LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT
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THIS LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT, dated as of April
9, 1998 is entered into by and between BankAmerica Corporation (the "Letter of
Credit Provider") and The First National Bank of Chicago, as Trustee under the
Pooling and Servicing Agreement identified below (the "Trustee").
RECITALS
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A. The Trustee has requested the Letter of Credit Provider to issue an
irrevocable direct draw letter of credit (the "Letter of Credit") in
substantially the form of Exhibit A in the amount of $15,000,000.00 (as reduced
and increased from time to time in accordance with the terms of the Letter of
Credit) to the Trustee for the benefit of the holders from time to time of the
Senior Certificates and the Class A-7 Certificates issued under the Pooling and
Servicing Agreement dated as of June 1, 1996 by and among Bank of America FSB,
Bank of America National Trust and Savings Association and the Trustee (the
"Pooling and Servicing Agreement").
B. The Letter of Credit Provider is willing to issue the Letter of Credit
upon the terms and subject to the conditions set forth herein.
C. Terms used herein and not otherwise defined herein shall have the
meanings given in the Pooling and Servicing Agreement.
AGREEMENT
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NOW, THEREFORE, in consideration of the premises and in order to
induce the Letter of Credit Provider to issue the Letter of Credit, the parties
hereto agree as follows:
ARTICLE I
THE LETTER OF CREDIT
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Section 1.01. The Letter of Credit. The Letter of Credit Provider
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agrees, on the terms and conditions hereinafter set forth, to issue the Letter
of Credit to the Trustee on the date hereof.
Section 1.02. Payments.
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(a) The Trustee shall make a Credit Demand (as such term is defined in the
Letter of Credit) in accordance with the terms of the Letter of Credit by 10:00
a.m. on the Business Day prior to each Payment Date if the Trustee has been
notified pursuant to its receipt of the Monthly Report that a Deficiency Amount
(as such term is defined in the Letter of Credit) will exist on such Payment
Date. The Trustee shall deposit all such amounts into an Eligible Account (the
"Letter of Credit Account"), which shall be titled the "Letter of Credit
Account" and which shall not be the Certificate Account, and such amounts shall
not be commingled with any other funds. The Trustee shall pay such amounts on
such Payment Date to the Senior Certificateholders and the Class A-7
Certificateholders in respect of each such Certificateholders' Interest
Distribution Amount or Formula Principal Distribution Amount, as
applicable, in accordance with the priorities set forth in Section 5.02 of the
Pooling and Servicing Agreement.
(b) The Trustee shall make a Downgrade Demand (as such term is defined in
the Letter of Credit) in accordance with the terms of the Letter of Credit if
the Trustee has been notified by the Letter of Credit Provider that Xxxxx'x
Investors Service's ("Moody's") has reduced or withdrawn its rating of the long-
term unsecured debt obligations of the Letter of Credit Provider below "Aa3" and
within 30 days of such downgrade, the Letter of Credit Provider has not obtained
a Replacement Letter of Credit (as such term is defined in the Letter of
Credit). The Trustee shall deposit all such amounts into the Letter of Credit
Account, and such amounts shall not be commingled with any other funds. The
Trustee shall pay such amounts on each Payment Date to the Senior
Certificateholders and the Class A-7 Certificateholders in respect of each such
Certificateholders' Interest Distribution Amount or Formula Principal
Distribution Amount, as applicable, in accordance with the priorities set forth
in Section 5.02 of the Pooling and Servicing Agreement to the extent that the
Available Distribution Amount and the amounts on deposit in the Reserve Account
are insufficient.
(c) The Trustee agrees to promptly notify the Letter of Credit Provider
when the Senior Certificates and the Class A-7 Certificates have been paid in
full.
(d) The Letter of Credit Provider agrees to promptly notify the Trustee if
Moody's reduces or withdraws its rating of the long-term unsecured debt
obligations of the Letter of Credit Provider below "Aa3".
Section 1.03. Reimbursement.
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(a) To the extent that any payments, as set forth in the Monthly Report,
are to be made on any Payment Date to the Senior Certificateholders or the Class
A-7 Certificateholders pursuant to Section 5.02 of the Pooling and Servicing
Agreement which payments are in excess of amounts that are otherwise due to any
of the Senior Certificateholders or the Class A-7 Certificateholders on such
Payment Date without regard to proceeds from drawings on the Letter of Credit,
the Trustee agrees to pay such amounts to the Letter of Credit Provider and that
the rights of the Senior Certificateholders and the Class A-7 Certificateholders
are subrogated to the rights of the Letter of Credit Provider.
(b) If the Trustee draws upon the Letter of Credit pursuant to a Downgrade
Demand, and thereafter the Letter of Credit Provider notifies the Trustee in
writing that Moody's has reinstated its rating of the long term unsecured debt
obligations of the Letter of Credit Provider to "Aa3" or higher, the Trustee
shall withdraw amounts on deposit in the Letter of Credit Account and remit such
amounts to the Letter of Credit Provider in accordance with the Letter of Credit
Provider's instructions within 5 Business Days of receipt of such notification
Section 1.04. Non-recourse. The parties hereto agree that to the extent
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that the Letter of Credit Provider makes a payment in accordance with the terms
of the Letter of Credit, the Letter of Credit Provider's only recourse to be
reimbursed for such payment shall be under Section 1.03 hereof. In no event
shall the Trustee be obligated to reimburse the Letter of Credit provider for
any such payment other than pursuant to Section 1.03 hereof. No fees, interest,
commissions or
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any other amounts shall be payable by the Trustee to the Letter of Credit
Provider for its issuance of the Letter of Credit or for payments thereunder.
Section 1.05. Uniform Customs and Practice. The Uniform Customs and
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Practice for Documentary Credits, 1993 Revision, International Chamber of
Commerce Publication No. 500 ("UCP") shall in all respects be deemed a part of
this Article I as if incorporated herein and shall apply to the Letter of
Credit.
ARTICLE II
MISCELLANEOUS
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Section 2.01. Amendments, Etc. No amendment or waiver of any provision
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of this Agreement shall be effective unless the same shall be in writing and
signed by the parties hereto.
Section 2.02. Notices, Etc. All notices and other communications
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provided for hereunder shall be in writing (including facsimile communication)
and mailed or sent by facsimile, if to the Trustee, at Xxx Xxxxx Xxxxxxxx Xxxxx,
Xxxxx 0000, Xxxxxxx XX 00000, fx: 000-000-0000; and if to the Letter of Credit
Provider, at its address at 000 Xxxxx Xxxxxxx Xxxxxx, 00xx xxxxx, Xxx Xxxxxxx,
XX 00000, Attention: Xxxxxxxx Xxxxxxx, Facsimile No. (000) 000-0000; or, as to
each party, at such other address as shall be designated by such party in a
written notice to the other party. All such notices and communications shall,
when mailed or sent by facsimile, be effective when deposited in the mails or
sent by facsimile, respectively, addressed as aforesaid.
Section 2.03. Binding Effect. This Agreement shall become effective when
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it shall have been executed by the parties hereto and thereafter shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
Section 2.04. Severability. Any provision of this Agreement which is
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prohibited, unenforceable or not authorized in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition,
unenforceability or non-authorization without invalidating the remaining
provisions hereof or affecting the validity, enforceability or legality of such
provision in any other jurisdiction.
Section 2.05. Governing Law. This Agreement shall be governed by, and
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construed in accordance with, the laws of the State of California (except, in
the case of Article I, to the extent the laws of the State of California are
inconsistent with the UCP).
Section 2.06. Headings. Section headings in this Agreement are included
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herein for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose.
Section 2.07. Certain Matters Affecting the Trustee. The Trustee shall
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not be personally liable for any action taken 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 or the Pooling and Servicing
Agreement. The Trustee may execute the powers hereunder or perform any duties
hereunder either directly or by or through agents or attorneys.
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Section 2.08. REMIC Matters. The Letter of Credit shall not constitute
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a part of the REMIC or the Trust Fund.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered as of the day and year first above written.
THE FIRST NATIONAL BANK OF CHICAGO
as Trustee
/s/ X. Xxxxxxx
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Name: X. Xxxxxxx
Title: Vice President
BANKAMERICA CORPORATION
as Letter of Credit Provider
/s/ Xxxxxxxx Xxxxxxx
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Name: Xxxxxxxx Xxxxxxx
Title: Attorney-in-Fact
/s/ Xxxxxx Xxxx
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Name: Xxxxxx Xxxx
Title: Attorney-in-Fact
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