_____________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest Event
Reported): March 27, 1997
TRYON MORTGAGE FUNDING, INC. (as sponsor under the Pool-
ing and Servicing Agreement, dated as of March 1, 1997,
providing for the issuance of the Tryon Mortgage Funding,
Inc. Mortgage Pass-Through Certificates, Series 1997-1).
TRYON MORTGAGE FUNDING, INC.
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(Exact name of registrant as specified in its charter)
Delaware 33-87402 56-193-0085
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(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
100 North Tryon Street
Charlotte, North Carolina 28255
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(Address of Principal (Zip Code)
Executive Offices)
Registrant's telephone number, including area code (704) 386-2400
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(Former Address:
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Item 5. Other Events
------------
On March 27, 1997, Tryon Mortgage Funding, Inc. (the "Sponsor")
entered into a Pooling and Servicing Agreement dated as of March 1,
1997 (the "Pooling and Servicing Agreement"), by and among, the Sponsor,
as sponsor, NationsBanc Mortgage Corporation, as master servicer (the "Master
Servicer"), and PNC Bank, National Association, as trustee (the "Trustee").
The Pooling and Servicing Agreement is annexed hereto as Exhibit 99.1.
Item 7. Financial Statements, Pro Forma Financial
-----------------------------------------
Information and Exhibits.
------------------------
(a) Not applicable.
(b) Not applicable.
(c) Exhibits:
99.1 The Pooling and Servicing Agreement, dated as of March 1, 1997, by
and among, the Sponsor, the Master Servicer, and the Trustee,
providing for the issuance of the Certificates.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrants have duly caused this report to be signed on their behalf by the
undersigned hereunto duly authorized.
TRYON MORTGAGE FUNDING, INC.
By: /s/Robert Perret
---------------------------------
Name: Robert Perret
Title: Senior Vice President
Dated: March 27, 1997
Exhibit Index
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Exhibit Page
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99.1. Pooling and Servicing Agreement 5
EXECUTION COPY
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TRYON MORTGAGE FUNDING, INC.,
as Sponsor
NATIONSBANC MORTGAGE CORPORATION,
as Master Servicer,
and
PNC BANK, NATIONAL ASSOCIATION
as Trustee
POOLING AND SERVICING AGREEMENT
Dated as of March 1, 1997
_______________________
Mortgage Pass-Through Certificates
Series 1997-1
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TABLE OF CONTENTS
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Section Page
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ARTICLE I
Definitions
1.01. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1
Advance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1
Allocable Share . . . . . . . . . . . . . . . . . . . . . . . . . . I-1
Amount Available for Senior Principal . . . . . . . . . . . . . . . I-1
Amount Held for Future Distribution . . . . . . . . . . . . . . . . I-1
Applicable Credit Support Percentage . . . . . . . . . . . . . . . . I-2
Appraised Value . . . . . . . . . . . . . . . . . . . . . . . . . . I-2
Assignment of Mortgage . . . . . . . . . . . . . . . . . . . . . . . I-2
Authenticating Agents . . . . . . . . . . . . . . . . . . . . . . . I-2
Available Funds . . . . . . . . . . . . . . . . . . . . . . . . . . I-2
Bankruptcy Coverage Termination Date . . . . . . . . . . . . . . . . I-3
Bankruptcy Loss . . . . . . . . . . . . . . . . . . . . . . . . . . I-3
Book-Entry Certificate . . . . . . . . . . . . . . . . . . . . . . . I-3
Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-3
Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-3
Certificate Balance . . . . . . . . . . . . . . . . . . . . . . . . I-3
Certificateholder . . . . . . . . . . . . . . . . . . . . . . . . . I-3
Certificate Owner . . . . . . . . . . . . . . . . . . . . . . . . . I-3
Certificate Register . . . . . . . . . . . . . . . . . . . . . . . . I-3
Certificate Registrar . . . . . . . . . . . . . . . . . . . . . . . I-4
Class . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-4
Class A-8 Percentage . . . . . . . . . . . . . . . . . . . . . . . . I-4
Class A-8 Prepayment Percentage . . . . . . . . . . . . . . . . . . I-4
Class A-8 Principal Distribution Amount . . . . . . . . . . . . . . I-4
Class Certificate Balance . . . . . . . . . . . . . . . . . . . . . I-4
Class Interest Shortfall . . . . . . . . . . . . . . . . . . . . . . I-5
Class Optimum Interest Distribution Amount . . . . . . . . . . . . . I-5
Class P Deferred Amount . . . . . . . . . . . . . . . . . . . . . . I-5
Class Subordination Percentage . . . . . . . . . . . . . . . . . . . I-5
Class Unpaid Interest Shortfall . . . . . . . . . . . . . . . . . . I-5
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-5
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-5
Collection Account . . . . . . . . . . . . . . . . . . . . . . . . . I-6
Combined Prepayment Percentage . . . . . . . . . . . . . . . . . . . I-6
Compensating Interest . . . . . . . . . . . . . . . . . . . . . . . I-6
Corporate Trust Office . . . . . . . . . . . . . . . . . . . . . . . I-6
Corresponding Class of Certificates . . . . . . . . . . . . . . . . I-6
Current Bankruptcy Amount . . . . . . . . . . . . . . . . . . . . . I-6
Custodian . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-6
Customary Servicing Procedures . . . . . . . . . . . . . . . . . . . I-6
Cut-Off Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-6
Cut-Off Date Pool Principal Balance . . . . . . . . . . . . . . . . I-6
Cut-Off Date Principal Balance . . . . . . . . . . . . . . . . . . . I-6
Debt Service Reduction . . . . . . . . . . . . . . . . . . . . . . . I-7
Debt Service Reduction Mortgage Loan . . . . . . . . . . . . . . . . I-7
Defective Mortgage Loan . . . . . . . . . . . . . . . . . . . . . . I-7
Deficient Valuation . . . . . . . . . . . . . . . . . . . . . . . . I-7
Deficient Valuation Mortgage Loan . . . . . . . . . . . . . . . . . I-7
Definitive Certificates . . . . . . . . . . . . . . . . . . . . . . I-7
Denomination . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-7
Depository . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-8
Depository Participant . . . . . . . . . . . . . . . . . . . . . . . I-8
Determination Date . . . . . . . . . . . . . . . . . . . . . . . . . I-8
Discount Mortgage Loan . . . . . . . . . . . . . . . . . . . . . . . I-8
Distribution Account . . . . . . . . . . . . . . . . . . . . . . . . I-8
Distribution Account Deposit Date . . . . . . . . . . . . . . . . . I-8
Distribution Date . . . . . . . . . . . . . . . . . . . . . . . . . I-8
Due Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-8
Eligible Account . . . . . . . . . . . . . . . . . . . . . . . . . . I-8
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-9
ERISA-Restricted Certificate . . . . . . . . . . . . . . . . . . . . I-9
Escrow Account . . . . . . . . . . . . . . . . . . . . . . . . . . . I-9
Escrow Payments . . . . . . . . . . . . . . . . . . . . . . . . . . I-9
Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . I-9
Excess Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-9
Excess Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . I-9
Expense Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-9
FDIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-10
FHLMC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-10
Final Distribution Date . . . . . . . . . . . . . . . . . . . . . I-10
FIRREA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-10
Fitch . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-10
FNMA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-10
Fraud Coverage Termination Date . . . . . . . . . . . . . . . . . I-10
Fraud Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-10
Fraud Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-10
Fraud Loss Coverage Amount . . . . . . . . . . . . . . . . . . . . I-10
Fraud Loss Coverage Termination Date . . . . . . . . . . . . . . . I-10
Holder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-10
Independent . . . . . . . . . . . . . . . . . . . . . . . . . . . I-10
Initial Bankruptcy Coverage Amount . . . . . . . . . . . . . . . . I-11
Initial Class Certificate Balance . . . . . . . . . . . . . . . . I-11
Initial Fraud Loss Coverage Amount . . . . . . . . . . . . . . . . I-11
Initial LIBOR Rate . . . . . . . . . . . . . . . . . . . . . . . . I-11
Initial Special Hazard Coverage Amount . . . . . . . . . . . . . . I-11
Insurance Policy . . . . . . . . . . . . . . . . . . . . . . . . . I-11
Insurance Proceeds . . . . . . . . . . . . . . . . . . . . . . . . I-11
Insured Expenses . . . . . . . . . . . . . . . . . . . . . . . . . I-11
Interest Accrual Period . . . . . . . . . . . . . . . . . . . . . I-11
LIBOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-11
LIBOR Certificates . . . . . . . . . . . . . . . . . . . . . . . . I-11
LIBOR Determination Date . . . . . . . . . . . . . . . . . . . . . I-12
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Liquidated Mortgage Loan . . . . . . . . . . . . . . . . . . . . . I-12
Liquidation Proceeds . . . . . . . . . . . . . . . . . . . . . . . I-12
Loan-to-Value Ratio . . . . . . . . . . . . . . . . . . . . . . . I-12
Master REMIC . . . . . . . . . . . . . . . . . . . . . . . . . . . I-12
Master Servicer . . . . . . . . . . . . . . . . . . . . . . . . . I-12
Master Servicer Advance Date . . . . . . . . . . . . . . . . . . . I-12
Master Servicer Employees . . . . . . . . . . . . . . . . . . . . I-12
Master Servicing Fee . . . . . . . . . . . . . . . . . . . . . . . I-12
Master Servicing Fee Rate . . . . . . . . . . . . . . . . . . . . I-13
Monthly Payment . . . . . . . . . . . . . . . . . . . . . . . . . I-13
Moody's . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-13
Mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-13
Mortgage File . . . . . . . . . . . . . . . . . . . . . . . . . . I-13
Mortgage Loans . . . . . . . . . . . . . . . . . . . . . . . . . . I-13
Mortgage Loan Schedule . . . . . . . . . . . . . . . . . . . . . . I-13
Mortgage Note . . . . . . . . . . . . . . . . . . . . . . . . . . I-14
Mortgage Rate . . . . . . . . . . . . . . . . . . . . . . . . . . I-14
Mortgaged Property . . . . . . . . . . . . . . . . . . . . . . . . I-14
Mortgagor . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-14
Net Mortgage Rate . . . . . . . . . . . . . . . . . . . . . . . . I-14
Net Prepayment Interest Shortfalls . . . . . . . . . . . . . . . . I-15
NMR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-15
1933 Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-15
Nonrecoverable Advance . . . . . . . . . . . . . . . . . . . . . . I-15
Non-Delay Certificates . . . . . . . . . . . . . . . . . . . . . . I-15
Non-PO Formula Principal Amount . . . . . . . . . . . . . . . . . I-15
Non-PO Percentage . . . . . . . . . . . . . . . . . . . . . . . . I-15
Non-U.S. Person . . . . . . . . . . . . . . . . . . . . . . . . . I-16
Notional Amount . . . . . . . . . . . . . . . . . . . . . . . . . I-16
Notional Amount Certificates . . . . . . . . . . . . . . . . . . . I-16
Offered Certificates . . . . . . . . . . . . . . . . . . . . . . . I-16
Officers' Certificate . . . . . . . . . . . . . . . . . . . . . . I-16
Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . I-16
Original Applicable Credit Support Percentage . . . . . . . . . . I-16
Original Mortgage Loans . . . . . . . . . . . . . . . . . . . . . I-16
Original Subordinate Certificate Balance . . . . . . . . . . . . . I-17
OTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-17
Outstanding Mortgage Loan . . . . . . . . . . . . . . . . . . . . I-17
Ownership Interest . . . . . . . . . . . . . . . . . . . . . . . . I-17
Pass-Through Rate . . . . . . . . . . . . . . . . . . . . . . . . I-17
Percentage Interest . . . . . . . . . . . . . . . . . . . . . . . I-17
Permitted Investments . . . . . . . . . . . . . . . . . . . . . . I-17
Permitted Transferee . . . . . . . . . . . . . . . . . . . . . . . I-18
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-18
Physical Certificates . . . . . . . . . . . . . . . . . . . . . . I-18
PO Formula Principal Amount . . . . . . . . . . . . . . . . . . . I-18
PO Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . I-19
Pool Stated Principal Balance . . . . . . . . . . . . . . . . . . I-19
Premium Mortgage Loan . . . . . . . . . . . . . . . . . . . . . . I-19
Prepayment Interest Shortfall . . . . . . . . . . . . . . . . . . I-19
Primary Insurance Policy . . . . . . . . . . . . . . . . . . . . . I-19
Principal Only Certificates . . . . . . . . . . . . . . . . . . . I-19
Principal Prepayment . . . . . . . . . . . . . . . . . . . . . . . I-19
Principal Prepayment in Full . . . . . . . . . . . . . . . . . . . I-20
Private Certificates . . . . . . . . . . . . . . . . . . . . . . . I-20
Pro Rata Share . . . . . . . . . . . . . . . . . . . . . . . . . . I-20
Prospectus . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-20
Prospectus Supplement . . . . . . . . . . . . . . . . . . . . . . I-20
PTCE 95-60 . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-20
Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . I-20
Rating Agency . . . . . . . . . . . . . . . . . . . . . . . . . . I-20
Realized Loss . . . . . . . . . . . . . . . . . . . . . . . . . . I-20
Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . I-21
Reference Bank . . . . . . . . . . . . . . . . . . . . . . . . . . I-21
Regular Certificate . . . . . . . . . . . . . . . . . . . . . . . I-21
Relief Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-21
Relief Act Reductions . . . . . . . . . . . . . . . . . . . . . . I-21
REMIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-21
REMIC Certificate Maturity Date . . . . . . . . . . . . . . . . . I-21
REMIC Change of Law . . . . . . . . . . . . . . . . . . . . . . . I-22
REMIC Provisions . . . . . . . . . . . . . . . . . . . . . . . . . I-22
REO Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . I-22
REO Property . . . . . . . . . . . . . . . . . . . . . . . . . . . I-22
Request for Release . . . . . . . . . . . . . . . . . . . . . . . I-22
Required Coupon . . . . . . . . . . . . . . . . . . . . . . . . . I-22
Required Insurance Policy . . . . . . . . . . . . . . . . . . . . I-22
Reserve Interest Rate . . . . . . . . . . . . . . . . . . . . . . I-22
Residual Certificate . . . . . . . . . . . . . . . . . . . . . . . I-22
Responsible Officer . . . . . . . . . . . . . . . . . . . . . . . I-22
Restricted Classes . . . . . . . . . . . . . . . . . . . . . . . . I-22
Sale Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . I-22
Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-22
Senior Certificate . . . . . . . . . . . . . . . . . . . . . . . . I-23
Senior Credit Support Termination Date . . . . . . . . . . . . . . I-23
Senior Percentage . . . . . . . . . . . . . . . . . . . . . . . . I-23
Senior Prepayment Percentage . . . . . . . . . . . . . . . . . . . I-23
Senior Principal Distribution Amount . . . . . . . . . . . . . . . I-23
Senior Step Down Conditions . . . . . . . . . . . . . . . . . . . I-24
Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-24
Servicer Mortgage File . . . . . . . . . . . . . . . . . . . . . . I-24
Servicing Advances . . . . . . . . . . . . . . . . . . . . . . . . I-24
Servicing Agreement . . . . . . . . . . . . . . . . . . . . . . . I-25
Servicing Officer . . . . . . . . . . . . . . . . . . . . . . . . I-25
Special Hazard Coverage Termination Date . . . . . . . . . . . . . I-25
Special Hazard Event . . . . . . . . . . . . . . . . . . . . . . . I-25
Special Hazard Loss Coverage Amount . . . . . . . . . . . . . . . I-26
Special Hazard Mortgage Loan . . . . . . . . . . . . . . . . . . . I-26
Sponsor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-26
Startup Day . . . . . . . . . . . . . . . . . . . . . . . . . . . I-26
Stated Principal Balance . . . . . . . . . . . . . . . . . . . . . I-26
Subordinate Certificate . . . . . . . . . . . . . . . . . . . . . I-27
Subordinate Percentage . . . . . . . . . . . . . . . . . . . . . . I-27
Subordinate Prepayment Percentage . . . . . . . . . . . . . . . . I-27
Subordinate Principal Distribution Amount . . . . . . . . . . . . I-27
Subsidiary REMIC . . . . . . . . . . . . . . . . . . . . . . . . . I-27
Subsidiary REMIC Interest . . . . . . . . . . . . . . . . . . . . I-27
Subsidiary REMIC Regular Interest . . . . . . . . . . . . . . . . I-27
Substitute Mortgage Loan . . . . . . . . . . . . . . . . . . . . . I-27
Substitution Adjustment Amount . . . . . . . . . . . . . . . . . . I-28
Tax Matters Person . . . . . . . . . . . . . . . . . . . . . . . . I-28
Tax Matters Person Certificate . . . . . . . . . . . . . . . . . . I-28
Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-28
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-28
Trustee Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . I-28
Trustee Fee Rate . . . . . . . . . . . . . . . . . . . . . . . . . I-28
Underwriter . . . . . . . . . . . . . . . . . . . . . . . . . . . I-28
Voting Rights . . . . . . . . . . . . . . . . . . . . . . . . . . I-28
1.02. Interest Calculations . . . . . . . . . . . . . . . . . . . I-29
ARTICLE II
Conveyance of Mortgage Loans;
Original Issuance of Certificates
2.01. Conveyance of Mortgage Loans . . . . . . . . . . . . . . . II-1
2.02. Acceptance by the Trustee of the Mortgage Loans . . . . . . II-3
2.03. Representations, Warranties and Covenants of the
Seller and the Master Servicer . . . . . . . . . . . . . II-5
2.04. Representations and Warranties of the Sponsor as
to the Mortgage Loans . . . . . . . . . . . . . . . . . II-7
2.05. Designation of Interests in REMIC . . . . . . . . . . . . . II-8
2.06. Designation of Start-up Day . . . . . . . . . . . . . . . . II-8
2.07. REMIC Certificate Maturity Date . . . . . . . . . . . . . . II-8
2.08. Repurchases for Tax Violations . . . . . . . . . . . . . . II-8
2.09. Execution and Delivery of Certificates . . . . . . . . . . II-8
ARTICLE III
Administration and Servicing
of Mortgage Loans
3.01. Master Servicer to Service Mortgage Loans . . . . . . . . . III-1
3.02. Subservicing; Enforcement of the Obligations of
Servicers . . . . . . . . . . . . . . . . . . . . . . . III-2
3.03. Fidelity Bond; Errors and Omissions Insurance . . . . . . . III-3
3.04. Access to Certain Documentation . . . . . . . . . . . . . . III-4
3.05. Maintenance of Primary Mortgage Insurance
Policy; Claims . . . . . . . . . . . . . . . . . . . . . III-4
3.06. Rights of the Sponsor and the Trustee in
Respect of the Master Servicer . . . . . . . . . . . . . III-5
3.07. Trustee to Act as Master Servicer . . . . . . . . . . . . . III-5
3.08. Collection of Mortgage Loan Payments;
Collection Account and Distribution Account . . . . . . III-6
3.09. Collection of Taxes, Assessments and Similar
Items; Escrow Accounts . . . . . . . . . . . . . . . . . III-9
3.10. Access to Certain Documentation and
Information Regarding the Mortgage Loans . . . . . . . III-11
3.11. Permitted Withdrawals from the Collection
Account and Distribution Account . . . . . . . . . . . III-11
3.12. Maintenance of Hazard Insurance . . . . . . . . . . . . . III-13
3.13. Enforcement of Due-On-Sale Clauses;
Assumption Agreements . . . . . . . . . . . . . . . . III-14
3.14. Realization Upon Defaulted Mortgage Loans;
REO Property . . . . . . . . . . . . . . . . . . . . . III-16
3.15. Trustee to Cooperate; Release of Mortgage
Files . . . . . . . . . . . . . . . . . . . . . . . . III-18
3.16. Documents, Records and Funds in Possession
of the Master Servicer to be Held for
the Trustee . . . . . . . . . . . . . . . . . . . . . III-20
3.17. Servicing Compensation . . . . . . . . . . . . . . . . . III-20
3.18. Annual Statement as to Compliance . . . . . . . . . . . . III-21
3.19. Annual Independent Public Accountants'
Servicing Statement; Financial Statements . . . . . . III-21
3.20. Advances . . . . . . . . . . . . . . . . . . . . . . . . III-21
3.21. Modifications, Waivers, Amendments and Consents . . . . . III-22
3.22. Reports to the Securities and Exchange
Commission . . . . . . . . . . . . . . . . . . . . . . III-23
ARTICLE IV
Master Servicer's Certificate
4.01. Master Servicer's Certificate . . . . . . . . . . . . . . . IV-1
ARTICLE V
Payments and Statements to
Certificateholders; REMIC Servicing
5.01. Distributions . . . . . . . . . . . . . . . . . . . . . . . . V-1
5.02. Priorities of Distribution . . . . . . . . . . . . . . . . . V-1
5.03. Allocation of Losses . . . . . . . . . . . . . . . . . . . . V-6
5.04. Statements to Certificateholders . . . . . . . . . . . . . . V-7
5.05. Tax Returns and Reports to Certificateholders . . . . . . . . V-9
5.06. Tax Matters Person . . . . . . . . . . . . . . . . . . . . V-10
5.07. Rights of the Tax Matters Person in Respect of
the Trustee . . . . . . . . . . . . . . . . . . . . . . V-10
5.08. REMIC Related Covenants . . . . . . . . . . . . . . . . . . V-10
5.09. Determination of Pass-Through Rates for LIBOR
Certificates . . . . . . . . . . . . . . . . . . . . . . V-12
ARTICLE VI
The Certificates
6.01. The Certificates . . . . . . . . . . . . . . . . . . . . . VI-1
6.02. Registration of Transfer and Exchange of
Certificates . . . . . . . . . . . . . . . . . . . . . . VI-1
6.03. Mutilated, Destroyed, Lost or Stolen
Certificates . . . . . . . . . . . . . . . . . . . . . . VI-7
6.04. Persons Deemed Owners . . . . . . . . . . . . . . . . . . . VI-7
ARTICLE VII
The Sponsor and the Master Servicer
7.01. Respective Liabilities of the Sponsor and the
Master Servicer . . . . . . . . . . . . . . . . . . . . VII-1
7.02. Merger or Consolidation of the Sponsor or the
Master Servicer . . . . . . . . . . . . . . . . . . . . VII-1
7.03. Limitation on Liability of the Sponsor, the
Master Servicer and Others . . . . . . . . . . . . . . . VII-1
7.04. Sponsor and Master Servicer Not to Resign . . . . . . . . . VII-2
ARTICLE VIII
Default
8.01. Events of Default . . . . . . . . . . . . . . . . . . . . VIII-1
8.02. Remedies of Trustee . . . . . . . . . . . . . . . . . . . VIII-2
8.03. Directions by Certificateholders and Duties of
Trustee During Event of Default . . . . . . . . . . . VIII-3
8.04. Action upon Certain Failures of the Master
Servicer and upon Event of Default . . . . . . . . . . VIII-3
8.05. Trustee to Act; Appointment of Successor . . . . . . . . VIII-3
8.06. Notification to Certificateholders . . . . . . . . . . . VIII-4
ARTICLE IX
The Trustee
9.01. Duties of Trustee . . . . . . . . . . . . . . . . . . . . . IX-1
9.02. Certain Matters Affecting the Trustee . . . . . . . . . . . IX-2
9.03. Trustee Not Liable for Certificates . . . . . . . . . . . . IX-3
9.04. Trustee May Own Certificates . . . . . . . . . . . . . . . IX-3
9.05. Eligibility Requirements for Trustee . . . . . . . . . . . IX-3
9.06. Resignation and Removal of Trustee . . . . . . . . . . . . IX-4
9.07. Successor Trustee . . . . . . . . . . . . . . . . . . . . . IX-5
9.08. Merger or Consolidation of Trustee . . . . . . . . . . . . IX-5
9.09. Appointment of Co-Trustee or Separate Trustee . . . . . . . IX-6
9.10. Authenticating Agents . . . . . . . . . . . . . . . . . . . IX-7
9.11. Trustee's Fees and Expenses . . . . . . . . . . . . . . . . IX-8
9.12. Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . IX-8
9.13. Paying Agents . . . . . . . . . . . . . . . . . . . . . . . IX-8
ARTICLE X
Termination
10.01. Termination upon Purchase by the Sponsor or
Liquidation of All Mortgage Loans . . . . . . . . . . . . X-1
10.02. Additional Termination Requirements . . . . . . . . . . . . X-3
ARTICLE XI
Miscellaneous Provisions
11.01. Amendment . . . . . . . . . . . . . . . . . . . . . . . . XI-1
11.02. Recordation of Agreement . . . . . . . . . . . . . . . . . XI-2
11.03. Limitation on Rights of Certificateholders . . . . . . . . XI-2
11.04. Governing Law . . . . . . . . . . . . . . . . . . . . . . XI-3
11.05. Notices . . . . . . . . . . . . . . . . . . . . . . . . . XI-3
11.06. Severability of Provisions . . . . . . . . . . . . . . . . XI-4
11.07. Certificates Nonassessable and Fully Paid . . . . . . . . XI-4
11.08. Access to List of Certificateholders. . . . . . . . . . . XI-4
EXHIBITS
Exhibit A - Form of Face of Senior Certificates . . . . . . . . . . . A-1
Exhibit B - Form of Face of Residual Certificates . . . . . . . . . . B-1
Exhibit C - (Reserved) . . . . . . . . . . . . . . . . . . . . . . . . C-1
Exhibit D - Form of Face of Subordinate Certificate . . . . . . . . . D-1
Exhibit E - Form of Reverse of all Certificates . . . . . . . . . . . E-1
Exhibit F - Mortgage Loan Schedule . . . . . . . . . . . . . . . . . . F-1
Exhibit G - Sale Agreements . . . . . . . . . . . . . . . . . . . . . G-1
Exhibit H - Request for Release of Documents . . . . . . . . . . . . . H-1
Exhibit I - Form of Affidavit regarding Transfer of
Residual Certificates pursuant
to Section 6.02 . . . . . . . . . . . . . . . . . . . . . I-1
Exhibit 1 Certain Definitions from Article I of the Agreement
Exhibit 2 Excerpt from Section 6.02 of the Agreement
Exhibit J - Form of Investment Letter . . . . . . . . . . . . . . . . J-1
Exhibit K - Form of Master Servicer's Certificate . . . . . . . . . . K-1
Exhibit L - Form of Opinion of Counsel pursuant to
Section 6.02 . . . . . . . . . . . . . . . . . . . . . . . L-1
Exhibit M - Contents of Servicer Mortgage File . . . . . . . . . . . . M-1
Exhibit N - Form of Certification of Establishment of
Account . . . . . . . . . . . . . . . . . . . . . . . . . N-1
Exhibit O - Form of Custodial Agreement . . . . . . . . . . . . . . . O-1
SCHEDULES
Schedule I: Representations and Warranties of the Master Servicer
Schedule II: Representations and Warranties as to the Mortgage Loans
THIS POOLING AND SERVICING AGREEMENT, dated as of March 1, 1997, among
Tryon Mortgage Funding, Inc., as sponsor (together with its permitted
successors and assigns, the "Sponsor"), NationsBanc Mortgage Corporation, as
master servicer (together with its permitted successors and assigns, the
"Master Servicer") and PNC Bank, National Association, as trustee (together
with its permitted successors and assigns, the "Trustee").
W I T N E S S E T H T H A T:
----------------------------
In consideration of the mutual agreements herein contained, the Sponsor,
the Master Servicer and the Trustee agree as follows:
PRELIMINARY STATEMENT
The Sponsor is the owner of the Trust Fund that is hereby conveyed to
the Trustee in return for the Certificates. The Trust Fund for federal
income tax purposes will consist of two REMICs. The Subsidiary REMIC will
consist of all of the assets constituting the Trust Fund and will be
evidenced by the Subsidiary REMIC Regular Interests (which will be
uncertificated and will represent the "regular interests" in the Subsidiary
REMIC) and the Class R-I Certificates as the single "residual interest" in
the Subsidiary REMIC. The Trustee will hold the Subsidiary REMIC Regular
Interests. The Master REMIC will consist of the Subsidiary REMIC Regular
Interests and will be evidenced by the Regular Certificates (which will
represent the "regular interests" in the Master REMIC) and the Class R-II
Certificate as the single "residual interest" in the Master REMIC. The
Certificates will represent the entire beneficial ownership interest in the
Trust Fund. The "latest possible maturity date" for federal income tax
purposes of all interests created hereby will be the Latest Possible Maturity
Date.
The following table sets forth characteristics of the Certificates,
together with the minimum denominations and integral multiples in excess
thereof in which such Classes shall be issuable (except that one Certificate
of each Class of Certificates may be issued in any amount in excess of the
minimum denomination and, in addition, one Residual Certificate of each Class
of Residual Certificates representing the Tax Matters Person Certificate may
be issued in a different amount):
Initial Integral
Class Multiples
Certificate Pass-Through Minimum in Excess
Balance Rate Denomination of Minimum
------------ ------------- ------------ ----------
Class A-1 $31,185,929 7.00% $10,000 $1
Class A-2 $12,107,857 7.25% $10,000 $1
Class A-3 $13,893,799 7.50% $10,000 $1
Class A-4 $24,000,000 7.50% $10,000 $1
Class A-5 $ 8,341,459 7.50% $10,000 $1
Class A-6 $ 7,683,000 7.50% $10,000 $1
Class A-7 $10,904,258 7.50% $10,000 $1
Class A-8 $21,750,000 7.50% $10,000 $1
Class F $12,413,285 (1) $25,000 $1
Class S (2) (2) $25,000(6) $1
Class P $ 974,317 (3) $25,000 $1
Class X (4) (5) $25,000(6) $1
Class R-I $ 100 7.50% $100 N/A
Class R-II $ 100 7.50% $100 N/A
Class B-1 $ 2,625,076 7.50% $25,000 $1
Class B-2 $ 1,500,044 7.50% $25,000 $1
Class B-3 $ 1,125,033 7.50% $25,000 $1
Class B-4 $ 450,013 7.50% $25,000 $1
Class B-5 $ 525,016 7.50% $25,000 $1
Class B-6 $ 525,016 7.50% $25,000 $1
_______________
(1) The Class F Certificates will bear interest at 5.8750% per annum during
the first Interest Accrual Period. During each subsequent Interest
Accrual Period, the Class F Certificates will bear interest at the per
annum rate equal to the sum of (a) LIBOR and (b) 0.50%, subject to a
minimum Pass-Through Rate of 0.50% per annum and a maximum Pass-Through
Rate of 9.00% per annum.
(2) The Class S Certificates will be Notional Amount Certificates, will have
no Class Certificate Balance and bear interest on the Class S Notional
Amount (initially, $12,413,285). The Pass-Through Rate for the Class S
Certificates for the first Distribution Date is 3.1250% per annum. The
Pass-Through Rate for the Class S Certificates will be equal to the per
annum rate equal to the excess of (a) 8.50% per annum over (b) LIBOR,
subject to a minimum Pass-Through Rate of 0% and a maximum Pass-Through
Rate of 8.50% per annum.
(3) The Class P Certificates will be Principal Only Certificates and will
not bear interest.
(4) The Class X Certificates will be Notional Amount Certificates, will have
no Class Certificate Balance and will bear interest on the Class X
Notional Amount (initially, $150,004,302.82).
(5) The Pass-Through Rate for the Class X Certificates for any Distribution
Date will be equal to the per annum rate equal to the weighted average
for all Mortgage Loans of the excess of (a) the Net Mortgage Rate then
in effect for each Mortgage Loan over (b) 7.50%. The Pass-Through Rate
for the Class X Certificates for the first Distribution Date is 0.2891%
per annum.
(6) The minimum denomination is based on the Notional Amount.
Principal of and interest on the Subsidiary REMIC Regular Interests and
the Class R-I Certificate shall be allocated to the Corresponding Classes of
Certificates in the manner set forth in the following table:
Corresponding Class of Certificates(1)
Subsidiary Initial
REMIC Principal Interest Allocation Allocation
Balance Balance Rate of Principal of Interest
1 $31,185,929 7.00% A-1 A-1
2 $12,107,857 7.25% A-2 A-2
3 $13,893,799 7.50% A-3 A-3
4 $24,000,000 7.50% A-4 A-4
5 $ 8,341,459 7.50% A-5 A-5
6 $ 7,683,000 7.50% A-6 A-6
7 $10,904,258 7.50% A-7 A-7
8 $21,750,000 7.50% A-8 A-8
9 $12,413,285 9.00% F F, S
10 $ 2,625,076 7.50% B-1 B-1
11 $ 1,500,044 7.50% B-2 B-2
12 $ 1,125,033 7.50% B-3 B-3
13 $ 450,013 7.50% B-4 B-4
14 $ 525,016 7.50% B-5 B-5
15 $ 525,016 7.50% B-6 B-6
16 $ 974,317 (3) P --
17 (4) (5) -- X
R-I $ 100 7.50% R-I R-I
18 $ 100 7.50% R-II R-II
______________________
(1) The amount of principal and, except in the case of Subsidiary REMIC
Regular Interest 16, interest allocable from a Subsidiary REMIC Regular
Interest to its Corresponding Class or Classes of Certificates on any
Distribution Date shall be 100%.
(2) Interest on Subsidiary REMIC Regular Interest 9 will be allocated to the
Class F Certificates and the Class S Certificates on a pro rata basis in
accordance with their respective Pass-Through Rates.
(3) Subsidiary REMIC Regular Interest 16 will be a principal only Subsidiary
REMIC Regular Interest and will not bear interest.
(4) Subsidiary REMIC Regular Interest 17 will have no principal balance and
will bear interest on its notional amount. The notional amount of
Subsidiary REMIC Regular Interest 17 with respect to any Distribution
Date will be equal to the Class X Notional Amount for such Distribution
Date.
(5) The Interest Rate for Subsidiary REMIC Interest 17 for any Distribution
Date will be equal to the Pass-Through Rate applicable to the Class X
Certificates for such Distribution Date.
Set forth below are designations of Classes of Certificates to the
categories used herein:
Book-Entry Certificates All Classes of Certificates other than the
Physical Certificates.
Class A Certificates Class A-1, Class A-2, Class A-3, Class A-4,
Class A-5, Class A-6, Class A-7 and Class A-8
Certificates.
Class B Certificates Class B-1, Class B-2, Class B-3, Class B-4,
Class B-5 and Class B-6 Certificates.
Class R Certificates Class R-I and Class R-II Certificates.
Delay Certificates All interest-bearing Classes of Certificates
other than the Non-Delay Certificates, if any.
ERISA-Restricted
Certificates The Subordinate and Class R Certificates.
Floating Rate Certificates Class F Certificates.
Inverse Floating Rate
Certificates Class S Certificates.
LIBOR Certificates Class F and Class S Certificates.
Non-Delay Certificates Class F and Class S Certificates.
Notional Amount
Certificates Class S and Class X Certificates.
Offered Certificates All Classes of Certificates other than the
Private Certificates.
Physical Certificates The Residual Certificates and the Private
Certificates.
Principal Only Certificates Class P Certificates.
Private Certificates Class B-4, Class B-5 and Class B-6
Certificates.
Rating Agencies Moody's and Fitch.
Regular Certificates Class A Certificates, Class B Certificates,
Class F Certificates, Class P Certificates,
Class S Certificates and Class X Certificates.
Residual Certificates Class R Certificates.
Senior Certificates Class A, Class P, Class X, Class F, Class S
and Class R Certificates.
Subordinate Certificates The Class B Certificates.
ARTICLE I
Definitions
Section 1.01. Whenever used in this Agreement, the following words and
phrases, unless the context otherwise requires, shall have the meanings
specified in this Article.
Advance: The payment required to be made by the Master Servicer with
-------
respect to any Distribution Date pursuant to Section 3.20, the amount of any
such payment being equal to the aggregate of Monthly Payments (net of the
Master Servicing Fee) on the Mortgage Loans (including any REO Property) that
were due on the related Due Date and not received as of the close of business
on the related Determination Date, less the aggregate amount of any such
----
delinquent payments that the Master Servicer has determined would constitute
a Nonrecoverable Advance if advanced.
Agreement: This Pooling and Servicing Agreement and all amendments
---------
hereof and supplements hereto.
Allocable Share: As to any Distribution Date and any Mortgage Loan (i)
---------------
with respect to the Class X Certificates, (a) the ratio that (x) the excess,
if any, of the Net Mortgage Rate with respect to such Mortgage Loan over the
Required Coupon bears to (y) such Net Mortgage Rate or (b) if the Net
Mortgage Rate with respect to such Mortgage Loan does not exceed the Required
Coupon, zero, (ii) with respect to the Class P Certificates, zero and
(iii) with respect to each other Class of Certificates, the product of (a)
the lesser of (I) the ratio that the Required Coupon bears to such Net
Mortgage Rate and (II) one, multiplied by (b) the ratio that the amount
calculated with respect to such Distribution Date for such Class pursuant to
clause (i) of the definition of Class Optimum Interest Distribution Amount
(without giving effect to any reduction of such amount pursuant to Section
5.02(c)) bears to the amount calculated with respect to such Distribution
Date for all Classes of Certificates pursuant to clause (i) of the definition
of Class Optimum Interest Distribution Amount (without giving effect to any
reduction of such amount pursuant to Section 5.02(c)).
Amount Available for Senior Principal: As to any Distribution Date,
-------------------------------------
Available Funds for such Distribution Date reduced by the aggregate amount
distributable on such Distribution Date in respect of interest on the Senior
Certificates pursuant to Section 5.02(a)(i).
Amount Held for Future Distribution: As to any Distribution Date, the
-----------------------------------
total of the amounts held in the Collection Account at the close of business
on the preceding Determination Date on account of (i) Principal Prepayments
and Liquidation Proceeds received or made in the month of such Distribution
Date and (ii) payments which represent receipt of Monthly Payments in respect
of a Due Date or Due Dates subsequent to the related Due Date.
Applicable Credit Support Percentage: As defined in Section 5.02(d).
------------------------------------
Appraised Value: With respect to any Mortgaged Property, the lesser of
---------------
(i) the value thereof as determined by an appraisal made for the originator
of the Mortgage Loan at the time of origination of the Mortgage Loan by an
appraiser who met the minimum requirements of FNMA or FHLMC, and (ii) the
purchase price paid for the related Mortgaged Property by the Mortgagor with
the proceeds of the Mortgage Loan; provided, however, that in the case of a
-------- -------
Refinanced Mortgage Loan, such value of the Mortgaged Property is based
solely upon the value determined by an appraisal made for the originator of
such Refinanced Mortgage Loan at the time of origination of such Refinanced
Mortgaged Loan by an appraiser who met the minimum requirements of FNMA or
FHLMC.
Assignment: Any of the Assignments of Mortgage Loan Sale Agreements,
----------
dated March 27, 1997, among the Seller, NationsBanc Mortgage Capital
Corporation and the Sponsor, relating to the assignment of all rights, title
and interest of NationsBanc Mortgage Capital Corporation under the Sale
Agreements to the Sponsor.
Assignment of Mortgage: An individual assignment of the Mortgage,
----------------------
notice of transfer or equivalent instrument in recordable form, sufficient
under the laws of the jurisdiction wherein the related Mortgaged Property is
located to give record notice of the sale of the Mortgage.
Authenticating Agents: As defined in Section 9.10.
---------------------
Available Funds: As to any Distribution Date, the excess of (A) the sum
---------------
of (i) the aggregate of (a) interest portion of any Monthly Payment (net of
the Master Servicing Fee) and the principal portion of any Monthly Payment
due on the Due Date in the month in which such Distribution Date occurs and
which is received prior to the related Determination Date and (b) all
Advances made by the Master Servicer in respect of such Distribution Date
deposited to the Collection Account pursuant to Section 3.08(b)(vii); (ii)
all Liquidation Proceeds received during the preceding calendar month and
deposited to the Collection Account pursuant to Section 3.08(b)(iii); (iii)
all Principal Prepayments received during the month preceding the month of
such Distribution Date and deposited to the Collection Account pursuant to
Section 3.08(b) during such period; (iv) in connection with Defective
Mortgage Loans, as applicable, the aggregate of the Purchase Prices and
Substitution Adjustment Amounts deposited on the related Distribution Account
Deposit Date and (v) any other amounts in the Collection Account deposited
therein pursuant to Sections 3.08(b)(iv), (v) and (viii) in respect of such
Distribution Date; over (B) any amounts permitted to be withdrawn from the
Collection Account pursuant to clauses (i) - (vii), inclusive, of Section
3.11(a) and amounts permitted to be withdrawn from the Distribution Account
pursuant to clauses (i) - (ii), inclusive, of Section 3.11(b).
Bankruptcy Coverage Termination Date: The point of time at which the
------------------------------------
Current Bankruptcy Amount is reduced to zero.
Bankruptcy Loss: Any Deficient Valuation or Debt Service Reduction.
---------------
Book-Entry Certificate: As specified in the Preliminary Statement.
----------------------
Business Day: Any day other than (i) a Saturday or a Sunday or (ii) a
------------
day on which banking institutions in the State of North Carolina or in the
state where the Corporate Trust Office is located are required or authorized
by law or executive order to be closed.
Certificate: Any Regular Certificate or Residual Certificate.
-----------
Certificate Balance: With respect to any Certificate at any date, the
-------------------
maximum dollar amount of principal to which the Holder thereof is then
entitled hereunder, such amount being equal to the Denomination thereof minus
the sum of (i) all distributions of principal previously made with respect
thereto and (ii) all Realized Losses allocated thereto and, in the case of
any Subordinate Certificates, all other reductions in Certificate Balance
previously allocated thereto pursuant to Section 5.03.
Certificateholder: The Person in whose name a Certificate is registered
-----------------
in the Certificate Register, except that, solely for the purpose of giving
any consent pursuant to this Agreement, any Certificate registered in the
name of the Sponsor, the Master Servicer or any affiliate thereof shall be
deemed not to be outstanding and the Percentage Interest and Voting Rights
evidenced thereby shall not be taken into account in determining whether the
requisite amount of Percentage Interests or Voting Rights, as the case may
be, necessary to effect any such consent has been obtained, unless such
entity is the registered owner of the entire Class of Certificates, provided
that the Trustee shall not be responsible for knowing that any Certificate is
registered in the name of such an affiliate unless one of its Responsible
Officers has actual knowledge.
Certificate Owner: With respect to a Book-Entry Certificate, the person
-----------------
who is the beneficial owner of a Book-Entry Certificate.
Certificate Register: The register maintained pursuant to Section 6.02.
--------------------
Certificate Registrar: The registrar appointed pursuant to Section
---------------------
6.02.
Class: As to the Certificates, the Class A-1, Class A-2, Class A-3,
-----
Class A-4, Class A-5, Class A-6, Class A-7, Class A-8, Class X, Class F,
Class S, Class P, Class R-I, Class R-II, Class B-1, Class B-2, Class B-3,
Class B-4, Class B-5 and Class B-6 Certificates, as the case may be.
Class A-8 Percentage: As to any Distribution Date, the percentage
--------------------
carried six places rounded up equivalent of a fraction the numerator of which
is the Class Certificate Balance of the Class A-8 Certificates immediately
prior to such date and the denominator of which is the aggregate of the Class
Certificate Balances of all Classes of Certificates (other than the Class P
Certificates) immediately prior to such date.
Class A-8 Prepayment Percentage: As to any Distribution Date, the
-------------------------------
product of (i) a fraction, expressed as a percentage carried six places
rounded up, the numerator of which is the Class Certificate Balance of the
Class A-8 Certificates immediately prior to such Distribution Date and the
denominator of which is the aggregate of the Class Certificate Balances of
the Class A-8 Certificates and the Subordinate Certificates immediately prior
to such Distribution Date and (ii) the Combined Prepayment Percentage.
Class A-8 Principal Distribution Amount: As to any Distribution Date,
---------------------------------------
the sum of (i) the Class A-8 Percentage of the applicable Non-PO Percentage
of all amounts described in clauses (a) through (d) of the definition of
"Non-PO Formula Principal Amount" for such Distribution Date, (ii) with
respect to any Mortgage Loan that became a Liquidated Mortgage Loan during
the calendar month preceding the month of such Distribution Date, the lesser
of (x) the Class A-8 Percentage of the applicable Non-PO Percentage of the
Stated Principal Balance of such Mortgage Loan and (y) either (A) the Class
A-8 Prepayment Percentage, if the Class A-8 Prepayment Percentage is greater
than 0%, or if the Class A-8 Prepayment Percentage equals 0%, the percentage
obtained by dividing the Class A-8 Percentage by the sum of the Senior
Percentage and the Class A-8 Percentage or (B) if an Excess Loss was
sustained with respect to such Liquidated Mortgage Loan during such preceding
calendar month, the Class A-8 Percentage of the applicable Non-PO Percentage
of the portion of Liquidation Proceeds that are allocable to principal
received with respect to such Mortgage Loan during such preceding calendar
month and (iii) the Class A-8 Prepayment Percentage of the applicable Non-PO
Percentage of the amounts described in clause (f) of the definition "Non-PO
Formula Principal Amount" for such Distribution Date.
Class Certificate Balance: With respect to any Class and as to any date
-------------------------
of determination, the aggregate of the Certificate Balances of all
Certificates of such Class as of such date.
Class Interest Shortfall: As to any Distribution Date and Class, the
------------------------
amount by which the amount described in clause (i) of the definition of Class
Optimum Interest Distribution Amount for the related Class exceeds the amount
of interest actually distributed on such Class on such Distribution Date
pursuant to such clause (i).
Class Optimum Interest Distribution Amount: As to any Distribution Date
------------------------------------------
and interest-bearing Class, the sum of (i) one month's interest accrued
during the related Interest Accrual Period at the related Pass-Through Rate
on the applicable Class Certificate Balance or Notional Amount, as
applicable, subject to reduction pursuant to Section 5.02(c), and (ii) any
Class Unpaid Interest Shortfall for such Class.
Class P Deferred Amount: As to any Distribution Date, the aggregate of
-----------------------
the applicable PO Percentage of each Realized Loss, other than the Excess
Loss, to be allocated to the Class P Certificates on such Distribution Date,
if such Distribution Date is prior to the Senior Credit Support Depletion
Date or previously allocated to the Class P Certificates and not yet paid to
the Holders of the Class P Certificates pursuant to Section 5.02(a)(iii).
Class S Notional Amount: As to any Distribution Date and the Class S
-----------------------
Certificates, the Class Certificate Balance of the Class F Certificates
immediately prior to such date.
Class Subordination Percentage: With respect to any Distribution Date
------------------------------
and each Class of Subordinate Certificates, the quotient (expressed as a
percentage) of (a) the Class Certificate Balance of such Class of Subordinate
Certificates immediately prior to such Distribution Date divided by (b) the
aggregate of the Class Certificate Balances immediately prior to such
Distribution Date of all Classes of Certificates.
Class Unpaid Interest Shortfall: As to any Distribution Date and each
-------------------------------
Class, the amount by which the aggregate Class Interest Shortfalls for such
Class on prior Distribution Dates exceeds the amount of interest actually
distributed on such Class on such prior Distribution Dates pursuant to clause
(ii) of the definition of Class Optimum Interest Distribution Amount.
Class X Notional Amount: As to any Distribution Date and the Class X
-----------------------
Certificates, the aggregate of the Stated Principal Balances of the Mortgage
Loans as of the Due Date in the month of such Distribution Date (prior to
giving effect to any Monthly Payments due on such Mortgage Loans on such Due
Date).
Closing Date: March 27, 1997.
------------
Code: The Internal Revenue Code of 1986, as the same may be amended
----
from time to time.
Collection Account: The separate Eligible Account or Accounts created
------------------
and maintained by the Master Servicer pursuant to Section 3.08(b) and meeting
the requirements specified therein.
Combined Prepayment Percentage: As to any Distribution Date, the
------------------------------
difference between 100% and the Senior Prepayment Percentage for such date.
Compensating Interest: As defined in Section 3.17.
---------------------
Corporate Trust Office: The principal office of the Trustee at which
----------------------
at any particular time its corporate business shall be administered, which
office at the date of the execution of this instrument is located at 1600
Market Street, 30th Floor, Philadelphia, Pennsylvania 19103.
Corresponding Class of Certificates: With respect to each Subsidiary
-----------------------------------
REMIC Interest, any Class of Certificates appearing opposite such Subsidiary
REMIC Interest in the Preliminary Statement.
Current Bankruptcy Amount: As of any Distribution Date, the Current
-------------------------
Bankruptcy Amount shall equal the Initial Bankruptcy Coverage Amount as
reduced by the aggregate amount of Bankruptcy Losses previously incurred
during the period from the Cut-Off Date through the last day of the month
preceding the month of such Distribution Date; provided, however, that such
amount may be reduced from time to time with the written consent of the
Rating Agencies without resulting in a downgrading to the current rating of
the Certificates.
Custodial Agreement: The custodial agreement, dated as of March 1,
-------------------
1997, between the Trustee and the Custodian, substantially in the form of
Exhibit O hereto.
Custodian: First Chicago National Processing Corporation, as the
---------
Custodian pursuant to the Custodial Agreement.
Customary Servicing Procedures: Procedures (including collection
------------------------------
procedures) that the Master Servicer customarily employs and exercises in
servicing and administering mortgage loans for its own account and which are
in accordance with accepted mortgage servicing practices of prudent lending
institutions.
Cut-Off Date: March 1, 1997.
------------
Cut-Off Date Pool Principal Balance: The aggregate of the Cut-Off Date
-----------------------------------
Principal Balances of the Mortgage Loans which is $150,004,302.83.
Cut-Off Date Principal Balance: As to any Mortgage Loan, the unpaid
------------------------------
principal balance thereof as of the close of business on the Cut-Off Date,
reduced by all installments of principal due on or prior thereto whether or
not paid.
Debt Service Reduction: As to any Mortgage Loan and any Determination
----------------------
Date, the excess of (i) the Monthly Payment due on the related Due Date under
the terms of such Mortgage Loan over (ii) the amount of the monthly payment
of principal and/or interest required to be paid with respect to such Due
Date by the Mortgagor as established by a court of competent jurisdiction
(pursuant to an order which has become final and nonappealable) as a result
of a proceeding initiated by or against the related Mortgagor under the
Bankruptcy Code, as amended from time to time (11 U.S.C.); provided that no
--------
such occurrence shall be considered a Debt Service Reduction so long as the
Master Servicer is pursuing an appeal of the court order giving rise to any
such modification and (a) such Mortgage Loan is not in default with respect
to payment due thereunder in accordance with the terms of such Mortgage Loan
as in effect on the Cut-Off Date or (b) Monthly Payments are being advanced
by the Master Servicer in accordance with the terms of such Mortgage Loan as
in effect on the Cut-Off Date.
Debt Service Reduction Mortgage Loan: Any Mortgage Loan that became the
------------------------------------
subject of a Debt Service Reduction.
Defective Mortgage Loan: Any Mortgage Loan which is required to be
-----------------------
repurchased pursuant to Sections 2.02 or 2.03.
Deficient Valuation: As to any Mortgage Loan and any Determination
-------------------
Date, the excess of (i) the then outstanding indebtedness under such Mortgage
Loan over (ii) the secured valuation thereof established by a court of
competent jurisdiction (pursuant to an order which has become final and
nonappealable) as a result of a proceeding initiated by or against the
related Mortgagor under the Bankruptcy Code, as amended from time to time (11
U.S.C.), pursuant to which such Mortgagor retained such Mortgaged Property;
provided that no such occurrence shall be considered a Deficient Valuation
- --------
so long as the Master Servicer is pursuing an appeal of the court order
giving rise to any such modification and (a) such Mortgage Loan is not in
default with respect to payments due thereunder in accordance with the terms
of such Mortgage Loan as in effect on the Cut-Off Date or (b) Monthly
Payments are being advanced by the Master Servicer in accordance with the
terms of such Mortgage Loan as in effect on the Cut-Off Date.
Deficient Valuation Mortgage Loan: Any Mortgage Loan that became the
---------------------------------
subject of a Deficient Valuation.
Definitive Certificates: As defined in Section 6.02.
-----------------------
Denomination: With respect to each Certificate, the amount set forth
------------
on the face thereof as the "Initial Certificate Balance of this Certificate"
or the "Initial Notional Amount of this Certificate" or, if neither of the
foregoing, the Percentage Interest appearing on the face thereof.
Depository: The initial Depository shall be The Depository Trust
----------
Company, the nominee of which is CEDE & Co., as the registered Holder of the
Book-Entry Certificates. The Depository shall at all times be a "clearing
corporation" as defined in Section 8-102(3) of the Uniform Commercial Code of
the State of New York.
Depository Participant: A broker, dealer, bank or other financial
----------------------
institution or other Person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
Determination Date: As to any Distribution Date, the fifth Business Day
------------------
preceding such Distribution Date.
Discount Mortgage Loan: Any Mortgage Loan with a Net Mortgage Interest
----------------------
Rate that is less than the Required Coupon.
Distribution Account: The separate Eligible Account created and
--------------------
maintained by the Trustee pursuant to Section 3.08(c) in the name of the
Trustee for the benefit of the Certificateholders and designated "PNC Bank,
National Association, in trust for registered holders of Tryon Mortgage
Funding, Inc. Mortgage Pass-Through Certificates, Series 1997-1." Funds in
the Distribution Account shall be held in trust for the Certificateholders
for the uses and purposes set forth in this Agreement.
Distribution Account Deposit Date: As to any Distribution Date, 12:30
---------------------------------
p.m. Eastern time on the Business Day immediately preceding such Distribution
Date.
Distribution Date: The 20th day of each month beginning April 1997 or,
-----------------
if such 20th day is not a Business Day, the Business Day immediately
following.
Due Date: As to any Distribution Date and Mortgage Loan the first day
--------
in the calendar month of such Distribution Date.
Eligible Account: Any of (i) an account or accounts maintained with (a)
----------------
NationsBank, N.A. or (b) a federal or state chartered depository institution
or trust company the short-term unsecured debt obligations of which (or, in
the case of a depository institution or trust company that is the principal
subsidiary of a holding company, the debt obligations of such holding
company) have the highest short-term ratings of each Rating Agency at the
time any amounts are held on deposit therein, or (ii) an account or
accounts in a depository institution or trust company in which such accounts
are insured by the FDIC (to the limits established by the FDIC) and the
uninsured deposits in which accounts are otherwise secured such that, as
evidenced by an Opinion of Counsel delivered to the Trustee and to 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 in 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 or (iv) any other account acceptable
to the Rating Agency. Eligible Accounts may bear interest, and may include,
if otherwise qualified under this definition, accounts maintained with the
Trustee.
ERISA: The Employee Retirement Income Security Act of 1974, as amended.
-----
ERISA-Restricted Certificate: As specified in the Preliminary
----------------------------
Statement.
Escrow Account: As defined in Section 3.09.
--------------
Escrow Payments: The amounts constituting taxes, assessments, Primary
---------------
Insurance Policy premiums, fire and hazard insurance premiums and other
payments as may be required to be escrowed by the Mortgagor with the
Mortgagee pursuant to the terms of any Mortgage Note or Mortgage.
Event of Default: As defined in Section 8.01.
----------------
Excess Loss: The amount of any (i) Fraud Loss realized after the Fraud
-----------
Loss Coverage Termination Date, (ii) Special Hazard Loss realized after the
Special Hazard Coverage Termination Date or (iii) Bankruptcy Loss realized
after the Bankruptcy Coverage Termination Date.
Excess Proceeds: With respect to any Liquidated Mortgage Loan, the
---------------
amount, if any, by which the sum of any Liquidation Proceeds of such Mortgage
Loan received in the calendar month in which such Mortgage Loan became a
Liquidated Mortgage Loan, net of any amounts previously reimbursed to the
Master Servicer as Nonrecoverable Advance(s) with respect to such Mortgage
Loan pursuant to Section 3.11(a)(iii), exceeds (i) the unpaid principal
balance of such Liquidated Mortgage Loan as of the Due Date in the month in
which such Mortgage Loan became a Liquidated Mortgage Loan plus (ii) accrued
interest at the Mortgage Rate from the Due Date as to which interest was last
paid or for which an Advance was made (and not reimbursed) up to the Due Date
applicable to the Distribution Date immediately following the calendar month
during which such liquidation occurred.
Expense Rate: As to each Mortgage Loan, the sum of the Master Servicing
------------
Fee Rate and the Trustee Fee Rate.
FDIC: The Federal Deposit Insurance Corporation, or any successor
----
thereto.
FHLMC: The Federal Home Loan Mortgage Corporation, or any successor
-----
thereto.
Final Distribution Date: The Distribution Date on which the final
-----------------------
distribution in respect of the Certificates will be made pursuant to Section
10.01.
FIRREA: The Financial Institutions Reform, Recovery and Enforcement Act
------
of 1989, as amended.
Fitch: Fitch Investors Service, L.P., or any successor thereto.
-----
FNMA: The Federal National Mortgage Association, or any successor
----
thereto.
Fraud Coverage Termination Date: The point of time at which the Fraud
-------------------------------
Loss Coverage Amount is reduced to zero.
Fraud Loan: Any Liquidated Mortgage Loan as to which a Fraud Loss has
----------
been sustained.
Fraud Loss: Realized Losses on Mortgage Loans as to which a loss is
----------
sustained by reason of a default arising from fraud, dishonesty or
misrepresentation in connection with the related Mortgage Loan, including a
loss by reason of the denial of coverage under any related Primary Insurance
Policy because of such fraud, dishonesty or misrepresentation.
Fraud Loss Coverage Amount: As of the Closing Date, $2,970,085 subject
--------------------------
to reduction from time to time, by the amount of Fraud Losses allocated to
the Certificates. In addition, on each anniversary of the Cut-off Date, the
Fraud Loss Coverage Amount will be reduced as follows: (a) on the first,
second, third and fourth anniversaries of the Cut-off Date, to an amount
equal to the lesser of (i) 1% of the then current Pool Stated Principal
Balance and (ii) the excess of the Fraud Loss Coverage Amount as of the
preceding anniversary of the Cut-off Date over the cumulative amount of Fraud
Losses allocated to the Certificates since such preceding anniversary; and
(b) on the fifth anniversary of the Cut-off Date, to zero.
Fraud Loss Coverage Termination Date: The point in time at which the
------------------------------------
Fraud Loss Coverage Amount is reduced to zero.
Holder: A Certificateholder.
------
Independent: When used with respect to any specified Person means such
-----------
a Person who (i) is in fact independent of the Sponsor or the Master
Servicer, (ii) does not have any direct financial interest or any material
indirect financial interest in the Sponsor or the Master Servicer or in an
affiliate of either, and (iii) is not connected with the Sponsor or the
Master Servicer as an officer, employee, promoter, underwriter, trustee,
partner, director or person performing similar functions.
Initial Bankruptcy Coverage Amount: $100,000.
----------------------------------
Initial Class Certificate Balance: As to each Class of Certificates,
---------------------------------
the aggregate of the Initial Certificate Balances of all Certificates of the
same Class, which is set forth in the Preliminary Statement. As to each
Certificate of the same Class of Certificates, the Initial Class Certificate
Balance set forth on the face thereof.
Initial Fraud Loss Coverage Amount: $2,970,085.
----------------------------------
Initial LIBOR Rate: 5.3750%.
------------------
Initial Special Hazard Coverage Amount: $1,840,769.
--------------------------------------
Insurance Policy: With respect to any Mortgage Loan included in the
----------------
Trust Fund, any insurance policy, including all riders and endorsements
thereto in effect, including any replacement policy or policies for any
Insurance Policies.
Insurance Proceeds: Proceeds paid by an insurer pursuant to any
------------------
Insurance Policy, in each case other than any amount included in such
Insurance Proceeds in respect of Insured Expenses.
Insured Expenses: Expenses covered by an Insurance Policy or any other
----------------
insurance policy with respect to the Mortgage Loans.
Interest Accrual Period: As to any Distribution Date and each Class of
-----------------------
Certificates (other than the Non-Delay Certificates), the period from and
including the first day of the calendar month preceding the calendar month of
such Distribution Date to but not including the first day of the calendar
month of such Distribution Date. With respect to any Distribution Date and
the Non-Delay Certificates, the period commencing on the 20th day of the
calendar month preceding the calendar month in which such Distribution Date
occurs and ending on the 19th day of the calendar month in which such
Distribution Date occurs.
LIBOR: The London Interbank Offered Rate for one-month U.S. dollar
-----
deposits, calculated as set forth in Section 5.09.
LIBOR Certificates: As specified in the Preliminary Statement.
------------------
LIBOR Business Day: Any day other than (i) a Saturday or a Sunday or
------------------
(ii) a day on which banking institutions in the State of North Carolina, the
state where the Corporate Trust Office is located or in the City of London,
England are required or authorized by law to be closed.
LIBOR Determination Date: As to any Distribution Date (other than the
------------------------
first Distribution Date), the second LIBOR Business Day prior to the day on
which the related Interest Accrual Period commences.
Liquidated Mortgage Loan: With respect to any Distribution Date, a
------------------------
defaulted Mortgage Loan (including any REO Property) which was liquidated in
the calendar month preceding the month of such Distribution Date and as to
which the Master Servicer has certified (in accordance with this Agreement)
that it has received all proceeds it expects to receive in connection with
the liquidation of such Mortgage Loan including the final disposition of an
REO Property.
Liquidation Proceeds: Amounts, including Insurance Proceeds, received
--------------------
in connection with the partial or complete liquidation of defaulted Mortgage
Loans, whether through trustee's sale, foreclosure sale or otherwise or
amounts received in connection with any condemnation or partial release of a
Mortgaged Property and any other proceeds received in connection with an REO
Property, less the sum of related unreimbursed Master Servicing Fees,
Servicing Advances and Advances.
Loan-to-Value Ratio: As of any date, the fraction, expressed as a
-------------------
percentage, the numerator of which is the outstanding principal balance of
the related Mortgage Loan at the date of determination and the denominator of
which is the Appraised Value of the related Mortgaged Property.
LTV: The Loan-to-Value Ratio.
---
Master REMIC: As described in the Preliminary Statement.
------------
Master Servicer: NationsBanc Mortgage Corporation, a Texas corporation,
---------------
or its successor in interest, as Master Servicer, or any successor master
servicer appointed as herein provided.
Master Servicer Advance Date: As to any Distribution Date, 11:30 a.m.,
----------------------------
Eastern time, on the Business Day immediately preceding such Distribution
Date.
Master Servicer Employees: As defined in Section 3.03.
-------------------------
Master Servicing Fee: With respect to each Mortgage Loan and
--------------------
Distribution Date, the amount of the fee payable to the Master Servicer,
which shall, for such Distribution Date, be equal to one-twelfth of the
product of the Master Servicing Fee Rate and the Stated Principal Balance of
such Mortgage Loan, subject to reduction as provided in Section 3.17. Such
fee shall be payable monthly, computed on the basis of the same Stated
Principal Balance and period respecting which any related interest payment on
a Mortgage Loan is computed. The Master Servicer's right to receive the
Master Servicing Fee is limited to, and payable solely from, the interest
portion (including recoveries with respect to interest from Liquidation
Proceeds and other proceeds, to the extent permitted by Section 3.11) of
related Monthly Payments collected by the Master Servicer, or as otherwise
provided under Section 3.11.
Master Servicing Fee Rate: With respect to each Mortgage Loan, 0.25%
-------------------------
per annum.
Monthly Payment: The scheduled monthly payment on a Mortgage Loan due
---------------
on any Due Date allocable to principal and/or interest on such Mortgage Loan
which, unless otherwise specified herein, shall give effect to any related
Debt Service Reduction and any Deficient Valuation that affects the amount of
the monthly payment due on such Mortgage Loan.
Moody's: Moody's Investors Service, Inc., or any successor thereto.
-------
Mortgage: The mortgage, deed of trust or other instrument creating a
--------
first lien on a Mortgaged Property securing a Mortgage Note or creating a
first lien on a leasehold interest.
Mortgage File: The mortgage documents listed in Section 2.01 pertaining
-------------
to a particular Mortgage Loan and any additional documents required to be
added to the Mortgage File pursuant to this Agreement.
Mortgage Loans: Such of the mortgage loans transferred and assigned to
--------------
the Trustee pursuant to Section 2.01 as from time to time are held as a part
of the Trust Fund (including any Substitute Mortgage Loans and REO Property),
the Mortgage Loans originally so held being identified in the Mortgage Loan
Schedule.
Mortgage Loan Schedule: The list of Mortgage Loans (as from time to
----------------------
time amended by the Master Servicer to reflect the addition of Substitute
Mortgage Loans and the deletion of Defective Mortgage
Loans pursuant to the provisions of this Agreement) transferred to the
Trustee as part of the Trust Fund and from time to time subject to this
Agreement, attached hereto as Schedule I, setting forth the following
information with respect to each Mortgage Loan:
(i) the Mortgage Loan identifying number;
(ii) the Mortgagor's name and the street address of the Mortgaged
Property, including the state code;
(iii) the stated maturity date;
(iv) the original principal amount of the Mortgage Loan;
(v) the Cut-Off Date Principal Balance;
(vi) the date on which the first Monthly Payment was due on the
Mortgage Loan, and, if such date is not the Due Date currently in
effect, such Due Date;
(vii) the Monthly Payment as of the Cut-Off Date;
(viii) the paid-through date;
(ix) the Loan-to-Value Ratio at origination;
(x) a code indicating whether the Mortgaged Property is owner-
occupied;
(xi) the property type for each Mortgaged Property;
(xii) the Mortgage Rate;
(xiii) the original months to maturity and the remaining months to
maturity from the Cut-Off Date;
(xiv) a code indicating the purpose for the Mortgage Loan; and
(xv) a code indicating the documentation style pursuant to which the
Mortgage Loan was originated.
Such schedule shall also set forth the total of the number of Mortgage
Loans and the amounts described under (v) above for all of the Mortgage
Loans and the weighted average Mortgage Rate and maturity of the
Mortgage Loans as of the Cut-Off Date.
Mortgage Note: The originally executed note or other evidence of
-------------
indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage
Loan, together with all riders thereto and amendments thereof.
Mortgage Rate: As to any Mortgage Loan, the per annum rate of interest
-------------
at which interest accrues on the principal balance of such Mortgage Loan in
accordance with the terms of the related Mortgage Note.
Mortgaged Property: The underlying property securing a Mortgage Loan.
------------------
Mortgagor: The obligor on a Mortgage Note.
---------
Net Mortgage Rate: As to any Mortgage Loan and Distribution Date, such
-----------------
Mortgage Loan's Mortgage Rate thereon on the first day of the month preceding
the month of the related Distribution Date reduced by the related Expense
Rate.
Net Prepayment Interest Shortfalls: As to any Distribution Date, the
----------------------------------
amount by which the aggregate of Prepayment Interest Shortfalls exceeds an
amount equal to the Master Servicing Fee for such Distribution Date before
reduction of the Master Servicing Fee in respect of such Prepayment Interest
Shortfalls.
NMR: With respect to any Mortgage Loan, its Net Mortgage Interest Rate.
---
1933 Act: As defined in Section 6.02.
--------
Nonrecoverable Advance: Any portion of an Advance or a Servicing
----------------------
Advance previously made or proposed to be made in respect of a Mortgage Loan
which has not been previously reimbursed and which, in the good faith
judgment of the Master Servicer, will not or, in the case of a proposed
Advance or Servicing Advance, would not be ultimately recoverable from the
related Mortgagor, related Liquidation Proceeds, or other recoveries in
respect of the related Mortgage Loan. The determination by the Master
Servicer that it has made a Nonrecoverable Advance or that any proposed
advance, if made, would constitute a Nonrecoverable Advance, shall be
evidenced by a certificate of a Servicing Officer of the Master Servicer
delivered to the Trustee and the Sponsor and detailing the reasons for such
determination.
Non-Delay Certificates: As specified in the Preliminary Statement.
----------------------
Non-PO Formula Principal Amount: As to any Distribution Date, the sum
-------------------------------
of the applicable Non-PO Percentage of (a) the principal portion of each
Monthly Payment (without giving effect, prior to the Bankruptcy Coverage
Termination Date, to any reductions thereof caused by any Debt Service
Reductions or Deficient Valuations) due on each Mortgage Loan on the related
Due Date, (b) the Stated Principal Balance of each Mortgage Loan that was
repurchased by the Seller or the Sponsor pursuant to this Agreement as of
such Distribution Date, (c) the Substitution Adjustment Amount in connection
with any Defective Mortgage Loan received with respect to such Distribution
Date, (d) any Liquidation Proceeds allocable to recoveries of principal of
Mortgage Loans that are not yet Liquidated Mortgage Loans received during the
calendar month preceding the month of such Distribution Date, (e) with respect
to each Mortgage Loan that became a Liquidated Mortgage Loan during the calendar
month preceding the month of such Distribution Date, the amount of Liquida-
tion Proceeds allocable to principal received during the calendar month
preceding the month of such Distribution Date with respect to such Mortgage
Loan, and (f) all Principal Prepayments received during the calendar month
preceding such Distribution Date.
Non-PO Percentage: As to any Discount Mortgage Loan, a fraction
-----------------
(expressed as a percentage) the numerator of which is the Net Mortgage Rate
of such Discount Mortgage Loan and the denominator of which is the Required
Coupon. As to any Premium Mortgage Loan, 100%.
Non-U.S. Person: An individual, corporation, partnership or other
---------------
person other than 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, an estate that is subject
to U.S. federal income tax regardless of the source of its income, or a trust
if a court within the United States is able to exercise primary supervision
of the administration of the trust and one or more United Stated fiduciaries
have the authority to control all substantial decisions of the trust.
Notional Amount: Either the Class S Notional Amount or the Class X
---------------
Notional Amount, as the context requires, or collectively, the Class S
Notional Amount and the Class X Notional Amount.
Notional Amount Certificates: As specified in the Preliminary
----------------------------
Statement.
Offered Certificates: As specified in the Preliminary Statement.
--------------------
Officers' Certificate: A certificate signed by the Chairman of the
---------------------
Board, Vice Chairman of the Board, President, a Vice President and by the
Treasurer, the Secretary or one of the Assistant Treasurers or Assistant
Secretaries, or any other duly authorized officer of the Sponsor or the
Master Servicer, as the case may be, and delivered to the Trustee.
Opinion of Counsel: A written opinion of counsel acceptable to the
------------------
Trustee, who may be counsel for the Sponsor or the Master Servicer, except
that any opinion of counsel relating to the qualification of the Trust Fund as
a REMIC or compliance with the REMIC Provisions must be an opinion of
Independent counsel.
Original Applicable Credit Support Percentage: With respect to each of
---------------------------------------------
the following Classes of Subordinate Certificates, the corresponding
percentage described below, as of the Closing Date:
Class B-1 4.50%
Class B-2 2.75%
Class B-3 1.75%
Class B-4 1.00%
Class B-5 0.70%
Class B-6 0.35%
Original Mortgage Loans: The Mortgage Loans identified in Exhibit F
-----------------------
hereto, and conveyed, transferred, sold and assigned to, and deposited with,
the Trustee pursuant to Section 2.01 hereof on the Closing Date.
Original Subordinate Certificate Balance: $6,750,198.
----------------------------------------
OTS: The Office of Thrift Supervision.
---
Outstanding Mortgage Loan: As to any Due Date, a Mortgage Loan which
-------------------------
was not the subject of a Principal Prepayment in Full prior to such Due Date,
which did not become a Liquidated Mortgage Loan prior to such Due Date and
which was not purchased prior to such Due Date pursuant to Sections 2.02 or
2.03.
Ownership Interest: As to any Certificate, any ownership or security
------------------
interest in such Certificate, including any interest in such Certificate as
the Holder thereof and any other interest therein, whether direct or
indirect, legal or beneficial, as owner or as pledgee.
Pass-Through Rate: As to each Class of interest bearing Certificates,
-----------------
the per annum rate set forth or described in the Preliminary Statement.
Percentage Interest: As to any Certificate, the percentage interest
-------------------
evidenced thereby in distributions required to be made on the related Class,
such percentage interest being set forth on the face thereof or equal to the
percentage obtained by dividing the Denomination of such Certificate by the
aggregate of the Denominations of all Certificates of the same Class.
Permitted Investments: One or more of the following:
---------------------
(i) obligations of or guaranteed as to principal and interest by
the United States, FHLMC, FNMA or any agency or instrumentality of the
United States when such obligations are backed by the full faith and
credit of the United States; provided, that such obligations of FHLMC or
--------
FNMA shall be limited to senior debt obligations and mortgage participation
certificates other than investments in mortgage-backed or mortgage
participation securities with yields evidencing extreme sensitivity to the
rate of principal payments on the underlying mortgages shall not constitute
Permitted Investments hereunder;
(ii) repurchase agreements on obligations specified in clause (i)
maturing not more than one month from the date of acquisition thereof
with a corporation incorporated under the laws of the United States or
any state thereof rated not lower than "P-1" by Moody's and "F-1" by
Fitch;
(iii) federal funds, certificates of deposit, demand deposits, time
deposits and bankers' acceptances (which shall each have an original
maturity of not more than 90 days and, in the case of bankers'
acceptances, shall in no event have an original maturity of more than
365 days or a remaining maturity of more than 30 days) denominated in
United States dollars of any U.S. depository institution or trust
company incorporated under the laws of the United States or any state
thereof, rated not lower than "P-1" by Moody's and "F-1" by Fitch;
(iv) commercial paper (having original maturities of not more than
365 days) of any corporation incorporated under the laws of the United
States or any state thereof which is rated not lower than "P-1" by
Moody's and "F-1" by Fitch; and
(v) investments in money market funds (including funds of the
Trustee or its affiliates as well as funds for which the Trustee and its
affiliates may receive compensation) rated "Aaa" by Moody's and "AAA" by
Fitch or otherwise approved in writing by the Rating Agency.
provided, however, that no instrument shall be a Permitted Investment if it
- -------- -------
represents, either (1) the right to receive only interest payments with
respect to the underlying debt instrument or (2) the right to receive both
principal and interest payments derived from obligations underlying such
instrument and the principal and interest with respect to such instrument
provide a yield to maturity greater than 120% of the yield to maturity at par
of such underlying obligations.
Permitted Transferee: Any Person other than (i) the United States, or
--------------------
any State or any political subdivision thereof, or any agency or
instrumentality of any of the foregoing, (ii) a foreign government,
international organization or any agency or instrumentality of either of the
foregoing, (iii) an organization which is exempt from tax imposed by Chapter
1 of the Code (including the tax imposed by section 511 of the Code on unrelated
business taxable income) (except certain farmers' cooperatives described in Code
section 521), (iv) rural electric and telephone cooperatives described in Code
section 1381(a)(2)(C), (v) any Non-U.S. Person and (vi) any other Person so
designated by the Master Servicer based on an Opinion of Counsel to the
effect that any transfer to such Person may cause the Pool or any other
Holder of a Residual Certificate to incur tax liability that would not be
imposed other than on account of such transfer. The terms "United States",
"State" and "international organization" shall have the meanings set forth in
Code section 7701 or successor provisions.
Person: Any individual, corporation, partnership, joint venture,
------
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
Physical Certificates: As specified in the Preliminary Statement.
---------------------
PO Formula Principal Amount: As to any Distribution Date, the sum of
---------------------------
the applicable PO Percentage of (a) the principal portion of each Monthly
Payment (without giving effect, prior to the Bankruptcy Coverage Termination
Date, to any reductions thereof caused by any Debt Service Reductions or
Deficient Valuations) due on each Mortgage Loan on the related Due Date, (b)
the Stated Principal Balance of each Mortgage Loan that was repurchased by
the Seller or the Sponsor pursuant to this Agreement as of such Distribution
Date, (c) the Substitution Adjustment Amount in connection with any Defective
Mortgage Loan received with respect to such Distribution Date, (d) any
Liquidation Proceeds allocable to recoveries of principal of Mortgage Loans
that are not yet Liquidated Mortgage Loans received during the calendar month
preceding the month of such Distribution Date, (e) with respect to each
Mortgage Loan that became a Liquidated Mortgage Loan during the calendar
month preceding the month of such Distribution Date, the amount of
Liquidation Proceeds allocable to principal received with respect to such
Mortgage Loan during the calendar month preceding the month of such
Distribution Date with respect to such Mortgage Loan and (f) all Principal
Prepayments received during the calendar month preceding such Distribution
Date.
PO Percentage: As to any Discount Mortgage Loan, a fraction (expressed
-------------
as a percentage) the numerator of which is the excess of the Required Coupon
over the Net Mortgage Rate of such Discount Mortgage Loan and the denominator
of which is the Required Coupon. As to any Premium Mortgage Loan, 0%.
Pool Stated Principal Balance: As to any Distribution Date, the
-----------------------------
aggregate Stated Principal Balances of all Mortgage Loans that were
Outstanding Mortgage Loans on the Due Date in the applicable month as to
which such determination is being made.
Premium Mortgage Loan: Any Mortgage Loan with a Net Mortgage Rate that
---------------------
is equal to or greater than the Required Coupon.
Prepayment Interest Shortfall: As to any Distribution Date, Mortgage
-----------------------------
Loan and Principal Prepayment, the amount, if any, by which one month's
interest at the related Mortgage Rate (net of the Master Servicing Fee) on
such Principal Prepayment exceeds the amount of interest paid in connection
with such Principal Prepayment.
Primary Insurance Policy: Each policy of primary mortgage guaranty
------------------------
insurance or any replacement policy therefor with respect to any Mortgage
Loan, in each case issued by an insurer acceptable to FNMA or FHLMC.
Principal Only Certificates: As specified in the Preliminary Statement.
---------------------------
Principal Prepayment: Any payment or other recovery of principal on a
--------------------
Mortgage Loan (other than Liquidation Proceeds) which 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.
Principal Prepayment in Full: Any Principal Prepayment of the entire
----------------------------
principal balance of a Mortgage Loan.
Private Certificates: As specified in the Preliminary Statement.
--------------------
Pro Rata Share: As to any Distribution Date, the Subordinate Principal
--------------
Distribution Amount and any Class of Subordinate Certificates, the portion of
the Subordinate Principal Distribution Amount allocable to such Class, equal
to the product of the Subordinate Principal Distribution Amount on such
Distribution Date and a fraction, the numerator of which is the related Class
Certificate Balance thereof and the denominator of which is the aggregate of
the Class Certificate Balances of the Subordinate Certificates.
Prospectus: The Prospectus Supplement together with the related
----------
Prospectus dated March 20, 1997.
Prospectus Supplement: The Prospectus Supplement, dated March 20, 1997,
---------------------
relating to the offering of the Offered Certificates.
PTCE 95-60: As defined in Section 6.02.
----------
Purchase Price: As to any Defective Mortgage Loan repurchased on any
--------------
date pursuant to Sections 2.02, 2.03 or 2.08, an amount equal to the sum of (i)
the unpaid principal balance thereof and (ii) the unpaid accrued interest
thereon at the applicable Mortgage Interest Rate from the Due Date to which
interest was last paid by the Mortgagor to the first day of the month following
the month in which such Mortgage Loan became eligible to be repurchased;
provided, however, that if at the time of repurchase the Seller is the Master
- -------- -------
Servicer, the amount described in clause (ii) shall be computed at the Mortgage
Rate net of the Master Servicing Fee Rate.
Rating Agency: Each of the Rating Agencies specified in the Preliminary
-------------
Statement. If either such organization or a successor is no longer in
existence, "Rating Agency" shall be such nationally recognized statistical
rating organization, or other comparable Person, as is designed by the
Sponsor, notice of which designation shall be given to the Trustee.
References herein to a given rating or rating category of a Rating Agency
shall mean such rating category without giving effect to any modifiers.
Realized Loss: With respect to each Liquidated Mortgage Loan, an amount
-------------
(not less than zero or more than the Stated Principal Balance of the Mortgage
Loan) as of the date of such liquidation, equal to (i) the unpaid principal
balance of the Liquidated Mortgage Loan as of the date of such liquidation,
plus (ii) interest at the Net Mortgage Rate from the Due Date as to which
interest was last paid or advanced (and not reimbursed) to Certificateholders
up to the Due Date in the month in which Liquidation Proceeds are required to
be distributed on the Stated Principal Balance of such Liquidated Mortgage
Loan from time to time, minus (iii) the Liquidation Proceeds, if any,
received during the month in which such liquidation occurred, to the extent
applied as recoveries of interest at the Net Mortgage Rate and to principal
of the Liquidated Mortgage Loan. With respect to each Mortgage Loan which
has become the subject of a Deficient Valuation, if the principal amount due
under the related Mortgage Note has been reduced, the difference between the
principal balance of the Mortgage Loan outstanding immediately prior to such
Deficient Valuation and the principal balance of the Mortgage Loan as reduced
by the Deficient Valuation. With respect to each Mortgage Loan which has
become the subject of a Debt Service Reduction and any Distribution Date, the
amount, if any, by which the principal portion of the related Monthly Payment
has been reduced.
Record Date: The last day of the month (or if such last day is not a
-----------
Business Day, the Business Day immediately preceding such last day) next
preceding the month of the related Distribution Date.
Reference Bank: As defined in Section 5.09 hereof.
--------------
Refinanced Mortgage Loan: Any Mortgage Loan the proceeds of which were
------------------------
not used to purchase the related Mortgaged Property.
Regular Certificate: As specified in the Preliminary Statement.
-------------------
Relief Act: The Soldiers' and Sailors' Civil Relief Act of 1940, as
----------
amended.
Relief Act Reductions: With respect to any Distribution Date, for any
---------------------
Mortgage Loan as to which there has been a reduction in the amount of
interest collectible thereon for the most recently ended calendar month as a
result of the application of the Relief Act, the amount, if any, by which
(i) interest collectible on such Mortgage Loan for the most recently ended
calendar month is less than (ii) interest accrued pursuant to the Mortgage
Note on the same principal amount and for the same period as the interest
collectible on such Mortgage Loan for the most recently ended calendar month.
REMIC: A "real estate mortgage investment conduit" within the meaning
-----
of Section 860D of the Code.
REMIC Certificate Maturity Date: The "latest possible maturity date"
-------------------------------
of the Regular Certificates as that term is defined in Section 2.07.
REMIC Change of Law: Any proposed, temporary or final regulation,
-------------------
revenue ruling, revenue procedure or other official announcement or
interpretation relating to the REMIC and the REMIC Provisions issued after
the Closing Date.
REMIC Provisions: Provisions of the federal income tax law relating to
----------------
real estate mortgage investment conduits, which appear at Section 860A
through 860G of Subchapter M of Chapter 1 of the Code, and related
provisions, and regulations promulgated thereunder, as the foregoing may be
in effect from time to time as well as provisions of applicable state laws.
REO Proceeds: Proceeds, net of any related expenses of the Master
------------
Servicer, received in respect of any REO Property (including, without
limitation, proceeds from the rental of the related Mortgaged Property) which
are received prior to the final liquidation of such Mortgaged Property.
REO Property: A Mortgaged Property acquired by the Master Servicer on
------------
behalf of the Trust Fund through foreclosure or deed-in-lieu of foreclosure
in connection with a defaulted Mortgage Loan.
Request for Release: The Request for Release submitted by the Master
-------------------
Servicer to the Custodian on behalf of the Trustee, substantially in the form
of Exhibits H, as appropriate.
Required Coupon: 7.50% per annum.
---------------
Required Insurance Policy: With respect to any Mortgage Loan, any
-------------------------
insurance policy which is required to be maintained from time to time under
this Agreement in respect of such Mortgage Loan.
Reserve Interest Rate: As defined in Section 5.09(b).
---------------------
Residual Certificate: As specified in the Preliminary Statement.
--------------------
Responsible Officer: When used with respect to the Trustee, any officer
-------------------
in its corporate trust department or successor group.
Restricted Classes: As defined in Section 5.02(d).
------------------
Sale Agreement: With respect to Mortgage Loan #24794737, the Mortgage
--------------
Loan Sale and Servicing Agreement dated December 19, 1997, between the Seller
and NationsBanc Mortgage Capital Corporation, as purchaser, or, with respect
to all other Mortgage Loans, the Mortgage Loan Sale, and Servicing Agreement
dated March 13, 1997, between the Seller and NationsBanc Mortgage Capital
Corporation, as purchaser, with respect to the sale of the Mortgage Loans.
Seller: NationsBanc Mortgage Corporation, as seller of the Mortgage
------
Loans under the Sale Agreements as the context requires.
Senior Certificate: As specified in the Preliminary Statement.
------------------
Senior Credit Support Termination Date: The point of time at which the
--------------------------------------
Class Certificate Balances of all of the Subordinate Certificates are reduced
to zero.
Senior Percentage: With respect to any Distribution Date, the
-----------------
percentage carried six places rounded up, obtained by dividing the Class
Certificate Balance of the Senior Certificates (other than the Class A-8 and
Class P Certificates), immediately prior to such Distribution Date by the
aggregate of the Class Certificate Balances of all Classes of Certificates
(other than the Class P Certificates) immediately prior to such Distribution
Date.
Senior Prepayment Percentage: For any Distribution Date during the five
----------------------------
years beginning on the first Distribution Date, 100%. The Senior Prepayment
Percentage for any Distribution Date occurring on or after the fifth
anniversary of the first Distribution Date will, except as provided herein,
be as follows: for any Distribution Date in the first year thereafter, the
Senior Percentage plus 70% of the sum of the Class A-8 Percentage and the
Subordinate Percentage for such Distribution Date; for any Distribution Date
in the second year thereafter, the Senior Percentage plus 60% of the sum of
the Class A-8 Percentage and the Subordinate Percentage for such Distribution
Date; for any Distribution Date in the third year thereafter, the Senior
Percentage plus 40% of the sum of the Class A-8 Percentage and the Subordinate
Percentage for such Distribution Date; for any Distribution Date in the fourth
year thereafter, the Senior Percentage plus 20% of the sum of the Class A-8
Percentage and the Subordinate Percentage for such Distribution Date; and for
any Distribution Date thereafter, the Senior Percentage for such Distribution
Date (unless on any of the foregoing Distribution Dates the Senior Percentage
exceeds the initial Senior Percentage, in which case the Senior Prepayment
Percentage for such Distribution Date will once again equal 100%).
Notwithstanding the foregoing, no decrease in the Senior Prepayment Percentage
will occur unless both of the Senior Step Down Conditions are satisfied.
Senior Principal Distribution Amount: As to any Distribution Date, the
------------------------------------
sum of (i) the Senior Percentage of the applicable Non-PO Percentage of all
amounts described in clauses (a) through (d) of the definition of "Non-PO
Formula Principal Amount" for such Distribution Date, (ii) with respect to
each Mortgage Loan that became a Liquidated Mortgage Loan during the calendar
month preceding the month of such Distribution Date, the lesser of (x) the
Senior Percentage of the applicable Non-PO Percentage of the Stated Principal
Balance of such Mortgage Loan and (y) either (A) the Senior Prepayment
Percentage, if the Senior Prepayment Percentage is less than 100%, or, if the
Senior Prepayment Percentage equals 100%, the percentage obtained by dividing
the Senior Percentage by the sum of the Senior Percentage and the Class A-8
Percentage or (B) if an Excess Loss was sustained with respect to such
Liquidated Mortgage Loan during such prior calendar month, the Senior
Percentage of the applicable Non-PO Percentage of the portion of Liquidation
Proceeds that are allocable to principal received with respect to such
Mortgage Loan during such preceding calendar month, and (iii) the Senior
Prepayment Percentage of the applicable Non-PO Percentage of the amounts
described in clause (f) of the definition of "Non-PO Formula Principal
Amount" for such Distribution Date.
Senior Step Down Conditions: As of any Distribution Date as to which
---------------------------
any decrease in the Senior Prepayment Percentage applies, (i) the outstanding
principal balance of all Mortgage Loans (including, for this purpose, any
Mortgage Loans in foreclosure or any Mortgage Loans with respect to which the
related Mortgaged Property has been acquired by the Trust Fund) delinquent 60
days or more (averaged over the preceding six month period), as a percentage
of the aggregate Class Certificate Balance of the Subordinate Certificates
(averaged over the preceding six-month period), is not equal to or greater
than 50% or (ii) cumulative Realized Losses with respect to the Mortgage
Loans do not exceed (a) with respect to the Distribution Date on the fifth
anniversary of the first Distribution Date, 30% of the Original Subordinate
Certificate Balance, (b) with respect to the Distribution Date on the sixth
anniversary of the first Distribution Date, 35% of the Original Subordinate
Certificate Balance, (c) with respect to the Distribution Date on the seventh
anniversary of the first Distribution Date, 40% of the Original Subordinate
Certificate Balance, (d) with respect to the Distribution Date on the eighth
anniversary of the first Distribution Date, 45% of the Original Subordinate
Principal Balance and (e) with respect to the Distribution Date on the ninth
anniversary of the first Distribution Date, 50% of the Original Subordinate
Principal Balance.
Servicer: Any Person with which the Master Servicer has entered into
--------
a Servicing Agreement and which satisfies the requirements set forth therein.
Servicer Mortgage File: The items pertaining to a particular Mortgage
----------------------
Loan referred to in Exhibit M hereto, and any additional documents required
to be added to the Servicer Mortgage File pursuant to the Agreement.
Servicing Advances: All customary, reasonable and necessary "out of
------------------
pocket" costs and expenses incurred in the performance by the Master Servicer
of its servicing obligations, including, but not limited to (i) the
preservation, restoration and protection of a Mortgaged Property, (ii)
expenses reimbursable to the Master Servicer pursuant to Section 3.14 and any
enforcement or judicial proceedings, including foreclosures, (iii) the
management and liquidation of any REO Property and (iv) compliance with the
obligations under Section 3.12.
Servicing Agreement: Any servicing agreement between the Master
-------------------
Servicer and any Servicer relating to servicing and/or administration of
certain Mortgage Loans as provided in Section 3.02.
Servicing Officer: Any officer of the Master Servicer involved in, or
-----------------
responsible for, the administration and servicing of the Mortgage Loans whose
name appears on a list of servicing officers furnished to the Trustee by the
Master Servicer, as such list may from time to time be amended.
Special Hazard Coverage Termination Date: The point of time at which
----------------------------------------
the Special Hazard Loss Coverage Amount is reduced to zero.
Special Hazard Event: As to a Mortgaged Property, any loss on account
--------------------
of direct physical loss, exclusive of (i) any loss covered by a hazard policy
or a flood insurance policy maintained in respect of such Mortgaged Property
pursuant to Section 3.12 and (ii) any loss caused by or resulting from:
(a) (i) wear and tear, deterioration, rust or corrosion,
mold, wet or dry rot; inherent vice or latent defect; animals,
birds, vermin or insects; or
(ii) settling, subsidence, cracking, shrinkage, building
or expansion of pavements, foundations, walls, floors, roofs or
ceilings.
(b) errors in design, faulty workmanship or faulty materials,
unless the collapse of the property or a part thereof ensues and
then only for the ensuing loss;
(c) nuclear or chemical reaction or nuclear radiation or
radioactive or chemical contamination, all whether controlled or
uncontrolled, and whether such loss is direct or indirect,
proximate or remote or be in whole or in part caused by,
contributed to or aggravated by a peril insured against in the
Special Hazard Insurance Policy; or
(d) (i) hostile or warlike action in time of peace or war,
including action in hindering, combating or defending against an
actual, impending or expected attack (A) by any government or
sovereign power (de jure or de facto), or by any authority
maintaining or using military, naval or air forces; or (B) by
military, naval or air forces; or (C) by an agent of any such
government, power, authority or forces;
(ii) any weapon or war or facility for producing same
employing atomic fission, radioactive force or chemical or
biological contaminants, whether in time of peace or war; or
(iii) insurrection, rebellion, revolution, civil war,
usurped power or action taken by governmental authority in
hindering, combating or defending against such an occurrence,
seizure or destruction under quarantine or customs regulations,
confiscation by order of any government or public authority, or
risks of contraband or illegal transportation or trade.
Special Hazard Loss Coverage Amount: As to any Distribution Date, the
-----------------------------------
lesser of (a) the greatest of (i) 1% of the aggregate principal balance of
the Mortgage Loans, (ii) twice the principal balance of the largest Mortgage
Loan, and (iii) the aggregate principal balance of all Mortgage Loans secured
by Mortgaged Properties located in the single California five-digit postal
zip code having the highest aggregate principal balance of any zip code area,
all principal balances to be calculated as of the first day of the month
preceding such Distribution Date after giving effect to scheduled
installments of principal and interest on the Mortgage Loans then due,
whether or not paid and (b) the Initial Special Hazard Coverage Amount,
reduced (but not below zero) by the amount of Realized Losses in respect
of Special Hazard Mortgage Loans previously incurred during the period from
the Cut-Off Date through the last day of the month preceding the month of such
Distribution Date. The Special Hazard Loss Coverage Amount may be further
reduced from time to time below the amounts specified above with the written
consent of the Rating Agencies and without resulting in a downgrading to the
then current rating of the Certificates.
Special Hazard Mortgage Loan: Any Liquidated Mortgage Loan as to which
----------------------------
the ability to recover thereon was substantially impaired by reason of a
Special Hazard Event.
Sponsor: Tryon Mortgage Funding, Inc., a Delaware corporation, or its
-------
successor in interest, as sponsor of the Trust Fund.
Startup Day: The Closing Date.
-----------
Stated Principal Balance: As to any Mortgage Loan and date, the unpaid
------------------------
principal balance of such Mortgage Loan as of the Due Date immediately
preceding such date as specified in the amortization schedule at the time
relating thereto (before any adjustment to such amortization schedule by
reason of any moratorium or similar waiver or grace period) after giving
effect to any previous partial Principal Prepayments and Liquidation Proceeds
allocable to principal (other than with respect to any Liquidated Mortgage
Loan) and to the payment of principal due on such Due Date and irrespective
of any delinquency in payment by the related Mortgagor.
Subordinate Certificate: As specified in the Preliminary Statement.
-----------------------
Subordinate Percentage: As of any Distribution Date, 100% minus the sum
----------------------
of the Senior Percentage and the Class A-8 Percentage for such Distribution
Date.
Subordinate Prepayment Percentage: As to any Distribution Date, the
---------------------------------
Combined Prepayment Percentage minus the Class A-8 Prepayment Percentage for
such Distribution Date.
Subordinate Principal Distribution Amount: With respect to any
-----------------------------------------
Distribution Date, an amount equal to (A) the sum of (i) the Subordinate
Percentage of the applicable Non-PO Percentage of all amounts described in
clauses (a) through (d) of the definition of "Non-PO Formula Principal
Amount" for such Distribution Date, (ii) with respect to each Mortgage Loan
that became a Liquidated Mortgage Loan during the calendar month preceding
the month of such Distribution Date, the applicable Non-PO Percentage of the
portion of Liquidation Proceeds allocable to principal received with respect
to such Mortgage Loan during such preceding calendar month and remaining
after application thereof pursuant to clause (ii) of the definition of
Senior Principal Distribution Amount and clause (ii) of the definition of
Class A-8 Principal Distribution Amount, up to the Subordinate Percentage of
the applicable Non-PO Percentage of the Stated Principal Balance of such
Mortgage Loan and (iii) the Subordinate Prepayment Percentage of the applicable
Non-PO Percentage of the amounts described in clause (f) of the definition of
"Non-PO Formula Principal Amount" for such Distribution Date reduced by (B)
the amount of any payments in respect of Class P Deferred Amounts on the
related Distribution Date.
Subsidiary REMIC: As described in the Preliminary Statement.
----------------
Subsidiary REMIC Interest: Any one of the Subsidiary REMIC Regular
-------------------------
Interests or the Class R-I Certificates.
Subsidiary REMIC Regular Interest: Any one of the uncertificated
---------------------------------
"regular interests" in the Subsidiary REMIC described in the Preliminary
Statement.
Substitute Mortgage Loan: A Mortgage Loan substituted by the Seller for
------------------------
a Defective Mortgage Loan which must, on the date of such substitution, be
approved by the Depositor and (i) have a Stated Principal Balance, after
deduction of the principal portion of the Monthly Payment due in the month of
substitution, not in excess of, and not more than 10% less than, the Stated
Principal Balance of the Defective Mortgage Loan; (ii) be accruing interest
at a rate no lower than and not more than 2% per annum higher than, that of
the Defective Mortgage Loan; (iii) have a Loan-to-Value Ratio not higher than
that of the Defective Mortgage Loan; (iv) have a remaining term to maturity
not greater than (and not more than one year less than) that of the Defective
Mortgage Loan and (v) comply with each representation and warranty set forth
in the Sale Agreement that relates to the Defective Mortgage Loan. More than
one Substitute Mortgage Loan may be substituted for a Defective Mortgage Loan
if such Substitute Mortgage Loans meet the foregoing attributes in the
aggregate.
Substitution Adjustment Amount: As defined in Section 2.03(c).
------------------------------
Tax Matters Person: The person designated as "tax matters person" in
------------------
the manner provided under Treasury regulations Section 1.860F-4(d) and
temporary Treasury regulation Section 301.6231(a)(7)-IT. Initially, the Tax
Matters Person shall be the Master Servicer.
Tax Matters Person Certificate: Each Class R Certificate with a
------------------------------
denomination of $1.00.
Trust Fund: The corpus of the trust created by this Agreement, to the
----------
extent described herein, consisting of the Mortgage Loans, such assets as
shall from time to time be identified as deposited in the Collection Account
or the Distribution Account in accordance with this Agreement, property which
secured a Mortgage Loan and which has been acquired by foreclosure or deed in
lieu of foreclosure or otherwise, the Primary Insurance Policies and any
other Required Insurance Policy.
Trustee: PNC Bank, National Association, and its successors and, if a
-------
successor trustee is appointed hereunder, such successor, as trustee.
Trustee Fee: As to any Distribution Date, an amount equal to one
-----------
twelfth of the Trustee Fee Rate multiplied by the Pool Stated Principal
Balance with respect to such Distribution Date.
Trustee Fee Rate: With respect to each Mortgage Loan, 0.01% per annum.
----------------
Underwriter: Each of NationsBanc Capital Markets, Inc. and Salomon
-----------
Brothers Inc, as underwriters of the public offering of the Offered
Certificates.
Voting Rights: The portion of the voting rights of all of the
-------------
Certificates which is allocated to any Certificate. As of any date of
determination, (a) 1% of all Voting Rights shall be allocated to each Class
of Notional Amount Certificates and the Residual Certificates (such Voting
Rights to be allocated among the holders of Certificates of each such Class
in accordance with their respective Percentage Interests), and (b) the
remaining Voting Rights shall be allocated among Holders of the remaining
Classes of Certificates in proportion to the Certificate Balances of their
respective Certificates on such date.
Section 1.02. Interest Calculations. All calculations of interest will
---------------------
be made on a 360-day year consisting of twelve 30-day months. All dollar
amounts calculated hereunder shall be rounded to the nearest penny with one-
half of one penny being rounded down.
ARTICLE II
Conveyance of Mortgage Loans;
Original Issuance of Certificates
Section 2.01. Conveyance of Mortgage Loans.
----------------------------
(a) The Sponsor, concurrently with the execution and delivery hereof,
hereby sells, transfers, assigns, sets over and otherwise conveys to the
Trustee for the benefit of the Certificateholders, without recourse, all the
right, title and interest of the Sponsor in and to the Mortgage Loans,
including all interest and principal received on or with respect to the
Mortgage Loans (other than payments of principal and interest due and payable
on the Mortgage Loans on or before the Cut-off Date), together with the
Sponsor's rights under the Sale Agreements and Assignments, and the
representations and warranties of the Seller thereunder, together with all
rights of the Sponsor to require the Seller to cure any breach of a
representation or warranty made in each Sale Agreement by the Seller or to
repurchase or substitute for any affected Mortgage Loan in accordance
herewith and the applicable Sale Agreement.
(b) In connection with such transfer and assignment, the Sponsor has
delivered or caused to be delivered to the Custodian on behalf of the
Trustee, for the benefit of the Certificateholders the following documents or
instruments with respect to each Mortgage Loan so assigned:
(i) the original Mortgage Note, endorsed by manual or
facsimile signature in the following form: "Pay to the order of
PNC Bank, National Association, as Trustee", without recourse, with
all intervening endorsements showing a complete chain of
endorsement from the originator to the Person endorsing it to the
Trustee (each such endorsement being sufficient to transfer all
right, title and interest of the party so endorsing, as noteholder
or assignee thereof, in and to that Mortgage Note);
(ii) except as provided below, the original recorded Mortgage
with evidence of a recording thereon, or if any such Mortgage has
not been returned from the applicable recording office or has been
lost, or if such public recording office retains the original
recorded Mortgage, a copy of such Mortgage certified by the Seller
as being a true and correct copy of the Mortgage;
(iii) a duly executed Assignment of Mortgage (which may be
included in a blanket assignment or assignments), together with,
except as provided below, originals of all interim recorded
assignments of such mortgage or a copy of such interim assignment
certified by the Seller as being a true and complete copy of the
original recorded intervening assignment of Mortgage (each such
assignment, when duly and validly completed, to be in recordable
form and sufficient to effect the assignment of and transfer to
the assignee thereof, under the Mortgage to which the assignment
relates); provided that, if the related Mortgage has not been
--------
returned from the applicable public recording office, such assignment
of the Mortgage may exclude the information to be provided by the
recording office;
(iv) the originals of all assumption, modification,
consolidation or extension agreements, if any, with evidence of
recording thereon, if any;
(v) the original or duplicate original mortgagee title
insurance policy and all riders thereto;
(vi) the original of any guarantee executed in connection
with the Mortgage Note; and
(vii) the original of any security agreement, chattel
mortgage or equivalent document executed in connection with the
Mortgage.
In the event that in connection with any Mortgage Loan the Sponsor
cannot deliver (a) the Mortgage, (b) all interim recorded assignments, (c)
all assumption, modification, consolidation or extension agreements, if any,
or (d) the lender's title policy (together with all riders thereto)
satisfying the requirements of clause (ii), (iii), (iv) or (v) above,
respectively, concurrently with the execution and delivery hereof because
such document or documents have not been returned from the applicable public
recording office in the case of clause (ii), (iii) or (iv) above, or because
the title policy has not been delivered to either the Master Servicer or the
Sponsor by the applicable title insurer in the case of clause (v) above, the
Sponsor shall promptly deliver or cause to be delivered to the Trustee or the
Custodian on behalf of the Trustee, in the case of clause (ii), (iii) or (iv)
above, such Mortgage, such interim assignment or such assumption,
modification, consolidation or extension agreement, as the case may be, with
evidence of recording indicated thereon upon receipt thereof from the public
recording office, but in no event shall any such delivery of any such
documents or instruments be made later than one year following the Closing
Date, unless, in the case of (ii), (iii) or (iv) above, there has been a
continuing delay at the applicable recording office or, in the case of (v),
there has been a continuing delay at the applicable insurer and the Sponsor
has delivered the Officer's Certificate to such effect to the Trustee. The
Sponsor shall forward or cause to be forwarded to the Trustee (a) from time to
time additional original documents evidencing an assumption or modification of
a Mortgage Loan and (b) any other documents required to be delivered by the
Sponsor or the Master Servicer to the Trustee or the Custodian on the
Trustee's behalf. In the event that the original Mortgage is not delivered and
in connection with the payment in full of the related Mortgage Loan the
public recording office requires the presentation of a "lost instruments
affidavit and indemnity" or any equivalent document, because only a copy
of the Mortgage can be delivered with the instrument of satisfaction or
reconveyance, the Master Servicer shall execute and deliver or cause to be
xecuted and delivered, on behalf of the Trust Fund, such a document to the
public recording office.
As promptly as practicable subsequent to such transfer and assignment,
and in any event, within thirty (30) days thereafter, the Master Servicer
shall (i) affix the Trustee's name to each Assignment of Mortgage, as the
assignee thereof, (ii) cause such assignment to be in proper form for record-
ing in the appropriate public office for real property records within thirty
(30) days of the Closing Date and (iii), at the Sponsor's expense, cause to
be delivered for recording in the appropriate public office for real property
records the Assignments of the Mortgages to the Trustee, except that, with
respect to any Assignment of a Mortgage as to which the Master Servicer has
not received the information required to prepare such assignment in
recordable form, the Master Servicer's obligation to do so and to deliver the
same for such recording shall be as soon as practicable after receipt of such
information and in any event within thirty (30) days after the receipt
thereof.
In the case of Mortgage Loans that have been prepaid in full as of the
Closing Date, the Sponsor, in lieu of delivering the above documents to the
Trustee or the Custodian on the Trustee's behalf, will cause the Master
Servicer to deposit in the Collection Account the portion of such payment
that is required to be deposited in the Collection Account pursuant to
Section 3.08.
Section 2.02. Acceptance by the Trustee of the Mortgage Loans. The
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Trustee acknowledges receipt of the documents referred to in Section 2.01,
subject to the examination referred to below, and declares that it or the
Custodian as its agent holds and will hold such documents and the other
documents delivered to it constituting the Mortgage Files, and that it holds
or will hold such other assets as are included in the Trust Fund, in trust
for the exclusive use and benefit of all present and future Certificate-
holders.
The Trustee agrees, for the benefit of Certificateholders, to review, or
cause the Custodian to review, each Mortgage File within 90 days after the
execution and delivery of this Agreement. If, in the course of such review,
the Trustee or the Custodian finds any document constituting a part of a
Mortgage File which does not meet the requirements of Section 2.01 or is
omitted from such Mortgage File, the Trustee shall promptly so notify the
Master Servicer or shall cause the Custodian to promptly so notify the
Master Servicer, the Seller and the Sponsor. In performing any such
review, the Trustee or the Custodian may conclusively rely on the Seller as
to the purported genuineness of any such document and any signature thereon.
It is understood that the scope of the Trustee's or the Custodian's review of
the Mortgage Files is limited solely to confirming that the documents listed
in Section 2.01 have been received and further confirming that any and
all documents delivered pursuant to Section 2.01 have been executed and
relate to the Mortgage Loans identified in the Mortgage Loan Schedule.
Neither Trustee nor the Custodian shall have any responsibility for determining
whether any document is valid and binding, whether the text of any assignment
or endorsement is in proper or recordable form, whether any document has
been recorded in accordance with the requirements of any applicable
jurisdiction, or whether a blanket assignment is permitted in any applicable
jurisdiction. In accordance with the terms and provisions of Subsection
7.03 of each Sale Agreement, the Seller shall promptly correct or cure such
defect within 90 days from the date it was so notified of such defect and,
if the Seller does not correct or cure such defect within such period,
the Seller shall either (a) substitute for the related Mortgage Loan a
Substitute Mortgage Loan, which substitution shall be accomplished in the
manner and subject to the conditions set forth in Section 2.03(c) and must
occur within the 90-day period following the Closing Date, or (b) purchase
such Mortgage Loan from the Trustee at the Purchase Price for such Mortgage
Loan, in either case within 90 days from the date the Seller was notified
of such defect in writing; provided, however, that in no event shall such
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substitution or purchase occur more than one year from the Closing Date,
unless, in the case of any document referred to in Section 2.01(b)(ii),
(iii) or (iv), such defect is due to a delay at the applicable recording
office or, in the case of any document referred to in Section 2.01(b)(v),
such defect is due to a delay at the applicable insurer, and the Seller has
delivered the Officer's Certificate to such effect to the Trustee in accordance
with Subsection 7.03 of the Sale Agreement.
The Trustee shall retain or shall cause the Custodian to retain
possession and custody of each Mortgage File in accordance with and subject
to the terms and conditions set forth herein. The Master Servicer shall
promptly deliver to the Trustee, upon the execution or, in the case of
documents requiring recording, receipt thereof, the originals of such other
documents or instruments constituting the Mortgage File as come into the
possession of the Master Servicer from time to time.
It is understood and agreed that the obligation of the Seller to
substitute for or to purchase any Mortgage Loan which does not
meet the requirements of Section 2.01 shall constitute the sole remedy
respecting such defect available to the Trustee, the Sponsor and any
Certificateholder against the Seller.
The Trustee or the Custodian, on behalf of the Trustee, shall be under
no duty or obligation (i) to inspect, review or examine any such documents,
instruments, certificates or other papers to determine that they are genuine,
enforceable, or appropriate for the represented purpose or that they are
other than what they purport to be on their face or (ii) to determine whether
any Trustee's Mortgage File should include any of the documents specified in
Section 2.01(b)(iv), (vi) and (vii).
Section 2.03. Representations, Warranties and Covenants of the Seller
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and the Master Servicer. (a) The Master Servicer hereby makes the
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representations and warranties set forth in Schedule I hereto, and by this
reference incorporated herein, to the Sponsor and the Trustee, as of the
Closing Date.
(b) The Seller has made certain representations and warranties with
respect to the Mortgage Loans in Subsection 7.01 of each Sale Agreement to
NationsBanc Mortgage Capital Corporation and, such representations and
warranties (together with any rights to cure breaches with respect thereto)
have been assigned to the Sponsor by NationsBanc Mortgage Capital Corporation
pursuant to the Assignments. The Sponsor hereby assigns such representations
and warranties (together with any rights to cure breaches with respect
thereto) to the Trustee.
(c) Upon discovery by any of the parties hereto of a breach of a
representation or warranty made pursuant to Subsection 7.01 of either Sale
Agreement that materially and adversely affects the value of any Mortgage
Loan or the interests of the Certificateholders in any Mortgage Loan, the
party discovering such breach shall give prompt notice thereof to the other
parties. In accordance with the terms and provisions of Subsection 7.03 of
each Sale Agreement, the Seller shall within 90 days of the earlier of its
discovery or its receipt of written notice from any party of a breach of any
representation or warranty made pursuant to Subsection 7.01 of the related
Sale Agreement which materially and adversely affects the value of any
Mortgage Loan or interests of the Certificateholders in any Mortgage Loan, it
shall cure such breach in all material respects, and if such breach is not so
cured, shall, (i) if such action is taken within the 90-day period following
the Closing Date, remove such Mortgage Loan from the Trust Fund and
substitute in its place a Substitute Mortgage Loan, in the manner and subject
to the conditions set forth in this Section 2.03(c); or (ii) purchase the
affected Mortgage Loan or Mortgage Loans from the Trustee at the Purchase
Price in the manner set forth below.
The Seller shall deliver to the Trustee for the benefit of the Certifi-
cateholders the Mortgage Note, the Mortgage, the related Assignment of
Mortgage, and such other documents and agreements as are otherwise required
by Section 2.01, with the Mortgage Note endorsed and the Mortgage assigned as
required by Section 2.01. No substitution is permitted to be made in any
calendar month after the Determination Date for such month. Monthly Payments
due with respect to Substitute Mortgage Loans in the month of substitution
shall not be part of the Trust Fund and will be retained by the Seller. For
the month of substitution, distributions to Certificateholders will include
the Monthly Payment due on any Defective Mortgage Loan for such month and
thereafter the Seller shall be entitled to retain all amounts received in
respect of such Defective Mortgage Loan.
The Master Servicer shall amend the Mortgage Loan Schedule for the
benefit of the Certificateholders to reflect the removal of such Defective
Mortgage Loan and the substitution of the Substitute Mortgage Loan or Loans
and the Master Servicer shall deliver the amended Mortgage Loan Schedule to
the Trustee and the Custodian. Upon such substitution, the Substitute
Mortgage Loan or Loans shall be subject to the terms of this Agreement in all
respects, and the Seller shall be deemed to have made with respect to such
Substitute Mortgage Loan or Loans, as of the date of substitution, the repre-
sentations and warranties made pursuant to Subsection 7.01 of the Sale
Agreement that related to the Defective Mortgage Loan with respect to such
Substitute Mortgage Loan to the Trustee as of the date of its inclusion in
the Trust Fund. Upon any such substitution and the deposit to the Collection
Account of the amount required to be deposited therein in connection with
such substitution as described in the following paragraph and receipt of a
Request for Release in the form of Exhibit H hereto, the Trustee shall
release, or shall direct the Custodian to release, the Mortgage File held for
the benefit of the Certificateholders relating to such Defective Mortgage
Loan to the Seller and shall execute and deliver at the Seller's direction
such instruments of transfer or assignment prepared by the Seller, in each
case without recourse, as shall be necessary to vest title in the Seller, or
its designee, the Trustee's interest in any Defective Mortgage Loan sub-
stituted for pursuant to this Section 2.03(c).
For any month in which the Seller substitutes one or more Substitute
Mortgage Loans for one or more Defective Mortgage Loans, the Master Servicer
will determine the amount (if any) by which the aggregate principal balance
of all such Substitute Mortgage Loans as of the date of substitution is less
than the aggregate Stated Principal Balance of all such Defective Mortgage
Loans (after application of the scheduled principal portion of the
Monthly Payments due in the month of substitution). The amount of such
shortage (the "Substitution Adjustment Amount") plus an amount equal to the
------------------------------
aggregate of any unreimbursed Advances and Servicer Advances with respect
to such Defective Mortgage Loans shall be deposited into the Collection
Account by the Seller on or before the Distribution Account Deposit Date
for the Distribution Date in the month succeeding the calendar month during
which the related Mortgage Loan became required to be purchased or replaced
hereunder.
In the event that the Seller shall have repurchased a Mortgage Loan, the
Purchase Price therefor shall be deposited in the Collection Account pursuant
to Section 3.08(b)(vi) on or before the Distribution Account Deposit Date for
the Distribution Date in the month following the month during which the
Seller became obligated to repurchase or substitute for such Mortgage Loan
and upon such deposit of the Purchase Price, and receipt of a Request for
Release in the form of Exhibit H hereto, the Custodian, on behalf of the
Trustee, shall release the related Mortgage File held for the benefit of the
Certificateholders to the Seller, and the Trustee shall execute and deliver
at the Seller's direction such instruments of transfer or assignment prepared
by the Seller, in each case without recourse, as shall be necessary to
transfer title from the Trustee. It is understood and agreed that the
obligation under this Agreement of any Person to cure, repurchase or
substitute for any Mortgage Loan as to which a breach has occurred and is
continuing shall constitute the sole remedy against the Seller respecting
such breach available to Certificateholders, the Sponsor or the Trustee on
their behalf.
The representations and warranties made or assigned pursuant to this
Section 2.03 shall survive delivery of the respective Mortgage Files to the
Trustee for the benefit of the Certificateholders.
Section 2.04. Representations and Warranties of the Sponsor as to the
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Mortgage Loans. The Sponsor hereby represents and warrants to the Trustee
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with respect to each Mortgage Loan as of the date hereof or such other date
set forth herein that as of the Closing Date, and following the transfer of
the Mortgage Loans to it by NationsBanc Mortgage Capital Corporation, the
Sponsor had good title to the Mortgage Loans and the Mortgage Notes were
subject to no offsets, defenses or counterclaims.
The Sponsor hereby assigns, transfers and conveys to the Trustee all of
its rights with respect to the Mortgage Loans including, without limitation,
the representations and warranties of the Seller made pursuant to Subsections
7.01 and 7.02 of the Sale Agreements, together with all rights of the Sponsor
to require the Seller to cure any breach thereof or to repurchase or
substitute for any affected Mortgage Loan in accordance with the Sale
Agreements, such rights having been assigned to the Sponsor by NationsBanc
Mortgage Capital Corporation pursuant to the Assignments.
It is understood and agreed that the representations and warranties set
forth in this Section 2.04 shall survive delivery of the Mortgage Files to
the Trustee. Upon discovery by the Sponsor or the Trustee of a breach of any
of the foregoing representations and warranties set forth in this Section
2.04 (referred to herein as a "breach"), which breach materially and
adversely affects the interest of the Certificateholders, the party
discovering such breach shall give prompt written notice to the others and to
each Rating Agency.
Section 2.05. Designation of Interests in REMIC. The Preliminary
---------------------------------
Statement sets forth the designations for federal income tax purposes of all
interests created hereby. The "tax matters person" with respect to each
REMIC hereunder shall be the Master Servicer and the Master Servicer shall
hold the Tax Matters Person Certificate. Each REMIC's fiscal year shall be
the calendar year.
Section 2.06. Designation of Start-up Day. The Closing Date is hereby
---------------------------
designated as the "start-up day" of the Master and Subsidiary REMICs within
the meaning of Section 860G(a)(9) of the Code.
Section 2.07. REMIC Certificate Maturity Date. Solely for purposes of
-------------------------------
satisfying Section 1.860G-1(a)(4)(iii) of the Treasury Regulations, the
"latest possible maturity date" of each Class of uncertificated interests
(other than the Class R-I Certificates) in the Subsidiary REMIC and the
Regular Certificates is the Distribution Date in February, 2027.
Section 2.08. Repurchases for Tax Violations. Upon discovery by the
------------------------------
Sponsor, the Seller, the Master Servicer, or the Trustee that any Mortgage
Loan does not constitute a "qualified mortgage" within the meaning of Section
860G(a)(3) of the Code, the party discovering such fact shall promptly (and
in any event within five (5) Business Days of discovery) give written notice
thereof to the other parties. In connection therewith, the Trustee shall
require the Seller, at the Seller's option, to either (i) substitute, if the
conditions in Section 2.03(c) with respect to substitutions are satisfied, a
Substitute Mortgage Loan for the affected Mortgage Loan, or (ii) purchase the
affected Mortgage Loan within 60 days of such discovery in the same manner as
it would a Mortgage Loan for a breach of representation or warranty made
pursuant to Subsection 7.01 of the applicable Sale Agreement and in
accordance with Section 2.03. The Trustee shall reconvey to the Seller the
Mortgage Loan to be released pursuant hereto in the same manner, and on the
same terms and conditions, as it would a Mortgage Loan purchased for breach
of a representation or warranty pursuant to Subsection 7.01 the Sale
Agreement and in accordance with Section 2.03.
Section 2.09. Execution and Delivery of Certificates. The Trustee
--------------------------------------
acknowledges the transfer and assignment to it of the Trust Fund and, concur-
rently with such transfer and assignment, has executed and delivered to or
upon the order of the Sponsor, the Certificates in authorized denominations
evidencing directly or indirectly the entire ownership of the Trust Fund.
The Trustee agrees to hold the Trust Fund and exercise the rights referred to
above for the benefit of all present and future Holders of the Certificates
and to perform the duties set forth in this Agreement to the best of its
ability, to the end that the interests of the Holders of the Certificates may
be adequately and effectively protected.
ARTICLE III
Administration and Servicing
of Mortgage Loans
Section 3.01. Master Servicer to Service Mortgage Loans. For and on
-----------------------------------------
behalf of the Certificateholders, the Master Servicer shall service and
administer the Mortgage Loans in accordance with the terms of this Agreement,
Customary Servicing Procedures, applicable law and the terms of the Mortgage
Notes and Mortgages. In connection with such servicing and administration,
the Master Servicer shall have full power and authority, acting alone and/or
through Servicers as provided in Section 3.02, 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 including but not limited to, the power and
authority, subject to the terms hereof, (i) to execute and deliver, on behalf
of the Certificateholders and the Trustee, customary consents or waivers and
other instruments and documents, (ii) to consent to transfers of any
Mortgaged Property and assumptions of the Mortgage Notes and related
Mortgages (but only in the manner provided in this Agreement), (iii) to
collect any Insurance Proceeds and other Liquidation Proceeds, and (iv) to
effectuate foreclosure or other conversion of the ownership of the Mortgaged
Property securing any Mortgage Loan. The Master Servicer shall represent and
protect the interests of the Trust Fund in the same manner as it protects its
own interests in mortgage loans in its own portfolio in any claim, proceeding
or litigation regarding a Mortgage Loan and shall not make or permit any
modification, waiver or amendment of any term of any Mortgage Loan, except as
provided pursuant to Section 3.21. Without limiting the generality of the
foregoing, the Master Servicer, in its own name or in the name of any
Servicer or the Sponsor and the Trustee, is hereby authorized and empowered
by the Sponsor and the Trustee, when the Master Servicer or the Servicer, as
the case may be, believes it appropriate in its reasonable judgment, to
execute and deliver, on behalf of the Trustee, the Sponsor, the Certifi-
cateholders or any of them, any and all instruments of satisfaction or
cancellation, or of partial or full release or discharge, and all other
comparable instruments, with respect to the Mortgage Loans, and with respect
to the Mortgaged Properties held for the benefit of the Certificateholders.
The Master Servicer shall prepare and deliver to the Sponsor and/or the
Trustee such documents requiring execution and delivery by either or both of
them as are necessary or appropriate to enable the Master Servicer to service
and administer the Mortgage Loans to the extent that the Master Servicer is
not permitted to execute and deliver such documents pursuant to the preceding
sentence. Upon receipt of such documents, the Sponsor and/or the Trustee
shall promptly execute such documents and deliver them to the Master
Servicer.
In accordance with the standards of the preceding paragraph, the Master
Servicer shall advance or cause to be advanced funds as necessary for the
purpose of effecting the payment of taxes and assessments on the Mortgaged
Properties, which Servicing Advances shall be reimbursable in the first
instance from related collections from the Mortgagors pursuant to Section
3.09, and further as provided in Section 3.11. The costs incurred by the
Master Servicer, if any, in effecting the timely payments of taxes and
assessments on the Mortgaged Properties and related insurance premiums shall
not, for the purpose of calculating monthly distributions to the
Certificateholders, be added to the Stated Principal Balances of the related
Mortgage Loans, notwithstanding that the terms of such Mortgage Loans so
permit.
The relationship of the Master Servicer (and of any successor to the
Master Servicer as master servicer under this Agreement) 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.
Section 3.02. Subservicing; Enforcement of the Obligations of
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Servicers. (a) The Master Servicer may arrange for the subservicing of any
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Mortgage Loan by a Servicer pursuant to a Servicing Agreement; provided,
--------
however, that such subservicing arrangement and the terms of the related
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Servicing Agreement must provide for the servicing of such Mortgage Loans in
a manner consistent with the servicing arrangements contemplated hereunder.
Notwithstanding the provisions of any Servicing Agreement, any of the
provisions of this Agreement relating to agreements or arrangements between
the Master Servicer or a Servicer or reference to actions taken through a
Master Servicer or otherwise, the Master Servicer shall remain obligated and
liable to the Sponsor, the Trustee and the Certificateholders for the
servicing and administration of the Mortgage Loans in accordance with the
provisions of this Agreement without diminution of such obligation or
liability by virtue of such servicing agreements or arrangements or by virtue
of indemnification from the Servicer and to the same extent and under the
same terms and conditions as if the Master Servicer alone were servicing and
administering the Mortgage Loans. All actions of each Servicer performed
pursuant to the related Servicing Agreement shall be performed as agent of
the Master Servicer with the same force and effect as if performed directly
by the Master Servicer.
(b) For purposes of this Agreement, the Master Servicer shall be deemed
to have received any collections, recoveries or payments with respect to the
Mortgage Loans that are received by a Servicer regardless of whether such
payments are remitted by the Servicer to the Master Servicer.
(c) As part of its servicing activities hereunder, the Master Servicer,
for the benefit of the Trustee and the Certificateholders, shall use its
best reasonable efforts to enforce the obligations of each Servicer
under the related Servicing Agreement, to the extent that the non-
performance of any such obligation would have material and adverse effect
on a Mortgage Loan. Such enforcement, including, without limitation, the
legal prosecution of claims, termination of Servicing Agreements and the
pursuit of other appropriate remedies, shall be in such form and carried
out to such an extent and at such time as the Master Servicer, in its
good faith business judgment, would require were it the owner of the
related Mortgage Loans. The Master Servicer shall pay the costs of such
enforcement at its own expense, and shall be reimbursed therefor only (i) from
a general recovery resulting from such enforcement to the extent, if any, that
such recovery exceeds all amounts due in respect of the related Mortgage
Loan or (ii) from a specific recovery of costs, expenses or attorneys
fees against the party against whom such enforcement is directed.
(d) Any Servicing Agreement entered into by the Master Servicer shall
provide that it may be assumed or terminated by the Trustee if the Trustee
has assumed the duties of the Master Servicer or any successor Master
Servicer, without cost or obligation to the assuming or terminating party or
the Trust Fund, upon the assumption by such party of the obligations of the
Master Servicer pursuant to Section 7.02.
Any Servicing Agreement, and any other transactions or services relating
to the Mortgage Loans involving a Servicer shall be deemed to be between the
Master Servicer and such Servicer alone, and the Trustee and the
Certificateholders shall not be deemed parties thereto and shall have no
claims or rights of action against, rights, obligations, duties or
liabilities to or with respect to the Servicer or its officers, directors or
employees, except as set forth in Section 3.01.
Section 3.03. Fidelity Bond; Errors and Omissions Insurance. The
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Master Servicer shall maintain, at its own expense, a blanket fidelity bond
and an errors and omissions insurance policy, with broad coverage on all
officers, employees or other persons acting in any capacity requiring such
persons to handle funds, money, documents or papers relating to the Mortgage
Loans ("Master Servicer Employees"). These policies must insure the Master
Servicer against losses resulting from dishonest or fraudulent acts committed
by the Master Servicer's personnel, any employees of outside firms that
provide data processing services for the Master Servicer, and temporary
contract employees or student interns. Such fidelity bond shall also protect
and insure the Master Servicer against losses in connection with the release
or satisfaction of a Mortgage Loan without having obtained payment in full of
the indebtedness secured thereby. No provision of this Section 3.03
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 coverage under any such bond and
insurance policy shall be at least equal to the corresponding amounts
required by FNMA in the FNMA Servicing Guide or by FHLMC in the FHLMC
Sellers' & Servicers' Guide, as amended or restated from time to time,
or in an amount as may be permitted to the Master Servicer by express
waiver of FNMA or FHLMC.
Section 3.04. Access to Certain Documentation. The Master Servicer
-------------------------------
shall provide to the OTS and the FDIC and to comparable regulatory
authorities supervising Holders of Subordinated Certificates and the
examiners and supervisory agents of the OTS, the FDIC and such other
authorities, access to the documentation regarding the Mortgage Loans
required by applicable regulations of the OTS and the FDIC. Such access
shall be afforded without charge, but only upon reasonable and prior written
request and during normal business hours at the offices designated by the
Master Servicer. Nothing in this Section 3.04 shall limit the obligation of
the Master Servicer to observe any applicable law and the failure of the
Master Servicer to provide access as provided in this Section 3.04 as a
result of such obligation shall not constitute a breach of this Section 3.04.
Section 3.05. Maintenance of Primary Mortgage Insurance Policy; Claims.
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With respect to each Mortgage Loan with an LTV in excess of 80%, the Master
Servicer shall, without any cost to the Trust Fund maintain or cause the
Mortgagor to maintain in full force and effect a Primary Insurance Policy
insuring that portion of the Mortgage Loan in excess of a percentage in
conformity with FNMA requirements. The Master Servicer shall pay or shall
cause the Mortgagor to pay the premium thereon on a timely basis, at least
until the LTV of such Mortgage Loan is reduced to 80%. In the event that
such Primary Insurance Policy shall be terminated, the Master Servicer shall
obtain from another insurer a comparable replacement policy, with a total
coverage equal to the remaining coverage of such terminated Primary Insurance
Policy. If the insurer shall cease to be an insurer acceptable to FNMA, the
Master Servicer shall notify the Trustee in writing, it being understood that
the Master Servicer shall in no event have any responsibility or liability
for any failure to recover under the Primary Insurance Policy for such
reason. If the Master Servicer determines that recoveries under the Primary
Insurance Policy are jeopardized by the financial condition of the insurer,
the Master Servicer shall obtain from another insurer which meets the
requirements of this Section 3.05 a replacement insurance policy. The Master
Servicer shall not take any action which would result in noncoverage under
any applicable Primary Insurance Policy of any loss which, but for the
actions of the Master Servicer would have been covered thereunder. In
connection with any assumption or substitution agreement entered into or to
be entered into pursuant to Section 3.13, the Master Servicer shall promptly
notify the insurer under the related Primary Insurance Policy, if any, of
such assumption or substitution of liability in accordance with the terms of
such Primary Insurance Policy and shall take all actions which may be required
by such insurer as a condition to the continuation of coverage under such
Primary Insurance Policy. If such Primary Insurance Policy is terminated as
a result of such assumption or substitution of liability, the Master Servicer
shall obtain a replacement Primary Insurance Policy as provided above.
In connection with its activities as master servicer, the Master
Servicer agrees to prepare and present, on behalf of itself, the Trustee and
the Certificateholders, claims to the insurer under any Primary Insurance
Policy in a timely fashion in accordance with the terms of such Primary
Insurance Policy and, in this regard, to take such action as shall be
necessary to permit recovery under any Primary Insurance Policy respecting a
defaulted Mortgage Loan. Pursuant to Section 3.09(a), any amounts collected
by the Master Servicer under any Primary Insurance Policy shall be deposited
in the Escrow Account, subject to withdrawal pursuant to Section 3.09(b).
Section 3.06. Rights of the Sponsor and the Trustee in Respect of the
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Master Servicer. The Sponsor may, but is not obligated to, enforce the
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obligations of the Master Servicer hereunder and may, but is not obligated
to, perform, or cause a designee to perform, any defaulted obligation of the
Master Servicer hereunder and in connection with any such defaulted
obligation to exercise the related rights of the Master Servicer hereunder;
provided that the Master Servicer shall not be relieved of any of its
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obligations hereunder by virtue of such performance by the Sponsor or its
designee. Neither the Trustee nor the Sponsor shall have any responsibility
or liability for any action or failure to act by the Master Servicer nor
shall the Trustee or the Sponsor be obligated to supervise the performance of
the Master Servicer hereunder or otherwise.
Section 3.07. Trustee to Act as Master Servicer. In the event that the
---------------------------------
Master Servicer shall for any reason no longer be the Master Servicer
hereunder (including by reason of an Event of Default), the Trustee or its
successor shall thereupon assume all of the rights and obligations of the
Master Servicer hereunder arising thereafter (except that the Trustee shall
not be (i) liable for losses of the Master Servicer pursuant to Section 3.12
or any acts or omissions of the predecessor Master Servicer hereunder, (ii)
obligated to make Advances if it is prohibited from doing so by applicable
law, (iii) obligated to effectuate repurchases or substitutions of Mortgage
Loans hereunder, including but not limited to repurchases or substitutions
pursuant to Section 2.02 or 2.03, or (iv) deemed to have made any represen-
tations and warranties of the Master Servicer hereunder). Any such
assumption shall be subject to Section 7.02. 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 its successor shall succeed to any rights
and obligations of the Master Servicer under each Servicing Agreement. The
Trustee or the successor servicer for the Trustee shall be deemed to have
assumed all of the Master Servicer's interest therein and to have replaced
the Master Servicer as a party to any Servicing Agreement entered into by
the Master Servicer as contemplated by Section 3.02 to the same extent as if
the Servicing Agreement had been assigned to the assuming party except that
the Master Servicer shall not be relieved of any liability or obligations under
any such Servicing Agreement.
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 each Servicing Agreement or substitute servicing
agreement and the Mortgage Loans then being serviced thereunder and an
accounting of amounts collected or held by it and otherwise use its best
efforts to effect the orderly and efficient transfer of such substitute
Servicing Agreement to the assuming party.
Section 3.08. Collection of Mortgage Loan Payments; Collection Account
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and Distribution Account. (a) Continuously from the date hereof until the
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principal and interest on all Mortgage Loans are paid in full, the Master
Servicer will proceed diligently, in accordance with this Agreement, to
collect all payments due under each of the Mortgage Loans when the same shall
become due and payable. Further, the Master Servicer will in accordance with
all applicable law and Customary Servicing Procedures ascertain and estimate
taxes, assessments, fire and hazard insurance premiums, mortgage insurance
premiums, and all other charges that, as provided in any Mortgage, will
become due and payable to the end that the installments payable by the
Mortgagors will be sufficient to pay such charges as and when they become due
and payable. Consistent with the foregoing, the Master Servicer may in its
discretion (i) waive any late payment charge or any prepayment charge or
penalty interest in connection with the prepayment of a Mortgage Loan and
(ii) extend the due dates for payments due on a Mortgage Note for a period
not greater than 120 days; provided, however, that the Master Servicer cannot
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extend the maturity of any such Mortgage Loan past the date on which the
final payment is due on the latest maturing Mortgage Loan as of the Cut-off
Date. In the event of any such arrangement, the Master Servicer shall make
Advances on the related Mortgage Loan in accordance with the provisions of
Section 3.20 during the scheduled period in accordance with the amortization
schedule of such Mortgage Loan without modification thereof by reason of such
arrangements. The Master Servicer shall not be required to institute or join
in litigation with respect to collection of any payment (whether under a
Mortgage, Mortgage Note or otherwise or against any public or governmental
authority with respect to a taking or condemnation) if it reasonably believes
that enforcing the provision of the Mortgage or other instrument pursuant to
which such payment is required is prohibited by applicable law.
(b) The Master Servicer shall establish and maintain a Collection
Account titled "NationsBanc Mortgage Corporation, in trust for the registered
holders of Tryon Mortgage Funding, Inc. Mortgage Pass-Through Certificates,
Series 1997-1." Such Collection Account shall be an Eligible Account.
The Master Servicer shall deposit or cause to be deposited into the
Collection Account on a daily basis within one Business Day of receipt,
except as otherwise specifically provided herein, the following payments and
collections remitted by Servicers or received by it in respect of Mortgage
Loans subsequent to the Cut-off Date (other than in respect of principal and
interest due on the Mortgage Loans on or before the Cut-off Date) and the
following amounts required to be deposited hereunder:
(i) all payments on account of principal on the Mortgage Loans,
including Principal Prepayments;
(ii) all payments on account of interest on the Mortgage Loans,
net of the Master Servicing Fee;
(iii) (A) all Insurance Proceeds and Liquidation Proceeds, other
than proceeds to be applied to the restoration or repair of the
Mortgaged Property, released to the Mortgagor in accordance with
Customary Servicing Procedures or required to be deposited to an Escrow
Account pursuant to Section 3.09(a) and (B) any Insurance Proceeds
released from an Escrow Account pursuant to Section 3.09(b)(iv);
(iv) any amount required to be deposited by the Master Servicer
pursuant to Section 3.08(d) in connection with any losses on Permitted
Investments with respect to the Collection Account;
(v) any amounts required to be deposited by the Master Servicer
pursuant to Section 3.14;
(vi) all Purchase Prices from the Seller and all Substitution
Adjustment Amounts;
(vii) all Advances made by the Master Servicer pursuant to Section
3.20 and any payments of Compensating Interest; and
(viii) any other amounts required to be deposited hereunder.
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, payments in the nature of prepayment penalties,
late payment charges or assumption fees, if collected, need not be remitted
by the Master Servicer. In the event that the Master Servicer shall remit
any amount not required to be remitted, it may at any time withdraw
or direct the institution maintaining the Collection Account to withdraw
such amount from the Collection Account, any provision herein to the contrary
notwithstanding. The Master Servicer shall maintain adequate records with
respect to all withdrawals made pursuant to this Section 3.08. All funds
required to be deposited in the Collection Account shall be held in
trust for the Certificateholders until withdrawn in accordance with Section
3.11.
(c) The Trustee shall establish and maintain, on behalf of the
Certificateholders, the Distribution Account. The Trustee shall, promptly
upon receipt, deposit in the Distribution Account and retain therein the
following:
(i) the aggregate amount remitted by the Master Servicer to the
Trustee pursuant to Section 3.11(a)(ix);
(ii) any amount paid by the Master Servicer pursuant to Section
3.08(d) in connection with any losses on Permitted Investments with
respect to the Distribution Account; and
(iii) any other amounts deposited hereunder which are required to
be deposited in the Distribution Account.
In the event that the Master Servicer shall remit any amount not
required to be remitted, it may at any time direct the Trustee to withdraw
such amount from the Distribution Account, any provision herein to the
contrary notwithstanding. Such direction may be accomplished by delivering
an Officer's Certificate to the Trustee which describes the amounts deposited
in error in the Distribution Account. All funds required to be deposited in
the Distribution Account shall be held by the Trustee in trust for the
Certificateholders until disbursed in accordance with this Agreement or
withdrawn in accordance with Section 3.11. In no event shall the Trustee
incur liability for withdrawals from the Distribution Account at the
direction of the Master Servicer.
(d) Each institution at which the Collection Account or the
Distribution Account is maintained shall invest the funds therein as directed
in writing by the Master Servicer in Permitted Investments, which shall
mature not later than (i) in the case of the Collection Account, the Business
Day next preceding the related Distribution Account Deposit Date (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 Distribution Account Deposit Date) and (ii) in the case of the
Distribution Account, the Business Day next preceding the Distribution Date
(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 Distribution Date) and, in each case, shall not be sold or
disposed of prior to its maturity. All such Permitted Investments shall be
made in the name of the Trustee, for the benefit of the Certificateholders.
All income and gain (net of any losses) realized from any such investment of
funds on deposit in the Collection Account or the Distribution Account shall
be for the benefit of the Master Servicer as servicing compensation and shall
be retained by it monthly as provided herein. The amount of any realized
losses in the Collection Account or the Distribution Account incurred in any
such account in respect of any such investments shall promptly be deposited
by the Master Servicer in the Collection Account or paid to the Trustee for
deposit into the Distribution Account, as applicable. The Trustee in its
fiduciary capacity shall not be liable for the amount of any loss incurred in
respect of any investment or lack of investment of funds (unless the Trustee
has failed to invest such funds after being directed to do so) held in the
Collection Account or the Distribution Account and made in accordance with
this Section 3.08. Notwithstanding the foregoing, unless the Trustee
receives contrary written instructions from the Master Servicer, all amounts
on deposit in the Distribution Account shall be invested in Permitted
Investments set forth in clause (v) of the definition of "Permitted
Investments".
(e) The Master Servicer shall give notice to the Trustee, of any
proposed change of the location of the Collection Account not later than 30
days and not more than 45 days prior to any change thereof. The Trustee
shall give notice to the Master Servicer, the Seller, the Rating Agency and
the Sponsor of any proposed change of the location of the Distribution
Account not later than 30 days and not more than 45 days prior to any change
thereof. The creation of any Collection Account shall be evidenced by (a) a
certification in the form of Exhibit N-1 hereto, in the case of an account
established with an affiliate of the Master Servicer, or (b) a letter
agreement in the form of Exhibit N-2 hereto, in the case of an account held
by a depository other than an affiliate of the Master Servicer. In either
case, a copy of such certification or letter agreement shall be furnished to
the Trustee.
Section 3.09. Collection of Taxes, Assessments and Similar Items;
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Escrow Accounts. (a) To the extent required by the related Mortgage Note
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and not violative of current law, the Master Servicer shall segregate and
hold all funds collected and received pursuant to each Mortgage Loan which
constitute Escrow Payments in trust separate and apart from any of its own
funds and general assets and shall establish and maintain one or more escrow
accounts (collectively, the "Escrow Account"), titled "NationsBanc Mortgage
Corporation, in trust for registered holders of Tryon Mortgage Funding, Inc.
Mortgage Pass-Through Certificates, Series 1997-1 and various Mortgagors".
The Escrow Account shall be established with a commercial bank, a savings
bank or a savings and loan association that meets the guidelines set forth by
FNMA or FHLMC as an eligible institution for escrow accounts and which is a
member of the Automated Clearing House. In any case, the Escrow Account
shall be insured by the FDIC to the fullest extent permitted by law. The
Master Servicer shall deposit in the Escrow Account on a daily basis, and
retain therein: (i) all Escrow Payments collected on account of the Mortgage
Loans, for the purpose of effecting timely payment of any such times as required
under the terms of this Agreement, (ii) all amounts representing proceeds of
any hazard insurance policy which are to be applied to the restoration or
repair of any Mortgaged Property and (iii) all amounts representing proceeds
of any Primary Insurance Policy. Nothing herein shall require the Master
Servicer to compel a Mortgagor to establish an Escrow Account in violation of
applicable law.
(b) Withdrawals of amounts so collected from the Escrow Accounts
may be made by the Master Servicer only (i) to effect timely payment of
taxes, assessments, mortgage insurance premiums, fire and hazard insurance
premiums, condominium or PUD association dues, or comparable items
constituting Escrow Payments for the related Mortgage, (ii) to reimburse the
Master Servicer out of related Escrow Payments made with respect to a
Mortgage Loan for any Servicing Advance made by the Master Servicer pursuant
to Section 3.09(c) hereof with respect to such Mortgage Loan, (iii) to refund
to any Mortgagor any sums determined to be overages, (iv) for transfer to the
Collection Account upon default of a Mortgagor or in accordance with the
terms of the related Mortgage Loan and if permitted by applicable law, (v)
for application to restore or repair of the Mortgaged Property, (vi) to pay
to the Mortgagor, to the extent required by law, any interest paid on the
funds deposited in the Escrow Account, (vii) to pay to itself any interest
earned on funds deposited in the Escrow Account (and not required to be paid
to the Mortgagor), (viii) to the extent permitted under the terms of the
related Mortgage Note and applicable law, to pay late fees with respect to
any Monthly Payment which is received after the applicable grace period, (ix)
to withdraw suspense payments that are deposited into the Escrow Account, (x)
to withdraw any amounts inadvertently deposited in the Escrow Account or (xi)
to clear and terminate the Escrow Account upon the termination of this
Agreement in accordance with Section 10.01. The Escrow Accounts shall not be
a part of the Trust Fund.
(c) With respect to each Mortgage Loan, the Master Servicer shall
maintain accurate records reflecting the status of taxes, assessments and
other charges which are or may become a lien upon the Mortgaged Property and
the status of Primary Insurance Policy premiums and fire and hazard insurance
coverage and shall obtain, from time to time, all bills for the payment of
such charges (including renewal premiums) and shall effect payment thereof
prior to the applicable penalty or termination date and at a time appropriate
for securing maximum discounts allowable, employing for such purpose deposits
of the Mortgagor in the Escrow Account, if any, which shall have been
estimated and accumulated by the Master Servicer in amounts sufficient for
such purposes, as allowed under the terms of the Mortgage. To the extent
that a Mortgage does not provide for Escrow Payments, the Master Servicer shall
determine that any such payments are made by the Mortgagor. The Master
Servicer assumes full responsibility for the timely payment of all such bills
and shall effect timely payments of all such bills irrespective of each
Mortgagor's faithful performance in the payment of same or the making of the
Escrow Payments. The Master Servicer shall advance any such payments that
are not timely paid, but the Master Servicer shall be required so to advance
only to the extent that such Servicing Advances, in the good faith judgment
of the Master Servicer, will be recoverable by the Master Servicer out of
Insurance Proceeds, Liquidation Proceeds or otherwise.
Section 3.10. Access to Certain Documentation and Information Regarding
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the Mortgage Loans. The Master Servicer shall afford the Trustee reasonable
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access to all records and documentation regarding the Mortgage Loans and all
accounts, insurance information and other matters relating to this Agreement,
such access being afforded without charge, but only upon reasonable request
and during normal business hours at the office designated by the Master
Servicer.
Upon reasonable advance notice in writing, the Master Servicer will
provide to each Certificateholder which is a savings and loan association,
bank or insurance company certain reports and reasonable access to
information and documentation regarding the Mortgage Loans sufficient to
permit such Certificateholder to comply with applicable regulations of the
OTS or other regulatory authorities with respect to investment in the
Certificates; provided that the Master Servicer shall be entitled to be
--------
reimbursed by each such Certificateholder for actual expenses incurred by the
Master Servicer in providing such reports and access.
Section 3.11. Permitted Withdrawals from the Collection Account and
-----------------------------------------------------
Distribution Account. (a) The Master Servicer may from time to time make
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withdrawals from the Collection Account for the following purposes:
(i) to pay to the Master Servicer (to the extent not previously
retained), the servicing compensation to which it is entitled pursuant
to Section 3.17, and to pay to the Master Servicer, as additional master
servicing compensation, earnings on or investment income with respect to
funds in or credited to the Collection Account;
(ii) to reimburse the Master Servicer for unreimbursed Advances
made by it, such right of reimbursement pursuant to this subclause (ii)
being limited to amounts received on the Mortgage Loan(s) in respect of
which any such Advance was made;
(iii) to reimburse the Master Servicer for any Nonrecoverable
Advance previously made, it being understood that, in the case of any
such reimbursement, the Master Servicer's right thereto shall be prior
to the rights of the Trust Fund unless the Seller is required to
purchase a Mortgage Loan pursuant to the Sale Agreement and in
accordance with Section 2.02 or 2.03, in which case the Master
Servicer's right to such reimbursement shall be subsequent to the
payment to the Trust Fund of the Purchase Price and all other amounts
required to be paid to the Trust Fund with respect to such Mortgage
Loan;
(iv) to reimburse the Master Servicer for Insured Expenses from
the related Insurance Proceeds;
(v) to reimburse the Master Servicer for (a) unreimbursed
Servicing Advances, the Master Servicer's right to reimbursement
pursuant to this clause (a) with respect to any Mortgage Loan being
limited to amounts received on such Mortgage Loan(s) which represent
late recoveries of the payments for which such advances were made
pursuant to Section 3.01 or Section 3.09 and (b) for unpaid Master
Servicing Fees as provided in Section 3.14, it being understood that, in
the case of any such reimbursement, the Master Servicer's right thereto
shall be prior to the rights of the Trust Fund unless the Seller is
required to repurchase a Mortgage Loan pursuant to the applicable Sale
Agreement and in accordance with Section 2.02, 2.03 or 2.08, in which
case the Master Servicer's right to such reimbursement shall be
subsequent to the payment to the Trust Fund of the Purchase Price and
all other amounts required to be paid to the Trust Fund with respect to
such Mortgage Loan;
(vi) to pay to the purchaser, with respect to each Mortgage Loan
or REO Property that has been purchased pursuant to Section 2.02, 2.03
or 2.08, all amounts received thereon after the date of such purchase;
(vii) to reimburse the Seller, the Master Servicer or the Sponsor
for expenses incurred by any of them and reimbursable pursuant to
Section 7.03;
(viii) to withdraw any amount deposited in the Collection Account
and not required to be deposited therein;
(ix) on or prior to the Distribution Account Deposit Date, to
withdraw an amount equal to the related Available Funds, to the extent
on deposit, and remit such amount to the Trustee for deposit in the
Distribution Account; and
(x) to clear and terminate the Collection Account upon
termination of this Agreement pursuant to Section 10.01.
The Master Servicer shall keep and maintain separate accounting, on
a Mortgage Loan by Mortgage Loan basis, for the purpose of justifying
any withdrawal from the Collection Account pursuant to such subclauses
(i), (ii), (iv), (v) and (vi). Prior to making any withdrawal from the
Collection Account pursuant to subclause (iii), the Master Servicer
shall deliver to the Trustee an Officer's Certificate of a Servicing
Officer indicating the amount of any previous Advance determined by the
Master Servicer to be a Nonrecoverable Advance and identifying the
related Mortgage Loan(s) and their respective portions of such
Nonrecoverable Advance.
(b) The Trustee shall withdraw funds from the Distribution Account for
distributions to Certificateholders in the manner specified in this
Agreement. In addition, the Trustee may from time to time make withdrawals
from the Distribution Account for the following purposes:
(i) to pay to itself the Trustee Fee for the related
Distribution Date;
(ii) to pay to the Master Servicer as additional servicing
compensation earnings on or investment income with respect to funds in
the Distribution Account;
(iii) to withdraw and return to the Master Servicer any amount
deposited in the Distribution Account and not required to be deposited
therein; and
(iv) to clear and terminate the Distribution Account upon
termination of the Agreement pursuant to Section 10.01.
Section 3.12. Maintenance of Hazard Insurance. The Master Servicer
-------------------------------
shall cause to be maintained for each Mortgage Loan fire and hazard insurance
with extended coverage customary in the area where the Mortgaged Property is
located by an insurer rated B-VI or better in the current Best's Insurance
Reports, in an amount which is at least equal to the lesser of (i) the full
insurable value of the Mortgaged Property or (ii) the greater of (a) the
outstanding principal balance owing on the Mortgage Loan and (b) an amount
such that the proceeds of such insurance shall be sufficient to avoid the
application to the Mortgagor or loss payee of any coinsurance clause under
the policy. If the Mortgaged Property is in an area identified in the
Federal Register by the Federal Emergency Management Agency as having special
flood hazards (and such flood insurance has been made available) the Master
Servicer will cause to be maintained a flood insurance policy meeting the
requirements of the current guidelines of the Federal Insurance
Administration, in an amount representing coverage not less than the least of
(i) the outstanding principal balance of the Mortgage Loan, (ii) the full
insurable value of the Mortgaged Property, or (iii) the maximum amount of
insurance available under the National Flood Insurance Act of 1968 and the
Flood Disaster Protection Act of 1973, each as amended. The Master Servicer
shall also maintain on REO Property, fire and hazard insurance with
extended coverage in an amount which is at least equal to the maximum
insurable value of the improvements which are a part of such property,
liability insurance and, to the extent required and available under the National
Flood Insurance Act of 1968 and the Flood Disaster Protection Act of 1973,
each as amended, flood insurance in an amount required above. Any amounts
collected by the Master Servicer under any such policies (other than amounts
to be deposited in the Escrow Account and applied to the restoration or
repair of the property subject to the related Mortgage or property acquired
in liquidation of the Mortgage Loan, or to be released to the Mortgagor in
accordance with Customary Servicing Procedures) shall be deposited in the
Collection Account, subject to withdrawal pursuant to Section 3.11(a).
It is understood and agreed that no earthquake or other additional
insurance need be required by the Master Servicer of any Mortgagor or
maintained on REO Property, other than pursuant to such applicable laws
and regulations as shall at any time be in force and as shall require such
additional insurance. All policies required hereunder shall be endorsed with
standard mortgagee clauses with loss payable to the Master Servicer, and
shall provide for at least thirty (30) days prior written notice of any
cancellation, reduction in amount or material change in coverage to the
Master Servicer. The Master Servicer shall not interfere with the
Mortgagor's freedom of choice in selecting either his insurance carrier or
agent; provided, however, that the Master Servicer shall not accept any such
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insurance policies from insurance companies unless such companies currently
reflect a General Policy Rating of B-VI or better in Best's Insurance Reports
and are licensed to do business in the state wherein the property subject to
the policy is located.
The hazard insurance policies for each Mortgage Loan secured by a unit
in a condominium development or planned unit development shall be maintained
with respect to such Mortgage Loan and the related development in a manner
which is consistent with FNMA requirements.
Section 3.13. Enforcement of Due-On-Sale Clauses; Assumption
----------------------------------------------
Agreements. (a) Except as otherwise provided in this Section 3.13, when any
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Mortgaged Property subject to a Mortgage has been conveyed by the Mortgagor,
the Master Servicer shall use reasonable efforts, to the extent that it has
knowledge of such conveyance, to enforce any due-on-sale clause contained in
any 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 any Required Insurance
Policy. Notwithstanding the foregoing, the Master Servicer is not required
to exercise such rights with respect to a Mortgage Loan if the Person to whom
the related Mortgaged Property has been conveyed or is proposed to be conveyed
satisfies the terms and conditions contained in the Mortgage Note and Mortgage
related thereto and the consent of the mortgagee under such Mortgage Note or
Mortgage is not otherwise so required under such Mortgage Note or Mortgage as a
condition to such transfer. In the event that (i) the Master Servicer is
prohibited by law from enforcing any such due-on-sale clause, (ii) coverage
under any Required Insurance Policy would be adversely affected, (iii) the
Mortgage Note does not include a due-on-sale clause or (iv) nonenforcement is
otherwise permitted hereunder, the Master Servicer is authorized, subject to
Section 3.13(b), to take or enter into an assumption and modification
agreement from or with the Person to whom such Mortgaged Property has been or
is about to be conveyed, pursuant to which such Person becomes liable under
the 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 applicable Required Insurance Policies. The Master
Servicer, subject to Section 3.13(b), is also authorized with the prior
approval of 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 3.13 by reason of any transfer or assumption which the Master
Servicer reasonably believes it 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 3.13(a), in any case in which a
Mortgaged Property has been conveyed to a Person by a Mortgagor, and such
Person is to enter into an assumption agreement or modification agreement or
supplement to the Mortgage Note or Mortgage 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 prepare and deliver or cause to be prepared and delivered to
the Trustee for signature and shall direct, in writing, the Trustee to
execute 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. In connection with any
such assumption, no material term of the Mortgage Note may be changed. In
addition, the substitute Mortgagor and the Mortgaged Property must be
acceptable to the Master Servicer in accordance with its underwriting
standards as then in effect. Together with each such substitution,
assumption or other agreement or instrument delivered to the Trustee for
execution by it, the Master Servicer shall deliver an Officer's Certificate
signed by a Servicing Officer stating that the requirements of this subsection
have been met in connection therewith. The Master Servicer shall notify
the Trustee that any such substitution or assumption agreement has been
completed by forwarding to the Trustee (or at the direction of the Trustee,
the Custodian) the original of such substitution or assumption agreement,
which in the case of the original shall be added to the related Mortgage
File and shall, for all purposes, be considered a part of such Mortgage
File to the same extent as all other documents and instruments constituting
a part thereof. 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 master servicing compensation.
Notwithstanding the foregoing, to the extent permissible under applicable law
and at the request of the Master Servicer, the Trustee shall furnish to the
Master Servicer any powers of attorney and other documents reasonably
necessary or appropriate to enable the Master Servicer to execute any
assumption agreement or modification agreement required to be executed
by the Trustee under this Section 3.13.
Section 3.14. Realization Upon Defaulted Mortgage Loans; REO Property.
-------------------------------------------------------
The Master Servicer shall use reasonable efforts to foreclose upon or
otherwise comparably convert the ownership of Mortgaged Properties securing
such of the Mortgage Loans as come into and continue in default and as to
which no satisfactory arrangements can be made for collection of delinquent
payments. In connection with such foreclosure or other conversion, the
Master Servicer shall follow Customary Servicing Procedures and as shall meet
the requirements of the insurer under any Required Insurance Policy.
Notwithstanding the foregoing, the Master Servicer shall not be required to
expend its own funds in connection with any foreclosure or towards the
restoration of any Mortgaged Property unless it shall determine (i) that such
restoration and/or foreclosure will increase the proceeds of liquidation of
the Mortgage Loan after reimbursement to itself of such expenses and (ii)
that such expenses will be recoverable to it through proceeds of the
liquidation of the Mortgage Loan (respecting which it shall have priority for
purposes of withdrawals from the Collection Account). The Master Servicer
shall be responsible for all other costs and expenses incurred by it in any
such proceedings; provided, however, that it shall be entitled to reimbursement
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thereof from the liquidation proceeds with respect to the related Mortgaged
Property, as provided in the definition of Liquidation Proceeds.
The decision of the Master Servicer to foreclose on a defaulted Mortgage
Loan shall be subject to a determination by the Master Servicer that the
proceeds of such foreclosure would exceed the costs and expenses of bringing
such a proceeding.
With respect to any REO Property, the deed or certificate of sale shall
be taken in the name of the Trustee for the benefit of the Certificate-
holders, or its nominee, on behalf of the Certificateholders. The Trustee's
name shall be placed on the title to such REO Property solely as the Trustee
hereunder and not in its individual capacity. The Master Servicer shall
ensure that the title to such REO Property references the Agreement and the
Trustee's capacity hereunder. Pursuant to its efforts to sell such REO
Property, the Master Servicer shall either itself or through an agent
selected by the Master Servicer manage, conserve, protect and operate such
REO Property in the same manner that it manages, conserves, protects and
operates other foreclosed property for its own account and in the same manner
that similar property in the same locality as the REO Property is managed.
Incident to its conservation and protection of the interests of the
Certificateholders, the Master Servicer may rent the same, or any part
thereof, as the Master Servicer deems to be in the best interest of the
Certificateholders for the period prior to the sale of such REO Property.
The Master Servicer shall prepare for and deliver to the Trustee a statement
with respect to each REO Property that has been rented, if any, showing the
aggregate rental income received and all expenses incurred in connection with
the management and maintenance of such REO Property at such times as is
necessary to enable the Trustee to comply with the reporting requirements of
the REMIC Provisions; provided, however, that the Master Servicer shall have
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no duty to rent any REO Property on behalf of the Trust Fund. The net
monthly rental income, if any, from such REO Property shall be deposited in
the Collection Account no later than the close of business on each
Determination Date. The Master Servicer shall perform the tax reporting and
withholding required by Sections 1445 and 6050J of the Code with respect to
foreclosures and abandonments, the tax reporting required by Section 6050H of
the Code with respect to the receipt of mortgage interest from individuals
and, if required by Section 6050P of the Code with respect to the
cancellation of indebtedness by certain financial entities, by preparing such
tax and information returns as may be required, in the form required.
In the event that the Trust Fund acquires any Mortgaged Property as
aforesaid or otherwise in connection with a default or imminent default on a
Mortgage Loan, the Master Servicer shall dispose of such Mortgaged Property
prior to two years after its acquisition by the Trust Fund unless the
Trustee shall have been supplied with an Opinion of Counsel to the effect that
the holding by the Trust Fund of such Mortgaged Property subsequent to such two-
year period will not result in the imposition of taxes on "prohibited
transactions" on the Subsidiary REMIC as defined in section 860F of the Code
or cause the Subsidiary REMIC to fail to qualify as a REMIC at any time that
any Certificates are outstanding, in which case the Trust Fund may continue
to hold such Mortgaged Property (subject to any conditions contained in such
Opinion of Counsel). Notwithstanding any other provision of this Agreement,
no Mortgaged Property acquired by the Trust Fund shall be rented (or allowed
to continue to be rented) or otherwise used for the production of income by or
on behalf of the Trust Fund in such a manner or pursuant to any terms that
would (i) cause such Mortgaged Property to fail to qualify as "foreclosure
property" within the meaning of Section 860G(a)(8) of the Code or (ii)
subject the REMIC to the imposition of any federal, state or local
income taxes on the income earned from such Mortgaged Property under Section
860G(c) of the Code or otherwise, unless the Master Servicer has agreed to
indemnify and hold harmless the Trust Fund with respect to the imposition of
any such taxes. The Master Servicer shall identify to the Trustee any
Mortgaged Property held by the Trust Fund for eighteen months for which no
plans to dispose of such Mortgaged Property by the Master Servicer have been
made. Unless the Trustee promptly advises otherwise after receipt of such
identification, the Master Servicer shall proceed to dispose of any such
Mortgaged Property by holding a commercially reasonable auction for such
property.
The income earned from the management of any REO Properties, net of
reimbursement to the Master Servicer for expenses incurred (including any
property or other taxes) in connection with such management and net of
unreimbursed Master Servicing Fees, Advances and Servicing Advances, shall be
applied to the payment of principal of and interest on the related defaulted
Mortgage Loans (solely for the purposes of allocating principal and interest,
interest shall be treated as accruing as though such Mortgage Loans were
still current and adjustments, if applicable, to the Mortgage Rate were being
made in accordance with the terms of the Mortgage Note) and all such income
shall be deemed, for all purposes in this Agreement, to be payments on
account of principal and interest on the related Mortgage Notes and shall be
deposited into the Collection Account. To the extent the net income received
during any calendar month is in excess of the amount attributable to
amortizing principal and accrued interest at the related Mortgage Rate on the
related Mortgage Loan for such calendar month, such excess shall be
considered to be a partial prepayment of principal of the related Mortgage
Loan.
The proceeds from any liquidation of a Mortgage Loan, as well as any
income from an REO Property, will be applied in the following order of
priority: first, to reimburse the Master Servicer for any related
unreimbursed Servicing Advances and Master Servicing Fees; second, to
reimburse the Master Servicer for any unreimbursed Advances and to reimburse
the Collection Account for any Nonrecoverable Advances (or portions thereof)
that were previously withdrawn by the Master Servicer pursuant to Section
3.11(a)(iii) that related to such Mortgage Loan; third, to accrued and unpaid
interest (to the extent no Advance has been made for such amount or any such
Advance has been reimbursed) on the Mortgage Loan or related REO Property, at
the Net Mortgage Rate to the Due Date occurring in the month in which such
amounts are required to be distributed; and fourth, as a recovery of principal
of the Mortgage Loan. Excess Proceeds, if any, from the liquidation of a
Liquidated Mortgage Loan will be retained by the Master Servicer as additional
servicing compensation pursuant to Section 3.17.
Section 3.15. Trustee to Cooperate; Release of Mortgage Files. Upon
-----------------------------------------------
the payment in full of any Mortgage Loan, or the receipt by the Master
Servicer of a notification that payment in full will be escrowed in a manner
customary for such purposes, the Master Servicer will immediately notify the
Trustee (or, at the direction of the Trustee, the Custodian) by delivering,
or causing to be delivered, a "Request for Release" substantially in the form
of Exhibit H. Upon receipt of such request, the Trustee or the Custodian, as
applicable shall within seven (7) Business Days release the related Mortgage
File to the Master Servicer, and the Trustee or the Custodian on behalf of
the Trustee, as applicable shall at the Master Servicer's direction execute
and deliver to the Master Servicer the request for reconveyance, deed of
reconveyance or release or satisfaction of mortgage or such instrument
releasing the lien of the Mortgage in each case provided by the Master
Servicer, together with the Mortgage Note with written evidence of cancella-
tion thereon. Expenses incurred in connection with any instrument of
satisfaction or deed of reconveyance shall be chargeable to the related
Mortgagor. From time to time and as shall be appropriate for the servicing
or foreclosure of any Mortgage Loan, including for such purpose collection
under any policy of flood insurance, any fidelity bond or errors or omissions
policy, or for the purposes of effecting a partial release of any Mortgaged
Property from the lien of the Mortgage or the making of any corrections to
the Mortgage Note or the Mortgage or any of the other documents included in
the Mortgage File, the Trustee or the Custodian, as applicable shall, upon
delivery to the Trustee (or, at the direction of the Trustee, the Custodian)
of a Request for Release in the form of Exhibit H signed by a Servicing
Officer, release the Mortgage File within seven (7) Business Days to the
Master Servicer. Subject to the further limitations set forth below, the
Master Servicer shall cause the Mortgage File or documents so released to be
returned to the Trustee or the Custodian, as applicable when the need
therefor by the Master Servicer no longer exists, unless the Mortgage Loan is
liquidated and the proceeds thereof are deposited in the Collection Account,
in which case the Master Servicer shall deliver to the Trustee or the
Custodian, as applicable a Request for Release in the form of Exhibit H,
signed by a Servicing Officer.
The Trustee shall furnish to the Master Servicer any powers of attorney
and other documents reasonably necessary or appropriate to enable the Master
Servicer to carry out its servicing and administrative duties under this
Agreement, upon the request of the Master Servicer.
If the Master Servicer at any time seeks to initiate a foreclosure
proceeding in respect of any Mortgaged Property as authorized by this
Agreement, the Master Servicer shall provide written notice to the Trustee
prior to initiating such foreclosure. After receipt of such notice, the
Master Servicer shall deliver or cause to be delivered to the Trustee, for
signature, as appropriate, any court pleadings, requests for trustee's sale
or other documents necessary to effectuate such foreclosure or any legal
action brought to obtain judgment against the Mortgagor on the Mortgage Note
or the Mortgage or to obtain a deficiency judgment or to enforce any other
remedies or rights provided by the Mortgage Note or the Mortgage or otherwise
available at law or in equity.
Section 3.16. Documents, Records and Funds in Possession of the Master
--------------------------------------------------------
Servicer to be Held for the Trustee. The Master Servicer shall transmit to
- -----------------------------------
the Trustee or, at the direction of the Trustee, the Custodian as required by
this Agreement all documents and instruments in respect of a Mortgage Loan
coming into the possession of the Master Servicer from time to time and shall
account fully to the Trustee for any funds received by the Master Servicer or
which otherwise are collected by the Master Servicer as Liquidation Proceeds
or Insurance Proceeds in respect of any Mortgage Loan. The documents
constituting the Servicer Mortgage File shall be held by the Master Servicer
as custodian and bailee for the Trustee. All Mortgage Files and 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 and interest
payments or from Liquidation Proceeds, including but not limited to, any
funds on deposit in the Collection Account, shall be held by the Master
Servicer for and on behalf of the Trustee and shall be and remain the sole
and exclusive property of the Trustee, subject to the applicable provisions
of this Agreement. The Master Servicer also agrees that it shall not
knowingly create, incur or subject any Mortgage File or any funds that are
deposited in the Collection Account, Distribution Account or any 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
created by the Master Servicer, or assert by legal action or otherwise any
claim or right of setoff against any 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 3.17. Servicing Compensation. The Master Servicer shall be
----------------------
entitled out of each payment of interest on a Mortgage Loan (or portion
thereof) included in the Trust Fund to retain or withdraw from the Collection
Account an amount equal to the Master Servicing Fee for such Distribution
Date.
Additional master servicing compensation in the form of Excess Proceeds,
prepayment penalties, assumption fees, late payment charges and all income
and gain net of any losses realized from Permitted Investments and all other
customary and ancillary income and fees shall be retained by the Master
Servicer to the extent not required to be deposited in the Collection Account
pursuant to Section 3.08(b). The Master Servicer shall be required to pay
all expenses incurred by it in connection with its servicing activities
hereunder and shall not be entitled to reimbursement therefor except as
specifically provided in this Agreement.
Notwithstanding the foregoing, with respect to the payment of the Master
Servicing Fee on any Distribution Date, the aggregate Master Servicing Fee
for such Distribution Date shall be reduced (but not below zero) by an amount
equal to such Prepayment Interest Shortfall for such Distribution Date (any
such reduction, "Compensating Interest").
Section 3.18. Annual Statement as to Compliance. The Master Servicer
---------------------------------
shall deliver to the Trustee on or before 75 days after the end of the Master
Servicer's fiscal year, commencing with its 1997 fiscal year, an Officer's
Certificate stating, as to the 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, and (ii) to the best of such officer's
knowledge, based on such review, the Master Servicer has fulfilled all its
obligations under this Agreement throughout such year, or, if there has been
a default in the fulfillment of any such obligation, specifying each such
default known to such officer and the nature and status thereof. The Trustee
shall forward a copy of each such statement to each Rating Agency.
SECTION 3.19. Annual Independent Public Accountants' Servicing
------------------------------------------------
Statement; Financial Statements. On or before 75 days after the end of the
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Master Servicer's fiscal year, commencing with its 1997 fiscal year, the
Master Servicer at its expense shall cause a firm of independent public
accountants (who may also render other services to the Master Servicer, the
Seller or any affiliate thereof) which is a member of the American Institute
of Certified Public Accountants to furnish a statement to the Trustee to the
effect that such firm has with respect to the Master Servicer's overall
servicing operations, examined such operations in accordance with the
requirements of the Uniform Single Attestation Program for Mortgage Bankers,
stating such firm's conclusions relating thereto.
Section 3.20. Advances. The Master Servicer shall determine on or
--------
before each Master Servicer Advance Date whether it is required to make an
Advance pursuant to the definition thereof. If the Master Servicer deter-
mines it is required to make an Advance, it shall, on or before the Master
Servicer Advance Date, either (i) deposit into the Collection Account an
amount equal to the Advance and/or (ii) make an appropriate entry in its
records relating to the Collection Account that any Amount Held for Future
Distribution has been used by the Master Servicer in discharge of its obligation
to make any such Advance. Any funds so applied shall be replaced by the
Master Servicer by deposit in the Collection Account no later than the close of
business on the Business Day preceding the next Master Servicer Advance Date.
The Master Servicer shall be entitled to be reimbursed from the Collection
Account for all Advances of its own funds made pursuant to this Section 3.20
as provided in Section 3.11(a). The obligation to make Advances with respect
to any Mortgage Loan shall continue until the ultimate disposition of the REO
Property or Mortgaged Property relating to such Mortgage Loan. The Master
Servicer shall inform the Trustee of the amount of the Advance to be made on
each Master Servicer Advance Date no later than the related Distribution Account
Deposit Date.
The Master Servicer shall deliver to the Trustee on the related Master
Servicer Advance Date an Officer's Certificate of a Servicing Officer
indicating the amount of any proposed Advance determined by the Master
Servicer to be a Nonrecoverable Advance. Notwithstanding anything to the
contrary, the Master Servicer shall not be required to make any Advance or
Servicing Advance that would be a Nonrecoverable Advance.
Section 3.21. Modifications, Waivers, Amendments and Consents. (a)
-----------------------------------------------
Subject to this Section 3.21, the Master Servicer may agree to any
modification, waiver, forbearance, or amendment of any term of any Mortgage
Loan without the consent of the Trustee or any Certificateholder. All
modifications, waivers, forbearances, or amendments of any Mortgage Loan
shall be in writing and shall be consistent with Customary Servicing
Procedures.
(b) The Master Servicer shall not agree to enter into, and shall not
enter into, any modification, waiver (other than a waiver referred to in
Section 3.13, which waiver, if any, shall be governed by Section 3.13),
forbearance, or amendment of any term of any Mortgage Loan if such
modification, waiver, forbearance, or amendment would:
(i) affect the amount or timing of any related payment of
principal, interest or other amount payable thereunder; or
(ii) in the Master Servicer's judgment, materially impair
the security for such Mortgage Loan or reduce the likelihood of
timely payment of amounts due thereon,
unless, in either case, (A) such Mortgage Loan is 90 days or more past due or
(B) the Master Servicer delivers to the Trustee an
Opinion of Counsel to the effect that such modification, waiver, forbearance
or amendment would not affect the Trust Fund's REMIC status and, in either
case, such modification, waiver, forbearance or amendment is reasonably
likely to produce a greater recovery with respect to such Mortgage Loan than
would liquidation. Subject to Customary Servicing Procedures, the Master
Servicer may permit a forbearance for a Mortgage Loan which in the Master
Servicer's judgment is subject to imminent default.
(c) Any payment of interest, which is deferred pursuant to any
modification, waiver, forbearance or amendment permitted hereunder, shall
not, for purposes hereof, including, without limitation, calculating monthly
distributions to Certificateholders, be added to the unpaid principal balance
of the related Mortgage Loan, notwithstanding that the terms of such Mortgage
Loan or such modification, waiver or amendment so permit.
(d) The Master Servicer may, as a condition to granting any request by
a Mortgagor for consent, modification, waiver, forbearance or amendment, the
granting of which is within the Master Servicer's discretion pursuant to the
Mortgage Loan and is permitted by the terms of this Agreement, require that
such Mortgagor pay to the Master Servicer, as additional servicing compen-
sation, a reasonable or customary fee for the additional services performed
in connection with such request, together with any related costs and expenses
incurred by the Master Servicer, which amount shall be retained by the Master
Servicer as additional servicing compensation.
(e) The Master Servicer shall notify the Trustee, in writing, of any
modification, waiver, forbearance or amendment of any term of any Mortgage
Loan and the date thereof, and shall deliver to the Trustee (or, at the
direction of the Trustee, the Custodian) for deposit in the related Mortgage
File, an original counterpart of the agreement relating to such modification,
waiver, forbearance or amendment, promptly (and in any event within 10
Business Days) following the execution thereof; provided, however, that if
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any such modification, waiver, forbearance or amendment is required by
applicable law to be recorded, the Master Servicer (i) shall deliver to the
Trustee a copy thereof and (ii) shall deliver to the Trustee such document,
with evidence of notification upon receipt thereof from the public recording
office.
Section 3.22. Reports to the Securities and Exchange Commission. The
-------------------------------------------------
Trustee shall, on behalf of the Trust, cause to be filed with the Securities
and Exchange Commission any periodic reports required to be filed under the
provisions of the Securities Exchange Act of 1934, as amended, and the rules
and regulations of the Securities and Exchange Commission thereunder. Upon
the request of the Trustee, each of the Master Servicer and the Sponsor shall
cooperate with the Trustee in the preparation of any such report and shall
provide to the Trustee in a timely manner all such information or documentation
as the Trustee may reasonably request in connection with the performance
of its duties and obligations under this Section.
ARTICLE IV
Master Servicer's Certificate
Section 4.01. Master Servicer's Certificate. Each month, not later
-----------------------------
than 12:00 noon Eastern time on the Business Day following each Determination
Date, the Master Servicer shall deliver to the Trustee, a Master Servicer's
Certificate substantially in the form of Exhibit K, certified by a Servicing
Officer.
Such statement shall be provided by the Trustee to any Holder of a
Certificate upon request and shall also, to the extent available, include
information regarding delinquencies on Mortgage Loans, indicating the number
and aggregate principal amount of Mortgage Loans which are either one, two,
three or more than three months delinquent and the book value of any REO
Property.
ARTICLE V
Payments and Statements to
Certificateholders; REMIC Servicing
Section 5.01. Distributions. On each Distribution Date, the Trustee
-------------
shall distribute out of the Distribution Account (i) to each Certificate-
holder of record on the related Record Date (other than as provided in
Section 10.01 respecting the final distribution) by check mailed to such
Certificateholder entitled to receive a distribution on such Distribution
Date at the address appearing in the Certificate Register, or upon written
request by a Regular Certificateholder (in the event such Certificateholder
owns of record 100% of a Class of Certificates or who holds Certificates of
any Class having denominations aggregating $1,000,000 or more), by wire
transfer or by such other means of payment as such Certificateholder and the
Trustee shall agree upon, such Certificateholder's Percentage Interest in,
the amount to which the related Class of Certificates is entitled in accor-
dance with the priorities set forth below in Section 5.02.
Neither the Holders of any Class of Regular Certificates or the Residual
Certificates, the Master Servicer, nor the Trustee shall in any way be
responsible or liable to Holders of any Class of Certificates in respect of
amounts properly previously distributed on any such Class.
Amounts distributed with respect to any Class of Certificates shall be
applied first to the distribution of interest thereon and then to principal
thereon.
Section 5.02. Priorities of Distribution. (a) On each Distribution
--------------------------
Date, the Trustee shall withdraw the Available Funds from the Distribution
Account, in an amount as specified in written notice received by the Trustee
from the Master Servicer no later than the related Determination Date, and
apply such funds first to payment of the Trustee Fee and then to
distributions on the Certificates in the following order of priority and to
the extent of Available Funds:
(i) to each Class of Senior Certificates (other than the Class P
Certificates), an amount allocable to interest equal to the related
Class Optimum Interest Distribution Amount, any shortfall being
allocated among such Classes in proportion to the amount of the Class
Optimum Interest Distribution Amount that would have been distributed in
the absence of such shortfall;
(ii) to each Class of Senior Certificates, concurrently as
follows:
(x) to the Class P Certificates, an amount allocable to
principal equal to the PO Formula Principal Amount, up to the
outstanding Class Certificate Balance of the Class P Certificates;
(y) on each Distribution Date prior to the Senior Credit
Support Depletion Date, the Non-PO Formula Principal Amount, up to
the amount of the Senior Principal Distribution Amount for such
Distribution Date, will be distributed in the following order of
priority:
(A) concurrently, to the Residual Certificates, until
the Class Certificate Balances thereof have been reduced to
zero;
(B) concurrently, 35.8801795325% to the Class A-1
Certificates, 13.9303877372% to the Class A-2 Certificates,
15.9851580021% to the Class A-3 Certificates, 19.9224845533%
to the Class A-4 Certificates and 14.2817901749% to the Class
F Certificates, until the Class Certificate Balance of each of
the Class A-1 Certificates, the Class A-2 Certificates, the
Class A-3 Certificates and the Class F Certificates have been
reduced to zero;
(C) concurrently, 66.6702641744% to the Class A-4
Certificates and 33.3297358256% to the Class A-5 Certificates,
until the Class Certificate Balance of the Class A-4
Certificates has been reduced to zero;
(D) concurrently, 39.4228494836% to the Class A-5
Certificates and 60.5771505164% to the Class A-6 Certificates,
until the Class Certificate Balances thereof have been reduced
to zero; and
(E) to the Class A-7 Certificates, until the Class
Certificate Balance thereof has been reduced to zero; and
(z) on each Distribution Date prior to the Senior Credit
Support Depletion Date, the Non-PO Formula Principal Amount, up to
the amount of the Class A-8 Principal Distribution Amount for such
Distribution Date, will be distributed as principal to the Class A-
8 Certificates until the Class Certificate Balance thereof has been
reduced to zero;
(iii) to the Class P Certificates, any Class P Deferred Amount, up
to an amount not to exceed the amount calculated pursuant to clause (A)
of the definition of the Subordinate Principal Distribution Amount
actually received or advanced for such Distribution Date (with such amount
to be allocated first from amounts calculated pursuant to (A)(i) and
(ii) then (iii) of the definition of Subordinate Principal Distribution
Amount);
(iv) to each Class of Subordinate Certificates, subject to
paragraph (d) below, in the following order of priority:
(A) to the Class B-1 Certificates, an amount allocable
to interest equal to the Class Optimum Interest Distribution
Amount for such Class for such Distribution Date;
(B) to the Class B-1 Certificates, an amount allocable
to principal equal to its Pro Rata Share for such Distribution
Date until the Class Certificate Balance thereof is reduced to
zero;
(C) to the Class B-2 Certificates, an amount allocable
to interest equal to the Class Optimum Interest Distribution
Amount for such Class for such Distribution Date;
(D) to the Class B-2 Certificates, an amount allocable
to principal equal to its Pro Rata Share for such Distribution
Date until the Class Certificate Balance thereof is reduced to
zero;
(E) to the Class B-3 Certificates, an amount allocable
to interest equal to the Class Optimum Interest Distribution
Amount for such Class for such Distribution Date;
(F) to the Class B-3 Certificates, an amount allocable
to principal equal to its Pro Rata Share for such Distribution
Date until the Class Certificate Balance thereof is reduced to
zero;
(G) to the Class B-4 Certificates, an amount allocable
to interest equal to the Class Optimum Interest Distribution
Amount for such Class for such Distribution Date;
(H) to the Class B-4 Certificates, an amount allocable
to principal equal to its Pro Rata Share for such Distribution
Date until the Class Certificate Balance thereof is reduced to
zero;
(I) to the Class B-5 Certificates, an amount allocable
to interest equal to the Class Optimum Interest Distribution
Amount for such Class for such Distribution Date;
(J) to the Class B-5 Certificates, an amount allocable
to principal equal to its Pro Rata Share for such Distribution
Date until the Class Certificate Balance thereof is reduced to
zero;
(K) to the Class B-6 Certificates, an amount allocable
to interest equal to the Class Optimum Interest Distribution
Amount for such Class for such Distribution Date; and
(L) to the Class B-6 Certificates, an amount allocable
to principal equal to its Pro Rata Share for such Distribution
Date until the Class Certificate Balance thereof is reduced to
zero; and
(v) to the Class R-I Certificates, any remaining funds in the
Subsidiary REMIC and to the Class R-II Certificates, any remaining funds
in the Master REMIC.
On any Distribution Date, amounts distributed in respect of Class P Deferred
Amounts will not reduce the Class Certificate Balance of the Class P
Certificates.
On any Distribution Date, to the extent the Amount Available for Senior
Principal is insufficient to make the full distribution required to be made
pursuant to clause (ii) above, (A) the amount distributable on the Class P
Certificates in respect of principal shall be equal to the product of (1) the
Amount Available for Senior Principal and (2) a fraction, the numerator of
which is the PO Formula Principal Amount and the denominator of which is the
sum of the PO Formula Principal Amount, the Senior Principal Distribution
Amount and the Class A-8 Principal Distribution Amount and (B) the amount
distributable on the Senior Certificates, other than the Class A-8 and Class
P Certificates, in respect of principal and otherwise in accordance with
clause (ii)(y) shall be equal to the product of (1) the Amount Available for
Senior Principal and (2) a fraction, the numerator of which is the Senior
Principal Distribution Amount and the denominator of which is the sum of the
Senior Principal Distribution Amount, the Class A-8 Principal Distribution
Amount and the PO Formula Principal Amount and (C) the amount distributable
on the Class A-8 Certificates, in respect of principal shall be equal to the
product of (1) the Amount Available for Senior Principal and (2) a fraction,
the numerator of which is the Class A-8 Principal Distribution Amount and the
denominator of which is the sum of the Senior Principal Distribution Amount,
the Class A-8 Principal Distribution Amount and the PO Formula Principal
Amount.
(b) On each Distribution Date on or after the Senior Credit Support
Depletion Date, notwithstanding the allocation and priority set forth in
Section 5.02(a)(ii)(y) and (z), the portion of
Available Funds available to be distributed as principal of the Senior
Certificates (other than the Class P Certificates) shall be distributed
concurrently, as principal, on such Classes, pro rata, on the basis of their
respective Class Certificate Balances, until the Class Certificate Balances
thereof are reduced to zero.
(c) On each Distribution Date, the amount referred to in clause (i) of
the definition of Class Optimum Interest Distribution Amount for each Class
of Certificates for such Distribution Date shall be reduced by (i) the
related Class' pro rata share of Net Prepayment Interest Shortfalls based on
such Class' Class Optimum Interest Distribution Amount for such Distribution
Date without taking into account such Net Prepayment Interest Shortfalls and
(ii) the related Class' Allocable Share of (A) after the Special Hazard
Coverage Termination Date, with respect to each Mortgage Loan that became a
Special Hazard Mortgage Loan during the calendar month preceding the month of
such Distribution Date, the excess of one month's interest at the related Net
Mortgage Rate on the Stated Principal Balance of such Mortgage Loan as of the
Due Date in such month over the amount of Liquidation Proceeds applied as
interest on such Mortgage Loan with respect to such month, (B) after the
Bankruptcy Coverage Termination Date, with respect to each Mortgage Loan that
became subject to a Bankruptcy Loss during the calendar month preceding the
month of such Distribution Date, the interest portion of the related Debt
Service Reduction or Deficient Valuation, (C) each Relief Act Reduction
incurred during the calendar month preceding the month of such Distribution
Date and (D) after the Fraud Coverage Termination Date, with respect to each
Mortgage Loan that became a Fraud Loan during the calendar month preceding
the month of such Distribution Date, the excess of one month's interest at
the related Net Mortgage Rate on the Stated Principal Balance of such
Mortgage Loan as of the Due Date in such month over the amount of Liquidation
Proceeds applied as interest on such Mortgage Loan with respect to such
month.
(d) Notwithstanding the priority and allocation contained in Section
5.02(a)(iv), if with respect to any Class of Subordinate Certificates on any
Distribution Date the sum of the related Class Subordination Percentages of
such Class and of all Classes of Subordinate Certificates which have a higher
numerical Class designation than such Class (the "Applicable Credit Support
Percentage") is less than the Original Applicable Credit Support Percentage
for such Class, no distribution of Principal Prepayments will be made to any
such Classes (the "Restricted Classes") and the amount of such Principal
Prepayments and the principal portion of any Liquidation Proceeds otherwise
distributable to the Restricted Classes shall be distributed to any Classes
of Subordinate Certificates having lower numerical Class designations than
such Class, pro rata, based on their respective Class Certificate Balances
immediately prior to such Distribution Date and shall be distributed in the
sequential order provided in Section 5.02(a)(iv).
(e) On each Distribution Date, Available Funds shall be applied to
distributions on the Subsidiary REMIC Regular Interests, in each case in an
amount sufficient to make the distributions on the respective Corresponding
Classes of Certificates on such Distribution Date in accordance with the
provisions of Section 5.02(a).
Section 5.03. Allocation of Losses. (a) On or prior to each
--------------------
Determination Date, the Master Servicer shall determine the total amount of
Realized Losses, including Excess Losses, with respect to the related
Distribution Date and shall notify the Trustee in writing on or before the
related Determination Date of such Realized Losses.
Realized Losses with respect to any Distribution Date shall be
allocated as follows:
(i) the applicable PO Percentage of any Realized Loss, including
any Excess Loss, shall be allocated to the Class P Certificates until
the Class Certificate Balance thereof is reduced to zero; and
(ii) (1) the applicable Non-PO Percentage of any Realized Loss
(other than an Excess Loss) shall be allocated first to the Subordinate
Certificates in reverse order of their respective numerical Class
designations (beginning with the Class of Subordinate Certificates then
outstanding with the highest numerical Class designation) until the
respective Class Certificate Balance of each such Class is reduced to
zero, and second to the Senior Certificates (other than the Notional
Amount Certificates and the Class P Certificates), pro rata, on the
basis of their respective Class Certificate Balances immediately prior
to the related Distribution Date until the Class Certificate Balances
thereof have been reduced to zero; and
(2) the applicable Non-PO Percentage of any Excess Losses shall be
allocated to the Senior Certificates (other than the Notional Amount
Certificates and the Class P Certificates) and the Subordinate
Certificates then outstanding, pro rata, on the basis of their
respective Class Certificate Balances.
(b) The Class Certificate Balance of the Class of Subordinate
Certificates then outstanding with the highest numerical Class designation
shall be reduced on each Distribution Date (i) by the amount of any payments
on the Class P Certificates in respect of Class P Deferred Amounts pursuant
to Section 5.02(a)(iii) and (ii) by the amount, if any, by which the
aggregate of the Class Certificate Balances of all outstanding Classes of
Certificates (after giving effect to the distribution of principal and the
allocation of Realized Losses and Class P Deferred Amounts on such
Distribution Date) exceeds the Pool Stated Principal Balance for the
following Distribution Date.
(c) Any Realized Loss allocated to a Class of Certificates or any
reduction in the Class Certificate Balance of a Class of Certificates
pursuant to Section 5.03(b) above shall be allocated among the Certificates
of such Class in proportion to their respective Certificate Balances.
(d) Any allocation of Realized Losses to a Certificate or any reduction
in the Certificate Balance of a Certificate, pursuant to Section 5.03(b)
above shall be accomplished by reducing the Certificate Balance thereof
immediately following the distributions made on the related Distribution Date
in accordance with the definition of "Certificate Balance."
Section 5.04. Statements to Certificateholders. (a) Prior to the
--------------------------------
Distribution Date in each month, based upon the information provided to the
Trustee on the Master Servicer's Certificate delivered to the Trustee
pursuant to Section 4.01, the Trustee shall determine the following
information with respect to the following Distribution Date:
(i) the amount thereof allocable to principal, separately
identifying the aggregate amount of any Principal Prepayments and
Liquidation Proceeds included therein;
(ii) the amount thereof allocable to interest, any Class Unpaid
Interest Shortfall included in such distribution and any remaining Class
Unpaid Interest Shortfall after giving effect to such distribution;
(iii) if the distribution to the Holders of such Class of
Certificates is less than the full amount that would be distributable to
such Holders if there were sufficient funds available therefor, the
amount of the shortfall and the allocation thereof as between principal
and interest;
(iv) the Class Certificate Balance of each Class of Certificates
after giving effect to the distribution of principal on such
Distribution Date;
(v) the Pool Stated Principal Balance for the following
Distribution Date;
(vi) the Senior Percentage, Class A-8 Percentage and Subordinate
Percentage for the following Distribution Date;
(vii) the amount of the Master Servicing Fees paid to or retained
by the Master Servicer with respect to such Distribution Date;
(viii) the Pass-Through Rate for each such Class of Certificates
with respect to such Distribution Date;
(ix) the amount of Advances included in the distribution on such
Distribution Date and the aggregate amount of Advances outstanding as of
the close of business on such Distribution Date;
(x) the number and aggregate principal amounts of Mortgage Loans
(A) delinquent (exclusive of Mortgage Loans in foreclosure) (1) 1 to 30
days (2) 31 to 60 days (3) 61 to 90 days and (4) 91 or more days and (B)
in foreclosure and delinquent (1) 1 to 30 days (2) 31 to 60 days (3) 61
to 90 days and (4) 91 or more days, as of the close of business on the
last day of the calendar month preceding such Distribution Date;
(xi) with respect to any Mortgage Loan that became an REO
Property during the preceding calendar month, the loan number and Stated
Principal Balance of such Mortgage Loan as of the close of business on
the Determination Date preceding such Distribution Date and the date of
acquisition thereof;
(xii) the total number and principal balance of any REO Properties
(and market value, if available) as of the close of business on the
Determination Date preceding such Distribution Date;
(xiii) the Senior Prepayment Percentage, Class A-8 Prepayment
Percentage and the Subordinate Prepayment Percentage for the following
Distribution Date;
(xiv) the aggregate amount of Realized Losses incurred during the
preceding calendar month and any Class P Deferred Amounts for such
Distribution Date; and
(xv) the Special Hazard Loss Coverage Amount, the Fraud Loss
Coverage Amount and the Bankruptcy Loss Coverage Amount, in each case as
of the related Determination Date.
(b) No later than each Distribution Date, the Trustee, based upon
information supplied to it on the Master Servicer's Certificate, shall
prepare and mail to each Holder of a Certificate, each Rating Agency and the
Master Servicer a statement setting forth the information set forth in
Section 5.04(a).
In the case of information furnished pursuant to subclauses (i), (ii)
and (ix) of Section 5.04(a), the amounts shall be expressed as a dollar
amount or Notional Amount, as the case may be, per Certificate with a $1,000
denomination.
Within a reasonable period of time after the end of each calendar year,
the Master Servicer shall forward to the Trustee for mailing to each Person
who at any time during the calendar year was the Holder of a Certificate,
Certificate a statement containing the information set forth in subclauses
(i), (ii) and (vii) of Section 5.04(a), in each case aggregated for such
calendar year or applicable portion thereof during which such Person was a
Certificateholder. Such obligation of the Master Servicer shall be deemed to
have been satisfied to the extent that substantially comparable information
shall be provided by the Master Servicer pursuant to any requirements of the
Code as from time to time in force.
The Master Servicer shall provide on an aggregate basis with respect to
each Class of Certificates to enable the Trustee to deliver to the Holders of
Certificates any reports or information the Trustee is required by this
Agreement or the Code, Treasury Regulations or REMIC Provisions to deliver to
the Holders of Certificates, and the Master Servicer shall prepare and
provide to the Trustee, and the Trustee shall forward to Certificateholders
in the form so provided (by mail, telephone, or publication as may be
permitted by applicable Treasury Regulations) as directed by the Master
Servicer, such other reasonable information as the Master Servicer deems
necessary or appropriate or is required by the Code, Treasury Regulations,
and the REMIC Provisions including, but not limited to, (i) information to be
reported to the Holders of the Residual Certificates for quarterly notices on
Schedule Q (Form 1066) (which information shall be forwarded to the Holders
of the Certificates by the Master Servicer), (ii) information to be provided
to the Holders of Certificates with respect to amounts which should be
included as interest and original issue discount in such Holders' gross
income and (iii) information to be provided to all Holders of Certificates
setting forth the percentage of the REMIC's assets, determined in accordance
with Treasury Regulations using a convention, not inconsistent with Treasury
Regulations, selected by the Master Servicer in its absolute discretion, that
constitute real estate assets under Section 856 of the Code, and assets
described in Section 7701(a)(19)(C) of the Code; provided, however, that in
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setting forth the percentage of such assets of the REMIC, nothing contained
in this Agreement, including without limitation Section 7.03 hereof, shall be
interpreted to require the Master Servicer periodically to appraise the fair
market values of the assets of the Trust Fund or to indemnify the Trust Fund
or any Certificateholders from any adverse federal, state or local tax
consequences associated with a change subsequently required to be made in the
Master Servicer's initial good faith determinations of such fair market
values (if subsequent determinations are required pursuant to the REMIC Pro-
visions) made from time to time.
Section 5.05. Tax Returns and Reports to Certificateholders. (a) For
---------------------------------------------
federal income tax purposes, the Master and Subsidiary REMICs shall each have
a calendar year taxable year and shall maintain their books on the accrual
method of accounting.
(b) The Master Servicer shall prepare or cause to be prepared and shall
deliver to the Trustee for signature, and the Master Servicer shall file or
cause to be filed with the Internal Revenue Service and applicable state or
local tax authorities income tax information returns for each taxable year
with respect to each REMIC containing such information at the times and in
the manner as may be required by the Code or state or local tax laws, regula-
tions, or rules, and shall furnish or cause to be furnished to each REMIC and
the Certificateholders the schedules, statements or information at such times
and in such manner as may be required thereby. Within thirty (30) days of
the Closing Date, the Master Servicer shall furnish or cause to be furnished
to the Internal Revenue Service, on Form 8811 or as otherwise required by the
Code, the name, title, address and telephone number of the person that
Holders of the Certificates may contact for tax information relating thereto,
together with such additional information at the time or times and in the
manner required by the Code. Such federal, state, or local income tax or
information returns shall be signed by the Trustee, or such other Person as
may be required to sign such returns by the Code or state or local tax laws,
regulations, or rules.
(c) In the first federal income tax return of each REMIC for its short
taxable year ending December 31, 1997, REMIC status shall be elected for such
taxable year and all succeeding taxable years.
(d) The Master Servicer will maintain or cause to be maintained such
records relating to each REMIC, including but not limited to the income,
expenses, assets and liabilities of the Trust Fund, and the fair market value
and adjusted basis of the Trust Fund property and assets determined at such
intervals as may be required by the Code, as may be necessary to prepare the
foregoing returns, schedules, statements or information.
Section 5.06. Tax Matters Person. The Tax Matters Person shall have
------------------
the same duties with respect to each REMIC as those of a "tax matters
partner" under Subchapter C of Chapter 63 of Subtitle F of the Code.
Section 5.07. Rights of the Tax Matters Person in Respect of the
--------------------------------------------------
Trustee. The Trustee shall afford the Tax Matters Person, upon reasonable
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notice during normal business hours, access to all records maintained by the
Trustee in respect of its duties hereunder and access to officers of the
Trustee responsible for performing such duties. Upon request, the Trustee
shall furnish the Tax Matters Person with its most recent statement of
condition publicly available. The Trustee shall make available to the Tax
Matters Person such books, documents or records relating to the Trustee's
services hereunder as the Tax Matters Person shall reasonably request. The
Tax Matters Person shall not have any responsibility or liability for any
action or failure to act by the Trustee and is not obligated to supervise the
performance of the Trustee under this Agreement or otherwise.
Section 5.08. REMIC Related Covenants. For as long as the Trust Fund
-----------------------
shall exist, the Trustee shall act in accordance herewith to assure
continuing treatment of the Master REMIC and the Subsidiary REMICs as REMICs
and avoid the imposition of tax on such REMICs. In particular:
(a) The Trustee shall not create, or permit the creation of, any
"interests" in each REMIC within the meaning of Code Section 860D(a)(2)
other than the interests represented by the Trust Fund, the Regular
Certificates, the Subsidiary REMIC Interests and the Residual Certifi-
cates, respectively.
(b) Except as otherwise provided in the Code, the Sponsor and the
Master Servicer shall not grant and the Trustee shall not accept
property unless (i) substantially all of the property held in either
REMIC constitutes either "qualified mortgages" or "permitted invest-
ments" as defined in Code Sections 860G(a)(3) and (5), respectively, and
(ii) no property shall be contributed to either REMIC after the start-up
day unless such grant would not subject the Trust Fund to the 100% tax
on contributions to a REMIC after the start-up day of the REMIC imposed
by Code Section 860G(d).
(c) The Trustee shall not accept on behalf of either REMIC any fee
or other compensation for services and the Trustee shall not knowingly
accept, and the Master Servicer shall not knowingly accept, on behalf of
the Trust Fund any income from assets other than those permitted to be
held by a REMIC.
(d) The Trustee shall not sell or permit the sale of all or any
portion of the Mortgage Loans (other than in accordance with Sections
2.02, 2.03 or 2.08), unless such sale is pursuant to a "qualified
liquidation" as defined in Code Section 860F(a)(4)(A) and in accordance
with Article X.
(e) The Master Servicer shall maintain books with respect to the
Trust Fund on a calendar year taxable year and on an accrual basis.
Neither the Master Servicer nor the Trustee shall engage in a
"prohibited transaction" (as defined in Code Section 860F(a)(2)), except
that, with the prior written consent of the Master Servicer and the Sponsor,
the Trustee may engage in the activities otherwise prohibited by the fore-
going clauses (b), (c) and (d), provided that the Master Servicer shall have
delivered to the Trustee an Opinion of Counsel to the effect that such
transaction will not result in the imposition of a tax on the Master REMIC
or Subsidiary REMIC and will not disqualify either the Master REMIC or
Subsidiary REMIC from treatment as a REMIC; and provided, that the Master
Servicer shall have demonstrated to the satisfaction of the Trustee that such
action will not adversely affect the rights of the Holders of the Certificates
and the Trustee and that such action will not adversely impact the rating of
the Certificates.
Section 5.09. Determination of Pass-Through Rates for LIBOR
---------------------------------------------
Certificates. On each LIBOR Determination Date so long as the LIBOR
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Certificates are outstanding, the Trustee shall determine LIBOR and the Pass-
Through Rates for the Class F and Class S Certificates based on quotations
provided by the Reference Banks. LIBOR for the next Interest Accrual Period
will be established by the Trustee on each LIBOR Determination Date as follows:
(a) On any LIBOR Determination Date, the Trustee will determine
LIBOR based on LIBOR quotations provided by each of the Reference Banks
as of approximately 11:00 a.m. (London Time) on such LIBOR Determination
Date, as such quotations appear on the Telerate Page 3750 (as defined in
the International Swap Dealers Association Inc. Code of 1987 Interest
Rate and Currency Exchange Definitions).
(b) If on any LIBOR Determination Date two or more Reference Banks
provide such offered quotations, LIBOR for the next Interest Accrual
Period shall be the arithmetic mean of such offered quotations (rounding
such arithmetic mean upwards if necessary to the nearest whole multiple
of 1/32%).
(c) If on any LIBOR Determination Date only one or none of the
Reference Banks provides such offered quotations, LIBOR for the next
Interest Accrual Period shall be whichever is the higher of (i) LIBOR as
determined on the previous LIBOR Determination Date or (ii) the Reserve
Interest Rate. The "Reserve Interest Rate" shall be the rate per annum
which the Trustee determines to be either (i) the arithmetic mean
(rounded upwards if necessary to the nearest whole multiple of 1/32%) of
the one-month United States dollar lending rates that New York City
banks selected by the Trustee are quoting, on the relevant LIBOR
Determination Date, to the principal London offices of at least two of
the Reference Banks to which such quotations are, in the opinion of the
Trustee, being so made, or (ii) in the event that the Trustee can
determine no such arithmetic mean, the lowest one-month United States
dollar lending rate which New York City banks selected by the Trustee
are quoting on such LIBOR Determination Date to leading European banks.
(d) If on any LIBOR Determination Date the Trustee is required but
is unable to determine the Reserve Interest Rate in the manner provided
in paragraph (b) above, LIBOR shall be LIBOR as determined on the
preceding LIBOR Determination Date, or, in the case of the first LIBOR
Determination Date, the Initial LIBOR Rate.
Until all of the LIBOR Certificates are paid in full, the Trustee will
at all times retain at least four Reference Banks for the purpose of
determining LIBOR with respect to each Interest Determination Date. The
Master Servicer initially shall designate the Reference Banks. Each
"Reference Bank" shall be a leading bank engaged in transactions in
Eurodollar deposits in the international Eurocurrency market, shall not
control, be controlled by, or be under common control with, the Sponsor and
shall have an established place of business in London. If any such Reference
Bank should be unwilling or unable to act as such or if the Master Servicer
should terminate its appointment as Reference Bank, the Trustee shall
promptly appoint or cause to be appointed another Reference Bank. The
Trustee shall have no liability or responsibility to any Person for (i) the
selection of any Reference Bank for purposes of determining LIBOR or (ii) any
inability to retain at least four Reference Banks which is caused by
circumstances beyond its reasonable control. The initial Reference Banks
shall be Barclay's, Citibank, Norwest and Abbey.
The Pass-Through Rate for each Class of LIBOR Certificates for each
Interest Accrual Period shall be determined by the Trustee on each LIBOR
Determination Date so long as the LIBOR Certificates are outstanding on the
basis of LIBOR and the respective formulae appearing in footnotes
corresponding to the LIBOR Certificates in the table relating to the
Certificates in the Preliminary Statement.
In determining LIBOR, any Pass-Through Rate for the LIBOR Certificates
or any Reserve Interest Rate, the Trustee may conclusively rely and shall be
protected in relying upon the offered quotations (whether written, oral or on
the Telerate Screen) from the Reference Banks or the New York City banks as
to LIBOR or the Reserve Interest Rate, as appropriate, in effect from time to
time. The Trustee shall not have any liability or responsibility to any
Person for (i) the Trustee's selection of New York City banks for purposes of
determining any Reserve Interest Rate or (ii) its inability, following a
good-faith reasonable effort, to obtain such quotations from the Reference
Banks or the New York City banks or to determine such arithmetic mean, all as
provided for in this Section 5.09.
The establishment of LIBOR and each Pass-Through Rate for the LIBOR
Certificates by the Trustee shall (in the absence of manifest error) be
final, conclusive and binding upon each Holder of a Certificate and the
Trustee.
ARTICLE VI
The Certificates
Section 6.01. The Certificates. The Classes of Senior Certificates and
----------------
the Subordinate Certificates shall be substantially in the forms set forth in
Exhibits A, B, D and E (reverse of all Certificates) and shall, on original
issue, be executed by the Sponsor and shall be countersigned and delivered by
the Trustee to or upon the order of the Sponsor upon receipt by the Trustee
of the documents specified in Section 2.01. The Senior Certificates (other
than the Class F, Class P, Class S, Class X, Class R-I and Class R-II
Certificates) shall be available to investors in interests representing
minimum dollar Certificate Balances of $10,000 and integral multiples of $1
in excess thereof. The Subordinate Certificates and the Class P, Class F,
Class S and Class X Certificates shall be available to investors in fully
registered form in interests representing minimum dollar Certificate Balances
or Notional Amounts, as the case may be, of $25,000 and integral dollar
multiples of $1 in excess thereof (except one Certificate of such Class may
be issued with a different Certificate Balance).
The Residual Certificates shall be in fully registered form in minimum
denominations of $99 (except one Residual Certificate of each Class may be
available in a different denomination).
The Certificates shall be executed by manual or facsimile signature on
behalf of the Trustee by an authorized officer or signatory. 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 execution and delivery
of such Certificates or did not hold such offices or positions at the date of
such Certificate. No Certificate shall be entitled to any benefit under this
Agreement, or be valid for any purpose, unless such Certificate shall have
been manually countersigned by the Trustee substantially in the form provided
for herein, and such countersignature 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 countersignature.
Section 6.02. Registration of Transfer and Exchange of Certificates.
-----------------------------------------------------
The Trustee shall cause to be kept at an office or agency in the city in
which the Corporate Trust Office of the Trustee is located a Certificate
Register in which, subject to such reasonable regulations as it may
prescribe, the Trustee shall provide for the registration of Certificates and
of transfers and exchanges of Certificates as herein provided. The Trustee
shall initially serve as Certificate Registrar for the purpose of
registering Certificates and transfers and exchanges of Certificates as herein
provided.
At the option of the Certificateholders, Certificates may be exchanged
for other Certificates of authorized denominations of a like Class, tenor and
aggregate Percentage Interest, upon surrender of the Certificates to be
exchanged at any such office or agency. Whenever any Certificates are so
surrendered for exchange the Sponsor shall execute and the Trustee shall
authenticate, countersign and deliver the Certificates which the Certif-
icateholder making the exchange is entitled to receive. Every Certificate
presented or surrendered for transfer or exchange shall (if so required by
the Trustee or the Certificate Registrar) be duly endorsed by, or be
accompanied by a written instrument of transfer in form satisfactory to the
Trustee and the Certificate Registrar duly executed by, the Holder thereof or
his attorney duly authorized in writing.
No transfer of a Private Certificate shall be made unless such transfer
is exempt from the registration requirements of the Securities Act of 1933,
as amended (the "1933 Act"), and any applicable state securities laws or is
made in accordance with the 1933 Act and such laws. In the event of any such
transfer, (i) unless such transfer is made in reliance upon Rule 144A under
the 1933 Act, the Trustee or the Sponsor may require a written Opinion of
Counsel (which may be in-house counsel) acceptable to and in form and
substance reasonably satisfactory to the Trustee and the Sponsor that such
transfer may be made pursuant to an exemption, describing the applicable
exemption and the basis therefor, from the 1933 Act and such laws or is being
made pursuant to the 1933 Act and such laws, which Opinion of Counsel shall
not be an expense of the Trustee or the Sponsor and (ii) the Trustee shall
require the transferee to execute an investment letter (in substantially the
form attached hereto as Exhibit J) acceptable to and in form and substance
reasonably satisfactory to the Sponsor and the Trustee certifying to the
Sponsor and the Trustee the facts surrounding such transfer, which investment
letter shall not be an expense of the Trustee or the Sponsor; provided that
--------
the foregoing requirements under clauses (i) and (ii) shall not apply to a
transfer of a Private Certificate between or among the Sponsor, the Seller,
their affiliates or both. The Sponsor shall provide to any Holder of a
Private Certificate and any prospective transferees designated by any such
Holder, information regarding the related Certificates and the Mortgage Loans
and such other information as shall be necessary to satisfy the condition to
eligibility set forth in Rule 144A(d)(4) for transfer of any such certificate
without registration thereof under the 1933 Act pursuant to the registration
exemption provided by Rule 144A. The Holder of a Private Certificate
desiring to effect such transfer shall, and does hereby agree to, indemnify
the Trustee and the Sponsor against any liability that may result if the
transfer is not so exempt or is not made in accordance with such federal and
state laws.
Except as provided below, the Book-Entry Certificates shall at all times
remain registered in the name of the Depository or its nominee and at all
times: (i) registration of the Certificates may not be transferred by the
Trustee except to another Depository; (ii) the Depository shall maintain
book-entry records with respect to the Certificate Owners and with respect to
ownership and transfers of such Book-Entry Certificates; (iii) ownership and
transfers of registration of the Book-Entry Certificates on the books of the
Depository shall be governed by applicable rules established by the
Depository; (iv) the Depository may collect its usual and customary fees,
charges and expenses from its Depository Participants; (v) the Trustee shall
deal with the Depository as the representative of the Certificate Owners of
the Book-Entry Certificates for purposes of exercising the rights of Holders
under this Agreement, and requests and directions for and votes of the
Depository shall not be deemed to be inconsistent if they are made with
respect to different Certificate Owners; and (vi) the Trustee may rely and
shall be fully protected in relying upon information furnished by the
Depository with respect to its Depository Participants and furnished by the
Depository Participants with respect to indirect participating firms and
persons shown on the books of such indirect participating firms as direct or
indirect Certificate Owners.
All transfers by Certificate Owners of Book-Entry Certificates shall be
made in accordance with the procedures established by the Depository
Participant or brokerage firm representing such Certificate Owner. Each
Depository Participant shall only transfer Book-Entry Certificates of
Certificate Owners it represents or of brokerage firms for which it acts as
agent in accordance with the Depository's normal procedures.
If (x) (i) the Depository or the Sponsor advises the Trustee in writing
that the Depository is no longer willing or able to properly discharge its
responsibilities as Depository, and (ii) the Trustee or the Sponsor is unable
to locate a qualified successor, (y) the Sponsor at its option advises the
Trustee in writing that it elects to terminate the book-entry system through
the Depository or (z) after the occurrence of an Event of Default,
Certificate Owners representing at least 51% of the aggregate Class
Certificate Balances of the Book-Entry Certificates together advise the
Trustee and the Depository through the Depository Participants in writing
that the continuation of a book-entry system through the Depository is no
longer in the best interests of the Certificate Owners, the Trustee shall
notify all Certificate Owners, through the Depository, of the occurrence of
any such event and of the availability of definitive, fully registered
Certificates (the "Definitive Certificates") to Certificate Owners requesting
the same. Upon surrender to the Trustee of the related Class of Certificates
by the Depository, accompanied by the instructions from the Depository for
registration, the Trustee shall issue the Definitive Certificates. Neither
the Master Servicer, the Sponsor nor the Trustee shall be liable for any delay
in delivery of such instruction and may conclusively rely on, and shall be
protected in relying on, such instructions. The Master Servicer shall provide
the Trustee with an adequate inventory of certificates to facilitate the
issuance and transfer of Definitive Certificates. Upon the issuance of
Definitive Certificates, the Trustee shall recognize the Holders of the
Definitive Certificates as Certificateholders hereunder.
No transfer of an ERISA-Restricted Certificate shall be made unless the
Trustee shall have received either (i) a representation letter from the
transferee of such Certificate, acceptable to and in form and substance
satisfactory to the Trustee and the Master Servicer (in the event such
Certificate is a Private Certificate or a Residual Certificate, such
requirement is satisfied only by the Trustee's receipt of a representation
letter from the transferee substantially in the form of Exhibit J), to the
effect that such transferee is not an employee benefit plan subject to
Section 406 of ERISA, nor a person acting on behalf of any such plan, which
representation letter shall not be an expense of the Trustee or the Master
Servicer, (ii) if the purchaser is an insurance company, a representation
that the purchaser is an insurance company which is purchasing such ERISA-
Restricted Certificates with funds contained in an "insurance company general
account" (as such term is defined in Section V(e) of Prohibited Transaction
Class Exemption 95-60 ("PTCE 95-60")) and that the purchase and holding of
such ERISA-Restricted Certificates are covered under Section III of PTCE 95-
60, or (iii) in the case of any ERISA-Restricted Certificate presented for
registration in the name of an employee benefit plan subject to ERISA, and
Section 4975 of the Code (or comparable provisions of any subsequent
enactments), or a trustee of any such plan, an Opinion of Counsel
satisfactory to the Trustee and the Master Servicer to the effect that the
purchase or holding of such ERISA-Restricted Certificate will not result in
the assets of the Trust Fund being deemed to be "plan assets" and subject to
the prohibited transaction provisions of ERISA and the Code and will not
subject the Trustee or the Master Servicer to any obligation in addition to
those undertaken in this Agreement, which opinion of counsel shall not be an
expense of the Trustee or the Master Servicer. For purposes of the preceding
sentence, with respect to an ERISA-Restricted Certificate that is not a
Private Certificate or a Residual Certificate, in the event the
representation letter referred to in the preceding sentence is not furnished,
such representation shall be deemed to have been made to the Trustee by the
transferee's (including an initial acquiror's) acceptance of the ERISA-
Restricted Certificates. Notwithstanding anything else to the contrary
herein, any purported transfer of an ERISA-Restricted Certificate to or on
behalf of an employee benefit plan subject to ERISA or to the Code without
the delivery to the Trustee of an Opinion of Counsel satisfactory to the Trustee
as described above shall be void and of no effect.
To the extent permitted under applicable law (including, but not limited
to, ERISA), the Trustee shall be under no liability to any Person for any
registration of transfer of any ERISA-Restricted Certificate that is in fact
not permitted by this Section 6.01 or for making any payments due on such
Certificate to the Holder thereof or taking any other action with respect to
such Holder under the provisions of this Agreement so long as the transfer
was registered by the Trustee in accordance with the foregoing requirements.
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 appointed the Sponsor or its designee as its attorney-in-
fact to negotiate the terms of any mandatory sale under clause (v) below and
to execute all instruments of transfer and to do all other things necessary
in connection with any such sale, and the rights of each Person acquiring any
Ownership Interest in a Residual Certificate are expressly subject to the
following provisions:
(i) Each Person holding or acquiring any Ownership Interest in a
Residual Certificate shall be a Permitted Transferee and shall promptly
notify the Trustee of any change or impending change in its status as a
Permitted Transferee.
(ii) No Person shall acquire an Ownership Interest in a Residual
Certificate unless such Ownership Interest is a pro rata undivided
--- ----
interest.
(iii) No Ownership Interest in a Residual Certificate may be
transferred without the express written consent of the Trustee. In
connection with any proposed transfer of any Ownership Interest in a
Residual Certificate, the Trustee shall as a condition to such consent,
require delivery to it, in form and substance satisfactory to it, of
each of the following:
A. an affidavit in the form of Exhibit I hereto from the
proposed transferee to the effect that such transferee is a
Permitted Transferee and that it is not acquiring its Ownership
Interest in the Residual Certificate that is the subject of the
proposed transfer as a nominee, trustee or agent for any Person who
is not a Permitted Transferee; and
B. a covenant of the proposed transferee to the effect that
the proposed transferee agrees to be bound by
and to abide by the transfer restrictions applicable to the
Residual Certificates.
(iv) Any attempted or purported transfer of any Ownership Interest
in a Residual Certificate in violation of the provisions of this Section
6.02 shall be absolutely null and void and shall vest no rights in the
purported transferee. If any purported transferee shall, in violation
of the provisions of this Section 6.02, become a Holder of a Residual
Certificate, then the prior Holder of such Residual Certificate that is
a Permitted Transferee shall, upon discovery that the registration of
transfer of such Residual Certificate was not in fact permitted by this
Section 6.02, be restored to all rights as Holder thereof retroactive to
the date of registration of 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 or for making any distributions due on such Residual
Certificate to the Holder thereof or taking any other action with
respect to such Holder under the provisions of the Agreement so long as
the transfer was not registered upon the express written consent of the
Trustee. The Trustee shall be entitled to recover from any Holder of a
Residual Certificate that was in fact not a Permitted Transferee at the
time such distributions were made all distributions made on such
Residual Certificate. Any such distributions so recovered by the
Trustee shall be distributed and delivered by the Trustee to the prior
Holder of such Residual Certificate that is a Permitted Transferee.
(v) If any Person other than a Permitted Transferee acquires any
Ownership Interest in a Residual Certificate in violation of the
restrictions in this Section 6.02, then the Trustee shall have the right
but not the obligation, without notice to the Holder of such Residual
Certificate or any other Person having an Ownership Interest therein, to
notify the Underwriter to arrange for the sale of such Residual Certif-
icate. The proceeds of such sale, net of commissions (which may include
commissions payable to the Trustee or its affiliates), expenses and
taxes due, if any, will be remitted by the Trustee to the previous
Holder of such Residual Certificate that is a Permitted Transferee,
except that in the event that the Trustee determines that the Holder of
such Residual Certificate may be liable for any amount due under this
Section 6.02 or any other provisions of this Agreement, the Trustee may
withhold a corresponding amount from such remittance as security for
such claim. The terms and conditions of any sale under this clause (v)
shall be determined in the sole discretion of the Trustee, and it shall
not be liable to any Person having an Ownership Interest in a Residual
Certificate as a result of its exercise of such discretion.
(vi) If any Person other than a Permitted Transferee acquires any
Ownership Interest in a Residual Certificate in violation of the
restrictions in this Section 6.02, then the Trustee, based on
information provided to the Trustee by the Master Servicer will provide
to the Internal Revenue Service, and to the persons specified in Section
860E(e)(3) and (6) of the Code, information needed to compute the tax
imposed under Section 860E(e)(5) of the Code on transfers of residual
interests to disqualified organizations.
The foregoing provisions of Section 6.02 shall cease to apply to transfers
occurring on or after the date on which there shall have been delivered to
the Trustee, in form and substance satisfactory to the Trustee, (i) written
notification from each Rating Agency that the removal of the restrictions on
Transfer set forth in this Section 6.02 will not cause such Rating Agency to
downgrade its rating of the Certificates and (ii) an Opinion of Counsel to
the effect that such removal will not cause the Trust Fund to fail to qualify
as a REMIC.
No service charge shall be imposed for any transfer or exchange of
Certificates of any Class, but the Trustee may require payment of a sum suf-
ficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.
All Certificates surrendered for transfer and exchange shall be
destroyed by the Certificate Registrar.
Section 6.03. Mutilated, Destroyed, Lost or Stolen Certificates. If
-------------------------------------------------
(i) any mutilated Certificate is surrendered to the Certificate Registrar or
the Certificate Registrar receives evidence to its satisfaction of the
destruction, loss or theft of any Certificate, and (ii) there is delivered to
the Trustee, the Sponsor and the Certificate Registrar such security or
indemnity reasonably satisfactory to each, to save each of them harmless,
then, in the absence of actual notice to the Trustee or the Certificate
Registrar that such Certificate has been acquired by a bona fide purchaser,
the Trustee shall countersign and deliver, in exchange for or in lieu of any
such mutilated, destroyed, lost or stolen Certificate, a new Certificate of
like tenor, Class and Percentage Interest but bearing a number not
contemporaneously outstanding. Upon the issuance of any new Certificate
under this Section, the Trustee may require the payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of the
Trustee and the Certificate Registrar) connected therewith. Any duplicate
Certificate issued pursuant to this Section 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 presentation of a
---------------------
Certificate for registration of transfer, the Sponsor, the Master Servicer,
the Trustee, the Certificate Registrar and any agent of the Sponsor, the
Master Servicer, the Trustee or the Certificate Registrar may treat the Per-
son in whose name any Certificate is registered as the owner of such Certifi-
cate for the purpose of receiving distributions pursuant to Section 5.01 and
for all other purposes whatsoever, and neither the Sponsor, the Master
Servicer, the Trustee, the Certificate Registrar nor any agent of the Master
Servicer, the Trustee or the Certificate Registrar shall be affected by
notice to the contrary.
ARTICLE VII
The Sponsor and the Master Servicer
Section 7.01. Respective Liabilities of the Sponsor and the Master
----------------------------------------------------
Servicer. The Sponsor 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 the Sponsor and the Master
Servicer herein. By way of illustration and not limitation, the Sponsor is
not liable for the servicing and administration of the Mortgage Loans, nor is
it obligated by Section 8.01 to assume any obligations of the Master Servicer
or to appoint a designee to assume such obligations, nor is it liable for any
other obligation hereunder that it may, but is not obligated to, assume
unless it elects to assume such obligation in accordance herewith.
Section 7.02. Merger or Consolidation of the Sponsor or the Master
----------------------------------------------------
Servicer. The Sponsor and the Master Servicer will each keep in full effect
- --------
its existence, rights and franchises as a corporation under the laws of the
state of its incorporation, 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, the Certificates or any of the Mortgage
Loans and to perform its respective duties under this Agreement.
Any Person into which the Sponsor or the Master Servicer may be merged
or consolidated, or any corporation resulting from any merger or
consolidation to which the Sponsor or the Master Servicer shall be a party,
or any Person succeeding to the business of the Sponsor or the Master
Servicer, shall be the successor of the Sponsor 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
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surviving Person to the Master Servicer shall be qualified to service
mortgage loans on behalf of FNMA or FHLMC.
Section 7.03. Limitation on Liability of the Sponsor, the Master
--------------------------------------------------
Servicer and Others. Neither the Sponsor, the Master Servicer nor any of the
- -------------------
directors, officers, employees or agents of the Sponsor or of the Master
Servicer shall be under any liability to the Trust Fund or the
Certificateholders for any action taken or for refraining from the taking of
any action in good faith pursuant to this Agreement, or for errors in
judgment; provided, however, that this provision shall not protect the
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Sponsor, the Master Servicer or any such person against any breach of
warranties or representations made herein or any liability which would
otherwise be imposed by reason of willful misfeasance, bad faith or gross
negligence in the performance of duties or by reason of reckless disregard of
obligations and duties hereunder. The Sponsor, the Master Servicer and any
director, officer, employee or agent of the Sponsor 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. The Sponsor, the Master Servicer and any director, officer,
employee or agent of the Sponsor 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 related to any
specific Mortgage Loan or Mortgage Loans (except as any such loss, liability
or expense shall be otherwise reimbursable pursuant to this Agreement) and
any loss, liability or expense incurred by reason of willful misfeasance, bad
faith or gross negligence in the performance of duties hereunder or by reason
of reckless disregard of obligations and duties hereunder. Neither the
Sponsor nor the Master Servicer shall be under any obligation to appear in,
prosecute or defend any legal action which is not incidental to its
respective duties under this Agreement and which in its opinion may involve
it in any expense or liability; provided, however, that the Sponsor or the
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Master Servicer may in its discretion undertake any such action which it may
deem necessary or desirable in respect to this Agreement and the rights and
duties of the parties hereto and the interests of the Certificateholders
hereunder. In such event, the legal expenses and costs of such action and
any liability resulting therefrom shall be expenses, costs and liabilities of
the Trust Fund, and the Sponsor and the Master Servicer shall be entitled to
be reimbursed therefor out of amounts attributable to the Mortgage Loans on
deposit in the Collection Account as provided by Section 3.11.
Section 7.04. Sponsor and Master Servicer Not to Resign. Subject to
-----------------------------------------
the provisions of Section 7.02, neither the Sponsor nor the Master Servicer
shall resign from its respective obligations and duties hereby imposed on it
except upon determination that its duties hereunder are no longer permissible
under applicable law. Any such determination permitting the resignation of
the Sponsor or the Master Servicer shall be evidenced by an Opinion of
Counsel to such effect delivered to the Trustee. No such resignation 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 8.05 hereof.
ARTICLE VIII
Default
Section 8.01. Events of Default. If any one of the following events
-----------------
("Events of Default") shall occur and be continuing:
(i) Any failure by the Master Servicer to deposit amounts in the
Collection Account in the amount and manner provided herein so as to
enable the Trustee to distribute to Holders of Certificates any payment
required to be made under the terms of such Certificates and this Agree-
ment (other than the payments required to be made under Section 3.20)
which continues unremedied for a period of five (5) days; or
(ii) Failure on the part of the Master Servicer duly to observe or
perform in any material respect any other covenants or agreements of the
Master Servicer set forth in the Certificates or in this Agreement,
which covenants and agreements continue unremedied for a period of
thirty (30) days after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given to the Master
Servicer by the Trustee or the Sponsor, or to the Master Servicer, the
Sponsor and the Trustee by the Holders of Certificates evidencing,
Voting Rights aggregating not less than 25% of all Certificates affected
thereby; or
(iii) The entry of a decree or order by a court or agency or
supervisory authority having jurisdiction in the premises for the
appointment of a conservator, receiver or liquidator in any insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings against the Master Servicer, or for the winding up or
liquidation of the Master Servicer's affairs, and the continuance of any
such decree or order unstayed and in effect for a period of 60
consecutive days; or
(iv) The consent by the Master Servicer to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment of
debt, marshalling of assets and liabilities or similar proceedings of or
relating to the Master Servicer or of or relating to substantially all
of its property; or the Master Servicer shall admit in writing its
inability to pay its debts generally as they become due, file a petition
to take advantage of any applicable insolvency or reorganization
statute, make an assignment for the benefit of its creditors, or
voluntarily suspend payment of its obligations; or
(v) the failure of the Master Servicer to remit the Advance
required to be remitted pursuant to Section 3.20 which failure continues
unremedied at 3:00 p.m. on the related Distribution Date.
then, and in each and every such case, so long as an Event of Default shall
not have been remedied by the Master Servicer, either the Trustee or the
Sponsor may, and at the direction of the Holders of Certificates evidencing
Voting Rights aggregating not less than 51% of all Certificates affected
thereby shall by notice then given in writing to the Master Servicer (and to
the Trustee if given by the Sponsor and to the Sponsor if given by the
Trustee), terminate all of the rights and obligations of the Master Servicer
as servicer under this Agreement. If an Event of Default described in clause
(v) hereof shall occur, the Trustee shall, by notice to the Master Servicer,
terminate all of the rights and obligations of the Master Servicer under this
Agreement and in and to the Mortgage Loans and proceeds thereof and shall, as
successor Master Servicer, make the Advance which the Master Servicer failed
to make. On or after the receipt by the Master Servicer of such written
notice, all authority and power of the Master Servicer under this Agreement,
whether with respect to the Certificates or the Mortgage Loans or otherwise,
shall pass to and be vested in the Trustee pursuant to and under this Section
8.01, and, without limitation, the Trustee is hereby authorized and empowered
to execute and deliver, on behalf 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 the
purposes of such notice of termination, whether to complete the transfer and
endorsement of the Mortgage Loans and related documents, or otherwise,
including, without limitation, the recordation of the assignments of the
Mortgage Loans to it. The Master Servicer agrees to cooperate with the
Trustee in effecting the termination of the responsibilities and rights of
the Master Servicer hereunder, including, without limitation, the transfer to
the Trustee for the administration by it of all cash amounts that have been
deposited by the Master Servicer in the Collection Account or thereafter
received by the Master Servicer with respect to the Mortgage Loans. Upon
obtaining notice or knowledge of the occurrence of any Event of Default, the
Person obtaining such notice or knowledge shall give prompt written notice
thereof to Certificateholders at their respective addresses appearing in the
Certificate Register and to the Rating Agency. Notwithstanding the
termination of the Master Servicer pursuant hereto, the Master Servicer shall
remain liable for any causes of action arising out of any Event of Default
occurring prior to such termination.
Section 8.02. 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 its 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). Except
as otherwise expressly provided in 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.
Section 8.03. Directions by Certificateholders and Duties of Trustee
------------------------------------------------------
During Event of Default. During the continuance of any Event of Default,
- -----------------------
Holders of Certificates evidencing Voting Rights aggregating not less than
25% of each Class of Certificates affected thereby may direct 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; provided, however, that the Trustee shall be under no
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obligation to pursue any such remedy, or to exercise any of the trusts or
powers vested in it by this Agreement (including, without limitation, (a) the
conducting or defending of any administrative action or litigation hereunder
or in relation hereto, and (b) the terminating of the Master Servicer or any
successor servicer from its rights and duties as servicer hereunder) at the
request, order or direction of any of the Certificateholders, 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 and, provided further, that, subject to the provisions of
-------- -------
Section 9.01, the Trustee shall have the right to decline to follow any such
direction if the Trustee, in accordance with an Opinion of Counsel,
determines that the action or proceeding so directed may not lawfully be
taken or if the Trustee in good faith determines that the action or
proceeding so directed would involve it in personal liability or be unjustly
prejudicial to the non-assenting Certificateholders.
Section 8.04. Action upon Certain Failures of the Master Servicer and
-------------------------------------------------------
upon Event of Default. In the event that the Trustee shall have knowledge
- ---------------------
of any failure of the Master Servicer specified in Section 8.01(i) or (ii)
which would become an Event of Default upon the Master Servicer's failure to
remedy the same after notice, the Trustee may, but need not if the Trustee
deems it not in the Certificateholder's best interest, give notice thereof to
the Master Servicer. In the event that the Trustee shall have knowledge of
an Event of Default, the Trustee shall give prompt written notice thereof to
the Certificateholders.
Section 8.05. Trustee to Act; Appointment of Successor. (a) On and
----------------------------------------
after the time the Master Servicer receives a notice of termination pursuant
to Section 8.01, the Trustee shall be the successor in all respects to the
Master Servicer in its capacity as servicer under this Agreement and the
transactions set forth or provided for herein and shall be subject to all the
responsibilities, duties and liabilities relating thereto placed on the Master
Servicer by the terms and provisions hereof. Notwithstanding anything
provided herein to the contrary, under no circumstances shall any provision of
this Agreement, be construed to require the Trustee, acting in its capacity as
successor to the Master Servicer in its obligation to make Advances, to advance,
expend or risk its own funds or otherwise incur any financial liability in the
performance of its duties hereunder if it shall have reasonable grounds for
believing that such funds are non-recoverable. As compensation therefor, the
Trustee shall be entitled to such compensation as the Master Servicer would
have been entitled to hereunder if no such notice of termination had been
given. Notwithstanding the above, the Trustee may, if it shall be unwilling
so to act, or shall, if it is legally unable so to act, appoint, or petition
a court of competent jurisdiction to appoint, any established housing and
home finance institution having a net worth of not less than $10,000,000 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 hereunder; provided, however, that any such institution appointed
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as successor Master Servicer shall not as evidenced in writing by the Rating
Agency adversely affect the then current rating of any Class of Certificates
immediately prior to the termination of the Master Servicer. Pending
appointment of a successor to the Master Servicer hereunder, unless the
Trustee is prohibited by law from so acting, the Trustee shall act in such
capacity as hereinabove provided. 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.
(b) Any successor, including the Trustee, to the Master Servicer as
servicer shall during the term of its service as servicer maintain in force
(i) a policy or policies of insurance covering errors and omissions in the
performance of its obligations as servicer hereunder and (ii) a fidelity bond
in respect of its officers, employees and agents to the same extent as the
Master Servicer is so required pursuant to Section 3.03.
Section 8.06. Notification to Certificateholders. Upon any termination
----------------------------------
or appointment of a successor to the Master Servicer pursuant to this Article
VIII, the Trustee shall give prompt written notice thereof to
Certificateholders at their respective addresses appearing in the Certificate
Register and to each Rating Agency.
ARTICLE IX
The Trustee
Section 9.01. Duties of Trustee. (a) The Trustee, except during the
-----------------
continuance of a default by (i) the Seller or (ii) the occurrence of one or
more of the events specified in Section 8.01, undertakes to perform such
duties and only such duties as are specifically set forth in this Agreement.
In case of default or the occurrence of any such event as specified above,
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 investor would exercise or use under the circumstances in the conduct
of such investor's own affairs.
The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they are
in the form required by this Agreement; provided, however, that the Trustee
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shall not be responsible for the accuracy or content of any such certificate,
statement, opinion, report, or other order or instrument furnished by the
Master Servicer or the Sponsor to the Trustee pursuant to this Agreement.
(b) No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own gross negligent action, its own gross
negligent failure to act or its own willful misconduct; provided, however,
-------- -------
that:
(i) This paragraph shall not be construed to limit the effect of
paragraph (a) of this Section 9.01;
(ii) The Trustee and co-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 Certificateholders as
provided in Section 8.03 hereof;
(iii) For all purposes under this Agreement, the Trustee shall not
be deemed to have notice of any matter, including without limitation
those matters described in Section 8.01(ii) through (v) unless a
Responsible Officer assigned to and working in the Trustee's corporate
trust division has actual knowledge thereof or unless written notice of
any event is received at the Corporate Trust Office, and such notice
references the Certificates and this Agreement;
(iv) No provision of this Agreement shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability
in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if it
shall have reasonable grounds for believing that repayment of such funds
or adequate indemnity against such risk or liability is not reasonably
assured to it; and
(v) Prior to the occurrence of an event of default as described in
the first paragraph of this Section 9.01 and after the curing of all
such events of default which may have occurred, the duties and
obligations of the Trustee shall be determined solely by the express
provisions of this Agreement, the Trustee shall not be liable except for
the performance of such duties and obligations as are specifically set
forth in this Agreement, no implied covenants or obligations shall be
read into this Agreement against the Trustee, and, in the absence of bad
faith on the part of the Trustee, the Trustee may conclusively rely, as
to the truth of the statements and the correctness of the opinions
expressed therein, upon any certificates or opinions furnished to the
Trustee and conforming to the requirements of this Agreement.
Section 9.02. Certain Matters Affecting the Trustee. Except as
-------------------------------------
otherwise provided in Section 9.01:
(i) The Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, Officer's Certificate,
certificate of auditor or any other certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, 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;
(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 and any co-trustee shall not be personally liable
for any action taken, suffered or omitted by it in good faith and
reasonably believed by it to be authorized or within the discretion or
rights or powers conferred upon it by this Agreement;
(iv) Unless an event specified in Section 8.01 shall have occurred
and be continuing and, in each case is known to a Responsible Officer of
the Trustee, the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent, order,
approval, bond or other paper or document, unless requested in writing
to do so by Holders of Certificates evidencing not less than 50% of the
Percentage Interests of each Class of Certificates; provided, however,
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that if the payment within a reasonable time to the Trustee of the costs,
expenses or liabilities likely to be incurred by it in the making of
such investigation is, in the opinion of the Trustee, not reasonably
assured to the Trustee by the security afforded to it by the terms of this
Agreement, the Trustee may require reasonable indemnity against such
expense or liability or payment of such estimated expenses as a condition
to proceeding; and
(v) The Trustee and any co-trustee may execute any of the trusts
or powers hereunder or perform any duties hereunder either directly or
by or through agents or attorneys and the Trustee and any co-trustee
shall not be responsible for any willful misconduct or gross negligence
on the part of any agent or attorney appointed with due care by it here-
under.
Section 9.03. Trustee Not Liable for Certificates. The recitals
-----------------------------------
contained herein (other than those relating to the due organization, power
and authority of the Trustee) and in the Certificates (other than the
execution of, and the counter-signature on the Certificates) shall be taken
as the statements of the Sponsor or Master Servicer, as applicable, and the
Trustee assumes no responsibility for their corrections. The Trustee makes
no representations as to the validity or sufficiency of this Agreement or of
the Certificates or any Mortgage Loans save that the Trustee represents that,
assuming due execution and delivery by the other parties hereto, this
Agreement has been duly authorized, executed and delivered by it and
constitutes its legal, valid and binding obligation, enforceable against it
in accordance with its terms, subject, as to enforcement of remedies, to
applicable insolvency, receivership, moratorium and other laws affecting the
rights of creditors generally, and to general principles of equity and the
discretion of the court (regardless of whether enforcement of such remedies
is considered in a proceeding in equity or at law). The Trustee shall not be
accountable for the use or application by the Sponsor of funds paid to the
Sponsor in consideration of the assignment of the Mortgage Loans hereunder by
the Sponsor, or for the use or application of any funds paid to Servicers or
the Master Servicer in respect of the Mortgage Loans or deposited into the
Collection Account, or any other account hereunder (other than the
Distribution Account) by the Master Servicer.
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 it would have if it were not Trustee and
may otherwise deal with the Master Servicer, any Servicer or any of their
respective affiliates with the same right it would have if it were not the
Trustee.
Section 9.05. Eligibility Requirements for Trustee. The Trustee
------------------------------------
hereunder shall at all times be (i) an institution the deposits of which are
fully insured by the FDIC and (ii) a corporation or national banking association
organized and doing business under the laws of the United States of America or
of any State, authorized under such laws to exercise corporate trust powers,
having a combined capital and surplus of not less than $30,000,000 and
subject to supervision or examination by Federal or State authority and,
(iii) with respect to every successor trustee hereunder either an institution
(a) the long-term unsecured debt obligations of which are rated at least "A1"
by Moody's and "A" by Fitch or (b) whose serving as Trustee hereunder would not
result in the lowering of the ratings originally assigned to any Class of
Certificates. The Trustee shall not be an affiliate of the Sponsor or the
Master Servicer. If such corporation or national banking 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 9.05, the combined capital and surplus of such
corporation or national banking 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 provision of this Section 9.05, the Trustee shall
resign immediately in the manner and with the effect specified in Section
9.06.
Section 9.06. Resignation and Removal of Trustee. The Trustee may at
----------------------------------
any time resign and be discharged from the trust hereby created by giving
written notice thereof to the Master Servicer and mailing a copy of such
notice to all Holders of record. The Trustee shall also mail a copy of such
notice of resignation to each Rating Agency. Upon receiving such notice of
resignation, the Master Servicer shall use its best efforts to promptly
appoint a successor trustee by written instrument, in duplicate, one copy of
which instrument shall be delivered to the resigning Trustee and one copy to
the successor trustee. If no successor trustee shall have been so appointed
and shall 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 9.05 and shall fail to resign after written request
therefor by the Master Servicer, 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
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 Master Servicer 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 so removed and one copy to the
successor. The Holders of Certificates evidencing not less than 50% of
the Voting Rights may at any time remove the Trustee by written instrument or
instruments delivered to the Master Servicer and the Trustee; the Master
Servicer shall thereupon use its best efforts to appoint a successor trustee
in accordance with this Section.
Any resignation or removal of the Trustee and appointment of a successor
trustee pursuant to any of the provisions of this Section 9.06 shall become
effective upon acceptance of appointment by the successor trustee as provided
in Section 9.07.
Section 9.07. Successor Trustee. Any successor trustee appointed as
-----------------
provided in Section 9.06 shall execute, acknowledge and deliver to the Master
Servicer and to its predecessor trustee an instrument accepting such
appointment hereunder, and thereupon the resignation or removal of the
predecessor trustee shall become effective and such successor trustee,
without any further act, deed or conveyance, shall become fully vested with
all the rights, powers, duties and obligations of its predecessor hereunder,
with like effect as if originally named as Trustee herein. The predecessor
trustee shall duly assign, transfer, deliver and pay over to the successor
trustee the whole of the Mortgage Files and related documents and statements
held by it hereunder, together with all instruments of transfer and
assignment or other documents properly executed as may be reasonably required
to effect such transfer and such of the records or copies thereof maintained
by the predecessor trustee in the administration hereof as may be reasonably
requested by the successor trustee and shall thereupon be discharged from all
duties and responsibilities under this Agreement.
No successor trustee shall accept appointment as provided in this
Section 9.07 unless at the time of such appointment such successor trustee
shall be eligible under the provisions of Section 9.05.
Upon acceptance of appointment by a successor trustee as provided in
this Section 9.07, 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 and to each Rating Agency. If the Master
Servicer fails to mail such notice within 10 days after acceptance of
appointment by the successor trustee, the successor trustee shall cause such
notice to be mailed at the expense of the Master Servicer.
Section 9.08. Merger or Consolidation of Trustee. Any corporation or
----------------------------------
national banking association into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation or
national banking association resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any corporation or
national banking association succeeding to all or substantially all of the
corporate trust business of the Trustee, shall be the successor of the
Trustee hereunder, provided such corporation or national banking association
shall be eligible under the provisions of Section 9.05, without the
execution or filing of any paper or any further act on the part of any of
the parties hereto, anything herein to the contrary notwithstanding.
Section 9.09. Appointment of Co-Trustee or Separate Trustee.
---------------------------------------------
Notwithstanding any of the provisions hereof, at any time, for the purpose of
meeting any legal requirements of any jurisdiction in which any Mortgaged
Property may at the time be located or for any other reason, 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, or separate trustee or separate trustees, of all or any part
of the Trust Fund, and to vest in such Person or Persons, in such capacity,
such title to the Trust Fund, or any part thereof, and, subject to the other
provision of this Section 9.09, 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 10 days after the receipt by it of a request to do so, 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 9.05 hereunder and no notice to Holders
of Certificates of the appointment of co-trustee(s) or separate trustee(s)
shall be required under Section 9.07 hereof.
In the case of any appointment of a co-trustee or separate trustee
pursuant to this Section 9.09, all rights, powers, duties and obligations
conferred or imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or co-trustee
jointly, except to the extent that under any law of any jurisdiction in which
any particular act or acts are to be performed (whether as Trustee hereunder
or as successor to the Master Servicer hereunder), the Trustee shall be
incompetent or unqualified to perform such act or acts, in which event such
rights, powers, duties and obligations (including the holding of title to he
Trust Fund or any portion thereof in any such jurisdiction) shall be
exercised and performed by such separate trustee or co-trustee at the
direction of the Trustee.
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, the Trustee. Every such instrument shall be filed
with the Trustee.
Any separate trustee or co-trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of
this Agreement on its behalf and in its name. If any separate trustee or
co-trustee shall become incapable of acting, resign or be removed, or shall
be adjudged a bankrupt or insolvent, or a receiver of its property shall be
appointed, or any public officer shall take charge or control of such trustee
or co-trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation, all of its estates, properties,
rights, remedies and trusts shall vest in and be exercised by the Trustee, to
the extent permitted by law, without the appointment of a new or successor
trustee.
Section 9.10. Authenticating Agents. The Trustee may appoint one or
---------------------
more authenticating agents ("Authenticating Agents") which shall be
authorized to act on behalf of the Trustee in authenticating or
countersigning Certificates. Wherever reference is made in this Agreement to
the authentication or countersigning of Certificates by the Trustee or the
Trustee's certificate of authentication or countersigning, such reference
shall be deemed to include authentication or countersigning on behalf of the
Trustee by an Authenticating Agent and a certificate of authentication or
countersignature executed on behalf of the Trustee by an Authenticating
Agent. Each Authenticating Agent must be acceptable to the Master Servicer
and must be a corporation or national banking association organized and doing
business under the laws of the United States of America or of any State,
having a principal office and place of business in New York, New York, having
a combined capital and surplus of at least $15,000,000, authorized under such
laws to do a trust business and subject to supervision or examination by
Federal or State authorities.
Any corporation or national banking association into which any
Authenticating Agent may be merged or converted or with which it may be
consolidated, or any corporation or national banking association resulting
from any merger, conversion or consolidation to which any Authenticating
Agent shall be a party, or any corporation or national banking association
succeeding to the corporate agency business of any Authenticating Agent,
shall continue to be the Authenticating Agent without the execution or filing
of any paper or any further act on the part of the Trustee or the Authen-
ticating Agent.
Any Authenticating Agent may at any time resign by giving written notice
of resignation to the Trustee and to the Master Servicer. The Trustee may at
any time terminate the agency of any Authenticating Agent by giving written
notice of termination to such Authenticating Agent and to the Master
Servicer. Upon receiving a notice of resignation or upon such a
termination, or in case, at any time any Authenticating Agent shall
cease to be eligible in accordance with the provisions of this
Section 9.10, the Trustee may appoint a successor Authenticating Agent,
shall give written notice of such appointment to the Master Servicer and
shall mail notice of such appointment to all Certificateholders. Any
successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers, duties and
responsibilities of its predecessor hereunder, with like effect as if
originally named as Authenticating Agent.
Section 9.11. Trustee's Fees and Expenses. The Trustee, as
---------------------------
compensation for its activities hereunder, shall be entitled to receive on
each Distribution Date an amount equal to the Trustee Fee for such
Distribution Date pursuant to Section 5.02(a). The Trustee and any director,
officer, employee or agent of the Trustee shall be indemnified by the Sponsor
and held harmless against any loss, liability or expense (including
reasonable attorney's fees) (i) incurred in connection with any claim or
legal action relating to (a) this Agreement, (b) the Certificates, or (c) the
performance of any of the Trustee's duties hereunder, other than any loss,
liability or expense incurred by reason of willful misfeasance, bad faith or
negligence in the performance of any of the Trustee's duties hereunder, (ii)
resulting from any tax or information return which was prepared by, or should
have been prepared by, the Master Servicer and (iii) arising out of the
transfer of any Private Certificate not in compliance with ERISA. Such
indemnity shall survive the termination of this Agreement or the resignation
or removal of the Trustee hereunder. Without limiting the foregoing, the
Sponsor covenants and agrees, except as otherwise agreed upon in writing by
the Sponsor and the Trustee, and except for any such expense, disbursement or
advance as may arise from the Trustee's negligence, bad faith or willful
misconduct, to pay or reimburse the Trustee, for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance with
any of the provisions of this Agreement with respect to (A) the reasonable
compensation and the expenses and disbursements of its counsel not associated
with the closing of the issuance of the Certificates, (B) the reasonable
compensation, expenses and disbursements of any accountant, engineer or
appraiser that is not regularly employed by the Trustee, to the extent that
the Trustee must engage such persons to perform acts or services hereunder
and (C) printing and engraving expenses in connection with preparing any
Definitive Certificates). Except as otherwise provided herein, the Trustee
shall not be entitled to payment or reimbursement for any routine ongoing
expenses incurred by the Trustee in the ordinary course of its duties as
Trustee, Certificate Registrar or Paying Agent hereunder or for any other
expenses. Section 9.12. Tax Returns. The Master Servicer will prepare any
-----------
federal, state and local income tax or information returns of the Pool, the
Master REMIC and the Subsidiary REMIC and shall furnish such documents to the
Trustee and the Trustee shall file or cause to be filed such returns.
Section 9.13. Paying Agents. The Trustee may appoint one or more
-------------
Paying Agents which shall be authorized to act on behalf of the Trustee in
making withdrawals from the Collection Account, and distributions to
Certificateholders as provided in Section 3.08 and Section 5.02. Wherever
reference is made in this Agreement to the withdrawal from the Collection
Account by the Trustee, such reference shall be deemed to include such a
withdrawal on behalf of the Trustee by a Paying Agent. Whenever reference is
made in this Agreement to a distribution by the Trustee or the furnishing of
a statement to Certificateholders by the Trustee, such reference shall be
deemed to include such a distribution or furnishing on behalf of the Trustee
by a Paying Agent. Each Paying Agent shall provide to the Trustee such
information concerning the Collection Account as the Trustee shall request
from time to time. Each Paying Agent must be reasonably acceptable to the
Master Servicer and must be a corporation or banking association organized
and doing business under the laws of the United States of America or of any
state, having a principal office and place of business in New York, New York,
having a combined capital and surplus of at least $15,000,000, authorized
under such laws to do a trust business and subject to supervision or
examination by federal or state authorities.
Any corporation into which any Paying Agent may be merged or converted
or with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which any Paying Agent shall be a
party, or any corporation succeeding to the corporate agency business of any
Paying Agent, shall continue to be the Paying Agent provided that such
corporation after the consummation of such merger, conversion, consolidation
or succession meets the eligibility requirements of this Section 9.13.
Any Paying Agent may at any time resign by giving written notice of
resignation to the Trustee and to the Master Servicer; provided that the
--------
Paying Agent has returned to the Collection Account or otherwise accounted,
to the reasonable satisfaction of the Trustee, for all amounts it has
withdrawn from the Collection Account. The Trustee may, upon prior written
approval of the Master Servicer, at any time terminate the agency of any
Paying Agent by giving written notice of termination to such Paying Agent and
to the Master Servicer. Upon receiving a notice of resignation or upon such
a termination, or in case at any time any Paying Agent shall cease to be
eligible in accordance with the provisions of the first paragraph of this
Section 9.13, the Trustee may appoint, upon prior written approval of the
Master Servicer, a successor Paying Agent, shall give written notice of such
appointment to the Master Servicer and shall mail notice of such appointment
to all Certificateholders. Any successor Paying Agent upon acceptance of its
appointment hereunder shall become vested with all rights, powers, duties
and responsibilities of its predecessor hereunder, with like effect as if
originally named as Paying Agent. The Trustee shall remain liable for any
duties and obligations assumed by its appointed Paying Agent.
ARTICLE X
Termination
Section 10.01. Termination upon Purchase by the Sponsor or Liquidation
-------------------------------------------------------
of All Mortgage Loans. Subject to Section 10.02, the respective obligations
- ---------------------
and responsibilities of the Sponsor, the Master Servicer and the Trustee
created hereby (other than the obligation of Trustee to make certain payments
to Certificateholders after the Final Distribution Date, the obligations of
the Master Servicer to send certain notices as hereinafter set forth and
pursuant to Sections 9.11 and 9.12 hereof and the obligation of the Master
Servicer pursuant to Section 5.05(b)) shall terminate upon the last action
required to be taken by the Trustee on the Final Distribution Date pursuant
to this Article X following the earlier of (a) the purchase by the Sponsor of
all Mortgage Loans and all REO Property remaining in the Trust Fund at a
price equal to the sum of (A) 100% of the Stated Principal Balance of each
Mortgage Loan (other than any Mortgage Loan as to which REO Property has been
acquired and whose fair market value is included pursuant to clause (B)
below) and (B) the fair market value of such REO Property (as determined by
the Sponsor as of the close of business on the third Business Day next
preceding the date upon which notice of any such termination is furnished to
Certificateholders pursuant to the third paragraph of this Article X), plus
any Class Unpaid Interest Shortfall for any Class of Certificates as well as
one month's interest at the related Mortgage Interest Rate on the Stated
Principal Balance of each Mortgage Loan (including any Mortgage Loan as to
which REO Property has been acquired) or (b) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund or the disposition of all REO Property; provided,
--------
however, that in no event shall the trust created hereby continue beyond the
- -------
earlier of (a) the expiration of 21 years from the death of the last survivor
of the descendants of Joseph P. Kennedy, the late ambassador of the United
States to the Court of St. James, living on the date hereof and (b) May 1,
2028.
The right of the Sponsor to repurchase all Mortgage Loans pursuant to
(a) above is conditioned upon the Pool Stated Principal Balance as of the
Final Distribution Date being less than five percent (5%) of the Cut-Off Date
Pool Principal Balance. If such right is exercised, the Trustee shall,
promptly following payment of the purchase price, release to the purchaser
the Mortgage Files pertaining to the Mortgage Loans being purchased.
Notice of any termination, specifying the Final Distribution Date (which
shall be a date that would otherwise be a Distribution Date) upon which the
Certificateholders may surrender their Certificates to the Trustee for
payment of the final distribution and for cancellation, shall be given
promptly by the Sponsor (if exercising its right to purchase the assets of the
Trust Fund) or by the Trustee (in any other case) by letter to
Certificateholders mailed not earlier than the 15th day and not later
than the 25th day of the month next preceding the month of such final
distribution specifying (A) the Final Distribution Date upon which final
payment of the Certificates will be made upon presentation and sur-
render of Certificates at the office or agency of the Trustee therein desig-
nated, (B) the amount of any such final payment and (C) that the Record Date
otherwise applicable to such Distribution Date is not applicable, payments
being made only upon presentation and surrender of the Certificates at the
office or agency of the Trustee therein specified. If the Sponsor is
obligated to give notice to Certificateholders as aforesaid, it shall give
such notice to the Trustee and the Certificate Registrar at the time such
notice is given to Certificateholders. In the event such notice is given by
the Sponsor, the Sponsor shall deposit in the Collection Account on or before
the Final Distribution Date in immediately available funds an amount equal to
the amount necessary to make the amount, if any, on deposit in the Collection
Account on the Final Distribution Date equal to the purchase price for the
assets of the Pool computed as above provided together with a statement as to
the amount to be distributed on each Class of Certificates pursuant to the
next succeeding paragraph.
Upon presentation and surrender of the Certificates, the Trustee shall
cause to be distributed to Certificateholders of each Class, in the order set
forth in Section 5.02 hereof, on the final Distribution Date and in
proportion to their respective Percentage Interests, with respect to
Certificateholders of the same Class, an amount equal to (i) as to each Class
of Certificates, the Class Certificate Balance thereof plus (a) accrued
interest thereon (or on their Notional Amount, if applicable) in the case of
an interest bearing Certificate and (b) the Class P Deferred Amount with
respect to the Class P Certificates and (ii) as to the Class R-I
Certificates, the amount, if any, which remains on deposit in the
Distribution Account (other than the amounts retained to meet claims) after
application pursuant to clause (i) above.
In the event that all of the Certificateholders shall not surrender
their Certificates for final payment and cancellation on or before the Final
Distribution Date, the Trustee shall on such date cause all funds in the
Collection Account not distributed in final distribution to
Certificateholders to continue to be held by the Trustee in an Eligible
Account for the benefit of such Certificateholders and the Sponsor (if it
exercised its right to purchase the assets of the Trust Fund) or the Trustee
(in any other case) shall give a second written notice to the remaining
Certificateholders to surrender their Certificates for cancellation and
receive the final distribution with respect thereto. If within one year
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 on deposit in such Eligible Account.
Section 10.02. Additional Termination Requirements. (a) In the event
-----------------------------------
the Sponsor exercises its purchase option as provided in Section 10.01, the
Trust Fund 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 the Trust Fund to comply with the requirements of
this Section 10.02 will not (i) result in the imposition of taxes on
"prohibited transactions" of the Trust Fund as defined in Section 860F of the
Code, or (ii) cause the Trust Fund to fail to qualify as a REMIC at any time
that any Certificates are outstanding:
(A) Within 90 days prior to the Final Distribution Date set forth
in the notice given by the Sponsor under Section 10.01, the Holders of
100% of the aggregate Percentage Interests evidenced by the Residual
Certificates shall adopt a plan of complete liquidation of the Trust
Fund; and
(B) At or after the time of adoption of such a plan of complete
liquidation and at or prior to the Final Distribution Date, the Trustee
shall sell all of the assets of the Trust Fund to the Sponsor for cash.
(b) By their acceptance of the Residual Certificates, the Holders
thereof hereby agree to adopt such a plan of complete liquidation upon the
written request of the Sponsor and to take such other action in connection
therewith as may be reasonably requested by the Sponsor.
ARTICLE XI
Miscellaneous Provisions
Section 11.01. Amendment. This Agreement may be amended from time to
---------
time by the Sponsor, the Master Servicer and the Trustee, without the consent
of any of the Certificateholders, (i) to cure any ambiguity, (ii) to correct
or supplement any provisions herein or therein which may be defective or
inconsistent with any other provisions herein or therein, as the case may be,
(iii) to modify, eliminate or add to any of its provisions to such extent as
shall be necessary to maintain the qualification of the Master REMIC and the
Subsidiary REMIC as REMICs or (iv) to add any other provisions with respect
to matters or questions arising under this Agreement which shall not be
inconsistent with the provisions of this Agreement; provided, however, that
-------- -------
(x) as evidenced by an Opinion of Counsel in each case such action shall not,
adversely affect in any material respect the interests of any Certificate-
holder, (y) in each case, such action is necessary or desirable to maintain
the qualification of the Master REMIC and the Subsidiary REMIC as REMICs or
shall not adversely affect such qualification and (z) if the opinion called
for in clause (x) cannot be delivered with regard to an amendment pursuant to
clause (iii) above, such amendment is necessary to maintain the qualification
of the Master REMIC and the Subsidiary REMIC as REMICs; and provided,
--------
further, that the amendment shall not be deemed to adversely affect
- -------
in any material respect the interests of the Certificateholders and no
Opinion of Counsel to that effect shall be required if the Person requesting
the amendment obtains a letter from the Rating Agency stating that the
amendment would not result in the downgrading or withdrawal of the respective
ratings then assigned to the Certificates.
This Agreement may also be amended from time to time by the Sponsor, the
Master Servicer and the Trustee, with the consent of the Holders of Certifi-
cates of each Class of Certificates which is affected by such amendment,
evidencing, as to each such Class of Certificates, Percentage Interests
aggregating not less than 66-2/3%, for the purpose of adding any provisions
to or changing in any manner or eliminating any of the provisions of this
Agreement or of modifying in any manner the rights of the Holders of such
Certificates; provided, however, that no such amendment shall (a) reduce in
-------- -------
any manner the amount of, or delay the timing of, collections of payments on
Mortgage Loans or distributions which are required to be made on any
Certificate without the consent of the Holder of such Certificate or (b)
reduce the aforesaid percentage required to consent to any such amendment,
without the consent of the Holders of all Certificates then Outstanding.
Prior to the solicitation of consent of Certificateholders in connection
with any such amendment, the party seeking such amendment shall furnish the
Trustee with an Opinion of Counsel stating whether such amendment would
adversely affect the qualification of the Master REMIC and the Subsidiary
REMIC as REMICs and notice of the conclusion expressed in such Opinion of
Counsel shall be included with any such solicitation. An amendment made
with the consent of all Certificateholders and executed in accordance with
this Section 11.01 shall be permitted or authorized by this Agreement
notwithstanding that such Opinion of Counsel may conclude that such amendment
would adversely affect the qualification of the Master REMIC and the
Subsidiary REMIC as REMICs.
Promptly after the execution of any such amendment or consent the
Trustee shall furnish written notification of the substance of or a copy of
such amendment to each Certificateholder and to the Rating Agency.
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 requirements as the Trustee may prescribe.
Section 11.02. Recordation of Agreement. This Agreement is subject to
------------------------
recordation in all appropriate public offices for real property records in
all the counties or other comparable jurisdictions in which any or all of the
properties subject to the Mortgages are situated, and in any other appropri-
ate public recording office or elsewhere, such recordation to be effected by
the Master Servicer and at its expense on direction by the Trustee, who will
act at the direction of Holders of Certificates evidencing not less than 50%
of all Voting Rights but only upon direction of the Trustee accompanied by an
Opinion of Counsel to the effect that such recordation materially and
beneficially affects the interests of Certificateholders.
For the purpose of facilitating the recordation of this Agreement as
herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts
shall be deemed to be an original, and such counterparts shall constitute but
one and the same instrument.
Section 11.03. Limitation on Rights of Certificateholders. The death
------------------------------------------
or incapacity of any Certificateholder shall not operate to terminate this
Agreement or the Trust Fund, nor entitle such Certificateholder's legal
representatives or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a partition or winding up of the
Trust Fund, nor otherwise affect the rights, obligations and liabilities of
the parties hereto or any of them. No Certificateholder shall have any right
to vote (except as 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 person by reason of any
action taken by the parties to this Agreement pursuant to any provision
hereof.
No Certificateholder shall have any right by virtue 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 default and of the continuance thereof, as
hereinbefore provided, and unless also the Holders of Certificates evidencing
Percentage Interests aggregating not less than 25% of each Class of
Certificates affected thereby shall 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 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 equal, ratable and common benefit of all Certificateholders. For the
protection and enforcement of the provisions of this Section 11.03, each
and every Certificateholder and the Trustee shall be entitled to such relief
as can be given either at law or in equity.
Section 11.04. Governing Law. This Agreement shall be construed in
-------------
accordance with the laws of the State of New York and the obligations, rights
and remedies of the parties hereunder shall be determined in accordance with
such laws.
Section 11.05. Notices. All demands, notices and communications
-------
required to be delivered hereunder shall be in writing and shall be deemed to
have been duly given if personally delivered at or mailed by certified mail,
return receipt requested, (provided, however, that notices to the
-------- -------
Trustee shall be deemed effective upon receipt) to (a) in the case of the
Sponsor, Tryon Mortgage Funding, Inc., NationsBanc Corporate Center, 11th
Floor, 100 North Tryon Street, Charlotte, North Carolina 28255, Attention:
Corporate Secretary, (b) in the case of the Master Servicer, NationsBanc
Mortgage Corporation, 101 East Main Street, Suite 400, Louisville, Kentucky
40202, Attention: Servicing Manager, with a copy to: NationsBanc
Mortgage Corporation, 101 South Tryon Street, NC1-002-39-13) Charlotte, North
Carolina 28255, Attention: Paul W. Kucinski, Esq. (c) in the case of the
Trustee, PNC Bank, National Association, at the Corporate Trust Office,
Attention: Constantine Hromych, or, as to each party, at such other address as
shall be designated by such party in a written notice to each other party, (d)
in the case of Moody's, Moody's Investors Service, Inc., 99 Church Street, New
York, New York 10007, Attn: Residential Pass-Through Monitoring, and (e) in
the case of Fitch, Fitch Investors Service, L.P., One State Street Plaza,
New York, New York 10004, Attn: Residential Mortgage Surveillance Group.
Any notice required or permitted to be mailed to a Certificateholder shall
be given by first class mail, postage prepaid, at the address of such Holder as
shown in the Certificate Register. Any notice so mailed within the time
prescribed in this Agreement shall be conclusively presumed to have been duly
given, whether or not the Certificateholder receives such notice.
Section 11.06. Severability of Provisions. If any one or more of the
--------------------------
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions
or terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity
or enforceability of the other provisions of this Agreement or of the
Certificates or the rights of the Holders thereof.
Section 11.07. Certificates Nonassessable and Fully Paid. It is the
-----------------------------------------
intention of the Trustee that Certificateholders shall not be personally
liable for obligations of the Trust Fund, that the beneficial ownership
interests represented by the Certificates shall be nonassessable for any
losses or expenses of the Trust Fund or for any reason whatsoever, and that
Certificates upon execution, countersignature and delivery thereof by the
Trustee pursuant to Section 6.01 are and shall be deemed fully paid.
Section 11.08. Access to List of Certificateholders. The Certificate
-------------------------------------
Registrar will furnish or cause to be furnished to the Trustee, within 15
days after the receipt of a request by the Trustee in writing, a list, in
such form as the Trustee may reasonably require, of the names and addresses
of the Certificateholders as of the most recent Record Date for payment of
distributions to Certificateholders.
If three or more Certificateholders (hereinafter referred to as
"applicants") apply in writing to the Trustee, and such application states
that the applicants desire to communicate with other Certificateholders with
respect to their rights under this Agreement or under the Certificates and is
accompanied by a copy of the communication which such applicants propose to
transmit, then the Trustee shall, within five Business Days after the
receipt of such application, afford such applicants access during normal
business hours to the most recent list of Certificateholders held by the
Trustee. If such a list is as of a date more than 90 days prior to the
date of receipt of such applicants' request, the Trustee shall promptly
request from the Certificate Registrar a current list as provided above, and
shall afford such applicants access to such list promptly upon receipt.
Every Certificateholder, by receiving and holding such list, agrees with
the Certificate Registrar and the Trustee that neither the Certificate
Registrar nor the Trustee shall be held accountable by reason of the
disclosure of any such information as to the names and addresses of the
Certificateholders hereunder, regardless of the source from which such
information was derived.
IN WITNESS WHEREOF, the Sponsor, the Master Servicer
and the Trustee have caused this Agreement to be duly executed by their
respective officers thereunto duly authorized to be hereunto affixed, all as
of the day and year first above written.
TRYON MORTGAGE FUNDING, INC.,
as Sponsor
By
--------------------------------
Title: Senior Vice President
NATIONSBANC MORTGAGE CORPORATION,
as Master Servicer
By
--------------------------------
Title:
PNC BANK, NATIONAL ASSOCIATION,
as Trustee
By
--------------------------------
Title:
State of New York )
) ss.:
County of New York )
On the 27th day of March 1997, before me, a notary public in and for
the State of New York, personally appeared _____________________________, known
to me who, being by me duly sworn, did depose and say that he is a Vice
President of Tryon Mortgage Funding, Inc., a Delaware corporation, one of
the parties that executed the foregoing instrument; and that he signed
his name thereto by order of the Board of Directors of such corporation.
----------------------------------
Notary Public
(Notarial Seal)
State of North Carolina )
) ss.:
County of Mecklenberg )
On the 27th day of March, 1997, before me, a notary public in and
for the State of New York, personally appeared _________________________,
known to me who, being by me duly sworn, did depose and say that he is
an Authorized Signatory of NationsBanc Mortgage Corporation, a Texas
corporation, one of the parties that executed the foregoing instrument;
and that he signed his name thereto by order of the Board of Directors of
such corporation.
----------------------------------
Notary Public
(Notarial Seal)State of
New York )
) ss.:
County of New York )
On the 27th day of March, 1997, before me, a notary public in and
for the State of New York, personally appeared _________________________,
known to me who, being by me duly sworn, did depose and say that he is a Vice
President of PNC Bank, National Association, a national banking association,
one of the parties that executed the foregoing instrument; and that he signed
his name thereto by order of the Board of Directors of said national banking
association.
--------------------------------------------
Notary Public
(Notarial Seal)
