreements,
(v) securities owned but subject to a repurchase agreement and (vi) currency,
interest rate and commodity swaps. For purposes of determining the aggregate
amount of securities owned and/or invested on a discretionary basis by the
Transferee, or owned by the Transferee's Family of Investment Companies, the
securities referred to in this paragraph were excluded.
5. The Transferee is familiar with Rule 144A and understands that
the parties to which this certification is being made are relying and will
continue to rely on the statements made herein because one or more sales to the
Transferee will be in reliance on Rule 144A.
____ ____ Will the Transferee be purchasing the Certificate
Yes No only for the Transferee's own account?
6. If the answer to the foregoing question is "no", then in each
case where the Transferee is purchasing for an account other than its own, such
account belongs to a third party that is itself a "qualified institutional
buyer" within the meaning of Rule 144A, and the "qualified institutional buyer"
status of such third party has been established by the Transferee through one or
more of the appropriate methods contemplated by Rule 144A.
2
<PAGE>
7. The undersigned will notify the parties to which this
certification is made of any changes in the information and conclusions herein.
Until such notice, the Transferee's purchase of the Certificate will constitute
a reaffirmation of this certification by the undersigned as of the date of such
purchase.
Print Name of Transferee or Adviser
By:
Name:
Title:
IF AN ADVISER:
Print Name of Transferee
Date
<PAGE>
EXHIBIT E
FORM OF ERISA REPRESENTATION
Certain American Southwest Financial Securities Corporation
Series 1996-FHA1, Class __, Commercial Mortgage Pass-Through Certificates
The undersigned (the "Transferee"), intends to acquire the
securities described above (the "Certificates") from ______________ (the
"Transferor") on _____________________ (the "Acquisition Date").
Reference is made to the Pooling and Servicing Agreement, dated as
of December 1, 1996, by and among American Southwest Financial Securities
Corporation, as depositor (the "Depositor"), Greystone Servicing Corporation,
Inc., as master servicer (the "Master Servicer"), Greystone Funding Corporation,
as seller ("Greystone Funding"), Daiwa Finance Corp., as seller ("Daiwa
Finance"; Daiwa Finance and Greystone Funding, each a "Seller" and, together the
"Sellers"), and LaSalle National Bank, as trustee (the "Trustee").
The Transferee warrants and represents to, and covenants with, the
Trustee, the Depositor, the Master Servicer and the Transferor that either:
(1) The Certificates (i) are not being acquired by, and will not be
transferred to, any employee benefit plan within the meaning of section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA") or other retirement arrangement, including individual retirement
accounts and annuities, Keogh plans and bank collective investment funds
and insurance company general or separate accounts in which such plans,
accounts or arrangements are invested, that is subject to Section 406 of
ERISA or Section 4975 of the Internal Revenue Code of 1986 (the "Code")
(any of the foregoing, a "Plan"), (ii) are not being acquired with "plan
assets" of a Plan within the meaning of the Department of Labor ("DOL")
regulation, 29 C.F.R. ss. 2510.3-101, and (iii) will not be transferred to
any entity that is deemed to be investing in plan assets within the
meaning of the DOL regulation, 29 C.F.R. ss. 2510.3-101; or
(2) The purchase of the Certificates is permissible under applicable
law, will not constitute or result in any prohibited transaction under
ERISA or Section 4975 of the Code, will not subject the Depositor, the
Trustee or the Master Servicer to any obligation in addition to those
undertaken in the Pooling and Servicing Agreement and, with respect to
each source ("Source") of funds being used by the Transferee to acquire
the Certificates, the Transferee is an insurance company and (i) the
Source is assets of its "general account," (ii) the conditions set forth
in Sections I and III of PTCE 95-60 issued by the DOL have been satisfied
and the purchase and holding of the Certificates by or on behalf of the
Transferee are exempt under PTCE 95-60 and (iii) the amount of reserves
and liabilities for such general account contracts held by or on behalf of
any Plan do not exceed 10% of the total reserves and liabilities of such
general account plus surplus as of the date hereof (for purposes of this
clause, all Plans maintained by the
4
<PAGE>
same employer (or affiliate thereof) or employee organization are deemed
to be a single Plan) in connection with its purchase and holding of such
Certificates.
IN WITNESS WHEREOF, the Buyer has executed this document as of the
Acquisition Date set forth below.
[NAME OF INVESTOR]
By:
Name:
Title:
5
<PAGE>
EXHIBIT F-1
FORM OF INVESTOR TRANSFER AFFIDAVIT AND AGREEMENT
STATE OF )
: ss.:
COUNTY OF )
[NAME OF OFFICER], being first duly sworn, deposes and says:
1. That he is [Title of Officer] of [Name of Transferee], a [savings
institution] [corporation] duly organized and existing under the laws of [the
State of ______________] [the United States] (the "Transferee"), which entity is
acquiring record or beneficial ownership of the American Southwest Financial
Securities Corporation Commercial Mortgage Pass-Through Certificates, Series
1996-FHA1, Class R-[I], [Class R-II and Class R-III] (the "Residual
Certificates") on behalf of which he makes this affidavit and agreement.
2. That the Transferee (i) is not and will not be a "disqualified
organization" as of [date of transfer] within the meaning of Section 860E(e)(5)
of the Internal Revenue Code of 1986, as amended (the "Code"), (ii) will
endeavor to remain a Permitted Transferee for so long as it retains its
ownership interest in the Residual Certificate, and (iii) is acquiring the
Residual Certificates for its own account or for the account of another person
from which it has received an affidavit and agreement in substantially the same
form as this affidavit and agreement. A "Permitted Transferee" is any person
other than a "disqualified organization". (For this purpose, a "disqualified
organization" means the United States, any state or political subdivision
thereof, any agency or instrumentality of any of the foregoing (other than an
instrumentality all of the activities of which are subject to tax and, except
for the Federal Home Loan Mortgage Corporation, a majority of whose board of
directors is not selected by any such governmental entity) or any foreign
government, international organization or any agency or instrumentality of such
foreign government or organization, any rural electric or telephone cooperative,
or any organization (other than certain farmers' cooperatives) that is generally
exempt from federal income tax unless such organization is subject to the tax on
unrelated business taxable income).
3. That the Transferee is aware (i) of the tax that would be imposed
on transfers of Residual Certificates to disqualified organizations under the
Code; (ii) that such tax would be on the transferor, or, if such transfer is
through an agent (which person includes a broker, nominee or middleman) for a
"disqualified organization", on the agent; (iii) that the person otherwise
liable for the tax shall be relieved of liability for the tax if the transferee
furnishes to such person an affidavit that the transferee is a Permitted
Transferee and, at the time of transfer, such person does not have actual
knowledge that the affidavit is false; and (iv) that the Residual Certificates
may be "noneconomic residual interests" within the meaning of Treasury
regulations promulgated pursuant to the Code and that the transferor of a
noneconomic residual interest will remain liable for any taxes due with respect
to the income on such residual interest
6
<PAGE>
if a significant purpose of the transfer was to enable the transferor to impede
the assessment or collection of tax.
4. That the Transferee is aware of the tax imposed on a
"pass-through entity" holding Residual Certificates if at any time during the
taxable year of the pass-through entity a "disqualified organization" is the
record holder of an interest in such entity. (For this purpose, a "pass through
entity" includes a regulated investment company, a real estate investment trust
or common trust fund, a partnership, trust or estate, and certain cooperatives.)
5. That the Transferee is aware that the Trustee will not register
the Transfer of any Residual Certificates unless the transferee, or the
transferee's agent, delivers to it, among other things, an affidavit and
agreement in substantially the same form as this affidavit and agreement. The
Transferee expressly agrees that it will not consummate any such transfer if it
knows or believes that any of the representations contained in such affidavit
and agreement are false.
6. That the Transferee has reviewed the restrictions set forth on
the face of the Residual Certificates and the provisions of Section 6.02 of the
Pooling and Servicing Agreement under which the Residual Certificates were
issued. The Transferee acknowledges that the transfer of the Residual
Certificates is subject to the approval of the Depositor, which approval shall
be at its sole discretion. The Transferee expressly agrees to be bound by and to
comply with such restrictions and provisions.
7. That the Transferee consents to any additional restrictions or
arrangements that shall be deemed necessary upon advice of counsel to constitute
a reasonable arrangement to ensure that the Residual Certificates will only be
owned, directly or indirectly, by a Permitted Transferee.
8. That the Transferee's Taxpayer Identification Number is
______________.
9. That the Transferee is a citizen or resident of the United
States, a corporation, partnership or other entity created or organized in, or
under the laws of, the United States or any political subdivision thereof, or an
estate or trust whose income from sources without the United States is
includible in gross income for United States federal income tax purposes
regardless of its connection with the conduct of a trade or business within the
United States.
10. That no purpose of the Transferee relating to the purchase of
the Residual Certificates by the Transferee is or will be to impede the
assessment or collection of tax.
11. That the Transferee has no present knowledge or expectation that
it will be unable to pay any United States taxes owed by it so long as the
Residual Certificates remain outstanding.
7
<PAGE>
12. That the Transferee has no present knowledge or expectation that
it will become insolvent or subject to a bankruptcy proceeding for so long as
the Residual Certificates remain outstanding.
13. That no purpose of the Transferee relating to any sale of the
Residual Certificate by the Transferee will be to impede the assessment or
collection of tax.
14. The Transferee hereby agrees to cooperate with the Trustee and
to take any action required of it by the Code or Treasury regulations thereunder
(whether now or hereafter promulgated) in order to create or maintain the REMIC
status of the Trust Fund.
15. The Transferee hereby agrees that it will not take any action
that could endanger the REMIC status of any portion of the Trust Fund or result
in the imposition of tax on the Trust Fund unless counsel acceptable to the
Trustee has provided to the Trustee, at the Transferee's expense, an opinion
that such action will not result in the loss of such REMIC status or the
imposition of such tax, as applicable.
8
<PAGE>
IN WITNESS WHEREOF, the Transferee has caused this instrument to be
executed on its behalf, pursuant to the 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 TRANSFEREE]
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 me to be the same person who executed the foregoing
instrument and to be the [Title of Officer] of the Transferee, and acknowledged
to me that he executed the same as his free act and deed and the free act and
deed of the Transferee.
Subscribed and sworn before me this ____ day of __________, ____.
NOTARY PUBLIC
COUNTY OF
STATE OF
My Commission expires the ____ day of
__________, 19____.
<PAGE>
EXHIBIT F-2
FORM OF TRANSFER CERTIFICATE
__________ ____, 19____
American Southwest Financial
Securities Corporation
__________________________
__________________________
__________________________
LaSalle National Bank
135 South LaSalle Street
Suite 200
Chicago, Illinois 60603-4107
Re: American Southwest Financial Securities Corporation
Commercial Mortgage Pass-Through Certificates, Series
1996-FHA1 Class [R-I] [R-II] [R-III], evidencing a ___%
Percentage Interest in the related Class
-------------------------------------------------------
Ladies and Gentlemen:
This letter is delivered to you in connection with the transfer by
_______________ (the "Seller") to __________________________________ (the
"Purchaser") of the captioned mortgage pass-through certificates (the
"Certificates"), pursuant to Section 6.02 of the Pooling and Servicing Agreement
(the "Pooling and Servicing Agreement"), dated as of December 1, 1996, among
American Southwest Financial Securities Corporation, as depositor (the
"Depositor"), Greystone Servicing Corporation, Inc., as master servicer,
Greystone Funding Corporation, as seller, Daiwa Finance Corp., as seller, and
LaSalle National Bank, as trustee (the "Trustee"). All terms used herein and not
otherwise defined shall have the meanings set forth in the Pooling and Servicing
Agreement. The Seller hereby certifies, represents and warrants to, and
covenants with, the Depositor and the Trustee that:
1. No purpose of the Seller relating to sale of the Certificates by
the Seller to the Purchaser is or will be to enable the Seller to impede the
assessment or collection of any tax.
2. The Seller understands that the Purchaser has delivered to the
Trustee a transfer affidavit and agreement in the form attached to the Pooling
and Servicing Agreement as
<PAGE>
Exhibit F-1. The Seller does not know or believe that any representation
contained therein is false.
3. The Seller has no actual knowledge that the proposed Transferee
is not a Permitted Transferee.
4. The Seller has no actual knowledge that the Purchaser would be
unwilling or unable to pay taxes due on its share of the taxable income
attributable to the Certificates.
5. The Seller has conducted a reasonable investigation of the
financial condition of the Purchaser and, as a result of the investigation,
found that the Purchaser has historically paid its debts as they came due, and
found no significant evidence to indicate that the Purchaser will not continue
to pay its debts as they come due in the future.
6. The Purchaser has represented to the Seller that, if the
Certificates constitute a noneconomic residual interest, it (i) understands that
as holder of a noneconomic residual interest it may incur tax liabilities in
excess of any cash flows generated by the interest, and (ii) intends to pay
taxes associated with its holding of the Certificates as they become due.
Very truly yours,
____________________________________
(Seller)
By:
Name:
Title:
F-2-2
<PAGE>
EXHIBIT G
LETTER OF REPRESENTATIONS
<PAGE>
EXHIBIT H-1
FORM OF LOST NOTE AFFIDAVIT AND INDEMNITY
STATE OF )
: ss.:
COUNTY OF )
Greystone Funding Corporation, a Georgia corporation ("Greystone
Funding"), and Greystone Servicing Corporation, Inc. (the "Master Servicer"), by
their undersigned authorized representatives, hereby certify:
1. Pursuant to the Pooling and Servicing Agreement, dated as of
December 1, 1996 (the "Pooling and Servicing Agreement"), among American
Southwest Financial Securities Corporation, as depositor, the Master Servicer,
as master servicer, Greystone Funding, as seller, Daiwa Finance Corp., as
seller, and LaSalle National Bank, as trustee, Greystone Funding and the Master
Servicer are granting all of their right, title and interest in and to the
Mortgage Loan identified below to the Trustee. Terms used but not defined herein
have the respective meanings assigned to them in the Pooling and Servicing
Agreement.
FHA Project No:
Project Name:
Location:
Original Principal Amount:
Original Mortgage Note Date:
Maturity Date:
2. Greystone Funding is the beneficial owner of and the Master
Servicer holds legal title to the indebtedness evidenced by the original
Mortgage Note.
3. After diligent search, Greystone Funding and the Master Servicer
have been unable to locate the original Mortgage Note and believe it to be lost
or misplaced.
4. A true, complete and correct photocopy of the original Mortgage
Note is attached hereto.
5. If at any time Greystone Funding or the Master Servicer locates
the original Mortgage Note, such party shall endorse such original Mortgage Note
in blank for transfer to the Trustee and shall promptly deliver the original
Mortgage Note, so endorsed, to the Trustee or its designee.
6. Greystone Funding hereby indemnifies and holds harmless the
Trustee, the Certificateholders and the Depositor and their respective
successors and assigns against any
<PAGE>
losses, costs, or charges whatsoever, including attorney's fees, which may be
sustained by the Trustee, the Certificateholders or the Depositor as a result of
the loss of the original Mortgage Note.
7. This Lost Note Affidavit and Indemnity shall inure to the benefit
of the Trustee, the Certificateholders, the Depositor and their respective
successors and permitted assigns.
GREYSTONE FUNDING
CORPORATION
By: ______________________________
Name:
Title:
GREYSTONE SERVICING
CORPORATION, INC.
By: ______________________________
Name:
Title:
Subscribed and Sworn to before me
this ____ day of December, 1996
_________________________________
Notary Public
H-2
<PAGE>
EXHIBIT H-2
FORM OF LOST NOTE AFFIDAVIT AND INDEMNITY
STATE OF )
: ss.:
COUNTY OF )
Daiwa Finance Corp., a New York corporation ("Daiwa Finance"), and
the Daiwa Titleholders (the "Daiwa Titleholders"), by their undersigned
authorized representatives, hereby certify:
1. Pursuant to the Pooling and Servicing Agreement, dated as of
December 1, 1996 (the "Pooling and Servicing Agreement"), among American
Southwest Financial Securities Corporation, as depositor, Greystone Servicing
Corporation, Inc., as master servicer, Greystone Funding, as seller, Daiwa
Finance, as seller, and LaSalle National Bank, as trustee, Daiwa Finance and the
Daiwa Titleholders are granting all of their right, title and interest in and to
the Mortgage Loan identified below to the Trustee. Terms used but not defined
herein have the respective meanings assigned to them in the Pooling and
Servicing Agreement.
FHA Project No:
Project Name:
Location:
Original Principal Amount:
Original Mortgage Note Date:
Maturity Date:
2. Daiwa Finance is the beneficial owner of and the Daiwa
Titleholders hold legal title to the indebtedness evidenced by the original
Mortgage Note.
3. After diligent search, Daiwa Finance and the Daiwa Titleholders
have been unable to locate the original Mortgage Note and believe it to be lost
or misplaced.
4. A true, complete and correct photocopy of the original Mortgage
Note is attached hereto.
5. If at any time Daiwa Finance or the Daiwa Titleholders locates
the original Mortgage Note, such party shall endorse such original Mortgage Note
in blank for transfer to the Trustee and shall promptly deliver the original
Mortgage Note, so endorsed, to the Trustee or its designee.
6. Daiwa Finance hereby indemnifies and holds harmless the Trustee,
the Certificateholders and the Depositor and their respective successors and
assigns against any
<PAGE>
losses, costs, or charges whatsoever, including attorney's fees, which may be
sustained by the Trustee, the Certificateholders or the Depositor as a result of
the loss of the original Mortgage Note.
7. This Lost Note Affidavit and Indemnity shall inure to the benefit
of the Trustee, the Certificateholders, the Depositor and their respective
successors and permitted assigns.
DAIWA FINANCE CORP.
By: _____________________________
Name:
Title:
DAIWA TITLEHOLDERS:
By: _____________________________
Name:
Title:
Subscribed and Sworn to before me
this ____ day of December, 1996
__________________________________
Notary Public
I-2
<PAGE>
GREYSTONE MORTGAGE ASSET PURCHASE AGREEMENT
This Mortgage Asset Purchase Agreement (this "Agreement"), dated and
effective as of December 19, 1996, is made between Greystone Funding Corporation
(the "Seller"), Greystone Servicing Corporation, Inc. (the "Master Servicer")
and American Southwest Financial Securities Corporation (the "Depositor").
The Depositor intends to create a trust fund (the "Trust Fund"), the
beneficial ownership of which will be evidenced by the Depositor's Commercial
Mortgage Pass-Through Certificates, Series 1996-FHA1. The Seller, the Master
Servicer and the Depositor each intends for the Seller and the Master Servicer
to convey to LaSalle National Bank, as trustee for the Trust Fund (the
"Trustee"), or cause to be conveyed to the Trustee (i) certain fixed-rate,
fully-amortizing mortgage loans (the "Greystone FHA Loans") insured by the
Federal Housing Administration (the "FHA") of the United States Department of
Housing and Urban Development ("HUD") under certain sections of the National
Housing Act of 1934, as amended (the "Housing Act"), and secured by liens on
multifamily rental housing developments (collectively, "Multifamily Properties")
or nursing homes, intermediate care facilities, board and care homes or other
nursing facilities (collectively, "Nursing Facilities") and (ii) certain
securities (the "Greystone GNMA Certificates"; collectively with the Greystone
FHA Loans, the "Greystone Mortgage Assets") guaranteed by the Government
National Mortgage Association ("GNMA") and backed by fixed-rate, level payment,
fully-amortizing mortgage loans (the "Greystone Underlying Loans"; collectively
with the Greystone FHA Loans, the "Greystone FHA Loans") insured by the FHA and
secured by liens on Multifamily Properties or Nursing Facilities.
The Trust Fund will be created, and the Greystone Mortgage Assets
will be conveyed at the direction of the Depositor, pursuant to a Pooling and
Servicing Agreement (the "Pooling and Servicing Agreement"), to be dated as of
December 1, 1996 (the "Cut-off Date"), among the Depositor, Greystone Servicing
Corporation as Master Servicer (the "Master Servicer"), the Seller, Daiwa
Finance Corp. ("Daiwa Finance") and the Trustee. Daiwa Finance transferred, or
caused the transfer of all legal and beneficial ownership of the Daiwa Mortgage
Assets (as such term is defined in the Daiwa Mortgage Asset Purchase Agreement)
to the Trustee, at the direction of the Depositor, pursuant to a Mortgage Asset
Purchase Agreement, dated and effective as of December 19, 1996 (the "Daiwa
Mortgage Asset Purchase Agreement"), among Daiwa Finance and the Depositor.
Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"), Daiwa Securities
America Inc. ("Daiwa Securities", Daiwa Securities and DLJ each an
"Underwriter", and together, the "Underwriters"), Daiwa Finance, the Seller and
the Depositor have participated in the preparation of a Prospectus Supplement
dated December 19, 1996 (the "Prospectus Supplement") to a Prospectus, dated
July 25, 1995 (and together with the Prospectus Supplement, the "Prospectus")
and a Private Placement Memorandum dated December 27, 1996 (the "Memorandum")
relating to American Southwest Financial Securities Corporation Commercial
Mortgage Pass-Through Certificates, Series 1996- FHA1, Class A-1, Class A-2,
Class A-3, Class A-4, Class A-Z, Class S, Class B, Class R-I, Class R-II and
Class R-III (the "Certificates") to be issued pursuant to the Pooling and
Servicing Agreement. The Class A-1, Class A-2, Class A-3, Class A-4, Class A-Z
and Class S Certificates will be sold to the Underwriters pursuant to an
Underwriting Agreement (the "Underwriting Agreement"), to be dated as of
December 19, 1996, among DLJ, Daiwa Securities and the Depositor.
<PAGE>
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The Seller, Daiwa Finance, DLJ and Daiwa Securities are all parties
to a Letter Agreement (the "Letter Agreement"), dated December 19, 1996,
pursuant to which certain parties have agreed to share in certain costs and
expenses incurred in connection with the issuance of the Certificates.
Capitalized terms used but not defined herein have the respective
meanings set forth in the Pooling and Servicing Agreement.
Now, therefore, in consideration of the premises and the mutual
agreements set forth herein, and for other good and valuable consideration, the
parties acknowledge and agree as follows:
SECTION 1. Agreement to Sell and Assign the Greystone Mortgage
Assets and enter into the Pooling and Servicing Agreement.
(a) At the direction of the Depositor, in accordance with the terms
and conditions of the Pooling and Servicing Agreement, the Seller and the Master
Servicer each agrees to sell, assign and deliver to the Trustee, all of its
right, title and interest in and to, or cause the assignment and delivery of,
the Greystone Mortgage Assets, without recourse, initially for the benefit of
the Depositor and immediately thereafter for the benefit of the
Certificateholders, identified on the schedule annexed hereto as Exhibit A, as
such schedule may be amended from time to time pursuant to the terms hereof (the
"Greystone Mortgage Asset Schedule") (exclusive of the right to receive any
Retained Yield (the "Greystone Retained Yield") in respect of any Greystone FHA
Loan assigned to the FHA (a "Greystone FHA Assigned Loan") and/or of any
Greystone FHA Debentures which may be acquired as part of the Trust Fund). The
Greystone Mortgage Assets will have an aggregate principal balance (the "Initial
Balance") as of the close of business on the Cut-off Date, after giving effect
to any payments due on or before such date whether or not received, and subject
to a variance of plus or minus 5%, of approximately $137,653,287.60. The sale
and assignment of the Greystone Mortgage Assets shall take place on or about
December 27, 1996 or such other date as shall be mutually acceptable to the
parties hereto (the "Closing Date"). The consideration for the Seller's and the
Master Servicer's conveyance of the Greystone Mortgage Assets to the Trustee (as
set forth in the first sentence of this Section 1(a)) for the benefit of the
Certificateholders shall consist of a cash amount equal to approximately
$143,012,810.28, together with interest accrued on each Greystone Mortgage Asset
at the related Mortgage Rate (net of any applicable servicing fee) or GNMA
Certificate Rate, as applicable, for the period from and including December 1,
1996 up to but not including the Closing Date (which cash amount shall be paid
to the Seller by or on behalf of the Depositor by wire transfer in immediately
available funds on the Closing Date).
(b) The Trustee shall be entitled to receive all scheduled payments
of principal and interest due after the Cut-off Date, and all other recoveries
of principal and interest collected after the Cut-off Date (other than in
respect of principal and interest on the Greystone Mortgage Assets due on or
before the Cut-off Date and other than the Greystone Retained Yield in respect
of any Greystone FHA Assigned Loan and/or any Greystone FHA Debentures acquired
as part of the Trust Fund). All scheduled payments of principal and interest due
on the Greystone
<PAGE>
- 3 -
Mortgage Assets on or before the Cut-off Date but collected (and, in the case of
an Daiwa Underlying Loan, passed through on the related Daiwa GNMA Certificate)
after the Cut-off Date, and all recoveries of the Greystone Retained Yield in
respect of any Greystone FHA Assigned Loan and/or any FHA Debentures acquired as
part of the Trust Fund and prior to purchase out of the Trust Fund, shall belong
to, and be promptly remitted to, the Seller.
(c) In connection with the transactions contemplated by this
Agreement, the Seller and the Master Servicer each hereby agrees to execute and
deliver the Pooling and Servicing Agreement, substantially in the form attached
hereto as Exhibit B, with such reasonable changes and modifications as the
parties hereto may agree or as may be requested by the Trustee or as may be
required by Standard & Poor's Ratings Services ("S&P") in connection with its
rating of certain Classes of the Certificates.
SECTION 2. Examination of Greystone Mortgage Files and Due Diligence
Review. The Seller and the Master Servicer have delivered to the Depositor a
magnetic disk acceptable to the Depositor which contains such information about
the Greystone Mortgage Assets, the Greystone Underlying Loans and the
Multifamily Properties and Nursing Facilities securing the Greystone FHA Loans
and the Greystone Underlying Loans (such properties, the "Greystone Mortgaged
Properties") as has been requested by the Depositor, and shall otherwise
continue to cooperate fully with the Depositor in its examination of the credit
files, underwriting documentation and Greystone Mortgage Files for the Greystone
FHA Loans and its general due diligence review of the Greystone Mortgage Assets
and the Seller. If the Depositor identifies, prior to the determination of the
Initial Purchase Price (as such term is defined in the Letter Agreement), any
Greystone Mortgage Assets that, in its sole reasonable discretion, do not
conform to its requirements, including, but not limited to, the FHA Loan
document delivery requirements as are set forth in Section 2.01 of the Pooling
and Servicing Agreement and described in the Prospectus, or for any other reason
decides, in its sole reasonable discretion, to exclude any Greystone Mortgage
Asset from this transaction, then the Depositor shall inform the Seller of the
reasons for the exclusion of any Greystone Mortgage Asset from this transaction,
and such Greystone Mortgage Asset shall be deleted from the Greystone Mortgage
Asset Schedule. The Depositor may, at its option and without notice to the
Seller, accept all or part of the Greystone Mortgage Assets without conducting
any partial or complete examination. The fact that the Depositor has conducted
or has failed to conduct any partial or complete examination of the Greystone
Mortgage Files for the Greystone FHA Loans or other general due diligence review
of the Greystone Mortgage Assets or the Seller shall not in any manner impair or
otherwise adversely affect the Depositor's, the Trustee's and/or the
Certificateholders' rights and remedies hereunder or under the Pooling and
Servicing Agreement or otherwise at law or in equity.
On or prior to the Closing Date, the Seller and the Master Servicer shall
allow representatives of the Depositor, DLJ and Daiwa Securities to examine and
audit all books, records and files pertaining to the Greystone Mortgage Assets.
Such examinations and audits shall take place at one or more offices of the
Seller and/or the Master Servicer during normal business hours and shall not be
conducted in a manner that is disruptive to Seller's or Master Servicer's normal
business operations. In the course of such examinations and audits, the Seller
<PAGE>
- 4 -
and the Master Servicer shall make available to such representatives of the
Depositor and the Underwriters reasonably adequate facilities, as well as the
assistance of a sufficient number of knowledgeable and responsible individuals
who are familiar with the Greystone Mortgage Assets and the terms of this
Agreement and the Pooling and Servicing Agreement, and the Master Servicer and
the Seller shall cooperate fully with any such reasonable examination and audit
in all respects. On or prior to the Closing Date, the Seller and the Master
Servicer agree to provide the Depositor and the Underwriters with all material
information regarding the respective financial conditions thereof and the Master
Servicer's servicing capabilities and to provide access to knowledgeable
financial, accounting and servicing officers for the purpose of answering
questions with respect to the Master Servicer's and the Seller's respective
financial conditions, the Master Servicer's and the Seller's respective
financial statements as provided to the Depositor and/or the Underwriters, the
Master Servicer's servicing capabilities or other relevant developments
affecting the Master Servicer and/or the Seller.
SECTION 3. Representations, Warranties and Covenants of the Seller
and the Master Servicer.
(a) The Master Servicer hereby represents and warrants to, and
covenants with, the Depositor, as of the date hereof, that:
(i) the Master Servicer is a corporation, duly organized, validly
existing and in good standing under the laws of the State of Georgia;
(ii) the Master Servicer has the full corporate power and authority
to enter into and consummate the transactions contemplated by this
Agreement and the Pooling and Servicing Agreement and has duly authorized
by all necessary corporate action on the part of the Master Servicer the
execution, delivery and performance of this Agreement and the Pooling and
Servicing Agreement; and, assuming the due authorization, execution and
delivery of this Agreement and the Pooling and Servicing Agreement by the
other parties hereto and thereto, this Agreement constitutes, and the
Pooling and Servicing Agreement will constitute, a legal, valid and
binding obligation of the Master Servicer, enforceable against the Master
Servicer in accordance with its respective terms, except that (A) such
enforceability may be limited by bankruptcy, insolvency, moratorium,
receivership and other similar laws relating to creditors' rights
generally and (B) the remedy of specific performance and injunctive and
other forms of equitable relief may be subject to the equitable defenses
and to the discretion of the court before which any proceeding therefor
may be brought;
(iii) the execution and delivery by the Master Servicer of this
Agreement and the Pooling and Servicing Agreement, the consummation of any
other of the transactions herein or therein contemplated, and the
fulfillment of or compliance with the terms hereof and thereof, are in the
ordinary course of business of the Master Servicer and will not (A) result
in a material breach of any term or provision of the organizational
documents of the Master Servicer or (B) materially conflict with, result
in a material
<PAGE>
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breach, violation or acceleration of, or result in a material default
under, the terms of any other material agreement or instrument to which
the Master Servicer is a party or by which it may be bound, or any
statute, order or regulation applicable to the Master Servicer of any
court, regulatory body, administrative agency or governmental body having
jurisdiction over the Master Servicer; and the Master Servicer is not a
party to, bound by, or in breach or violation of any indenture or other
agreement or instrument, or subject to or in violation of any statute,
order or regulation of any court, regulatory body, administrative agency
or governmental body having jurisdiction over it, which materially and
adversely affects, or, in the Master Servicer's good faith and reasonable
judgment, would in the future materially and adversely affect, (X) the
ability of the Master Servicer to perform its obligations under this
Agreement or the Pooling and Servicing Agreement or (Y) the business,
operations, financial condition, properties or assets of the Master
Servicer;
(iv) no litigation is pending or, to the best of the Master
Servicer's knowledge, threatened against the Master Servicer that would
adversely affect the execution, delivery or enforceability of this
Agreement or the ability of the Master Servicer to perform any of its
obligations hereunder or under the Pooling and Servicing Agreement in
accordance with the terms hereof or thereof;
(v) no written information, certificate of an officer, statement
furnished in writing or written report delivered to the Depositor, any
affiliate of the Depositor or the Trustee and prepared by the Master
Servicer pursuant to this Agreement or in connection with the transactions
contemplated by this Agreement contains any untrue statement of a material
fact or omits to state a material fact necessary to make the information,
certificate, statement or report not misleading;
(vi) no consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Master Servicer of, or compliance by the Master
Servicer with, this Agreement or the Pooling and Servicing Agreement or
the consummation of the transactions contemplated hereby or thereby, or if
any such consent, approval, authorization or order is required, the Master
Servicer has, or prior to the Closing Date will have, obtained the same;
(vii) the Master Servicer is an FHA-Approved Mortgagee; and
(viii) The "Greystone Information" (as defined in Section 6(a)
hereof) set forth in the Prospectus and in the Private Placement
Memorandum dated December 27, 1996 (including all exhibits thereto, the
"Memorandum") that describes the Class B Certificates, does not contain
any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(b) The Seller hereby represents and warrants to, and covenants
with, the Depositor, as of the date hereof, that:
<PAGE>
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(i) the Seller is a corporation, duly organized, validly existing
and in good standing under the laws of the Commonwealth of Virginia;
(ii) the Seller has the full corporate power and authority to
transfer and deliver the Greystone Mortgage Assets in its possession to
the Trustee and to cause the transfer and delivery of the Greystone
Mortgage Assets held by the Greystone Titleholders (as defined in the
Pooling and Servicing Agreement) to the Trustee, and to execute, deliver
and perform, and to enter into and consummate the transactions
contemplated by this Agreement, the Letter Agreement and the Pooling and
Servicing Agreement and has duly authorized by all necessary corporate
action on the part of the Seller the execution, delivery and performance
of this Agreement, the Letter Agreement and the Pooling and Servicing
Agreement; and, assuming the due authorization, execution and delivery of
this Agreement, the Letter Agreement and the Pooling and Servicing
Agreement by the other parties hereto and thereto, this Agreement
constitutes, and the Pooling and Servicing Agreement and the Letter
Agreement will constitute, the legal, valid and binding obligations of the
Seller, enforceable against the Seller in accordance with their respective
terms, except that (A) such enforceability may be limited by bankruptcy,
insolvency, moratorium, receivership and other similar laws relating to
creditors' rights generally and (B) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to the
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought;
(iii) the execution and delivery by the Seller of this Agreement,
the Letter Agreement and the Pooling and Servicing Agreement, the transfer
of the Greystone Mortgage Assets by the Seller, and on its behalf by the
Greystone Titleholders (as defined in the Pooling and Servicing
Agreement), each of which is an FHA-Approved Mortgagee and the
consummation of any other of the transactions contemplated herein or in
the Pooling and Servicing Agreement or in the Letter Agreement and the
fulfillment of or compliance with the terms hereof and of the Pooling and
Servicing Agreement and the Letter Agreement are in the ordinary course of
business of the Seller and will not (A) result in a material breach of any
term or provision of the organizational documents of the Seller or (B)
materially conflict with, result in a material breach, violation or
acceleration of, or result in a material default under, the terms of any
other material agreement or instrument to which the Seller is a party or
by which it may be bound, or any statute, order or regulation applicable
to the Seller of any court, regulatory body, administrative agency or
governmental body having jurisdiction over the Seller; and the Seller is
not a party to, bound by, or in breach or violation of any indenture or
other agreement or instrument, or subject to or in violation of any
statute, order or regulation of any court, regulatory body, administrative
agency or governmental body having jurisdiction over it, which materially
and adversely affects, or, in the Seller's good faith and reasonable
judgment, would in the future materially and adversely affect, (X) the
ability of the Seller to perform its obligations under this Agreement or
the Letter Agreement or the Pooling and Servicing Agreement or (Y) the
business, operations, financial condition, properties or assets of the
Seller;
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(iv) no litigation is pending or, to the best of the Seller's
knowledge, threatened against the Seller that would adversely affect the
execution, delivery or enforceability of this Agreement or the ability of
the Seller to transfer, or cause to be transferred, the Greystone Mortgage
Assets or to perform in all material respects any of its other obligations
hereunder or under the Pooling and Servicing Agreement or under the Letter
Agreement in accordance with the terms hereof or thereof;
(v) no written information, certificate of an officer, statement
furnished in writing or written report delivered to the Depositor, any
affiliate of the Depositor or the Trustee and prepared by the Seller
pursuant to this Agreement or in connection with the transactions
contemplated by this Agreement contains any untrue statement of a material
fact or omits to state a material fact necessary to make the information,
certificate, statement or report not misleading;
(vi) no consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Seller of, or compliance by the Seller with, this
Agreement or the Letter Agreement or the Pooling and Servicing Agreement
or the consummation of the transactions contemplated hereby or thereby, or
if any such consent, approval, authorization or order is required, the
Seller has, or prior to the Closing Date will have, obtained the same;
(vii) the consummation of the transactions contemplated by this
Agreement, the Letter Agreement and the Pooling and Servicing Agreement
are not subject to the bulk transfer or any similar statutory provisions
in effect in any applicable jurisdiction;
(viii) The Greystone Information (as defined in Section 6(a)
hereof) set forth in the Prospectus and the Memorandum does not contain
any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(ix) The Greystone Mortgage Assets identified on the Greystone
Mortgage Asset Schedule attached hereto were not selected for inclusion
therein from the Seller's portfolio on any basis which would (1) cause
private institutional investors to regard the Greystone Mortgage Assets as
an unacceptable investment, (2) cause the Greystone Mortgage Assets to
become delinquent or (3) affect adversely the value or marketability of
the Greystone Mortgage Assets.
(x) In selecting the Greystone Mortgage Assets for sale pursuant
hereto, no selection procedure was employed by the Seller that was
intended to adversely affect the interests of the Depositor or its
successors and assigns, including the delinquency or loss characteristics
of the Greystone Mortgage Assets.
SECTION 4. Closing. The closing of the sale of the Greystone
Mortgage Assets (the "Closing") shall be held at the offices of Thacher
<PAGE>
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Proffitt & Wood, Two World Trade Center, New York, New York 10048 at 10:00 A.M.,
New York time, on the Closing Date.
The Closing shall be subject to each of the following conditions:
(a) All of the representations and warranties of the Seller and the
Master Servicer set forth in this Agreement, the Letter Agreement and/or the
Pooling and Servicing Agreement shall be true and correct in all material
respects as of the Closing Date;
(b) All documents specified in Section 5 of this Agreement (the
"Closing Documents"), in such forms as are agreed upon and acceptable to the
Depositor, shall be duly executed and delivered by all signatories as required
pursuant to the respective terms thereof;
(c) All other terms and conditions of this Agreement, the Letter
Agreement and the Pooling and Servicing Agreement required to be complied with
on or before the Closing Date shall have been complied with and the Seller and
the Master Servicer shall have the ability to comply with all terms and
conditions and perform all duties and obligations required to be complied with
or performed after the Closing Date;
(d) The Class A Certificates and Class S Certificates shall have
been assigned the ratings set forth in the Prospectus Supplement by S&P;
(e) The Seller shall have paid all fees and expenses payable by it
to the Depositor or otherwise pursuant to this Agreement and the Letter
Agreement; and
(f) All other terms and conditions of the Underwriting Agreement,
Letter Agreement, the Pooling and Servicing Agreement and the Daiwa Mortgage
Asset Purchase Agreement required to be complied with on or before the Closing
Date shall have been complied with by the parties thereto.
All parties hereto agree to act in good faith and use their best
efforts to perform their respective obligations hereunder in a manner that will
enable the Seller to convey the Greystone Mortgage Assets on the Closing Date.
Except as may be limited of superseded by the terms of the Letter Agreement, if
any of the foregoing conditions shall not have been satisfied in all material
respects as and when required under this Agreement, other than by reason of a
material breach of any covenants or agreements contained herein on the part of
the Depositor, or if the Master Servicer or the Seller is in material breach of
any covenants or agreements contained herein, then the Depositor shall be
entitled to terminate this Agreement (exclusive of any payment or reimbursement
obligations of the Master Servicer and/or the Seller hereunder), cancel all of
its obligations hereunder and pursue any other right or remedy available at law
or in equity.
SECTION 5. Closing Documents. The Closing Documents shall consist of
the following:
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(a) This Agreement, the Pooling and Servicing Agreement and the
Letter Agreement, duly executed and delivered by the Master Servicer and the
Seller, as appropriate, and by each of the other parties thereto;
(b) A Certificate of the Seller, executed by a duly authorized
officer of the Seller and dated the Closing Date, and upon which the Depositor
and the Underwriters may rely, to the effect that: (i) the representations and
warranties of the Seller in this Agreement and in the Pooling and Servicing
Agreement are true and correct in all material respects at and as of the Closing
Date with the same effect as if made on such date; and (ii) the Seller has, in
all material respects, complied with all the agreements and satisfied all the
conditions on its part that are required under this Agreement, the Letter
Agreement or the Pooling and Servicing Agreement to be performed or satisfied at
or prior to the Closing Date;
(c) An Officer's Certificate from an officer of the Seller, in his
or her individual capacity, dated the Closing Date, and upon which the Depositor
and the Underwriters may rely, to the effect that each individual who, as an
officer or representative of the Seller, signed this Agreement, the Pooling and
Servicing Agreement, the Letter Agreement or any other document or certificate
delivered on or before the Closing Date in connection with the transactions
contemplated herein or therein, was at the respective times of such signing and
delivery, and is as of the Closing Date, duly elected or appointed, qualified
and acting as such officer or representative, and the signatures of such persons
appearing on such documents and certificates are their genuine signatures;
(d) A Certificate of the Master Servicer, executed by a duly
authorized officer of the Master Servicer and dated the Closing Date, and upon
which the Depositor and the Underwriter may rely, to the effect that: (i) the
representations and warranties of the Master Servicer in this Agreement and in
the Pooling and Servicing Agreement are true and correct in all material
respects at and as of the Closing Date with the same effect as if made on such
date; and (ii) the Master Servicer has, in all material respects, complied with
all the agreements and satisfied all the conditions on its part that are
required under this Agreement or the Pooling and Servicing Agreement to be
performed or satisfied at or prior to the Closing Date;
(e) An Officer's Certificate from an officer of the Master Servicer,
in his or her individual capacity, dated the Closing Date, and upon which the
Depositor and the Underwriter may rely, to the effect that each individual who,
as an officer or representative of the Master Servicer, signed this Agreement,
the Pooling and Servicing Agreement or any other document or certificate
delivered on or before the Closing Date in connection with the transactions
contemplated herein or therein, was at the respective times of such signing and
delivery, and is as of the Closing Date, duly elected or appointed, qualified
and acting as such officer or representative, and the signatures of such persons
appearing on such documents and certificates are their genuine signatures;
(f) The resolutions of the board of directors of the Seller and any
requisite shareholder consent authorizing the Seller's entering into the
transactions contemplated by this Agreement, the certificate of incorporation
and by-laws of the Seller as in effect on the Closing
<PAGE>
- 10 -
Date, and a certificate of good standing of the Seller issued by the Secretary
of State of Virginia not earlier than thirty (30) days prior to the Closing
Date;
(g) The resolutions of the board of directors of the Master Servicer
and any requisite shareholder consent authorizing the Master Servicer's entering
into the transactions contemplated by this Agreement, the certificate of
incorporation and by-laws of the Master Servicer as in effect on the Closing
Date, and a certificate of good standing of the Master Servicer issued by the
Secretary of State of Georgia not earlier than thirty (30) days prior to the
Closing Date;
(h) One or more letters from a firm of certified public accountants
acceptable to the Depositor and the Seller, dated the date hereof, to the effect
that they have performed certain specified procedures as a result of which they
determined that certain information of an accounting, financial or statistical
nature constituting part of Greystone's Information (as defined in Section 6(a)
below) in the Prospectus and the Memorandum agrees with the records of the
Seller and the Master Servicer;
(i) Such written opinion or opinions of Ballard Spahr Andrews &
Ingersoll, counsel for the Seller, the Master Servicer and Daiwa Finance, as may
be required by the Depositor and its counsel with respect to matters relating to
the Master Servicer, the Seller and Daiwa Finance, this Agreement and the
Pooling and Servicing Agreement, in form and substance acceptable to the
Depositor and its counsel, with any modifications required by S&P, dated the
Closing Date and addressed to the Depositor, the Underwriters and S&P, together
with such other written opinions as may be required by the S&P; and
(j) Such further certificates, opinions and documents as the
Depositor may reasonably request.
SECTION 6. Indemnification.
(a) The Seller and the Master Servicer agree to be jointly and
severally liable to indemnify and hold harmless the Depositor, each Underwriter,
Daiwa Finance and the Master Servicer, their respective officers and directors,
and each person, if any, who controls such Person within the meaning of either
Section 15 of the 1933 Act or Section 20 of the Securities Exchange Act of 1934,
as amended (the "1934 Act"), against any and all losses, claims, damages or
liabilities, joint or several, to which they or any of them may become subject
under the 1933 Act, the 1934 Act or other federal or state statutory law or
regulation, at common law or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based in
whole or in part, directly or indirectly, upon any untrue statement or alleged
untrue statement of a material fact set forth in the Prospectus Supplement in
the first narrative paragraph on the cover page thereof (which paragraph carries
over to page S-2), under the captions "SUMMARY OF TERMS-- Sellers", "--The
Mortgage Pool", "--Prepayment Provisions of the Mortgage Loans", "--FHA
Insurance and GNMA Guaranty" (other than information contained therein regarding
specific terms of the Pooling and Servicing Agreement) and "--Servicing Fees",
"RISK FACTORS--The Mortgage Assets", "DESCRIPTION OF THE
<PAGE>
- 11 -
MORTGAGE POOL", "FHA MORTGAGE INSURANCE PROGRAMS" (except for information under
the sub-heading "-- FHA Default and Prepayment Experience"), "GNMA
MORTGAGE-BACKED SECURITIES PROGRAM" and "GREYSTONE FUNDING CORPORATION" and
"SERVICING OF THE FHA LOANS-The Master Servicer" and "--Master Servicer
Compensation and Payment of Expenses" or elsewhere in the Prospectus Supplement
with respect to, or based on information provided by or on behalf of the Seller
regarding specific characteristics of the Greystone Mortgage Assets, the
Greystone FHA Loans, the Greystone Mortgaged Properties and/or the Seller and/or
the Master Servicer (collectively, the "Greystone Information"), or which arise
out of or are based upon any omission or alleged omission to state in the
Greystone Information a material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances in which they
were made, not misleading. The Seller and/or the Master Servicer further agree
to be jointly and severally liable to indemnify and hold harmless the Depositor,
each Underwriter, Daiwa Finance and the Master Servicer, their respective
officers and directors, and each person, if any, who controls any such Person
within the meaning of either Section 15 of the 1933 Act or Section 20 of the
1934 Act, to the same extent as the foregoing indemnity with reference to the
inclusion of information in the Memorandum or any amendment thereof or
supplement thereto substantially identical to that included in the Prospectus
Supplement with respect to the Greystone Information (all such substantially
identical information included in the Memorandum also being referred to herein
as the "Greystone Information"). The Seller and/or the Master Servicer further
agree to indemnify and hold harmless the Depositor, each Underwriter, Daiwa
Finance and the Master Servicer, their respective officers and directors, and
each person, if any, who controls any such Person within the meaning of either
Section 15 of the 1933 Act or Section 20 of the 1934 Act, against any and all
losses, claims, damages or liabilities, joint or several, to which they or any
of them may become subject under the 1933 Act, the 1934 Act or other federal or
state statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based in whole or in part, directly or indirectly, upon any untrue
statement or alleged untrue statement of a material fact in any ABS Terms Sheets
or Computational Materials (as such terms are defined in the Underwriting
Agreement), including any amendments thereof or supplements thereto, or arise
out of or are based upon any omission or 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 in which they were made, not misleading,
which untrue statement, alleged untrue statement, omission or alleged omission,
in turn, arose out of or was based upon any information or data provided by or
on behalf of the Seller and/or the Master Servicer to DLJ or the Depositor
regarding the Greystone Mortgage Assets, the Greystone FHA Loans, the Greystone
Underlying Loans, the Mortgaged Properties securing the Greystone FHA Loans
and/or the Greystone Underlying Loans, and/or the Seller, the Master Servicer or
their respective affiliates (such information or data so supplied by or on
behalf of the Seller the "Greystone Raw Data"); provided that the Seller shall
not be liable for any untrue statement, alleged untrue statement, omission or
alleged omission in any Computational Materials or ABS Term Sheets, or in any
amendments thereof or supplements thereto, which arose out of or was based upon
any Greystone Raw Data which (although subsequently determined to be erroneous
or incomplete) was, at the time that any such Greystone Raw Data was delivered
to the Depositor or DLJ, believed by the Seller and/or the Master Servicer to
the best of its or their knowledge to be accurate and complete. This indemnity
<PAGE>
- 12 -
agreement will be in addition to any liability which the Seller or the Master
Servicer may otherwise have.
(b) Promptly after receipt by any person entitled to indemnification
under this Section 6 (an "indemnified party") of notice of the commencement of
any action, such indemnified party will, if a claim in respect thereof is to be
made against the Seller and/or the Master Servicer (collectively, the
"indemnifying party") under this Section 6, notify the indemnifying party in
writing of the commencement thereof, but the omission so to notify the
indemnifying party will not relieve it from any liability that it may have to
any indemnified party otherwise than under this Section 6. 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
satisfactory to such indemnified party; provided, however, that if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party or parties shall have reasonably
concluded that there may be legal defenses available to it or them and/or other
indemnified parties that are different from or additional to those available to
the indemnifying party, 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. Upon receipt of notice from the indemnifying party to such indemnified
party of its election so to assume the defense of such action and approval by
the indemnified party of counsel, the indemnifying party will not be liable for
any legal or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof, unless (i) the indemnified party shall have
employed separate counsel in connection with the assertion of legal defenses in
accordance with the proviso to the preceding sentence (it being understood,
however, that the indemnifying party shall not be liable for the expenses of
more than one separate counsel, approved by the Depositor, representing all the
indemnified parties under Section 6(a) who are parties to such action), (ii) the
indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of commencement of the action or (iii) the indemnifying party has
authorized the employment of counsel for the indemnified party at the expense of
the indemnifying party; and except that, if clause (i) or (iii) is applicable,
such liability shall only be in respect of the counsel referred to in such
clause (i) or (iii).
(c) If the indemnification provided for in this Section 6 is
unavailable to an indemnified party under Section 6(a) hereof or insufficient in
respect of any losses, claims, damages or liabilities referred to therein, then
the indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities, in such proportion as is
appropriate to reflect the relative fault of the indemnified and indemnifying
parties in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative fault of the indemnified and indemnifying parties
shall be determined by reference to, among other things, whether the untrue
<PAGE>
- 13 -
or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by such
parties.
(d) The Depositor, the Seller and the Master Servicer agree that it
would not be just and equitable if contribution pursuant to Section 6(c) were
determined by pro rata allocation or by any other method of allocation that does
not take account of the considerations referred to in Section 6(c) above. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to in this Section 6 shall be deemed to
include, subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim, except where the indemnified party is
required to bear such expenses pursuant to this Section 6, which expenses the
indemnifying party shall pay as and when incurred, at the request of the
indemnified party, to the extent that the indemnifying party will be ultimately
obligated to pay such expenses. If any expenses so paid by the indemnifying
party are subsequently determined not to be required to be borne by the
indemnifying party hereunder, the party that received such payment shall
promptly refund the amount so paid to the party which made such payment. 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.
(e) The indemnity and contribution agreements contained in this
Section 6 shall remain operative and in full force and effect regardless of (i)
any termination of this Agreement, (ii) any investigation made by the Depositor,
any of the Underwriters, any of their respective directors or officers, or any
person controlling the Depositor or the Underwriters, and (iii) conveyance of
and payment for the Greystone Mortgage Assets.
(f) Without in any way limiting any other Person's right to
contribution otherwise provided for pursuant to this Section 6, the Seller
agrees that in the event contribution is obtained pursuant to this Section 6
from the Seller, as between the Seller and Daiwa Finance, the Seller will each
pay its proportionate share of such contribution based on the portion of the
Mortgage Assets sold to the Depositor by the Seller in connection with the
issuance and sale of the Certificates.
SECTION 7. Costs. The Seller, but only to the extent and in the
manner set forth in the Letter Agreement, shall be responsible for, and shall
pay or reimburse the Depositor with respect to the aggregate of the following
amounts: (i) the costs and expenses of printing (or otherwise reproducing) and
delivering a final Prospectus and Memorandum relating to the Certificates; (ii)
the initial fees, costs and expenses of the Trustee (including reasonable
attorneys' fees); (iii) fees in connection with the registration of the Class A
Certificates and the Class S Certificates under the 1933 Act; (iv) the fees
charged by S&P to rate the Publicly Offered Certificates; (v) the fees and
disbursements of Thacher Proffitt & Wood, as counsel to DLJ, and the fees and
disbursements of O'Conner Cavanagh, Anderson Westover, Killingsworth & Beshears,
as counsel to the Depositor; and (vi) the cost of obtaining a "comfort letter or
letters" from a firm of certified public accountants selected by the Depositor
with respect to numerical
<PAGE>
- 14 -
information in respect of the Greystone Mortgage Assets and Certificates
included in the Prospectus and Memorandum. All other costs and expenses in
connection with the transactions contemplated hereunder shall be borne by the
party incurring such expense.
SECTION 8. 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
Federal Express or other nationally recognized courier service or transmitted by
facsimile, telex or telegraph and confirmed by a similar mailed writing: if to
the Depositor, addressed to the Depositor at 2390 East Camelback Road, Suite
225, Phoenix, Arizona 85016, or to such other address as may hereafter be
furnished to the Seller and the Master Servicer in writing by the Depositor; if
to the Seller or the Master Servicer, addressed to the Seller and the Master
Servicer at Greystone Funding Corporation, 98 Alexandria Pike, Warrenton,
Virginia 22186, Attention: Ms. Julie J. DeLimba with an additional copy to
Greystone & Co., Inc., 152 West 57th Street, 60th Floor, New York, New York
10019, Attention: Mr. Mark Jarrell, or to such address as the Seller and the
Master Servicer may designate in writing to the Depositor.
SECTION 9. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement, incorporated herein by reference or contained in the certificates of
officers of the Seller and the Master Servicer submitted pursuant hereto or in
connection with the transactions contemplated hereby, shall remain operative and
in full force and effect and shall survive delivery of the Greystone Mortgage
Assets by the Seller to the Trustee.
SECTION 10. Severability of Provisions. Any part, provision,
representation, warranty or covenant of this Agreement that 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 that is prohibited or unenforceable or is held to be void or
unenforceable in any particular 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 particular jurisdiction 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 11. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be an original, but which together
shall constitute one and the same agreement.
SECTION 12. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS, DUTIES,
OBLIGATIONS AND RESPONSIBILITIES OF THE PARTIES HERETO SHALL BE GOVERNED IN
ACCORDANCE WITH THE INTERNAL LAWS AND DECISIONS OF NEW YORK. THE PARTIES HERETO
INTEND THAT THE
<PAGE>
- 15 -
PROVISIONS OF SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW SHALL APPLY
TO THIS AGREEMENT.
SECTION 13. Further Assurances. The Seller, the Master Servicer and
the Depositor agree to execute and deliver such instruments and take such
further actions as the other party may, from time to time, reasonably request in
order to effectuate the purposes and to carry out the terms of this Agreement.
SECTION 14. Successors and Assigns. The rights and obligations of
the Seller and the Master Servicer under this Agreement shall not be assigned by
the Seller or the Master Servicer, as the case may be, without the prior written
consent of the Depositor, except that any person into which the Seller or the
Master Servicer may be merged or consolidated, or any corporation resulting from
any merger, conversion or consolidation to which the Seller or the Master
Servicer is a party, or any person succeeding to all or substantially all of the
business of the Seller and the Master Servicer, shall be the successor to the
Seller or the Master Servicer, as the case may be, hereunder. The Depositor has
the right to assign its interest under this Agreement, in whole or in part, as
may be required to effect the purposes of the Pooling and Servicing Agreement,
and the assignee shall, to the extent of such assignment, succeed to the rights
and obligations hereunder of the Depositor. Subject to the foregoing, this
Agreement shall bind and inure to the benefit of and be enforceable by the
Seller, the Master Servicer and the Depositor, and their permitted successors
and assigns, and the officers, directors and controlling persons referred to in
Section 6.
SECTION 15. Amendments. No term or provision of this Agreement may
be waived or modified unless such waiver or modification is in writing and
signed by a duly authorized officer of the party against whom such waiver or
modification is sought to be enforced.
SECTION 16. Third-Party Beneficiaries. This Agreement will inure to
the benefit of and be binding upon the parties hereto, the Underwriters, Daiwa
Finance, their respective successors and permitted assigns. Except as otherwise
provided in this Agreement, no other Person will have any right or obligation
hereunder.
<PAGE>
IN WITNESS WHEREOF, the Seller, the Master Servicer and the
Depositor have caused their names to be signed hereto by their respective duly
authorized officers as of the date first above written.
SELLER
GREYSTONE FUNDING CORPORATION
By:______________________________
Name:____________________________
Title:___________________________
MASTER SERVICER
GREYSTONE SERVICING CORPORATION, INC.
By:______________________________
Name:____________________________
Title:___________________________
DEPOSITOR
AMERICAN SOUTHWEST FINANCIAL
SECURITIES CORPORATION
By:______________________________
Name:____________________________
Title:___________________________
<PAGE>
Greystone Loan Schedule
<TABLE>
<CAPTION>
(I) (II) (III) (IV) (V) (VI) (VII) (VIII)
--- ---- ----- ---- --- ---- ----- ------
Property Section of GNMA Original Cut-Off Lien Mortgage
# Type Type Housing Act Pool Number Balance Balance Position Rate
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
2 FHA Multifamily 207 101-11023 11,503,900.00 11,238,870.62 First 8.600%
4 FHA Multifamily 221(d)4 012-35203 9,879,400.00 9,021,896.41 First 9.500%
5 FHA Multifamily 223(e) 012-57014 9,236,700.00 8,187,273.54 First 8.500%
6 FHA Multifamily 220 017-32023 8,116,378.00 8,075,289.33 First 7.500%
8 FHA Multifamily 220 012-32188 8,734,900.00 7,879,950.96 First 9.000%
10 GNMA Multifamily 223(f) 413874 7,609,700.00 7,577,130.35 First 7.750%
12 GNMA Nursing Facility 232 157013 6,559,300.00 6,557,351.99 First 7.875%
13 FHA Nursing Facility 223(f) 024-43059 5,943,500.00 5,924,426.63 First 7.875%
14 GNMA Multifamily 223(f) 382270 5,649,100.00 5,511,712.40 First 8.375%
16 GNMA Multifamily 223(f) 419430 5,047,300.00 5,047,300.00 First 7.875%
17 FHA Multifamily 223(f) 133-11012 5,015,000.00 5,002,528.51 First 8.275%
19 FHA Nursing Facility 223(f) 024-43060 4,734,200.00 4,758,879.05 First 7.875%
23 FHA Nursing Facility 223(f) 042-43122 4,004,700.00 3,980,953.75 First 8.300%
24 FHA Multifamily 2223(f) 067-11058 3,867,500.00 3,838,016.35 First 8.825%
27 FHA Multifamily 221(d)4 114-35324 3,850,000.00 3,687,868.23 First 9.750%
28 FHA Multifamily 221(d)4 012-35281 4,459,300.00 3,485,858.44 First 9.500%
30 FHA Nursing Facility 232 042-43084 3,434,200.00 3,398,410.30 First 10.500%
31 FHA Multifamily 223(f) 000-94033 3,337,680.79 3,313,791.33 First 8.250%
32 FHA Multifamily 223(a)7 012-35639 2,990,100.00 2,930,412.99 First 8.500%
35 GNMA Multifamily 223(a)7 181119 2,892,800.00 2,856,635.08 First 8.450%
36 FHA Nursing Facility 223(f) 091-22001 2,837,900.00 2,836,736.71 First 8.250%
37 FHA Nursing Facility 223(f) 091-22003 2,779,800.00 2,778,660.53 First 8.250%
38 FHA Nursing Facility 223(f) 091-22002 2,750,400.00 2,749,272.58 First 8.250%
40 FHA Multifamily 223(f) 133-11010 2,465,000.00 2,458,869.91 First 8.275%
41 FHA Nursing Facility 232 047-43062 2,562,400.00 2,441,713.46 First 9.750%
48 GNMA Nursing Facility 223(f) 436930 1,829,800.00 1,826,768.71 First 8.250%
49 FHA Nursing Facility 232 042-43086 1,806,200.00 1,792,587.20 First 10.500%
52 FHA Multifamily 223(f) 044-94005 1,725,000.00 1,709,275.94 First 8.875%
54 FHA Nursing Facility 232 042-43087 1,715,600.00 1,702,543.25 First 10.500%
59 GNMA Multifamily 223(a)7 427643 1,506,400.00 1,500,220.30 First 8.250%
62 FHA Multifamily 221(d)4 053-35553 1,354,300.00 1,304,408.10 First 8.000%
69 FHA Multifamily 223(f) 133-11011 844,000.00 841,901.08 First 8.275%
71 GNMA Multifamily 223(f) 285711 819,796.00 792,721.81 First 7.900%
74 FHA Multifamily 241 051-10004 660,100.00 643,050.76 Second 10.250%
</TABLE>
<TABLE>
<CAPTION>
(IX) (X) (XI) (XII) (XIII) (XIV) (XV)
---- --- ---- ----- ------ ----- ----
Remaining
Servicing First Stated Term to FHA Retained
Net Asset Fee Scheduled Maturity Stated Debenture Yield
# Rate Rate Due Date Date Maturity Rate Rate
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
2 8.405% 0.175% 1/1/97 9/1/27 369 8.500%
4 9.305% 0.175% 1/1/97 3/1/21 291 7.750%
5 8.360% 0.120% 1/1/97 2/1/21 290 7.125%
6 7.380% 0.100% 1/1/97 11/1/29 395 11.625% 4.125%
8 8.805% 0.175% 1/1/97 6/1/20 282 7.250%
10 7.355% 0.000% 1/1/97 3/1/31 411 N/A
12 7.605% 0.000% 1/1/97 11/1/36 479 N/A
13 7.680% 0.175% 1/1/97 5/1/31 413 6.500%
14 7.980% 0.000% 1/1/97 4/1/23 316 N/A
16 7.605% 0.000% 1/1/97 12/1/31 420 N/A
17 8.055% 0.200% 1/1/97 6/1/31 414 6.500%
19 7.680% 0.175% 1/1/97 5/1/31 413 6.500%
23 7.930% 0.350% 1/1/97 8/1/30 404 8.375% 0.075%
24 8.630% 0.175% 1/1/97 4/1/30 400 8.375%
27 9.610% 0.120% 1/1/97 6/1/25 342 10.125% 0.375%
28 9.305% 0.175% 1/1/97 12/1/20 288 7.750%
30 10.330% 0.150% 1/1/97 12/1/31 420 9.000%
31 8.130% 0.100% 1/1/97 6/1/21 294 10.250% 2.000%
32 8.180% 0.300% 1/1/97 10/1/23 322 7.250%
35 8.180% 0.000% 1/1/97 7/15/29 391 N/A
36 7.930% 0.300% 1/1/97 11/1/31 419 7.250%
37 7.930% 0.300% 1/1/97 11/1/31 419 7.250%
38 7.930% 0.300% 1/1/97 11/1/31 419 7.250%
40 8.055% 0.200% 1/1/97 6/1/31 414 6.500%
41 9.055% 0.675% 1/1/97 11/1/17 251 8.000%
48 7.980% 0.000% 1/1/97 8/15/31 416 N/A
49 10.305% 0.175% 1/1/97 6/1/32 426 9.000%
52 8.555% 0.300% 1/1/97 5/1/22 305 8.000%
54 10.305% 0.175% 1/1/97 5/1/32 425 9.000%
59 7.980% 0.000% 1/1/97 11/1/25 347 N/A
62 7.805% 0.175% 1/1/97 9/1/27 369 10.250% 2.250%
69 8.055% 0.200% 1/1/97 6/1/31 414 6.500%
71 7.630% 0.000% 1/1/97 12/1/21 300 N/A
74 9.930% 0.300% 1/1/97 12/1/27 372 10.250%
</TABLE>
<PAGE>
Greystone Loan Schedule
<TABLE>
<CAPTION>
(XVI) (XVII) (XVIII) (XIX) (XX) (XXI)
Annual Cut-Off NOI
# Prepayment Provision City State Debt Service DSCR NOI Date
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
2 L(0.67) Aurora CO 1,041,212 1.79 1,865,539 FY'96
4 0.750%(.75)...0.125%(1) New York NY 960,351 1.07 1,029,957 FY'94
5 0.750%(0.5)...0.125%(1) New York NY 812,564 1.33 1,076,996 FY'95
6 L(9.25) Hartford CT 662,158 0.99 657,598 FY'95
8 0.75%(0.17)...0.125%(1) New York NY 808,532 1.60 1,290,361 FY'95
10 L(4.25),5%(1),4%(1),3%(1),2%(1),1%(1) Atlanta GA 673,601 1.60 1,076,744 FY'95
12 L(9.92) Atlanta PA 539,921 1.41 760,000 U/W
13 L(4.33),5%(1),4%(1),3%(1),2%(1),1%(1) Dover NH 500,110 1.67 835,232 U/W
14 L(2.33),5%(1),4%(1),3%(1),2%(1),1%(1) Austintown OH N/A N/A N/A N/A
16 L(5),5%(1),4%(1),3%(1),2%(1),1%(1) Blacksburg VA N/A N/A N/A N/A
17 L(4.42),5%(1),4%(1),3%(1),2%(1),1%(1) Lubbock TX N/A N/A N/A N/A
19 L(4.33),5%(1),4%(1),3%(1),2%(1),1%(1) Exeter NH 401,720 1.67 670,912 U/W
23 L(3.67),5%(1),4%(1),3%(1),2%(1),1%(1) Tallonadge OH 351,847 1.59 559,357 FY'95
24 L(3.25),5%(1),4%(1),3%(1),2%(1),1%(1) Merritt Island FL 357,793 1.32 473,165 U/W
27 1.375%(1.0)...0.125%(1) Port Arthur TX N/A N/A N/A N/A
28 0.750%(1)...0.125%(1) New York NY 449,721 1.75 788,156 FY'95
30 L(5) Navarre OH 366,183 1.61 590,711 FY'95
31 L(9.42) Suitland MD 315,475 0.44 137,247 FY'96
32 L(4.00) Brooklyn NY 311,556 1.50 468,370 FY'95
35 L(2.58),5%(1),4%(1),3%(1),2%(1),1%(1) Laurel MD N/A N/A N/A N/A
36 L(4.83),5%(1),4%(1),3%(1),2%(1),1%(1) Rapid City SD 248,086 2.68 663,956 U/W
37 L(4.83),5%(1),4%(1),3%(1),2%(1),1%(1) Pierre SD 243,007 2.43 590,151 U/W
38 L(4.83),5%(1),4%(1),3%(1),2%(1),1%(1) Rapid City SD 240,437 2.19 526,511 U/W
40 L(4.42),5%(1),4%(1),3%(1),2%(1),1%(1) Lubbock TX N/A N/A N/A N/A
41 L(0.58),5%(1),4%(1),3%(1),2%(1),1%(1) Manistee MI 274,014 1.39 381,959 FY'94
48 L(4.58),5%(1),4%(1),3%(1),2%(1),1%(1) Lonacering MD 159,959 2.00 320,223 U/W
49 L(5.5) Wadsworth OH 192,981 1.37 264,706 FY'95
52 L(0.08),3%(1),2%(1),1%(1) Detroit MI 169,622 0.97 164,239 FY'94
54 L(5.42) Plain Township OH 183,329 1.16 212,135 FY'95
59 L(4.42),5%(1),4%(1),3%(1),2%(1),1%(1) Amherst MA 136,427 1.42 194,328 FY'95
62 L(7) Clayton NC 114,199 1.25 142,222 FY'95
69 L(4.42),5%(1),4%(1),3%(1),2%(1),1%(1) Lubbock TX 73,967 1.37 101,609 U/W
71 2%(1),1%(1) Philadelphia PA 72,791 1.27 92,115 FY'95
74 1.0%(0.83) Roanoke VA 240,145 1.84 442,210 FY'95
</TABLE>
<PAGE>
EXHIBIT B
DRAFT OF THE POOLING AND SERVICING AGREEMENT
[To be provided upon request]
<PAGE>
DAIWA MORTGAGE ASSET PURCHASE AGREEMENT
This Mortgage Asset Purchase Agreement (this "Agreement"), dated and
effective as of December 19, 1996, is made between Daiwa Finance Corp. (the
"Seller") and American Southwest Financial Securities Corporation (the
"Depositor").
The Depositor intends to create a trust fund (the "Trust Fund"), the
beneficial ownership of which will be evidenced by the Depositor's Commercial
Mortgage Pass-Through Certificates, Series 1996-FHA1. The Seller and the
Depositor both intend for the Seller to convey to LaSalle National Bank, as
trustee for the Trust Fund (the "Trustee"), or cause to be conveyed to the
Trustee (i) certain fixed-rate, fully-amortizing mortgage loans (the "Daiwa FHA
Loans") insured by the Federal Housing Administration (the "FHA") of the United
States Department of Housing and Urban Development ("HUD") under certain
sections of the National Housing Act of 1934, as amended (the "Housing Act"),
and secured by liens on multifamily rental housing developments (collectively,
"Multifamily Properties") or nursing homes, intermediate care facilities, board
and care homes or other nursing facilities (collectively, "Nursing Facilities")
and (ii) certain securities (the "Daiwa GNMA Certificates"; collectively with
the Daiwa FHA Loans, the "Daiwa Mortgage Assets") guaranteed by the Government
National Mortgage Association ("GNMA") and backed by fixed-rate, level payment,
fully-amortizing mortgage loans (the "Daiwa Underlying Loans"; collectively with
the Daiwa FHA Loans, the "Daiwa FHA Loans") insured by the FHA and secured by
liens on Multifamily Properties or Nursing Facilities.
The Trust Fund will be created, and the Daiwa Mortgage Assets will
be conveyed at the direction of the Depositor, pursuant to a Pooling and
Servicing Agreement (the "Pooling and Servicing Agreement"), to be dated as of
December 1, 1996 (the "Cut-off Date"), among the Depositor, Greystone Servicing
Corporation as Master Servicer (the "Master Servicer"), the Seller, Greystone
Funding Corporation ("Greystone Funding") and the Trustee. Greystone Funding
transferred, or caused the transfer of all legal and beneficial ownership of the
Greystone Mortgage Assets (as such term is defined in the Greystone Mortgage
Asset Purchase Agreement) to the Trustee, at the direction of the Depositor,
pursuant to a Mortgage Asset Purchase Agreement, dated and effective as of
December 19, 1996 (the "Greystone Mortgage Asset Purchase Agreement"), among
Greystone Funding and the Depositor. Donaldson, Lufkin & Jenrette Securities
Corporation ("DLJ"), Daiwa Securities America Inc. ("Daiwa Securities", Daiwa
Securities and DLJ each an "Underwriter", and together, the "Underwriters"),
Greystone Funding, the Seller and the Depositor have participated in the
preparation of a Prospectus Supplement dated December 19, 1996 (the "Prospectus
Supplement") to a Prospectus, dated July 25, 1995 (and together with the
Prospectus Supplement, the "Prospectus") and a Private Placement Memorandum
dated December 27, 1996 (the "Memorandum") relating to American Southwest
Financial Securities Corporation Commercial Mortgage Pass-Through Certificates,
Series 1996-FHA1, Class A-1, Class A-2, Class A-3, Class A-4, Class A-Z, Class
S, Class B, Class R-I, Class R-II and Class R-III (the "Certificates") to be
issued pursuant to the Pooling and Servicing Agreement. The Class A-1, Class
A-2, Class A-3, Class A-4, Class A-Z and Class S Certificates will be sold to
the Underwriters pursuant to an Underwriting Agreement (the "Underwriting
Agreement"), to be dated as of December 19, 1996, among DLJ, Daiwa Securities
and the Depositor.
<PAGE>
- 2 -
The Seller, Greystone Funding, DLJ and Daiwa Securities are all
parties to a Letter Agreement (the "Letter Agreement"), dated December 19, 1996,
pursuant to which certain parties have agreed to share in certain costs and
expenses incurred in connection with the issuance of the Certificates.
Capitalized terms used but not defined herein have the respective
meanings set forth in the Pooling and Servicing Agreement.
Now, therefore, in consideration of the premises and the mutual
agreements set forth herein, and for other good and valuable consideration, the
parties acknowledge and agree as follows:
SECTION 1. Agreement to Sell and Assign the Daiwa Mortgage Assets
and enter into the Pooling and Servicing Agreement.
(a) At the direction of the Depositor, in accordance with the terms
and conditions of the Pooling and Servicing Agreement, the Seller agrees to
sell, assign and deliver to the Trustee, all of its right, title and interest in
and to, or cause the assignment and delivery of the Daiwa Mortgage Assets,
without recourse initially for the benefit of the Depositor and immediately
thereafter for the benefit of the Certificateholders, identified on the schedule
annexed hereto as Exhibit A, as such schedule may be amended from time to time
pursuant to the terms hereof (the "Daiwa Mortgage Asset Schedule") (exclusive of
the right to receive any Retained Yield (the "Daiwa Retained Yield") in respect
of any Daiwa FHA Loan assigned to the FHA (a "Daiwa FHA Assigned Loan") and/or
of any Daiwa FHA Debentures which may be acquired as part of the Trust Fund).
The Daiwa Mortgage Assets will have an aggregate principal balance (the "Initial
Balance") as of the close of business on the Cut-off Date, after giving effect
to any payments due on or before such date whether or not received, and subject
to a variance of plus or minus 5%, of approximately $128,857,177. The sale and
assignment of the Daiwa Mortgage Assets shall take place on or about December
27, 1996 or such other date as shall be mutually acceptable to the parties
hereto (the "Closing Date"). The consideration for the Seller's conveyance of
the Daiwa Mortgage Assets to the Trustee (as set forth in the first sentence of
this Section 1(a)) for the benefit of the Certificateholders shall consist of a
cash amount equal to approximately $136,849,686, together with interest accrued
on each Daiwa Mortgage Asset at the related Mortgage Rate (net of any applicable
servicing fee) or GNMA Certificate Rate, as applicable, for the period from and
including December 1, 1996 up to but not including the Closing Date (which cash
amount shall be paid to the Seller by or on behalf of the Depositor by wire
transfer in immediately available funds on the Closing Date).
(b) The Trustee shall be entitled to receive all scheduled payments
of principal and interest due after the Cut-off Date, and all other recoveries
of principal and interest collected after the Cut-off Date (other than in
respect of principal and interest on the Daiwa Mortgage Assets due on or before
the Cut-off Date and other than the Daiwa Retained Yield in respect of any Daiwa
FHA Assigned Loan and/or any Daiwa FHA Debentures acquired as part of the Trust
Fund). All scheduled payments of principal and interest due on the Daiwa
Mortgage Assets on or before the Cut-off Date but collected (and, in the case of
an Daiwa Underlying Loan, passed
<PAGE>
- 3 -
through on the related Daiwa GNMA Certificate) after the Cut-off Date, and all
recoveries of the Daiwa Retained Yield in respect of any Daiwa FHA Assigned Loan
and/or any FHA Debentures acquired as part of the Trust Fund and prior to
purchase out of the Trust Fund, shall belong to, and be promptly remitted to,
the Seller.
(c) In connection with the transactions contemplated by this
Agreement, the Seller hereby agrees to execute and deliver the Pooling and
Servicing Agreement, substantially in the form attached hereto as Exhibit B,
with such reasonable changes and modifications as the parties hereto may agree
or as may be requested by the Trustee or as may be required by Standard & Poor's
Ratings Services ("S&P") in connection with its rating of certain Classes of the
Certificates.
SECTION 2. Examination of Daiwa Mortgage Files and Due Diligence
Review. The Seller delivered to the Depositor a magnetic disk acceptable to the
Depositor which contains such information about the Daiwa Mortgage Assets, the
Daiwa Underlying Loans and the Multifamily Properties and Nursing Facilities
securing the Daiwa FHA Loans and the Daiwa Underlying Loans (such properties,
the "Daiwa Mortgaged Properties") as has been requested by the Depositor, and
shall otherwise continue to cooperate fully with the Depositor in its
examination of the credit files, underwriting documentation and Daiwa Mortgage
Files for the Daiwa FHA Loans and its general due diligence review of the Daiwa
Mortgage Assets and the Seller. If the Depositor identifies, prior to the
determination of the Initial Purchase Price (as such term is defined in the
Letter Agreement), any Daiwa Mortgage Assets that, in its sole reasonable
discretion, do not conform to its requirements, including, but not limited to,
the FHA Loan document delivery requirements as are set forth in Section 2.01 of
the Pooling and Servicing Agreement and described in the Prospectus, or for any
other reason decides, in its sole reasonable discretion, to exclude any Daiwa
Mortgage Asset from this transaction, then the Depositor shall inform the Seller
of the reasons for the exclusion of any Daiwa Mortgage Asset from this
transaction, and such Daiwa Mortgage Asset shall be deleted from the Daiwa
Mortgage Asset Schedule. The Depositor may, at its option and without notice to
the Seller, accept all or part of the Daiwa Mortgage Assets without conducting
any partial or complete examination. The fact that the Depositor has conducted
or has failed to conduct any partial or complete examination of the Daiwa
Mortgage Files for the Daiwa FHA Loans or other general due diligence review of
the Daiwa Mortgage Assets or the Seller shall not in any manner impair or
otherwise adversely affect the Depositor's, the Trustee's and/or the
Certificateholders' rights and remedies hereunder or under the Pooling and
Servicing Agreement or otherwise at law or in equity.
On or prior to the Closing Date, the Seller shall allow representatives of
the Depositor, DLJ and Daiwa Securities to examine and audit all books, records
and files pertaining to the Daiwa Mortgage Assets. Such examinations and audits
shall take place at one or more offices of the Seller during normal business
hours and shall not be conducted in a manner that is disruptive to Seller's
normal business operations. In the course of such examinations and audits, the
Seller shall make available to such representatives of the Depositor and the
Underwriters reasonably adequate facilities, as well as the assistance of a
sufficient number of knowledgeable and responsible individuals who are familiar
with the Daiwa Mortgage Assets and the terms of this Agreement and the Pooling
and Servicing Agreement, and the Seller shall cooperate fully
<PAGE>
- 4 -
with any such reasonable examination and audit in all respects. On or prior to
the Closing Date, the Seller agrees to provide the Depositor and the
Underwriters with all material information regarding the financial condition of
the Seller and to provide access to knowledgeable financial and accounting
officers for the purpose of answering questions with respect to the Seller's
financial condition, the Seller's financial statements as provided to the
Depositor and/or the Underwriters, and other relevant developments affecting the
Seller.
SECTION 3. Representations, Warranties and Covenants of the Seller.
(a) The Seller hereby represents and warrants to, and covenants
with, the Depositor, as of the date hereof, that:
(i) the Seller is a corporation, duly organized, validly
existing and in good standing under the laws of the state of New York;
(ii) the Seller has the full corporate power and authority to
transfer and deliver the Daiwa Mortgage Assets in its possession to the
Trustee and to cause the transfer and delivery of the Daiwa Mortgage
Assets held by the Daiwa Titleholders (as defined in the Pooling and
Servicing Agreement) and Daiwa Securities America, Inc. to the Trustee,
and to execute, deliver and perform, and to enter into and consummate the
transactions contemplated by this Agreement, the Letter Agreement and the
Pooling and Servicing Agreement and has duly authorized by all necessary
corporate action on the part of the Seller the execution, delivery and
performance of this Agreement, the Letter Agreement and the Pooling and
Servicing Agreement; and, assuming the due authorization, execution and
delivery of this Agreement, the Letter Agreement and the Pooling and
Servicing Agreement by the other parties hereto and thereto, this
Agreement constitutes, and the Pooling and Servicing Agreement and the
Letter Agreement will constitute, the legal, valid and binding obligations
of the Seller, enforceable against the Seller in accordance with their
respective terms, except that (A) such enforceability may be limited by
bankruptcy, insolvency, moratorium, receivership and other similar laws
relating to creditors' rights generally and (B) the remedy of specific
performance and injunctive and other forms of equitable relief may be
subject to the equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought;
(iii) the execution and delivery by the Seller of this
Agreement, the Letter Agreement and the Pooling and Servicing Agreement,
the transfer of the Daiwa Mortgage Assets by the Seller and on their
behalf by (i) the Daiwa Titleholders (as defined in the Pooling and
Servicing Agreement), each of which are FHA-Approved Mortgagees and (ii)
Daiwa Securities, the consummation of any other of the transactions
contemplated herein or in the Pooling and Servicing Agreement or in the
Letter Agreement and the fulfillment of or compliance with the terms
hereof and of the Pooling and Servicing Agreement and the Letter Agreement
are in the ordinary course of business of the Seller and will not (A)
result in a material breach of any term or provision of the organizational
documents of the Seller or (B) materially conflict with, result in a
material
<PAGE>
- 5 -
breach, violation or acceleration of, or result in a
material default under, the terms of any other material agreement or
instrument to which the Seller is a party or by which it may be bound, or
any statute, order or regulation applicable to the Seller of any court,
regulatory body, administrative agency or governmental body having
jurisdiction over the Seller; and the Seller is not a party to, bound by,
or in breach or violation of any indenture or other agreement or
instrument, or subject to or in violation of any statute, order or
regulation of any court, regulatory body, administrative agency or
governmental body having jurisdiction over it, which materially and
adversely affects, or, in the Seller's good faith and reasonable judgment,
would in the future materially and adversely affect, (X) the ability of
the Seller to perform its obligations under this Agreement or the Letter
Agreement or the Pooling and Servicing Agreement or (Y) the business,
operations, financial condition, properties or assets of the Seller;
(iv) no litigation is pending or, to the best of the Seller's
knowledge, threatened against the Seller that would adversely affect the
execution, delivery or enforceability of this Agreement or the ability of
the Seller to transfer, or cause to be transferred, the Daiwa Mortgage
Assets or to perform in all material respects any of its other obligations
hereunder or under the Pooling and Servicing Agreement or under the Letter
Agreement in accordance with the terms hereof or thereof;
(v) no written information, certificate of an officer, statement
furnished in writing or written report delivered to the Depositor, any
affiliate of the Depositor or the Trustee and prepared by the Seller
pursuant to this Agreement or in connection with the transactions
contemplated by this Agreement contains any untrue statement of a material
fact or omits to state a material fact necessary to make the information,
certificate, statement or report not misleading;
(vi) no consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Seller of, or compliance by the Seller with, this
Agreement or the Letter Agreement or the Pooling and Servicing Agreement
or the consummation of the transactions contemplated hereby or thereby, or
if any such consent, approval, authorization or order is required, the
Seller has, or prior to the Closing Date will have, obtained the same;
(vii) the consummation of the transactions contemplated by this
Agreement, the Letter Agreement and the Pooling and Servicing Agreement
are not subject to the bulk transfer or any similar statutory provisions
in effect in any applicable jurisdiction;
(viii) The Daiwa Information (as defined in Section 6(a) hereof)
set forth in the Prospectus and the Memorandum does not contain any untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
<PAGE>
- 6 -
(ix) The Daiwa Mortgage Assets identified on the Daiwa Mortgage
Asset Schedule attached hereto were not selected for inclusion therein
from the Seller's portfolio on any basis which would (1) cause private
institutional investors to regard the Daiwa Mortgage Assets as an
unacceptable investment, (2) cause the Daiwa Mortgage Assets to become
delinquent or (3) affect adversely the value or marketability of the Daiwa
Mortgage Assets.
(x) In selecting the Daiwa Mortgage Assets for sale pursuant hereto,
no selection procedure was employed by the Seller that was intended to
adversely affect the interests of the Depositor or its successors and
assigns, including the delinquency or loss characteristics of the Daiwa
Mortgage Assets.
SECTION 4. Closing. The closing of the sale of the Daiwa Mortgage
Assets (the "Closing") shall be held at the offices of Thacher Proffitt & Wood,
Two World Trade Center, New York, New York 10048 at 10:00 A.M., New York time,
on the Closing Date.
The Closing shall be subject to each of the following conditions:
(a) All of the representations and warranties of the Seller set
forth in this Agreement, the Letter Agreement and/or the Pooling and Servicing
Agreement shall be true and correct in all material respects as of the Closing
Date;
(b) All documents specified in Section 5 of this Agreement (the
"Closing Documents"), in such forms as are agreed upon and acceptable to the
Depositor, shall be duly executed and delivered by all signatories as required
pursuant to the respective terms thereof;
(c) All other terms and conditions of this Agreement, the Letter
Agreement and the Pooling and Servicing Agreement required to be complied with
on or before the Closing Date shall have been complied with and the Seller shall
have the ability to comply with all terms and conditions and perform all duties
and obligations required to be complied with or performed after the Closing
Date;
(d) The Class A Certificates and Class S Certificates shall have
been assigned the ratings set forth in the Prospectus Supplement by S&P;
(e) The Seller shall have paid all fees and expenses payable by it
to the Depositor or otherwise pursuant to this Agreement and the Letter
Agreement; and
(f) All other terms and conditions of the Underwriting Agreement,
Letter Agreement, the Pooling and Servicing Agreement and the Greystone Mortgage
Asset Purchase Agreement required to be complied with on or before the Closing
Date shall have been complied with by the parties thereto.
Both parties hereto agree to act in good faith and use their best
efforts to perform their respective obligations hereunder in a manner that will
enable the Seller to convey the Daiwa
<PAGE>
- 7 -
Mortgage Assets on the Closing Date. Except as may be limited of superseded by
the terms of the Letter Agreement, if any of the foregoing conditions shall not
have been satisfied in all material respects as and when required under this
Agreement, other than by reason of a material breach of any covenants or
agreements contained herein on the part of the Depositor, or if the Seller is in
material breach of any covenants or agreements contained herein, then the
Depositor shall be entitled to terminate this Agreement (exclusive of any
payment or reimbursement obligations of the Seller hereunder), cancel all of its
obligations hereunder and pursue any other right or remedy available at law or
in equity.
SECTION 5. Closing Documents. The Closing Documents shall consist of
the following:
(a) This Agreement, the Pooling and Servicing Agreement and the
Letter Agreement, duly executed and delivered by the Seller and by each of the
other parties thereto;
(b) A Certificate of the Seller, executed by a duly authorized
officer of the Seller and dated the Closing Date, and upon which the Depositor
and the Underwriters may rely, to the effect that: (i) the representations and
warranties of the Seller in this Agreement and in the Pooling and Servicing
Agreement are true and correct in all material respects at and as of the Closing
Date with the same effect as if made on such date; and (ii) the Seller has, in
all material respects, complied with all the agreements and satisfied all the
conditions on its part that are required under this Agreement, the Letter
Agreement or the Pooling and Servicing Agreement to be performed or satisfied at
or prior to the Closing Date;
(c) An Officer's Certificate from an officer of the Seller, in his
or her individual capacity, dated the Closing Date, and upon which the Depositor
and the Underwriters may rely, to the effect that each individual who, as an
officer or representative of the Seller, signed this Agreement, the Pooling and
Servicing Agreement, the Letter Agreement or any other document or certificate
delivered on or before the Closing Date in connection with the transactions
contemplated herein or therein, was at the respective times of such signing and
delivery, and is as of the Closing Date, duly elected or appointed, qualified
and acting as such officer or representative, and the signatures of such persons
appearing on such documents and certificates are their genuine signatures;
(d) The resolutions of the board of directors of the Seller and any
requisite shareholder consent authorizing the Seller's entering into the
transactions contemplated by this Agreement, the certificate of incorporation
and by-laws of the Seller as in effect on the Closing Date, and a certificate of
good standing of the Seller issued by the Secretary of State of New York not
earlier than thirty (30) days prior to the Closing Date;
(e) One or more letters from a firm of certified public accountants
acceptable to the Depositor and the Seller, dated the date hereof, to the effect
that they have performed certain specified procedures as a result of which they
determined that certain information of an accounting, financial or statistical
nature constituting part of Daiwa's Information (as defined in
<PAGE>
- 8 -
Section 6(a) below) in the Prospectus and the Memorandum agrees with the records
of the Seller and the Master Servicer;
(f) Such written opinion or opinions of Ballard Spahr Andrews &
Ingersoll, counsel for the Seller and Greystone Funding, as may be required by
the Depositor and its counsel with respect to matters relating to the Seller and
Greystone Funding, this Agreement and the Pooling and Servicing Agreement, in
form and substance acceptable to the Depositor and its counsel, with any
modifications required by S&P, dated the Closing Date and addressed to the
Depositor, the Underwriters and S&P, together with such other written opinions
as may be required by the S&P; and
(g) Such further certificates, opinions and documents as the
Depositor may reasonably request.
SECTION 6. Indemnification.
(a) The Seller agrees to indemnify and hold harmless the Depositor,
each Underwriter, Greystone Funding and the Master Servicer, their respective
officers and directors, and each person, if any, who controls any such Person
within the meaning of either Section 15 of the 1933 Act or Section 20 of the
Securities Exchange Act of 1934, as amended (the "1934 Act"), against any and
all losses, claims, damages or liabilities, joint or several, to which they or
any of them may become subject under the 1933 Act, the 1934 Act or other federal
or state statutory law or regulation, at common law or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based in whole or in part, directly or indirectly, upon any
untrue statement or alleged untrue statement of a material fact set forth in the
Prospectus Supplement in the first narrative paragraph on the cover page thereof
(which paragraph carries over to page S-2), under the captions "SUMMARY OF
TERMS--Sellers", "--The Mortgage Pool", "--Prepayment Provisions of the Mortgage
Loans", "--FHA Insurance and GNMA Guaranty" (other than information contained
therein regarding specific terms of the Pooling and Servicing Agreement) and
"--Servicing Fees", "RISK FACTORS--The Mortgage Assets", "DESCRIPTION OF THE
MORTGAGE POOL", "FHA MORTGAGE INSURANCE PROGRAMS" (except for information under
the sub-heading "-- FHA Default and Prepayment Experience"), "GNMA
MORTGAGE-BACKED SECURITIES PROGRAM" and "DAIWA FINANCE CORP." or elsewhere in
the Prospectus Supplement with respect to, or based on information provided by
or on behalf of the Seller regarding, specific characteristics of the Daiwa
Mortgage Assets, the Daiwa FHA Loans, the Daiwa Underlying Loans, the Mortgaged
Properties securing the Daiwa Mortgage Loans and/or the Daiwa Underlying Loans,
and/or the Seller and its affiliates (collectively, the "Daiwa Information"), or
arise out of or are based upon any omission or alleged omission to state in the
Daiwa Information a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances in which they
were made, not misleading. The Seller further agrees to indemnify and hold
harmless the Depositor, each Underwriter, Greystone Funding and the Master
Servicer, their respective officers and directors, and each person, if any, who
controls any such Person within the meaning of either Section 15 of the 1933 Act
or Section 20 of the 1934 Act, to the same extent as the foregoing indemnity
with reference to the inclusion of information in the Memorandum or any
<PAGE>
- 9 -
amendment thereof or supplement thereto substantially identical to that included
in the Prospectus Supplement with respect to the Daiwa Information (all such
substantially identical information included in the Memorandum also being
referred to herein as the "Daiwa Information"). The Seller further agrees to
indemnify and hold harmless the Depositor, each Underwriter, Greystone Funding
and the Master Servicer, their respective officers and directors, and each
person, if any, who controls any such Person within the meaning of either
Section 15 of the 1933 Act or Section 20 of the 1934 Act, against any and all
losses, claims, damages or liabilities, joint or several, to which they or any
of them may become subject under the 1933 Act, the 1934 Act or other federal or
state statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based in whole or in part, directly or indirectly, upon any untrue
statement or alleged untrue statement of a material fact in any ABS Terms Sheets
or Computational Materials (as such terms are defined in the Underwriting
Agreement), including any amendments thereof or supplements thereto, or arise
out of or are based upon any omission or 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 in which they were made, not misleading,
which untrue statement, alleged untrue statement, omission or alleged omission,
in turn, arose out of or was based upon any information or data provided by or
on behalf of the Seller to DLJ or the Depositor regarding the Daiwa Mortgage
Assets, the Daiwa FHA Loans, the Daiwa Underlying Loans, the Mortgaged
Properties securing the Daiwa FHA Loans and/or the Daiwa Underlying Loans,
and/or the Seller or its affiliates (such information or data so supplied by or
on behalf of the Seller the "Daiwa Raw Data"); provided that the Seller shall
not be liable for any untrue statement, alleged untrue statement, omission or
alleged omission in any Computational Materials or ABS Term Sheets, or in any
amendments thereof or supplements thereto, which arose out of or was based upon
any Daiwa Raw Data which (although subsequently determined to be erroneous or
incomplete) was, at the time that any such Daiwa Raw Data was delivered to the
Depositor or DLJ, believed by the Seller to the best of its knowledge to be
accurate and complete. This indemnity agreement will be in addition to any
liability which the Seller may otherwise have.
(b) Promptly after receipt by any person entitled to indemnification
under this Section 6 (an "indemnified party") of notice of the commencement of
any action, such indemnified party will, if a claim in respect thereof is to be
made against the Seller (the "indemnifying party") under this Section 6, notify
the indemnifying party in writing of the commencement thereof, but the omission
so to notify the indemnifying party will not relieve it from any liability that
it may have to any indemnified party otherwise than under this Section 6. 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 satisfactory to such indemnified party; provided, however, that if
the defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party or parties shall have reasonably
concluded that there may be legal defenses available to it or them and/or other
indemnified parties that are different from or additional to those available to
the indemnifying party, 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
<PAGE>
- 10 -
of such action on behalf of such indemnified party or parties. Upon receipt of
notice from the indemnifying party to such indemnified party of its election so
to assume the defense of such action and approval by the indemnified party of
counsel, the indemnifying party will not be liable for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof, unless (i) the indemnified party shall have employed separate
counsel in connection with the assertion of legal defenses in accordance with
the proviso to the preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than one
separate counsel, approved by the Depositor, representing all the indemnified
parties under Section 6(a) who are parties to such action), (ii) the
indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of commencement of the action or (iii) the indemnifying party has
authorized the employment of counsel for the indemnified party at the expense of
the indemnifying party; and except that, if clause (i) or (iii) is applicable,
such liability shall only be in respect of the counsel referred to in such
clause (i) or (iii).
(c) If the indemnification provided for in this Section 6 is
unavailable to an indemnified party under Section 6(a) hereof or insufficient in
respect of any losses, claims, damages or liabilities referred to therein, then
the indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities, in such proportion as is
appropriate to reflect the relative fault of the indemnified and indemnifying
parties in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative fault of the indemnified and indemnifying parties
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by such parties.
(d) The parties hereto agree that it would not be just and equitable
if contribution pursuant to Section 6(c) were determined by pro rata allocation
or by any other method of allocation that does not take account of the
considerations referred to in Section 6(c) above. The amount paid or payable by
an indemnified party as a result of the losses, claims, damages and liabilities
referred to in this Section 6 shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim, except where the indemnified party is required to bear such
expenses pursuant to this Section 6, which expenses the indemnifying party shall
pay as and when incurred, at the request of the indemnified party, to the extent
that the indemnifying party will be ultimately obligated to pay such expenses.
If any expenses so paid by the indemnifying party are subsequently determined
not to be required to be borne by the indemnifying party hereunder, the party
that received such payment shall promptly refund the amount so paid to the party
which made such payment. 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.
(e) The indemnity and contribution agreements contained in this
Section 6 shall remain operative and in full force and effect regardless of (i)
any termination of this Agreement,
<PAGE>
- 11 -
(ii) any investigation made by the Depositor, any of the Underwriters, any of
their respective directors or officers, or any person controlling the Depositor
or the Underwriters, and (iii) conveyance of and payment for the Daiwa Mortgage
Assets.
(f) Without in any way limiting any other Person's right to
contribution otherwise provided for pursuant to this Section 6, the Seller
agrees that in the event contribution is obtained pursuant to this Section 6
from the Seller, as between the Seller and Greystone Funding, the Seller will
each pay its proportionate share of such contribution based on the portion of
the Mortgage Assets sold to the Depositor by the Seller in connection with the
issuance and sale of the Certificates.
SECTION 7. Costs. The Seller, but only to the extent and in the
manner set forth in the Letter Agreement, shall be responsible for, and shall
pay or reimburse the Depositor with respect to the aggregate of the following
amounts: (i) the costs and expenses of printing (or otherwise reproducing) and
delivering a final Prospectus and Memorandum relating to the Certificates; (ii)
the initial fees, costs and expenses of the Trustee (including reasonable
attorneys' fees); (iii) fees in connection with the registration of the Class A
Certificates and the Class S Certificates under the 1933 Act; (iv) the fees
charged by S&P to rate the Publicly Offered Certificates; (v) the fees and
disbursements of Thacher Proffitt & Wood, as counsel to DLJ, and the fees and
disbursements of O'Conner Cavanagh, Anderson Westover, Killingsworth & Beshears,
as counsel to the Depositor; and (vi) the cost of obtaining a "comfort letter or
letters" from a firm of certified public accountants selected by the Depositor
with respect to numerical information in respect of the Daiwa Mortgage Assets
and Certificates included in the Prospectus and Memorandum. All other costs and
expenses in connection with the transactions contemplated hereunder shall be
borne by the party incurring such expense.
SECTION 8. Conveyance of GNMA Certificates. Daiwa Securities hereby
agrees to transfer and assign to the Trustee (for good and valuable
consideration hereunder as may be allocated from the proceeds received by Daiwa
Finance hereunder) without recourse, initially for the benefit of the Depositor
and, upon issuance of the Certificates, for the exclusive benefit of the
Certificateholders all the right, title and interest of Daiwa Securities in the
Daiwa GNMA Certificates identified on the Daiwa Mortgage Asset Schedule. Daiwa
Securities makes no representations, warranties or covenants with respect to the
GNMA Certificates or other Daiwa Mortgage Assets and assumes no obligations
other than the obligation to transfer and assign to the Trustee the GNMA
Certificates under this paragraph.
SECTION 9. 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
Federal Express or other nationally recognized courier service or transmitted by
facsimile, telex or telegraph and confirmed by a similar mailed writing: if to
the Depositor, addressed to the Depositor at 2390 East Camelback Road, Suite
225, Phoenix, Arizona 85016, or to such other address as may hereafter be
furnished to the Seller in writing by the Depositor; if to the Seller, addressed
to the Seller at Daiwa Finance Corp., 32 Old Slip,
<PAGE>
- 12 -
New York, New York 10005, Attention: Steve Sherwyn, Esq. with an additional copy
to Ms. Takkai Wang, or to such address as the Seller may designate in writing to
the Depositor.
SECTION 10. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement, incorporated herein by reference or contained in the certificates of
officers of the Seller and the Master Servicer submitted pursuant hereto or in
connection with the transactions contemplated hereby, shall remain operative and
in full force and effect and shall survive delivery of the Daiwa Mortgage Assets
by the Seller to the Trustee.
SECTION 11. Severability of Provisions. Any part, provision,
representation, warranty or covenant of this Agreement that 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 that is prohibited or unenforceable or is held to be void or
unenforceable in any particular 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 particular jurisdiction 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 12. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be an original, but which together
shall constitute one and the same agreement.
SECTION 13. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS, DUTIES,
OBLIGATIONS AND RESPONSIBILITIES OF THE PARTIES HERETO SHALL BE GOVERNED IN
ACCORDANCE WITH THE INTERNAL LAWS AND DECISIONS OF NEW YORK. THE PARTIES HERETO
INTEND THAT THE PROVISIONS OF SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS
LAW SHALL APPLY TO THIS AGREEMENT.
SECTION 14. Further Assurances. The Seller, the Master Servicer and
the Depositor agree to execute and deliver such instruments and take such
further actions as the other party may, from time to time, reasonably request in
order to effectuate the purposes and to carry out the terms of this Agreement.
SECTION 15. Successors and Assigns. The rights and obligations of
the Seller and the Master Servicer under this Agreement shall not be assigned by
the Seller or the Master Servicer, as the case may be, without the prior written
consent of the Depositor, except that any person into which the Seller or the
Master Servicer may be merged or consolidated, or any corporation resulting from
any merger, conversion or consolidation to which the Seller or the Master
Servicer is a party, or any person succeeding to all or substantially all of the
business of the Seller and the Master Servicer, shall be the successor to the
Seller or the Master Servicer, as
<PAGE>
- 13 -
the case may be, hereunder. The Depositor has the right to assign its interest
under this Agreement, in whole or in part, as may be required to effect the
purposes of the Pooling and Servicing Agreement, and the assignee shall, to the
extent of such assignment, succeed to the rights and obligations hereunder of
the Depositor. Subject to the foregoing, this Agreement shall bind and inure to
the benefit of and be enforceable by the Seller, the Master Servicer and the
Depositor, and their permitted successors and assigns, and the officers,
directors and controlling persons referred to in Section 6.
SECTION 16. Amendments. No term or provision of this Agreement may
be waived or modified unless such waiver or modification is in writing and
signed by a duly authorized officer of the party against whom such waiver or
modification is sought to be enforced.
SECTION 17. Third-Party Beneficiaries. This Agreement will inure to
the benefit of and be binding upon the parties hereto, the Underwriters,
Greystone and their respective successors and permitted assigns. Except as
otherwise provided in this Agreement, no other Person will have any right or
obligation hereunder.
<PAGE>
IN WITNESS WHEREOF, the Seller and the Depositor have caused their
names to be signed hereto by their respective duly authorized officers as of the
date first above written.
DAIWA FINANCE CORP., Seller
By:______________________________
Name:____________________________
Title:___________________________
AMERICAN SOUTHWEST FINANCIAL
SECURITIES CORPORATION, Depositor
By:______________________________
Name:____________________________
Title:___________________________
Acknowledged and Agreed to solely for the purposes of Section 8 hereof:
DAIWA SECURITIES AMERICA INC.
By:______________________________
Name:____________________________
Title:___________________________
<PAGE>
EXHIBIT A
MORTGAGE ASSET SCHEDULE
<PAGE>
Daiwa Finance Corp.
MORTGAGE ASSET SCHEDULE
<TABLE>
<CAPTION>
Loan Number Mortgage Mortgage Section of Original
(corresponding Asset Property Housing GNMA Pool Principal Cut-Off Date Lien
to Prospectus) Type Type Act Number Balance Balance Position
-------------- -------- -------- ---------- --------- --------- ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
1* GNMA Multifamily 223f 402308PL $12,583,228.00 $12,441,203.24 First
3 GNMA Nursing 223a7 436933PL $11,040,700.00 $11,030,669.86 First
7 FHA Nursing 223a7 N/A $7,942,900.00 $7,938,262.27 First
9 FHA Multifamily 223f N/A $7,800,100.00 $7,790,441.85 First
11 FHA Nursing 223f N/A $7,402,500.00 $7,396,846.53 First
15 GNMA Multifamily 223f 429325PL $5,450,000.00 $5,442,661.96 First
18 FHA Multifamily 221d4 N/A $4,943,000.00 $4,937,835.39 First
20 FHA Nursing 232 N/A $4,549,445.00 $4,483,182.91 First
21 FHA Multifamily 223f N/A $4,505,000.00 $4,458,246.24 First
22 FHA Nursing 223f N/A $3,995,000.00 $3,990,142.49 First
25 FHA Multifamily 221d4 N/A $3,813,200.00 $3,808,907.19 First
26 GNMA Multifamily 223f 372752PL $3,758,600.00 $3,755,508.03 First
29 FHA Nursing 223f N/A $3,478,200.00 $3,475,510.39 First
33 GNMA Multifamily 223f 420201PN $2,919,000.00 $2,916,367.21 First
34 FHA Multifamily 223f N/A $2,899,500.00 $2,899,500.00 First
39 FHA Nursing 223f N/A $2,701,300.00 $2,698,015.51 First
42 GNMA Multifamily 241f 378387PN $2,392,800.00 $2,377,104.74 Second
43 FHA Nursing 232 N/A $2,212,800.00 $2,208,574.32 First
44 FHA Multifamily 221d4 N/A $2,205,000.00 $2,195,585.18 First
45 FHA Nursing 232 N/A $2,187,200.00 $2,181,057.78 First
46 FHA Nursing 232 N/A $2,160,000.00 $2,149,274.05 First
47 FHA Nursing 223f N/A $2,125,000.00 $2,122,416.20 First
50 GNMA Multifamily 223f 414001PL $1,755,200.00 $1,754,051.85 First
51 FHA Multifamily 221d4 N/A $1,738,900.00 $1,724,783.37 First
53 FHA Nursing 232 N/A $1,709,100.00 $1,706,846.35 First
55 GNMA Multifamily 241f 378389PN $1,707,700.00 $1,685,622.50 Second
56 FHA Nursing 223d N/A $1,655,000.00 $1,654,033.67 Second
57 GNMA Multifamily 223a7 420200PN $1,624,500.00 $1,621,888.79 First
58 FHA Multifamily 223f N/A $1,568,500.00 $1,548,123.01 First
60 FHA Nursing 223f N/A $1,421,600.00 $1,419,871.50 First
61 GNMA Multifamily 223f 432832PL $1,348,600.00 $1,347,420.26 First
63 FHA Multifamily 241 N/A $1,302,400.00 $1,296,916.66 Second
FHA Multifamily 223f N/A $1,139,700.00 $1,129,714.75 First
64
65 GNMA Multifamily 221d4 373433PN $1,053,900.00 $1,044,232.69 First
</TABLE>
<TABLE>
<CAPTION>
Loan Number
(corresponding Mortgage Net Asset Servicing First Due Stated
to Prospectus) Rate Ratio Fee Rate Date Maturity Date
-------------- ---- ----- -------- ---- -------------
<S> <C> <C> <C> <C> <C>
1* 8.375% 8.105% 0.270% 11/01/94 10/15/29
3 8.450% 8.180% 0.270% 11/01/96 02/15/30
7 8.500% 8.305% 0.195% 11/01/96 12/01/34
9 8.250% 8.045% 0.205% 10/01/96 09/01/31
11 8.550% 8.355% 0.195% 11/01/96 10/01/31
15 8.000% 7.730% 0.270% 11/01/96 10/15/26
18 9.125% 8.910% 0.215% 08/01/96 07/01/36
20 9.000% 8.820% 0.180% 09/01/94 03/01/26
21 8.900% 8.680% 0.220% 10/01/94 09/01/29
22 8.500% 8.305% 0.195% 11/01/96 10/01/26
25 9.500% 9.305% 0.195% 07/01/96 06/01/36
26 8.250% 7.980% 0.270% 11/01/96 10/15/31
29 8.500% 8.305% 0.195% 11/01/96 10/01/31
33 7.875% 7.605% 0.270% 10/01/96 10/15/31
34 8.125% 7.785% 0.340% 12/01/96 12/01/31
39 8.500% 8.305% 0.195% 11/01/96 10/01/26
42 8.750% 8.355% 0.395% 11/01/94 10/15/34
43 9.125% 8.930% 0.195% 04/01/96 03/01/36
44 9.250% 9.055% 0.195% 05/01/95 04/01/35
45 10.000% 9.180% 0.820% 05/01/96 10/01/28
46 9.750% 9.555% 0.195% 03/01/96 11/01/25
47 8.500% 8.305% 0.195% 11/01/96 10/01/26
50 8.125% 7.855% 0.270% 11/01/96 11/15/26
51 9.500% 8.910% 0.590% 11/01/93 10/01/33
53 9.500% 9.230% 0.270% 06/01/96 05/01/36
55 9.000% 8.605% 0.395% 05/01/95 04/15/24
56 8.500% 8.305% 0.195% 11/01/96 12/01/34
57 7.750% 7.480% 0.270% 10/01/96 01/15/30
58 9.250% 9.055% 0.195% 02/01/95 01/01/25
60 8.500% 8.305% 0.195% 11/01/96 10/01/26
61 8.000% 7.730% 0.270% 10/01/96 10/15/31
63 10.000% 9.805% 0.195% 01/01/96 08/01/28
9.250% 8.930% 0.320% 12/01/94 11/01/29
64
65 8.950% 8.680% 0.270% 09/01/94 07/15/30
</TABLE>
<PAGE>
Daiwa Finance Corp.
MORTGAGE ASSET SCHEDULE
<TABLE>
<CAPTION>
Loan Number Mortgage Mortgage Section of Original
(corresponding Asset Property Housing GNMA Pool Principal Cut-Off Date Lien
to Prospectus) Type Type Act Number Balance Balance Position
-------------- -------- -------- ---------- --------- --------- ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
66 FHA Multifamily 223f N/A $1,020,000.00 $1,012,990.69 First
67 FHA Multifamily 223f N/A $907,600.00 $901,698.13 First
68 FHA Nursing 232 N/A $859,700.00 $857,717.45 First
70 FHA Nursing 232 N/A $798,300.00 $796,134.95 First
72 FHA Nursing 223f N/A $765,000.00 $760,678.31 First
73 FHA Nursing 241 N/A $700,000.00 $699,826.43 Second
75 GNMA Multifamily 241f 394108PL $627,000.00 $623,332.08 Second
76 FHA Nursing 223d N/A $584,400.00 $581,345.23 Second
77 FHA Multifamily 241f N/A $557,500.00 $550,974.33 Second
78 FHA Multifamily 241f N/A $484,000.00 $482,682.61 Second
79 FHA Multifamily 223f N/A $480,800.00 $476,358.02 First
80 FHA Multifamily 241f N/A $310,000.00 $307,793.06 Second
81 FHA Multifamily 241f N/A $175,600.00 $174,827.00 Second
----------------------------------------
$129,359,473.00 $128,857,177.03
========================================
</TABLE>
<TABLE>
<CAPTION>
Loan Number
(corresponding Mortgage Net Asset Servicing First Due Stated
to Prospectus) Rate Ratio Fee Rate Date Maturity Date
-------------- ---- ----- -------- ---- -------------
<S> <C> <C> <C> <C> <C>
66 9.250% 9.055% 0.195% 05/01/95 04/01/30
67 9.250% 8.930% 0.320% 06/01/95 05/01/30
68 9.500% 9.180% 0.320% 01/01/96 12/01/35
70 9.500% 9.180% 0.320% 11/01/95 10/01/35
72 8.500% 8.180% 0.320% 11/01/95 10/01/30
73 8.750% 8.545% 0.205% 12/01/96 01/01/36
75 9.000% 8.480% 0.520% 12/01/94 11/15/34
76 8.500% 7.920% 0.580% 12/01/95 11/01/30
77 9.250% 9.055% 0.195% 12/01/94 11/01/26
78 8.625% 8.430% 0.195% 02/01/96 01/01/36
79 8.500% 8.160% 0.340% 11/01/96 10/01/07
80 8.750% 8.555% 0.195% 09/01/94 08/01/34
81 9.500% 9.305% 0.195% 03/01/95 02/01/35
</TABLE>
Total Number of Loans = 47
Definitions
FHA - FHA Project Loan
GNMA = GNMA Pool
Nursing = Nursing Facility
N/A = Not Applicable
N/AV = Not Available
U/W = Underwriting Report
Lockout Date = In accordance with Mortgage Note and HUD regulations, loan is
locked out prior to this date.
Lockout Penalties of 5, 4, 3, 2, 1 = 5% declining 1% per year until zero.
Date of NOI = Last day of fiscal year for which NOI was being calculated. If
financial statements were not available, HUD underwriting reports were utilized.
* The original and current principal balance for Loan No. 1 represents
approximately 46% of GNMA pool with an original balance or $27,538,200.00. All
numbers relating to debt service and NOI were calculated based on entire loan.
<PAGE>
Daiwa Finance Corp.
MORTGAGE ASSET SCHEDULE
<TABLE>
<CAPTION>
Loan Number Prepayment Provisions
(corresponding Remaining Term to -----------------------------
to Stated Maturity Debenture Retained Lockout Penalties
Prospectus) (in Months) Rate Yield Rate Date (thereafter) City
----------- ----------- ---- ---------- ---- ------------ ----
<S> <C> <C> <C> <C> <C> <C>
1* 394 N/A 0.00% 10/01/99 5,4,3,2,1 Virginia Beach
3 398 N/A 0.00% None 7% till 11-1-01 Voorhees
then 5,4,3,2,1
7 456 7.250% 0.00% 11/01/01 None Brighton
9 417 7.250% 0.00% 08/31/06 None Erwin
11 418 7.250% 0.00% 09/26/06 None Mt. Vernon
15 358 N/A 0.00% 10/01/96 5,4,3,2,1 Lafayette
18 475 8.375% 0.00% 11/01/01 5,4,3,2,1 Killeen
20 351 11.500% 2.50% 07/01/94 10% declining Westfield
1/2% per year
21 393 7.750% 0.00% 09/01/99 None Sierra Vista
22 358 7.250% 0.00% 10/01/01 5,4,3,2,1 Greenville
25 474 7.750% 0.00% 02/08/01 5,4,3,2,1 La Porte
26 418 N/A 0.00% 11/01/06 None Texas City
29 418 7.250% 0.00% 10/01/01 5,4,3,2,1 Big Rapids
33 418 N/A 0.00% 11/01/01 5,4,3,2,1 East Haven
34 419 7.250% 0.00% 01/01/02 5,4,3,2,1 San Bernardino
39 358 7.250% 0.00% 10/01/01 5,4,3,2,1 E. Lansing
42 454 N/A 0.00% 09/30/04 None Naugatuck
43 471 8.375% 0.00% 01/01/01 5,4,3,2,1 Montrose
44 460 8.375% 0.00% 03/08/00 5,4,3,2,1 Chicago
45 382 7.750% 0.00% 07/28/00 5,4,3,2,1 Keysville
46 347 8.375% 0.00% 12/01/00 5,4,3,2,1 Muskegon
47 358 7.250% 0.00% 10/01/01 5,4,3,2,1 Litchfield
50 359 N/A 0.00% 10/01/01 5,4,3,2,1 Spring Valley
51 442 8.000% 0.00% 11/01/03 None Duluth
53 473 8.375% 0.00% 06/01/01 5,4,3,2,1 Lancaster
55 328 N/A 0.00% 05/01/00 5,4,3,2,1 Cumberland
56 456 7.250% 0.00% 11/01/01 None Brighton
57 397 N/A 0.00% 10/01/01 5,4,3,2,1 Miami Twnshp.
58 337 7.750% 0.00% 01/01/00 5,4,3,2,1 Waterbury
60 358 7.250% 0.00% 10/01/01 5,4,3,2,1 Zeeland
61 418 N/A 0.00% 10/01/06 None Burnsville
63 380 8.375% 0.00% 11/01/00 5,4,3,2,1 Lexington
64 395 7.750% 0.00% 11/01/99 5,4,3,2,1 Reynoldsburg
65 403 N/A 0.00% 11/01/04 None New Hope
66 400 8.375% 0.00% 04/01/00 5,4,3,2,1 Biddeford
</TABLE>
<TABLE>
<CAPTION>
Loan Number Cut-Off Debt
(corresponding Service
to Annual Debt Coverage
Prospectus) State Service Ratio NOI Date of NOI
----------- ----- ------- ----- --- -----------
<S> <C> <C> <C> <C> <C>
1* VA $2,437,655.00 1.17 $2,854,403.00 12/31/95
3 NJ $992,909.00 1.34 $1,330,613.00 12/31/95
7 MA $1,011,163.00 1.19 $1,011,163.00 U/W 1996
9 NY $681,876.00 1.53 $1,045,944.00 U/W 1996
11 IL $666,714.00 1.23 $822,500.00 U/W 1996
15 IN $479,882.00 1.30 $625,472.00 U/W 1996
18 TX $463,257.00 1.17 $542,367.00 U/W 1995
20 NY $435,077.00 1.90 $826,616.00 U/W 1994
21 AZ $419,790.00 1.33 $556,900.00 U/W 1994
22 MI $368,617.00 1.36 $500,520.00 U/W 1996
25 TX $370,671.00 1.17 $433,060.00 U/W 1994
26 TX $328,573.00 1.40 $459,304.00 U/W 1996
29 MI $311,728.00 1.55 $483,120.00 U/W 1996
33 CT $245,507.00 1.62 $397,369.00 U/W 1996
34 CA $250,294.00 1.32 $330,891.00 U/W 1996
39 MI $249,248.00 1.78 $444,866.00 U/W 1996
42 CT $215,975.00 N/AV N/AV N/AV
43 MI $207,383.00 1.27 $264,120.00 U/W 1995
44 IL $209,209.00 1.17 $244,714.00 U/W 1995
45 GA $227,667.00 1.20 $273,087.00 U/W 1994
46 MI $223,007.00 1.40 $312,225.00 U/W 1994
47 MI $196,073.00 1.28 $250,047.00 U/W 1996
50 CA $156,185.00 1.25 $195,120.00 U/W 1996
51 MN $169,034.00 1.17 $197,486.00 U/W 1992
53 OH $166,137.00 1.29 $213,635.00 U/W 1995
55 MD $164,197.00 N/AV N/AV N/AV
56 MA $146,452.00 N/AV $1,011,163.00 U/W 1996
57 OH $136,276.00 1.44 $196,129.00 U/W 1996
58 CT $154,844.00 1.24 $191,401.00 U/W 1994
60 MI $131,170.00 1.32 $172,480.00 U/W 1996
61 MN $114,893.00 1.32 $151,891.00 U/W 1996
63 KY $135,477.00 N/AV N/AV N/AV
64 OH $109,787.00 1.24 $135,876.00 U/W 1994
65 AL $98,352.00 1.33 $130,878.00 U/W 1994
66 ME $98,256.00 1.37 $134,338.00 U/W 1995
</TABLE>
<PAGE>
Daiwa Finance Corp.
MORTGAGE ASSET SCHEDULE
<TABLE>
<CAPTION>
Loan Number Prepayment Provisions
(corresponding Remaining Term to -----------------------------
to Stated Maturity Debenture Retained Lockout Penalties
Prospectus) (in Months) Rate Yield Rate Date (thereafter) City
----------- ----------- ---- ---------- ---- ------------ ----
<S> <C> <C> <C> <C> <C> <C>
67 401 8.375% 0.00% 05/01/00 5,4,3,2,1 Cuyahoga Falls
68 468 7.750% 0.00% 01/01/01 5,4,3,2,1 Wash. Crthse.
70 466 7.750% 0.00% 11/01/00 5,4,3,2,1 Marysville
72 406 7.250% 0.00% 11/01/00 5,4,3,2,1 Marysville
73 469 7.250% 0.00% 11/01/06 None Stamford
75 455 N/A 0.00% 11/01/04 None Excelsior
76 407 7.250% 0.00% 11/01/05 None Topsham
77 359 7.750% 0.00% 11/30/99 5,4,3,2,1 Grand Island
78 469 7.250% 0.00% 12/12/00 5,4,3,2,1 Los Angeles
79 130 7.250% 0.00% 11/01/01 None Irving
80 452 7.750% 0.00% 07/23/99 5,4,3,2,1 Ashland
81 458 8.375% 0.00% 01/27/05 None Ashland
</TABLE>
<TABLE>
<CAPTION>
Loan Number Cut-Off Debt
(corresponding Service
to Annual Debt Coverage
Prospectus) State Service Ratio NOI Date of NOI
----------- ----- ------- ----- --- -----------
<S> <C> <C> <C> <C> <C>
67 OH $87,428.00 1.24 $108,204.00 U/W 1995
68 OH $83,569.00 1.27 $106,132.00 U/W 1994
70 OH $77,601.00 1.19 $92,559.00 U/W 1994
72 OH $68,562.00 1.31 $89,709.00 U/W 1995
73 NY $63,333.00 N/AV N/AV N/AV
75 MO $56,593.00 N/AV N/AV N/AV
76 ME $52,376.00 N/AV N/AV N/AV
77 NE $54,421.00 N/AV N/AV N/AV
78 CA $43,131.00 N/AV N/AV N/AV
79 TX $67,426.00 1.08 $72,541.00 U/W 1996
80 OR $27,981.00 N/AV N/AV N/AV
81 OR $17,070.00 N/AV N/AV N/AV
</TABLE>
Total Number of Loans = 47
Definitions
FHA = FHA Project Loan
GNMA = GNMA Pool
Nursing = Nursing Facility
N/A = Not Applicable
N/AV = Not Available
U/W = Underwriting Report
Lockout Date = In accordance with Mortgage Note and HUD regulations, loan is
locked out prior to this date.
Lockout Penalties of 5,4,3,2,1 = 5% declining 1% per year until zero.
Date of NOI = Last day of fiscal year for which NOI was being calculated. If
financial statements were not available, HUD underwriting reports were utilized.
*The original and current principal balance for Loan No. 1 represents
approximately 46% of a GNMA pool with an original balance of $27,538,200.00. All
numbers relating to debt service and NOI were calculated based on entire loan.
<PAGE>
EXHIBIT B
DRAFT OF THE POOLING AND SERVICING AGREEMENT
[To be provided upon request]
<PAGE>
Daiwa Finance Corp.
MORTGAGE ASSET SCHEDULE
<TABLE>
<CAPTION>
Loan Number Mortgage Mortgage Section of Original
(corresponding Asset Property Housing GNMA Pool Principal Cut-Off Date Lien
to Prospectus) Type Type Act Number Balance Balance Position
-------------- -------- -------- ---------- --------- --------- ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
1* GNMA Multifamily 223f 402308PL $12,583,228.00 $12,441,203.24 First
3 GNMA Nursing 223a7 436933PL $11,040,700.00 $11,030,669.86 First
7 FHA Nursing 223a7 N/A $7,942,900.00 $7,938,262.27 First
9 FHA Multifamily 223f N/A $7,800,100.00 $7,790,441.85 First
11 FHA Nursing 223f N/A $7,402,500.00 $7,396,846.53 First
15 GNMA Multifamily 223f 429325PL $5,450,000.00 $5,442,661.96 First
18 FHA Multifamily 221d4 N/A $4,943,000.00 $4,937,835.39 First
20 FHA Nursing 232 N/A $4,549,445.00 $4,483,182.91 First
21 FHA Multifamily 223f N/A $4,505,000.00 $4,458,246.24 First
22 FHA Nursing 223f N/A $3,995,000.00 $3,990,142.49 First
25 FHA Multifamily 221d4 N/A $3,813,200.00 $3,808,907.19 First
26 GNMA Multifamily 223f 372752PL $3,758,600.00 $3,755,508.03 First
29 FHA Nursing 223f N/A $3,478,200.00 $3,475,510.39 First
33 GNMA Multifamily 223f 420201PN $2,919,000.00 $2,916,367.21 First
34 FHA Multifamily 223f N/A $2,899,500.00 $2,899,500.00 First
39 FHA Nursing 223f N/A $2,701,300.00 $2,698,015.51 First
42 GNMA Multifamily 241f 378387PN $2,392,800.00 $2,377,104.74 Second
43 FHA Nursing 232 N/A $2,212,800.00 $2,208,574.32 First
44 FHA Multifamily 221d4 N/A $2,205,000.00 $2,195,585.18 First
45 FHA Nursing 232 N/A $2,187,200.00 $2,181,057.78 First
46 FHA Nursing 232 N/A $2,160,000.00 $2,149,274.05 First
47 FHA Nursing 223f N/A $2,125,000.00 $2,122,416.20 First
50 GNMA Multifamily 223f 414001PL $1,755,200.00 $1,754,051.85 First
51 FHA Multifamily 221d4 N/A $1,738,900.00 $1,724,783.37 First
53 FHA Nursing 232 N/A $1,709,100.00 $1,706,846.35 First
55 GNMA Multifamily 241f 378389PN $1,707,700.00 $1,685,622.50 Second
56 FHA Nursing 223d N/A $1,655,000.00 $1,654,033.67 Second
57 GNMA Multifamily 223a7 420200PN $1,624,500.00 $1,621,888.79 First
58 FHA Multifamily 223f N/A $1,568,500.00 $1,548,123.01 First
60 FHA Nursing 223f N/A $1,421,600.00 $1,419,871.50 First
61 GNMA Multifamily 223f 432832PL $1,348,600.00 $1,347,420.26 First
63 FHA Multifamily 241 N/A $1,302,400.00 $1,296,916.66 Second
FHA Multifamily 223f N/A $1,139,700.00 $1,129,714.75 First
64
65 GNMA Multifamily 221d4 373433PN $1,053,900.00 $1,044,232.69 First
</TABLE>
<TABLE>
<CAPTION>
Loan Number
(corresponding Mortgage Net Asset Servicing First Due Stated
to Prospectus) Rate Ratio Fee Rate Date Maturity Date
-------------- ---- ----- -------- ---- -------------
<S> <C> <C> <C> <C> <C>
1* 8.375% 8.105% 0.270% 11/01/94 10/15/29
3 8.450% 8.180% 0.270% 11/01/96 02/15/30
7 8.500% 8.305% 0.195% 11/01/96 12/01/34
9 8.250% 8.045% 0.205% 10/01/96 09/01/31
11 8.550% 8.355% 0.195% 11/01/96 10/01/31
15 8.000% 7.730% 0.270% 11/01/96 10/15/26
18 9.125% 8.910% 0.215% 08/01/96 07/01/36
20 9.000% 8.820% 0.180% 09/01/94 03/01/26
21 8.900% 8.680% 0.220% 10/01/94 09/01/29
22 8.500% 8.305% 0.195% 11/01/96 10/01/26
25 9.500% 9.305% 0.195% 07/01/96 06/01/36
26 8.250% 7.980% 0.270% 11/01/96 10/15/31
29 8.500% 8.305% 0.195% 11/01/96 10/01/31
33 7.875% 7.605% 0.270% 10/01/96 10/15/31
34 8.125% 7.785% 0.340% 12/01/96 12/01/31
39 8.500% 8.305% 0.195% 11/01/96 10/01/26
42 8.750% 8.355% 0.395% 11/01/94 10/15/34
43 9.125% 8.930% 0.195% 04/01/96 03/01/36
44 9.250% 9.055% 0.195% 05/01/95 04/01/35
45 10.000% 9.180% 0.820% 05/01/96 10/01/28
46 9.750% 9.555% 0.195% 03/01/96 11/01/25
47 8.500% 8.305% 0.195% 11/01/96 10/01/26
50 8.125% 7.855% 0.270% 11/01/96 11/15/26
51 9.500% 8.910% 0.590% 11/01/93 10/01/33
53 9.500% 9.230% 0.270% 06/01/96 05/01/36
55 9.000% 8.605% 0.395% 05/01/95 04/15/24
56 8.500% 8.305% 0.195% 11/01/96 12/01/34
57 7.750% 7.480% 0.270% 10/01/96 01/15/30
58 9.250% 9.055% 0.195% 02/01/95 01/01/25
60 8.500% 8.305% 0.195% 11/01/96 10/01/26
61 8.000% 7.730% 0.270% 10/01/96 10/15/31
63 10.000% 9.805% 0.195% 01/01/96 08/01/28
9.250% 8.930% 0.320% 12/01/94 11/01/29
64
65 8.950% 8.680% 0.270% 09/01/94 07/15/30
</TABLE>
<PAGE>
Daiwa Finance Corp.
MORTGAGE ASSET SCHEDULE
<TABLE>
<CAPTION>
Loan Number Mortgage Mortgage Section of Original
(corresponding Asset Property Housing GNMA Pool Principal Cut-Off Date Lien
to Prospectus) Type Type Act Number Balance Balance Position
-------------- -------- -------- ---------- --------- --------- ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
66 FHA Multifamily 223f N/A $1,020,000.00 $1,012,990.69 First
67 FHA Multifamily 223f N/A $907,600.00 $901,698.13 First
68 FHA Nursing 232 N/A $859,700.00 $857,717.45 First
70 FHA Nursing 232 N/A $798,300.00 $796,134.95 First
72 FHA Nursing 223f N/A $765,000.00 $760,678.31 First
73 FHA Nursing 241 N/A $700,000.00 $699,826.43 Second
75 GNMA Multifamily 241f 394108PL $627,000.00 $623,332.08 Second
76 FHA Nursing 223d N/A $584,400.00 $581,345.23 Second
77 FHA Multifamily 241f N/A $557,500.00 $550,974.33 Second
78 FHA Multifamily 241f N/A $484,000.00 $482,682.61 Second
79 FHA Multifamily 223f N/A $480,800.00 $476,358.02 First
80 FHA Multifamily 241f N/A $310,000.00 $307,793.06 Second
81 FHA Multifamily 241f N/A $175,600.00 $174,827.00 Second
----------------------------------------
$129,359,473.00 $128,857,177.03
========================================
</TABLE>
<TABLE>
<CAPTION>
Loan Number
(corresponding Mortgage Net Asset Servicing First Due Stated
to Prospectus) Rate Ratio Fee Rate Date Maturity Date
-------------- ---- ----- -------- ---- -------------
<S> <C> <C> <C> <C> <C>
66 9.250% 9.055% 0.195% 05/01/95 04/01/30
67 9.250% 8.930% 0.320% 06/01/95 05/01/30
68 9.500% 9.180% 0.320% 01/01/96 12/01/35
70 9.500% 9.180% 0.320% 11/01/95 10/01/35
72 8.500% 8.180% 0.320% 11/01/95 10/01/30
73 8.750% 8.545% 0.205% 12/01/96 01/01/36
75 9.000% 8.480% 0.520% 12/01/94 11/15/34
76 8.500% 7.920% 0.580% 12/01/95 11/01/30
77 9.250% 9.055% 0.195% 12/01/94 11/01/26
78 8.625% 8.430% 0.195% 02/01/96 01/01/36
79 8.500% 8.160% 0.340% 11/01/96 10/01/07
80 8.750% 8.555% 0.195% 09/01/94 08/01/34
81 9.500% 9.305% 0.195% 03/01/95 02/01/35
</TABLE>
Total Number of Loans = 47
Definitions
FHA - FHA Project Loan
GNMA = GNMA Pool
Nursing = Nursing Facility
N/A = Not Applicable
N/AV = Not Available
U/W = Underwriting Report
Lockout Date = In accordance with Mortgage Note and HUD regulations, loan is
locked out prior to this date.
Lockout Penalties of 5, 4, 3, 2, 1 = 5% declining 1% per year until zero.
Date of NOI = Last day of fiscal year for which NOI was being calculated. If
financial statements were not available, HUD underwriting reports were utilized.
* The original and current principal balance for Loan No. 1 represents
approximately 46% of GNMA pool with an original balance or $27,538,200.00. All
numbers relating to debt service and NOI were calculated based on entire loan.
<PAGE>
Daiwa Finance Corp.
MORTGAGE ASSET SCHEDULE
<TABLE>
<CAPTION>
Loan Number Prepayment Provisions
(corresponding Remaining Term to -----------------------------
to Stated Maturity Debenture Retained Lockout Penalties
Prospectus) (in Months) Rate Yield Rate Date (thereafter) City
----------- ----------- ---- ---------- ---- ------------ ----
<S> <C> <C> <C> <C> <C> <C>
1* 394 N/A 0.00% 10/01/99 5,4,3,2,1 Virginia Beach
3 398 N/A 0.00% None 7% till 11-1-01 Voorhees
then 5,4,3,2,1
7 456 7.250% 0.00% 11/01/01 None Brighton
9 417 7.250% 0.00% 08/31/06 None Erwin
11 418 7.250% 0.00% 09/26/06 None Mt. Vernon
15 358 N/A 0.00% 10/01/96 5,4,3,2,1 Lafayette
18 475 8.375% 0.00% 11/01/01 5,4,3,2,1 Killeen
20 351 11.500% 2.50% 07/01/94 10% declining Westfield
1/2% per year
21 393 7.750% 0.00% 09/01/99 None Sierra Vista
22 358 7.250% 0.00% 10/01/01 5,4,3,2,1 Greenville
25 474 7.750% 0.00% 02/08/01 5,4,3,2,1 La Porte
26 418 N/A 0.00% 11/01/06 None Texas City
29 418 7.250% 0.00% 10/01/01 5,4,3,2,1 Big Rapids
33 418 N/A 0.00% 11/01/01 5,4,3,2,1 East Haven
34 419 7.250% 0.00% 01/01/02 5,4,3,2,1 San Bernardino
39 358 7.250% 0.00% 10/01/01 5,4,3,2,1 E. Lansing
42 454 N/A 0.00% 09/30/04 None Naugatuck
43 471 8.375% 0.00% 01/01/01 5,4,3,2,1 Montrose
44 460 8.375% 0.00% 03/08/00 5,4,3,2,1 Chicago
45 382 7.750% 0.00% 07/28/00 5,4,3,2,1 Keysville
46 347 8.375% 0.00% 12/01/00 5,4,3,2,1 Muskegon
47 358 7.250% 0.00% 10/01/01 5,4,3,2,1 Litchfield
50 359 N/A 0.00% 10/01/01 5,4,3,2,1 Spring Valley
51 442 8.000% 0.00% 11/01/03 None Duluth
53 473 8.375% 0.00% 06/01/01 5,4,3,2,1 Lancaster
55 328 N/A 0.00% 05/01/00 5,4,3,2,1 Cumberland
56 456 7.250% 0.00% 11/01/01 None Brighton
57 397 N/A 0.00% 10/01/01 5,4,3,2,1 Miami Twnshp.
58 337 7.750% 0.00% 01/01/00 5,4,3,2,1 Waterbury
60 358 7.250% 0.00% 10/01/01 5,4,3,2,1 Zeeland
61 418 N/A 0.00% 10/01/06 None Burnsville
63 380 8.375% 0.00% 11/01/00 5,4,3,2,1 Lexington
64 395 7.750% 0.00% 11/01/99 5,4,3,2,1 Reynoldsburg
65 403 N/A 0.00% 11/01/04 None New Hope
66 400 8.375% 0.00% 04/01/00 5,4,3,2,1 Biddeford
</TABLE>
<TABLE>
<CAPTION>
Loan Number Cut-Off Debt
(corresponding Service
to Annual Debt Coverage
Prospectus) State Service Ratio NOI Date of NOI
----------- ----- ------- ----- --- -----------
<S> <C> <C> <C> <C> <C>
1* VA $2,437,655.00 1.17 $2,854,403.00 12/31/95
3 NJ $992,909.00 1.34 $1,330,613.00 12/31/95
7 MA $1,011,163.00 1.19 $1,011,163.00 U/W 1996
9 NY $681,876.00 1.53 $1,045,944.00 U/W 1996
11 IL $666,714.00 1.23 $822,500.00 U/W 1996
15 IN $479,882.00 1.30 $625,472.00 U/W 1996
18 TX $463,257.00 1.17 $542,367.00 U/W 1995
20 NY $435,077.00 1.90 $826,616.00 U/W 1994
21 AZ $419,790.00 1.33 $556,900.00 U/W 1994
22 MI $368,617.00 1.36 $500,520.00 U/W 1996
25 TX $370,671.00 1.17 $433,060.00 U/W 1994
26 TX $328,573.00 1.40 $459,304.00 U/W 1996
29 MI $311,728.00 1.55 $483,120.00 U/W 1996
33 CT $245,507.00 1.62 $397,369.00 U/W 1996
34 CA $250,294.00 1.32 $330,891.00 U/W 1996
39 MI $249,248.00 1.78 $444,866.00 U/W 1996
42 CT $215,975.00 N/AV N/AV N/AV
43 MI $207,383.00 1.27 $264,120.00 U/W 1995
44 IL $209,209.00 1.17 $244,714.00 U/W 1995
45 GA $227,667.00 1.20 $273,087.00 U/W 1994
46 MI $223,007.00 1.40 $312,225.00 U/W 1994
47 MI $196,073.00 1.28 $250,047.00 U/W 1996
50 CA $156,185.00 1.25 $195,120.00 U/W 1996
51 MN $169,034.00 1.17 $197,486.00 U/W 1992
53 OH $166,137.00 1.29 $213,635.00 U/W 1995
55 MD $164,197.00 N/AV N/AV N/AV
56 MA $146,452.00 N/AV $1,011,163.00 U/W 1996
57 OH $136,276.00 1.44 $196,129.00 U/W 1996
58 CT $154,844.00 1.24 $191,401.00 U/W 1994
60 MI $131,170.00 1.32 $172,480.00 U/W 1996
61 MN $114,893.00 1.32 $151,891.00 U/W 1996
63 KY $135,477.00 N/AV N/AV N/AV
64 OH $109,787.00 1.24 $135,876.00 U/W 1994
65 AL $98,352.00 1.33 $130,878.00 U/W 1994
66 ME $98,256.00 1.37 $134,338.00 U/W 1995
</TABLE>
<PAGE>
Daiwa Finance Corp.
MORTGAGE ASSET SCHEDULE
<TABLE>
<CAPTION>
Loan Number Prepayment Provisions
(corresponding Remaining Term to -----------------------------
to Stated Maturity Debenture Retained Lockout Penalties
Prospectus) (in Months) Rate Yield Rate Date (thereafter) City
----------- ----------- ---- ---------- ---- ------------ ----
<S> <C> <C> <C> <C> <C> <C>
67 401 8.375% 0.00% 05/01/00 5,4,3,2,1 Cuyahoga Falls
68 468 7.750% 0.00% 01/01/01 5,4,3,2,1 Wash. Crthse.
70 466 7.750% 0.00% 11/01/00 5,4,3,2,1 Marysville
72 406 7.250% 0.00% 11/01/00 5,4,3,2,1 Marysville
73 469 7.250% 0.00% 11/01/06 None Stamford
75 455 N/A 0.00% 11/01/04 None Excelsior
76 407 7.250% 0.00% 11/01/05 None Topsham
77 359 7.750% 0.00% 11/30/99 5,4,3,2,1 Grand Island
78 469 7.250% 0.00% 12/12/00 5,4,3,2,1 Los Angeles
79 130 7.250% 0.00% 11/01/01 None Irving
80 452 7.750% 0.00% 07/23/99 5,4,3,2,1 Ashland
81 458 8.375% 0.00% 01/27/05 None Ashland
</TABLE>
<TABLE>
<CAPTION>
Loan Number Cut-Off Debt
(corresponding Service
to Annual Debt Coverage
Prospectus) State Service Ratio NOI Date of NOI
----------- ----- ------- ----- --- -----------
<S> <C> <C> <C> <C> <C>
67 OH $87,428.00 1.24 $108,204.00 U/W 1995
68 OH $83,569.00 1.27 $106,132.00 U/W 1994
70 OH $77,601.00 1.19 $92,559.00 U/W 1994
72 OH $68,562.00 1.31 $89,709.00 U/W 1995
73 NY $63,333.00 N/AV N/AV N/AV
75 MO $56,593.00 N/AV N/AV N/AV
76 ME $52,376.00 N/AV N/AV N/AV
77 NE $54,421.00 N/AV N/AV N/AV
78 CA $43,131.00 N/AV N/AV N/AV
79 TX $67,426.00 1.08 $72,541.00 U/W 1996
80 OR $27,981.00 N/AV N/AV N/AV
81 OR $17,070.00 N/AV N/AV N/AV
</TABLE>
Total Number of Loans = 47
Definitions
FHA = FHA Project Loan
GNMA = GNMA Pool
Nursing = Nursing Facility
N/A = Not Applicable
N/AV = Not Available
U/W = Underwriting Report
Lockout Date = In accordance with Mortgage Note and HUD regulations, loan is
locked out prior to this date.
Lockout Penalties of 5,4,3,2,1 = 5% declining 1% per year until zero.
Date of NOI = Last day of fiscal year for which NOI was being calculated. If
financial statements were not available, HUD underwriting reports were utilized.
*The original and current principal balance for Loan No. 1 represents
approximately 46% of a GNMA pool with an original balance of $27,538,200.00. All
numbers relating to debt service and NOI were calculated based on entire loan.
<PAGE>
Greystone Loan Schedule
<TABLE>
<CAPTION>
(I) (II) (III) (IV) (V) (VI) (VII) (VIII)
--- ---- ----- ---- --- ---- ----- ------
Property Section of GNMA Original Cut-Off Lien Mortgage
# Type Type Housing Act Pool Number Balance Balance Position Rate
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
2 FHA Multifamily 207 101-11023 11,503,900.00 11,238,870.62 First 8.600%
4 FHA Multifamily 221(d)4 012-35203 9,879,400.00 9,021,896.41 First 9.500%
5 FHA Multifamily 223(e) 012-57014 9,236,700.00 8,187,273.54 First 8.500%
6 FHA Multifamily 220 017-32023 8,116,378.00 8,075,289.33 First 7.500%
8 FHA Multifamily 220 012-32188 8,734,900.00 7,879,950.96 First 9.000%
10 GNMA Multifamily 223(f) 413874 7,609,700.00 7,577,130.35 First 7.750%
12 GNMA Nursing Facility 232 157013 6,559,300.00 6,557,351.99 First 7.875%
13 FHA Nursing Facility 223(f) 024-43059 5,943,500.00 5,924,426.63 First 7.875%
14 GNMA Multifamily 223(f) 382270 5,649,100.00 5,511,712.40 First 8.375%
16 GNMA Multifamily 223(f) 419430 5,047,300.00 5,047,300.00 First 7.875%
17 FHA Multifamily 223(f) 133-11012 5,015,000.00 5,002,528.51 First 8.275%
19 FHA Nursing Facility 223(f) 024-43060 4,734,200.00 4,758,879.05 First 7.875%
23 FHA Nursing Facility 223(f) 042-43122 4,004,700.00 3,980,953.75 First 8.300%
24 FHA Multifamily 2223(f) 067-11058 3,867,500.00 3,838,016.35 First 8.825%
27 FHA Multifamily 221(d)4 114-35324 3,850,000.00 3,687,868.23 First 9.750%
28 FHA Multifamily 221(d)4 012-35281 4,459,300.00 3,485,858.44 First 9.500%
30 FHA Nursing Facility 232 042-43084 3,434,200.00 3,398,410.30 First 10.500%
31 FHA Multifamily 223(f) 000-94033 3,337,680.79 3,313,791.33 First 8.250%
32 FHA Multifamily 223(a)7 012-35639 2,990,100.00 2,930,412.99 First 8.500%
35 GNMA Multifamily 223(a)7 181119 2,892,800.00 2,856,635.08 First 8.450%
36 FHA Nursing Facility 223(f) 091-22001 2,837,900.00 2,836,736.71 First 8.250%
37 FHA Nursing Facility 223(f) 091-22003 2,779,800.00 2,778,660.53 First 8.250%
38 FHA Nursing Facility 223(f) 091-22002 2,750,400.00 2,749,272.58 First 8.250%
40 FHA Multifamily 223(f) 133-11010 2,465,000.00 2,458,869.91 First 8.275%
41 FHA Nursing Facility 232 047-43062 2,562,400.00 2,441,713.46 First 9.750%
48 GNMA Nursing Facility 223(f) 436930 1,829,800.00 1,826,768.71 First 8.250%
49 FHA Nursing Facility 232 042-43086 1,806,200.00 1,792,587.20 First 10.500%
52 FHA Multifamily 223(f) 044-94005 1,725,000.00 1,709,275.94 First 8.875%
54 FHA Nursing Facility 232 042-43087 1,715,600.00 1,702,543.25 First 10.500%
59 GNMA Multifamily 223(a)7 427643 1,506,400.00 1,500,220.30 First 8.250%
62 FHA Multifamily 221(d)4 053-35553 1,354,300.00 1,304,408.10 First 8.000%
69 FHA Multifamily 223(f) 133-11011 844,000.00 841,901.08 First 8.275%
71 GNMA Multifamily 223(f) 285711 819,796.00 792,721.81 First 7.900%
74 FHA Multifamily 241 051-10004 660,100.00 643,050.76 Second 10.250%
</TABLE>
<TABLE>
<CAPTION>
(IX) (X) (XI) (XII) (XIII) (XIV) (XV)
---- --- ---- ----- ------ ----- ----
Remaining
Servicing First Stated Term to FHA Retained
Net Asset Fee Scheduled Maturity Stated Debenture Yield
# Rate Rate Due Date Date Maturity Rate Rate
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
2 8.405% 0.175% 1/1/97 9/1/27 369 8.500%
4 9.305% 0.175% 1/1/97 3/1/21 291 7.750%
5 8.360% 0.120% 1/1/97 2/1/21 290 7.125%
6 7.380% 0.100% 1/1/97 11/1/29 395 11.625% 4.125%
8 8.805% 0.175% 1/1/97 6/1/20 282 7.250%
10 7.355% 0.000% 1/1/97 3/1/31 411 N/A
12 7.605% 0.000% 1/1/97 11/1/36 479 N/A
13 7.680% 0.175% 1/1/97 5/1/31 413 6.500%
14 7.980% 0.000% 1/1/97 4/1/23 316 N/A
16 7.605% 0.000% 1/1/97 12/1/31 420 N/A
17 8.055% 0.200% 1/1/97 6/1/31 414 6.500%
19 7.680% 0.175% 1/1/97 5/1/31 413 6.500%
23 7.930% 0.350% 1/1/97 8/1/30 404 8.375% 0.075%
24 8.630% 0.175% 1/1/97 4/1/30 400 8.375%
27 9.610% 0.120% 1/1/97 6/1/25 342 10.125% 0.375%
28 9.305% 0.175% 1/1/97 12/1/20 288 7.750%
30 10.330% 0.150% 1/1/97 12/1/31 420 9.000%
31 8.130% 0.100% 1/1/97 6/1/21 294 10.250% 2.000%
32 8.180% 0.300% 1/1/97 10/1/23 322 7.250%
35 8.180% 0.000% 1/1/97 7/15/29 391 N/A
36 7.930% 0.300% 1/1/97 11/1/31 419 7.250%
37 7.930% 0.300% 1/1/97 11/1/31 419 7.250%
38 7.930% 0.300% 1/1/97 11/1/31 419 7.250%
40 8.055% 0.200% 1/1/97 6/1/31 414 6.500%
41 9.055% 0.675% 1/1/97 11/1/17 251 8.000%
48 7.980% 0.000% 1/1/97 8/15/31 416 N/A
49 10.305% 0.175% 1/1/97 6/1/32 426 9.000%
52 8.555% 0.300% 1/1/97 5/1/22 305 8.000%
54 10.305% 0.175% 1/1/97 5/1/32 425 9.000%
59 7.980% 0.000% 1/1/97 11/1/25 347 N/A
62 7.805% 0.175% 1/1/97 9/1/27 369 10.250% 2.250%
69 8.055% 0.200% 1/1/97 6/1/31 414 6.500%
71 7.630% 0.000% 1/1/97 12/1/21 300 N/A
74 9.930% 0.300% 1/1/97 12/1/27 372 10.250%
</TABLE>
<PAGE>
Greystone Loan Schedule
<TABLE>
<CAPTION>
(XVI) (XVII) (XVIII) (XIX) (XX) (XXI)
Annual Cut-Off NOI
# Prepayment Provision City State Debt Service DSCR NOI Date
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
2 L(0.67) Aurora CO 1,041,212 1.79 1,865,539 FY'96
4 0.750%(.75)...0.125%(1) New York NY 960,351 1.07 1,029,957 FY'94
5 0.750%(0.5)...0.125%(1) New York NY 812,564 1.33 1,076,996 FY'95
6 L(9.25) Hartford CT 662,158 0.99 657,598 FY'95
8 0.75%(0.17)...0.125%(1) New York NY 808,532 1.60 1,290,361 FY'95
10 L(4.25),5%(1),4%(1),3%(1),2%(1),1%(1) Atlanta GA 673,601 1.60 1,076,744 FY'95
12 L(9.92) Atlanta PA 539,921 1.41 760,000 U/W
13 L(4.33),5%(1),4%(1),3%(1),2%(1),1%(1) Dover NH 500,110 1.67 835,232 U/W
14 L(2.33),5%(1),4%(1),3%(1),2%(1),1%(1) Austintown OH N/A N/A N/A N/A
16 L(5),5%(1),4%(1),3%(1),2%(1),1%(1) Blacksburg VA N/A N/A N/A N/A
17 L(4.42),5%(1),4%(1),3%(1),2%(1),1%(1) Lubbock TX N/A N/A N/A N/A
19 L(4.33),5%(1),4%(1),3%(1),2%(1),1%(1) Exeter NH 401,720 1.67 670,912 U/W
23 L(3.67),5%(1),4%(1),3%(1),2%(1),1%(1) Tallonadge OH 351,847 1.59 559,357 FY'95
24 L(3.25),5%(1),4%(1),3%(1),2%(1),1%(1) Merritt Island FL 357,793 1.32 473,165 U/W
27 1.375%(1.0)...0.125%(1) Port Arthur TX N/A N/A N/A N/A
28 0.750%(1)...0.125%(1) New York NY 449,721 1.75 788,156 FY'95
30 L(5) Navarre OH 366,183 1.61 590,711 FY'95
31 L(9.42) Suitland MD 315,475 0.44 137,247 FY'96
32 L(4.00) Brooklyn NY 311,556 1.50 468,370 FY'95
35 L(2.58),5%(1),4%(1),3%(1),2%(1),1%(1) Laurel MD N/A N/A N/A N/A
36 L(4.83),5%(1),4%(1),3%(1),2%(1),1%(1) Rapid City SD 248,086 2.68 663,956 U/W
37 L(4.83),5%(1),4%(1),3%(1),2%(1),1%(1) Pierre SD 243,007 2.43 590,151 U/W
38 L(4.83),5%(1),4%(1),3%(1),2%(1),1%(1) Rapid City SD 240,437 2.19 526,511 U/W
40 L(4.42),5%(1),4%(1),3%(1),2%(1),1%(1) Lubbock TX N/A N/A N/A N/A
41 L(0.58),5%(1),4%(1),3%(1),2%(1),1%(1) Manistee MI 274,014 1.39 381,959 FY'94
48 L(4.58),5%(1),4%(1),3%(1),2%(1),1%(1) Lonacering MD 159,959 2.00 320,223 U/W
49 L(5.5) Wadsworth OH 192,981 1.37 264,706 FY'95
52 L(0.08),3%(1),2%(1),1%(1) Detroit MI 169,622 0.97 164,239 FY'94
54 L(5.42) Plain Township OH 183,329 1.16 212,135 FY'95
59 L(4.42),5%(1),4%(1),3%(1),2%(1),1%(1) Amherst MA 136,427 1.42 194,328 FY'95
62 L(7) Clayton NC 114,199 1.25 142,222 FY'95
69 L(4.42),5%(1),4%(1),3%(1),2%(1),1%(1) Lubbock TX 73,967 1.37 101,609 U/W
71 2%(1),1%(1) Philadelphia PA 72,791 1.27 92,115 FY'95
74 1.0%(0.83) Roanoke VA 240,145 1.84 442,210 FY'95
</TABLE>
