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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) February 14, 1997
FINANCIAL ASSET SECURITIES CORP., (as depositor under the Sale and
Servicing Agreement, dated as of February 1, 1997, relating to the
Cityscape Home Loan Owner Trust 1997-1, Home Loan Asset Backed Notes,
Series 1997-1).
FINANCIAL ASSET SECURITIES CORP.
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(Exact name of registrant as specified in its charter)
Delaware 333-21071 06-1442101
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(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
600 Steamboat Road
Greenwich, Connecticut 06830
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(Address of Principal (Zip Code)
Executive Offices)
Registrant's telephone number, including area code (203) 625-2700
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Item 5. Other Events.
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On February 14, 1997, Financial Asset Securities Corp. entered into a
Sale and Servicing Agreement dated as of February 1, 1997 (the "Sale and
Servicing Agreement"), by and among Cityscape Home Loan Owner Trust 1997-1,
as issuer, Financial Asset Securities Corp., as depositor, Cityscape Corp.,
as transferor and servicer, and First Bank National Association, as indenture
trustee and co-owner trustee. The Sale and Servicing Agreement is annexed
hereto as Exhibit 1.
On February 14, 1997, Financial Asset Securities Corp. entered into a
Trust Agreement dated as of February 1, 1997 (the "Trust Agreement"), by and
among Financial Asset Securities corp., as depositor, Cityscape Corp., as the
company, Wilmington Trust Company, as owner trustee and First Bank National
Association, as co-owner trustee. The Trust Agreement is annexed hereto as
Exhibit 2.
On February 14, 1997, Cityscape Home Loan Owner Trust 1997-1 (the
"Issuer") entered into an Indenture dated as of February 1, 1997 (the
"Indenture"), with First Bank National Association, as indenture trustee.
The Indenture is annexed hereto as Exhibit 3.
Item 7. Financial Statements, Pro Forma Financial
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Information and Exhibits.
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(a) Not applicable.
(b) Not applicable.
(c) Exhibits:
1. Sale and Servicing Agreement
2. Trust Agreement
3. Indenture
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FINANCIAL ASSET SECURITIES CORP.
By: /s/ Peter McMullin
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Peter McMullin
Dated: May 30, 1997
Exhibit Index
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Exhibit Page
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1. Sale and Servicing Agreement
2. Trust Agreement
3. Indenture
EXHIBIT 1
EXECUTION COPY
SALE AND SERVICING AGREEMENT
Dated as of February 1, 1997
among
CITYSCAPE HOME LOAN OWNER TRUST 1997-1
(Issuer)
FINANCIAL ASSET SECURITIES CORP.
(Depositor)
CITYSCAPE CORP.
(Transferor and Servicer)
and
FIRST BANK NATIONAL ASSOCIATION
(Indenture Trustee and Co-Owner Trustee)
CITYSCAPE HOME LOAN OWNER TRUST 1997-1
HOME LOAN ASSET BACKED NOTES AND CERTIFICATES
SERIES 1997-1
TABLE OF CONTENTS
Page
----
ARTICLE I.
DEFINITIONS
Section 1.01 Definitions . . . . . . . . . . . . . . . . . . . . . I-1
Section 1.02 Other Definitional Provisions . . . . . . . . . . . I-21
ARTICLE II.
CONVEYANCE OF THE HOME LOANS
Section 2.01 Conveyance of the Home Loans. . . . . . . . . . . . II-1
Section 2.02 (RESERVED) . . . . . . . . . . . . . . . . . . . . II-1
Section 2.03 Ownership and Possession of Home Loan Files . . . . II-1
Section 2.04 Books and Records . . . . . . . . . . . . . . . . . II-2
Section 2.05 Delivery of Home Loan Documents . . . . . . . . . . II-2
Section 2.06 Acceptance by Indenture Trustee of the Home Loans;
Certain Substitutions; Initial Certification by
Custodian . . . . . . . . . . . . . . . . . . . . . II-5
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
Section 3.01 Representations and Warranties of the Depositor . III-1
Section 3.02 Representations and Warranties of the Transferor III-3
Section 3.02A Representations, Warranties and Covenants of the
Servicer . . . . . . . . . . . . . . . . . . . . III-5
Section 3.03 Individual Home Loans . . . . . . . . . . . . . . III-7
Section 3.04 (RESERVED) . . . . . . . . . . . . . . . . . . . III-13
Section 3.05 Purchase and Substitution . . . . . . . . . . . . III-14
ARTICLE IV.
ADMINISTRATION AND SERVICING OF THE HOME LOANS
Section 4.01 Duties of the Servicer . . . . . . . . . . . . . . IV-1
Section 4.02 Liquidation of Home Loans . . . . . . . . . . . . . IV-2
Section 4.03 Fidelity Bond; Errors and Omission Insurance . . . IV-3
Section 4.04 Title, Management and Disposition of Foreclosure
Property . . . . . . . . . . . . . . . . . . . . . IV-3
Section 4.05 Access to Certain Documentation and Information
Regarding the Home Loans . . . . . . . . . . . . . IV-4
Section 4.06 Superior Liens . . . . . . . . . . . . . . . . . . IV-5
Section 4.07 Subservicing . . . . . . . . . . . . . . . . . . . IV-5
Section 4.08 Successor Servicers . . . . . . . . . . . . . . . . IV-6
Section 4.09 Maintenance of Hazard Insurance; Property Protection
Expenses . . . . . . . . . . . . . . . . . . . . . IV-7
Section 4.10 Maintenance of Mortgage Impairment Insurance
Policy . . . . . . . . . . . . . . . . . . . . . . IV-7
Section 4.11 Reports to the Securities and Exchange Commission . IV-8
Section 4.12 Payment of Taxes, Insurance and Other Charges . . . IV-8
ARTICLE V.
ESTABLISHMENT OF TRUST ACCOUNTS
Section 5.01 Collection Account and Note Distribution Account . . V-1
Section 5.02 Certificate Distribution Account . . . . . . . . . . V-4
Section 5.03 Trust Accounts; Trust Account Property . . . . . . . V-5
Section 5.04 Allocation of Losses. . . . . . . . . . . . . . . . . V-8
ARTICLE VI.
STATEMENTS AND REPORTS; SPECIFICATION OF TAX MATTERS
Section 6.01 Statements . . . . . . . . . . . . . . . . . . . . VI-1
Section 6.02 Reports of Foreclosure and Abandonment of
Mortgaged Property . . . . . . . . . . . . . . . . VI-4
Section 6.03 Specification of Certain Tax Matters . . . . . . . VI-4
ARTICLE VII.
GENERAL SERVICING PROCEDURE
Section 7.01 Assumption Agreements . . . . . . . . . . . . . . . VII-1
Section 7.02 Satisfaction of Mortgages and Release of Home
Loan Files . . . . . . . . . . . . . . . . . . . . VII-2
Section 7.03 Servicing Compensation . . . . . . . . . . . . . . VII-4
Section 7.04 Statement as to Compliance and Financial
Statements . . . . . . . . . . . . . . . . . . . . VII-5
Section 7.05 Independent Public Accountants' Servicing Report . VII-6
Section 7.06 Right to Examine Servicer Records . . . . . . . . . VII-6
Section 7.07 Reports to the Indenture Trustee; Collection
Account Statements . . . . . . . . . . . . . . . . VII-6
ARTICLE VIII.
REPORTS TO BE PROVIDED BY SERVICER
Section 8.01 Financial Statements . . . . . . . . . . . . . . VIII-1
ARTICLE IX.
THE SERVICER
Section 9.01 Indemnification; Third Party Claims . . . . . . . . IX-1
Section 9.02 Merger or Consolidation of the Servicer . . . . . . IX-2
Section 9.03 Limitation on Liability of the Servicer and
Others . . . . . . . . . . . . . . . . . . . . . . IX-2
Section 9.04 Servicer Not to Resign; Assignment . . . . . . . . IX-3
Section 9.05 Relationship of Servicer to Issuer and the
Indenture Trustee . . . . . . . . . . . . . . . . . IX-3
ARTICLE X.
DEFAULT
Section 10.01 Events of Default . . . . . . . . . . . . . . . . . . X-1
Section 10.02 Indenture Trustee to Act; Appointment of
Successor . . . . . . . . . . . . . . . . . . . . . . X-2
Section 10.03 Waiver of Defaults . . . . . . . . . . . . . . . . . X-4
Section 10.04 Accounting Upon Termination of Servicer . . . . . . . X-4
ARTICLE XI.
TERMINATION
Section 11.01 Termination . . . . . . . . . . . . . . . . . . . . XI-1
Section 11.02 Optional Termination . . . . . . . . . . . . . . . XI-1
Section 11.03 Notice of Termination . . . . . . . . . . . . . . . XI-1
ARTICLE XII.
MISCELLANEOUS PROVISIONS
Section 12.01 Acts of Securityholders . . . . . . . . . . . . . . XII-1
Section 12.02 Amendment . . . . . . . . . . . . . . . . . . . . . XII-1
Section 12.03 Recordation of Agreement . . . . . . . . . . . . . XII-2
Section 12.04 Duration of Agreement . . . . . . . . . . . . . . . XII-2
Section 12.05 Governing Law . . . . . . . . . . . . . . . . . . . XII-2
Section 12.06 Notices . . . . . . . . . . . . . . . . . . . . . . XII-2
Section 12.07 Severability of Provisions . . . . . . . . . . . . XII-3
Section 12.08 No Partnership . . . . . . . . . . . . . . . . . . XII-3
Section 12.09 Counterparts . . . . . . . . . . . . . . . . . . . XII-3
Section 12.10 Successors and Assigns . . . . . . . . . . . . . . XII-3
Section 12.11 Headings . . . . . . . . . . . . . . . . . . . . . XII-3
Section 12.12 Actions of Securityholders . . . . . . . . . . . . XII-3
Section 12.13 Reports to Rating Agencies. . . . . . . . . . . . . XII-4
Section 12.14 Holders of the Residual Interest . . . . . . . . . XII-5
EXHIBITS
EXHIBIT A Home Loan Schedule
EXHIBIT B Form of Request for Release
EXHIBIT C Form of Indenture Trustee's Receipt
EXHIBIT D Certification Form
EXHIBIT E Form of Exception Report
This Sale and Servicing Agreement is entered into effective as of
February 1, 1997, among CITYSCAPE HOME LOAN OWNER TRUST 1997-1, a Delaware
business trust (the "Issuer" or the "Trust"), FINANCIAL ASSET SECURITIES
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CORP., a Delaware corporation, as Depositor (the "Depositor"), CITYSCAPE
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CORP., a New York corporation ("Cityscape"), as Transferor (in such capacity,
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the "Transferor") and Servicer (in such capacity, the "Servicer") and FIRST
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BANK NATIONAL ASSOCIATION, a national banking association, as Indenture
Trustee on behalf of the Noteholders (in such capacity, the "Indenture
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Trustee") and as Co-Owner Trustee on behalf of the Certificateholders (in
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such capacity, the "Co-Owner Trustee").
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PRELIMINARY STATEMENT
WHEREAS, the Issuer desires to purchase a pool of Home Loans which were
originated or purchased by the Transferor in the ordinary course of business
of the Transferor and subsequently conveyed to an affiliate of the Depositor;
WHEREAS, the Depositor acquired the pool of Home Loans from its
affiliate in the ordinary course of business of the Depositor;
WHEREAS, the Depositor is willing to sell such Home Loans to the Issuer;
and
WHEREAS, the Servicer is willing to service such Home Loans in
accordance with the terms of this Agreement;
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, the parties hereto hereby agree as follows:
ARTICLE I.
DEFINITIONS
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Section 1.01 Definitions. Whenever used in this Agreement, the
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following words and phrases, unless the context otherwise requires, shall
have the meanings specified in this Article. Unless otherwise specified, all
calculations of interest described herein shall be made on the basis of a
360-day year consisting of twelve 30-day months.
Accepted Servicing Procedures: Servicing procedures that meet at least
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the same standards the Servicer would follow in servicing first, second and
third lien residential mortgage loans such as the Home Loans held for its own
account, giving due consideration to standards of practice of prudent
mortgage lenders and loan servicers that originate and service mortgage loans
comparable to the Home Loans and to the reliance placed by the
Securityholders on the Servicer for the servicing of the Home Loans but
without regard to:
(i) any relationship that the Servicer, any Subservicer or any
Affiliate of the Servicer or any Subservicer may have with the related
Obligor;
(ii) the ownership of any Securities by the Servicer or any
Affiliate of the Servicer;
(iii) the Servicer's obligation to make Servicing Advances; or
(iv) the Servicer's or any Subservicer's right to receive
compensation for its services hereunder with respect to any particular
transaction.
Aggregate Note Principal Balance: With respect to any Distribution
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Date, the aggregate of the Class Principal Balances of the Notes.
Agreement: This Sale and Servicing Agreement and all amendments hereof
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and supplements hereto.
Allocable Loss Amount: With respect to each Distribution Date, the
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excess, if any, of (a) the aggregate of the Class Principal Balances of all
Classes of Securities (after giving effect to all distributions on such
Distribution Date) over (b) the Pool Principal Balance as of the end of the
preceding Due Period.
Allocable Loss Amount Priority: With respect to any Distribution
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Date, sequentially, to the Class B Certificates, the Class M-2 Notes and the
Class M-1 Notes, in that order.
Assignment of Mortgage: With respect to each Home Loan secured by a
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Mortgage, an assignment, notice of transfer or equivalent instrument
sufficient under the laws of the jurisdiction wherein the related Mortgaged
Property is located to reflect of record the sale of the related Home Loan
which assignment, notice of transfer or equivalent instrument may be in the
form of one or more blanket assignments covering Mortgages secured by
Mortgaged Properties located in the same county, if permitted by law.
Available Collection Amount: With respect to any Distribution Date,
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an amount equal to the sum of: (i) all amounts received on the Home Loans or
required to be paid by the Servicer, the Transferor or the Depositor during
the related Due Period (exclusive of amounts not required to be deposited by
the Servicer in the Collection Account pursuant to Section 5.01(b)(1) and
amounts permitted to be withdrawn by the Indenture Trustee from the
Collection Account pursuant to Section 5.01(b)(3) as reduced by any portion
thereof that may not be withdrawn therefrom pursuant to an order of a United
States bankruptcy court of competent jurisdiction imposing a stay pursuant to
Section 362 of the United States Bankruptcy Code; (ii) with respect to the
final Distribution Date or an early redemption or termination of the
Securities pursuant to Section 11.02, the Termination Price; (iii) any and
all income or gain from investments in the Collection Account and (iv) the
Purchase Price paid for any Home Loans required to be purchased pursuant to
Section 3.05 prior to the related Determination Date.
Available Distribution Amount: With respect to any Distribution Date,
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the Available Collection Amount minus the amount required to be paid from the
Note Distribution Account pursuant to Section 5.01(c)(i).
Business Day: Any day other than (i) a Saturday or Sunday, or (ii) a
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day on which banking institutions in New York City or in the city in which
the corporate trust office of the Indenture Trustee is located are authorized
or obligated by law or executive order to be closed.
Certificate: Any Certificate issued pursuant to the Trust Agreement.
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Certificate Distribution Account: The Account established and
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maintained pursuant to Section 5.02.
Certificateholder: A holder of any Certificate.
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Certificateholders' Interest Carry-Forward Amount: With respect to
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any Distribution Date, the excess of the Certificateholders' Monthly Interest
Distributable Amount for the preceding Distribution Date and any outstanding
Certificateholders' Interest Carry-Forward Amount on such preceding
Distribution Date, over the amount of interest that is actually distributed
to the Certificateholders on such preceding Distribution Date.
Certificateholders' Interest Distributable Amount: With respect to
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any Distribution Date, the sum of the Certificateholders' Monthly Interest
Distributable Amount for such Distribution Date and the Certificateholders'
Interest Carry-Forward Amount for such Distribution Date; provided however,
that on the Distribution Date, if any, on which the Class Principal Balance
of the Class B Certificates is reduced to zero through application of an
Allocable Loss Amount, the Certificateholders' Interest Distributable Amount
shall be equal to the Certificateholders' Interest Distributable Amount
calculated without giving effect to this proviso, minus the portion, if any,
of the Allocable Loss Amount that otherwise would be applied to the Classes
of Mezzanine Notes on such date in the absence of this proviso.
Certificateholders' Monthly Interest Distributable Amount: With
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respect to any Distribution Date, thirty (30) days' accrued interest at the
Class B Pass Through Rate on the Class Principal Balance of the Class B
Certificates immediately preceding such Distribution Date (or, in the case
of the first Distribution Date, on the Closing Date).
Class: With respect to the Notes, all Notes bearing the same class
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designation, and with respect to the Certificates, the Class B Certificates.
Class A-1 Note, Class A-2 Note, Class A-3 Note, Class A-4 Note, Class
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M-1 Note and Class M-2 Note: The respective meanings assigned thereto in
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the Indenture.
Class B Optimal Principal Balance: With respect to any Distribution
---------------------------------
Date prior to the Stepdown Date, zero; and with respect to any other
Distribution Date, the Pool Principal Balance as of the preceding
Determination Date minus the sum of (i) the aggregate Class Principal Balance
of the Notes (after taking into account any distributions made on such
Distribution Date in reduction of the Class Principal Balances of the Notes
prior to such determination) and (ii) the Overcollateralization Target Amount
for such Distribution Date; provided however, that the Class B Optimal
Principal Balance amount shall never be less than zero or greater than the
Original Class Principal Balance of the Class B Certificates as of such
Distribution Date.
Class B Pass-Through Rate: The per annum rate of 8.17%.
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Class Factor: With respect to each Class and any date of
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determination, the then applicable Class Principal Balance of such Class
divided by the Original Class Principal Balance thereof.
Class M-1 Optimal Principal Balance: With respect to any
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Distribution Date prior to the Stepdown Date, zero; and with respect to any
other Distribution Date, the Pool Principal Balance as of the preceding
Determination Date minus the sum of (i) the aggregate Class Principal Balance
of the Senior Notes (after taking into account distributions made on such
Distribution Date in reduction of the Class Principal Balances of the Classes
of Senior Notes prior to such determination) and (ii) the greater of (x) the
sum of (1) 27.00% of the Pool Principal Balance as of the preceding
Determination Date and (2) the Overcollateralization Target Amount for such
Distribution Date (calculated without giving effect to the proviso in the
definition thereof) and (y) 0.50% of the Original Pool Principal Balance;
provided however, that the Class M-1 Optimal Principal Balance shall never be
less than zero or greater than the Original Class Principal Balance of the
Class M-1 Notes.
Class M-2 Optimal Principal Balance: With respect to any
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Distribution Date prior to the Stepdown Date, zero; with respect to any other
Distribution Date, the Pool Principal Balance as of the preceding
Determination Date minus the sum of (i) the aggregate Class Principal Balance
of the Senior Notes (after taking into account any distributions made on such
Distribution Date in reduction of the Class Principal Balances of the Classes
of Senior Notes prior to such determination) plus the Class Principal Balance
of the Class M-1 Notes (after taking into account any distributions made on
such Distribution Date in reduction of the Class Principal Balance of the
Class M-1 Notes prior to such determination) and (ii) the greater of (x) the
sum of (1) 7.00% of the Pool Principal Balance as of the preceding
Determination Date and (2) the Overcollateralization Target Amount for such
Distribution Date (without giving effect to the proviso in the definition
thereof) and (y) 0.50% of the Original Pool Principal Balance; provided,
however, that the Class M-2 Optimal Principal Balance shall never be less
than zero or greater than the Original Class Principal Balance of the Class
M-2 Notes.
Class Principal Balance: With respect to each Class and as of any
-----------------------
date of determination, the Original Class Principal Balance of such Class
reduced by the sum of (i) all amounts previously distributed in respect of
principal of such Class on all previous Distribution Dates and (ii) with
respect to the Class M-1 and Class M-2 Notes and the Class B Certificates,
all Allocable Loss Amounts applied in reduction of principal of such Class on
all previous Distribution Dates.
Closing Date: February 14, 1997.
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Code: The Internal Revenue Code of 1986, as amended from time to
----
time, and Treasury Regulations promulgated thereunder.
Collection Account: The account established and maintained by the
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Servicer in accordance with Section 5.01.
Combination Loan: A loan, the proceeds of which were used by the
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Obligor in combination to finance property improvements and for debt
consolidation or other purposes.
Co-Owner Trustee: First Bank National Association, a national
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banking association, in its capacity as the Co-Owner Trustee under the Trust
Agreement acting on behalf of the Certificateholders, or any successor co-
owner trustee under the Trust Agreement.
Custodial Agreement: The custodial agreement dated as of February 1,
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1997 by and between the Depositor, Cityscape, as the Transferor and the
Servicer, the Indenture Trustee, and First Bank National Association, a
national banking association, as the Custodian providing for the retention of
the Home Loan Files by the Custodian on behalf of the Indenture Trustee.
Custodian: Any custodian appointed by the Indenture Trustee pursuant
---------
to the Custodial Agreement, which shall not be affiliated with the Servicer,
the Transferor, any Subservicer, or the Depositor. First Bank National
Association shall be the initial Custodian pursuant to the terms of the
Custodial Agreement.
Custodian Fee: If applicable, the annual fee payable to the
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Custodian, calculated and payable monthly on each Distribution Date pursuant
to Section 5.01(c)(i) equal to the per annum percentage (as set forth in the
Custodial Agreement) of the Pool Principal Balance as of the first day of the
immediately preceding Due Period.
Cut-Off Date: The opening of business on February 1, 1997.
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DCR: Duff & Phelps Credit Rating Co.
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Debt Consolidation Loan: A loan, the proceeds of which were
-----------------------
primarily used by the related Obligor for debt consolidation purposes or
purposes other than to finance property improvements.
Debt Instrument: The note or other evidence of indebtedness
---------------
evidencing the indebtedness of an Obligor under a Home Loan.
Defaulted Home Loan: With respect to any date of determination, any
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Home Loan, including without limitation any Liquidated Home Loan, with
respect to which any of the following has occurred as of the end of the
preceding Due Period: (a) foreclosure or similar proceedings have been
commenced; or (b) the Servicer or any Subservicer has determined in good
faith and in accordance with customary servicing practices that such Home
Loan is in default or imminent default.
Defective Home Loan: As defined in Section 3.05 hereof.
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Delinquent: A Home Loan is "Delinquent" if any Monthly Payment due
----------
thereon is not made by the close of business on the day such Monthly Payment
is scheduled to be paid. A Home Loan is "30 days Delinquent" if such Monthly
Payment has not been received by the close of business on the corresponding
day of the month immediately succeeding the month in which such Monthly
Payment was due, or, if there is no such corresponding day (e.g., as when a
30-day month follows a 31-day month in which a payment
- ----
was due on the 31st day of such month) then on the last day of such
immediately succeeding month. The determination of whether a Home Loan is
"60 days Delinquent," "90 days Delinquent", etc., shall be done in like
manner.
Delivery: When used with respect to Trust Account Property means:
--------
(a) with respect to bankers' acceptances, commercial paper,
negotiable certificates of deposit and other obligations that constitute
"instruments" within the meaning of Section 9-105(1)(i) of the UCC and
are susceptible of physical delivery, transfer thereof to the Indenture
Trustee or its nominee or custodian by physical delivery to the
Indenture Trustee or its nominee or custodian endorsed to, or registered
in the name of, the Indenture Trustee or its nominee or custodian or
endorsed in blank, and, with respect to a certificated security (as
defined in Section 8-102 of the UCC) transfer thereof (i) by delivery of
such certificated security endorsed to, or registered in the name of,
the Indenture Trustee or its nominee or custodian or endorsed in blank
to a financial intermediary (as defined in Section 8-313 of the UCC) and
the making by such financial intermediary of entries on its books and
records identifying such certificated securities as belonging to the
Indenture Trustee or its nominee or custodian and the sending by such
financial intermediary of a confirmation of the purchase of such
certificated security by the Indenture Trustee or its nominee or
custodian, or (ii) by delivery thereof to a "clearing corporation" (as
defined in Section 8-102(3) of the UCC) and the making by such clearing
corporation of appropriate entries on its books reducing the appropriate
securities account of the transferor and increasing the appropriate
securities account of a financial intermediary by the amount of such
certificated security, the identification by the clearing corporation of
the certificated securities for the sole and exclusive account of the
financial intermediary, the maintenance of such certificated securities
by such clearing corporation or a "custodian bank" (as defined in
Section 8-102(4) of the UCC) or the nominee of either subject to the
clearing corporation's exclusive control, the sending of a confirmation
by the financial intermediary of the purchase by the Indenture Trustee
or its nominee or custodian of such securities and the making by such
financial intermediary of entries on its books and records identifying
such certificated securities as belonging to the Indenture Trustee or
its nominee or custodian (all of the foregoing, "Physical Property"),
and, in any event, any such Physical Property in registered form shall
be in the name of the Indenture Trustee or its nominee or custodian; and
such additional or alternative procedures as may hereafter become
appropriate to effect the complete transfer of ownership of any such
Trust Account Property (as defined herein) to the Indenture Trustee or
its nominee or custodian, consistent with changes in applicable law or
regulations or the interpretation thereof;
(b) with respect to any securities issued by the U.S. Treasury,
FNMA or FHLMC that is a book-entry security held through the Federal
Reserve System pursuant to federal book-entry regulations, the following
procedures, all in accordance with applicable law, including applicable
federal regulations and Articles 8 and 9 of the UCC: book-entry
registration of such Trust Account Property to an appropriate book-entry
account maintained with a Federal Reserve Bank by a financial
intermediary that is also a "depository" pursuant to applicable federal
regulations and issuance by such financial intermediary of a deposit
advice or other written confirmation of such book-entry registration to
the Indenture Trustee or its nominee or custodian of the purchase by the
Indenture Trustee or its nominee or custodian of such book-entry
securities; the making by such financial intermediary of entries in its
books and records identifying such book-entry security held through the
Federal Reserve System pursuant to federal book-entry regulations as
belonging to the Indenture Trustee or its nominee or custodian and
indicating that such custodian holds such Trust Account Property solely
as agent for the Indenture Trustee or its nominee or custodian; and such
additional or alternative procedures as may hereafter become appropriate
to effect complete transfer of ownership of any such Trust Account
Property to the Indenture Trustee or its nominee or custodian,
consistent with changes in applicable law or regulations or the
interpretation thereof; and
(c) with respect to any item of Trust Account Property that is an
uncertificated security under Article 8 of the UCC and that is not
governed by clause (b) above, registration on the books and records of
the issuer thereof in the name of the financial intermediary, the
sending of a confirmation by the financial intermediary of the purchase
by the Indenture Trustee or its nominee or custodian of such
uncertificated security, the making by such financial intermediary of
entries on its books and records identifying such uncertificated
certificates as belonging to the Indenture Trustee or its nominee or
custodian.
Depositor: Financial Asset Securities Corp., a Delaware corporation,
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and any successor thereto.
Determination Date: With respect to any Distribution Date, the
------------------
fourteenth calendar day of the month in which such Distribution Date occurs
or if such day is not a Business Day, the immediately preceding Business Day.
Distribution Date: The 25th day of any month or if such 25th day is
-----------------
not a Business Day, the first Business Day immediately following such day,
commencing in March 1997.
Distribution Statement: As defined in Section 6.01.
----------------------
DTC: The Depository Trust Company.
---
Due Date: The day of the month on which the Monthly Payment is due
--------
from the Obligor on a Home Loan.
Due Period: With respect to each Distribution Date, the calendar
----------
month immediately preceding the month in which such Distribution Date occurs.
Eligible Account: At any time, an account which is any of the
----------------
following: (i) an account maintained with a depository institution (A) the
long-term debt obligations of which are at such time rated by each Rating
Agency in one of their two highest long-term rating categories, or (B) the
short-term debt obligations of which are then rated by each Rating Agency in
their highest short-term rating category; (ii) an account or accounts the
deposits in which are fully insured by either the Bank Insurance Fund or the
Savings Association Insurance Fund of the FDIC; (iii) a trust account (which
shall be a "segregated trust account") maintained with the corporate trust
department of a federal or state chartered depository institution or trust
company with trust powers and acting in its fiduciary capacity for the
benefit of the Indenture Trustee and the Issuer, which depository institution
or trust company shall have capital and surplus of not less than $50,000,000;
or (iv) an account that will not cause any Rating Agency to downgrade or
withdraw its then-current rating(s) assigned to the Notes or the Class B
Certificates, as evidenced in writing by such Rating Agency. (Each reference
in this definition of "Eligible Account" to the Rating Agency shall be
construed as a reference to Standard & Poor's, Fitch and DCR.)
Eligible Servicer: A Person who is qualified to act as Servicer of
-----------------
the Home Loans under applicable federal and state laws and regulations.
Event of Default: As described in Section 10.01 hereof.
----------------
Excess Spread: With respect to any Distribution Date, the excess of
-------------
(a) the Available Distribution Amount over (b) the Regular Distribution
Amount.
FDIC: The Federal Deposit Insurance Corporation and any successor
----
thereto.
FHLMC: The Federal Home Loan Mortgage Corporation and any successor
-----
thereto.
FICO Score: The credit evaluation scoring methodology developed by
----------
Fair, Isaac and Company.
Fidelity Bond: As described in Section 4.03 hereof.
-------------
Fitch: Fitch Investors Service, L.P.
-----
FNMA: The Federal National Mortgage Association and any successor
----
thereto.
Foreclosure Property: Any real property securing a Home Loan that
--------------------
has been acquired by the Servicer through foreclosure, deed in lieu of
foreclosure or similar proceedings in respect of the related Home Loan.
Home Loan: Any Debt Consolidation Loan or Combination Loan that is
---------
included in the Home Loan Pool. As applicable, a Home Loan shall be deemed
to refer to the related Debt Instrument, Mortgage and any related Foreclosure
Property.
Home Loan File: As defined in Section 2.05.
--------------
Home Loan Interest Rate: The fixed annual rate of interest borne by
-----------------------
a Debt Instrument, as shown on the related Home Loan Schedule as the same may
be modified by the Servicer in accordance with Section 4.01(c) hereof.
Home Loan Pool: The pool of Home Loans.
--------------
Home Loan Schedule: The schedule of Home Loans attached hereto as
------------------
Exhibit A, as amended or supplemented from time to time, such schedule
- ---------
identifying each Home Loan by address (including the related city, state and
zip code) of the related Mortgaged Property, if any, and the name(s) of each
Obligor and setting forth as to each Home Loan the following information:
(i) the Principal Balance as of the Cut-Off Date, (ii) the account number,
(iii) the original principal amount, (iv) the Due Date, (v) the Home Loan
Interest Rate, (vi) the first date on which a Monthly Payment is due under
the related Debt Instrument, (vii) the Monthly Payment, (viii) the maturity
date of the related Debt Instrument, and (ix) the remaining number of months
to maturity as of the Cut-Off Date.
HUD: The United States Department of Housing and Urban Development
---
and any successor thereto.
Indenture: The Indenture, dated as of February 1, 1997, between the
---------
Issuer and the Indenture Trustee.
Indenture Trustee: First Bank National Association, a national
-----------------
banking association, as Indenture Trustee under the Indenture and this
Agreement acting on behalf of the Noteholders, or any successor indenture
trustee under the Indenture or this Agreement.
Indenture Trustee Fee: The annual fee payable to the Indenture
---------------------
Trustee, calculated and payable monthly on each Distribution Date pursuant to
Section 5.01(c)(i), equal to the per annum percentage (as set forth in the
Indenture Trustee Fee Agreement) of the Pool Principal Balance as of the
first day of the immediately preceding Due Period.
Indenture Trustee's Home Loan File: As defined in Section 2.05(d).
----------------------------------
Insurance Proceeds: With respect to any Home Loan, the proceeds paid
------------------
to the Servicer by any insurer pursuant to any insurance policy covering a
Home Loan, Mortgaged Property or Foreclosure Property or any other insurance
policy that relates to a Home Loan, net of any expenses which are incurred by
the Servicer in connection with the collection of such proceeds and not
otherwise reimbursed to the Servicer, other than proceeds of any insurance
policy that are to be applied to the restoration or repair of the Mortgaged
Property or released to the Obligor in accordance with customary mortgage
loan servicing procedures applicable to the respective loan type, including
Debt Consolidation Loans and Combination Loans.
Liquidated Home Loan: With respect to any date of determination, any
--------------------
Home Loan or Foreclosure Property in respect of a Home Loan on which a
Monthly Payment is in excess of 30 days past due and as to which the Servicer
has determined that all amounts which it reasonably and in good faith expects
to collect have been recovered from or on account of such Home Loan or the
related Foreclosure Property; provided that, in any event, such Home Loan or
the related Foreclosure Property shall be deemed uncollectible and therefore
deemed a Liquidated Home Loan upon the earlier of: (a) the liquidation of
the related Foreclosure Property, (b) the determination by the Servicer in
accordance with customary servicing practices that no further amounts are
collectible from the Home Loan and any related Mortgaged Property, or (c) the
date on which any portion of a Monthly Payment on any Home Loan is in excess
of 180 consecutive days past due.
Liquidation Proceeds: With respect to a Liquidated Home Loan, any
--------------------
cash amounts received in connection with the liquidation of such Liquidated
Home Loan, whether through trustee's sale, foreclosure sale or other
disposition, and any other amounts required to be deposited in the Collection
Account pursuant to Section 4.02 or 4.04, in each case other than Insurance
Proceeds and Released Mortgaged Property Proceeds.
Loss Reimbursement Deficiency: With respect to any Distribution Date
-----------------------------
and the Class M-1 Notes, Class M-2 Notes or Class B Certificates, the amount
of Allocable Loss Amounts applied to the reduction of the Class Principal
Balance of such Class and not reimbursed pursuant to Section 5.01 hereof as
of such Distribution Date, plus (in the case of the Class M-1 Notes and Class
M-2 Notes) interest accrued on the unreimbursed portion thereof at the
applicable Note Interest Rate through the end of the Due Period immediately
preceding such Distribution Date; however, no interest shall accrue on any
amount of any such accrued and unpaid interest.
Majority Securityholders: Until such time as the sum of the Class
------------------------
Principal Balances of all Classes of Notes has been reduced to zero, the
holder or holders of in excess of 50% of the Class Principal Balance of all
Classes of Notes (accordingly, the holders of the Class B Certificates shall
be excluded from any rights or actions of the Majority Securityholders during
such period); and thereafter, the holder or holders of in excess of 50% of
the Class Principal Balance of the Class B Certificates.
Mezzanine Noteholders' Interest Carry-Forward Amount: With respect
----------------------------------------------------
to any Distribution Date, the excess of (A) the Mezzanine Noteholders'
Monthly Interest Distributable Amount for the preceding Distribution Date and
any outstanding Mezzanine Noteholders' Interest Carry-Forward Amount for
preceding Distribution Dates, over (B) the amount of interest that is
actually distributed to the Holders of Mezzanine Notes on such preceding
Distribution Date.
Mezzanine Noteholders' Interest Distributable Amount: With respect
----------------------------------------------------
to any Distribution Date, the sum of the Mezzanine Noteholders' Monthly
Interest Distributable Amount for such Distribution Date and the Mezzanine
Noteholders' Interest Carry-Forward Amount for such Distribution Date.
Mezzanine Noteholders' Monthly Interest Distributable Amount: With
------------------------------------------------------------
respect to each Distribution Date and the Classes of Mezzanine Notes, the
aggregate amount of thirty (30) days' accrued interest at the respective Note
Interest Rates on the respective Class Principal Balances of such Classes
immediately preceding such Distribution Date (or, in the case of the first
Distribution Date, on the Closing Date).
Mezzanine Notes: The Class M-1 Notes and Class M-2 Notes.
---------------
Monthly Payment: The scheduled monthly payment of principal and/or
---------------
interest required to be made by an Obligor on the related Home Loan, as set
forth in the related Debt Instrument.
Mortgage: The mortgage, deed of trust or other security instrument
--------
creating a lien in accordance with applicable law on a Mortgaged Property to
secure the Debt Instrument which evidences a secured Home Loan.
Mortgaged Property: The real property encumbered by the Mortgage
------------------
which secures the Debt Instrument evidencing a secured Home Loan.
Mortgaged Property States: Each state in which any Mortgaged Property
-------------------------
securing a Home Loan is located as set forth in the Home Loan Schedule.
Net Delinquency Calculation Amount: With respect to any Distribution
----------------------------------
Date, the excess, if any, of (x) the product of 2.5 and the Six-Month Rolling
Delinquency Average over (y) the aggregate of the amounts of Excess Spread
for the three preceding Distribution Dates.
Net Liquidation Proceeds: With respect to any Distribution Date, any
------------------------
cash amounts received from Liquidated Home Loans during the related Due
Period, whether through trustee's sale, foreclosure sale, disposition of
Mortgaged Properties or otherwise (other than Insurance Proceeds and Released
Mortgaged Property Proceeds), and any other cash amounts received in
connection with the management of the Mortgaged Properties relating to
Defaulted Loans, in each case, net of any reimbursements to the Servicer made
from such amounts for any unreimbursed Servicing Compensation and Servicing
Advances (including Nonrecoverable Servicing Advances) made and any other
fees and expenses paid in connection with the foreclosure, conservation and
liquidation of the related Liquidated Home Loans or Foreclosure Property
pursuant to Sections 4.02 and 4.04 hereof.
Net Loan Losses: On each Distribution Date, the sum of
---------------
(A) with respect to the Home Loans that become Liquidated Home Loans
during the immediately preceding Due Period, an amount (but not less than
zero) determined as of the related Determination Date equal to:
(i) the aggregate uncollected Principal Balances of such Liquidated
Home Loans as of the last day of such Due Period and without the
application of any amounts included in clause (ii) below, minus
(ii) the aggregate amount of any recoveries attributable to principal
from whatever source received during any Due Period, with respect
to such Liquidated Home Loans, including any Due Period subsequent
to the Due Period wherein such Home Loan became a Liquidated Home
Loan, and including without limitation any Net Liquidation
Proceeds, any Insurance Proceeds, any Released Mortgaged Property
Proceeds, any payments from the related Obligor and any payments
made pursuant to Section 3.05, less the amount of any expenses
incurred in connection with such recoveries; and
(B) with respect to any Defaulted Home Loan that is subject to a
modification pursuant to Section 4.02, an amount equal to the portion of the
Principal Balance, if any, released in connection with such modification.
Nonrecoverable Servicing Advance: As of any date of determination
--------------------------------
(i) any Servicing Advance previously made and not reimbursed from late
collections, Liquidation Proceeds, Insurance Proceeds, Post Liquidation
Proceeds or the Released Mortgaged Property Proceeds or (ii) a Servicing
Advance proposed to be made in respect of a Home Loan or Foreclosure Property
either of which, in the good faith business judgment of the Servicer, as
evidenced by an Officer's Certificate delivered to the Indenture Trustee
would not be ultimately recoverable.
Note: Any of the Senior Notes, the Class M-1 Notes and the Class M-2
----
Notes.
Note Distribution Account: The account established and maintained
-------------------------
pursuant to Section 5.01(a)(2).
Noteholder: A holder of a Note.
----------
Note Interest Rate: With respect to each Class of Notes, the per
------------------
annum rate of interest payable to the holders of such Class of Notes. The
Note Interest Rates with respect to the Classes of Notes are as follows:
Class A-1: 6.54%; Class A-2: 6.50%; Class A-3: 6.63%; Class A-4: 7.23%; Class
M-1: 7.58%; and Class M-2: 7.87%.
Obligor: Each obligor on a Debt Instrument.
-------
Officer's Certificate: A certificate delivered to the Indenture
---------------------
Trustee or the Issuer signed by the President or a Vice President or an
Assistant Vice President of the Depositor, the Servicer or the Transferor, in
each case, as required by this Agreement.
Original Class Principal Balance: With respect to the Classes of
--------------------------------
Securities, as follows: Class A-1: $36,650,000; Class A-2: $10,000,000;
Class A-3: $15,350,000; Class A-4: $20,714,000; Class M-1: $17,703,000; Class
M-2: $11,609,000; and the Class B Certificates: $4,063,942.
Original Pool Principal Balance: $116,089,942, which is the Pool
-------------------------------
Principal Balance as of the Cut-Off Date.
Overcollateralization Amount: With respect to any Distribution Date,
----------------------------
the amount equal to the excess of (A) the Pool Principal Balance over (B) the
aggregate of the Class Principal Balances of the Securities (after giving
effect to all prior distributions on the Classes of Securities and to the
Residual Interest on such Distribution Date pursuant to Section 5.01(d)
hereof).
Overcollateralization Deficiency Amount: With respect to any
---------------------------------------
Distribution Date, the excess, if any, of the Overcollateralization Target
Amount over the Overcollateralization Amount (after giving effect to all
prior distributions on the Classes of Securities and to the Residual Interest
on such Distribution Date pursuant to Section 5.01(d) hereof).
Overcollateralization Target Amount: With respect to any
-----------------------------------
Distribution Date occurring prior to the Stepdown Date, an amount equal to
the greater of (x) 10% of the Original Pool Principal Balance and (y) the Net
Delinquency Calculation Amount; with respect to any other Distribution Date,
an amount equal to the greater of (x) 20% of the Pool Principal Balance as of
the end of the related Due Period and (y) the Net Delinquency Calculation
Amount; provided, however, that the Overcollateralization Target Amount shall
in no event be less than 0.50% of the Original Pool Principal Balance.
Ownership Interest: As to any Security, any ownership or security
------------------
interest in such Security, including any interest in such Security as the
holder thereof and any other interest therein, whether direct or indirect,
legal or beneficial, as owner or as pledgee.
Owner Trustee: Wilmington Trust Company, as owner trustee under the
-------------
Trust Agreement, and any successor owner trustee under the Trust Agreement.
Owner Trustee Fee: The annual fee of $4,000, payable in equal
-----------------
monthly installments to the Servicer, who shall in turn pay such $4,000 to
the Owner Trustee on the Distribution Date occurring in February each year
during the term of this Agreement commencing in February 1998; provided that
the initial Owner Trustee Fee shall be paid by the Transferor on the Closing
Date.
Percentage Interest: As defined in the Trust Agreement.
-------------------
Permitted Investments: Each of the following:
---------------------
(1) obligations of, or guaranteed as to principal and interest by,
the United States or any agency or instrumentality thereof when such
obligations are backed by the full faith and credit of the United
States;
(2) a repurchase agreement that satisfies the following criteria:
(1) must be between the Indenture Trustee and either (a) primary
dealers on the Federal Reserve reporting dealer list which are rated in
one of the two highest categories for long-term unsecured debt
obligations by each Rating Agency, or (b) banks rated in one of the two
highest categories for long-term unsecured debt obligations by each
Rating Agency; and (2) the written repurchase agreement must include the
following: (a) securities which are acceptable for transfer and are
either (I) direct U.S. government obligations, or (II) obligations of a
federal agency that are backed by the full faith and credit of the U.S.
government, or FNMA or FHLMC; (b) a term no greater than 60 days for any
repurchase transaction; (c) the collateral must be delivered to the
Indenture Trustee or a third party custodian acting as agent for the
Indenture Trustee by appropriate book entries and confirmation
statements, and must have been delivered before or simultaneous with
payment (i.e., perfection by possession of certificated securities); and
(d) the securities sold thereunder must be valued weekly,
marked-to-market at current market price plus accrued interest and the
value of the collateral must be equal to at least 104% of the amount of
cash transferred by the Indenture Trustee under the repurchase agreement
and if the value of the securities held as collateral declines to an
amount below 104% of the cash transferred by the Indenture Trustee plus
accrued interest (i.e., a margin call), then additional cash and/or
acceptable securities must be transferred to the Indenture Trustee to
satisfy such margin call; provided, however, that if the securities used
as collateral are obligations of FNMA or FHLMC, then the value of the
securities held as collateral must equal at least 105% of the cash
transferred by the Indenture Trustee under such repurchase agreement;
(3) certificates of deposit, time deposits and bankers acceptances
of any United States depository institution or trust company
incorporated under the laws of the United States or any state, including
the Indenture Trustee; provided that the debt obligations of such
depository institution or trust company at the date of the acquisition
thereof have been rated by each Rating Agency in one of its two highest
long-term rating categories;
(4) deposits, including deposits with the Indenture Trustee, which
are fully insured by the Bank Insurance Fund or the Savings Association
Insurance Fund of the FDIC, as the case may be;
(5) commercial paper of any corporation incorporated under the
laws of the United States or any state thereof, including corporate
affiliates of the Indenture Trustee, which at the date of acquisition is
rated by each Rating Agency in its highest short-term rating category
and which has an original maturity of not more than 365 days;
(6) debt obligations rated by each Rating Agency at the time at
which the investment is made in its highest long-term rating category
(or those investments specified in (3) above with depository
institutions which have debt obligations rated by each Rating Agency in
one of its two highest long-term rating categories);
(7) money market funds which are rated by each Rating Agency at
the time at which the investment is made in its highest long-term rating
category, any such money market funds which provide for demand
withdrawals being conclusively deemed to satisfy any maturity
requirements for Permitted Investments set forth in this Agreement; or
(8) any other demand, money market or time deposit obligation,
security or investment as may be acceptable to each Rating Agency at the
time at which the investment is made;
provided that no instrument described in the foregoing subparagraphs shall
evidence either the right to receive (a) only interest with respect to the
obligations underlying such instrument or (b) both principal and interest
payments derived from obligations underlying such instrument where the
interest and principal payments with respect to such instrument provide a
yield to maturity at par greater than 120% of the yield to maturity at par of
the underlying obligations; and provided, further, that no instrument
described in the foregoing subparagraphs may be purchased at a price greater
than par if such instrument may be prepaid or called at a price less than its
purchase price prior to stated maturity.
Each reference in this definition of "Permitted Investments" to the
Rating Agency shall be construed, in the case of each subparagraph above
referring to each Rating Agency, as a reference to each of Standard & Poor's,
Fitch and DCR.
Person: Any individual, corporation, partnership, joint venture,
------
limited liability company, association, joint-stock company, trust, national
banking association, unincorporated organization or government or any agency
or political subdivision thereof.
Physical Property: As defined in the definition of "Delivery" above.
-----------------
Pool Principal Balance: With respect to any date of determination,
----------------------
the aggregate Principal Balances of the Home Loans as of the end of the
preceding Due Period; provided, however, that the Pool Principal Balance on
the Distribution Date on which the Termination Price is to be paid will be
deemed to have been equal to zero as of such date.
Post Liquidation Proceeds: As defined in Section 4.02(b).
-------------------------
Principal Balance: With respect to any Home Loan or related
-----------------
Foreclosure Property, (i) at the Cut-Off Date, the outstanding unpaid
principal balance of the Home Loan as of the Cut-Off Date and (ii) with
respect to any date of determination, the outstanding unpaid principal
balance of the Home Loan as of the last day of the preceding Due Period
(after giving effect to all payments received thereon and the allocation of
any Net Loan Losses with respect to any Defaulted Home Loan that occurs
during such Due Period), without giving effect to amounts received in respect
of such Home Loan or related Foreclosure Property after such Due Period;
provided, however, that any Home Loan that became a Liquidated Home Loan
during the preceding Due Period shall have a Principal Balance of zero.
Principal Prepayment: With respect to any Home Loan and any Due
--------------------
Period, any principal amount received on a Home Loan in excess of the
principal portion of the Monthly Payment due in such Due Period.
Prospectus: The Depositor's final Prospectus as supplemented by the
----------
Prospectus Supplement.
Prospectus Supplement: The Prospectus Supplement to be prepared by
---------------------
the Transferor and the Depositor in connection with the issuance and sale of
the Securities.
Purchase Price: As defined in Section 3.05 herein.
--------------
Qualified Substitute Home Loan: A home loan or home loans
------------------------------
substituted for a Deleted Home Loan pursuant to Section 2.06 or 3.05, which
(i) has or have an interest rate or rates of not less than two percentage
points fewer and not more than two percentage points greater than the Home
Loan Interest Rate for the Deleted Home Loan, (ii) matures or mature not more
than two years later than and not more than two years earlier than the
Deleted Home Loan (provided, however, that no such Qualified Substitute Home
Loan shall mature later than the latest maturing Home Loan), (iii) has or
have a principal balance or principal balances (after application of all
payments received on or prior to the date of substitution) equal to or less
than the Principal Balance of the Deleted Home Loan as of such date, (iv) has
or have a lien priority equal or superior to that of the Deleted Home Loan,
(v) has a borrower with a comparable credit grade classification to the
credit grade classification of the borrower with respect to the Deleted Home
Loans, including a FICO Score that is no more than 10 points below that of
such Deleted Home Loan; and (vi) complies or comply as of the date of
substitution with each representation and warranty set forth in Section 3.03
and is not more than 29 days delinquent as of the date of substitution for
such loan. For purposes of determining whether multiple mortgage loans
proposed to be substituted for one or more Deleted Home Loans pursuant to
Section 2.06 or 3.05 are in fact "Qualified Substitute Home Loans" as
provided above, the criteria specified in clauses (i) and (iii) above may be
considered on an aggregate or weighted average basis, rather than on a loan-
by-loan basis (i.e., so long as the weighted average Home Loan Interest Rate
of any loans proposed to be substituted is not less than two percentage
points fewer than and not more than two percentage points greater than the
Home Loan Interest Rate for the designated Deleted Home Loan or Home Loans,
the requirements of clause (i) above would be deemed satisfied).
Rating Agencies: Standard & Poor's, Fitch and DCR. If no such
---------------
organization or successor is any longer in existence, "Rating Agency" shall
be a nationally recognized statistical rating organization or other
comparable person designated by the Issuer, notice of which designation shall
have been given to the Indenture Trustee, the Issuer and the Servicer.
Ratings: The ratings initially assigned to the Notes and the Class B
-------
Certificates by the Rating Agencies, as evidenced by letters from the Rating
Agencies.
Record Date: With respect to each Distribution Date, the close of
-----------
business on the last Business Day of the month immediately preceding the
month in which such Distribution Date occurs.
Regular Distribution Amount: With respect to any Distribution Date,
---------------------------
the lesser of (a) the Available Distribution Amount and (b) the sum of (i)
the Senior Noteholders' Interest Distributable Amount, (ii) the Mezzanine
Noteholders Interest Distributable Amount, (iii) the Certificateholders'
Interest Distributable Amount and (iv) the Regular Principal Distribution
Amount.
Regular Principal Distribution Amount: On each Distribution Date, an
-------------------------------------
amount equal to the lesser of:
(A) the aggregate of the Class Principal Balances of the Classes of
Securities immediately prior to such Distribution Date; and
(B) the sum of (i) each scheduled payment of principal collected by the
Servicer in the related Due Period, (ii) all partial and full principal
prepayments applied by the Servicer during such related Due Period, (iii) the
principal portion of all Net Liquidation Proceeds, Insurance Proceeds and
Released Mortgaged Property Proceeds received during the related Due Period,
(iv) that portion of the Purchase Price received prior to the related
Determination Date, that represents principal with respect to any repurchased
Home Loan; (v) the principal portion of any Substitution Adjustments required
to be deposited in the Collection Account as of the related Determination
Date and (vi) on the Distribution Date on which the Trust is to be terminated
pursuant to Section 11.02 hereof, the Termination Price.
Released Mortgaged Property Proceeds: With respect to any secured
------------------------------------
Home Loan, proceeds received by the Servicer in connection with (i) a taking
of an entire Mortgaged Property by exercise of the power of eminent domain or
condemnation or (ii) any release of part of the Mortgaged Property from the
lien of the related Mortgage, whether by partial condemnation, sale or
otherwise; which in either case are not released to the Obligor in accordance
with applicable law, Accepted Servicing Procedures and this Agreement.
Residual Interest: The interest which represents the right to the
-----------------
amount remaining, if any, after all prior distributions have been made under
this Agreement, the Indenture and the Trust Agreement on each Distribution
Date and certain other rights to receive amounts hereunder and under the
Trust Agreement.
Responsible Officer: When used with respect to the Indenture
-------------------
Trustee, any officer within the Corporate Trust Office of the Indenture
Trustee, including any Vice President, Assistant Vice President, Secretary,
Assistant Secretary or any other officer of the Indenture Trustee customarily
performing functions similar to those performed by any of the above
designated officers and also, with respect to a particular matter, any other
officer to whom such matter is referred because of such officer's knowledge
of and familiarity with the particular subject. When used with respect to
the Issuer, any officer in the Corporate Trust Administration Department of
the Owner Trustee with direct responsibility for the administration of the
Trust Agreement and this Agreement on behalf of the Issuer. When used with
respect to the Depositor, the Transferor, the Servicer, or the Custodian,
the President or any Vice President, Assistant Vice President, or any
Secretary or Assistant Secretary.
Securities: The Notes and/or the Class B Certificates, as
----------
applicable.
Securityholder: A holder of a Note or Certificate, as applicable.
--------------
Senior Noteholders' Interest Carry-Forward Amount: With respect to
-------------------------------------------------
any Distribution Date, the excess of (A) the Senior Noteholders' Monthly
Interest Distributable Amount for the preceding Distribution Date and any
outstanding Senior Noteholders' Interest Carry-Forward Amount for preceding
Distribution Dates, over (B) the amount of interest that is actually
distributed to the Holders of Senior Notes on such preceding Distribution
Date.
Senior Noteholders' Interest Distributable Amount: With respect to
-------------------------------------------------
any Distribution Date, the sum of the Senior Noteholders' Monthly Interest
Distributable Amount for such Distribution Date and the Senior Noteholders'
Interest Carry-Forward Amount for such Distribution Date.
Senior Noteholders' Monthly Interest Distributable Amount: With
---------------------------------------------------------
respect to each Distribution Date and the Classes of Senior Notes, the
aggregate amount of thirty (30) days' accrued interest at the respective Note
Interest Rates on the respective Class Principal Balances of such Classes
immediately preceding such Distribution Date (or, in the case of the first
Distribution Date, on the Closing Date).
Senior Notes: The Class A-1, Class A-2, Class A-3, and Class A-4
------------
Notes.
Senior Optimal Principal Balance: With respect to any Distribution
--------------------------------
Date prior to the Stepdown Date, zero; with respect to any other Distribution
Date, an amount equal to the Pool Principal Balance as of the preceding
Determination Date minus the greater of (a) the sum of (1) 57.50% of the Pool
Principal Balance as of the preceding Determination Date and (2) the
Overcollateralization Target Amount for such Distribution Date (without
giving effect to the proviso in the definition thereof) and (b) 0.5% of the
Original Pool Principal Balance; provided however, that the Senior Optimal
Principal Balance shall never be less than zero or greater than the Aggregate
Note Principal Balance as of the Closing Date.
Series or Series 1997-1: Cityscape Home Loan Asset Backed Securities,
------ -------------
Series 1997-1.
Servicer: Cityscape, in its capacity as the servicer hereunder, or
--------
any successor appointed as herein provided.
Servicer's Fiscal Year: January 1st through December 31st of each
----------------------
year.
Servicer's Home Loan Files: In respect of each Home Loan, all
--------------------------
documents customarily included in the servicer's loan file for the related
type of Home Loan in accordance with the servicing standard set forth in
Section 4.01.
Servicer's Monthly Remittance Report: The monthly report described
------------------------------------
in Section 6.01(a).
Servicing Advances: Subject to Section 4.01(b), all reasonable,
------------------
customary and necessary "out of pocket" costs and expenses advanced or paid
by the Servicer with respect to the Home Loans in accordance with the
performance by the Servicer of its servicing obligations hereunder,
including, but not limited to, the costs and expenses for (i) the
preservation, restoration and protection of the Mortgaged Property, including
without limitation advances in respect of real estate taxes and assessments,
(ii) any collection, enforcement or judicial proceedings, including without
limitation foreclosures, collections and liquidations pursuant to Section
4.02, (iii) the conservation, management and sale or other disposition of a
Foreclosure Property pursuant to Section 4.04, (iv) the preservation of the
security for a Home Loan if any lienholder under a Superior Lien has
accelerated or intends to accelerate the obligations secured by such Superior
Lien pursuant to Section 4.06; provided that such Servicing Advances are
reimbursable to the Servicer out of Net Liquidation Proceeds or, to the
extent that such Servicing Advances constitute Nonrecoverable Servicing
Advances, from any amounts on deposit in the Collection Account.
Servicing Compensation: The Servicing Fee and other amounts to which
----------------------
the Servicer is entitled pursuant to Sections 7.01 and 7.03.
Servicing Fee: As to each Home Loan (including any Home Loan that has
-------------
been foreclosed and has become a Foreclosure Property, but excluding any
Liquidated Home Loan), the fee payable monthly to the Servicer on each
Distribution Date, which shall be the product of 0.50% (50 basis points) and
the Principal Balance of such Home Loan as of the beginning of the
immediately preceding Due Period, divided by 12. The Servicing Fee includes
any servicing fees owed or payable to any Subservicer which fees shall be
paid from the Servicing Fee.
Servicing Officer: Any officer of the Servicer or Subservicer
-----------------
involved in, or responsible for, the administration and servicing of the Home
Loans whose name and specimen signature appears on a list of servicing
officers annexed to an Officer's Certificate furnished by the Servicer or the
Subservicer, respectively, to the Issuer and the Indenture Trustee, on behalf
of the Securityholders, as such list may from time to time be amended.
Six-Month Rolling Delinquency Average: With respect to any
-------------------------------------
Distribution Date, the average of the applicable 60-Day Delinquency Amounts
for each of the six immediately preceding Due Periods, where the 60-Day
Delinquency Amount for any Due Period is the aggregate of the Principal
Balances of all Loans that are 60 or more days delinquent, in foreclosure or
Foreclosure Property as of the end of such Due Period.
Standard & Poor's: Standard & Poor's Ratings Group, a division of The
-----------------
McGraw-Hill Companies, Inc., or any successor thereto.
Stepdown Date: The first Distribution Date occurring after February,
-------------
2000 as to which the aggregate Class Principal Balance of the Senior Notes
has been reduced to the excess of (i) the Pool Principal Balance as of the
preceding Determination Date over (ii) the greater of (a) the sum of (1)
57.50% of the Pool Principal Balance as of the preceding Determination Date
and (2) the Overcollateralization Target Amount for such Distribution Date
(calculated without giving effect to the proviso in the definition thereof)
and (b) 0.5% of the Original Pool Principal Balance.
Subservicer: Any Person with whom the Servicer has entered into a
-----------
Subservicing Agreement and who is an Eligible Servicer and who satisfies any
requirements set forth in Section 4.07(a) in respect of the qualifications of
a Subservicer.
Subservicing Account: An account established by a Subservicer
--------------------
pursuant to a Subservicing Agreement, which account must be an Eligible
Account.
Subservicing Agreement: Any agreement between the Servicer and any
----------------------
Subservicer relating to subservicing and/or administration of any or all Home
Loans as provided in Section 4.07(a), copies of which shall be made
available, along with any modifications thereto, to the Issuer and the
Indenture Trustee.
Substitution Adjustment: As to any date on which a substitution
-----------------------
occurs pursuant to Sections 2.06 or 3.05, the amount, if any, by which (a)
the sum of the aggregate principal balance (after application of principal
payments received on or before the date of substitution) of any Qualified
Substitute Home Loans as of the date of substitution plus any accrued and
unpaid interest thereon to the date of substitution, is less than (b) the sum
of the aggregate of the Principal Balances, together with accrued and unpaid
interest thereon to the date of substitution, of the related Deleted Home
Loans.
Superior Lien: With respect to any Home Loan which is secured by a
-------------
lien other than a first priority lien, the mortgage loan(s) relating to the
corresponding Mortgaged Property having a superior priority lien.
Termination Price: As of any date of determination, an amount
-----------------
without duplication equal to the sum of (i) the then outstanding Class
Principal Balances of the Classes of Notes plus all accrued and unpaid
interest thereon, (ii) the then outstanding Class Principal Balance of the
Class B Certificates plus all accrued and unpaid interest thereon, (iii) any
Trust Fees and Expenses due and unpaid on such date and (iv) any unreimbursed
Servicing Advances and any Nonrecoverable Servicing Advances.
Transferor: Cityscape, in its capacity as the transferor hereunder.
----------
Trust: The Issuer.
-----
Trust Account Property: The Trust Accounts, all amounts and
----------------------
investments held from time to time in any Trust Account and all proceeds of
the foregoing.
Trust Accounts: The Note Distribution Account, the Certificate
--------------
Distribution Account and the Collection Account.
Trust Agreement: The Trust Agreement dated as of February 1, 1997,
---------------
among the Depositor, the Company, the Co-Owner Trustee and the Owner Trustee.
Trust Estate: The assets subject to this Agreement, the Trust
------------
Agreement and the Indenture and assigned to the Trust, which assets consist
of: (i) such Home Loans as from time to time are subject to this Agreement as
listed in the Home Loan Schedule, as the same may be amended or supplemented
from time to time including the removal of Deleted Home Loans and the
addition of Qualified Substitute Home Loans, together with the Servicer's
Home Loan Files and the Trustee's Home Loan Files relating thereto and all
proceeds thereof, (ii) all payments in respect of interest due with respect
to the Home Loans on or after the Cut-Off Date and all payments received with
respect to principal, on or after the Cut-Off Date, (iii) such assets as from
time to time are identified as Foreclosure Property, (iv) such assets and
funds as are from time to time are deposited in the Collection Account, the
Note Distribution Account and the Certificate Distribution Account, including
amounts on deposit in such accounts which are invested in Permitted
Investments, (v) the Issuer's rights under all insurance policies with
respect to the Home Loans and any Insurance Proceeds and (vi) Net Liquidation
Proceeds, Post Liquidation Proceeds and Released Mortgaged Property Proceeds.
Trust Fees and Expenses: As of each Distribution Date, an amount
-----------------------
equal to the Servicing Compensation, the Indenture Trustee Fee, the Owner
Trustee Fee and the Custodian Fee.
Underwriter: Greenwich Capital Markets, Inc.
-----------
Uninsured Cause: Any cause of damage to a Mortgaged Property such
---------------
that the complete restoration of such property is not fully reimbursable by
the hazard insurance policies required to be maintained pursuant to this
Agreement.
Section 1.02 Other Definitional Provisions.
-----------------------------
(a) Capitalized terms used herein and not otherwise defined herein have
the meanings assigned to them in the Indenture and the Trust Agreement.
(b) All terms defined in this Agreement shall have the defined meanings
when used in any certificate or other document made or delivered pursuant
hereto unless otherwise defined therein.
(c) As used in this Agreement and in any certificate or other document
made or delivered pursuant hereto or thereto, accounting terms not defined in
this Agreement or in any such certificate or other document, and accounting
terms partly defined in this Agreement or in any such certificate or other
document to the extent not defined, shall have the respective meanings given
to them under generally accepted accounting principles. To the extent that
the definitions of accounting terms in this Agreement or in any such
certificate or other document are inconsistent with the meanings of such
terms under generally accepted accounting principles, the definitions
contained in this Agreement or in any such certificate or other document
shall control.
(d) The words "hereof," "herein," "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole
and not to any particular provision of this Agreement; Article, Section,
Schedule and Exhibit references contained in this Agreement are references to
Articles, Sections, Schedules and Exhibits in or to this Agreement unless
otherwise specified; and the term "including" shall mean "including without
limitation."
(e) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as
well as to the feminine and neuter genders of such terms.
(f) Any agreement, instrument or statute defined or referred to herein
or in any instrument or certificate delivered in connection herewith means
such agreement, instrument or statute as from time to time amended, modified
or supplemented and includes (in the case of agreements or instruments)
references to all attachments thereto and instruments incorporated therein;
references to a Person are also to its permitted successors and assigns.
ARTICLE II.
CONVEYANCE OF THE HOME LOANS
----------------------------
Section 2.01 Conveyance of the Home Loans.
----------------------------
(a) As of the Closing Date, in consideration of the Issuer's delivery
of the Notes, Class B Certificates and Residual Interest Instruments to the
Depositor or its designee, upon the order of the Depositor, the Depositor, as
of the Closing Date and concurrently with the execution and delivery hereof,
does hereby sell, transfer, assign, set over and otherwise convey to the
Issuer, without recourse, but subject to the other terms and provisions of
this Agreement, all of the right, title and interest of the Depositor in and
to the Trust Estate. The foregoing sale, transfer, assignment, set over and
conveyance does not and is not intended to result in a creation or an
assumption by the Issuer of any obligation of the Depositor, the Transferor
or any other person in connection with the Trust Estate or under any
agreement or instrument relating thereto except as specifically set forth
herein.
(b) As of the Closing Date, the Issuer acknowledges the conveyance to
it of the Trust Estate, including all right, title and interest of the
Depositor in and to the Trust Estate, receipt of which is hereby acknowledged
by the Issuer. Concurrently with such delivery and in exchange therefor, the
Issuer has pledged to the Indenture Trustee the Trust Estate and the
Indenture Trustee, pursuant to the written instructions of the Issuer, has
executed and caused to be authenticated and delivered the Notes to the
Depositor or its designee, upon the order of the Issuer. In addition,
concurrently with such delivery and in exchange therefor, the Owner Trustee,
pursuant to the instructions of the Depositor, has executed (not in its
individual capacity, but solely as Owner Trustee on behalf of the Issuer) and
caused to be authenticated and delivered the Class B Certificates and the
Residual Interest to the Depositor or its designee, upon the order of the
Depositor.
Section 2.02 (RESERVED).
-----------
Section 2.03 Ownership and Possession of Home Loan Files.
-------------------------------------------
Upon the issuance of the Securities, with respect to the Home Loans, the
ownership of each Debt Instrument, the related Mortgage and the contents of
the related Servicer's Home Loan File and the Indenture Trustee's Home Loan
File shall be vested in the Indenture Trustee for the benefit of the
Securityholders, although possession of the Servicer's Home Loan Files (other
than items required to be maintained in the Indenture Trustee's Home Loan
Files) on behalf of and for the benefit of the Securityholders shall remain
with the Servicer, and the Custodian shall take possession of the Indenture
Trustee's Home Loan Files as contemplated in Section 2.06.
Section 2.04 Books and Records.
-----------------
The sale of each Home Loan shall be reflected on the Depositor's, the
Depositor's affiliate, or the Transferor's, as the case may be, balance
sheets and other financial statements as a sale of assets by the Depositor,
the Depositor's affiliate, or the Transferor, as the case may be, under
generally accepted accounting principles ("GAAP"). Each of the
----
Servicer and the Custodian shall be responsible for maintaining, and shall
maintain, a complete set of books and records for each Home Loan which shall
be clearly marked to reflect the ownership of each Home Loan by the Indenture
Trustee for the benefit of the Securityholders.
Section 2.05 Delivery of Home Loan Documents.
-------------------------------
(a) With respect to each Home Loan, on the Closing Date the Transferor
and/or the Depositor, as applicable, have delivered or caused to be delivered
to the Custodian as the designated agent of the Indenture Trustee each of the
following documents (collectively, the "Home Loan Files"):
---------------
(i) The original Debt Instrument, endorsed by the Transferor in
blank or in the following form: "Pay to the order of First Bank National
Association, as Indenture Trustee under the Sale and Servicing
Agreement, dated as of February 1, 1997, Cityscape Home Loan Owner Trust
1997-1, without recourse", with all prior and intervening endorsements
showing a complete chain of endorsement from origination of the Home
Loan to the Transferor;
(ii) The original Mortgage with evidence of recording thereon (or,
if the original Mortgage has not been returned from the applicable
public recording office or is not otherwise available, a copy of the
Mortgage certified by a Responsible Officer of the Transferor or by the
closing attorney or by an officer of the title insurer or agent of the
title insurer which issued the related title insurance policy or
commitment therefor to be a true and complete copy of the original
Mortgage submitted for recording) and, if the Mortgage was executed
pursuant to a power of attorney, the original power of attorney with
evidence of recording thereon (or, if the original power of attorney has
not been returned from the applicable public recording office or is not
otherwise available, a copy of the power of attorney certified by a
Responsible Officer of the Transferor or by the closing attorney or by
an officer of the title insurer or agent of the title insurer which
issued the related title insurance policy or commitment therefor, to be
a true and complete copy of the original power of attorney submitted for
recording);
(iii) The original executed Assignment of Mortgage, acceptable
for recording except with respect to any currently unavailable recording
information, from the Transferor to the Indenture Trustee in blank or in
the following form: "First Bank National Association, as Indenture
Trustee under the Sale and Servicing Agreement, dated as of February 1,
1997, Cityscape Home Loan Owner Trust 1997-1";
(iv) The original Assignment of Mortgage and any original
intervening Assignments of Mortgage, with evidence of recording thereon,
showing a complete chain of assignment from origination of the Home Loan
to the Transferor (or, if any such Assignment of Mortgage has not been
returned from the applicable public recording office or is not otherwise
available, a copy of such Assignment of Mortgage certified by a
Responsible Officer of the Transferor or by the closing attorney or by
an officer of the title insurer or agent of the title insurer which
issued the related title insurance policy or commitment therefor to be a
true and complete copy of the original Assignment submitted for
recording);
(v) the original, or a copy certified by the Transferor to be a
true and correct copy of the original, of each assumption, modification,
written assurance or substitution agreement, if any; and
(b) (RESERVED).
(c) With respect to any Mortgage referred to in Section 2.05(a)(ii)
above as to which the original Mortgage is not available as of the Closing
Date, and with respect to any Assignment of Mortgage referred to in Section
2.05(a)(iii) or 2.05(a)(iv) as to which the original Assignment of Mortgage
is not available as of the Closing Date, the Transferor shall deliver, prior
to the Closing Date, a copy of such Mortgage or such Assignment of Mortgage,
as the case may be, certified by the Transferor to be a true and correct
copy, to the Indenture Trustee and shall also deliver the original Mortgage,
or where the original Mortgage is unavailable a copy thereof certified by the
applicable public recording office, and the original Assignment of Mortgage,
or where the original Assignment of Mortgage is unavailable a copy thereof
certified by the applicable public recording office, to the Indenture Trustee
within five Business Days of receipt thereof by the Transferor but in no
event later than 360 days following the date of origination of the related
Home Loan or the date of such Assignment of Mortgage to the Transferor. The
failure of the Transferor to deliver to the Indenture Trustee (x) any
original Mortgage under Section 2.05(a)(ii) (or where the original is
unavailable a copy thereof certified by the applicable public recording
office), or (y) any original Assignment of Mortgage under Section
2.05(a)(iii) and (iv) (or where the original is unavailable a copy thereof
certified by the applicable public recording office), shall not be deemed a
breach of this Agreement for any purpose whatsoever until the expiration of
such 360 day period.
The Indenture Trustee shall promptly (and in no event later than five
Business Days following the Closing Date) submit for recording, at the
Transferor's own expense, in the appropriate public office for real property
records, each original Assignment of Mortgage referred to in Section
2.05(a)(iii) above, as well as each original Assignment of Mortgage referred
to in Section 2.05(a)(iv) above that was not previously submitted for
recording. With respect to any original Assignment of Mortgage referred to
in Section 2.05(a)(iii) above as to which the related recording information
is unavailable within five Business Days following the Closing Date, such
original Assignment of Mortgage shall be submitted for recording within five
Business Days after receipt of such information (or any longer period as
approved by the Indenture Trustee in writing with respect to specific Home
Loans upon the request of the Transferor, pursuant to an Officer's
Certificate in accordance with Accepted Servicing Procedures, stating the
amount of time generally required by the applicable recording office to
record and return such documents submitted for recordation). The Transferor
shall deliver each recorded Assignment of Mortgage referred to in Section
2.05(a)(iii) or, where the original is unavailable, a copy thereof certified
by the applicable public recording office to be a true and correct copy of
the original, to the Indenture Trustee no later than the earlier of (i) five
Business Days after receipt thereof and (ii) within 360 days of the Closing
Date. Any failure of the Transferor to deliver to the Indenture Trustee,
prior to the expiration of such 360 day period, any such recorded Assignment
of Mortgage, or such certified copy if such recorded Assignment of Mortgage
has not been received by it, shall not be deemed a breach of this Agreement
for any purpose. In the event that any such Assignment of Mortgage is lost
or returned unrecorded because of a defect therein, the Transferor shall
promptly prepare a substitute Assignment of Mortgage or cure such defect, as
the case may be, and thereafter cause each such Assignment of Mortgage to be
duly recorded.
The Indenture Trustee shall promptly upon receipt thereof (and in any
event no longer than 30 days following the Closing Date), with respect to
each Debt Instrument and Assignment of Mortgage delivered in blank in
accordance with Section 2.05(a)(i) and (iii), respectively, endorse each such
Debt Instrument and Assignment of Mortgage in the form described therein.
The Servicer shall promptly upon receipt thereof (and in no event later
than the earlier of (i) five Business Days following such receipt and (ii)
360 days after the Closing Date) deliver to the Indenture Trustee (a) the
original recorded Mortgage in those instances where a certified copy thereof
was delivered to the Indenture Trustee; (b) the original recorded Assignment
of Mortgage or Assignment of Mortgages showing a complete chain of assignment
from origination of a Home Loan to the Transferor in those instances where
certified copies thereof were delivered to the Indenture Trustee; (c) the
original policy of title insurance (or the title report) or a copy certified
by the Transferor to be a true and correct copy in those instances where a
commitment (binder) (including any marked additions thereto or deletions
therefrom) to issue such policy was delivered to the Indenture Trustee; and
(d) any other original documents constituting a part of a Home Loan File
received with respect to any Home Loan, including, but not limited to, any
original documents evidencing an assumption or modification of any Home Loan.
All original documents relating to the Home Loans that are not delivered
to the Indenture Trustee are and shall be held by the Transferor or the
Servicer, as the case may be, in trust for the benefit of the Indenture
Trustee on behalf of the Securityholders. In the event that any such
original document is required pursuant to the terms of this Section to be a
part of a Home Loan File, such document shall be delivered promptly to the
Indenture Trustee. Any original document that is not required pursuant to
the terms of this Section to be a part of a Home Loan File delivered to or
held by the Indenture Trustee shall be delivered promptly to the Servicer.
In connection with the delivery of documentation provided by this
Section 2.05, the Transferor hereby appoints the Indenture Trustee its
attorney with full power and authority to act in its stead for the purpose of
executing and certifying assignments and endorsing and certifying promissory
notes which make a part of each Home Loan File to cure any deficiencies in
such documentation.
If the Transferor has not delivered all required documentation with
respect to any Home Loan within the time periods, if any, specified in this
Agreement, the Transferor shall be required to take action with respect to
such Home Loan as and to the extent provided in Section 2.06 hereof.
(d) All Home Loan documents held by the Custodian on behalf of the
Indenture Trustee are referred to herein as the "Indenture Trustee's Home
------------------------
Loan File." All recordings required pursuant to this Section 2.05 shall
- ---------
be accomplished by and at the expense of the Transferor.
Section 2.06 Acceptance by Indenture Trustee of the Home Loans;
--------------------------------------------------
Certain Substitutions; Initial Certification by Custodian.
- ---------------------- -----------------------------------
The Indenture Trustee acknowledges (a) the receipt by it on the Closing
Date, in good faith without notice of adverse claims, subject to the
provisions of Sections 2.05(a)(ii) and 2.05(c) and to any exceptions noted on
the Indenture Trustee's receipt in the form annexed hereto as Exhibit C
delivered to the Transferor, the Depositor and the Servicer on the Closing
Date, of the documents referred to in Section 2.05(a)(i), (ii), (iii), (iv)
and (v) above (except that any such applicable document may be endorsed in
blank upon receipt) with respect to the Home Loans listed on the Home Loan
Schedule delivered to the Indenture Trustee on the Closing Date and (b) the
assignment to it of (x) all other assets included in clauses (i) through (v)
of the definition of "Trust Estate" and (y) the Trust Accounts. The
Indenture Trustee declares that it holds and will hold such documents and the
other documents delivered to it constituting the Home Loan Files, and that it
holds or will hold all such assets and such other assets included in the
definition of "Trust Estate" that are delivered to it, in trust for the
exclusive use and benefit of all present and future Securityholders.
Within 10 Business Days following the Closing Date, the Indenture
Trustee shall deliver to the Transferor, the Depositor and the Servicer a
certification in the form annexed hereto as Exhibit D, with any applicable
exceptions noted thereon.
After the delivery of the certification, the Indenture Trustee shall
provide to the Servicer, the Transferor and the Depositor, and the Transferor
shall in turn provide to the Indenture Trustee, no less frequently than
quarterly, updated certifications, a form of which is attached hereto as
Exhibit E, indicating the then-current status of exceptions until all such
exceptions have been eliminated.
If in the process of reviewing the Home Loan Files and making or
preparing the certifications referred to above the Indenture Trustee finds
any document or documents constituting a part of a Home Loan File to be
missing or defective in any material respect, or at the end of any 360-day
period referenced above finds that all recorded Assignments of Mortgage and
all original Mortgages or certified copies thereof have not been delivered to
it, the Indenture Trustee shall promptly so notify the Transferor, the
Depositor and the Servicer. In performing any such review, the Indenture
Trustee may conclusively rely on the Transferor as to the purported
genuineness of any such document and any signature thereon. It is understood
that the scope of the Indenture Trustee's review of the items delivered to
the Indenture Trustee pursuant to this Section 2.06, unless otherwise
expressly stated, shall be limited solely to confirming that the documents
referred to in this Section 2.06 have been executed and received, relate to
the Home Loans in the Home Loan Schedule and conform as to the loan number
and address and description thereof contained in the Home Loan Schedule. In
addition, upon the discovery by the Transferor, the Depositor, the Servicer
or the Indenture Trustee of a breach of any of the representations and
warranties made by the Transferor herein in respect of any Home Loan which
materially and adversely affects the value of such Home Loan or the interests
of the Securityholders in such Home Loan, the Person discovering such breach
shall give prompt written notice to the other Persons set forth in this
sentence.
At such time as any Home Loan becomes 90 days Delinquent, the Servicer
shall make, or cause to be made, a reasonable investigation to determine
whether such Home Loan satisfied the representations and warranties of the
Transferor set forth in Section 3.03 as of the Closing Date; provided,
--------
however, that only one such investigation shall be required for any Home Loan.
- ------
If the Transferor has not delivered all required documentation with
respect to any Home Loan within the time periods specified in this Agreement
(as such may have been extended pursuant to Section 2.05(c) hereof), the
Transferor shall be required to take action with respect to such Home Loan as
and to the extent provided in Section 3.05 hereof.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
------------------------------
Section 3.01 Representations and Warranties of the Depositor.
-----------------------------------------------
The Depositor hereby represents and warrants to the Transferor, the
Indenture Trustee, the Owner Trustee and the Securityholders that as of the
Closing Date:
(a) The Depositor is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware and has, and had at
all relevant times, full power to own its property, to carry on its business
as presently conducted, to enter into and perform its obligations under this
Agreement and to create the Trust pursuant hereto;
(b) The execution and delivery of this Agreement by the Depositor and
its performance of and compliance with the terms of this Agreement will not
violate the Depositor's articles of incorporation or by-laws or constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, or result in the breach or acceleration of, any
material contract, agreement or other instrument to which the Depositor is a
party or which may be applicable to the Depositor or any of its assets;
(c) The Depositor has the full power and authority to enter into and
consummate the transactions contemplated by this Agreement, has duly
authorized the execution, delivery and performance of this Agreement, and has
duly executed and delivered this Agreement. This Agreement, assuming due
authorization, execution and delivery by the Indenture Trustee, the
Transferor and the Servicer, constitutes a valid, legal and binding
obligation of the Depositor, enforceable against it in accordance with the
terms hereof, except as such enforcement may be limited by bankruptcy,
insolvency, reorganization, receivership, moratorium or other similar laws
relating to or affecting the rights of creditors generally, and by general
equity principles (regardless of whether such enforcement is considered in a
proceeding in equity or at law);
(d) The Depositor is not in violation of, and the execution and
delivery of this Agreement by the Depositor and its performance and
compliance with the terms of this Agreement will not constitute a violation
with respect to, any order or decree of any court or any order or regulation
of any federal, state, municipal or governmental agency having jurisdiction,
which violation would materially and adversely affect the condition
(financial or otherwise) or operations of the Depositor or its properties or
materially and adversely affect the performance of its duties hereunder;
(e) There are no actions or proceedings against, or investigations of,
the Depositor pending with regard to which the Depositor has received service
of process, or, to the knowledge of the Depositor, threatened, before any
court, administrative agency or other tribunal (A) that, if determined
adversely, would prohibit its entering into this Agreement or render the
Securities invalid, (B) seeking to prevent the issuance of the Securities or
the consummation of any of the transactions contemplated by this Agreement or
(C) that, if determined adversely, would prohibit or materially and adversely
affect the performance by the Depositor of its obligations under, or the
validity or enforceability of, this Agreement or the Securities;
(f) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Depositor of, or compliance by the Depositor with, this
Agreement or the Certificates, or for the consummation of the transactions
contemplated by this Agreement, except for such consents, approvals,
authorizations and orders, if any, that have been obtained prior to the
Closing Date;
(g) The Depositor is solvent, is able to pay its debts as they become
due and has capital sufficient to carry on its business and its obligations
hereunder; it will not be rendered insolvent by the execution and delivery of
this Agreement or its obligations hereunder; no petition of bankruptcy (or
similar insolvency proceeding) has been filed by or against the Depositor
prior to the date hereof;
(h) The Depositor did not sell the Home Loans to the Trust with any
intent to hinder, delay or defraud any of its creditors; the Depositor will
not be rendered insolvent as a result of the sale of the Home Loans to the
Trust;
(i) As of the Closing Date, the Depositor had good title to, and was
the sole owner of, each Home Loan free and clear of any Lien other than any
such Lien released simultaneously with the sale contemplated herein, and,
immediately upon each transfer and assignment herein contemplated, the
Depositor will have taken all steps necessary so that the Trust will have
good title to, and will be the sole owner of, each Home Loan free and clear
of any lien;
(j) The Depositor acquired title to each of the Home Loans in good
faith, without notice of any adverse claim;
(k) No Officers' Certificate, statement, report or other document
prepared by the Depositor and furnished or to be furnished by it pursuant to
this Agreement or in connection with the transactions contemplated hereby
contains any untrue statement of material fact or omits to state a material
fact necessary to make the statements contained herein or therein not
misleading;
(l) The Depositor is not required to be registered as an "investment
company" under the Investment Company Act of 1940, as amended; and
(m) The transfer, assignment and conveyance of the Debt Instruments and
the Mortgages by the Depositor pursuant to this Agreement are not subject to
the bulk transfer laws or any similar statutory provisions in effect in any
applicable jurisdiction.
Section 3.02 Representations and Warranties of the Transferor.
------------------------------------------------
The Transferor hereby represents and warrants to the Indenture Trustee,
the Owner Trustee, the Securityholders and the Depositor that as of the
Closing Date or as of such date specifically provided herein:
(a) The Transferor is a corporation licensed as a mortgage banker duly
organized, validly existing and in good standing under the laws of the State
of New York and has, and had at all relevant times, full corporate power to
originate or purchase the Home Loans, to own its property, to carry on its
business as presently conducted and to enter into and perform its obligations
under this Agreement;
(b) The execution and delivery of this Agreement by the Transferor and
its performance of and compliance with the terms of this Agreement will not
violate the Transferor's articles of incorporation or by-laws or constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, or result in the breach or acceleration of, any
material contract, agreement or other instrument to which the Transferor is a
party or which may be applicable to the Transferor or any of its assets;
(c) The Transferor has the full power and authority to enter into and
consummate all transactions contemplated by this Agreement to be consummated
by it, has duly authorized the execution, delivery and performance of this
Agreement, and has duly executed and delivered this Agreement. This
Agreement, assuming due authorization, execution and delivery by the
Indenture Trustee and the Depositor, constitutes a valid, legal and binding
obligation of the Transferor, enforceable against it in accordance with the
terms hereof, except as such enforcement may be limited by bankruptcy,
insolvency, reorganization, receivership, moratorium or other similar laws
relating to or affecting the rights of creditors generally, and by general
equity principles (regardless of whether such enforcement is considered in a
proceeding in equity or at law);
(d) The Transferor is not in violation of, and the execution and
delivery of this Agreement by the Transferor and its performance and
compliance with the terms of this Agreement will not constitute a violation
with respect to, any order or decree of any court or any order or regulation
of any federal, state, municipal or governmental agency having jurisdiction,
which violation would materially and adversely affect the condition
(financial or otherwise) or operations of the Transferor or its properties or
materially and adversely affect the performance of its duties hereunder;
(e) There are no actions or proceedings against, or investigations of,
the Transferor pending or, to the knowledge of the Transferor, threatened,
before any court, administrative agency or other tribunal (A) that, if
determined adversely, would prohibit its entering into this Agreement or
render the Securities invalid, (B) seeking to prevent the issuance of the
Securities or the consummation of any of the transactions contemplated by
this Agreement or (C) that, if determined adversely, would prohibit or
materially and adversely affect the performance by the Transferor of its
obligations under, or the validity or enforceability of, this Agreement or
the Securities;
(f) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Transferor of, or compliance by the Transferor with, this
Agreement or the Securities, or for the consummation of the transactions
contemplated by this Agreement, except for such consents, approvals,
authorizations and orders, if any, that have been obtained prior to the
Closing Date;
(g) The Transferor acquired title to the Home Loans in good faith,
without notice of any adverse claim;
(h) (Reserved)
(i) No Officers' Certificate, statement, report or other document
prepared by the Transferor and furnished or to be furnished by it pursuant to
this Agreement or in connection with the transactions contemplated hereby
contains any untrue statement of material fact or omits to state a material
fact necessary to make the statements contained herein or therein not
misleading;
(j) The Transferor is duly licensed where required as a "Licensee" or
is otherwise qualified in each state in which it transacts business and is
not in default of such state's applicable laws, rules and regulations, except
where the failure to so qualify or such default would not have a material
adverse effect on the ability of the Transferor to conduct its business or
perform its obligations hereunder;
(k) The Transferor is solvent, is able to pay its debts as they become
due and has capital sufficient to carry on its business and its obligations
hereunder; it will not be rendered insolvent by the execution and delivery of
this Agreement or by the performance of its obligations hereunder; no
petition of bankruptcy (or similar insolvency proceeding) has been filed by
or against the Transferor prior to the date hereof;
(l) The information under the captions "Summary /__/ The Loans," "The
Pool," "Risk Factors--Underwriting Guidelines" and "The Transferor and
Servicer" in the Prospectus Supplement contains no untrue statement of a
material fact or omits to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading;
(m) The Transferor is not required to be registered as an "investment
company" under the Investment Company Act of 1940, as amended.
It is understood and agreed that the representations and warranties set
forth in this Section 3.02 shall survive delivery of the respective Home Loan
Files to the Custodian (as the agent of the Indenture Trustee) and shall
inure to the benefit of the Securityholders, the Depositor, the Servicer, the
Indenture Trustee, the Owner Trustee and the Trust. Upon discovery by any
of the Transferor, the Depositor, the Servicer or the Indenture Trustee of
a breach of any of the foregoing representations and warranties that
materially and adversely affects the value of any Home Loan or the
interests of the Securityholders therein, the party discovering such breach
shall give prompt written notice (but in no event later than two
Business Days following such discovery) to the other parties. The
obligations of the Transferor set forth in Section 3.05 to cure
any breach or to substitute for or repurchase an affected Home Loan shall
constitute the sole remedies available to the Securityholders, the Depositor,
to the Servicer, the Indenture Trustee, or to the Owner Trustee respecting a
breach of the representations and warranties contained in this Section 3.02.
Section 3.02A Representations, Warranties and Covenants of the
------------------------------------------------
Servicer.
- ---------
The Servicer hereby represents and warrants to and covenants with the
Owner Trustee, the Securityholders, the Depositor and the Transferor that as
of the Closing Date or as of such date specifically provided herein:
(a) The Servicer is a corporation duly organized, validly existing and
in good standing under the laws of the State of New York and is or will be in
compliance with the laws of each state in which any Mortgaged Property is
located to the extent necessary to ensure the enforceability of each Home
Loan in accordance with the terms of this Agreement;
(b) The execution and delivery of this Agreement by the Servicer and
its performance of and compliance with the terms of this Agreement will not
violate the Servicer's articles of incorporation or by-laws or constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, or result in the breach or acceleration of, any
material contract, agreement or other instrument to which the Servicer is a
party or which may be applicable to the Servicer or any of its assets;
(c) The Servicer has the full power and authority to enter into and
consummate all transactions contemplated by this Agreement, has duly
authorized the execution, delivery and performance of this Agreement, and has
duly executed and delivered this Agreement. This Agreement, assuming due
authorization, execution and delivery by the Indenture Trustee and the Owner
Trustee, constitutes a valid, legal and binding obligation of the Servicer,
enforceable against it in accordance with the terms hereof, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization,
receivership, moratorium or other similar laws relating to or affecting the
rights of creditors generally, and by general equity principles (regardless
of whether such enforcement is considered in a proceeding in equity or at
law);
(d) The Servicer is not in violation of, and the execution and delivery
of this Agreement by the Servicer and its performance and compliance with the
terms of this Agreement will not constitute a violation with respect to, any
order or decree of any court or any order or regulation of any federal,
state, municipal or governmental agency having jurisdiction, which violation
would materially and adversely affect the condition (financial or otherwise)
or operations of the Servicer or materially and adversely affect the
performance of its duties hereunder;
(e) There are no actions or proceedings against, or investigations of,
the Servicer pending, or, to the knowledge of the Servicer, threatened,
before any court, administrative agency or other tribunal (A) that, if
determined adversely, would prohibit its entering into this Agreement or
render the Securities invalid, (B) seeking to prevent the issuance of the
Securities or the consummation of any of the transactions contemplated by
this Agreement or (C) that, if determined adversely, would prohibit or
materially and adversely affect the performance by the Servicer of its
obligations under, or the validity or enforceability of, this Agreement or
the Securities;
(f) The Servicer will examine each Subservicing Agreement and will be
familiar with the terms thereof. Each designated Subservicer and the terms
of each Subservicing Agreement will be required to comply with the provisions
of Section 4.07. The terms of any Subservicing Agreement will not be
inconsistent with any of the provisions of this Agreement;
(g) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Servicer of, or compliance by the Servicer with, this
Agreement or the Securities, or for the consummation of the transactions
contemplated by this Agreement, except for such consents, approvals,
authorizations and orders, if any, that have been obtained prior to the
Closing Date;
(h) The collection practices used by the Servicer with respect to the
Home Loans have been, in all material respects, legal, proper, prudent and
customary in the non-conforming mortgage servicing business;
(i) The transactions contemplated by this Agreement are in the ordinary
course of business of the Servicer;
(j) The Servicer is duly licensed where required as a "Licensee" or is
otherwise qualified in each state in which it transacts business and is not
in default of such state's applicable laws, rules and regulations, except
where the failure to so qualify or such default would not have a material
adverse effect on the ability of the Servicer to conduct its business or
perform its obligations hereunder;
(k) The Servicer services mortgage loans in accordance with Accepted
Servicing Procedures;
(l) The information under the captions "Risk Factors - Underwriting
Guidelines" and "The Transferor and Servicer" in the Prospectus Supplement
contains no untrue statement of a material fact or omits to state any
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(m) No Officers' Certificate, statement, report or other document
prepared by the Servicer and furnished or to be furnished by it pursuant to
this Agreement or in connection with the transactions contemplated hereby
contains any untrue statement of material fact or omits to state a material
fact necessary to make the statements contained herein or therein not
misleading;
(n) The Servicer is not required to be registered as an "investment
company" under the Investment Company Act of 1940, as amended.
It is understood and agreed that the representations, warranties and
covenants set forth in this Section 3.02A shall survive delivery of the
respective Home Loan Files to the Indenture Trustee and shall inure to the
benefit of the Depositor, the Securityholders and the Indenture Trustee.
Upon discovery by any of the Transferor, the Depositor, the Servicer or the
Indenture Trustee of a breach of any of the foregoing representations,
warranties and covenants that materially and adversely affects the value of
any Home Loan or the interests of the Securityholders therein, the party
discovering such breach shall give prompt written notice (but in no event
later than two Business Days following such discovery) to the other parties.
Section 3.03 Representations and Warranties regarding Individual
---------------------------------------------------
Home Loans.
- ----------
The Transferor hereby represents and warrants to the Depositor, the
Issuer, the Indenture Trustee and the Securityholders, with respect to each
Home Loan, as of the Closing Date:
(a) Home Loan Information. The information with respect to each
---------------------
Home Loan set forth in the Home Loan Schedule is complete, true and correct
as of the Cut-Off Date.
(b) Delivery of Home Loan Documents. All of the original or
-------------------------------
certified documentation required to be delivered to the Indenture Trustee or
to the Custodian on or prior to the Closing Date or as otherwise provided in
this Agreement has been so delivered.
(c) Payments Current. As of the Cut-Off Date, approximately 0.46%
----------------
(by aggregate Cut-Off Date Principal Balance) of the Home Loans are more than
30 days but not more than 59 days delinquent, based on the terms under which
the related Mortgages, if applicable, and Debt Instruments have been made and
none of the Home Loans are 60 or more days delinquent. The Transferor has
not advanced funds, or induced, solicited or knowingly received any advance
of funds from a party other than the related Obligor, directly or indirectly,
for the payment of any amount required by any Home Loan.
(d) No Waiver or Modification. The terms of each Debt Instrument
-------------------------
and Mortgage have not been impaired, waived, altered or modified in any
respect that would have any adverse effect upon any of the Securityholders,
except by written instruments reflected in the Indenture Trustee's Home Loan
File. No instrument of waiver, alteration, modification or assumption has
been executed except for the instruments that are part of the Indenture
Trustee's Home Loan File and the terms of which are reflected in the
Indenture Trustee's Home Loan File.
(e) No Defenses. No Debt Instrument or Mortgage, if applicable, is
-----------
subject to any set-off, counterclaim or defense, including the defense of
usury, nor will the operation of any of the terms of any Debt Instrument or
Mortgage, if applicable, or the exercise of any right thereunder, render such
Debt Instrument or Mortgage unenforceable, in whole or in part, or subject to
any right of rescission, set-off, counterclaim or defense, including the
defense of usury, and no such right of rescission, set-off, counterclaim or
defense has been asserted in any proceeding or was asserted in any state or
federal bankruptcy or insolvency proceeding at the time the related Home Loan
was originated.
(f) Compliance with Laws. Any and all requirements of any federal,
--------------------
state or local law applicable to each Home Loan have been complied with
including, without limitation, all consumer, usury, truth-in-lending, real
estate settlement procedures, consumer credit protection, equal credit
opportunity or disclosure laws applicable to each Home Loan; each Home Loan
was originated in compliance with all applicable laws and no fraud or
misrepresentation was committed by any Person in connection therewith.
(g) No Satisfaction or Release of Lien. No Mortgage, if applicable,
----------------------------------
has been satisfied, canceled, subordinated or rescinded, in whole or in part.
No Mortgaged Property has been released from the lien of the related
Mortgage, if applicable, in whole or in part, nor has any instrument been
executed that would effect any such release, cancellation, subordination or
rescission, other than the subordination of the lien of such Mortgage
securing a Home Loan with respect to which a related Superior Lien was
released in connection with the refinancing of the mortgage loan relating to
such Superior Lien.
(h) Valid Lien. With respect to each Debt Instrument that is
----------
secured by a Mortgage, such Mortgage is or creates a valid, subsisting and
enforceable lien on the related Mortgaged Property, including the land and
all buildings on the related Mortgaged Property.
(i) Validity of Home Loan Documents. Each Debt Instrument and each
-------------------------------
Mortgage is genuine and each is the legal, valid and binding obligation of
the Obligor thereof, enforceable in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting creditors' rights in general
and by general principles of equity. All parties to each Debt Instrument and
each Mortgage, if applicable, had legal capacity at the time to enter into
the related Home Loan and to execute and deliver such Debt Instrument and
Mortgage, and such Debt Instrument and Mortgage have been duly and properly
executed by such parties.
(j) Full Disbursement of Proceeds. As of the Cut-Off Date, the
-----------------------------
proceeds of each Home Loan have been fully disbursed and there is no
requirement for future advances thereunder, all costs, fees and expenses
incurred in making or closing each Home Loan and the recording of the
Mortgage, if applicable, were disbursed, the Obligor is not entitled to any
refund of any amounts paid or due under the Debt Instrument or any related
Mortgage and any and all requirements set forth in the related Home Loan
documents have been complied with.
(k) Ownership. Immediately prior to the conveyance thereof to an
---------
affiliate of the Depositor, the Transferor had good and marketable title to
each Home Loan, Debt Instrument and Mortgage, was the sole owner thereof and
had full right to sell each Home Loan, Debt Instrument and Mortgage to such
affiliate of the Depositor and upon the conveyance thereof by the Transferor
to such affiliate of the Depositor, such affiliate of the Depositor became
the sole owner of each Home Loan, Debt Instrument and Mortgage free and clear
of any encumbrance, equity, lien, pledge, charge, claim or security interest.
(l) Ownership of Mortgaged Property. With respect to each Home
-------------------------------
Loan, the related Mortgaged Property is occupied by the Obligor(s) under such
Home Loan.
(m) Marketability of Title. Neither the Home Loans nor the related
----------------------
Mortgages are assigned or pledged by the Transferor to any Person other than
the Issuer, and immediately prior to the transfer of the Home Loans from the
Transferor to an affiliate of the Depositor, the Transferor had good and
marketable title thereto, and was the sole owner and holder of the Home Loans
free and clear of any and all liens, claims, encumbrances, participation
interests, equities, pledges, charges or security interests of any nature
(each, a "Lien"), other than any such Lien released simultaneously with the
sale contemplated herein, and had full right and authority, subject to no
interest or participation of, or agreement with, any other party, to sell and
assign the same pursuant to this Agreement, and immediately upon the transfer
and assignment of each Home Loan as herein contemplated, the Issuer shall
have good title to, and will be the sole legal owner of, each Home Loan free
and clear of any Lien (except for any Lien (i) arising under operation of law
that is affirmatively insured by the related title insurance policy, (ii)
related to real estate taxes and special assessments not yet due and (iii)
that is a Superior Lien);
(n) (Reserved)
(o) (Reserved)
(p) No Defaults. Except with respect to any delinquent scheduled
-----------
payment set forth in subsection (c) above, there is no default, breach,
violation or event of acceleration existing under any Mortgage, if
applicable, or any Debt Instrument and, to the best of the Transferor's
knowledge, there is no event which, with the passage of time or with notice
and/or the expiration of any grace or cure period, would constitute such a
default, breach, violation or event of acceleration and the Transferor has
not waived any such default, breach, violation or event of acceleration,
except as set forth in an instrument of waiver, alteration, modification or
assumption that is included in the Indenture Trustee's Home Loan File.
(q) No Condemnation or Damage. To the best of the Transferor's
-------------------------
knowledge, the physical condition of each Mortgaged Property has not
deteriorated since the date of origination of the related Home Loan (normal
wear and tear excepted) and there is no proceeding pending for the total or
partial condemnation of any Mortgaged Property.
(r) Mortgage Remedies Adequate. Each Mortgage, if applicable,
--------------------------
contains customary and enforceable provisions such as to render the rights
and remedies of the holder thereof adequate for the realization against the
related Mortgaged Property of the benefits of the security provided thereby,
including, (i) in the case of a Mortgage designated as a deed of trust, by
trustee's sale, and (ii) otherwise, by judicial foreclosure.
(s) Underwriting of Home Loans. Each Home Loan has been
--------------------------
underwritten by the originator thereof in accordance with the Transferor's
then-current "Sav/*/-A-Loan" underwriting guidelines.
(t) Terms of Home Loans. Each Home Loan is a fixed rate loan; each
-------------------
Debt Instrument has an original term to maturity of not less than 180 months
nor more than 240 months from the date of origination; each Debt Instrument
is payable in monthly installments of principal and interest, with interest
payable in arrears, and requires a monthly payment which is sufficient to
amortize the original principal balance over the original term and to pay
interest at the related Home Loan Interest Rate; and no Debt Instrument
provides for any extension of the original term.
(u) Security. No Debt Instrument is, or has been, secured by any
--------
collateral except the lien of the related Mortgage, if applicable.
(v) Deed of Trust. If a Mortgage for a Home Loan constitutes a deed
-------------
of trust, a trustee, duly qualified under applicable law to serve as such,
has been properly designated and currently so serves as such and is named in
such Mortgage, or a valid substitution of trustee has been recorded or may be
recorded and no extraordinary fees or expenses are, or will become, payable
by the Transferor to the trustee under the deed of trust, except in
connection with default proceedings and a trustee's sale after default by the
related Obligor.
(w) Types of Home Loans. Each Home Loan is either (i) a Debt
-------------------
Consolidation Loan, or (ii) a Combination Loan. No Home Loan was originated
for the express purpose of purchasing a home.
(x) Origination Practices. The origination practices used by each
---------------------
originator of the Home Loans and the servicing and collection practices used
by the Transferor with respect to each Home Loan have been in all material
respects legal, proper, prudent and customary with respect to the loan
origination and servicing business as applicable to the respective loan type.
(y) Servicing Practices. Each Home Loan has been serviced in
-------------------
accordance with all applicable laws and, to the best of the Transferor's
knowledge, no fraud or misrepresentation was committed by any Person in
connection therewith.
(z) No Bulk Transfer. The sale, transfer, assignment, conveyance
----------------
and grant of the Debt Instruments and the Mortgages, if applicable, by the
Transferor to the Depositor were not subject to the bulk transfer laws or any
similar statutory provisions in effect in any applicable jurisdiction.
(aa) (Reserved)
(ab) Relief Act Matters. No Obligor has notified the Transferor, and
------------------
no relief has been requested or allowed to an Obligor under the Soldiers' and
Sailors' Civil Relief Act of 1940.
(ac) Selection Criteria. The Home Loans were not selected by the
------------------
Transferor for sale to the Depositor's affiliate or the Issuer on any basis
intended to adversely affect the Depositor's affiliate or the Issuer.
(ad) Superior Lien Delinquencies. No Superior Lien was more than 30
---------------------------
days past due at the time of origination of the related Home Loan.
(ae) Treasury Regulation Section301.7701. On the Closing Date, 55%
-----------------------------------
or more (by aggregate Principal Balance) of the Home Loans do not
---
constitute "real estate mortgages" for the purpose of Treasury Regulation
Section301.7701 under the Code. For this purpose a Home Loan does not
---
constitute a "real estate mortgage" if:
(i) The Home Loan is not secured by an interest in real
---
property, or
(ii) The Home Loan is not an "obligation principally secured by
---
an interest in real property." For this purpose an "obligation is
principally secured by an interest in real property" if it satisfies
either the test set out in paragraph (1) or paragraph (2) below.
- ------
(1) The 80-percent test. An obligation is principally secured by
an interest in real property if the fair market value of the
interest in real property securing the obligation
(A) was at least equal to 80 percent of the adjusted issue
price of the obligation at the time the obligation was
originated (or, if later, the time the obligation was
significantly modified); or
(B) is at least equal to 80 percent of the adjusted issue
price of the obligation on the Closing Date.
For purposes of this paragraph (1), the fair market value of
the real property interest must be first reduced by the amount
of any lien on the real property interest that is senior to
the obligation being tested, and must be further reduced by a
proportionate amount of any lien that is in parity with the
obligation being tested, in each case before the percentages
set forth in (1)(A) and (1)(B) are determined. The adjusted
issue price of an obligation is its issue price plus the
amount of accrued original issue discount, if any, as of the
date of determination.
(2) Alternative test. An obligation is principally secured by an
interest in real property if substantially all of the proceeds
of the obligation were used to acquire or to improve or
protect an interest in real property that, at the origination
date, is the only security for the obligation. For purposes
of this test, loan guarantees made by the United States or any
state (or any political subdivision, agency, or
instrumentality of the United States or of any state), or
other third party credit enhancement are not viewed as
additional security for a loan. An obligation is not
considered to be secured by property other than real property
solely because the obligor is personally liable on the
obligation. For this purpose only, substantially all of the
proceeds of the obligations means 662/3% or more of the gross
proceeds.
(af) Good Repair. To the best of the Transferor's knowledge, the
-----------
related Mortgaged Property is free of damage and in good repair or will be
free of damage and in good repair following the completion of any
improvements or repairs to be financed by the related Home Loan.
(ag) Home Loan Interest Method. Interest for each Home Loan is
-------------------------
calculated at a rate of interest computed by the actuarial method.
(ah) (Reserved)
(ai) No Encroachment. To the best of the Transferor's knowledge, all
---------------
required inspections, licenses and certificates with respect to the use and
occupancy of all occupied portions of all property securing the Mortgages, if
applicable, have been made, obtained or issued as applicable. To the best of
the Transferor's knowledge, all improvements which were considered in
determining the appraised value of the property securing each Mortgage, if
applicable, lay wholly within the boundaries and building restrictions lines
of the related property and no improvements on adjoining properties encroach
upon such property and no improvement located on or being a part of such
property is in violation of any applicable zoning laws or regulation.
(aj) Consent of Senior Lien. With respect to each Home Loan
----------------------
that is not a first mortgage loan, either (i) no consent for the Home Loan is
required by the holder of the related prior lien or (ii) such consent has
been obtained and has been delivered to the Indenture Trustee.
(ak) Insurance. If the Mortgaged Property was, at the time of
---------
origination of the related Home Loan, in an area identified on a Flood Hazard
Boundary Map or Flood Hazard Rate Map issued by the Federal Emergency
Management Agency as having special flood hazards (and if the flood insurance
policy referenced herein has been made available), a flood insurance policy
is in effect with respect to such Mortgaged Property with a generally
acceptable carrier in an amount that is not less than the value of such
Mortgaged Property. All individual insurance policies (collectively, the
"hazard insurance policy") are the valid and binding obligation of the
insurer and contain a standard mortgagee clause naming the Transferor, its
successors and assigns, as mortgagee. All premiums thereon have been paid.
The Mortgage obligates the Obligor thereunder to maintain all such insurance
at the Obligor's cost and expense, and upon the Obligor's failure to do so,
authorizes the holder of the Mortgage to obtain and maintain such insurance
at the Obligor's cost and expense and to seek reimbursement therefor from the
Obligor. All acts required to be performed to preserve the rights and
remedies of the Indenture Trustee in any such insurance policies have been
performed including, without limitation, any necessary notifications of
insurers and assignments of policies or interests therein.
(al) No Fraudulent Conveyance. The Home Loans are not being
------------------------
transferred with any intent to hinder, delay or defraud any creditors.
(am) (Reserved)
(an) Environmental Compliance. To the best of the Transferor's
------------------------
knowledge, the Mortgaged Property is free from any and all toxic or hazardous
substances and there exists no violation of any local, state or federal
environmental law, rule or regulation.
(ao) Description Conforms to Prospectus Supplement. Each Home Loan
---------------------------------------------
conforms, and all Home Loans in the aggregate conform, in all material
respects to the description thereof set forth in the Prospectus Supplement.
(ap) No Buydown, GPM or Shared Appreciation Loans. No Home Loan
--------------------------------------------
contains any provisions pursuant to which principal and interest payments are
paid or partially paid with funds deposited in any separate account
established by the Transferor, the Obligor or anyone else on behalf of the
Obligor, or paid by any source other than the Obligor. No Home Loan contains
any other similar provision which may constitute a "buydown" provision. No
Home Loan is a graduated payment mortgage loan. No Home Loan has a shared
appreciation or other contingent interest feature.
(aq) No Chattel Paper. Each Debt Instrument is comprised of one
----------------
original promissory note and each such promissory note constitutes an
"instrument" for purposes of Section 9-105(1)(i) of the UCC. No Debt
Instrument constitutes or is comprised of "chattel paper" as such term is
defined in Section 9-105(1)(b) of the UCC. Each Debt Instrument has been
delivered to the Indenture Trustee.
(ar) Entire Agreement. The Debt Instrument and the Mortgage, if
----------------
applicable, contain the entire agreement between the related Obligor and the
lender and all obligations of the lender under the related Home Loan, and no
other agreement defines, modifies, or expands the obligations of the lender
under the Home Loan, except for any assumptions or modifications included in
the Indenture Trustee's Home Loan File pursuant to Section 2.05(a)(v).In
light of the Transferor's underwriting guidelines, the Transferor has
reviewed all of the documents constituting each Servicer's Home Loan File and
each Indenture Trustee's Home Loan File and has made such inquiries as it
deems reasonable under the circumstances to make and confirm the accuracy of
the representations set forth herein.
Section 3.04 (RESERVED).
----------
Section 3.05 Purchase and Substitution.
-------------------------
(a) It is understood and agreed that the representations and warranties
set forth in Section 3.03, shall survive the conveyance of the Home Loans to
the Issuer, the Grant of the Home Loans to the Indenture Trustee and the
delivery of the Securities to the Securityholders. Upon discovery by the
Depositor, the Servicer, the Transferor, the Custodian, the Issuer, the
Indenture Trustee or any Securityholder of a breach of any of such
representations and warranties which materially and adversely affects the
value of the Home Loans or the interest of the Securityholders, or which
materially and adversely affects the interests of the Securityholders in the
related Home Loan in the case of a representation and warranty relating to a
particular Home Loan (notwithstanding that such representation and warranty
was made to the Transferor's best knowledge), the party discovering such
breach shall give prompt written notice to the others. The Transferor shall
within 60 days of the earlier of its discovery or its receipt of notice of
any breach of a representation or warranty, promptly cure such breach in all
material respects. If, however, within 60 days after the earlier of the
Transferor's discovery of such breach or the Transferor's receiving notice
thereof such breach has not been remedied by the Transferor and such breach
materially and adversely affects the interests of the Securityholders or in
the related Home Loan (the "Defective Home Loan"),
-------------------
the Transferor shall on or before the Determination Date next succeeding the
end of such 60-day period either (i) remove such Defective Home Loan from the
Trust (in which case it shall become a "Deleted Home Loan") and
-----------------
substitute one or more Qualified Substitute Home Loans in the manner and
subject to the conditions set forth in this Section 3.05 or (ii) purchase
such Defective Home Loan at a purchase price equal to the Purchase Price (as
defined below) by depositing such Purchase Price in the Collection Account.
The Transferor shall provide the Servicer, the Indenture Trustee and the
Issuer with a certification of a Responsible Officer on the Determination
Date next succeeding the end of such 60-day period indicating whether the
Transferor is purchasing the Defective Home Loan or substituting in lieu of
such Defective Home Loan a Qualified Substitute Home Loan. With respect to
the purchase of a Defective Home Loan pursuant to this Section, the "Purchase
--------
Price" shall be equal to the Principal Balance of such Defective Home
- -----
Loan as of the date of purchase, plus all accrued and unpaid interest
on such Defective Home Loan to but not including the Due Date in the Due
Period most recently ended prior to such Determination Date computed at the
applicable Home Loan Interest Rate, plus the amount of any unreimbursed
Servicing Advances and Nonrecoverable Servicing Advances made by the
Servicer with respect to such Defective Home Loan, which Purchase Price
shall be deposited in the Collection Account (after deducting therefrom
any amounts received in respect of such repurchased Defective Home Loan
and being held in the Collection Account for future distribution to
the extent such amounts represent recoveries of principal not yet
applied to reduce the related Principal Balance or interest (net of
the Servicing Fee) for the period from and after the Due Date in the
Due Period most recently ended prior to such Determination Date).
Any substitution of Home Loans pursuant to this Section 3.05(a) and
Section 2.06(b) shall be accompanied by payment by the Transferor of the
Substitution Adjustment, if any, to be deposited in the Collection Account.
For purposes of calculating the Available Collection Amount for any
Distribution Date, amounts paid by the Transferor pursuant to this Section
3.05 in connection with the repurchase or substitution of any Defective Home
Loan that are on deposit in the Collection Account as of the Determination
Date for such Distribution Date shall be deemed to have been paid during the
related Due Period and shall be transferred to the Note Distribution Account
as part of the Available Collection Amount to be retained therein or
transferred to the Certificate Distribution Account, if applicable, pursuant
to Section 5.01(c).
As to any Deleted Home Loan for which the Transferor substitutes a
Qualified Substitute Home Loan or Loans, the Transferor shall effect such
substitution by delivering to the Issuer (i) a certification executed by a
Responsible Officer of the Transferor to the effect that the Substitution
Adjustment has been credited to the Collection Account and (ii) the documents
constituting the Indenture Trustee's Home Loan File for such Qualified
Substitute Home Loan or Loans.
(b) The Servicer shall deposit in the Collection Account all payments
received in connection with such Qualified Substitute Home Loan or Loans
after the date of such substitution. Monthly Payments received with respect
to Qualified Substitute Home Loans on or before the date of substitution will
be retained by the Transferor. The Issuer will be entitled to all payments
received on the Deleted Home Loan on or before the date of substitution, and
the Transferor shall thereafter be entitled to retain all amounts
subsequently received in respect of such Deleted Home Loan. The Transferor
shall give written notice to the Issuer, the Servicer (if the Transferor is
not then acting as such), the Indenture Trustee that such substitution has
taken place and the Servicer shall amend the Home Loan Schedule to reflect
(i) the removal of such Deleted Home Loan from the terms of this Agreement
and (ii) the substitution of the Qualified Substitute Home Loan. The
Transferor shall promptly deliver to the Issuer, the Servicer (if the
Transferor is not then acting as such) and the Indenture Trustee, a copy of
the amended Home Loan Schedule. Upon such substitution, such Qualified
Substitute Home Loan or Loans shall be subject to the terms of this Agreement
in all respects, and the Transferor shall be deemed to have made with respect
to such Qualified Substitute Home Loan or Loans, as of the date of
substitution, the covenants, representations and warranties set forth in
Section 3.03. On the date of such substitution, the Transferor will deposit
into the Collection Account an amount equal to the related Substitution
Adjustment, if any. In addition, on the date of such substitution, the
Issuer shall cause the Indenture Trustee to release the Deleted Home Loan
from the lien of the Indenture and the Issuer will cause such Qualified
Substitute Home Loan to be pledged to the Indenture Trustee under the
Indenture as part of the Trust Estate.
(c) It is understood and agreed that the obligations of the Transferor
set forth in this Section 3.05 to cure, purchase or substitute for a
Defective Home Loan (and to indemnify the Trust for certain losses as
described herein in connection with a Defective Home Loan) constitute the
sole remedies of the Depositor, the Issuer, the Indenture Trustee and the
Securityholders hereunder respecting a breach of the representations and
warranties contained in Section 3.03. Any cause of action against the
Transferor relating to or arising out of a defect in a Indenture Trustee's
Home Loan File as contemplated by Section 2.06 or against the Transferor
relating to or arising out of a breach of any representations and warranties
made in Section 3.03 shall accrue as to any Home Loan upon (i) discovery of
such defect or breach by any party and notice thereof to the Transferor or
notice thereof by the Transferor to the Issuer, (ii) failure by the
Transferor to cure such defect or breach or purchase or substitute such Home
Loan as specified above, and (iii) demand upon the Transferor, as applicable,
by the Issuer or the Majority Securityholders for all amounts payable in
respect of such Home Loan.
(d) Neither the Issuer nor the Indenture Trustee shall have any duty to
conduct any affirmative investigation other than as specifically set forth in
this Agreement as to the occurrence of any condition requiring the repurchase
or substitution of any Home Loan pursuant to this Section or the eligibility
of any Home Loan for purposes of this Agreement.
ARTICLE IV.
ADMINISTRATION AND SERVICING OF THE HOME LOANS
----------------------------------------------
Section 4.01 Duties of the Servicer.
----------------------
(a) Servicing Standard. The Servicer, as an independent contractor,
------------------
shall service and administer the Home Loans and shall have full power and
authority, acting alone, to do any and all things in connection with such
servicing and administration which the Servicer may deem necessary or
desirable and consistent with the terms of this Agreement. Notwithstanding
anything to the contrary contained herein, the Servicer, in servicing and
administering the Home Loans, shall employ or cause to be employed procedures
(including collection, foreclosure, liquidation and Foreclosure Property
management and liquidation procedures) and exercise the same care that it
customarily employs and exercises in servicing and administering loans of the
same type as the Home Loans for its own account, all in accordance with
Accepted Servicing Procedures of prudent lending institutions and servicers
of loans of the same type as the Home Loans and giving due consideration to
the Securityholders' reliance on the Servicer. The Servicer has and shall
maintain the facilities, procedures and experienced personnel necessary to
comply with the servicing standard set forth in this subsection (a) and the
duties of the Servicer set forth in this Agreement relating to the servicing
and administration of the Home Loans.
(b) Servicing Advances. In accordance with the preceding general
------------------
servicing standard, the Servicer, or any Subservicer on behalf of the
Servicer, shall make all Servicing Advances in connection with the servicing
of each Home Loan hereunder. Notwithstanding any provision to the contrary
herein, neither the Servicer, nor any Subservicer on behalf of the Servicer,
shall have any obligation to advance its own funds for any delinquent
scheduled payments of principal and interest on any Home Loan or to satisfy
or keep current the indebtedness secured by any Superior Liens on the related
Mortgaged Property. No costs incurred by the Servicer or any Subservicer in
respect of Servicing Advances shall, for the purposes of distributions to
Securityholders, be added to the amount owing under the related Home Loan.
Notwithstanding any obligation by the Servicer to make a Servicing Advance
hereunder with respect to a Home Loan, before making any Servicing Advance
that is material in relation to the outstanding principal balance thereof,
the Servicer shall assess the reasonable likelihood of (i) recovering such
Servicing Advance and any prior Servicing Advances for such Home Loan, and
(ii) recovering any amounts attributable to outstanding interest and
principal owing on such Home Loan for the benefit of the Securityholders in
excess of the costs, expenses and other deductions to obtain such recovery,
including without limitation any Servicing Advances therefor and, if
applicable, the outstanding indebtedness of all Superior Liens. The Servicer
shall only make a Servicing Advance with respect to a Home Loan to the extent
that the Servicer determines in its reasonable, good faith judgment that such
Servicing Advance would likely be recovered as aforesaid; provided, however,
that the Servicer will be entitled to be reimbursed for any Nonrecoverable
Servicing Advance pursuant to this Agreement.
(c) Waivers, Modifications and Extensions. The Servicer shall make
-------------------------------------
reasonably diligent efforts to collect all payments called for under the
terms and provisions of the Home Loans, and shall, to the extent such
procedures shall be consistent with this Agreement, follow Accepted Servicing
Procedures. The Servicer may in its discretion waive or permit to be waived
any penalty interest or any other fee or charge which the Servicer would be
entitled to retain hereunder as servicing compensation and extend the Due
Date on a Debt Instrument for a period (with respect to each payment as to
which the Due Date is extended) not greater than 90 days after the initially
scheduled due date for such payment. Notwithstanding anything in this
Agreement to the contrary, the Servicer shall not permit any additional
extension or modification with respect to any Home Loan other than that
permitted by the immediately preceding sentence unless the Home Loan is a
Defaulted Home Loan.
(d) Instruments of Satisfaction or Release. Without limiting the
--------------------------------------
generality of Section 4.01(c), the Servicer, in its own name or in the name
of a Subservicer, is hereby authorized and empowered when the Servicer
believes it appropriate in its best judgment to execute and deliver, on
behalf of the Securityholders and the Trust or any of them, and upon notice
to the Indenture Trustee, any and all instruments of satisfaction or
cancellation, or of partial or full release or discharge, and all other
comparable instruments, with respect to the Home Loans and the Mortgaged
Properties and to institute foreclosure proceedings or obtain a deed-in-lieu
of foreclosure so as to convert the ownership of such properties, and to hold
or cause to be held title to such properties, on behalf of the Trust and
Securityholders. The Servicer shall service and administer the Home Loans in
accordance with applicable state and federal law and shall provide to the
Obligors any reports required to be provided to them thereby. The Indenture
Trustee shall execute, at the written direction of the Servicer, any limited
or special powers of attorney and other documents reasonably acceptable to
the Indenture Trustee to enable the Servicer or any Subservicer to carry out
their servicing and administrative duties hereunder, including, without
limitation, limited or special powers of attorney with respect to any
Foreclosure Property, and the Indenture Trustee shall not be accountable for
the actions of the Servicer or any Subservicers under such powers of
attorney.
Section 4.02 Liquidation of Home Loans; Defaulted Home Loans.
-----------------------------------------------
(a) In the event that any payment due under any Home Loan and not
postponed pursuant to Section 4.01(c) is not paid when the same becomes due
and payable, or in the event the Obligor fails to perform any other covenant
or obligation under the Home Loan and such failure continues beyond any
applicable grace period, the Servicer shall, in accordance with the standard
of care specified in Section 4.01(a), take such action as it shall deem to be
in the best interest of the Securityholders to collect or liquidate such
Defaulted Home Loan in a manner that in the reasonable judgment of the
Servicer will be likely to maximize the net proceeds realizable therefrom
under the circumstances (including, but without limitation, the resale or
substitution of such Home Loan pursuant to Section 3.05, or, if no Superior
Liens exist on the related Mortgaged Property, foreclose or take other
comparable action to effect ownership in such Mortgaged Property in the name
of the Issuer for the benefit of Securityholders). The Servicer shall give
the Indenture Trustee notice of the election of remedies made pursuant to
this Section 4.02. The Servicer shall not be required to satisfy the
indebtedness secured by any Superior Liens on the related Mortgaged Property
or to advance funds to keep the indebtedness secured by such Superior Liens
current. In connection with any collection or liquidation activities, the
Servicer shall exercise collection or liquidation procedures with the same
degree of care and skill as it would exercise or use under the circumstances
in the conduct of its own affairs.
(b) During any Due Period occurring after a Home Loan becomes a
Liquidated Home Loan, the Servicer shall deposit into the Collection Account
any proceeds received by it with respect to such Liquidated Home Loan or the
related Foreclosure Property ("Post Liquidation Proceeds").
-------------------------
(c) After a Home Loan has become a Liquidated Home Loan, the Servicer
shall promptly prepare and forward to the Issuer, the Indenture Trustee, and,
upon request of any Securityholder, to such Securityholder a Liquidation
Report detailing the following: (i) the Net Liquidation Proceeds, Insurance
Proceeds or Released Mortgaged Property Proceeds received in respect of such
Liquidated Home Loan; (ii) expenses incurred with respect thereto; (iii) any
Net Loan Losses incurred in connection therewith; and (iv) any Post
Liquidation Proceeds.
(d) Either of the Transferor and the Servicer may at its option
purchase from the Trust any Home Loan, that is 90 days or more Delinquent and
that the Servicer determines in good faith would otherwise become subject to
foreclosure proceedings, at a price equal to the Purchase Price; provided,
however, that the aggregate Principal Balance of all
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Home Loans that may be so purchased by the Transferor or the Servicer shall
not exceed an amount equal to 10% of the Original Pool Principal Balance.
The Purchase Price for any Home Loan purchased hereunder shall be deposited
into the Collection Account and the Indenture Trustee, upon (i) receipt of an
Officer's Certificate of the Servicer as to the making of such deposit and
(ii) confirmation that such deposit has been made, shall release or cause to
be released to the Servicer the related Home Loan File and shall execute and
deliver such instruments of transfer or assignment as are furnished by the
Transferor or the Servicer, as the case may be, in each case without
recourse, as shall be necessary to vest in the Transferor or the Servicer, as
the case may be, title to any Home Loan released pursuant hereto, and the
Indenture Trustee shall have no further responsibility or liability (except
as to its own acts) with regard to such Home Loan.
Section 4.03 Fidelity Bond; Errors and Omission Insurance.
--------------------------------------------
The Servicer shall keep in force during the term of this Agreement a
policy or policies of insurance covering errors and omissions for failure in
the performance of the Servicer's obligations under this Agreement, which
policy or policies shall be in such form and amount that would meet the
requirements of FNMA or FHLMC if it were the purchaser of the Home Loans.
The Servicer shall also maintain a fidelity bond in the form and amount that
would meet the requirements of FNMA or FHLMC if it were the purchaser of the
Home Loans. The Servicer shall be deemed to have complied with this
provision if an affiliate of the Servicer has such errors and omissions and
fidelity bond coverage and, by the terms of such insurance policy or fidelity
bond, the coverage afforded thereunder extends to the Servicer. Any such
errors and omissions policy and fidelity bond shall not be canceled without
thirty days' prior written notice to the Indenture Trustee. Upon the request
of the Indenture Trustee, or any Securityholder, the Servicer shall furnish
to the requesting party copies of all binders and policies or certificates
evidencing that such bonds and insurance policies are in full force and
effect. The Servicer shall also cause each Sub-Servicer to maintain a policy
of insurance covering errors and omissions and a fidelity bond which would
meet the requirements set forth above.
Section 4.04 Title, Management and Disposition of Foreclosure
------------------------------------------------
Property.
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In the event that title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure (a "Foreclosure Property"),
--------------------
the deed or certificate of sale shall be taken in the name of the Indenture
Trustee for the benefit of the Securityholders.
The Servicer shall manage, conserve, protect and operate each
Foreclosure Property for the Indenture Trustee and the Securityholders solely
for the purpose of its prudent and prompt disposition and sale. The Servicer
shall, either itself or through an agent selected by the Servicer, manage,
conserve, protect and operate the Foreclosure Property in the same manner
that it manages, conserves, protects and operates other foreclosure property
for its own account. The Servicer shall attempt to sell the same (and may
temporarily lease the same) on such terms and conditions as the Servicer
deems to be in the best interest of the Securityholders.
(a) The Servicer shall, consistent with the servicing standards set
forth herein, foreclose upon or otherwise comparably convert the ownership of
properties securing such of the Home 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 realization upon
defaulted Home Loans, the Servicer shall follow such practices and procedures
as it shall deem necessary or advisable, as shall be normal and usual in
accordance with Accepted Servicing Procedures and the requirements of
insurers under any insurance policy required to be maintained hereunder with
respect to the related Home Loan. The Servicer shall be responsible for all
costs and expenses incurred by it in any such proceedings; provided, however,
-------- -------
that such costs and expenses will be recoverable as Servicing Advances by the
Servicer as contemplated herein.
The Servicer shall not be required to make any Servicing Advance, to
foreclose upon any Mortgaged Property, or otherwise expend its own funds
toward the restoration of any Mortgaged Property that shall have suffered
damage from an Uninsured Cause, unless it shall determine in its reasonable
judgment, as evidenced by a certificate of a Servicing Officer, that such
foreclosure or restoration, as the case may be, will increase the proceeds of
liquidation of the related Home Loan after reimbursement to itself for
Servicing Advances. Any Servicing Advances made with respect to a Home Loan
shall be recoverable by the Servicer only from recoveries on such Home Loan
except to the extent such Servicing Advance is deemed a Nonrecoverable
Servicing Advance.
The disposition of Foreclosure Property shall be carried out by the
Servicer at such price, and upon such terms and conditions, as the Servicer
deems to be in the best interest of the Indenture Trustee and the
Securityholders and, as soon as practicable thereafter, the expenses of such
sale shall be paid. The Net Liquidation Proceeds or Post Liquidation
Proceeds, as applicable, from the conservation, disposition and sale of the
Foreclosure Property shall be promptly deposited by the Servicer in the
Collection Account in accordance with Section 5.01 of this Agreement and the
Indenture.
Prior to acquiring any Foreclosure Property, the Servicer shall cause a
review to be performed, in accordance with Accepted Servicing Procedures, on
the related Mortgaged Property by a company such as Equifax, Inc. or
Toxicheck, and the scope of such review shall be limited to the review of
public records and documents for indications that such Mortgaged Property has
on it, or is near, hazardous or toxic material or waste. If such review
reveals that the Mortgaged Property has on it, under it or is near hazardous
or toxic material or waste or reveals any other environmental problem, the
Servicer shall provide a copy to the Indenture Trustee of the related report
with an attached certification of a Responsible Officer that based on an
analysis of all available information (including potential clean up costs and
liability claims) at the time it is the best judgment of such Responsible
Officer that such foreclosure shall increase Net Liquidation Proceeds to the
Indenture Trustee and the Trust shall take title to such Mortgaged Property.
The Indenture Trustee shall promptly forward such report and certification to
the Securityholders.
The Servicer may contract with any independent contractor for the
operation and management of any Foreclosure Property, provided that:
(i) the terms and conditions of any such contract shall not be
inconsistent with this Agreement;
(ii) any such contract shall require, or shall be administered to
require, that the independent contractor pay all costs and expenses
incurred in connection with the operation and management of such
Foreclosure Property, remit all related revenues (net of such costs and
expenses) to the Servicer as soon as practicable, but in no event later
than thirty days following the receipt thereof by such independent
contractor;
(iii) none of the provisions of this Section 4.04 relating to any
such contract or to actions taken through any such independent
contractor shall be deemed to relieve the Servicer of any of its duties
and obligations hereunder with respect to the operation and management
of any such Foreclosure Property; and
(iv) the Servicer shall be obligated with respect thereto to the
same extent as if it alone were performing all duties and obligations in
connection with the operation and management of such Foreclosure
Property.
The Servicer shall be entitled to enter into any agreement with any
independent contractor performing services for it related to its duties and
obligations hereunder for indemnification of the Servicer by such independent
contractor, and nothing in this Agreement shall be deemed to limit or modify
such indemnification. The Servicer shall not be liable for all fees owed by
it to any such independent contractor, and that any amounts so expended shall
be deemed Servicing Advances. Each liquidation of a Foreclosure Property
shall be carried out by the Servicer at such price and upon such terms and
conditions as the Servicer shall deem necessary or advisable, as shall be
normal and usual in accordance with Accepted Servicing Procedures, and the
resulting Liquidation Proceeds shall be distributed in accordance with the
Section 5.01 hereof.
Section 4.05 Access to Certain Documentation and Information
-----------------------------------------------
Regarding the Home Loans.
- ------------------------
The Servicer shall provide to the Issuer, the Indenture Trustee and the
Securityholders and the supervisory agents and examiners of each of the
foregoing access to the documentation regarding the Home Loans required by
applicable state and federal regulations, such access being afforded without
charge but only upon reasonable request and during normal business hours at
the offices of the Servicer designated by it.
Section 4.06 Superior Liens.
--------------
(a) The Servicer shall file (or cause to be filed) of record a request
for notice of any action by a lienholder under a Superior Lien for the
protection of the Issuer's interest, where permitted by local law and
whenever applicable state law does not require that a junior lienholder be
named as a party defendant in foreclosure proceedings in order to foreclose
such junior lienholder's equity of redemption. The Servicer shall also
notify any such superior lienholder in writing of the existence of the Home
Loan and request notification of any action (as described below) to be taken
against the Obligor or the Mortgaged Property by the superior lienholder.
(b) If the Servicer is notified that any lienholder under a Superior
Lien has accelerated or intends to accelerate the obligations secured by such
Superior Lien, or has declared or intends to declare a default under the
related mortgage or promissory note secured thereby, or has filed or intends
to file an election to have any Mortgaged Property sold or foreclosed, the
Servicer shall take, on behalf of the Issuer and the Indenture Trustee, all
reasonable actions that are necessary to protect the interests of the
Securityholders and/or to preserve the security of the related Home Loan,
including making any Servicing Advances that are necessary to cure the
default or reinstate the Superior Lien. Any Servicing Advances by the
Servicer pursuant to its obligations in this Section 4.06 shall comply with
requirements set forth in Section 4.01(b) hereof.
Section 4.07 Subservicing.
------------
(a) The Servicer may enter into Subservicing Agreements for any
servicing and administration of Home Loans with any institution which is in
compliance with the laws of each state necessary to enable it to perform its
obligations under such Subservicing Agreement and is an Eligible Servicer.
The Servicer shall give prior written notice to the Issuer and the Indenture
Trustee of the appointment of any Subservicer. The Servicer shall be
entitled to terminate any Subservicing Agreement in accordance with the terms
and conditions of such Subservicing Agreement and to either directly service
the related Home Loans or enter into a Subservicing Agreement with a
successor subservicer which qualifies hereunder.
In the event of termination of any Subservicer, and unless a successor
Subservicer has otherwise been appointed, all servicing obligations of such
Subservicer shall be assumed simultaneously by the Servicer without any
additional act or deed on the part of such Subservicer or the Servicer, and
the Servicer shall service directly the related Home Loans.
Each Subservicing Agreement shall include the provision that such
agreement may be immediately terminated by the Indenture Trustee in the event
that the Servicer shall, for any reason, no longer be the Servicer. In no
event shall any Subservicing Agreement require the Indenture Trustee, as
Successor Servicer, for any reason whatsoever to pay compensation to a
Subservicer in order to terminate such Subservicer.
(b) Notwithstanding any Subservicing Agreement, any of the provisions
of this Agreement relating to agreements or arrangements between the Servicer
and a Subservicer or reference to actions taken through a Subservicer or
otherwise, the Servicer shall remain obligated and primarily liable to the
Issuer, the Indenture Trustee and Securityholders for the servicing and
administering of the Home Loans in accordance with the provisions of this
Agreement without diminution of such obligation or liability by virtue of
such Subservicing Agreements or arrangements or by virtue of indemnification
from the Subservicer and to the same extent and under the same terms and
conditions as if the Servicer alone were servicing and administering the Home
Loans. For purposes of this Agreement, the Servicer shall be deemed to have
received payments on Home Loans when the Subservicer has actually received
such payments and, unless the context otherwise requires, references in this
Agreement to actions taken or to be taken by the Servicer in servicing the
Home Loans include actions taken or to be taken by a Subservicer on behalf of
the Servicer. The Servicer shall be entitled to enter into any agreement
with a Subservicer for indemnification of the Servicer by such Subservicer,
and nothing contained in this Agreement shall be deemed to limit or modify
such indemnification.
(c) In the event the Servicer shall for any reason no longer be the
Servicer (including by reason of an Event of Default), the successor
Servicer, on behalf of the Issuer, the Indenture Trustee and the
Securityholders pursuant to Section 4.08, shall thereupon assume all of the
rights and obligations of the Servicer under each Subservicing Agreement that
the Servicer may have entered into, unless the successor Servicer elects to
terminate any Subservicing Agreement in accordance with its terms. The
successor Servicer shall be deemed to have assumed all of the Servicer's
interest therein and to have replaced the Servicer as a party to each
Subservicing Agreement to the same extent as if the Subservicing Agreements
had been assigned to the assuming party, except that the Servicer shall not
thereby be relieved of any liability or obligations under the Subservicing
Agreements which accrued prior to the transfer of servicing to the successor
Servicer. The Servicer at its expense and without right of reimbursement
therefor, shall, upon request of the successor Servicer, deliver to the
assuming party all documents and records relating to each Subservicing
Agreement and the Home Loans then being serviced and an accounting of amounts
collected and held by it and otherwise use its best efforts to effect the
orderly and efficient transfer of the Subservicing Agreements to the assuming
party.
(d) As part of its servicing activities hereunder, the Servicer, for
the benefit of the Issuer, the Indenture Trustee and the Securityholders,
shall enforce the obligations of each Subservicer under the related
Subservicing Agreement. Such enforcement, including, without limitation, the
legal prosecution of claims 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 Servicer, in its good faith business judgment, would require were it the
owner of the related Home Loans. The 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
Home Loan or (ii) from a specific recovery of costs, expenses or attorneys
fees against the party against whom such enforcement is directed.
(e) Any Subservicing Agreement that may be entered into and any other
transactions or services relating to the Home Loans involving a Subservicer
in its capacity as such and not as an originator shall be deemed to be
between the Subservicer and the Servicer alone and none of the Issuer, the
Indenture Trustee or the Securityholders shall be deemed parties thereto or
shall have any claims, rights, obligations, duties or liabilities with
respect to the Subservicer in its capacity as such except as set forth in
Section 4.07(c) above.
(f) In those cases where a Subservicer is servicing a Home Loan
pursuant to a Subservicing Agreement, the Subservicer will be required to
establish and maintain one or more accounts (collectively, the "Subservicing
Account"). The Sub-Servicing Account shall be an Eligible Account. The
Subservicer will be required to deposit into the Subservicing Account no
later than the first Business Day after receipt all proceeds of Home Loans
received by the Subservicer and remit such proceeds to the Servicer for
deposit in the Collection Account not later than the Business Day following
receipt thereof by the Subservicer. Notwithstanding anything in this clause
(f) to the contrary, the Subservicer shall only be able to withdraw funds
from the Subservicing Account for the purpose of remitting such funds to the
Servicer for deposit into the Collection Account. The Servicer shall require
the Subservicer to cause any collection agent of the Subservicer to send a
copy to the Servicer of each statement of monthly payments collected by or on
behalf of the Subservicer within five Business Days after the end of every
month, and the Servicer shall compare the information provided in such
reports with the deposits made by the Subservicer into the Collection Account
for the same period. The Servicer shall be deemed to have received payments
on the Home Loans on the date on which the Subservicer has received such
payments.
Section 4.08 Successor Servicers.
-------------------
In the event that the Servicer is terminated pursuant to Section 10.01
hereof, or resigns pursuant to Section 9.04 hereof or otherwise becomes
unable to perform its obligations under this Agreement, the Indenture Trustee
will become the successor servicer or will appoint a successor servicer in
accordance with the provisions of Section 10.02 hereof; provided that any
successor servicer, including the Indenture Trustee, shall satisfy the
requirements of an Eligible Servicer and shall be approved by the Rating
Agencies.
Section 4.09 Maintenance of Hazard Insurance; Property Protection
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Expenses.
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The Servicer shall cause to be maintained for each Home Loan fire and
hazard insurance naming the Servicer as loss payee thereunder providing
extended coverage in an amount which is at least equal to the lesser of (i)
the maximum insurable value of the improvements securing such Home Loan from
time to time, (ii) the combined principal balance owing on such Home Loan and
any mortgage loan senior to such Home Loan and (iii) the minimum amount
required to compensate for damage or loss on a replacement cost basis. The
Servicer shall also maintain on property acquired upon foreclosure, or by
deed in lieu of foreclosure, hazard insurance with extended coverage in an
amount which is at least equal to the lesser of (i) the maximum insurable
value from time to time of the improvements which are a part of such prop-
erty, (ii) the combined principal balance owing on such Home Loan and any
mortgage loan senior to such Home Loan and (iii) the minimum amount required
to compensate for damage or loss on a replacement cost basis at the time of
such foreclosure, fire and or deed in lieu of foreclosure.
Any amounts to be collected by the Servicer under any such policies
(other than amounts to be applied to the restoration or repair of the
property subject to the related Mortgage or amounts to be released to the
Obligor in accordance with Accepted Servicing Procedures, subject to the
terms and conditions of the related Mortgage and Debt Instrument) shall be
deposited in the Collection Account, subject to withdrawal as set forth
herein.
Any cost incurred by the Servicer in maintaining any such insurance
shall not, for the purpose of calculating distributions to Securityholders,
be added to the Principal Balance of the related Home Loan, notwithstanding
that the terms of such Home Loan so permit. It is understood and agreed that
no earthquake or other additional insurance is to be required of any Obligor
other than pursuant to such applicable laws and regulations as shall at any
time be in force and as shall require such additional insurance. If the
Mortgaged Property or Foreclosure Property is located at the time of
origination of the Home Loan in a federally designated special flood hazard
area (and if the flood insurance policy referenced herein has been made
available), the Servicer will cause to be maintained flood insurance in
respect thereof. Such flood insurance shall be in an amount equal to the
lesser of (i) the sum of the Principal Balance of the related Home Loan and
any Senior Lien, (ii) the maximum insurable value of the related Mortgaged
Property, and (iii) the maximum amount of such insurance available for the
related Mortgaged Property under the national flood insurance program
(assuming that the area in which such Mortgaged Property is located is
participating in such program).
Section 4.10 Maintenance of Mortgage Impairment Insurance Policy.
---------------------------------------------------
In the event that the Servicer shall obtain and maintain a blanket
policy with an insurer having a general policy rating of A:VIII or better in
Best's Key Rating Guide, insuring against fire and hazards of extended
coverage on all of the Home Loans, then, to the extent such policy names the
Servicer as loss payee and provides coverage in an amount equal to the
aggregate unpaid principal balance on the Home Loans without co-insurance,
and otherwise complies with the requirements of Section 4.09, the Servicer
shall be deemed conclusively to have satisfied its obligations with respect
to fire and hazard insurance coverage under Section 4.09, it being understood
and agreed that such blanket policy may contain a deductible clause that is
in form and substance consistent with standard industry practice for
servicers of mortgage loans comparable to the Home Loans, in which case the
Servicer shall, in the event that there shall not have been maintained on the
related Mortgaged Property a policy complying with Section 4.09, and there
shall have been a loss which would have been covered by such policy, deposit
in the Collection Account the difference, if any, between the amount that
would have been payable under a policy complying with Section 4.09 and the
amount paid under such blanket policy. Upon the request of the Indenture
Trustee or any Securityholder, the Servicer shall cause to be delivered to
the Indenture Trustee or such Certificateholder, as the case may be, a
certified true copy of such policy. In connection with its activities as
administrator and servicer of the Home Loans, the Servicer agrees to prepare
and present, on behalf of itself, the Indenture Trustee and Securityholders,
claims under any such policy in a timely fashion in accordance with the terms
of such policy.
Section 4.11 Reports to the Securities and Exchange Commission.
-------------------------------------------------
The Indenture Trustee shall, on behalf of the Trust, cause to be filed
with the Securities and Exchange Commission all monthly collateral reports on
Forms 8-K and 10-K required to be filed under the provisions of the Securi-
ties Exchange Act of 1934, as amended, and the rules and regulations of the
Securities and Exchange Commission thereunder. Upon the request of the
Indenture Trustee, each of the Servicer and the Transferor shall cooperate
with the Indenture Trustee in the preparation of any such report and shall
provide to the Indenture Trustee in a timely manner all such information or
documentation as the Indenture Trustee may reasonably request in connection
with the performance of its duties and obligations under this Section.
Section 4.12 Payment of Taxes, Insurance and Other Charges.
---------------------------------------------
The Servicer may and, if required by the Servicer, the Subservicers
shall, establish and maintain one or more accounts (the "Servicing
Accounts"), into which any collections from the Obligors (or related advances
from Subservicers) for the payment of taxes, assessments, hazard insurance
premiums, and comparable items for the account of the Obligors shall be
deposited and retained. Servicing Accounts shall be Eligible Accounts.
Withdrawals of amounts so collected from a Servicing Account may be made only
to (i) effect timely payment of taxes, assessments, hazard insurance
premiums, and comparable items; (ii) reimburse the Servicer (or a Subservicer
to the extent provided in the related Subservicing Agreement) out of related
collections for any advances with respect to taxes, assessments and insurance
premiums and with respect to hazard insurance; (iii) refund to Obligors any
sums as may be determined to be overages; (iv) pay interest, if required and
as described below, to Obligors on balances in the Servicing Account; or (v)
clear and terminate the Servicing Account at the termination of this
Agreement in accordance with Section 11.01. As part of its servicing duties,
the Servicer or Subservicers shall pay to the Obligors interest on funds in
Servicing Accounts, to the extent required by law and, to the extent that
interest earned on funds in the Servicing Accounts is insufficient, to pay
such interest from its or their own funds, without any reimbursement from the
Trust, the Indenture Trustee, the Depositor, or any Securityholder therefor.
Upon request of the Indenture Trustee, the Transferor or the Servicer shall
cause the bank, savings association or other depository for each Servicing
Account to forward to the Indenture Trustee copies of such statements or
reports as the Indenture Trustee, the Depositor, or any Securityholder shall
reasonably request.
ARTICLE V.
ESTABLISHMENT OF TRUST ACCOUNTS
-------------------------------
Section 5.01 Collection Account and Note Distribution Account.
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(a)(1) Establishment of Collection Account. The Servicer, for the
-----------------------------------
benefit of the Securityholders, shall cause to be established and maintained
one or more Collection Accounts, which shall be separate Eligible Accounts,
which may be interest-bearing, entitled "Collection Account, First Bank
National Association, as Indenture Trustee, in trust for the Cityscape Home
Loan Asset Backed Securities, Series 1997-1". The Collection Account may be
maintained with the Indenture Trustee or any other depository institution
which satisfies the requirements set forth in the definition of Eligible
Account. The creation of any Collection Account other than one maintained
with the Indenture Trustee shall be evidenced by a letter agreement between
the Servicer and the depository institution acceptable to the Indenture
Trustee. A copy of such letter agreement shall be furnished to the Indenture
Trustee and, upon request of any Securityholder, to such Securityholder.
Funds in the Collection Account shall be invested in accordance with Section
5.03.
The Collection Account shall be established, as of the Closing Date,
with the Indenture Trustee as an Eligible Account pursuant to the definition
thereof. The Collection Account may, upon written notice to the Issuer and
the Indenture Trustee, be transferred to a different depository institution
so long as such transfer is to an Eligible Account reasonably acceptable to
the Indenture Trustee.
(2) Establishment of Note Distribution Account. No later than the
------------------------------------------
Closing Date, the Servicer, for the benefit of the Securityholders, shall
cause to be established and maintained with the Indenture Trustee one or more
Note Distribution Accounts, which shall be separate Eligible Accounts, which
may be interest-bearing and which shall be entitled "Note Distribution
Account, First Bank National Association, as Indenture Trustee, in trust for
the Cityscape Home Loan Asset Backed Securities, Series 1997-1". Funds in
the Note Distribution Account shall be invested in accordance with Section
5.03.
(b)(1) Deposits to Collection Account. The Servicer shall use its
------------------------------
best efforts to deposit or cause to be deposited (without duplication) within
two (2) Business Days, of receipt thereof in the Collection Account and
retain therein in trust for the benefit of the Securityholders:
(i) all payments on account of principal on the Home Loans
collected after the Cut-Off Date;
(ii) all payments on account of interest on the Home Loans due
after the Cut-Off Date;
(iii) all Net Liquidation Proceeds and Post Liquidation
Proceeds pursuant to Sections 4.02 or 4.04;
(iv) all Insurance Proceeds;
(v) all Released Mortgaged Property Proceeds;
(vi) any amounts payable in connection with the repurchase of any
Home Loan and the amount of any Substitution Adjustment pursuant to
Sections 2.06 and 3.05;
----
(vii) any amount required to be deposited in the Collection
Account pursuant to the receipt of proceeds from any insurance policies
under Section 4.03 or the deposit of the Termination Price under Section
11.02; and
(viii) interest and gains on funds held in the Collection Account.
The Servicer shall be entitled to retain and not deposit into the
Collection Account any amounts received with respect to a Home Loan that
constitute additional servicing compensation pursuant to Section 7.03, and
such amounts retained by the Servicer during a Due Period shall be excluded
from the calculation of the Servicing Compensation that is distributable to
the Servicer from the Note Distribution Account on the next Distribution Date
following such Due Period.
(2) Deposits to Note Distribution Account. On the Business Day
-------------------------------------
prior to the Distribution Date, the Indenture Trustee (based on information
provided by the Servicer for such Distribution Date) shall withdraw from the
Collection Account the Available Collection Amount (other than any amounts
set forth in clause (iii) of the definition thereof) and deposit such into
the Note Distribution Account for such Distribution Date.
(3) Withdrawals from Collection Account. The Indenture Trustee, at
-----------------------------------
direction of the Servicer shall also make the following withdrawals from the
Collection Account, in no particular order of priority:
(i) to withdraw any amount not required to be deposited in the
Collection Account or deposited therein in error;
(ii) on each Distribution Date, to pay to the Servicer (a) any
accrued and unpaid Servicing Fees and (b) any additional Servicing
Compensation pursuant to Section 7.03 not withheld pursuant to Section
5.01(b)(1);
(iii) on each Distribution Date, to pay to the Servicer any
unreimbursed Servicing Advances; provided, however, that the Servicer's
right to reimbursement for unreimbursed Servicing Advances shall be
limited to late collections on the related Home Loans, Liquidations
Proceeds, Released Mortgaged Property Proceeds, Insurance Proceeds, Post
Liquidation Proceeds and such other amounts as may be collected by the
Servicer from the related Obligor or otherwise relating to the Home Loan
in respect of which such unreimbursed amounts are owed;
(iv) on each Distribution Date, to reimburse the Servicer for any
Servicing Advances determined by the Servicer in good faith to have
become Nonrecoverable Servicing Advances, such reimbursement to be made
from any funds in the Collection Account.
(v) to clear and terminate the Collection Account in connection
with the termination of this Agreement; and
(vi) make payments set forth in Section 9.01(e).
(c) Withdrawals from Note Distribution Account. To the extent funds
------------------------------------------
are available in the Note Distribution Account, the Indenture Trustee (based
on the information provided by the Servicer contained in the Servicer's
Monthly Remittance Report for such Distribution Date) shall make withdrawals
therefrom by 9:00 a.m. (New York City time) on each Distribution Date, for
application in the following order of priority:
(i) to distribute on such Distribution Date the following amounts
in the following order: (a) to the Indenture Trustee, an amount equal
to the Indenture Trustee Fee and all unpaid Indenture Trustee Fees from
prior Distribution Dates, (b) to the Servicer, in trust for the Owner
Trustee, an amount equal to the Owner Trustee Fee and all unpaid Owner
Trustee Fees from prior Distribution Dates, and (c) to the Custodian, an
amount equal to the Custodian Fee and all unpaid Custodian Fees from
prior Distribution Dates; and
(ii) to deposit into the Certificate Distribution Account the
applicable portions of the Available Distribution Amount distributable
in respect of the Class B Certificates and the Residual Interest
calculated pursuant to 5.01(d) and (e) below on such Distribution Date;
Notwithstanding that the Notes have been paid in full, the Indenture
Trustee and the Servicer shall continue to maintain the Collection Account
and the Note Distribution Account hereunder until the Class Principal Balance
of each Class of Securities has been reduced to zero.
(d) On each Distribution Date, the Indenture Trustee shall distribute
the Regular Distribution Amount from the Note Distribution Account (in the
case of all amounts distributable to Noteholders) and from the Certificate
Distribution Account (in the case of all amounts distributable to
Certificateholders), in the following order of priority:
(i) to the holders of the Classes of Senior Notes, pro rata, based
on the amount of interest distributable in respect of each such Class
based on the Note Interest Rate and Class Principal Balance thereof, the
Senior Noteholders' Interest Distributable Amount for such Distribution
Date;
(ii) to the holders of the classes of Mezzanine Notes, based on the
amount of interest distributable in respect of each such Class based on
the Note Interest Rate and Class Principal Balance thereof, the
Mezzanine Noteholders' Interest Distributable Amount for such
Distribution Date (with any deficiency therein on such Distribution Date
being allocated first to the Class M-2 Notes and then to the Class M-1
Notes);
(iii) to the holders of the Class B Certificates, the
Certificateholders' Interest Distributable Amount for such Distribution
Date;
(iv) sequentially, to the holders of the Class A-1, Class A-2,
Class A-3 and Class A-4 Notes, in that order, until the respective Class
Principal Balances thereof are reduced to zero, the amount necessary to
reduce the aggregate Class Principal Balance of the Senior Notes to the
Senior Optimal Principal Balance for such Distribution Date;
(v) sequentially, to the holders of the Class M-1 and the Class M-
2 Notes in that order, the amount necessary to reduce the Class
Principal Balances thereof to the Class M-1 Optimal Principal Balance
and the Class M-2 Optimal Principal Balance, respectively, for such
Distribution Date;
(vi) to the holders of the Class B Certificates, the amount
necessary to reduce the Class Principal Balance thereof to the Class B
Optimal Principal Balance for such Distribution Date;
(vii) sequentially, to the Class M-1 Notes, Class M-2 Notes and
the Class B Certificates, in that order, until their respective Loss
Reimbursement Deficiencies have been paid in full (in the case of the
Class M-1 and Class M-2 Notes, first to the reimbursement of Allocable
Loss Amounts, until completely reimbursed, and then to any accrued
interest thereon); and
(viii) any remaining amount to the holders of the Residual
Interest.
(e) On each Distribution Date, the Indenture Trustee shall distribute
the Excess Spread, if any, in the following order of priority:
(i) in an amount equal to the Overcollateralization
Deficiency Amount, if any, as follows:
(A) sequentially, to the holders of the Class A-1, Class A-2,
Class A-3 and Class A-4 Notes, in that order, until the respective Class
Principal Balances thereof are reduced to zero, and until the aggregate
of their Class Balances have been reduced to the Senior Optimal
Principal Balance for such Distribution Date;
(B) sequentially, to the holders of the Class M-1 and Class M-2
Notes, in that order, until the respective Class Principal Balances
thereof have been reduced to the Class M-1 Optimal Principal Balance and
Class M-2 Optimal Principal Balance, respectively, for such Distribution
Date; and
(C) to the holders of the Class B Certificates, until the Class
Principal Balance thereof has been reduced to the Class B Optimal
Principal Balance for such Distribution Date; and
(ii) sequentially, to the Class M-1 Notes, the Class M-2 Notes
and the Class B Certificates, in that order, until their respective
Loss Reimbursement Deficiencies, if any, have been paid in full (in
the case of the Class M-1 and Class M-2 Notes, first to the
reimbursement of Allocable Loss Amounts, until completely
reimbursed, and then to any accrued interest thereon); and
(iii) any remaining amount to the holders of the Residual
Interest.
Section 5.02 Certificate Distribution Account.
--------------------------------
(a) Establishment. No later than the Closing Date, the Servicer,
-------------
for the benefit of the Securityholders, shall cause to be established and
maintained with Indenture Trustee for the benefit of the Owner Trustee on
behalf of the Certificateholders one or more separate Eligible Accounts,
which Trust Account(s) shall be entitled "Certificate Distribution Account,
First Bank National Association, as Indenture Trustee, in trust for the
Cityscape Home Loan Owner Trust Series 1997-1". Funds in the Certificate
Distribution Account shall be invested in accordance with Section 5.03.
(b) (RESERVED)
(c) Distributions. On each Distribution Date the Indenture Trustee
-------------
shall withdraw from the Note Distribution Account all amounts required to be
deposited in the Certificate Distribution Account with respect to such
Distribution Date pursuant to Section 5.01(c)(ii) and will remit such amount
to the Owner Trustee or the Co-Owner Trustee for deposit into the Certificate
Distribution Account. The Indenture Trustee shall distribute all remaining
amounts on deposit in the Note Distribution Account to the holders of the
Notes to the extent of amounts due and unpaid on the Notes for principal
thereof and interest thereon. The Owner Trustee or the Co-Owner Trustee
shall distribute all amounts on deposit in the Certificate Distribution
Account to the holders of the Class B Certificates to the extent of amounts
due and unpaid on the Class B Certificates for principal thereof and interest
thereon and to the holders of the Residual Interest.
(d) All distributions made on the Notes on each Distribution Date will
be made on a pro rata basis among the Noteholders of record of each Class on
the next preceding Record Date based on the Percentage Interests represented
by their respective Notes, and except as otherwise provided in the next
succeeding sentence, shall be made by wire transfer of immediately available
funds to the account of such Noteholder, if such Noteholder shall own of
record Notes which have original denominations aggregating at least $250,000
and shall have so notified the Indenture Trustee, and otherwise by check
mailed to the address of such Noteholder appearing in the Note Register. The
final distribution on each Note will be made in like manner, but only upon
presentment and surrender of such Note at the location specified in the
notice to Noteholders of such final distribution.
(e) All distributions made on the Class B Certificates on each
Distribution Date will be made on a pro rata basis among the
Certificateholders of record on the preceding Record Date based on the
Percentage Interest represented by their respective Class B Certificates, and
except as otherwise provided in the next succeeding sentence, shall be made
by wire transfer of immediately available funds to the account of such
Certificateholder, if such Certificateholder shall own of record Class B
Certificates which have original denominations aggregating at least $250,000
and shall have so notified the Owner Trustee or Co-Owner Trustee, and
otherwise by check mailed to the address of such Certificateholder appearing
in the Certificate Register. The final distribution on each Certificate will
be made in like manner, but only upon presentment and surrender of such
Certificate at the location specified in the notice to Certificateholders of
such final distribution.
(f) All distributions made on the Residual Interest on each
Distribution Date will be made on a pro rata basis among the holders of the
Residual Interest of record on the next preceding Record Date based on the
Percentage Interest represented by their respective Residual Interests, and
except as otherwise provided in the next succeeding sentence, shall be made
by wire transfer of immediately available funds to the account of each such
holder, if such holder shall own of record a Residual Interest having an
original denomination aggregating at least a 10% Percentage Interest thereof
and shall have so notified the Owner Trustee or Co-Owner Trustee, and
otherwise by check mailed to the address of such Residual Interest holder
appearing in the Certificate Register. The final distribution on each
Residual Interest Instrument will be made in like manner, but only upon
presentment and surrender of such Residual Interest Instrument at the
location specified in the notice to holders of the Residual Interest of such
final distribution.
Section 5.03 Trust Accounts; Trust Account Property.
--------------------------------------
(a) Control of Trust Accounts. Each of the Trust Accounts
-------------------------
established hereunder has been pledged by the Issuer to the Indenture Trustee
under the Indenture and shall be subject to the lien of the Indenture. In
addition to the provisions hereunder, each of the Trust Accounts shall also
be established and maintained pursuant to the Indenture. Amounts distributed
from each Trust Account in accordance with the Indenture and this Agreement
shall be released from the lien of the Indenture upon such distribution
thereunder or hereunder. The Indenture Trustee shall possess all right,
title and interest in all funds on deposit from time to time in the Trust
Accounts (other than the Certificate Distribution Account) and in all
proceeds thereof (including all income thereon) and all such funds,
investments, proceeds and income shall be part of the Trust Account Property
and the Trust Estate. If, at any time, any Trust Account ceases to be an
Eligible Account, the Indenture Trustee (or the Servicer on its behalf) shall
within 10 Business Days (or such longer period, not to exceed 30 calendar
days, as to which each Rating Agency may consent) (i) establish a new Trust
Account as an Eligible Account, (ii) terminate the ineligible Trust Account,
and (iii) transfer any cash and investments from such ineligible Trust
Account to such new Trust Account.
With respect to the Trust Accounts (other than the Certificate
Distribution Account), the Indenture Trustee agrees, by its acceptance
hereof, that each such Trust Account shall be subject to the sole and
exclusive custody and control of the Indenture Trustee for the benefit of the
Securityholders and the Issuer, as the case may be, and the Indenture Trustee
shall have sole signature and withdrawal authority with respect thereto.
In addition to this Agreement and the Indenture, the Certificate
Distribution Account established hereunder also shall be subject to and
established and maintained in accordance with the Trust Agreement. Subject
to rights of the Indenture Trustee hereunder and under the Indenture, the
Owner Trustee or Co-Owner Trustee shall possess all right, title and interest
for the benefit of the Certificateholders in all funds on deposit from time
to time in the Certificate Distribution Account and in all proceeds thereof
(including all income thereon) and all such funds, investments, proceeds and
income shall be part of the Trust Account Property and the Trust Estate.
Subject to the rights of the Indenture Trustee, the Owner Trustee and Co-
Owner Trustee agree, by its acceptance hereof, that such Certificate
Distribution Account shall be subject to the sole and exclusive custody and
control of the Owner Trustee and Co-Owner Trustee for the benefit of the
Issuer and the parties entitled to distributions therefrom, including without
limitation, the Certificateholders, and the Owner Trustee and the Co-Owner
Trustee shall have sole signature and withdrawal authority with respect to
the Certificate Distribution Account. Notwithstanding the preceding, the
distribution of amounts from the Certificate Distribution Account in
accordance with Section 5.02(c) also shall be made for the benefit of the
Indenture Trustee (including without limitation with respect to its duties
under the Indenture and this Agreement relating to the Trust Estate), and the
Indenture Trustee (in its capacity as Indenture Trustee) shall have the
right, but not the obligation to take custody and control of the Certificate
Distribution Account and to cause the distribution of amounts therefrom in
the event that the Owner Trustee fails to distribute such amounts in
accordance with Sections 5.02(d) and (e).
The Servicer shall have the power, revocable by the Indenture Trustee or
by the Owner Trustee or Co-Owner Trustee with the consent of the Indenture
Trustee, to instruct the Indenture Trustee or Owner Trustee to make
withdrawals and payments from the Trust Accounts for the purpose of
permitting the Servicer to carry out its respective duties hereunder or
permitting the Indenture Trustee or Owner Trustee to carry out its duties
herein or under the Indenture or the Trust Agreement, as applicable.
(b)(1) Investment of Funds. So long as no Event of Default shall
-------------------
have occurred and be continuing, the funds held in any Trust Account may be
invested (to the extent practicable and consistent with any requirements of
the Code) in Permitted Investments, as directed by the Servicer in writing or
by telephone or facsimile transmission confirmed in writing by the Servicer.
In any case, funds in any Trust Account must be available for withdrawal
without penalty, and any Permitted Investments must mature or otherwise be
available for withdrawal, not later than the Business Day immediately
preceding the Distribution Date next following the date of such investment
and shall not be sold or disposed of prior to its maturity subject to Section
5.03(b)(2) below. All interest and any other investment earnings on amounts
or investments held in any Trust Account shall be deposited into such Trust
Account immediately upon receipt by the Indenture Trustee, or in the case of
the Certificate Distribution Account, the Owner Trustee or Co-Owner Trustee,
as applicable, but shall be payable to the Servicer as additional Servicing
Compensation and may be withdrawn from the Collection Account pursuant to
Section 5.01(b)(3)(ii). All Permitted Investments in which funds in any
Trust Account (other than the Certificate Distribution Account) are invested
must be held by or registered in the name of "First Bank National
Association, as Indenture Trustee, in trust for the Cityscape Home Loan Asset
Backed Securities, Series 1997-1". While the Co-Owner Trustee holds the
Certificate Distribution Account, all Permitted Investments in which funds in
the Certificate Distribution Account are invested shall be held by or
registered in the name of "First Bank National Association, as Co-Owner
Trustee, in trust for the Cityscape Home Loan Asset Backed Securities,
Series 1997-1".
(2) Insufficiency and Losses in Trust Accounts. If any amounts are
------------------------------------------
needed for disbursement from any Trust Account held by or on behalf of the
Indenture Trustee and sufficient uninvested funds are not available to make
such disbursement, the Indenture Trustee, or Owner Trustee or Co-Owner
Trustee in the case of the Certificate Distribution Account, shall cause to
be sold or otherwise converted to cash a sufficient amount of the investments
in such Trust Account. The Indenture Trustee, or Owner Trustee or Co-Owner
Trustee in the case of the Certificate Distribution Account, shall not be
liable for any investment loss or other charge resulting therefrom, unless
such loss or charge is caused by the failure of the Indenture Trustee or
Owner Trustee or Co-Owner Trustee, respectively, to perform in accordance
with this Section 5.03.
If any losses are realized in connection with any investment in any
Trust Account pursuant to this Agreement and the Indenture, then the Servicer
shall deposit the amount of such losses (to the extent not offset by income
from other investments in such Trust Account) in such Trust Account
immediately upon the realization of such loss. All interest and any other
investment earnings on amounts held in any Trust Account shall be taxed to
the Issuer and for federal and state income tax purposes the Issuer shall be
deemed to be the owner of each Trust Account.
(c) Subject to Section 6.01 of the Indenture, the Indenture Trustee
shall not in any way be held liable by reason of any insufficiency in any
Account held by the Indenture Trustee resulting from any investment loss on
any Permitted Investment included therein (except to the extent that the
Indenture Trustee is the obligor and has defaulted thereon).
(d) With respect to the Trust Account Property, the Indenture Trustee
acknowledges and agrees that:
(1) any Trust Account Property that is held in deposit accounts
shall be held solely in the Eligible Accounts, subject to the last
sentence of Section 5.03(a); and each such Eligible Account shall be
---------------
subject to the exclusive custody and control of the Indenture Trustee,
and the Indenture Trustee shall have sole signature authority with
respect thereto;
(2) any Trust Account Property that constitutes Physical Property
shall be delivered to the Indenture Trustee in accordance with paragraph
(a) of the definition of "Delivery" and shall be held, pending maturity
or disposition, solely by the Indenture Trustee or a financial
intermediary (as such term is defined in Section 8-313(4) of the UCC)
acting solely for the Indenture Trustee;
(3) any Trust Account Property that is a book-entry security held
through the Federal Reserve System pursuant to federal book-entry
regulations shall be delivered in accordance with paragraph (b) of the
definition of "Delivery" and shall be maintained by the Indenture
Trustee, pending maturity or disposition, through continued book-entry
registration of such Trust Account Property as described in such
paragraph; and
(4) any Trust Account Property that is an "uncertificated
security" under Article VIII of the UCC and that is not governed by
clause (3) above shall be delivered to the Indenture Trustee in
accordance with paragraph (c) of the definition of "Delivery" and shall
be maintained by the Indenture Trustee, pending maturity or disposition,
through continued registration of the Indenture Trustee's (or its
nominee's) ownership of such security.
(e) The Servicer shall have the power, revocable by the Indenture
Trustee or by the Issuer with the consent of the Indenture Trustee, to
instruct the Indenture Trustee to make withdrawals and payments from the
Trust Accounts for the purpose of permitting the Servicer or the Issuer to
carry out their respective duties hereunder or permitting the Indenture
Trustee to carry out its duties under the Indenture.
Section 5.04 Allocation of Losses.
--------------------
(a) In the event that Net Liquidation Proceeds, Insurance Proceeds or
Released Mortgaged Property Proceeds on a Liquidated Home Loan are less than
the related Principal Balance plus accrued interest thereon, or any Obligor
makes a partial payment of any Monthly Payment due on a Home Loan, such Net
Liquidation Proceeds, Insurance Proceeds, Released Mortgaged Property
Proceeds or partial payment shall be applied to payment of the related Debt
Instrument, first to interest accrued at the Home Loan Interest Rate and then
to principal.
(b) On any Distribution Date, any Allocable Loss Amounts shall be
applied to the reduction of the Class Principal Balances of the Class B
Certificates, the Class M-1 and Class M-2 Notes in accordance with the
Allocable Loss Amount Priority.
ARTICLE VI.
STATEMENTS AND REPORTS; SPECIFICATION OF TAX MATTERS
----------------------------------------------------
Section 6.01 Statements.
----------
(a) No later than each Determination Date, the Servicer shall deliver
to the Indenture Trustee (i) a computer-readable magnetic tape setting forth
the payments and collections received with respect to the Home Loans during
the Due Period for the month immediately preceding the month in which such
Determination Date occurs (each such tape, a "Servicer Remittance Report")
and (ii) if not included in the Servicer Remittance Report, a report and an
electromagnetic tape, in computer readable format, setting forth the
information described in clauses (A) - (I) of Section 6.01(b) for the month
immediately preceding the month in which such Determination Date occurs (such
report, a "Delinquency Report"). Furthermore, no later than each
Determination Date, the Servicer shall deliver to the Indenture Trustee a
magnetic tape or computer disk providing such information regarding the
Servicer's activities in servicing the Home Loans during the related Due
Period as the Indenture Trustee may reasonably require.
(b) On each Distribution Date, Indenture Trustee shall distribute,
based on information provided by the Servicer, a monthly statement (the
"Distribution Statement"), to the Depositor, the Securityholders and the
----------------------
Rating Agencies, stating the date of original issuance of the Securities
(day, month and year), the name of the Issuer (i.e. "Cityscape Home Loan
Owner Trust 1997-1"), the series designation of the Notes and Class B
Certificates (i.e. "Series 1997-1"), the date of this Agreement and the
-------------
following information:
(i) the Available Collection Amount and Available Distribution
Amount for the related Distribution Date;
(ii) the Class Principal Balance of each Class of Notes and the
Class B Certificates before and after giving effect to distributions
made to the holders of such Securities on such Distribution Date, and
the Pool Principal Balance as of the first and last day of the related
Due Period;
(iii) the Class Factor with respect to each Class of the
Securities then outstanding;
(iv) the amount of principal and interest received on the Home
Loans during the related Due Period;
(v) with respect to each Class of Securities, the Optimal
Principal Balance thereof;
(vi) the Overcollateralization Deficiency Amount, and any amount to
be distributed to the Securityholders or the holders of the Residual
Interest on such Distribution Date;
(vii) the Servicing Compensation, the Indenture Trustee Fee, the
Owner Trustee Fee and, the Custodian Fee, if any, for such Distribution
Date;
(viii) the Overcollateralization Amount on such Distribution Date,
the Overcollateralization Target Amount as of such Distribution Date,
the Net Loan Losses incurred during the related Due Period, the
cumulative Net Loan Losses as of such Distribution Date and Allocable
Loss Amount for such Distribution Date; and
(ix) the weighted average maturity of the Home Loans and the
weighted average Home Loan Interest Rate of the Home Loans.
In addition, on each Distribution Date the Indenture Trustee shall
distribute to each Securityholder, together with the information described
above, the following information (based solely upon information provided to
the Indenture Trustee pursuant to Section 6.01(a) hereof, upon which the
Indenture Trustee may conclusively rely without independent verification):
(A) the number and aggregate Principal Balance (including the
percentage equivalent relative to the Pool Principal Balance) of
Home Loans (i) 30-59 days delinquent, (ii) 60-89 days delinquent
and (iii) 90 days or more delinquent (which statistics shall
include Home Loans in foreclosure and bankruptcy but which shall
exclude Foreclosure Properties), in each case as of the close of
business on the last day of the calendar month next preceding such
Distribution Date and the Pool Principal Balance as of such date;
(B) the number and aggregate Principal Balance (including the
percentage equivalent relative to the Pool Principal Balance) of
Home Loans in foreclosure proceedings (other than any Home Loans
described in clause (C) below) as of the close of business on the
last day of the calendar month next preceding such Distribution
Date;
(C) the number and aggregate Principal Balance (including the
percentage equivalent relative to the Pool Principal Balance) of
Home Loans in bankruptcy proceedings as of the close of business on
the last day of the calendar month next preceding such Distribution
Date;
(D) the number of Foreclosure Properties, the aggregate
Principal Balance of the related Home Loans (including the
percentage equivalent relative to the Pool Principal Balance) and
the book value of such Foreclosure Properties, in each case as of
the close of business on the last day of the calendar month next
preceding such Distribution Date;
(E) for each Foreclosure Property, the Principal Balance of
the related Home Loan, the loan number of such Home Loan, the value
of the Mortgaged Property, the value established by any new
appraisal, the estimated cost of disposing of the Home Loan and the
amount of any unreimbursed Servicing Advances;
(F) for each Home Loan which is in foreclosure, the Principal
Balance of such Home Loan, the book value of the Mortgaged
Property, the loan-to-value ratio as of the date of origination,
the Loan-to-Value Ratio as of the close of business on the last day
of the calendar month next preceding such Distribution Date and the
last paid-to-date;
(G) the principal balance of each Home Loan that was modified
or extended pursuant to the terms hereof;
(H) during the related Due Period, the number and aggregate
Principal Balance of Home Loans for each of the following: (A) that
became Defaulted Home Loans, (B) that became Liquidated Home Loans,
(C) that became Deleted Home Loans pursuant to Section 3.05 as a
result of such Deleted Home Loans being Defective Home Loans, and
(D) that became Deleted Home Loans pursuant to Section 3.05 as a
result of such Deleted Home Loans being Defaulted Home Loans or a
Home Loan in default or imminent default, including the foregoing
amounts by loan type (i.e., Combination Loans, or Debt
Consolidation Loans); and
(I) from the Closing Date through the most current Due
Period, the number and cumulative aggregate Principal Balance of
Home Loans: (A) that became Defaulted Home Loans, (B) that became
Liquidated Home Loans, (C) that became Deleted Home Loans pursuant
to Section 3.05 as a result of such Deleted Home loans being
Defective Home Loans, and (D) that became Deleted Home Loans
pursuant to Section 3.05 as a result of such Deleted Home Loans
being Defaulted Home Loans or a Home Loan in default or imminent
default, including the foregoing amounts by loan type (i.e.
Combination Loans or Debt Consolidation Loans).
All reports prepared by the Indenture Trustee of the withdrawals from
and deposits in the Collection Account will be based in whole or in part upon
the information provided to the Indenture Trustee by the Servicer, and the
Indenture Trustee may fully rely upon and shall have no liability with
respect to such information provided by the Servicer.
(c) Within a reasonable period of time after the end of each calendar
year, the Indenture Trustee shall prepare and distribute to each Person who
at any time during the calendar year was a Securityholder, such information
as is reasonably necessary to provide to such Person a statement containing
the information set forth in subclauses (b)(iv) and (vii) above, aggregated
for such calendar year or applicable portion thereof during which such Person
was a Securityholder.
(d) On each Distribution Date, the Indenture Trustee shall forward to
the holder of the Residual Interest a copy of the Distribution Statement in
respect of such Distribution Date and a statement setting forth the amounts
actually distributed to such holders of the Residual Interest on such
Distribution Date, together with such other information as the Indenture
Trustee deems necessary or appropriate.
(e) Within a reasonable period of time after the end of each calendar
year, the Indenture Trustee shall prepare and distribute to each Person who
at any time during the calendar year was a holder of Residual Interest, if
requested in writing by such Person, such information as is reasonably
necessary to provide to such Person a statement containing the information
provided pursuant to the previous paragraph aggregated for such calendar year
or applicable portion thereof during which such Person was a holder of
Residual Interest.
(f) Upon reasonable advance notice in writing, the Servicer will
provide to each Securityholder which is a savings and loan association, bank
or insurance company access to information and documentation regarding the
Home Loans sufficient to permit such Securityholder to comply with applicable
regulations of the FDIC or other regulatory authorities with respect to
investment in such Securities.
(g) The Indenture Trustee shall forward to each Securityholder and the
holder of a Residual Interest, during the term of this Agreement, such
periodic, special, or other reports, including information tax returns or
reports required with respect to the Securities and the Residual Interest,
including Internal Revenue Service Forms 1099 and (if instructed in writing
by the Depositor on the basis of the advice of legal counsel) Form 1066,
Schedule Q and other similar reports that are required to be filed by the
Indenture Trustee or its agent and the holder of a Residual Interest, whether
or not provided for herein, as shall be necessary, reasonable, or appropriate
with respect to the Securityholders or the holder of Residual Interest, or
otherwise with respect to the purposes of this Agreement, all such reports or
information to be provided by and in accordance with such applicable
instructions and directions as the Securityholders or the holder of Residual
Interest may reasonably require.
(h) Reports and computer tapes furnished by the Servicer and the
Indenture Trustee pursuant to this Agreement shall be deemed confidential and
of a proprietary nature, and shall not be copied or distributed except in
connection with the purposes and requirements of this Agreement. No Person
entitled to receive copies of such reports or tapes shall use the information
therein for the purpose of soliciting the customers of the Depositor or the
Servicer or for any other purpose except as set forth in this Agreement.
Section 6.02 Reports of Foreclosure and Abandonment of Mortgaged
---------------------------------------------------
Property.
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Each year beginning in 1998 the Servicer, at its expense, shall make the
reports of foreclosures and abandonments of any Mortgaged Property required
by Section 6050J of the Code. The reports from the Servicer shall be in form
and substance sufficient to meet the reporting requirements imposed by such
Section 6050J of the Code.
Section 6.03 Specification of Certain Tax Matters.
------------------------------------
Each Securityholder shall provide the Indenture Trustee with a completed
and executed Form W-9 prior to purchasing a Security. The Indenture Trustee
shall comply with all requirements of the Code, and applicable state and
local law, with respect to the withholding from any distributions made to any
Securityholder of any applicable withholding taxes imposed thereon and with
respect to any applicable reporting requirements in connection therewith.
ARTICLE VII.
GENERAL SERVICING PROCEDURE
---------------------------
Section 7.01 Assumption Agreements.
---------------------
Except as otherwise provided in the next sentence, the Servicer will, to
the extent it has knowledge of any conveyance or prospective conveyance of
any Mortgaged Property by any Obligor (whether by absolute conveyance or by
contract of sale, and whether or not the Obligor remains or is to remain
liable under the Debt Instrument and/or the Mortgage), exercise its rights to
accelerate the maturity of such Home Loan under the "due-on-sale" clause, if
any, applicable thereto. If the Servicer reasonably believes it is unable
under applicable law to enforce such "due-on-sale" clause or enforcement
would materially increase the risk of default or delinquency on, or impair
the security for, the Home Loan, the Servicer will enter into an assumption
and modification agreement from or with the person to whom such property has
been conveyed or is proposed to be conveyed, pursuant to which such person
becomes liable under the Debt Instrument and, to the extent permitted by
applicable state law, the Obligor remains liable thereon. The Servicer is
also authorized to enter into a substitution of liability agreement with such
person, pursuant to which the original Obligor is released from liability and
such person is substituted as the Obligor and becomes liable under the Debt
Instrument. In connection with any assumption or substitution, the Servicer
shall apply Accepted Servicing Procedures. Any fee collected by the Servicer
in respect of an assumption or substitution of liability agreement will be
retained by the Servicer as additional servicing compensation. In connection
with any such assumption, no material term of the Debt Instrument (including,
but not limited to, the related Home Loan Interest Rate and the amount of the
Monthly Payment) may be amended or modified, except as otherwise required
pursuant to the terms thereof. The Servicer shall notify the Indenture
Trustee that any such substitution or assumption agreement has been completed
by forwarding to the Indenture Trustee the original copy of such substitution
or assumption agreement, which copy shall be added to the related Indenture
Trustee's Home Loan File and shall, for all purposes, be considered a part of
such Home Loan File to the same extent as all other documents and instruments
constituting a part thereof.
Notwithstanding the foregoing paragraph or any other provision of this
Agreement, the Servicer shall not be deemed to be in default, breach or any
other violation of its obligations hereunder by reason of any assumption of a
Home Loan by operation of law or by the terms of the Debt Instrument or any
assumption which the Servicer believes in good faith that it may be
restricted by law from preventing, for any reason whatever. For purposes of
this Section 7.01, the term "assumption" is deemed to also include a sale (of
the Mortgaged Property) subject to the Mortgage that is not accompanied by an
assumption or substitution of liability agreement.
Section 7.02 Satisfaction of Mortgages and Release of Home Loan
--------------------------------------------------
Files.
- -----
Upon the payment in full of any Home Loan, or the receipt by the
Servicer of a notification that payment in full shall be escrowed in a manner
customary for such purposes, the Servicer will notify the Indenture Trustee
by an appropriate certification of a Servicing Officer and shall request
delivery to it of the Indenture Trustee's Home Loan File. Upon receipt of
such certification and request, the Indenture Trustee shall promptly release
the related Home Loan File to the Servicer. The Servicer shall provide for
preparation of the appropriate instrument of satisfaction covering any Home
Loan which pays in full and the Indenture Trustee shall cooperate in the
execution and return of such instrument to provide for its delivery or
recording as may be required. No expenses incurred in connection with any
instrument of satisfaction or deed of reconveyance shall be chargeable to any
Trust Account or shall be otherwise chargeable to the Trust, the Indenture
Trustee or the Securityholders.
From time to time and as appropriate for the servicing or foreclosure of
any Home Loan, the Indenture Trustee shall, upon request of the Servicer and
delivery to the Indenture Trustee of a Request for Release in the form of
Exhibit B, release the related Home Loan File to the Servicer, and the
Indenture Trustee shall, at the direction of the Servicer, execute such
documents as shall be necessary to the prosecution of any such proceedings.
Such Request for Release shall obligate the Servicer to return each and every
document previously requested from the Home Loan File to the Indenture
Trustee when the need therefor by the Servicer no longer exists, unless the
Home Loan has been liquidated and the Net Liquidation Proceeds relating to
the Home Loan File have been deposited in the Collection Account or the Home
Loan File or such document has been delivered to an attorney, or to a public
trustee or other public official as required by law, for purposes of
initiating or pursuing legal action or other proceedings for the foreclosure
of the Mortgaged Property either judicially or non-judicially, and the
Servicer has delivered to the Indenture Trustee a certificate of a Servicing
Officer certifying as to the name and address of the Person to which such
Home Loan File or such document was delivered and the purpose or purposes of
such delivery. Upon receipt of a certificate of a Servicing Officer stating
that such Home Loan was liquidated and that all amounts received or to be
received in connection with such liquidation which are required to be
deposited into the Collection Account have been so deposited, a copy of the
Request for Release shall be released by the Indenture Trustee to the
Servicer.
Upon written certification of a Servicing Officer, the Indenture Trustee
shall execute and deliver to the Servicer any court pleadings, requests for
trustee's sale or other documents necessary to the foreclosure or trustee's
sale in respect of a Mortgaged Property or to any legal action brought to
obtain judgment against any Obligor on the Debt Instrument or Mortgage or to
obtain a deficiency judgment, or to enforce any other remedies or rights
provided by the Debt Instrument or Mortgage or otherwise available at law or
in equity. Each such certification shall include a request that such plead-
ings or documents be executed by the Indenture Trustee and a statement as to
the reason such documents or pleadings are required and that the execution
and delivery thereof by the Indenture Trustee will not invalidate or
otherwise affect the lien of the Mortgage, except for the termination of such
a lien upon completion of the foreclosure or trustee's sale.
The Indenture Trustee shall execute and deliver to the Servicer any
court pleadings, requests for trustee's sale or other documents necessary to
the foreclosure or trustee's sale in respect of a Mortgaged Property or to
any legal action brought to obtain judgment against any Obligor on the Debt
Instrument or Mortgage or to obtain a deficiency judgment, or to enforce any
other remedies or rights provided by the Debt Instrument or Mortgage or
otherwise available at law or in equity. Together with such documents or
pleadings, the Servicer shall deliver to the Indenture Trustee a certificate
of a Servicing Officer requesting that such pleadings or documents be
executed by the Indenture Trustee and certifying as to the reason such
documents or pleadings are required and that the execution and delivery
thereof by the Indenture Trustee will not invalidate or otherwise affect the
lien of the Mortgage, except for the termination of such a lien upon
completion of the foreclosure or trustee's sale. The Indenture Trustee
shall, upon receipt of a written request from a Servicing Officer, execute
any document provided to the Indenture Trustee by the Servicer or take any
other action requested in such request that is, in the opinion of the
Servicer as evidenced by such request, required by any state or other
jurisdiction to discharge the lien of a Mortgage upon the satisfaction
thereof and the Indenture Trustee will sign and post, but will not guarantee
receipt of, any such documents to the Servicer, or such other party as the
Servicer may direct, within five Business Days, or more promptly if needed,
of the Indenture Trustee's receipt of such certificate or documents. Such
certificate or documents shall establish to the Indenture Trustee's
satisfaction that the related Home Loan has been paid in full by or on behalf
of the Obligor and that such payment has been deposited in the Collection
Account.
Section 7.03 Servicing Compensation.
----------------------
As compensation for its services hereunder, the Servicer shall be
entitled to receive from the Collection Account, the Servicing Fee out of
which the Servicer shall pay any servicing fees owed or payable to any
Subservicer. Additional servicing compensation in the form of assumption
fees, modification fees, and other administrative fees, insufficient funds
charges, prepayment penalties, amounts remitted pursuant to Section 7.01,
late payment charges and investment income on earnings on the Trust Accounts
shall be part of the Servicing Compensation payable to the Servicer hereunder
and shall be paid either by the Servicer retaining such additional servicing
compensation prior to deposit in the Collection Account pursuant to
Section 5.01(b)(1) or if deposited into the Collection Account as part of the
Servicing Compensation withdrawn from the Collection Account pursuant to
Section 5.01(b)(3) hereof.
The 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 for herein. The
Transferor also agrees to pay all annual Rating Agency monitoring fees.
Section 7.04 Statement as to Compliance and Financial Statements.
---------------------------------------------------
The Servicer will deliver to the Trustee, the Depositor and the
Transferor not later than 90 days following the end of each fiscal year
(beginning with 1998) of the Servicer, an Officers' Certificate stating, as
to each signatory thereof, that (i) a review of the activities of the
Servicer during the preceding year and of performance 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 Servicer has fulfilled all of
its obligations under this Agreement throughout such year, or, if there has
been a default in the fulfillment of any such obligation, specifying each
such default known to such officers and the nature and status thereof.
Contemporaneously with the submission of the Officers' Certificate
required by the preceding paragraph, the Servicer shall deliver to the
Trustee a copy of its annual audited financial statements prepared in the
ordinary course of business. The Servicer shall, upon the request of the
Depositor, deliver to such party any unaudited quarterly financial statements
of the Servicer.
The Servicer agrees to make available on a reasonable basis to the
Depositor a knowledgeable officer of the Servicer for the purpose of
answering reasonable questions respecting recent developments affecting the
Servicer or the financial statements of the Servicer and to permit the
Depositor or the Underwriter on reasonable notice to inspect the Servicer's
servicing facilities during normal business hours for the purpose of
satisfying the Depositor that the Servicer has the ability to service the
Home Loans in accordance with this Agreement.
The Servicer shall also furnish and certify to the requesting party such
other information as to (i) its organization, activities and personnel
relating to the performance of the obligations of the Servicer hereunder,
(ii) its financial condition, (iii) the Home Loans and (iv) the performance
of the obligations of any Subservicer under the related Subservicing
Agreement, in each case as the Trustee or the Depositor may reasonably
request from time to time.
Section 7.05 Independent Public Accountants' Servicing Report.
------------------------------------------------
Not later than 90 days following the end of each fiscal year (beginning
with 1998) of the Servicer, the Servicer at its expense shall cause any of
Arthur Andersen & Co., Coopers & Lybrand, Deloitte & Touche, Ernst & Young,
KPMG Peat Marwick and Price Waterhouse & Co. or such other nationally
recognized firm of Independent Certified Public Accountants (which may also
render other services to the Servicer) to furnish a statement to the Trustee,
the Transferor and the Depositor to the effect that such firm has examined
certain documents and records relating to the servicing of the Home Loans
under this Agreement or of mortgage loans under pooling and servicing
agreements (including the Home Loans and this Agreement) substantially
similar to one another (such statement to have attached thereto a schedule
setting forth the pooling and servicing agreements covered thereby) and that,
on the basis of such examination conducted substantially in compliance with
the Uniform Single Attestation Program for Mortgage Bankers or the Audit
Program for Mortgages serviced for FHLMC, such firm confirms that such
servicing has been conducted in compliance with such pooling and servicing
agreements except for such significant exceptions or errors in records that,
in the opinion of such firm, the Uniform Single Attestation Program for
Mortgage Bankers or the Audit Program for Mortgages serviced for FHLMC
requires it to report, each of which errors and omissions shall be specified
in such statement. In rendering such statement, such firm may rely, as to
matters relating to direct servicing of mortgage loans by Subservicers, upon
comparable statements for examinations conducted substantially in compliance
with the Uniform Single Attestation Program for Mortgage Bankers or the Audit
Program for Mortgages serviced for FHLMC (rendered within one year of such
statement) of independent public accountants with respect to the related
Subservicer.
Section 7.06 Right to Examine Servicer Records.
---------------------------------
Each Securityholder, the Indenture Trustee, the Issuer and each of their
respective agents shall have the right upon reasonable prior notice, during
normal business hours and as often as reasonably required, to examine, audit
and copy, at the expense of the Person making such examination, any and all
of the books, records or other information of the Servicer (including without
limitation any Subservicer to the extent provided in the related Subservicing
Agreement) whether held by the Servicer or by another on behalf of the
Servicer, which may be relevant to the performance or observance by the
Servicer of the terms, covenants or conditions of this Agreement. Each
Securityholder, the Indenture Trustee and the Issuer agree that any
information obtained pursuant to the terms of this Agreement shall be held
confidential.
Section 7.07 Reports to the Indenture Trustee; Collection Account
----------------------------------------------------
Statements.
- ----------
If the Collection Account is not maintained with the Indenture Trustee,
then not later than 25 days after each Record Date, the Servicer shall
forward to the Indenture Trustee a statement, certified by a Servicing
Officer, setting forth the status of the Collection Account as of the close
of business on the preceding Record Date and showing, for the period covered
by such statement, the aggregate of deposits into the Collection Account for
each category of deposit specified in Section 5.01(b)(1), the aggregate of
withdrawals from the Collection Account for each category of withdrawal
specified in Section 5.01(b)(2) and (3) and in the related Due Period in each
case, for the related Due Period.
ARTICLE VIII.
REPORTS TO BE PROVIDED BY SERVICER
----------------------------------
Section 8.01 Financial Statements.
--------------------
The Servicer understands that, in connection with the transfer of the
Securities, Securityholders may request that the Servicer make available to
the Securityholders and to prospective Securityholders annual audited
financial statements of the Servicer for one or more of the most recently
completed five fiscal years for which such statements are available, which
request shall not be unreasonably denied.
The Servicer also agrees to make available on a reasonable basis to the
Securityholders or any prospective Securityholder a knowledgeable financial
or accounting officer for the purpose of answering reasonable questions
respecting recent developments affecting the Servicer or the financial
statements of the Servicer and to permit the Securityholders and any
prospective Securityholder to inspect the Servicer's servicing facilities
during normal business hours for the purpose of satisfying the
Securityholders and such prospective Securityholder that the Servicer has the
ability to service the Home Loans in accordance with this Agreement.
ARTICLE IX.
THE SERVICER
------------
Section 9.01 Indemnification; Third Party Claims.
-----------------------------------
(a) The Servicer shall indemnify the Transferor, the Trust, the
Depositor and the Indenture Trustee (each an "Indemnified Party") and hold
harmless each of them against any and all claims, losses, damages, penalties,
fines, forfeitures, reasonable legal fees and related costs, judgments, and
other costs and expenses resulting from any claim, demand, defense or
assertion based on or grounded upon, or resulting from, a breach of any of
the Servicer's representations and warranties and covenants contained in this
Agreement or in any way relating to the failure of the Servicer to perform
its duties and service the Home Loans in compliance with the terms of this
Agreement; provided, however, that if the Servicer is not liable pursuant to
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the provisions of Section 9.01(d) hereof for its failure to perform its
duties and service the Home Loans in compliance with the terms of this
Agreement, then the provisions of this Section 9.01 shall have no force
and effect with respect to such failure.
(b) The Transferor, the Depositor or the Indenture Trustee, as the case
may be, shall promptly notify the Servicer if a claim is made by a third
party with respect to a breach of any of the Servicer's representations and
warranties and covenants contained in this Agreement or in any way relating
to the failure of the Servicer to perform its duties and service the Home
Loans in compliance with the terms of this Agreement. The Servicer shall
promptly notify the Indenture Trustee and the Depositor of any claim of which
it has been notified pursuant to this Section 9.01 by a Person other than the
Depositor, and, in any event, shall promptly notify the Depositor of its
intended course of action with respect to any claim.
(c) The Servicer shall be entitled to participate in and, upon notice
to the Indemnified Party, assume the defense of any such action or claim in
reasonable cooperation with, and with the reasonable cooperation of, the
Indemnified Party. The Indemnified Party will have the right to employ its
own counsel in any such action in addition to the counsel of the Servicer,
but the fees and expenses of such counsel will be at the expense of such
Indemnified Party, unless (a) the employment of counsel by the Indemnified
Party at its expense has been authorized in writing by the Servicer, (b) the
Servicer has not in fact employed counsel to assume the defense of such
action within a reasonable time after receiving notice of the commencement of
the action, or (c) the named parties to any such action or proceeding
(including any impleaded parties) include both the Servicer and one or more
Indemnified Parties, and the Indemnified Parties shall have been advised by
counsel that there may be one or more legal defenses available to them which
are different from or additional to those available to the Servicer. The
Servicer shall not be liable for any settlement of any such claim or action
unless the Servicer shall have consented thereto or be in default on its
obligations hereunder. Any failure by an Indemnified Party to comply with
the provisions of this Section shall relieve the Servicer of liability only
if such failure is materially prejudicial to the position of the Servicer and
then only to the extent of such prejudice.
(d) Neither the Transferor, the Depositor or the Servicer nor any of
the directors, officers, employees or agents of the Transferor, the Depositor
or the Servicer, or members or affiliates of the Depositor shall be under any
liability to the Trust or the Securityholders 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 Transferor, the Depositor, the
Servicer or any such person against the remedies provided herein for the
breach of any warranties, representations or covenants made herein, or
against any specific liability imposed on the Transferor, the Depositor or
the Servicer herein, or against any liability which would otherwise be
imposed by reason of willful misfeasance, bad faith or negligence in the
performance of the duties of the Servicer, the Depositor or the Transferor,
as the case may be, or by reason of reckless disregard of the obligations and
duties of the Servicer, the Depositor or the Transferor, as the case may be,
hereunder. The Transferor, the Depositor, the Servicer and any director,
officer, employee or agent of the Transferor, the Depositor or the Servicer,
or any member or affiliate of the Depositor may rely in good faith on any
document of any kind which, prima facie, is
----- -----
properly executed and submitted by any Person respecting any matters arising
hereunder.
(e) The Servicer, the Transferor and the Depositor and any director,
officer, employee or agent of the Servicer, the Transferor or the Depositor
shall be indemnified by the Trust and held harmless against any loss,
liability or expense incurred in connection with any audit, controversy or
judicial proceeding relating to a governmental taxing authority or any legal
action relating to this Agreement or the Securities, other than any loss,
liability or expense related to any specific Home Loan or Home 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 negligence in the performance of
duties hereunder or by reason of reckless disregard of obligations and duties
hereunder. Except as otherwise provided herein, neither of the Transferor,
the Depositor nor the Servicer shall be under any obligation to appear in,
prosecute or defend any legal action that is not related to its respective
duties under this Agreement; provided, however, that, except as otherwise
-------- -------
provided herein, any of the Transferor, the Depositor, or the Servicer may,
with the prior consent of the Indenture Trustee, in its discretion undertake
any such action which it may deem necessary or desirable with respect to this
Agreement and the rights and duties of the parties hereto and the interests
of the Securityholders 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, and the Transferor, the
Depositor and the Servicer shall be entitled to be reimbursed therefor out of
the Collection Account.
Section 9.02 Merger or Consolidation of the Servicer.
---------------------------------------
The Servicer shall keep in full effect its existence, rights and
franchises as a corporation, and will obtain and preserve its qualification
to do business as a foreign corporation and maintain such other licenses and
permits, in each jurisdiction necessary to protect the validity and
enforceability of this Agreement or any of the Home Loans and to perform its
duties under this Agreement.
Any Person into which the Servicer may be merged or consolidated, or any
corporation resulting from any merger, conversion or consolidation to which
the Servicer shall be a party, or any Person succeeding to the business of
the Servicer, shall be an Eligible Servicer and shall be the successor of the
Servicer, as applicable 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. The Servicer shall send notice of
any such merger, conversion, consolidation or succession to the Indenture
Trustee and the Issuer.
Section 9.03 Limitation on Liability of the Servicer and Others.
--------------------------------------------------
The Servicer and any director, officer, employee or agent of the
Servicer may rely on any document of any kind which it in good faith
reasonably believes to be genuine and to have been adopted or signed by the
proper authorities respecting any matters arising hereunder. Subject to the
terms of Section 9.01 herein, the Servicer shall have no obligation to appear
with respect to, prosecute or defend any legal action which is not incidental
to the Servicer's duty to service the Home Loans in accordance with this
Agreement.
Section 9.04 Servicer Not to Resign; Assignment.
----------------------------------
The Servicer shall not resign from the obligations and duties hereby
imposed on it except (a) by the consent of the Indenture Trustee or (b) upon
determination that its duties hereunder are no longer permissible under
applicable law. Any such determination pursuant to clause (b) of the
preceding sentence permitting the resignation of the Servicer shall be
evidenced by an independent opinion of counsel to such effect delivered (at
the expense of the Servicer) to the Indenture Trustee. No resignation of the
Servicer shall become effective until the Indenture Trustee or a successor
servicer, appointed pursuant to the provisions of Section 10.02 and
satisfying the requirements of Sections 4.08 hereof with respect to the
qualifications of a successor Servicer, shall have assumed the Servicer's
responsibilities, duties, liabilities (other than those liabilities arising
prior to the appointment of such successor) and obligations under this
Agreement.
Except as expressly provided herein, the Servicer shall not assign or
transfer any of its rights, benefits or privileges hereunder to any other
Person, or delegate to or subcontract with, or authorize or appoint any other
Person to perform any of the duties, covenants or obligations to be performed
by the Servicer hereunder, without the prior written consent of the Indenture
Trustee, and absent such written consent any agreement, instrument or act
purporting to effect any such assignment, transfer, delegation or appointment
shall be void.
Section 9.05 Relationship of Servicer to Issuer and the Indenture
----------------------------------------------------
Trustee.
- -------
The relationship of the Servicer (and of any successor to the Servicer
as servicer under this Agreement) to the Issuer and the Indenture Trustee
under this Agreement is intended by the parties hereto to be that of an
independent contractor and not of a joint venturer, agent or partner of the
Issuer or the Indenture Trustee.
ARTICLE X.
DEFAULT
-------
Section 10.01 Events of Default.
-----------------
(a) In case one or more of the following Events of Default by the
Servicer shall occur and be continuing, that is to say:
(i) any failure by the Servicer to deposit in the Collection
Account in accordance with Section 5.01(b) any payments in respect of
the Home Loans received by the Servicer no later than the second
Business Day following the day on which such payments were received; or
(ii) failure by the Servicer duly to observe or perform, in any
material respect, any other covenants, obligations or agreements of the
Servicer as set forth in this Agreement, which failure continues
unremedied for a period of 60 days after the date on which written
notice of such failure, requiring the same to be remedied and stating
that such notice is a "Notice of Default" hereunder, shall have been
given (a) to the Servicer by the Indenture Trustee or the Issuer, or (b)
to the Servicer, the Indenture Trustee or the Issuer by any Majority
Securityholder; or
(iii) a decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt,
marshaling of assets and liabilities or similar proceedings, or for the
winding-up or liquidation of its affairs, shall have been entered
against the Servicer and such decree or order shall have remained in
force, undischarged or unstayed for a period of 60 days; or
(iv) the Servicer shall consent to the appointment of a conservator
or receiver or liquidator in any insolvency, readjustment of debt,
marshaling of assets and liabilities or similar proceedings of or
relating to the Servicer or of or relating to all or substantially all
of the Servicer's property; or
(v) the Servicer shall admit in writing its inability to pay its
debts 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.
(b) then, and in each and every such case, so long as an Event of
Default shall not have been remedied, the Majority Securityholders, the
Indenture Trustee or the Issuer by notice in writing to the Servicer may, in
addition to whatever rights such Person may have at law or equity to damages,
including injunctive relief and specific performance, may terminate all the
rights and obligations of the Servicer under this Agreement and in and to the
Home Loans and the proceeds thereof, as servicer under this Agreement. Upon
receipt by the Servicer of such written notice, all authority and power of
the Servicer under this Agreement, whether with respect to the Home Loans or
otherwise, shall, subject to Section 10.02, pass to and be vested in a
successor servicer, or the Indenture Trustee if a successor servicer cannot
be retained in a timely manner, and the successor servicer, or Indenture
Trustee, as applicable, is hereby authorized and empowered to execute and
deliver, on behalf of the Servicer, as attorney-in-fact or otherwise, any and
all documents and other instruments and do or cause to be done all other acts
or things necessary or appropriate to effect the purposes of such notice of
termination, including, but not limited to, the transfer and endorsement or
assignment of the Home Loans and related documents. The Servicer agrees to
cooperate with the successor servicer in effecting the termination of the
Servicer's responsibilities and rights hereunder, including, without
limitation, the transfer to the successor servicer for administration by it
of all amounts which shall at the time be credited by the Servicer to each
Collection Account or thereafter received with respect to the Home Loans.
Section 10.02 Indenture Trustee to Act; Appointment of Successor.
--------------------------------------------------
On and after the date the Servicer receives a notice of termination
pursuant to Section 10.01, or the Indenture Trustee receives the resignation
of the Servicer evidenced by an opinion of counsel or accompanied by the
consents required by Section 9.04, or the Servicer is removed as servicer
pursuant to this Article X, then, subject to Section
---------
4.08, the Indenture Trustee shall appoint a successor servicer to be the
successor in all respects to the 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 Servicer by the terms and provisions hereof; provided,
however, that the successor servicer shall not be liable for any actions of
any servicer prior to it; provided further, however, that if a successor
servicer cannot be retained in a timely manner, the Indenture Trustee shall
act as successor Servicer. In the event the Indenture Trustee assumes the
responsibilities of the Servicer pursuant to this Section 10.02, the
Indenture Trustee will make reasonable efforts consistent with applicable law
to become licensed, qualified and in good standing in each Mortgaged Property
State the laws of which require licensing or qualification, in order to
perform its obligations as Servicer hereunder or, alternatively, shall retain
an agent who is so licensed, qualified and in good standing in any such
Mortgaged Property State.
In the case that the Indenture Trustee serves as successor servicer, the
Indenture Trustee in such capacity shall not be liable for any servicing of
the Home Loans prior to its date of appointment, and shall not be subject to
any obligations to repurchase any Home Loans. The successor servicer shall
be obligated to make Servicing Advances hereunder. As compensation therefor,
the successor servicer appointed pursuant to the following paragraph, shall
be entitled to all funds relating to the Home Loans which the Servicer would
have been entitled to receive from the Note Distribution Account pursuant to
Section 5.01(c) as if the Servicer had continued to act as servicer
hereunder, together with other servicing compensation in the form of
assumption fees, late payment charges or otherwise as provided in Sections
7.01 and 7.03.
----
Any collections received by the Servicer after removal or resignation
shall be endorsed by it to the Indenture Trustee and remitted directly to the
Indenture Trustee or, at the direction of the Indenture Trustee, to the
successor servicer. The compensation of any successor servicer (including,
without limitation, the Indenture Trustee) so appointed shall be the
Servicing Fees, together with other Servicing Compensation provided for
herein. In the event the Indenture Trustee is required to solicit bids to
appoint a successor servicer, the Indenture Trustee shall solicit, by public
announcement, bids from housing and home finance institutions, banks and
mortgage servicing institutions that: (i) have a net worth of not less than
$25,000,000, (ii) have a blanket fidelity bond and errors and omissions
insurance coverage satisfying the requirements set forth in Section 4.03 and
(iii) would not cause any rating of any Class of the Securities in effect
immediately prior to such assignment to be qualified, downgraded or
withdrawn, as evidenced by a letter from each Rating Agency to such effect.
Such public announcement shall specify that the successor servicer shall be
entitled to the full amount of the Servicing Fee and Servicing Compensation
provided for herein. Within thirty days after any such public announcement,
the Indenture Trustee shall negotiate and effect the sale, transfer and
assignment of the servicing rights and responsibilities hereunder to the
qualified party submitting the highest qualifying bid. The Indenture Trustee
shall deduct from any sum received by the Indenture Trustee from the
successor to the Servicer in respect of such sale, transfer and assignment
all costs and expenses of any public announcement and of any sale, transfer
and assignment of the servicing rights and responsibilities hereunder and the
amount of any unpaid Servicing Fees and unreimbursed Servicing Advances made
by the Indenture Trustee. After such deductions, the remainder of such sum
shall be paid by the Indenture Trustee to the Servicer at the time of such
sale, transfer and assignment to the Servicer's successor. The Indenture
Trustee, the Issuer, any Custodian, the Servicer and any such successor
servicer shall take such action, consistent with this Agreement, as shall be
necessary to effectuate any such succession. The Servicer agrees to
cooperate with the Indenture Trustee and any successor servicer in effecting
the termination of the Servicer's servicing responsibilities and rights
hereunder and shall promptly provide the Indenture Trustee or such successor
servicer, as applicable, all documents and records reasonably requested by it
to enable it to assume the Servicer's functions hereunder and shall promptly
also transfer to the Indenture Trustee or such successor servicer, as
applicable, all amounts which then have been or should have been deposited in
any Trust Account maintained by the Servicer or which are thereafter received
with respect to the Home Loans. Neither the Indenture Trustee nor any other
successor servicer shall be held liable by reason of any failure to make, or
any delay in making, any distribution hereunder or any portion thereof caused
by (i) the failure of the Servicer to deliver, or any delay in delivering,
cash, documents or records to it, or (ii) restrictions imposed by any
regulatory authority having jurisdiction over the Servicer hereunder. No
appointment of a successor to the Servicer hereunder shall be effective until
written notice of such proposed appointment shall have been provided by the
Indenture Trustee to each Securityholder, the Issuer and the Depositor and,
except in the case of the appointment of the Indenture Trustee as successor
to the Servicer (when no consent shall be required).
Pending appointment of a successor to the Servicer hereunder, the
Indenture Trustee shall act as servicer hereunder as hereinabove provided.
In connection with such appointment and assumption, the Indenture Trustee may
make such arrangements for the compensation of such successor servicer out of
payments on the Home Loans as it and such successor servicer shall agree;
provided, however, that no such compensation shall be in excess of that
permitted the Servicer pursuant to Section 7.03, together with other
Servicing Compensation in the form of assumption fees, late payment charges
or otherwise as provided in this Agreement.
Section 10.03 Waiver of Defaults.
------------------
The Majority Securityholders may waive any events permitting removal of
the Servicer as servicer pursuant to this Article X, provided, however,
---------
that the Majority Securityholders may not waive a default in making a
required distribution on a Security or Residual Interest without the consent
of the related Securityholder or holders of the Residual Interest. Upon any
waiver of a past default, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been remedied for every
purpose of this Agreement. No such waiver shall extend to any subsequent or
other default or impair any right consequent thereto except to the extent
expressly so waived.
ARTICLE XI.
TERMINATION
-----------
Section 11.01 Termination.
-----------
This Agreement shall terminate upon notice to the Indenture Trustee of
either: (a) the later of (i) the satisfaction and discharge of the Indenture
pursuant to the provisions thereof or (ii) the disposition of all funds with
respect to the last Home Loan and the remittance of all funds due hereunder
and the payment of all amounts due and payable to the Indenture Trustee, the
Owner Trustee, the Co-Owner Trustee, the Issuer and the Custodian; or (b) the
mutual consent of the Servicer, the Depositor, the Transferor and all
Securityholders in writing.
Section 11.02 Optional Termination.
--------------------
The Majority Residual Interestholders may, at their option, effect an
early termination of the Trust on or after any Distribution Date on which the
Pool Principal Balance declines to 10% or less of the Original Pool Principal
Balance. The Majority Residual Interestholders shall effect such early
termination by providing notice thereof to the Indenture Trustee and Owner
Trustee and by purchasing all of the Home Loans at a price not less than the
Termination Price.
Any such early termination by the Majority Residual Interestholders
shall be accomplished by depositing into the Collection Account on the
Determination Date immediately preceding the Distribution Date on which the
purchase is to occur the amount of the Termination Price to be paid. The
Termination Price and any amounts then on deposit in the Collection Account
(other than any amounts not required to have been deposited therein pursuant
to Section 5.01(b)(1) and any amounts withdrawable therefrom by the Indenture
Trustee pursuant to Section 5.01(b)(3)) shall be transferred to the Note
Distribution Account pursuant to Section 5.01(b)(2) for distribution to
Securityholders on the succeeding Distribution Date; and any amounts received
with respect to the Home Loans and Foreclosure Properties subsequent to the
Due Period immediately preceding such final Distribution Date shall belong to
the purchaser thereof. For purposes of calculating the Available
Distribution Amount for such final Distribution Date, amounts transferred to
the Note Distribution Account immediately preceding such final Distribution
Date shall in all cases be deemed to have been received during the related
Due Period, and amounts so transferred shall be applied pursuant to Section
5.01(c) and 5.01(d).
Section 11.03 Notice of Termination.
---------------------
Notice of termination of this Agreement or of early redemption and
termination of the Trust shall be sent (i) by the Indenture Trustee to the
Noteholders in accordance with Section 2.06(b) of the Indenture and (ii) by
the Owner Trustee to the Certificateholders and the Residual Interestholders
in accordance with Section 9.1(d) of the Trust Agreement.
ARTICLE XII.
MISCELLANEOUS PROVISIONS
------------------------
Section 12.01 Acts of Securityholders.
-----------------------
Except as otherwise specifically provided herein, whenever
Securityholder action, consent or approval is required under this Agreement,
such action, consent or approval shall be deemed to have been taken or given
on behalf of, and shall be binding upon, all Securityholders if the Majority
Securityholders agree to take such action or give such consent or approval.
Section 12.02 Amendment.
---------
(a) This Agreement may be amended from time to time by the Depositor,
the Servicer, the Transferor and the Issuer by written agreement with notice
thereof to the Securityholders, without the consent of any of the
Securityholders, to cure any error or ambiguity, to correct or supplement
any provisions hereof which may be defective or inconsistent with any other
provisions hereof or to add any other provisions with respect to matters or
questions arising under this Agreement; provided, however, that such action
will not adversely affect in any material respect the interests of the
Securityholders. An amendment described above shall be deemed not to
adversely affect in any material respect the interests of the Securityholders
if either (i) an opinion of counsel is obtained to such effect, and (ii) the
party requesting the amendment obtains a letter from each of the Rating
Agencies confirming that the amendment, if made, would not result in the
downgrading or withdrawal of the rating then assigned by the respective
Rating Agency to any Class of Securities then outstanding.
(b) This Agreement may also be amended from time to time by the
Depositor, the Servicer, the Transferor and the Issuer by written agreement,
with the prior written consent of the Majority Securityholders, 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 Securityholders; provided, however, that no such amendment
shall (i) reduce in any manner the amount of, or delay the timing of,
collections of payments on Home Loans or distributions which are required to
be made on any Security, without the consent of the holders of 100% of each
Class of Notes or the Class B Certificates affected thereby, (ii) adversely
affect in any material respect the interests of the holders of any Class of
Notes or Class B Certificates in any manner other than as described in (i),
without the consent of the holders of 100% of such Class of Notes or the
Class B Certificates, or (iii) reduce the percentage of any Class of Notes or
the Class B Certificates, the holders of which are required to consent to any
such amendment, without the consent of the holders of 100% of such Class of
Notes or the Class B Certificates.
(c) It shall not be necessary for the consent of Securityholders under
this Section to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent shall approve the substance thereof.
Prior to the execution of any amendment to this Agreement, the Issuer
shall be entitled to receive and rely upon an opinion of counsel stating that
the execution of such amendment is authorized or permitted by this Agreement.
The Issuer may, but shall not be obligated to, enter into any such amendment
which affects the Issuer's own rights, duties or immunities under this
Agreement.
Section 12.03 Recordation of Agreement.
------------------------
To the extent permitted by applicable law, this Agreement, or a
memorandum thereof if permitted under applicable law, is subject to
recordation in all appropriate public offices for real property records in
all of the counties or other comparable jurisdictions in which any or all of
the Mortgaged Properties are situated, and in any other appropriate public
recording office or elsewhere, such recordation to be effected by the
Servicer at the Securityholders' expense on direction of the Majority
Securityholders but only when accompanied by an opinion of counsel to the
effect that such recordation materially and beneficially affects the
interests of the Securityholders or is necessary for the administration or
servicing of the Home Loans.
Section 12.04 Duration of Agreement.
---------------------
This Agreement shall continue in existence and effect until terminated
as herein provided.
Section 12.05 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, WITHOUT GIVING
EFFECT TO PRINCIPLES OF CONFLICTS OF LAW.
Section 12.06 Notices.
-------
All demands, notices and communications hereunder shall be in writing
and shall be deemed to have been duly given if personally delivered at or
mailed by overnight mail, certified mail or registered mail, postage prepaid,
to: (i) in the case of the Depositor, Financial Asset Securities Corp., 600
Steamboat Road, Greenwich, Connecticut 06830 Attention: Peter McMullin, or
such other addresses as may hereafter be furnished to the Securityholders and
the other parties hereto in writing by the Depositor, (ii) in the case of the
Issuer, Cityscape Home Loan Owner Trust 1997-1, c/o Wilmington Trust Company,
Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890,
Attention: Emmett R. Harmon, or such other address as may hereafter be
furnished to the Securityholders and the other parties hereto, (iii) in the
case of the Transferor and the Servicer, Cityscape Corp., 565 Taxter Road,
Elmsford, New York Attention: Cheryl P. Carl, or such other address as may
hereafter be furnished to the Securityholders and the other parties hereto in
writing by the Servicer or the Transferor, (iv) in the case of the Indenture
Trustee or Co-Owner Trustee, First Bank National Association, 180 East Fifth
Street, St. Paul, Minnesota 55101, Attention: Structured Finance/Cityscape
1997-1, and (v) in the case of the Securityholders, as set forth in the
applicable Note Register and Certificate Register. Any such notices shall be
deemed to be effective with respect to any party hereto upon the receipt of
such notice by such party, except that notices to the Securityholders shall
be effective upon mailing or personal delivery.
Section 12.07 Severability of Provisions.
--------------------------
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be held invalid for any reason whatsoever, 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 covenants,
agreements, provisions or terms of this Agreement.
Section 12.08 No Partnership.
--------------
Nothing herein contained shall be deemed or construed to create any
partnership or joint venture between the parties hereto and the services of
the Servicer shall be rendered as an independent contractor.
Section 12.09 Counterparts.
------------
This Agreement may be executed in one or more counterparts and by the
different parties hereto on separate counterparts, each of which, when so
executed, shall be deemed to be an original; such counterparts, together,
shall constitute one and the same Agreement.
Section 12.10 Successors and Assigns.
----------------------
This Agreement shall inure to the benefit of and be binding upon the
Servicer, the Transferor, the Depositor, the Issuer and the Securityholders
and their respective successors and permitted assigns.
Section 12.11 Headings.
--------
The headings of the various sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed to be part
of this Agreement.
Section 12.12 Actions of Securityholders.
--------------------------
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Agreement to be given or taken by
Securityholders may be embodied in and evidenced by one or more instruments
of substantially similar tenor signed by such Securityholders in person or by
agent duly appointed in writing; and except as herein otherwise expressly
provided, such action shall become effective when such instrument or
instruments are delivered to the Depositor, the Servicer or the Issuer.
Proof of execution of any such instrument or of a writing appointing any such
agent shall be sufficient for any purpose of this Agreement and conclusive in
favor of the Depositor, the Servicer and the Issuer if made in the manner
provided in this Section.
(b) The fact and date of the execution by any Securityholder of any
such instrument or writing may be proved in any reasonable manner which the
Depositor, the Servicer or the Issuer deems sufficient.
(c) Any request, demand, authorization, direction, notice, consent,
waiver or other act by a Securityholder shall bind every holder of every
Security issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof, in respect of anything done, or omitted to be
done, by the Depositor, the Servicer or the Issuer in reliance thereon,
whether or not notation of such action is made upon such Security.
(d) The Depositor, the Servicer or the Issuer may require additional
proof of any matter referred to in this Section 12.12 as it shall deem
necessary.
Section 12.13 Reports to Rating Agencies.
--------------------------
(a) The Indenture Trustee shall provide to each Rating Agency copies of
statements, reports and notices, to the extent received or prepared in
connection herewith, as follows:
(i) copies of amendments to this Agreement;
(ii) notice of any substitution or repurchase of any Home Loans;
(iii) notice of any termination, replacement, succession,
merger or consolidation of either the Servicer, any Custodian or the
Issuer;
(iv) notice of final payment on the Notes and the Class B
Certificates;
(v) notice of any Event of Default;
(vi) copies of the annual independent auditor's report delivered
pursuant to Section 7.05, and copies of any compliance reports delivered
by the Servicer hereunder including Section 7.04; and
(vii) copies of any Distribution Date Statement pursuant to
Section 6.02(b).
However, with respect to clauses (a)(ii) and (a)(vi) above, the Servicer
shall provide a copy of such documents to the Indenture Trustee, and the
Indenture Trustee shall provide such copies of such documents to the Rating
Agencies.
(b) With respect to the requirement of the Indenture Trustee to provide
statements, reports and notices to the Rating Agencies such statements,
reports and notices shall be delivered to the Rating Agencies at the
following addresses: (i) if to Standard & Poor's, 26 Broadway, 15th Floor,
New York, New York 10004-1064, Attention: Asset-Backed Monitoring Department,
(ii) if to Fitch, One State Street Plaza, New York, New York 10004, (iii) if
to Duff & Phelps, 55 East Monroe Street, 35th Floor, Chicago, Illinois 60603,
Attention: MBS Monitoring.
Section 12.14 Holders of the Residual Interest.
--------------------------------
(a) Any sums to be distributed or otherwise paid hereunder or under the
Trust Agreement to the holders of the Residual Interest shall be paid to such
holders pro rata based on their percentage holdings in the
--- ----
Residual Interest;
(b) Where any act or event hereunder is expressed to be subject to the
consent or approval of the holders of the Residual Interest, such consent or
approval shall be capable of being given by the holder or holders of not less
than 51% of the Residual Interest in aggregate.
IN WITNESS WHEREOF, the Servicer, the Transferor, the Issuer and the
Depositor have caused their names to be signed by their respective officers
thereunto duly authorized, as of the day and year first above written, to
this SALE AND SERVICING AGREEMENT .
CITYSCAPE HOME LOAN OWNER TRUST 1997-1,
By: Wilmington Trust Company, not in its
individual capacity but solely as Owner
Trustee
By:
-----------------------------------------
Name:
Title:
FINANCIAL ASSET SECURITIES CORP., as
Depositor
By:
-----------------------------------------
Name:
Title:
CITYSCAPE CORP., as Transferor and Servicer
By:
-----------------------------------------
Name:
Title:
FIRST BANK NATIONAL ASSOCIATION, as
Indenture Trustee and Co-Owner Trustee
By:
-----------------------------------------
Name:
Title:
THE STATE OF ________ )
)
COUNTY OF ________ )
BEFORE ME, the undersigned authority, a Notary Public, on this day
personally appeared _______________, known to me to be a person and officer
whose name is subscribed to the foregoing instrument and acknowledged to me
that the same was the act of the said WILMINGTON TRUST COMPANY, not in its
individual capacity but in its capacity as Owner Trustee of _________ HOME
LOAN OWNER TRUST 1997-1 as Issuer, and that he executed the same as the act
of such corporation for the purpose and consideration therein expressed, and
in the capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF CITYSCAPE, this the ____ day of
February, 1997.
--------------------------------------------
Notary Public, State of ________
THE STATE OF ________ )
)
COUNTY OF ________ )
BEFORE ME, the undersigned authority, a Notary Public, on this day
personally appeared _______________________, known to me to be a person and
officer whose name is subscribed to the foregoing instrument and acknowledged
to me that the same was the act of the said FINANCIAL ASSET SECURITIES CORP.,
as the Depositor, and that he executed the same as the act of such
corporation for the purpose and consideration therein expressed, and in the
capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF CITYSCAPE, this the ____ day of
February, 1997.
--------------------------------------------
Notary Public, State of ________
THE STATE OF ________ )
)
COUNTY OF ________ )
BEFORE ME, the undersigned authority, a Notary Public, on this day
personally appeared _______________________, known to me to be the person and
officer whose name is subscribed to the foregoing instrument and acknowledged
to me that the same was the act of the said CITYSCAPE CORP., as the
Transferor and Servicer, and that he executed the same as the act of such
corporation for the purposes and consideration therein expressed, and in the
capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF CITYSCAPE, this the ____ day of
February, 1997.
------------------------------
Notary Public, State of ________
THE STATE OF ________ )
)
COUNTY OF ________ )
BEFORE ME, the undersigned authority, a Notary Public, on this day
personally appeared ____________________, known to me to be the person and
officer whose name is subscribed to the foregoing instrument and acknowledged
to me that the same was the act of the said FIRST BANK NATIONAL ASSOCIATION,
a national banking association, as the Indenture Trustee, and that she
executed the same as the act of such entity for the purposes and
consideration therein expressed, and in the capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF CITYSCAPE, this the ____ day of
February, 1997.
------------------------------
Notary Public, State of ________
EXHIBIT A
---------
(HOME LOAN SCHEDULE)
EXHIBIT B
---------
REQUEST FOR RELEASE OF DOCUMENTS
(Date)
To: FIRST BANK NATIONAL ASSOCIATION, as Custodian
180 East Fifth Street
St. Paul, Minnesota 55101
Attn: Corporate Trust Department
Re: Custodial Agreement dated as of February 1, 1997 (the "Custodial
--------
Agreement"), among FINANCIAL ASSET SECURITIES CORP., as Depositor,
- ---------
CITYSCAPE CORP., as Transferor and Servicer, FIRST BANK NATIONAL ASSOCIATION,
as Custodian, FIRST BANK NATIONAL ASSOCIATION, as Indenture Trustee and
CITYSCAPE HOME LOAN OWNER TRUST 1997-1, as Issuer
In connection with the Indenture Trustee's Home Loan Files held by FIRST
BANK NATIONAL ASSOCIATION, as the Custodian, we request the release, and
acknowledge receipt, of the (Indenture Trustee's Home Loan File/(specify
document)) for the Home Loan described below, for the reason indicated.
Obligor's Name, Address & Zip Code:
- ----------------------------------
Home Loan Number:
- ----------------
Reason for Requesting Documents (check one)
- -------------------------------
___ 1. Home Loan Paid in Full. (Servicer hereby certifies that all
amounts received in connection therewith have been credited to the
Collection Account.
___ 2. Home Loan Liquidated. (Servicer hereby certifies that all proceeds
of foreclosure, insurance or other liquidation have been finally
received and credited to the Collection Account.
____ 3. (a) Home Loan in foreclosure or another method of liquidation
pursuant to Section 4.02 of the Sale and Servicing Agreement.
(b) Home Loan subject to documentation corrections for errors and
ambiguities. (Servicer hereby certifies that the
documentation released pursuant to this Request for Release of
Documents has errors or ambiguities that require correction
and that such documentation shall be corrected in a prompt
manner and returned to the Custodian in accordance with the
Sale and Servicing Agreement.
____ 4. Home Loan repurchased pursuant to Section 11.02 of the Sale and
Servicing Agreement.
____ 5. Home Loan repurchased or substituted pursuant to Article II or III
of the Sale and Servicing Agreement. (Servicer hereby certifies
that the Purchase Price or Substitution Adjustment has been
credited to the Collection Account).
____ 6. Subject to the approval of the Indenture Trustee set forth below,
other servicing release (explain)
---------------------------------------------
---------------------------------------------
If box 1 or 2 above is checked, and if all or part of the Indenture
Trustee's Home Loan File was previously released to us, please release to us
our previous receipt on file with you, as well as any additional documents in
your possession relating to the above specified Home Loan.
If box 3, 4, 5 or 6 above is checked, upon our return of all of the
above documents to ______________________, as Custodian, please acknowledge
your receipt by signing in the space indicated below, and returning this
form.
Capitalized words used and not otherwise defined herein have the
meanings assigned to them in the Custodial Agreement.
CITYSCAPE CORP.,
as Servicer
By:
-----------------------------------------
Name:
---------------------------------
Title:
--------------------------------
Date:
---------------------------------------
WITH RESPECT TO BOX NUMBERS 4, 5 OR 6
- -------------------------------------
ONLY, SUCH RELEASE APPROVED BY
- ------------------------------
THE INDENTURE TRUSTEE:
- ----------------------
FIRST BANK NATIONAL ASSOCIATION,
as Indenture Trustee
By:
----------------------
Name:
-------------------------
Title:
------------------------
RECEIPT OF DOCUMENTS RETURNED TO CUSTODIAN:
- ------------------------------------------
FIRST BANK NATIONAL ASSOCIATION, as Custodian
By:
----------------------
Name:
-------------------------
Title:
------------------------
EXHIBIT C
---------
INDENTURE TRUSTEE'S ACKNOWLEDGMENT OF RECEIPT
First Bank National Association, a national banking association, in its
capacity as Indenture Trustee under that certain Sale and Servicing
Agreement, dated as of February 1, 1997 among Cityscape Corp., the Depositor,
the Indenture Trustee and the Issuer (the "Sale and Servicing Agreement"),
hereby acknowledges receipt by it in good faith without notice of adverse
claims, subject to the provisions of Sections 2.05(a)(ii) and 2.05(c) of the
Sale and Servicing Agreement of (x) the documents relating to the Home Loans
referred to in Section 2.05(a)(i), (ii), (iii), (iv) and (v) of the Sale and
Servicing Agreement, except that such may have been endorsed in blank and
except with respect to the list of exceptions attached hereto, and based on
its examination and only as to the foregoing, the information set forth in
the Home Loan Schedule which corresponds to items (i), (ii) and (iv)-(viii)
of the definition of "Home Loan Schedule" accurately reflects information set
forth in the Home Loan File as well as the assignment to it of all other
assets included in clauses (i) through (v) of the definition of "Trust
Estate", and (y) the Trust Accounts and declares that it holds and will hold
such documents and the other documents delivered to it constituting the Home
Loan Files, and that it holds or will hold all such assets and such other
assets included in the definition of "Trust Estate" that are delivered to it,
in trust for the exclusive use and benefit of all present and future
Securityholders. The Indenture Trustee makes no representation as to and
shall not be responsible to verify (i) the validity, legality,
enforceability, sufficiency, recordability or genuineness of any document in
the Home Loan Files or of any such Home Loan or (ii) the collectability,
insurability, effectiveness or suitability of any Home Loan.
The Schedule of Home Loans is attached to this Acknowledgment of
Receipt.
Capitalized terms used herein and not defined shall have the respective
meanings assigned to them in the Sale and Servicing Agreement.
FIRST BANK NATIONAL ASSOCIATION, as Indenture Trustee
By: ______________________________
Name:
Title:
EXHIBIT D
---------
FORM OF INDENTURE TRUSTEE'S CERTIFICATION
______________________, 199_
Financial Asset Securities Corp.
600 Steamboat Road
Greenwich, Connecticut 06830
Attention: Peter McMullin
Cityscape Corp.
565 Taxter Road
Elmsford, NY 10523-2300
Attention: Cheryl P. Carl
Re: Sale and Servicing Agreement, dated as of February 1, 1997
among Cityscape Corp., Financial Asset Securities Corp. and
First Bank National Association; Cityscape Home Loan Owner
Trust, Series 1997-1 Home Loan Asset-Backed Notes and
Certificates
----------------------------------------------------------
Ladies and Gentlemen:
This certification is being delivered to you in accordance with
Section 2.06 of the above-captioned Sale and Servicing Agreement.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-referenced Sale and Servicing
Agreement.
The Indenture Trustee hereby certifies that it has reviewed the
Home Loan Files with respect to the Home Loans listed in the related Home
Loan Schedule, and that except as noted on the list of exceptions attached
hereto and without making any determination as to whether any Home Loan File
includes any of the documents specified in Section 2.05 of the Sale and
Servicing Agreement, as to each Home Loan listed in the Home Loan Schedule,
(i) all documents constituting part of each such Home Loan File required to
be delivered to it pursuant to the Sale and Servicing Agreement are in its
possession, (ii) such documents have been reviewed by it and appear to have
been properly executed and regular on their face and to relate to such Home
Loan and (iii) based on its examination and only as to the foregoing
documents, the information set forth in the Home Loan Schedule relating to
such Home Loans which corresponds to items (i), (ii) and (iv)-(viii) of the
definition of "Home Loan Schedule" accurately reflects information set forth
in the Home Loan File.
The Indenture Trustee has made no independent examination of any
documents contained in each Home Loan File beyond the review specifically
required in the above-referenced Sale and Servicing Agreement. The Indenture
Trustee makes no representations as
to: (i) the validity, legality, sufficiency, enforceability, execution by a
Responsible Officer or genuineness of any of the documents contained in any
Home Loan File of any of the Home Loans identified on the Home Loan Schedule,
or (ii) the collectability, insurability, effectiveness or suitability of any
such Home Loan or (iii) the existence of any document specified in clause (v)
of Section 2.05(a) of the Sale and Servicing Agreement.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Sale and Servicing
Agreement.
FIRST BANK NATIONAL ASSOCIATION, as Indenture
Trustee
By:
---------------------------
Name:
----------------------
Title:
---------------------
EXHIBIT E
---------
FORM OF INDENTURE TRUSTEE'S EXCEPTION REPORT
, 199__
-----------
Financial Asset Securities Corp.
660 Steamboat Road
Greenwich, Connecticut 06830
Attention: Peter McMullin
Cityscape Corp.
565 Taxter Road
Elmsford, NY 10523-2300
Attention: Cheryl P. Carl
Re: Sale and Servicing Agreement, dated as of February 1, 1997,
among Cityscape Corp., Financial Asset Securities Corp. and
First Bank National Association; Cityscape Home Owner Loan
Trust, Series 1997-1 Home Loan Asset Backed Notes and
Certificates
-----------------------------------------------------------
Ladies and Gentlemen:
In accordance with Section 2.06 of the above-referenced Sale and
Servicing Agreement, the undersigned, as Indenture Trustee, hereby sets forth
an updated exception report from the previous Indenture Trustee's
Certification issued (INSERT DATE).
The Indenture Trustee has made no independent examination of any
documents contained in each Home Loan File beyond the review specifically
required in the above-referenced Sale and Servicing Agreement. The Indenture
Trustee makes no representations as to: (i) the validity, legality,
sufficiency, enforceability, execution by a Responsible Officer, or
genuineness of any of the documents contained in each Home Loan File of any
of the Home Loans identified on the Home Loan Schedule, or (ii) the
collectability, insurability, effectiveness or suitability of any such Home
Loan or (iii) the existence of any document specified in clause (v) of
Section 2.05(a) of the Sale and Servicing Agreement.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Sale and Servicing
Agreement.
FIRST BANK NATIONAL ASSOCIATION, as
Indenture Trustee
By:
---------------------------
Name:
----------------------
Title:
---------------------
EXHIBIT 2
Execution Copy
TRUST AGREEMENT
among
FINANCIAL ASSET SECURITIES CORP.,
as Depositor,
CITYSCAPE CORP.,
as the Company,
WILMINGTON TRUST COMPANY,
as Owner Trustee
and
FIRST BANK NATIONAL ASSOCIATION,
as Co-Owner Trustee
Dated as of February 1, 1997
CITYSCAPE HOME LOAN OWNER TRUST 1997-1
Home Loan Asset Backed Notes and Certificates, Series 1997-1
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS
SECTION 1.1 Capitalized Terms . . . . . . . . . . . . . . . -1-
SECTION 1.2 Other Definitional Provisions . . . . . . . . . -5-
ARTICLE II
ORGANIZATION
SECTION 2.1 Name . . . . . . . . . . . . . . . . . . . . . . -6-
SECTION 2.2 Office . . . . . . . . . . . . . . . . . . . . . -6-
SECTION 2.3 Purposes and Powers . . . . . . . . . . . . . . -6-
SECTION 2.4 Appointment of Owner Trustee . . . . . . . . . . -7-
SECTION 2.5 Initial Capital Contribution of Owner Trust
Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . -7-
SECTION 2.6 Declaration of Trust . . . . . . . . . . . . . . -7-
SECTION 2.7 (RESERVED) . . . . . . . . . . . . . . . . . . . -8-
SECTION 2.8 Title to Trust Property . . . . . . . . . . . . -8-
SECTION 2.9 Situs of Trust . . . . . . . . . . . . . . . . . -8-
SECTION 2.10 Representations and Warranties of the Depositor
and
the Company; Covenant of the Company . . . . . -8-
SECTION 2.11 Federal Income Tax Allocations . . . . . . . . -10-
ARTICLE III
TRUST CERTIFICATES AND TRANSFER OF INTERESTS
SECTION 3.1 Initial Ownership . . . . . . . . . . . . . . -11-
SECTION 3.2 The Trust Certificates . . . . . . . . . . . . -11-
SECTION 3.3 Execution, Authentication and Delivery of Trust
Certificates . . . . . . . . . . . . . . . . -11-
SECTION 3.4 Registration of Transfer and Exchange of Trust
Certificates . . . . . . . . . . . . . . . . -12-
SECTION 3.5 Mutilated, Destroyed, Lost or Stolen Trust
Certificates . . . . . . . . . . . . . . . . -13-
SECTION 3.6 Persons Deemed Owners . . . . . . . . . . . . -13-
SECTION 3.7 Access to List of Owners' Names and Addresses -13-
SECTION 3.8 Maintenance of Office or Agency . . . . . . . -13-
SECTION 3.9 Appointment of Paying Agent . . . . . . . . . -14-
SECTION 3.10 (Reserved) . . . . . . . . . . . . . . . . . . -14-
SECTION 3.11 Book-Entry Certificates . . . . . . . . . . . -14-
SECTION 3.12 Notices to Clearing Agency . . . . . . . . . . -15-
SECTION 3.13 Definitive Certificates . . . . . . . . . . . -15-
SECTION 3.14 Restrictions on Transfer of Residual Interest
Instruments and the Certificates . . . . . . -16-
ARTICLE IV
ACTIONS BY OWNER TRUSTEE
SECTION 4.1 Prior Notice to Owners with Respect to Certain
Matters . . . . . . . . . . . . . . . . . . -19-
SECTION 4.2 Action by Owners with Respect to Certain
Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . -21-
SECTION 4.3 Action by Owners with Respect to Bankruptcy . -21-
SECTION 4.4 Restrictions on Owners' Power . . . . . . . . -21-
SECTION 4.5 Majority Control . . . . . . . . . . . . . . . -21-
ARTICLE V
APPLICATION OF TRUST FUNDS; CERTAIN DUTIES
SECTION 5.1 Establishment of Trust Account . . . . . . . . -21-
SECTION 5.2 Application Of Trust Funds . . . . . . . . . . -22-
SECTION 5.3 Method of Payment . . . . . . . . . . . . . . -23-
SECTION 5.4 Segregation of Moneys; No Interest . . . . . . -23-
SECTION 5.5 Accounting and Reports to the
Certificateholder,
Owners, the Internal Revenue Service and Others
-23-
SECTION 5.6 Signature on Returns; Tax Matters Partner . . -23-
ARTICLE VI
AUTHORITY AND DUTIES OF OWNER TRUSTEE
SECTION 6.1 General Authority . . . . . . . . . . . . . . -24-
SECTION 6.2 General Duties . . . . . . . . . . . . . . . . -24-
SECTION 6.3 Action upon Instruction . . . . . . . . . . . -25-
SECTION 6.4 No Duties Except as Specified in this
Agreement, the
Basic Documents or in Instructions . . . . . -26-
SECTION 6.5 No Action Except Under Specified Documents or
Instructions . . . . . . . . . . . . . . . . -26-
SECTION 6.6 Restrictions . . . . . . . . . . . . . . . . . -26-
ARTICLE VII
CONCERNING THE OWNER TRUSTEE
SECTION 7.1 Acceptance of Trusts and Duties . . . . . . . -26-
SECTION 7.2 Furnishing of Documents . . . . . . . . . . . -28-
SECTION 7.3 Representations and Warranties . . . . . . . . -28-
SECTION 7.4 Reliance; Advice of Counsel . . . . . . . . . -29-
SECTION 7.5 Not Acting in Individual Capacity. . . . . . -29-
SECTION 7.6 Owner Trustee Not Liable for Trust Certificates
or
Home Loans . . . . . . . . . . . . . . . . . -29-
SECTION 7.7 Owner Trustee May Own Trust Certificates and
Notes . . . . . . . . . . . . . . . . . . . -30-
SECTION 7.8 Licenses . . . . . . . . . . . . . . . . . . . -30-
SECTION 7.9 Rights of Co-Owner Trustee . . . . . . . . . . -30-
ARTICLE VIII
COMPENSATION OF OWNER TRUSTEE
SECTION 8.1 Owner Trustee's Fees and Expenses . . . . . . -30-
SECTION 8.2 Indemnification . . . . . . . . . . . . . . . -31-
SECTION 8.3 Payments to the Owner Trustee . . . . . . . . -31-
ARTICLE IX
TERMINATION OF TRUST AGREEMENT
SECTION 9.1 Termination of Trust Agreement . . . . . . . . -31-
ARTICLE X
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
SECTION 10.1 Eligibility Requirements for Owner Trustee . . -33-
SECTION 10.2 Resignation or Removal of Owner Trustee or
Co-Owner Trustee . . . . . . . . . . . . . . -33-
SECTION 10.3 Successor Owner Trustee or Co-Owner Trustee . -34-
SECTION 10.4 Merger or Consolidation of Owner Trustee or
Co-Owner Trustee . . . . . . . . . . . . . . -34-
SECTION 10.5 Appointment of Co-Owner Trustee or Separate
Owner Trustee . . . . . . . . . . . . . . . -35-
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 Supplements and Amendments . . . . . . . . . . -36-
SECTION 11.2 No Legal Title to Owner Trust Estate in Owners -37-
SECTION 11.3 Limitations on Rights of Others . . . . . . . -38-
SECTION 11.4 Notices . . . . . . . . . . . . . . . . . . . -38-
SECTION 11.5 Severability . . . . . . . . . . . . . . . . . -38-
SECTION 11.6 Separate Counterparts . . . . . . . . . . . . -38-
SECTION 11.7 Successors and Assigns . . . . . . . . . . . . -38-
SECTION 11.8 No Petition . . . . . . . . . . . . . . . . . -39-
SECTION 11.9 No Recourse . . . . . . . . . . . . . . . . . -39-
SECTION 11.10 Headings . . . . . . . . . . . . . . . . . . . -39-
SECTION 11.11 GOVERNING LAW . . . . . . . . . . . . . . . . -39-
EXHIBIT A Form of Certificate
EXHIBIT B Form of Residual Interest Instrument
EXHIBIT C Form of Certificate of Trust
EXHIBIT D Form of Certificate Depository Agreement
EXHIBIT E Form of Transfer Certificate
TRUST AGREEMENT, dated as of February 1, 1997, among FINANCIAL ASSET
SECURITIES CORP., a Delaware corporation, as Depositor (the "Depositor"),
CITYSCAPE CORP., a New York corporation (the "Company"), WILMINGTON TRUST
COMPANY, a Delaware banking corporation, as Owner Trustee (the "Owner
Trustee") and FIRST BANK NATIONAL ASSOCIATION, as Co-Owner Trustee (the "Co-
Owner Trustee").
ARTICLE I
DEFINITIONS
SECTION 1.1 Capitalized Terms. For all purposes of this Agreement,
-----------------
the following terms shall have the meanings set forth below:
"Agreement" shall mean this Trust Agreement, as the same may be amended
---------
and supplemented from time to time.
"Administration Agreement" shall mean the Administration Agreement,
------------------------
dated as of February 1, 1997 among the Issuer, the Company, and First Bank
National Association, as Administrator.
"Administrator" shall mean First Bank National Association, or any
-------------
successor in interest thereto, in its capacity as Administrator under the
Administration Agreement.
"Basic Documents" shall mean this Agreement, the Sale and Servicing
---------------
Agreement, the Indenture, the Administration Agreement, the Custodial
Agreement, the Note Depository Agreement, the Certificate Depository
Agreement and the other documents and certificates delivered in connection
therewith.
"Benefit Plan" shall have the meaning assigned to such term in Section
------------
11.12.
"Book-Entry-Certificate" shall mean a beneficial interest in the
----------------------
Certificates, ownership and transfers of which shall be made through book
entries by a Clearing Agency as described in Section 3.11.
------------
"Business Trust Statute" shall mean Chapter 38 of Title 12 of the
----------------------
Delaware Code, 12 Del. Code Section 3801 et seq., as the same may be amended
-- ---
from time to time.
"Certificate" shall mean a certificate (other than a Residual Interest
-----------
Instrument) evidencing the beneficial interest of an Owner in the Trust,
substantially in the form attached hereto as Exhibit A.
---------
"Certificate Depository Agreement" shall mean the agreement among the
--------------------------------
Trust and the DTC, dated as of the Closing Date, substantially in the form
attached hereto as Exhibit D, relating to the Certificates, as the same may
---------
be amended and supplemented from time to time.
"Certificate Distribution Account" shall have the meaning assigned to
--------------------------------
such term in Section 5.1.
-----------
"Certificate of Trust" shall mean the Certificate of Trust in the form
--------------------
of Exhibit C to be filed for the Trust pursuant to Section 3810(a) of the
---------
Business Trust Statute.
"Certificate Owner" shall mean, with respect to a Book-Entry
-----------------
Certificate, the Person who is the beneficial owner of such Book-Entry
Certificate, as reflected on the books of the Clearing Agency, or on the
books of a Person maintaining an account with such Clearing Agency (directly
as a Clearing Agency Participant or as an indirect participant, in each case
in accordance with the rules of such Clearing Agency).
"Certificate Register" and "Certificate Registrar" shall mean the
-------------------- ---------------------
register mentioned and the registrar appointed pursuant to Section 3.4.
-----------
"Certificateholder" or "Holder" shall mean a Person in whose name a
----------------- ------
Certificate is registered.
"Clearing Agency" shall mean an organization registered as a "clearing
---------------
agency" pursuant to Section 17A of the Exchange Act.
"Clearing Agency Participant" shall mean a broker, dealer, bank, other
---------------------------
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with
the Clearing Agency.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
----
Treasury Regulations promulgated thereunder.
"Corporate Trust Office" shall mean, with respect to the Owner Trustee,
----------------------
the principal corporate trust office of the Owner Trustee located at Rodney
Square North, 1100 North Market Street, Wilmington, DE 19890-0001,
Attention: Corporate Trust Administration; or at such other address in the
State of Delaware as the Owner Trustee may designate by notice to the Owners
and the Company, or the principal corporate trust office of any successor
Owner Trustee (the address (which shall be in the State of Delaware) of which
the successor owner trustee will notify the Owners and the Company).
"Definitive Certificates" means a certificated form of security that
-----------------------
represents a Certificate pursuant to Section 3.13 or a Residual Interest
------------
Instrument.
"DTC" shall mean the Depository Trust Company, as the initial Clearing
---
Agency.
"ERISA" shall have the meaning assigned thereto in Section 11.12.
----- -------------
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
------------
amended.
"Expenses" shall have the meaning assigned to such term in Section 8.2.
-------- -----------
"Indenture" shall mean the Indenture, dated as of February 1, 1997, by
---------
and between the Issuer and the Indenture Trustee.
"Indenture Trustee" means First Bank National Association, as Indenture
-----------------
Trustee under the Indenture.
"Initial Certificate Principal Balance" shall mean $4,063,942.
-------------------------------------
"Insolvency Event" shall have occurred with respect to the Company if:
----------------
(i) a decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt,
marshaling of assets and liabilities or similar proceedings, or for the
winding-up or liquidation of its affairs, shall have been entered
against the Company and such decree or order shall have remained in
force, undischarged or unstayed for a period of 60 days; or
(ii) the Company shall consent to the appointment of a conservator
or receiver or liquidator in any insolvency, readjustment of debt,
marshaling of assets and liabilities or similar proceedings of or
relating to the Company or of or relating to all or substantially all of
the Company's property;
(iii) the board of directors of the Company shall voluntarily
dissolve the Company; or
(iv) the Company shall admit in writing its inability to pay its
debts 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; provided however, that the substantive consolidation of the
Company with an entity in respect of which the events described in
(i) - (iv) above have occurred shall not constitute an Insolvency Event
with respect to the Company.
"Issuer" shall mean Cityscape Home Loan Owner Trust 1997-1, the Delaware
------
business trust created pursuant to this Agreement.
"Majority Residual Interestholders" The Holders of more than an
---------------------------------
aggregate 50% Percentage Interest of the Residual Interest.
"Non-permitted Foreign Holder" shall have the meaning set forth in
----------------------------
Section 3.14.
"Non-U.S. Person" shall mean 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 over the administration of the trust and one or more
United States trustees have authority to control all substantial decisions of
the trust.
"Owner" shall mean each holder of a Certificate and each holder of a
-----
Residual Interest Instrument, as applicable.
"Owner Trust Estate" shall mean the contribution of $1 referred to in
------------------
Section 2.5 and the Collateral (as defined in the Indenture).
- -----------
"Owner Trustee" shall mean Wilmington Trust Company, a Delaware banking
-------------
corporation, not in its individual capacity but solely as owner trustee under
this Agreement, and any successor owner trustee hereunder.
"Paying Agent" shall mean the Co-Owner Trustee or any successor in
-------------
interest thereto or any other paying agent or co-paying agent appointed
pursuant to Section 3.9 and authorized by the Issuer to make payments to and
-----------
distributions from the Certificate Distribution Account, including payment of
principal of or interest on the Certificates on behalf of the Issuer.
"Percentage Interest" shall mean with respect to any Certificate, the
-------------------
portion of the Certificates as a whole evidenced by such single Certificate,
expressed as a percentage rounded to five decimal places, equivalent to a
fraction, the numerator of which is the denomination represented by such
single Certificate and the denominator of which is the Original Class
Principal Balance of the Certificates. With respect to each Residual
Interest Instrument, the percentage portion of all of the Residual Interest
evidenced thereby as stated on the face of such Residual Interest Instrument.
"Prospective Owner" shall mean each prospective purchaser of a Trust
-----------------
Certificate.
"Rating Agency Condition" shall mean, with respect to any action to
-----------------------
which a Rating Agency Condition applies, that each Rating Agency shall have
been given 10 days (or such shorter period as is acceptable to each Rating
Agency) prior notice thereof and that each of the Rating Agencies shall have
notified the Depositor, the Company, the Owner Trustee and the Co-Owner
Trustee in writing that such action will not result in a reduction or
withdrawal of the then current rating of the Notes and Certificates.
"Record Date" shall mean as to each Distribution Date the last Business
-----------
Day of the month immediately preceding the month in which such Distribution
Date occurs.
"Residual Interest" shall mean the right to receive distributions of
-----------------
Excess Spread, if any, and certain other funds, if any, on each Distribution
Date, pursuant to Section 5.01 of the Sale and Servicing Agreement.
"Residual Interest Instrument" shall mean an instrument substantially
----------------------------
in the form attached as Exhibit B hereto and evidencing the Residual
---------
Interest.
"Residual Interestholders" shall mean, initially, the Company, as holder
------------------------
of 100% Percentage Interest of the Residual Interest.
"Sale and Servicing Agreement" shall mean the Sale and Servicing
----------------------------
Agreement dated as of the date hereof, among the Trust as Issuer, the
Depositor, the Indenture Trustee as Indenture Trustee and Co-Owner Trustee
and the Company, as Transferor and Servicer.
"Secretary of State" shall mean the Secretary of State of the State of
------------------
Delaware.
"Treasury Regulations" shall mean regulations, including proposed or
--------------------
temporary regulations, promulgated under the Code. References herein to
specific provisions of proposed or temporary regulations shall include
analogous provisions of final Treasury Regulations or other successor
Treasury Regulations.
"Trust" shall mean the trust established by this Agreement.
-----
"Trust Certificates" shall mean the Certificates and the Residual
------------------
Interest Instruments, collectively.
"Underwriter" shall mean Greenwich Capital Markets, Inc.
-----------
SECTION 1.2 Other Definitional Provisions.
-----------------------------
(a) Capitalized terms used herein and not otherwise defined herein
have the meanings assigned to them in the Sale and Servicing Agreement or, if
not defined therein, in the Indenture.
(b) All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein.
(c) As used in this Agreement and in any certificate or other
document made or delivered pursuant hereto or thereto, accounting terms not
defined in this Agreement or in any such certificate or other document, and
accounting terms partly defined in this Agreement or in any such certificate
or other document to the extent not defined, shall have the respective
meanings given to them under generally accepted accounting principles. To
the extent that the definitions of accounting terms in this Agreement or in
any such certificate or other document are inconsistent with the meanings of
such terms under generally accepted accounting principles, the definitions
contained in this Agreement or in any such certificate or other document
shall control.
(d) The words "hereof", "herein", "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole
and not to any particular provision of this Agreement; Section and Exhibit
references contained in this Agreement are references to Sections and
Exhibits in or to this Agreement unless otherwise specified; and the term
"including" shall mean "including without limitation".
(e) The definitions contained in this Agreement are applicable to
the singular as well as the plural forms of such terms and to the masculine
as well as to the feminine and neuter genders of such terms.
(f) Any agreement, instrument or statute defined or referred to
herein or in any instrument or certificate delivered in connection herewith
means such agreement, instrument or statute as from time to time amended,
modified or supplemented and includes (in the case of agreements or
instruments) references to all attachments thereto and instruments
incorporated therein; references to a Person are also to its permitted
successors and assigns.
ARTICLE II
ORGANIZATION
SECTION 2.1 Name. The Trust created hereby shall be known as
----
"Cityscape Home Loan Owner Trust 1997-1", in which name the Owner
Trustee may conduct the business of the Trust, make and execute
contracts and other instruments on behalf of the Trust and sue and be sued.
SECTION 2.2 Office. The office of the Trust shall be in care of the
------
Owner Trustee at the Corporate Trust Office or at such other address
in Delaware as the Owner Trustee may designate by written
notice to the Owners and the Company.
SECTION 2.3 Purposes and Powers. (a) The purpose of the Trust is
-------------------
to engage in the following activities:
(i) to issue the Notes pursuant to the Indenture and the
Certificates pursuant to this Agreement and to sell such Notes and such
Certificates;
(ii) with the proceeds of the sale of the Notes and the
Certificates, to pay the organizational, start-up and transactional
expenses of the Trust and to pay the balance to the Depositor and the
Company, as their interests may appear pursuant to the Sale and
Servicing Agreement;
(iii) to assign, grant, transfer, pledge, mortgage and
convey the Owner Trust Estate pursuant to the Indenture and to hold,
manage and distribute to the Owners pursuant to the terms of the Sale
and Servicing Agreement any portion of the Owner Trust Estate released
from the lien of, and remitted to the Trust pursuant to, the Indenture;
(iv) to enter into and perform its obligations under the Basic
Documents to which it is to be a party;
(v) to engage in those activities, including entering into
agreements, that are necessary, suitable or convenient to accomplish the
foregoing or are incidental thereto or connected therewith;
(vi) subject to compliance with the Basic Documents, to engage
in such other activities as may be required in connection with
conservation of the Owner Trust Estate and the making of distributions
to the Owners and the Noteholders; and
(vii) to issue the Residual Interest Instruments pursuant
to this Agreement.
The Trust is hereby authorized to engage in the foregoing activities. The
Trust shall not engage in any activity other than in connection with the
foregoing or other than as required or authorized by the terms of this
Agreement or the Basic Documents.
SECTION 2.4 Appointment of Owner Trustee. The Depositor hereby
----------------------------
appoints the Owner Trustee as trustee of the Trust effective
as of the date hereof, to have all the rights, powers and duties
set forth herein.
SECTION 2.5 Initial Capital Contribution of Owner Trust Estate. The
--------------------------------------------------
Company hereby sells, assigns, transfers, conveys and sets over to
the Owner Trustee, as of the date hereof, the sum of $1. The
Owner Trustee hereby acknowledges receipt in trust from the Company,
as of the date hereof, of the foregoing contribution, which shall constitute
the initial Owner Trust Estate and shall be deposited in the Certificate
Distribution Account. The Company shall pay organizational expenses of the
Trust as they may arise or shall, upon the request of the Owner Trustee,
promptly reimburse the Owner Trustee for any such expenses paid by the Owner
Trustee.
SECTION 2.6 Declaration of Trust. The Owner Trustee hereby declares
--------------------
that it will hold the Owner Trust Estate in trust upon and subject to the
conditions set forth herein for the use and benefit of the Owners,
subject to the obligations of the Trust under the Basic Documents. It is
the intention of the parties hereto that the Trust constitute a
business trust under the Business Trust Statute and that this Agreement
constitute the governing instrument of such business trust. It is the
intention of the parties hereto that, solely for income and franchise tax
purposes, the Trust shall be treated as a partnership, with the assets of the
partnership being the Home Loans and other assets held by the Trust, the
partners of the partnership being the holders of the Trust Certificates and
the Notes being non-recourse debt of the partnership. The parties agree
that, unless otherwise required by appropriate tax authorities, the Trust
will file or cause to be filed annual or other necessary returns, reports and
other forms consistent with the characterization of the Trust as a
partnership for such tax purposes. Effective as of the date hereof, the
Owner Trustee shall have all rights, powers and duties set forth herein and
in the Business Trust Statute with respect to accomplishing the purposes of
the Trust.
SECTION 2.7 (RESERVED)
SECTION 2.8 Title to Trust Property.
-----------------------
(a) Subject to the Indenture, legal title to all the Owner Trust
Estate shall be vested at all times in the Trust as a separate legal entity
except where applicable law in any jurisdiction requires title to any part of
the Owner Trust Estate to be vested in a trustee or trustees, in which case
title shall be deemed to be vested in the Owner Trustee, the Co-Owner Trustee
and/or a separate trustee, as the case may be.
(b) The Owners shall not have legal title to any part of the Owner
Trust Estate. No transfer by operation of law or otherwise of any interest
of the Owners shall operate to terminate this Agreement or the trusts
hereunder or entitle any transferee to an accounting or to the transfer to it
of any part of the Owner Trust Estate.
SECTION 2.9 Situs of Trust. The Trust will be located and
--------------
administered in the state of Delaware. All bank accounts maintained
by the Owner Trustee on behalf of the Trust shall be located in
the State of Delaware or the State of New York, except with
respect to the Co-Owner Trustee. The Trust shall not have
any employees; provided, however, that nothing herein shall
restrict or prohibit the Owner Trustee from having employees within or
without the State of Delaware. Payments will be received and made by the
Trust only in Delaware, Minnesota or New York. The only office of the
Trust will be at the Corporate Trust Office in Delaware.
SECTION 2.10 Representations and Warranties of the Depositor and the
-------------------------------------------------------
Company; Covenant of the Company.
- --------------------------------
(a) The Depositor hereby represents and warrants to the Owner
Trustee and the Co-Owner Trustee that:
(i) The Depositor is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Delaware
and has all licenses necessary to carry on its business as now being
conducted. The Depositor has the power and authority to execute and
deliver this Agreement and to perform in accordance herewith; the
execution, delivery and performance of this Agreement (including all
instruments of transfer to be delivered pursuant to this Agreement) by
the Depositor and the consummation of the transactions contemplated
hereby have been duly and validly authorized by all necessary action of
the Depositor; this Agreement evidences the valid, binding and
enforceable obligation of the Depositor; and all requisite action has
been taken by the Depositor to make this Agreement valid, binding and
enforceable upon the Depositor in accordance with its terms, subject to
the effect of bankruptcy, insolvency, reorganization, moratorium and
other, similar laws relating to or affecting creditors' rights generally
or the application of equitable principles in any proceeding, whether at
law or in equity;.
(ii) The consummation of the transactions contemplated by this
Agreement will not result in (i) the breach of any terms or provisions
of the articles of incorporation or bylaws of the Depositor, (ii) the
breach of any term or provision of, or conflict with or constitute a
default under or result in the acceleration of any obligation under, any
material agreement, indenture or loan or credit agreement or other
material instrument to which the Depositor, or its property is subject,
or (iii) the violation of any law, rule, regulation, order, judgment or
decree to which the Depositor or its respective property is subject;
(iii) The Depositor is not in default with respect to any
order or decree of any court or any order, regulation or demand of any
federal, state, municipal or other governmental agency, which default
might have consequences that would materially and adversely affect the
condition (financial or otherwise) or operations of the Depositor or its
properties or might have consequences that would materially and
adversely affect its performance hereunder.
(b) The Company hereby represents and warrants to the Owner
Trustee and the Co-Owner Trustee that:
(i) The Company is duly organized and validly existing as a
corporation in good standing under the laws of the State of New York,
with power and authority to own its properties and to conduct its
business as such properties are currently owned and such business is
presently conducted.
(ii) The Company is duly qualified to do business as a foreign
corporation in good standing, and has obtained all necessary licenses
and approvals in all jurisdictions in which the ownership or lease of
property or the conduct of its business shall require such
qualifications.
(iii) The Company has the power and authority to execute
and deliver this Agreement and to carry out its terms; and the
execution, delivery and performance of this Agreement has been duly
authorized by the Company by all necessary corporate action.
(iv) The consummation of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof do not conflict with,
result in any breach of any of the terms and provisions of, or
constitute (with or without notice or lapse of time) a default under,
the articles of incorporation or by-laws of the Company, or any
indenture, agreement or other instrument to which the Company is a party
or by which it is bound; nor result in the creation or imposition of any
lien upon any of its properties pursuant to the terms of any such
indenture, agreement or other instrument (other than pursuant to the
Basic Documents); nor violate any law or, to the best of the Company's
knowledge, any order, rule or regulation applicable to the Company of
any court or of any federal or state regulatory body, administrative
agency or other governmental instrumentality having jurisdiction over
the Company or its properties.
(v) There are no proceedings or investigations pending or, to
the Company's best knowledge, threatened, before any court, regulatory
body, administrative agency or other governmental instrumentality having
jurisdiction over the Company or its properties: (i) asserting the
invalidity of this Agreement, (ii) seeking to prevent the consummation
of any of the transactions contemplated by this Agreement or (iii)
seeking any determination or ruling that might materially and adversely
affect the performance by the Company of its obligations under, or the
validity or enforceability of, this Agreement.
(c) The Company covenants with the Owner Trustee and the Co-Owner
Trustee that during the continuance of this Agreement it will comply in all
respects with the provisions of its articles of incorporation in effect from
time to time.
SECTION 2.11 Federal Income Tax Allocations. Net income of the Trust
------------------------------
for any month, as determined for federal income tax purposes (and each
item of income, gain, loss and deduction entering into the computation
thereof), shall be allocated:
(a) among the Certificates as of the first Record Date following
the end of such month, in proportion to their ownership of principal amount
of Certificates on such date, an amount of net income up to the sum of (i)
the amount distributable in respect of interest to the Certificateholders
pursuant to Section 5.01 of the Sale and Servicing Agreement for such month,
------------
and (ii) the portion of the market discount on the Home Loans accrued during
such month that is allocable to the excess, if any, of the initial aggregate
principal amount of the Certificates over their initial aggregate issue
price; and
(b) to the Residual Interestholders, pro rata, to the extent of
any remaining net income.
If the net income of the Trust for any month is insufficient for the
allocations described in clause (a) above, subsequent net income shall first
be allocated to make up such shortfall before being allocated as provided in
the preceding sentence. Net losses of the Trust, if any, for any month, as
determined for federal income tax purposes (and each item of income, gain,
loss and deduction entering into the computation thereof), shall be allocated
to the Residual Interestholders to the extent the Residual Interestholders
are reasonably expected to bear the economic burden of such net losses, and
any remaining net losses shall be allocated among the Certificates as of the
first Record Date following the end of such month in proportion to their
ownership of principal amount of Trust certificates on such Record Date. Any
indebtedness allocated pursuant to Treasury Regulation Section 1.752 -
3(a)(3) shall be allocated to the Residual Interest.
ARTICLE III
TRUST CERTIFICATES AND TRANSFER OF INTERESTS
SECTION 3.1 Initial Ownership. Upon the formation of the Trust by the
-----------------
contribution by the Company pursuant to Section 2.5 and
----------
until the issuance of the Trust Certificates, the Company shall be the
sole Owner of the Trust.
SECTION 3.2 The Trust Certificates. The Certificates (other than the
----------------------
Residual Interest) shall be issued in minimum denominations
of $100,000 and in integral multiples of $1,000 in excess
thereof. The Residual Interest shall not be issued with a principal amount.
The Trust Certificates shall be executed on behalf of the Trust by manual or
facsimile signature of a Trust Officer of the Owner Trustee or the
Administrator. Trust Certificates bearing the manual or facsimile signatures
of individuals who were, at the time when such signatures shall have been
affixed, authorized to sign on behalf of the Trust, shall be valid and
binding obligations of the Trust, notwithstanding that such individuals or
any of them shall have ceased to be so authorized prior to the authentication
and delivery of such Trust Certificates or did not hold such offices at the
date of authentication and delivery of such Trust Certificates.
A transferee of a Trust Certificate shall become an Owner, and shall be
entitled to the rights and subject to the obligations of an Owner hereunder
and under the Sale and Servicing Agreement, upon such transferee's acceptance
of a Trust Certificate duly registered in such transferee's name pursuant to
Section 3.4.
- -----------
SECTION 3.3 Execution, Authentication and Delivery of Trust
-----------------------------------------------
Certificates. Concurrently with the initial sale of the
- ------------
Home Loans to the Trust pursuant to the Sale and Servicing
Agreement, the Owner Trustee shall cause the Certificates, in an
aggregate principal amount equal to the initial Class Principal
Balance of the Certificates, and the Residual Interest Instruments
representing 100% of the Percentage Interests of the Residual
Interest to be executed on behalf of the Trust, authenticated
and delivered to or upon the written order of the Depositor,
signed by its chairman of the board, its president or any vice
president, without further corporate action by the Depositor, in
authorized denominations. No Trust Certificate shall entitle its
holder to any benefit under this Agreement, or shall be valid for
any purpose, unless there shall appear on such Trust Certificate
a certificate of authentication substantially in the form set
forth in Exhibit A and B, executed by the Owner
---------------
Trustee or the Administrator, as the Owner Trustee's authenticating
agent, by manual or facsimile signature; such authentication shall
constitute conclusive evidence that such Trust Certificate shall have
been duly authenticated and delivered hereunder. All Trust Certificates
shall be dated the date of their authentication.
SECTION 3.4 Registration of Transfer and Exchange of Trust
----------------------------------------------
Certificates. The Certificate Registrar shall keep or
- ------------
cause to be kept, at the office or agency maintained
pursuant to Section 3.8, a Certificate Register in which, subject to such
-----------
reasonable regulations as it may prescribe, the Owner
Trustee shall provide for the registration of Trust Certificates and of
transfers and exchanges of Trust Certificates as herein provided. The
Administrator shall be the initial Certificate Registrar.
Upon surrender for registration of transfer of any Trust Certificate at
the office or agency maintained pursuant to Section 3.8, the Owner Trustee
-----------
shall execute, authenticate and deliver (or shall cause
the Administrator as its authenticating agent to authenticate
and deliver), in the name of the designated transferee or
transferees, one or more new Trust Certificates in authorized
denominations of a like aggregate amount dated the date of
authentication by the Owner Trustee or any authenticating agent.
At the option of an Owner, Trust Certificates may be exchanged for
other Trust Certificates of authorized denominations of a like
aggregate amount upon surrender of the Trust Certificates to be exchanged
at the office or agency maintained pursuant to Section 3.8.
-----------
Every Trust Certificate presented or surrendered for registration of
transfer or exchange shall be accompanied by a written instrument of transfer
in form satisfactory to the Owner Trustee and the Certificate Registrar duly
executed by the Owner or his attorney duly authorized in writing. In
addition, (i) each Residual Interest Instrument presented or surrendered for
registration of transfer and exchange must be accompanied by a letter from
the Prospective Owner certifying as to the representations set forth in
Section 3.14(a) and (b); and (ii) each Certificate presented or surrendered
- -----------------------
for registration of transfer and exchange must be accompanied by a letter
from the Prospective Owner certifying as to the representations set forth in
Section 11.12. Each Trust Certificate surrendered for registration of
transfer or exchange shall be canceled and disposed of by the Owner Trustee
in accordance with its customary practice.
No service charge shall be made for any registration of transfer or
exchange of Trust Certificates, but the Owner Trustee or the Certificate
Registrar may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer or
exchange of Trust Certificates.
The preceding provisions of this Section notwithstanding, the Owner
Trustee shall not make and the Certificate Registrar shall not register
transfer or exchanges of Trust Certificates for a period of 15 days preceding
the due date for any payment with respect to the Trust Certificates.
SECTION 3.5 Mutilated, Destroyed, Lost or Stolen Trust Certificates.
-------------------------------------------------------
If (a) any mutilated Trust Certificate shall be surrendered
to the Certificate Registrar, or if the Certificate Registrar
shall receive evidence to its satisfaction of the destruction, loss or theft
of any Trust Certificate and (b) there shall be delivered to the Certificate
Registrar and the Owner Trustee such security or indemnity as may be required
by them to save each of them harmless, then in the absence of notice that
such Trust Certificate shall have been acquired by a bona fide purchaser, the
Owner Trustee on behalf of the Trust shall execute and the Owner Trustee, or
the Administrator as the Owner Trustee's authenticating agent, shall
authenticate and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Trust Certificate, a new Trust Certificate of like
tenor and denomination. In connection with the issuance of any new Trust
Certificate under this Section, the Owner Trustee or the Certificate
Registrar may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in connection therewith. Any
duplicate Trust Certificate issued pursuant to this Section shall constitute
conclusive evidence of ownership in the Trust, as if originally issued,
whether or not the lost, stolen or destroyed Trust Certificate shall be found
at any time.
SECTION 3.6 Persons Deemed Owners. Prior to due presentation of a
---------------------
Trust Certificate for registration of transfer, the Owner Trustee or the
Certificate Registrar may treat the Person in whose name any Trust
Certificate shall be registered in the Certificate Register
as the owner of such Trust Certificate for the purpose of receiving
distributions pursuant to Section 5.2 and for
-----------
all other purposes whatsoever, and neither the Owner Trustee
nor the Certificate Registrar shall be bound by any notice
to the contrary.
SECTION 3.7 Access to List of Owners' Names and Addresses.
--------------------------------------------
The Owner Trustee shall furnish or cause to be furnished to the Servicer,
the Depositor and the Indenture Trustee, within 15 days after receipt by
the Owner Trustee of a request therefor from the Servicer, the Depositor
or the Indenture Trustee in writing, a list, in such form as the Servicer,
the Depositor or the Indenture Trustee may reasonably require, of the
names and addresses of the Owners as of the most recent Record Date.
If three or more Holders of Certificates or any Holder(s) of
Certificates evidencing not less than 25% of the Class Principal
Balance of the Certificates apply in writing to the
Owner 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 such
application is accompanied by a copy of the communication that such
applicants propose to transmit, then the Owner Trustee shall, within
five Business Days after the receipt of such application, afford
such applicants access during normal business hours to the current list of
Certificateholders. Each Owner, by receiving and holding a Trust
Certificate, shall be deemed to have agreed not to hold any of the
Depositor, the Company, the Certificate Registrar or the Owner
Trustee accountable by reason of the disclosure of its name and address,
regardless of the source from which such information was derived.
SECTION 3.8 Maintenance of Office or Agency. The Owner Trustee
-------------------------------
shall maintain an office or offices or agency or agencies where
Trust Certificates may be surrendered for registration of transfer
or exchange and where notices and demands to or upon the Owner
Trustee in respect of the Trust Certificates and the Basic Documents may be
served. The Owner Trustee initially designates the Administrator's office
in St. Paul, Minnesota as its principal corporate trust office for such
purposes. The Owner Trustee shall give prompt written notice to the
Company and to the Certificateholders of any change in the location of the
Certificate Register or any such office or agency.
SECTION 3.9 Appointment of Paying Agent. The Owner Trustee hereby
---------------------------
appoints the Co-Owner Trustee as Paying Agent under this Agreement.
The Paying Agent shall make distributions to Certificateholders and
Residual Interestholders from the Certificate Distribution Account
pursuant to Section 5.2 hereof and Section 5.01(e) of the Sale and Servicing
-----------
Agreement and shall report the amounts of such distributions
to the Owner Trustee. The Paying Agent shall have the revocable
power to withdraw funds from the Certificate Distribution Account
for the purpose of making the distributions referred to above.
In the event that the Co-Owner Trustee shall no longer be the Paying
Agent hereunder, the Owner Trustee shall appoint a successor to act as
Paying Agent (which shall be a bank or trust company). The Owner
Trustee shall cause such successor Paying Agent or any additional
Paying Agent appointed by the Owner Trustee to execute and deliver
to the Owner Trustee an instrument in which such successor Paying
Agent or additional Paying Agent shall agree with the Owner Trustee
that as Paying Agent, such successor Paying Agent or additional Paying
Agent will hold all sums, if any, held by it for
payment to the Owners in trust for the benefit of the
Certificateholders and Residual Interestholders entitled thereto until
such sums shall be paid to such Owners. The Paying Agent shall
return all unclaimed funds to the Owner Trustee, and upon removal of a
Paying Agent, such Paying Agent shall also return all funds in its
possession to the Owner Trustee. The provisions of
Sections 7.1, 7.3, 7.4 and 8.1 shall apply to the Co-Owner Trustee also
- ------------------------------
in its role as Paying Agent, for so long as the Co-Owner Trustee
shall act as Paying Agent and, to the extent applicable, to any other
paying agent appointed hereunder. Any reference in this Agreement
to the Paying Agent shall include any co-paying agent unless the
context requires otherwise. Notwithstanding anything herein
to the contrary, the Co-Owner Trustee and the Paying Agent
shall be the same entity as the Indenture Trustee under the
Indenture and the Sale and Servicing Agreement. In such event,
the Co-Owner Trustee and the Paying Agent shall resign and the
Owner Trustee shall assume the duties and obligations of the Co-Owner
Trustee and the Paying Agent hereunder and under the Sale and Servicing
Agreement.
SECTION 3.10 (Reserved).
----------
SECTION 3.11 Book-Entry Certificates. The Certificates, upon
-----------------------
original issuance, will be issued in the form of a typewritten
Certificate or Certificates representing Book-Entry Certificates, to
be delivered to The Depository Trust Company, the initial Clearing Agency,
by, or on behalf of, the Trust; provided, however, that one Definitive
-------- -------
Certificate (the Residual Interest Instrument) may be issued to the
Company. Such Certificate or Certificates shall initially be registered
on the Certificate Register in the name of Cede & Co., the nominee of the
initial Clearing Agency, and no Certificate Owner will receive a
definitive Certificate representing such Certificate Owners' interest in
such Certificate, except as provided in this Section 3.11 and in Section
------------
SECTION 3.13.
- ------- -----
Unless and until Definitive Certificates, fully registered,
have been issued to Certificate Owners pursuant to Section 3.13:
------------
(i) the provisions of this Section shall be in full force
and effect;
(ii) the Certificate Registrar and the Owner Trustee shall
be entitled to deal with the Clearing Agency for all purposes of
this Agreement (including the payment of principal of and interest
on the Certificates and the giving of instructions or directions
hereunder) as the sole Holder of such Certificates and shall have no
obligation to the related Certificate Owners;
(iii) to the extent that the provisions of this
Section conflict with any other provisions of this Agreement, the
provisions of this Section shall control;
(iv) the rights of Certificate Owners shall be exercised
only through the Clearing Agency and shall be limited to those
established by law and agreements between such Certificate Owners
and the Clearing Agency and/or the Clearing Agency Participants.
Pursuant to the Certificate Depository Agreement, unless and
until Definitive Certificates are issued pursuant to Section 3.13,
------------
the initial Clearing Agency will make book-entry transfers among the
Clearing Agency participants and receive and transmit payments of
principal of and interest on the Certificates to such Clearing
Agency Participants; and
(v) whenever this Agreement requires or permits actions to
be taken based upon instructions or directions of Holders of
Certificates evidencing a specified percentage of the Class Principal
Balance of the Certificates, the Clearing Agency shall be deemed to
represent such percentage only to the extent that it has received
instructions to such effect from Certificate Owners and/or Clearing
Agency Participants owning or representing, respectively, such required
percentage of the beneficial interest in the Certificates and
has delivered such instructions to the Owner Trustee.
SECTION 3.12 Notices to Clearing Agency. Whenever a notice or other
--------------------------
communication to the Certificateholders is required under this
Agreement, unless and until Definitive Certificates shall have been -
issued to Certificate Owners pursuant to Section 3.13, the Owner Trustee
------------
shall give all such notices and communications specified herein to
be given to Certificateholders to the Clearing Agency, and shall have no
obligations to the Certificate Owners.
SECTION 3.13 Definitive Certificates. If (i) the Administrator
-----------------------
advises the Owner Trustee in writing that the Clearing Agency is no
longer willing or able to properly discharge its responsibilities
with respect to the Certificates, and the Administrator is unable to
locate a qualified successor, (ii) the Administrator at its option advises
the Owner Trustee in writing that it elects to terminate the book- entry
system through the Clearing Agency or (iii) after the occurrence of an
Event of Default, Certificate Owners representing beneficial
interests aggregating at least 50% of the Class Principal Balance of the
Certificates advise the Clearing Agency in writing that the continuation of
a book-entry system through the Clearing Agency is no longer in the best
interest of the Certificate Owners, then the Clearing Agency shall notify
all Certificate Owners and the Owner Trustee of the occurrence of any such
event and of the availability of the Definitive Certificates to
Certificate Owners requesting the same. Upon surrender to the Owner Trustee
of the typewritten Certificate or Certificates representing the Book-Entry
Certificates by the Clearing Agency, accompanied by registration
instructions the Owner Trustee shall execute and authenticate the
Definitive Certificates in accordance with the instructions of the
Clearing Agency. Neither the Certificate Registrar nor the Owner Trustee
shall be liable for any delay in delivery of such instructions and
may conclusively rely on, and shall be protected in relying on, such
instructions. Upon the issuance of Definitive Certificates, the Owner
Trustee shall recognize the Holders of the Definitive Certificates as
Certificateholders. The Definitive Certificates shall be
printed, lithographed or engraved or SECTION 3.61 may be produced
in any other manner as is reasonably acceptable to the Owner Trustee, as
evidenced by its execution thereof.
SECTION 3.14 Restrictions on Transfer of Residual Interest Instruments.
---------------------------------------------------------
(a) Each Prospective Owner and any subsequent transferee of
a Residual Interest Instrument, other than the Company, shall represent and
warrant, in writing, to the Owner Trustee and the Certificate Registrar and
any of their respective successors that:
(i) Such Person is (A) a "qualified institutional buyer"
as defined in Rule 144A under the Securities Act of 1933, as
amended (the "Securities Act"), and is aware that the seller of
--------------
the Residual Interest Instrument may be relying on the
exemption from the registration requirements of the Securities
Act provided by Rule 144A and is acquiring such Residual
Interest Instrument for its own account or for the account of one or
more qualified institutional buyers for whom it is authorized to act,
or (B) a Person involved in the organization or operation of the Trust or an
affiliate of such Person within the meaning of Rule 3a-7 of the Investment
Company Act of 1940, as amended (including, but not limited to, the
Transferor or the Company).
(ii) Such Person understands that the Residual
Interest Instruments have not been and will not be registered
under the Securities Act and may be offered, sold, pledged or
otherwise transferred only to a person whom the seller reasonably
believes is (A) a qualified institutional buyer or (B) a Person
involved in the organization or operation of the Trust or an
affiliate of such Person, in a transaction meeting the
requirements of Rule 144A under the Securities Act and in
accordance with any applicable securities laws of any state of
the United States.
(iii) Such Person understands that the Residual
Interest Instruments bear a legend to the following effect:
"THE RESIDUAL INTEREST IN THE TRUST REPRESENTED BY THIS
RESIDUAL INTEREST INSTRUMENT HAS NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), OR ANY STATE SECURITIES LAWS. THIS RESIDUAL
INTEREST MAY BE DIRECTLY OR INDIRECTLY OFFERED OR SOLD OR
OTHERWISE DISPOSED OF (INCLUDING PLEDGED) BY THE HOLDER
HEREOF ONLY TO (I) A "QUALIFIED INSTITUTIONAL BUYER" AS
DEFINED IN RULE 144A UNDER THE ACT, IN A TRANSACTION THAT
IS REGISTERED UNDER THE ACT AND APPLICABLE STATE
SECURITIES LAWS OR THAT IS EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF THE ACT PURSUANT TO RULE 144A OR (II) A
PERSON INVOLVED IN THE ORGANIZATION OR OPERATION OF THE
TRUST OR AN AFFILIATE OF SUCH A PERSON WITHIN THE MEANING
OF RULE 3a-7 OF THE INVESTMENT COMPANY ACT OF 1940, AS
AMENDED (INCLUDING, BUT NOT LIMITED TO, CITYSCAPE CORP.)
IN A TRANSACTION THAT IS REGISTERED UNDER THE ACT AND
APPLICABLE STATE SECURITIES LAWS OR THAT IS EXEMPT FROM
THE REGISTRATION REQUIREMENTS OF THE ACT AND SUCH LAWS.
NO PERSON IS OBLIGATED TO REGISTER THIS RESIDUAL INTEREST
UNDER THE ACT OR ANY STATE SECURITIES LAWS."
(iv) Such Person shall comply with the provisions
of Section 3.14(b), as applicable, relating to the ERISA restrictions
---------------
with respect to the acceptance or acquisition of such Residual
Interest Instrument.
(b) Each Prospective Owner of any Trust Certificate, other
than the Company, shall represent and warrant, in writing, to the
Owner Trustee and the Certificate Registrar and any of their
respective successors that the Prospective Owner is not (A) an
"employee benefit plan" within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
-----
or (B) a "plan" within the meaning of Section 4975(e)(1) of
the Code (any such plan or employee benefit plan, a "Plan")
____
or (C) any entity, including an insurance company separate
account or general account, whose underlying assets include
plan assets by reason of a plan's investment in the
entity and is not directly or indirectly purchasing such Trust
Certificate on behalf of, as investment manager of, as named
fiduciary of, as trustee of, or with assets of a Plan.
(c) By its acceptance of a Residual Interest Instrument,
each Prospective Owner thereof agrees and acknowledges that no legal or
beneficial interest in all or any portion of the Residual Interest
Instruments may be transferred directly or indirectly to an individual,
corporation, partnership or other person unless such transferee is not a
Non-U.S. Person (any such person being referred to herein as a
"Non-permitted Foreign Holder"), and any such purported transfer shall be
void and have no effect.
(d) (Reserved)
(e) The Residual Interest Instruments shall bear an additional
legend referring to the foregoing restrictions contained in paragraphs (c)
and (d) above.
(f) The Prospective Owner of any Residual Interest Instrument
shall obtain an opinion of counsel to the effect that, as a matter of
federal income tax law, such Prospective Owner is permitted to accept the
transfer of a Residual Interest Instrument.
(g) Each Prospective Owner of any Trust Certificate shall execute
and deliver to the Owner Trustee and the Certificate Registrar a
transfer certificate substantially in the form attached hereto as Exhibit E.
ARTICLE IV
ACTIONS BY OWNER TRUSTEE
SECTION 4.1 Prior Notice to Owners with Respect to Certain Matters.
------------------------------------------------------
With respect to the following matters, the Owner Trustee shall
not take action, and the Owners shall not direct the Owner Trustee to
take any action, unless at least 30 days before the taking of such action,
the Owner Trustee shall have notified the Owners in writing of the proposed
action and the Owners shall not have notified the Owner Trustee in writing
prior to the 30th day after such notice is given that such Owners have
withheld consent or the Owners have provided alternative direction:
(a) the initiation of any claim or lawsuit by the Trust (except
claims or lawsuits brought in connection with the collection of the Home
Loans) and the compromise of any action, claim or lawsuit brought by or
against the Trust (except with respect to the aforementioned claims or
lawsuits for collection of the Home Loans);
(b) the election by the Trust to file an amendment to the
Certificate of Trust (unless such amendment is required to be filed under
the Business Trust Statute);
(c) the amendment or other change to this Agreement or any Basic
Document in circumstances where the consent of any Noteholder is required;
(d) the amendment or other change to this Agreement or any Basic
Document in circumstances where the consent of any Noteholder is not
required and such amendment materially adversely affects the interest of the
Owners;
(e) the appointment pursuant to the Indenture of a successor Note
Registrar, Paying Agent or Indenture Trustee or pursuant to this Agreement
of a successor Certificate Registrar, or the consent to the assignment by
the Note Registrar, Paying Agent or Indenture Trustee or Certificate
Registrar of its obligations under the Indenture or this Agreement, as
applicable;
(f) the consent to the calling or waiver of any default of any
Basic Document;
(g) the consent to the assignment by the Indenture Trustee or
Servicer of their respective obligations under any Basic Document;
(h) except as provided in Article IX hereof, dissolve, terminate
or liquidate the Trust in whole or in part;
(i) merge or consolidate the Trust with or into any other entity,
or convey or transfer all or substantially all of the Trust's assets to any
other entity;
(j) cause the Trust to incur, assume or guaranty any indebtedness
other than as set forth in this Agreement;
(k) do any act that conflicts with any other Basic Document;
(l) do any act which would make it impossible to carry on the
ordinary business of the Trust;
(m) confess a judgment against the Trust;
(n) possess Trust assets, or assign the Trust's right to
property, for other than a Trust purpose;
(o) cause the Trust to lend any funds to any entity; or
(p) change the Trust's purpose and powers from those set forth in
this Trust Agreement.
In addition, the Trust shall not commingle its assets with those of any
other entity. The Trust shall maintain its financial and accounting books
and records separate from those of any other entity. Except as expressly
set forth herein, the Trust shall pay its indebtedness, operating expenses
from its own funds, and the Trust shall not pay the indebtedness, operating
expenses and liabilities of any other entity. The Trust shall maintain
appropriate minutes or other records of all appropriate actions and shall
maintain its office separate from the offices of the Company, the Depositor,
and any of their respective affiliates.
The Owner Trustee shall not have the power, except upon the direction
of the Owners, and to the extent otherwise consistent with the Basic
Documents, to (i) remove or replace the Servicer or the Indenture Trustee,
(ii) institute proceedings to have the Trust declared or adjudicated a
bankrupt or insolvent, (iii) consent to the institution of bankruptcy or
insolvency proceedings against the Trust, (iv) file a petition or consent to
a petition seeking reorganization or relief on behalf of the Trust under any
applicable federal or state law relating to bankruptcy, (v) consent to the
appointment of a receiver, liquidator, assignee, trustee, sequestrator (or
any similar official) of the Trust or a substantial portion of the property
of the Trust, (vi) make any assignment for the benefit of the Trust's
creditors, (vii) cause the Trust to admit in writing its inability to pay
its debts generally as they become due, (viii) take any action, or cause the
Trust to take any action, in furtherance of any of the foregoing (any of the
above, a "Bankruptcy Action"). So long as the Indenture remains in effect,
no Certificateholder shall have the power to take, and shall not take, any
Bankruptcy Action with respect to the Trust or the Company or direct the
Owner Trustee to take any Bankruptcy Action with respect to the Trust or the
Company.
SECTION 4.2 Action by Owners with Respect to Certain Matters. The
-------------------------------------------------
Owner Trustee shall not have the power, except upon the direction of the
Owners, to (a) remove the Administrator under the Administration Agreement
pursuant to Section 8 thereof, (b) appoint a successor Administrator pursuant
---------
to Section 8 of the Administration Agreement, (c) remove the Servicer under
---------
the Sale and Servicing Agreement pursuant to Section 10.01 thereof or (d)
-------------
sell the Home Loans after the termination of the Indenture. The Owner
Trustee shall take the actions referred to in the preceding sentence only
upon written instructions signed by the Owners.
SECTION 4.3 Action by Owners with Respect to Bankruptcy. The Owner
-------------------------------------------
Trustee shall not have the power to commence a voluntary proceeding in
bankruptcy relating to the Trust without the unanimous prior
approval of all Owners and the delivery to the Owner Trustee by each such
Owner of a certificate certifying that such Owner reasonably believes that
the Trust is insolvent.
SECTION 4.4 Restrictions on Owners' Power. The Owners shall not
-----------------------------
direct the Owner Trustee to take or refrain from taking any action if such
action or inaction would be contrary to any obligation of the Trust or the
Owner Trustee under this Agreement or any of the Basic Documents or would be
contrary to Section 2.3 nor shall the Owner Trustee be obligated to
-----------
follow any such direction, if given.
SECTION 4.5 Majority Control. Except as expressly provided herein,
----------------
any action that may be taken by the Owners under this Agreement
may be taken by Principal Balance of the Certificates and (ii) the
Majority Residual Interestholders. Except as expressly provided
herein, any written notice of the Owners delivered pursuant to this
Agreement shall be effective if signed by Holders of Certificates
evidencing more than (i) 50% of the Class Principal Balance of
the Certificates and (ii) the Majority Residual Interestholders
at the time of the delivery of such notice.
ARTICLE V
APPLICATION OF TRUST FUNDS; CERTAIN DUTIES
SECTION 5.1 Establishment of Trust Account. The Owner Trustee shall
------------------------------
cause the Servicer, for the benefit of the Owners, to establish and maintain
with First Bank National Association for the benefit of the Owner Trustee or
Co-Owner Trustee one or more Eligible Accounts which while the Co-Owner
Trustee holds such Trust Account shall be entitled "Certificate Distribution
Account, First Bank National Association, as Indenture Trustee and Co-Owner
Trustee, in trust for the Cityscape Home Loan Owner Trust, Series 1997-1".
Funds shall be deposited in the Certificate Distribution Account as
required by the Sale and Servicing Agreement.
All of the right, title and interest of the Co-Owner Trustee or Owner
Trustee in all funds on deposit from time to time in the Certificate
Distribution Account and in all proceeds thereof shall be held for the
benefit of the Owners and such other persons entitled to distributions
therefrom. Except as otherwise expressly provided herein or in the Sale and
Servicing Agreement, the Certificate Distribution Account shall be under the
sole dominion and control of the Owner Trustee or Co-Owner Trustee for the
benefit of the Owners and the Servicer.
In addition to the foregoing, the Certificate Distribution Account is a
Trust Account under the Sale and Servicing Agreement and constitutes part of
the Trust Estate pledged by the Trust to the Indenture Trustee under the
Indenture. The Certificate Distribution Account shall be subject to and
established and maintained in accordance with the applicable provisions of
the Sale and Servicing Agreement and the Indenture, including, without
limitation, the provisions of Section 5.02 of the Sale and Servicing
Agreement regarding distributions from the Certificate Distribution Account.
The Company agrees to direct and shall have the sole authority to
direct the Owner Trustee or Co-Owner Trustee, or their successor in
interest, as to the Permitted Investments in which the funds on deposit in
the Trust Accounts (as such term is defined in the Sale and Servicing
Agreement) may be invested.
SECTION 5.2 Application Of Trust Funds.
--------------------------
(a) On each Distribution Date, the Owner Trustee or Co-Owner
Trustee shall direct the Paying Agent to distribute to the
Certificateholders, the Servicer and the Residual Interestholders from
amounts on deposit in the Certificate Distribution Account the distributions
as provided in Section 5.01 of the Sale and Servicing Agreement with respect
------------
to such Distribution Date.
(b) On each Distribution Date, the Owner Trustee shall cause the
Paying Agent to send to DTC and each Residual Interestholder the statement
provided to the Owner Trustee by the Servicer pursuant to Section 6.01 of
------------
the Sale and Servicing Agreement with respect to such Distribution Date.
(c) In the event that any withholding tax is imposed on the
Trust's payment (or allocations of income) to an Owner, such tax shall
reduce the amount otherwise distributable to the Owner in accordance with
this Section. The Owner Trustee is hereby authorized and directed to retain
from amounts otherwise distributable to the Owners sufficient funds for the
payment of any tax that is legally owed by the Trust (but such authorization
shall not prevent the Owner Trustee from contesting any such tax in
appropriate proceedings, and withholding payment of such tax, if permitted
by law, pending the outcome of such proceedings). The amount of any
withholding tax imposed with respect to an Owner shall be treated as cash
distributed to such Owner at the time it is withheld by the Trust and
remitted to the appropriate taxing authority. If there is a possibility
that withholding tax is payable with respect to a distribution (such as a
distribution to a non- U.S. Owner), the Owner Trustee may in its sole
discretion withhold such amounts in accordance with this paragraph (c). In
the event that an Owner wishes to apply for a refund of any such withholding
tax, the Owner Trustee shall reasonably cooperate with such owner in making
such claim so long as such Owner agrees to reimburse the Owner Trustee for
any out-of-pocket expenses incurred.
SECTION 5.3 Method of Payment. Subject to Section 3.11,
----------------- ------------
distributions required to be made to Owners on any Distribution Date shall
be made to each Owner of record on the preceding Record Date either by wire
transfer, in immediately available funds, to the account of such Holder at a
bank or other entity having appropriate facilities therefor, if such Owner
shall have provided to the Certificate Registrar appropriate written
instructions at least five Business Days prior to such Distribution Date and
such Holder's Certificates in the aggregate evidence a denomination of not
less than $1,000,000; or, if not, by check mailed to such Owner at the
address of such holder appearing in the Certificate Register; provided,
however, that the initial Residual Interestholder shall receive all payments
by wire transfer, in immediately available funds.
SECTION 5.4 Segregation of Moneys; No Interest. Subject to Sections
----------------------------------
4.1 and 5.2, moneys received by the Owner Trustee hereunder and deposited
____________
hereunder and deposited into the Certificate Distribution Account will be
segregated except to the extent required otherwise by law or the Sale and
Servicing Agreement and shall be invested in Permitted Investments at the
direction of the Company. The Owner Trustee shall not be liable for
payment of any interest in respect of such moneys.
SECTION 5.5 Accounting and Reports to the Certificateholder, Owners,
--------------------------------------------------------
the Internal Revenue Service and Others.
- -------------------------------------
The Owner Trustee shall (a) maintain (or cause to be maintained)
the books of the Trust on a calendar year basis on the accrual method of
accounting, and such books shall be maintained separate from those of any
other entity and reflect the separate interest of the Trust, (b) deliver to
each Owner, as may be required by the Code and applicable Treasury
Regulations, such information as may be required (including Schedule K-1) to
enable each Owner to prepare its federal and state income tax returns, (c)
file such tax return relating to the Trust (including a partnership
information return, IRS Form 1065), and make such elections as may from time
to time be required or appropriate under any applicable state or federal
statute or rule or regulation thereunder so as to maintain the Trust's
characterization as a partnership for federal income tax purposes, (d) cause
such tax returns to be signed in the manner required by law and (e) collect
or cause to be collected any withholding tax as described in and in
accordance with Section 5.2(c) with respect to income or distributions to
--------------
Owners. The Owner Trustee shall elect under Section 1278 of the Code
to include in income currently any market discount that accrues
with respect to the Home Loans. The Owner Trustee shall not make the
election provided under Section 754 of the Code.
SECTION 5.6 Signature on Returns; Tax Matters Partner.
-----------------------------------------
(a) The Owner Trustee shall sign on behalf of the Trust the tax
returns of the Trust, unless applicable law requires an Owner to sign such
documents, in which case such documents shall be signed by the Company.
(b) The Administrator shall be designated the "tax matters
partner" of the Trust pursuant to Section 6231(a)(7)(A) of the Code and
applicable Treasury Regulations.
ARTICLE VI
AUTHORITY AND DUTIES OF OWNER TRUSTEE
SECTION 6.1 General Authority. The Owner Trustee is authorized and
-----------------
directed to execute and deliver or cause to be executed and delivered the
Notes, the Trust Certificates and the Basic Documents to which the Trust is
to be a party and each certificate or other document attached as an exhibit
to or contemplated by the Basic Documents to which the Trust is to be a
party and any amendment or other agreement or instrument described in
Article III, in each case, in such form as the Company shall approve, as
evidenced conclusively by the Owner Trustee's execution thereof, and, on
behalf of the Trust, to direct the Indenture Trustee to authenticate and
deliver Classes of Securities in the following aggregate principal amounts:
Class A-1 Notes, $36,650,000; Class A-2 Notes, $10,000,000; Class A- 3
Notes, $15,350,000; Class A-4 Notes, $20,714,000; Class M-1 Notes,
$17,703,000; and Class M-2 Notes, $11,609,000. The administrator on behalf
of the Owner Trustee shall authenticate and deliver the Class B
Certificates. In addition to the foregoing, the Owner Trustee is
authorized, but shall not be obligated, to take all actions required of the
Trust, pursuant to the Basic Documents.
SECTION 6.2 General Duties. It shall be the duty of the Owner
--------------
Trustee:
(a) to discharge (or cause to be discharged) all of its
responsibilities pursuant to the terms of this Agreement and the Basic
Documents to which the Trust is a party and to administer the Trust in the
interest of the Owners, subject to the Basic Documents and in accordance
with the provisions of this Agreement. Notwithstanding the foregoing, the
Owner Trustee shall be deemed to have discharged its duties and
responsibilities hereunder and under the Basic Documents to the extent the
Administrator or the Co-Owner Trustee has agreed in the Administration
Agreement or this Agreement, respectively, to perform any act or to discharge
any duty of the Owner Trustee or the Trust hereunder or under any
Basic Document, and the Owner Trustee shall not be held liable for the
default or failure of the Administrator or the Co-Owner Trustee to carry
out its obligations under the Administration Agreement or this Agreement,
respectively; and
(b) to obtain and preserve, the Issuer's qualification to do
business in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of the Indenture, the
Notes, the Collateral and each other instrument and agreement included in
the Trust Estate.
SECTION 6.3 Action upon Instruction.
-----------------------
(a) Subject to Article IV and in accordance with the terms of the
Basic Documents, the Owners may by written instruction direct the Owner
Trustee in the management of the Trust but only to the extent consistent
with the limited purpose of the Trust. Such direction may be exercised at
any- time by written instruction of the Owners pursuant to Article IV.
(b) The Owner Trustee shall not be required to take any action
hereunder or under any Basic Document if the Owner Trustee shall have
reasonably determined, or shall have been advised by counsel, that such
action is likely to result in liability on the part of the Owner Trustee or
is contrary to the terms hereof or of any Basic Document or is otherwise
contrary to law.
(c) Whenever the Owner Trustee is unable to decide between
alternative courses of action permitted or required by the terms of this
Agreement or under any Basic Document, the Owner Trustee shall promptly give
notice (in such form as shall be appropriate under the circumstances) to the
Owners requesting instruction from the Owners as to the course of action to
be adopted, and to the extent the Owner Trustee acts in good faith in
accordance with any written instruction of the Owners received, the Owner
Trustee shall not be liable on account of such action to any Person. If the
Owner Trustee shall not have received appropriate instruction within 10 days
of such notice (or within such shorter period of time as reasonably may be
specified in such notice or may be necessary under the circumstances) it
may, but shall be under no duty to, take or refrain from taking such action,
not inconsistent with this Agreement or the Basic Documents, as it shall
deem to be in the best interests of the Owners, and shall have no liability
to any Person for such action or inaction.
(d) In the event that the Owner Trustee is unsure as to the
application of any provision of this Agreement or any Basic Document or any
such provision is ambiguous as to its application, or is, or appears to be,
in conflict with any other applicable provision, or in the event that this
Agreement permits any determination by the Owner Trustee or is silent or is
incomplete as to the course of action that the Owner Trustee is required to
take with respect to a particular set of facts, the Owner Trustee may give
notice (in such form as shall be appropriate under the circumstances) to the
Owners requesting instruction and, to the extent that the Owner Trustee acts
or refrains from acting in good faith in accordance with any such
instruction received, the Owner Trustee shall not be liable, on account of
such action or inaction, to any Person. If the Owner Trustee shall not have
received appropriate instruction within 10 days of such notice (or within
such shorter period of time as reasonably may be specified in such notice or
may be necessary under the circumstances) it may, but shall be under no duty
to, take or refrain from taking such action, not inconsistent with this
Agreement or the Basic Documents, as it shall deem to be in the best
interests of the Owners, and shall have no liability to any Person for such
action or inaction.
SECTION 6.4 No Duties Except as Specified in this Agreement, the
----------------------------------------------------
Basic Documents or in Instructions. The Owner Trustee shall not have any
- ----------------------------------
duty or obligation to manage, make any payment with respect to,
register, record, sell, dispose of, or otherwise deal with
the Owner Trust Estate, or to otherwise take or refrain from taking any
action under, or in connection with, any document contemplated hereby to
which the Owner Trustee is a party, except as expressly provided by the
terms of this Agreement, any Basic Document or in any document or written
instruction received by the Owner Trustee pursuant to Section 6.3; and no
-----------
implied duties or obligations shall be read into this Agreement or any
Basic Document against the Owner Trustee. The Owner Trustee shall
have no responsibility for filing any financing or continuation
statement in any public office at any time or to otherwise
perfect or maintain the perfection of any security interest or lien granted
to it hereunder or to prepare or file any Securities and Exchange Commission
filing for the Trust or to record this Agreement or any Basic Document. The
Owner Trustee nevertheless agrees that it will, at its own cost and expense,
promptly take all action as may be necessary to discharge any liens on any
part of the Owner Trust Estate that result from actions by, or claims
against, the Owner Trustee that are not related to the ownership or the
administration of the Owner Trust Estate.
SECTION 6.5 No Action Except Under Specified Documents or
---------------------------------------------
Instructions.
- ------------
The Owner Trustee shall not manage, control, use, sell, dispose
of or otherwise deal with any part of the Owner Trust Estate except (i) in
accordance with the powers granted to and the authority conferred upon the
Owner Trustee pursuant to this Agreement, (ii) in accordance with the Basic
Documents and (iii) in accordance with any document or instruction delivered
to the Owner Trustee pursuant to Section 6.3.
-----------
SECTION 6.6 Restrictions. The Owner Trustee shall not take any
------------
action (a) that is inconsistent with the purposes of the Trust set forth
in Section 2.3
___________
or (b) that, to the actual knowledge of the Owner Trustee, would result in the
Trust's becoming taxable as a corporation for federal income tax purposes.
The Owners shall not direct the Owner Trustee to take action that would
violate the provisions of this Section.
ARTICLE VII
CONCERNING THE OWNER TRUSTEE
SECTION 7.1 Acceptance of Trusts and Duties. The Owner Trustee
-------------------------------
accepts the trusts hereby created and agrees to perform its duties
hereunder with respect to such trusts but only upon the terms of this
Agreement and the Basic Documents. The Owner Trustee also agrees to
disburse all moneys actually received by it constituting part of the Owner
Trust Estate upon the terms of the Basic Documents and this Agreement. The
Owner Trustee shall not be answerable or accountable hereunder or under any
Basic Document under any circumstances, except (i) for its own willful
misconduct or negligence or (ii) in the case of the
inaccuracy of any representation or warranty contained in Section 7.3
-----------
expressly made by the Owner Trustee. In particular, but not by way
of limitation (and subject to the exceptions set forth in the preceding
sentence):
(a) the Owner Trustee shall not be liable for any error of
judgment made by a responsible officer of the Owner Trustee;
(b) the Owner Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in accordance with the
instructions of the Administrator or the Owners;
(c) no provision of this Agreement or any Basic Document shall
require the Owner Trustee to expend or risk funds or otherwise incur any
financial liability in the performance of any of its rights or powers
hereunder or under any Basic Document if the Owner Trustee shall have
reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured or
provided to it;
(d) under no circumstances shall the Owner Trustee be liable for
indebtedness evidenced by or arising under any of the Basic Documents,
including the principal of and interest on the Notes;
(e) the Owner Trustee shall not be responsible for or in respect
of the validity or sufficiency of this Agreement or for the due execution
hereof by the Depositor or the Company or for the form, character,
genuineness, sufficiency, value or validity of any of the Owner Trust Estate
or for or in respect of the validity or sufficiency of the Basic Documents,
other than the certificate of authentication on the Trust Certificates, and
the Owner Trustee shall in no event assume or incur any liability, duty, or
obligation to any Noteholder or to any Owner, other than as expressly
provided for herein and in the Basic Documents;
(f) the Owner Trustee shall not be liable for the default or
misconduct of the Administrator, the Seller, the Company, the Indenture
Trustee or the Servicer under any of the Basic Documents or otherwise and
the Owner Trustee shall have no obligation or liability to perform the
obligations of the Trust under this Agreement or the Basic Documents that
are required to be performed by the Administrator under the Administration
Agreement, the Indenture Trustee under the Indenture or the Servicer under
the Sale and Servicing Agreement; and
(g) the Owner Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Agreement, or to institute,
conduct or defend any litigation under this Agreement or otherwise or in
relation to this Agreement or any Basic Document, at the request, order or
direction of any of the Owners, unless such Owners have offered to the Owner
Trustee security or indemnity satisfactory to it against the costs, expenses
and liabilities that may be incurred by the Owner Trustee therein or
thereby. The right of the Owner Trustee to perform any discretionary act
enumerated in this Agreement or in any Basic Document shall not be construed
as a duty, and the Owner Trustee shall not be answerable for other than its
gross negligence or willful misconduct in the performance of any such act
provided, that the Owner Trustee shall be liable for its negligence or
willful misconduct in the event that it assumes the duties and obligations
of the Co-Owner Trustee under the Sale and Servicing Agreement pursuant to
Section 10.5 hereof.
- ------------
SECTION 7.2 Furnishing of Documents. The Owner Trustee shall
-----------------------
furnish (a) to the Owners promptly upon receipt of a written request
therefor, duplicates or copies of all reports, notices, requests, demands,
certificates, financial statements and any other instruments furnished to
the Owner Trustee under the Basic Documents and (b) to Noteholders promptly
upon written request therefor, copies of the Sale and Servicing Agreement,
the Administration Agreement and the Trust Agreement.
SECTION 7.3 Representations and Warranties.
------------------------------
(a) The Owner Trustee hereby represents and warrants to the
Depositor and the Company, for the benefit of the Owners, that:
(i) It is a banking corporation duly organized and validly
existing in good standing under the laws of the State of Delaware. It
has all requisite corporate power and authority to execute, deliver and
perform its obligations under this Agreement.
(ii) It has taken all corporate action necessary to authorize
the execution and delivery by it of this Agreement, and this Agreement
will be executed and delivered by one of its officers who is duly
authorized to execute and deliver this Agreement on its behalf.
(iii) Neither the execution nor the delivery by it of
this Agreement nor the consummation by it of the transactions
contemplated hereby nor compliance by it with any of the terms or
provisions hereof will contravene any federal or Delaware law,
governmental rule or regulation governing the banking or trust powers
of the Owner Trustee or any judgment or order binding on it, or
constitute any default under its charter documents or by-laws or any
indenture, mortgage, contract, agreement or instrument to which it is a
party or by which any of its properties may be bound.
(b) The Co-Owner Trustee hereby represents and warrants to the
Depositor and the Company that:
(i) It is a national banking association duly organized and
validly existing in good standing under the laws of the United States.
It has all requisite corporate power and authority to execute, deliver
and perform its obligations under this Agreement.
(ii) It has taken all corporate action necessary to authorize
the execution and delivery by it of this Agreement, and this Agreement
will be executed and delivered by one of its officers who is duly
authorized to execute and deliver this Agreement on its behalf.
(iii) Neither the execution nor the delivery by it of
this Agreement nor the consummation by it of the transactions
contemplated hereby nor compliance by it with any of the terms or
provisions hereof will contravene any federal or Minnesota law,
governmental rule or regulation governing the banking or trust powers
of the Co-Owner Trustee or any judgment or order binding on it, or
constitute any default under its charter documents or by-laws or any
indenture, mortgage, contract, agreement or instrument to which it is a
party or by which any of its properties may be bound.
SECTION 7.4 Reliance; Advice of Counsel.
---------------------------
(a) The Owner Trustee shall incur no liability to anyone in
acting upon any signature, instrument, notice, resolution, request, consent,
order, certificate, report, opinion, bond, or other document or paper
believed by it to be genuine and believed by it to be signed by the proper
party or parties. The Owner Trustee may accept a certified copy of a
resolution of the board of directors or other governing body of any
corporate party as conclusive evidence that such resolution has been duly
adopted by such body and that the same is in full force and effect. As to
any fact or matter the method of the determination of which is not
specifically prescribed herein, the Owner Trustee may for all purposes
hereof rely on a certificate, signed by the president or any vice president
or by the treasurer or other authorized officers of the relevant party, as
to such fact or matter and such certificate shall constitute full protection
to the Owner Trustee for any action taken or omitted to be taken by it in
good faith in reliance thereon.
(b) In the exercise or administration of the trusts hereunder and
in the performance of its duties and obligations under this Agreement or the
Basic Documents, the Owner Trustee (i) may act directly or through its
agents or attorneys pursuant to agreements entered into with any of them,
and the Owner Trustee shall not be liable for the conduct or misconduct of
such agents or attorneys if such agents or attorneys shall have been
selected by the Owner Trustee with reasonable care, and (ii) may consult
with counsel, accountants and other skilled persons to be selected with
reasonable care and employed by it. The Owner Trustee shall not be liable
for anything done, suffered or omitted in good faith by it in accordance
with the written opinion or advice of any such counsel, accountants or other
such persons and not contrary to this Agreement or any Basic Document.
SECTION 7.5 Not Acting in Individual Capacity. Except as provided
-----------------------------------
in this Article VII, in accepting the trusts hereby created Wilmington Trust
Company acts solely as Owner Trustee hereunder and not in its individual
capacity and all Persons having any claim against the Owner Trustee by
reason of the transactions contemplated by this Agreement or any
Basic Document shall look only to the Owner Trust Estate for payment or
satisfaction thereof.
SECTION 7.6 Owner Trustee Not Liable for Trust Certificates or Home
-------------------------------------------------------
Loans. The recitals contained herein and in the Trust Certificates
-----
(other than the signature and countersignature of the Owner Trustee on the
Trust Certificates) shall be taken as the statements of the Depositor and
the Company, and the Owner Trustee assumes no responsibility for the
correctness thereof. The Owner Trustee makes no representations as to the
validity or sufficiency of this Agreement, of any Basic Document or of the
Trust Certificates (other than the signature and countersignature of the
Owner Trustee on the Trust Certificates and as specified in Section 7.3) or
-----------
the Notes, or of any Home Loans or related documents. The Owner Trustee shall
at no time have any responsibility or liability for or with respect to the
legality, validity and enforceability of any Home Loan, or the perfection
and priority of any security interest created by any Home Loan or the
maintenance of any such perfection and priority, or for or with respect to
the sufficiency of the Owner Trust Estate or its ability to generate the
payments to be distributed to Owners under this Agreement or the Noteholders
under the Indenture, including, without limitation: the existence, condition
and ownership of any Mortgaged Property; the existence and enforceability of
any insurance thereon; the existence and contents of any Home Loan on any
computer or other record thereof; the validity of the assignment of any Home
Loan to the Trust or of any intervening assignment; the completeness of any
Home Loan; the performance or enforcement of any Home Loan; the compliance
by the Depositor, the Company or the Servicer with any warranty or
representation made under any Basic Document or in any related document or
the accuracy of any such warranty or representation or any action of the
Administrator, the Indenture Trustee or the Servicer or any Subservicer
taken in the name of the Owner Trustee.
SECTION 7.7 Owner Trustee May Own Trust Certificates and Notes.
--------------------------------------------------
The Owner Trustee in its individual or any other capacity may become the
owner or pledgee of Trust Certificates or Notes and may deal with the
Depositor, the Company, the Administrator, the Indenture Trustee and the
Servicer in banking transactions with the same rights as it would have if it
were not Owner Trustee.
SECTION 7.8 Licenses. The Owner Trustee shall cause the Trust to
--------
use its best efforts to obtain and maintain the effectiveness of any
licenses required in connection with this Agreement and the Basic
Documents and the transactions contemplated hereby and thereby
until such time as the Trust shall terminate in accordance with the terms
hereof.
SECTION 7.9 Rights of Co-Owner Trustee. The Co-Owner Trustee shall
--------------------------
be entitled to all the rights and benefits, but none of the
liabilities, conferred upon the Owner Trustee in Article VII of this
Agreement.
ARTICLE VIII
COMPENSATION OF OWNER TRUSTEE
SECTION 8.1 Owner Trustee's Fees and Expenses. The Owner Trustee
---------------------------------
shall receive as compensation for its services hereunder such fees as
have been separately agreed upon before the date hereof between the Company
and the Owner Trustee, and the Owner Trustee shall be entitled to be
reimbursed by the Servicer for its other reasonable expenses hereunder,
including the reasonable compensation, expenses and disbursements of such
agents, representatives, experts and counsel as the Owner Trustee may employ
in connection with the exercise and performance of its rights and its duties
hereunder.
SECTION 8.2 Indemnification. The Company shall be liable pursuant
---------------
to the Administration Agreement, for, and shall indemnify the Owner Trustee,
the Co-Owner Trustee and their successors, assigns, agents and servants
(collectively, the "Indemnified Parties") from and against, any and all
liabilities, obligations, losses, damages, taxes, claims, actions and suits,
and any and all reasonable costs, expenses and disbursements (including
reasonable legal fees and expenses) of any kind and nature whatsoever
(collectively, "Expenses") which may at any time be imposed on, incurred by,
or asserted against the Owner Trustee or any Indemnified Party in any way
relating to or arising out of this Agreement, the Basic Documents, the Owner
Trust Estate, the administration of the Owner Trust Estate or the action or
inaction of the Owner Trustee or the Co-Owner Trustee hereunder, except only
that the Company shall not be liable for or required to indemnify an
Indemnified Party from and against Expenses arising or resulting from any of
the matters described in the third sentence of Section 7.01 of the Sale
------------
and Servicing Agreement. The indemnities contained in this Section shall
survive the resignation or termination of the Owner Trustee or the
Co-Owner Trustee or the termination of this Agreement. In any event of
any claim, action or proceeding for which indemnity will be sought pursuant
to this Section, the Owner Trustee's or Co-Owner Trustee's choice of legal
counsel shall be subject to the approval of the Company, which approval
shall not be unreasonably withheld.
SECTION 8.3 Payments to the Owner Trustee. Any amounts paid to the
-----------------------------
Owner Trustee pursuant to this Article VIII shall be deemed not to be
a part of the Owner Trust Estate immediately after such payment.
ARTICLE IX
TERMINATION OF TRUST AGREEMENT
SECTION 9.1 Termination of Trust Agreement.
------------------------------
(a) This Agreement (other than Article VIII) and the Trust shall
terminate and be of no further force or effect on the earlier of: (i)
the satisfaction and discharge of the Indenture pursuant to Section 4.01
of the Indenture and the termination of the Sale and Servicing Agreement;
(ii) at the time provided in Section 9.1(c).; and (iii) 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's) alive on the date hereof. The
bankruptcy, liquidation, dissolution, death or incapacity of any Owner shall
not (x) operate to terminate this Agreement or the Trust, nor (y) entitle
such Owner's legal representatives or heirs to claim an accounting or to
take any action or proceeding in any court for a partition or winding up of
all or any part of the Trust or Owner Trust Estate nor (z) otherwise affect
the rights, obligations and liabilities of the parties hereto.
(b) The Certificates shall be subject to an early redemption or
termination at the option of the Company in the manner and subject to the
provisions of Section 11.02 of the Sale and Servicing Agreement.
(c) Notice of any termination of the Trust, specifying the
Distribution Date upon which the Certificateholders shall surrender their
Certificates to the Paying Agent for payment of the final distributions and
cancellation, shall be given by the Owner Trustee to the Certificateholders
and the Rating Agencies mailed within five Business Days of receipt by the
Owner Trustee of notice of such termination pursuant to Section 9.1(a) or
--------------
(b) above, which notice given by the Owner Trustee shall state (i) the
Distribution Date upon or with respect to which final payment of the
Certificates shall be made upon presentation and surrender of the
Certificates at the office of the Paying Agent therein designated, (ii) the
amount of any such final payment and (iii) that the Record Date otherwise
applicable to such Distribution Date is not applicable, payments being made
only upon presentation and surrender of the Trust Certificates at the office
of the Paying Agent therein specified. The Owner Trustee shall give such
notice to the Certificate Registrar (if other than the Owner Trustee) and
the Paying Agent at the time such notice is given to Certificateholders.
Upon presentation and surrender of the Certificates, the Paying Agent shall
cause to be distributed to Certificateholders amounts distributable on such
Distribution Date pursuant to Section 5.02 of the Sale and Servicing
------------
Agreement.
In the event that all of the Certificateholders shall not surrender
their Trust Certificates for cancellation within six months after the date
specified in the above mentioned written notice, the Owner Trustee shall
give a second written notice to the remaining Certificateholders to
surrender their Trust Certificates for cancellation and receive the final
distribution with respect thereto. If within one year after the second
notice all the Trust Certificates shall not have been surrendered for
cancellation, the Owner Trustee may take appropriate steps, or may appoint
an agent to take appropriate steps, to contact the remaining
Certificateholders concerning surrender of their Trust Certificates, and the
cost thereof shall be paid out of the funds and other assets that shall
remain subject to this Agreement. Any funds remaining in the Trust after
exhaustion of such remedies shall be distributed by the Co-Owner Trustee to
the Residual Interestholders on a pro rata basis.
(d) Except as provided in Sections 9.1(a) and (b) above, none of
-----------------------
the Depositor, the Company nor any Owner shall be entitled to revoke
or terminate the Trust.
(e) Upon the winding up of the Trust and its termination, the
Owner Trustee shall cause the Certificate of Trust to be canceled by filing
a certificate of cancellation with the Secretary of State in accordance with
the provisions of Section 3820 of the Business Trust Statute.
ARTICLE X
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
SECTION 10.1 Eligibility Requirements for Owner Trustee. The Owner
------------------------------------------
Trustee shall at all times be a corporation satisfying the provisions
of Section 3807(a) of the Business Trust Statute; authorized
to exercise corporate powers; having a combined capital and surplus of at
least $50,000,000 and subject to supervision or examination by federal or
state authorities; and having (or having a parent which has) a long-term
rating of at least "A-1" by Standard & Poor's, "D-1" by DCR and "F-1" by
Fitch. If such corporation shall publish reports of condition at least
annually, pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the purpose of this Section,
the combined capital and surplus of such corporation 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 Owner Trustee shall cease
to be eligible in accordance with the provisions of this Section, the Owner
Trustee shall resign immediately in the manner and with the effect specified
in Section 10.2.
------------
SECTION 10.2 Resignation or Removal of Owner Trustee or Co-Owner
---------------------------------------------------
Trustee. The Owner Trustee or Co-Owner Trustee may at any time resign and
- -------
be discharged from the trusts hereby created by giving written notice
thereof to the Administrator and the Indenture Trustee. Upon receiving such
notice of resignation, the Administrator shall promptly appoint a successor
Owner Trustee or Co-Owner Trustee by written instrument, in duplicate, one
copy of which instrument shall be delivered to the resigning Owner Trustee
or Co-Owner Trustee and one copy to the successor Owner Trustee or Co-Owner
Trustee. If no successor Owner Trustee or Co-Owner Trustee shall have been
so appointed and have accepted appointment within 30 days after the giving
of such notice of resignation, the resigning Owner Trustee or SECTION
10.9 Co-Owner Trustee may petition any court of competent jurisdiction for
the appointment of a successor Owner Trustee or Co-Owner Trustee.
If at any time the Owner Trustee or Co-Owner Trustee shall cease to be
eligible in accordance with the provisions of Section 10.1 and shall fail to
------------
resign after written request therefor by the Administrator, or if at
any time the Owner Trustee or Co-Owner Trustee shall be legally unable
to act, or shall be adjudged bankrupt or insolvent, or a receiver of
the Owner Trustee or Co-Owner Trustee or of its property shall
be appointed, or any public officer shall take charge or control of
the Owner Trustee or Co-Owner Trustee or of its property or affairs
for the purpose of rehabilitation, conservation or liquidation, then
the Administrator may remove the Owner Trustee or Co- Owner Trustee.
If the Administrator shall remove the Owner Trustee or Co- Owner
Trustee under the authority of the immediately preceding sentence,
the Administrator shall promptly appoint a successor Owner Trustee
or Co-Owner Trustee by written instrument in duplicate, one
copy of which instrument shall be delivered to the outgoing Owner Trustee or
Co-Owner Trustee so removed and one copy to the successor Owner Trustee or
Co-Owner Trustee, and the Servicer shall be responsible for the payment of
all fees owed to the outgoing Owner Trustee or Co-Owner Trustee.
Any resignation or removal of the Owner Trustee or Co-Owner Trustee and
appointment of a successor Owner Trustee or Co-Owner Trustee pursuant to any
of the provisions of this Section shall not become effective until acceptance
of appointment by the successor Owner Trustee or Co-Owner Trustee pursuant
to Section 10.3 and payment of all fees and expenses owed to the outgoing
------------
Owner Trustee or Co-Owner Trustee. The Administrator shall
provide notice of such resignation or removal of the Owner Trustee or
Co-Owner Trustee to each of the Rating Agencies.
SECTION 10.3 Successor Owner Trustee or Co-Owner Trustee. Any
-------------------------------------------
successor Owner Trustee or Co-Owner Trustee appointed pursuant to Section
10.2 shall execute, acknowledge and deliver to the Administrator and to its
predecessor Owner Trustee or Co-Owner Trustee an instrument accepting such
appointment under this Agreement, and thereupon the resignation or removal
of the predecessor Owner Trustee or Co-Owner Trustee shall become effective
and such successor Owner Trustee or Co-Owner Trustee, without any further
act, deed or conveyance, shall become fully vested with all the rights,
powers, duties, and obligations of its predecessor under this Agreement,
with like effect as if originally named as Owner Trustee or Co-Owner
Trustee. The predecessor Owner Trustee or Co-Owner Trustee shall upon
payment of its fees and expenses deliver to the successor Owner Trustee or
Co-Owner Trustee all documents and statements and monies held by it under
this Agreement; and the Administrator and the predecessor Owner Trustee or
Co-Owner Trustee shall execute and deliver such instruments and do such
other things as may reasonably be required for fully and certainly vesting
and confirming in the successor Owner Trustee or Co-Owner Trustee all such
rights, powers, duties, and obligations. No successor Owner Trustee shall
accept appointment as provided in this Section unless at the time of such
acceptance such successor Owner Trustee shall be eligible pursuant to
Section 10.1.
- ------------
Upon acceptance of appointment by a successor Owner Trustee or Co-Owner
Trustee pursuant to this Section, the Administrator shall mail notice of the
successor of such Owner Trustee or Co-Owner Trustee to all Owners, the
Indenture Trustee, the Noteholders and the Rating Agencies. If the
Administrator fails to mail such notice within 10 days after acceptance of
appointment by the successor Owner Trustee or Co-Owner Trustee, the
successor Owner Trustee or Co-Owner Trustee shall cause such notice to be
mailed at the expense of the Administrator.
SECTION 10.4 Merger or Consolidation of Owner Trustee or Co-Owner
----------------------------------------------------
Trustee. Any corporation into which the Owner Trustee may be merged or
- -------
converted or with which it may be consolidated or any corporation resulting
from any merger, conversion or consolidation to which the Owner Trustee
shall be a party, or any corporation succeeding to all or substantially all
of the corporate trust business of the Owner Trustee, shall be the successor
of the Owner Trustee hereunder, provided such corporation shall be eligible
--------
pursuant to Section 10.1, without the execution or filing of any
------------
instrument or any further act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding; provided further that the
-------- -------
Owner Trustee shall mail notice of such merger or consolidation to the Rating
Agencies.
SECTION 10.5 Appointment of Co-Owner Trustee or Separate Owner Trustee.
---------------------------------------------------------
Notwithstanding any other provisions of this Agreement, at any time, for
the purpose of meeting any legal requirements of any jurisdiction in which
any part of the Owner Trust Estate or any Mortgaged Property may at the time
be located, and for the purpose of performing certain duties and obligations
of the Owner Trustee with respect to the Trust and the Certificates under
the Sale and Servicing Agreement, the Administrator and the Owner Trustee
acting jointly shall have the power and shall execute and deliver all
instruments to appoint one or more Persons approved by the Owner
Trustee to act as co-owner trustee, jointly with the Owner Trustee,
or separate trustee or separate trustees, of all or any part of the
Owner Trust Estate, and to vest in such Person, in such capacity,
such title to the Trust, or any part thereof, and, subject to
the other provisions of this Section, such powers, duties, obligations,
rights and trusts as the Administrator and the Owner Trustee may consider
necessary or desirable. If the Administrator shall not have joined in such
appointment within 25 days after the receipt by it of a request so to do,
the Owner Trustee shall have the power to make such appointment. No
co-owner trustee or separate owner trustee under this Agreement shall be
required to meet the terms of eligibility as a successor trustee pursuant to
Section 10.1 and no notice of the appointment of any co-trustee or separate
- ------------
owner trustee shall be required pursuant to Section 10.3.
------------
The Owner Trustee hereby appoints the Indenture Trustee as Co-Owner
Trustee for the purpose of establishing and maintaining the Certificate
Distribution Account and making the distributions therefrom to the Persons
entitled thereto pursuant to Section 5.02 of the Sale and Servicing
Agreement.
Each separate owner trustee and co-owner trustee shall, to the extent
permitted by law, be appointed and act subject to the following provision
and conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon the Owner Trustee shall be conferred upon and exercised or
performed by the Owner Trustee and such separate owner trustee or co-
owner trustee jointly (it being understood that such separate owner
trustee or co-owner trustee is not authorized to act separately without
the Owner Trustee joining in such act), except to the extent that under
any law of any jurisdiction in which any particular act or acts are to
be performed, the Owner Trustee shall be incompetent or unqualified to
perform such act or acts, in which event such rights, powers, duties,
and obligations (including the holding of title to the Trust or any
portion thereof in any such jurisdiction) shall be exercised and
performed singly by such separate owner trustee or co-owner trustee, but
solely at the direction of the Owner Trustee; provided that Co-Owner
--------
Trustee, in performing its duties and obligations under the
Sale and Servicing Agreement, may act separately in its capacity
as Co-Owner Trustee without the Owner Trustee joining in such Acts.
(ii) no owner trustee under this Agreement shall be
personally liable by reason of any act or omission of any other owner
trustee under this Agreement; and
(iii) the Administrator and the Owner Trustee acting
jointly may at any time accept the resignation of or remove any separate
owner trustee or co-owner trustee.
Any notice, request or other writing given to the Owner Trustee shall
be deemed to have been given to the separate owner trustees and co-owner
trustees, as if given to each of them. Every instrument appointing any
separate owner trustee or co-owner trustee, other than this Agreement, shall
refer to this Agreement and to the conditions of this Article. Each separate
owner trustee and co-owner trustee, upon its acceptance of appointment,
shall be vested with the estates specified in its instrument of appointment,
either jointly with the Owner 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 Owner Trustee.
Each such instrument shall be filed with the Owner Trustee and a
copy thereof given to the Administrator.
Any separate owner trustee or co-owner trustee may at any time appoint
the Owner Trustee as 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 owner trustee or co-owner trustee shall die, become incapable of
acting, resign or be removed, all of its estates, properties, rights,
remedies and trusts shall vest in and be exercised by the Owner Trustee, to
the extent permitted by law, without the appointment of a new or successor
trustee.
The Co-Owner Trustee, in its capacity as Co-Owner Trustee, shall not
have any rights, duties or obligations except as expressly provided in this
Agreement and the Sale and Servicing Agreement.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 Supplements and Amendments. This Agreement may be
--------------------------
amended by the Depositor, the Company and the Owner Trustee, with prior
written notice to the Rating Agencies, but without the consent of any of the
Noteholders or the Owners or the Indenture Trustee, to cure any ambiguity,
to correct or supplement any provisions in this Agreement or for the purpose
of adding any provisions to or changing in any manner or eliminating any of
the provisions in this Agreement or of modifying in any manner the rights of
the Noteholders or the Owners provided, however, that such action shall not
-----------------
adversely affect in any material respect the interests of any Noteholder or
Owner. An amendment described above shall be deemed not to adversely
affect in any material respect the interests of any Noteholder or Owner
if (i) an opinion of counsel is obtained to such effect, and (ii) the
party requesting the amendment satisfies the Rating Agency Condition with
respect to such amendment.
This Agreement may also be amended from time to time by the Depositor,
the Company and the Owner Trustee, with the prior written consent of the
Rating Agencies and with the prior written consent of the Indenture Trustee,
the Holders (as defined in the Indenture) of Notes evidencing more than 50%
of the Outstanding Amount of the Notes, the Holders of Certificates
evidencing more than 50% of the Class Principal Balance of the Certificates
and the Majority Residual Interestholders, 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
Noteholders or the Owners; provided, however, that no such amendment shall
-------- -------
(a) increase or reduce in any manner the amount of, or accelerate or delay
the timing of, collections of payments on the Home Loans or distributions
that shall be required to be made for the benefit of the Noteholders
or the Certificateholders (b) reduce the aforesaid percentage of the
Outstanding Amount of the Notes and the Class Principal Balance of
the Certificates or the Percentage Interests required to consent to
any such amendment, in either case of clause (a) or (b)
without the consent of the holders of all the outstanding Notes and
Certificates, and in the case of clause (b) without the consent of the
holders of all the outstanding Residual Interest Instruments.
Promptly after the execution of any such amendment or consent, the
Owner Trustee shall furnish written notification of the substance of such
amendment or consent to each Certificateholder and each Residual
Interestholder, the Indenture Trustee and each of the Rating Agencies.
It shall not be necessary for the consent of Owners, the Noteholders or
the Indenture Trustee pursuant to this Section to approve the particular
form of any proposed amendment or consent, but it shall be sufficient if
such consent shall approve the substance thereof. The manner of obtaining
such consents (and any other consents of Owners provided for in this
Agreement or in any other Basic Document) and of evidencing the
authorization of the execution thereof by Certificateholders shall be
subject to such reasonable requirements as the Owner Trustee may prescribe.
Promptly after the execution of any amendment to the Certificate of
Trust, the Owner Trustee shall cause the filing of such amendment with the
Secretary of State.
Prior to the execution of any amendment to this Agreement or the
Certificate of Trust, the Owner Trustee shall be entitled to receive and
rely upon an Opinion of Counsel stating that the execution of such amendment
is authorized or permitted by this Agreement. The Owner Trustee may, but
shall not be obligated to, enter into any such amendment which affects the
Owner Trustee's own rights, duties or immunities under this Agreement or
otherwise.
SECTION 11.2 No Legal Title to Owner Trust Estate in Owners. The
----------------------------------------------
Owners shall not have legal title to any part of the Owner Trust Estate.
The Owners shall be entitled to receive distributions with respect
to their undivided ownership interest therein only in accordance with
Articles V and IX. No transfer, by operation of law or otherwise, of
any right, title, or interest of the Owners to and in their
ownership interest in the Owner Trust Estate shall operate to terminate
this Agreement or the trusts hereunder or entitle any transferee to
an accounting or to the transfer to it of legal title to any part of
the Owner Trust Estate.
SECTION 11. 3 Limitations on Rights of Others. The provisions of this
-------------------------------
Agreement are solely for the benefit of the Owner Trustee, the Depositor,
the Company, the Owners, the Administrator and, to the extent expressly
provided herein, the Indenture Trustee and the Noteholders, and
nothing in this Agreement, whether express or implied, shall be construed to
give to any other Person any legal or equitable right, remedy or claim in
the Owner Trust Estate or under or in respect of this Agreement or any
covenants, conditions or provisions contained herein.
SECTION 11.4 Notices. (a) Unless otherwise expressly specified or
-------
permitted by the terms hereof, all notices shall be in writing and
shall be deemed given upon receipt by the intended recipient or
three Business Days after mailing if mailed by certified mail,
postage prepaid (except that notice to the Owner Trustee shall be
deemed given only upon actual receipt by the Owner Trustee), at the
following addresses: (i) if to the Owner Trustee, its Corporate
Trust Office; (ii) if to the Depositor, Financial Asset Securities
Corp., 600 Steamboat Road, Greenwich, Connecticut 06830,
Attention: Peter McMullin, Vice President; (iii) if to the Company,
Cityscape Corp., 565 Taxter Road, Elmsford, New York 10523-2300, Attention:
Cheryl P. Carl, Secretary; (iv) if to the Co-Owner Trustee, First Bank
National Association, 180 East Fifth Street, St. Paul, Minnesota 55101,
Attention: Structured Finance/Cityscape 1997-1; or, as to each such party,
at such other address as shall be designated by such party in a written
notice to each other party.
(b) Any notice required or permitted to be given to an Owner shall be
given by first-class mail, postage prepaid, at the address of such Owner 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 Owner receives such notice.
SECTION 11.5 Severability. Any provision of this Agreement that is
------------
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
SECTION 11.6 Separate Counterparts. This Agreement may be executed
---------------------
by the parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts shall
together constitute but one and the same instrument.
SECTION 11.7 Successors and Assigns. All covenants and agreements
----------------------
contained herein shall be binding upon, and inure to the benefit of, the
Depositor, the Company, the Owner Trustee and its successors and each owner
and its successors and permitted assigns, all as herein provided. Any
request, notice, direction, consent, waiver or other instrument or action by
an Owner shall bind the successors and assigns of such Owner.
SECTION 11.8 No Petition. The Owner Trustee, by entering into this
-----------
Agreement, each Owner, by accepting a Trust Certificate, and the Indenture
Trustee and each Noteholder by accepting the benefits of this Agreement,
hereby covenant and agree that they will not at any time institute against
the Company, the Depositor or the Trust, or join in any institution against
the Company or the Trust of, any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings, or other proceedings under any United
States Federal or state bankruptcy or law in connection with any obligations
relating to the Trust Certificates, the Notes, this Agreement or any of the
Basic Documents.
SECTION 11.9 No Recourse. Each Owner by accepting a Trust
-----------
Certificate acknowledges that such Owner's Trust Certificate represents
a beneficial interest in the Trust only and does not represent an
interest in or an obligation of the Servicer, the Company, the
Depositor, the Administrator, the Owner Trustee, the Co-Owner
Trustee or any Affiliate thereof and no recourse may be had against
such parties or their assets, except as may be expressly set forth
or contemplated in this Agreement, the Trust Certificates or the
Basic Documents.
SECTION 11.10 Headings. The headings of the various Articles and
--------
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
SECTION 11.11 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
-------------
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement
to be duly executed by their respective officers hereunto duly authorized,
as of the day and year first above written.
FINANCIAL ASSET SECURITIES CORP., Depositor
By:
------------------------------------------------------------------
Name: Title:
CITYSCAPE CORP.
By:
------------------------------------------------------------------
Name: Title:
WILMINGTON TRUST COMPANY,
not in its individual capacity but solely as Owner Trustee
By:
------------------------------------------------------------------
Name: Title:
FIRST BANK NATIONAL ASSOCIATION, not in its individual capacity but
solely as Co-Owner Trustee and Paying Agent
By:
------------------------------------------------------------------
Name: Title:
Exhibit A
---------
(FORM OF CLASS B CERTIFICATE)
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT
IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO. HAS AN INTEREST HEREIN.
THIS CERTIFICATE DOES NOT REPRESENT AN INTEREST IN OR OBLIGATION OF
FINANCIAL ASSET SECURITIES CORP., CITYSCAPE CORP. OR ANY OF THEIR RESPECTIVE
AFFILIATES, EXCEPT TO THE EXTENT DESCRIBED BELOW.
CITYSCAPE HOME LOAN OWNER TRUST 1997-1
8.17% HOME LOAN ASSET BACKED CERTIFICATE
evidencing a fractional undivided interest in the Trust, as defined below,
the property of which includes a pool of Home Loans sold to the Trust by
Financial Asset Securities Corp..
NUMBER:______ FRACTIONAL UNDIVIDED INTEREST: __________/__________th
CUSIP NO. _________
(See Reverse Pages for certain definitions)
THIS CERTIFIES THAT___________ is the registered owner of a
_________/__________th nonassessable, fully-paid, fractional undivided
interest in CITYSCAPE Home Loan Owner Trust 1997-1 (the "Trust") formed by
Financial Asset Securities Corp., a Delaware corporation (the "Seller").
The Trust was created pursuant to a Trust Agreement dated as of
February 1, 1997 (as amended and supplemented from time to time, the "Trust
Agreement"), among the Seller, Financial Asset Securities Corp., a Delaware
corporation (the "Company"), Wilmington Trust Company, as owner trustee (the
"Owner Trustee") and First Bank National Association, as Co-Owner Trustee
(the "Co-Owner Trustee"), a summary of certain of the pertinent provisions
of which is set forth below. To the extent not otherwise defined herein,
the capitalized terms used herein have the meanings assigned to them in the
Trust Agreement or the Sale and Servicing Agreement dated as of February 1,
1997 (as amended and supplemented from time to time, the "Sale and Servicing
Agreement"), among the Trust, the Seller, Cityscape Corp., as servicer (the
"Servicer") and the Co-Owner Trustee, as applicable.
This Certificate is one of the duly authorized Certificates designated
as "Cityscape Home Loan Asset Backed Certificates, Series 1997-1", Class B
(herein called the "Certificates") issued under the Trust Agreement. Also
issued under an Indenture dated as of February 1, 1997, between the Trust
and First Bank National Association, as Indenture Trustee, are the six
classes of Notes designated as "Cityscape Home Loan Asset Backed Notes,
Series 1997-1, Class A-1, Class A-2, Class A-3, Class A-4, Class M-1 and
Class M-2 (collectively, the "Notes"). This Certificate is issued under and
is subject to the terms, provisions and conditions of the Trust Agreement to
which Trust Agreement the holder of this Certificate by virtue of the
acceptance hereof assents and by which such holder is bound. Payments of
principal and interest on this Certificate shall be made by First Bank
National Association, in its capacity as Co-Owner Trustee under the Sale and
Servicing Agreement. The property of the Trust includes a pool of Home Loans
(the "Home Loans"), all monies due thereunder on or after the Cut-Off Date,
certain accounts and the proceeds thereof, and certain other rights under
the Trust Agreement and the Sale and Servicing Agreement and all proceeds of
the foregoing. The rights of the holders of the Certificates are
subordinated to the rights of the holders of the Notes, as set forth in the
Sale and Servicing Agreement and the Indenture.
Under the Trust Agreement, there will be distributed on the 25th day of
each month or, if such 25th day is not a Business Day, the next Business
Day, (each, a "Distribution Date"), commencing in March, 1997, to the person
in whose name this Certificate is registered at the close of business on the
last Business Day of the month immediately preceding the month in which each
Distribution Date occurs (the "Record Date") such Certificateholder's
fractional undivided interest in the amounts distributable to
Certificateholders on such Distribution Date pursuant to Section 5.01 of the
Sale and Servicing Agreement.
The holder of this Certificate acknowledges and agrees that its rights
to receive distributions in respect of this Certificate are subordinated to
the rights of the Noteholders as described in the Sale and Servicing
Agreement and the Indenture.
It is the intent of the Seller, the Company, the Servicer and the
Certificateholders that, for purposes of federal, state and local income and
single business tax and any other income taxes, the Trust will be treated as
a partnership and the Certificateholders (including the Company) will be
treated as partners in that partnership. The Company and the other
Certificateholders by acceptance of a Certificate, agree to treat, and to
take no action inconsistent with the treatment of, the Certificates for such
tax purposes as partnership interests in the Trust. Each Certificateholder
or Certificate Owner, by its acceptance of a Certificate or, in the case of
a Certificate Owner, a beneficial interest in a Certificate, covenants
and agrees that such Certificateholder or Certificate Owner, as the
case may be, will not at any time institute against the Company,
or join in any institution against the Company of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings,
or other proceedings under any United States federal or state bankruptcy
or similar law in connection with any obligations relating to the
Certificates, the Notes, the Trust Agreement or any of the Basic Documents.
Distributions on this Certificate will be made as provided in the Trust
Agreement and the Sale and Servicing Agreement by the Indenture Trustee by
wire transfer or check mailed to the Certificateholder of record in the
Certificate Register without the presentation or surrender of this
Certificate or the making of any notation hereon, except that with respect
to Certificates registered on the Record Date in the name of the nominee of
the Clearing Agency (initially, such nominee to be Cede & Co.), payments
will be made by wire transfer in immediately available funds to the account
designated by such nominee. Except as otherwise provided in the Trust
Agreement and notwithstanding the above, the final distribution on this
Certificate will be made after due notice by the Co-Owner Trustee of the
pendency of such distribution and only upon presentation and surrender of
this Certificate at the office or agency maintained for the purpose by the
Co-Owner Trustee in the Borough of Manhattan, The City of New York.
Reference is hereby made to the further provisions of this Certificate
set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
(Remainder of page intentionally left blank)
Unless the certificate of authentication hereon shall have been
executed by an authorized officer of the Owner Trustee, by manual or
facsimile signature, this Certificate shall not entitle the holder hereof to
any benefit under the Trust Agreement or the Sale and Servicing Agreement or
be valid for any purpose.
THIS TRUST CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF LAW
PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Trust and not
in its individual capacity, has caused this Certificate to be duly executed.
CITYSCAPE HOME LOAN OWNER TRUST 1997-1
By: Wilmington Trust Company, not in its individual
capacity but solely as Owner Trustee under the
Trust Agreement
By:
--------------------------------------------------------------
Authorized Signatory
DATED: February __, 1997
CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within-mentioned
Trust Agreement.
First Bank National Association, as Administrator and Authenticating Agent
By:
-----------------------------------------------------------------------
Authorized Signatory
(REVERSE OF TRUST CERTIFICATE)
The Certificates do not represent an obligation of, or an interest in,
the Seller, the Servicer, the Company, the Depositor, the Owner Trustee, the
Co-Owner Trustee or any affiliates of any of them and no recourse may be had
against such parties or their assets, except as may be expressly set forth
or contemplated herein or in the Trust Agreement or the Basic Documents. In
addition, this Certificate is not guaranteed by any governmental agency or
instrumentality and is limited in right of payment to certain collections
and recoveries respecting the Home Loans, all as more specifically set forth
herein, in the Sale and Servicing Agreement and in the Indenture. A copy of
each of the Sale and Servicing Agreement, the Indenture and the Trust
Agreement may be examined during normal business hours at the principal
office of the Seller, and at such other places, if any, designated by the
Seller, by any Certificateholder upon written request.
The Trust Agreement permits, with certain exceptions therein provided,
the amendment thereof and the modification of the rights and obligations of
the Seller and the Company and the rights of the Certificateholders under
the Trust Agreement at any time by the Seller, the Company and the Owner
Trustee with the consent of the holders of the Notes and the Certificates
each voting as a class evidencing not less than a majority of the
outstanding Notes and the Class Principal Balance of the Certificates. Any
such consent by the holder of this Certificate shall be conclusive and
binding on such holder and on all future holders of this Certificate and of
any Certificate issued upon the transfer hereof or in exchange herefor or in
lieu hereof whether or not notation of such consent is made upon this
Certificate. The Trust Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the holders of any of
the Certificates.
As provided in the Trust Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registerable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies of the Certificate Registrar maintained
by the Co-Owner Trustee in the Borough of Manhattan, The City of New York,
accompanied by a written instrument of transfer in form satisfactory to the
Co-Owner Trustee and the Certificate Registrar duly executed by the holder
hereof or such holder's attorney duly authorized in writing, and thereupon
one or more new Certificates of authorized denominations evidencing the same
aggregate interest in the Trust will be issued to the designated transferee.
The initial Certificate Registrar appointed under the Trust Agreement is
the Co-Owner Trustee.
The Certificates are issuable only as registered Certificates without
coupons in denominations of $100,000 and in integral multiples of $1,000 in
excess thereof. As provided in the Trust Agreement and subject to certain
limitations therein set forth, Certificates are exchangeable for new
Certificates of authorized denominations evidencing the same aggregate
denomination, as requested by the holder surrendering the same. No service
charge will be made for any such registration of transfer or exchange, but
the Co-Owner Trustee or the Certificate Registrar may require payment of a
sum sufficient to cover any tax or governmental charge payable in connection
therewith.
The Owner Trustee, the Co-Owner Trustee, the Certificate Registrar and
any agent of the Owner Trustee, the Co-Owner Trustee or the Certificate
Registrar may treat the person in whose name this Certificate is registered
as the owner hereof for all purposes and none of the Owner Trustee, the Co-
Owner Trustee, the Certificate Registrar or any such agent shall be affected
by any notice to the contrary.
The obligations and responsibilities created by the Trust Agreement and
the Trust created thereby and the Sale and Servicing Agreement shall
terminate eighteen months after the payment to Certificateholders of all
amounts required to be paid to them pursuant to the Trust Agreement and the
Sale and Servicing Agreement and the disposition of all property held as
part of the Trust. The Majority Residual Interestholders may at their
option purchase the corpus of the Trust at a price specified in the Sale and
Servicing Agreement, and such purchase of the Home Loans and other property
of the Trust will effect early retirement of the Certificates; however, such
right of purchase is exercisable only on a Distribution Date on which the
Pool Principal Balance is less than or equal to 10% of the Original Pool
Principal Balance.
The Certificates may not be acquired by (a) an employee benefit plan
(as defined in Section 3(3) of ERISA) that is subject to the provisions of
Title I of ERISA, (b) a plan described in Section 4975(e)(1) of the Code or
(c) any entity, including an insurance company separate account, whose
underlying assets include plan assets by reason of a plan's investment in
the entity (each, a "Benefit Plan"). By accepting and holding this
Certificate, the Holder hereof shall be deemed to have represented and
warranted that it is not a Benefit Plan.
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
- --------------------------------------------------------------------------
(Please print or type name and address, including postal zip code, of
assignee)
- --------------------------------------------------------------------------
the within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
Attorney to
- ------------------------------------------------------- transfer said
Certificate on the books of the Certificate Registrar, with full power of
substitution in the premises.
Dated: --------------
*/
- ---------------------------------------
Signature Guaranteed:
*/
- ---------------------------------------
- --------------- */ NOTICE: The signature to this assignment must
correspond with the - name as it appears upon the face of the within
Certificate in every particular, without alteration, enlargement or any
change whatever. Such signature must be guaranteed by a member firm of the
New York Stock Exchange or a commercial bank or trust company.
EXHIBIT B
TO THE TRUST AGREEMENT
(FORM OF RESIDUAL INTEREST INSTRUMENT)
THE RESIDUAL INTEREST IN THE TRUST REPRESENTED BY THIS RESIDUAL INTEREST
INSTRUMENT HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS. THIS
RESIDUAL INTEREST MAY BE DIRECTLY OR INDIRECTLY OFFERED OR SOLD OR OTHERWISE
DISPOSED OF (INCLUDING PLEDGED) BY THE HOLDER HEREOF ONLY TO (I) A
"QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE ACT, IN A
TRANSACTION THAT IS REGISTERED UNDER THE ACT AND APPLICABLE STATE SECURITIES
LAWS OR THAT IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE ACT
PURSUANT TO RULE 144A OR (II) A PERSON INVOLVED IN THE ORGANIZATION OR
OPERATION OF THE TRUST OR AN AFFILIATE OF SUCH A PERSON WITHIN THE MEANING
OF RULE 3A-7 OF THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED (INCLUDING,
BUT NOT LIMITED TO, CITYSCAPE CORP.) IN A TRANSACTION THAT IS REGISTERED
UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS OR THAT IS EXEMPT FROM
THE REGISTRATION REQUIREMENTS OF THE ACT AND SUCH LAWS. NO PERSON IS
OBLIGATED TO REGISTER THIS RESIDUAL INTEREST UNDER THE ACT OR ANY STATE
SECURITIES LAWS.
NO TRANSFER OF THIS RESIDUAL INTEREST INSTRUMENT OR ANY BENEFICIAL INTEREST
THEREIN SHALL BE MADE TO ANY PERSON UNLESS THE OWNER TRUSTEE HAS RECEIVED A
CERTIFICATE FROM THE TRANSFEREE TO THE EFFECT THAT SUCH TRANSFEREE (I) IS
NOT A PERSON WHICH IS AN EMPLOYEE BENEFIT PLAN, TRUST OR ACCOUNT SUBJECT TO
TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
("ERISA") OR SECTION 4975 OF THE CODE OR A GOVERNMENTAL PLAN, DEFINED IN
SECTION 3(32) OF ERISA SUBJECT TO ANY FEDERAL, STATE OR LOCAL LAW WHICH IS,
TO A MATERIAL EXTENT, SIMILAR TO THE FOREGOING PROVISIONS OF ERISA OR THE
CODE (ANY SUCH PERSON BEING A "PLAN") AND (II) IS NOT AN ENTITY, INCLUDING
AN INSURANCE COMPANY SEPARATE ACCOUNT OR GENERAL ACCOUNT, WHOSE UNDERLYING
ASSETS INCLUDE PLAN ASSETS BY REASON OF A PLAN'S INVESTMENT IN THE ENTITY.
(THIS RESIDUAL INTEREST INSTRUMENT IS NONTRANSFERABLE. NOTWITHSTANDING
ANYTHING HEREIN OR IN THE TRUST AGREEMENT TO THE CONTRARY, ANY ATTEMPTED
TRANSFER OF THIS RESIDUAL INTEREST INSTRUMENT SHALL BE NULL AND VOID FOR ALL
PURPOSES.)
CITYSCAPE HOME LOAN OWNER TRUST 1997-1
RESIDUAL INTEREST CERTIFICATE
No. _____
THIS CERTIFIES THAT __________________________________ (the "Owner") is
the registered owner of a _____% residual interest in Cityscape Home Loan
Owner Trust 1997-1 (the "Trust") existing under the laws of the State of
Delaware and created pursuant to the Trust Agreement dated as of February 1,
1997 (the "Trust Agreement") between Financial Asset Securities Corp., as
Depositor, Cityscape Corp., as the Company, Wilmington Trust Company, not in
its individual capacity but solely in its fiduciary capacity as owner
trustee under the Trust Agreement (the "Owner Trustee") and First Bank
National Association, as Co-Owner Trustee (the "Co-Owner Trustee").
Initially capitalized terms used but not defined herein have the meanings
assigned to them in the Trust Agreement. The Owner Trustee, on behalf of
the Issuer and not in its individual capacity, has executed this Residual
Interest Instrument by one of its duly authorized signatories as set forth
below. This Residual Interest Instrument is one of the Residual Interest
Instruments referred to in the Trust Agreement and is issued under and is
subject to the terms, provisions and conditions of the Trust Agreement to which
the holder of this Residual Interest Instrument by virtue of the acceptance
hereof agrees and by which the holder hereof is bound. Reference is hereby
made to the Trust Agreement and the Sale and Servicing Agreement for the
rights of the holder of this Residual Interest Instrument, as well as for
the terms and conditions of the Trust created by the Trust Agreement.
The holder, by its acceptance hereof, agrees not to transfer this
Residual Interest Instrument (except in accordance with terms and provisions
of the Agreement).
THIS RESIDUAL INTEREST INSTRUMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF LAW
PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Trust and not
in its individual capacity, has caused this Residual Interest Instrument to
be duly executed.
CITYSCAPE HOME LOAN OWNER TRUST 1997-1
By: Wilmington Trust Company, not in its
individual capacity but solely as
Owner Trustee under the Trust Agreement
By:
-------------------------------------
Authorized Signatory
DATED: February __, 1997
CERTIFICATE OF AUTHENTICATION
This is one of the Residual Interest Instruments referred to in the
within-mentioned Agreement.
_______________________,
as Authenticating Agent
By:
--------------------------------------------------
Authorized Signatory
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER <PAGE>
OF ASSIGNEE
- --------------------------------------------------------------------------
(Please print or type name and address, including postal zip code, of
assignee)
- --------------------------------------------------------------------------
the within Instrument, and all rights thereunder, hereby irrevocably
constituting and appointing
Attorney to
- ------------------------------------------------------- transfer said
Instrument on the books of the Certificate Registrar, with full power of
substitution in the premises.
Dated: --------------
*/
- ---------------------------------------
Signature Guaranteed:
*/ ---------------------------------------
- --------------- */ NOTICE: The signature to this assignment must
correspond with the - name as it appears upon the face of the within
Certificate in every particular, without alteration, enlargement or any
change whatever. Such signature must be guaranteed by a member firm of the
New York Stock Exchange or a commercial bank or trust company.
EXHIBIT C
TO THE TRUST AGREEMENT
CERTIFICATE OF TRUST OF
CITYSCAPE HOME LOAN OWNER TRUST 1997-1
--------------------------------------
THIS Certificate of Trust of Cityscape Home Loan Owner Trust
1997-1 (the "Trust"), dated February __, 1997, is being duly executed and
filed by Wilmington Trust Company, a Delaware banking corporation, as
trustee, to form a business trust under the Delaware Business Trust Act (12
Del. Code, Section 3801 et seq.).
- ---------
1. Name. The name of the business trust formed hereby is Cityscape
-----
Home Loan Owner Trust 1997-1.
2. Delaware Trustee. The name and business address of the
----------------
trustee of the Trust in the State of Delaware is Wilmington Trust
Company, Rodney Square North, 1100 North Market Street,
Wilmington, Delaware 19890- 0001, Attention: Corporate Trust Administration.
IN WITNESS WHEREOF, the undersigned, being the sole trustee of the
Trust, has executed this Certificate of Trust as of the date first above
written.
WILMINGTON TRUST COMPANY,
not in its individual capacity but solely
as owner trustee under a Trust Agreement
dated as of February 1, 1997
By: ___________________________
Name:
Title:
EXHIBIT D
TO THE TRUST AGREEMENT
(Form of Certificate Depository Agreement)
EXHIBIT E
TRANSFER CERTIFICATE
- -----------------------------------------------
First Bank National Association
180 East Fifth Street
St. Paul, Minnesota 55101
Attention: Structured Finance/Cityscape Home Loan Owner Trust 1997-1
Financial Asset Securities Corp.
600 Steamboat Road
Greenwich, Connecticut 06830
Re: Trust Agreement, dated as of February 1, 1997, among
Cityscape Corp., Financial Asset Securities Corp.,
First Bank National Association and Wilmington Trust
Company, as Owner Trustee; Cityscape Home Loan
Owner Trust 1997-1 Home Loan Asset-Backed Notes and
Certificates, Series 1997-1
-------------------------------------------------
Ladies and Gentlemen:
The undersigned (the "Transferee") has agreed to purchase from
(the "Transferor") the following:
- -----------------------------------
(Insert Residual Interest Instrument(s) to be transferred) A.
Rule 144A "Qualified Institutional Buyers" should complete this section
I. The Transferee is (check one):
(i) An insurance company, as defined in Section 2(13)
----- of the Securities Act of 1933, as amended (the "Securities
Act"), (ii) an investment company registered under the Investment Company
Act of 1940, as amended (the "Investment Company Act"), (iii) a business
development company as defined in Section 2(a)(48) of the Securities Act,
(iv) a Small Business Investment Company licensed by the U.S. Small Business
Administration under Section 301(c) or (d) of the Small Business Investment
Act of 1958, (v) a plan established and maintained by a state, its political
subdivisions, or any agency or instrumentality of a state or its political
subdivisions, for the benefit of its employees, (vi) an employee benefit
plan within the meaning of Title I of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), (vii) a business development
company as defined in Section 202(a)(22) of the Investment Advisors Act of
1940, (viii) an organization described in Section 501(c)(3) of the Internal
Revenue Code, corporation (other than a bank as defined in Section 3(a)(2)
of the Securities Act or a savings and loan association or other institution
referenced in Section 3(a)(2) of the Securities Act or a foreign bank or
savings and loan association or equivalent institution), partnership, or
Massachusetts or similar business trust; or (ix) an investment advisor
registered under the Investment Advisors Act of 1940, which, for each of (i)
through (ix), owns and invests on a discretionary basis at least $100
million in securities other than securities of issuers affiliated with the
Transferee, securities issued or guaranteed by the United States or a person
controlled or supervised by and acting as an instrumentality of the
government of the United States pursuant to authority granted by the
Congress of the United States, bank deposit notes and certificates of
deposit, loan participations, repurchase agreements, securities owned but
subject to a repurchase agreement, and currency, interest rate and commodity
swaps (collectively, "Excluded Securities");
a dealer registered pursuant to Section 15 of the
----- Securities Exchange Act of 1934, as amended (the "Exchange Act")
that in the aggregate owns and invests on a discretionary basis at least $10
million of securities other than Excluded Securities and securities
constituting the whole or part of an unsold allotment to, or subscription
by, Transferee as a participant in a public offering;
an investment company registered under the Investment
---- Company Act that is part of a family of investment companies (as
defined in Rule 144A of the Securities and Exchange Commission) which own in
the aggregate at least $100 million in securities other than Excluded
Securities and securities of issuers that are part of such family of
investment companies;
an entity, all of the equity owners of which are
----- entities described in this Paragraph A(I);
a bank as defined in Section 3(a)(2) of the Securities
----- Act, any savings and loan association or other institution as
referenced in Section 3(a)(5)(A) of the Securities Act, or any foreign bank
or savings and loan association or equivalent institution that in the
aggregate owns and invests on a discretionary basis at least $100 million in
securities other than Excluded Securities and has an audited net worth of at
least $25 million as demonstrated in its latest annual financial statements,
as of a date not more than 16 months preceding the date of transfer of the
Residual Interest Instruments to the Transferee in the case of a U.S. Bank
or savings and loan association, and not more than 18 months preceding such
date in the case of a foreign bank or savings association or equivalent
institution.
II. The Transferee is acquiring such Residual Interest
Instruments solely for its own account, for the account of one or more
others, all of which are "Qualified Institutional Buyers" within the meaning
of Rule 144A, or in its capacity as a dealer registered pursuant to Section
15 of the Exchange Act acting in a riskless principal transaction on behalf
of a "Qualified Institutional Buyer". The Transferee is not acquiring such
Residual Interest Instruments with a view to or for the resale,
distribution, subdivision or fractionalization thereof which would require
registration of the Residual Interest Instruments under the Securities Act.
B. "Accredited Investors" should complete this Section
I. The Transferee is (check one):
a bank within the meaning of Section 3(a)(2) of the
----- Securities Act;
a savings and loan association or other institution
----- defined in Section 3(a)(5) of the Securities Act;
a broker or dealer registered pursuant to the Exchange
----- Act;
an insurance company within the meaning of Section
----- 2(13) of the Securities Act;
an investment company registered under the Investment
----- Company Act;
an employee benefit plan within the meaning of Title I
------ of ERISA, which has total assets in excess of $5,000,000;
another entity which is an "accredited investor"
----- within the meaning of paragraph (fill in) of subsection
(a) of Rule 501 -- of the Securities and Exchange
Commission.
II. The Transferee is acquiring such Residual Interest
Instruments solely for its own account, for investment, and not with a view
to or for the resale, distribution, subdivision or fractionalization thereof
which would require registration of the Residual Interest Instruments under
the Securities Act.
C. If the Transferee is unable to complete one of paragraph A(I)
or paragraph B(I) above, the Transferee must furnish an opinion in form and
substance satisfactory to the Trustee of counsel satisfactory to the Trustee
to the effect that such purchase will not violate any applicable federal or
state securities laws.
(To be completed by any Transferee acquiring an interest in
Residual Interest Instruments or the Class B Certificates)
D. The Transferee represents that it is not (A) an "employee benefit
plan" within the meaning of Section 3(3) of the Employee Retirement Income
Security Act of 19974, as amended ("ERISA"), or (B) a "plan" within the
-----
meaning of Section 4975(e)(1) of the Code (any such plan or employee benefit
plan, a "Plan") or (C) any entity, including an insurance company
----
separate account or general account, whose underlying assets include plan
assets by reason of a plan's investment in the entity and is not directly or
indirectly purchasing such Trust Certificate on behalf of, as investment
manager of, as named fiduciary of, as trustee of, or with assets of a Plan.
(By its acceptance of a Residual Interest Instrument, each Prospective
Owner thereof agrees and acknowledges that no legal or beneficial interest
in all or any portion of the Residual Interest Instruments may be
transferred directly or indirectly to an individual, corporation,
partnership or other person unless such transferee is not a Non-U.S. Person
(any such person being referred to herein as a "Non-permitted Foreign Holder"),
and any such purported transfer shall be void and have no effect.)
(iii) the Transferee is an "accredited investor" as
defined in Rule 501(a) of Regulation D pursuant to the 1933 Act.
Very truly yours,
(NAME OF PURCHASER)
By: __________________________
Title: __________________________
Dated:
THE FOREGOING IS ACKNOWLEDGED THIS ____ DAY OF __________, 199_.
(NAME OF SELLER)
By:________________________
Title:_____________________
<PAGE>
AMENDMENT
This Amendment (this "Amendment") is dated and effective as of
May 28, 1997, by and between Morgan Stanley Mortgage Capital, Inc.,
a New York corporation ("MSMC"), and NationsBanc Mortgage Corporation,
a Texas corporation ("NationsBanc").
RECITALS
A. MSMC and NationsBanc have heretofore executed and entered
into that certain Master Mortgage Loan Sale and Servicing Agreement dated
as of October 1, 1996, for Fixed Rate and Adjustable Mortgage Loans
(ther "Sale and Servicing Agreement").
B. MSMC, as seller, Norwest Bank Minnesota, National Association,
as program administrator (the "Program Administrator"), and First Bank National
Association, as trustee for Mortgage Pass-Through Certificates, Weighted
Average Coupon Pass-Through Rates, Series 1997-P1 (the "Trustee"), have
this day entered into that certain Pooling and Servicing Agreement, effective
as of May 1, 1997 (the "Pooling Agreement"), with respect to certain but
not all of the mortgage loans covered by the Sale and Servicing Agreement.
The mortgage loans so included and so covered are collectively referred to
herein as the "Mortgage Loans" and are listed in Schedule 1 attached hereto.
NOW THEREFORE, consideration of the above recitals and the covenants
and agreements contained herein and for other good and valuable consideration
the receipt and acknowledgment of which are hereby acknowledged by the
parties, MSMC and NationsBanc hereby agree as follows:
1. Amendment of Sale and Servicing Agreement.
-----------------------------------------
Anything to the contrary in the Sale and Servicing Agreement
notwithstanding, the Sale and Servicing Agreement is hereby amended, but
only with respect to the Mortgage Loans, by the addition of the following
provisions:
A. Not to Affect Adversely.
-----------------------
NationsBanc shall neither take any action nor consent to the taking of
any action which would, or could reasonably be expected to, affect
materially and adversely (i) the coverage of the Mortgage Pool
Insurance Policy or the Special Hazard Policy maintained pursuant to
the Pooling Agreement (a copy of which are attached hereto as Exhhibits
A and B, respectively or (ii) the tax status of the Trust established
by the Pooling Agreement as a grantor trust, without in each case first
having obtained the prior written consent of the Program Administrator.
In addition, prior to any determination that an Advance by NationsBanc
would be non-recoverable, NationsBanc shall consult with the Program
Administrator to deterime possible coverage of the Mortgage Loan to
which such Advance relates under the Mortgage Pool Insurance Policy
or the Special Hazard Policy maintained pursuant to the Pooling
Agreement.
B. Environmental Matters. With respect to any Mortgage Loan as
---------------------
to which NationsBanc has received actual notice of, or has actual
knowledge of, the presence of any toxic or hazardous substance on the
related Mortgaged Property, NationsBanc shall not, on behalf of the
Trustee, either (i) obtain title to such Mortgaged Property as a result
of or in lieu of foreclosure or otherwise, or (ii) otherwise acquire
possession of, or take any other action, with respect to, such Mortgaged
Property, if, as a result of any such action, the Trustee or the related
Certificateholders would be considered to hold title to, to be a
"mortgagee-in-possession" of, or to be an "owner" or "operator" of such
Mortgaged Property within the meaning of the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended from time
to time, or any comparable law, unless NationsBanc has also previously
determined, based on its reasonable judgment and a prudent report
prepared by a Person who regularly conducts environmental audits using
customary mortgage lending industry standards, that:
(1) such Mortgaged Property is in compliance with applicable
environmental laws or, if not, that it would be in the best
economic interest of the Trust to take such actions as are
necessary to bring the Mortgaged Property into compliance
therewith; and
(2) there are no circumstances present at such Mortgaged Property
relating to the use, management or disposal of any hazardous
substances, hazardous materials, hazardous wastes, or petroleum-
based materials for which investigation, testing, monitoring,
containment, clean-up or remediation could be required under any
federal, state or local law or regulation, or that if any such
materials are present for which such action could be required, that
it would be in the best economic interest of the Trust to take such
actions with respect to the affected Mortgaged Property.
The cost of the environmental audit report contemplated by this
Section shall be advanced by NationsBanc, subject to NationsBanc's right
to be reimbursed therefor as a Servicing Advance pursuant to Section
11.05(iii) of the Sale and Servicing Agreement.
If NationsBanc determines, as described above, that it is in the
best economic interest of the Trust to take such actions as are
necessary to bring any such Mortgaged Property into compliance with
applicable environmental laws, or to take such action with respect to
the containment, clean-up or remediation of hazardous substances,
hazardous materials, hazardous wastes, or petroleum-based materials
affecting any such Mortgaged Property, then NationsBanc shall take such
action as it deems to be in the best economic interest of the Trust.
The cost of any such compliance, containment, cleanup or remediation
shall be advanced by NationsBanc, subject to NationsBanc's right to be
reimbursed therefor as a Servicing Advance from the Custodial Account as
a Servicing Advance pursuant to Section 11.05(iii) of the Sale and
Servicing Agreement.
2. No Other Change. Except as amended hereby, the Sale and Servicing
---------------
Agreement shall continue in full force and effect as originally written.
IN WITNESS WHEREOF, the parties have hereunto set their hands and seals
as of the date first above written.
MORGAN STANLEY MORTGAGE CAPITAL INC.
By: _____________________________
Name: _____________________________
Title:_____________________________
EXHIBIT 3
Execution Copy
--------------
INDENTURE
between
CITYSCAPE HOME LOAN OWNER TRUST 1997-1,
as Issuer
and
FIRST BANK NATIONAL ASSOCIATION,
as Indenture Trustee
Dated as of February 1, 1997
CITYSCAPE HOME LOAN OWNER TRUST 1997-1
Home Loan Asset Backed Notes and Certificates, Series 1997-1
TABLE OF CONTENTS
Page
----
ARTICLE I
Definitions
Section 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . I-1
Section 1.02. Rules of Construction . . . . . . . . . . . . . . . . I-8
ARTICLE II
THE NOTES
Section 2.01. Form . . . . . . . . . . . . . . . . . . . . . . . II-1
Section 2.02. Execution, Authentication, Delivery and Dating . . II-1
Section 2.03. Registration; Registration of Transfer and
Exchange. . . . . . . . . . . . . . . . . . . . . . II-2
Section 2.04. Mutilated, Destroyed, Lost or Stolen Notes. . . . . II-3
Section 2.05. Persons Deemed Owner . . . . . . . . . . . . . . . II-4
Section 2.06. Payment of Principal and Interest; Defaulted
Interest . . . . . . . . . . . . . . . . . . . . . II-4
Section 2.07. Cancellation . . . . . . . . . . . . . . . . . . . II-4
Section 2.08. Conditions Precedent to the Authentication of the
Initial Issuance of Notes . . . . . . . . . . . . . II-5
Section 2.09. Release of Collateral . . . . . . . . . . . . . . . II-7
Section 2.10. Book-Entry Notes . . . . . . . . . . . . . . . . . II-8
Section 2.11. Notices to Clearing Agency . . . . . . . . . . . . II-8
Section 2.12. Definitive Notes . . . . . . . . . . . . . . . . . II-9
Section 2.13. Tax Treatment . . . . . . . . . . . . . . . . . . . II-9
ARTICLE III
COVENANTS
Section 3.01. Payment of Principal and Interest . . . . . . . . . III-1
Section 3.02. Maintenance of Office or Agency . . . . . . . . . . III-1
Section 3.03. Money for Payments To Be Held in Trust . . . . . . III-1
Section 3.04. Existence . . . . . . . . . . . . . . . . . . . . . III-3
Section 3.05. Protection of Collateral . . . . . . . . . . . . . III-3
Section 3.06. Annual Opinions as to Collateral . . . . . . . . . III-4
Section 3.07. Performance of Obligations; Servicing of Home Loans III-4
Section 3.08. Negative Covenants . . . . . . . . . . . . . . . . III-6
Section 3.09. Annual Statement as to Compliance . . . . . . . . . III-7
Section 3.10. Covenants of the Issuer . . . . . . . . . . . . . . III-7
Section 3.11. Servicer's Obligations . . . . . . . . . . . . . . III-8
Section 3.12. Restricted Payments . . . . . . . . . . . . . . . . III-8
Section 3.14. Notice of Events of Default . . . . . . . . . . . . III-8
Section 3.15. Further Instruments and Acts . . . . . . . . . . . III-8
ARTICLE IV
SATISFACTION AND DISCHARGE
Section 4.01. Satisfaction and Discharge of Indenture . . . . . . IV-1
Section 4.02. Application of Trust Money . . . . . . . . . . . . IV-2
Section 4.03. Repayment of Moneys Held by Paying Agent . . . . . IV-2
ARTICLE V
REMEDIES
Section 5.01. Events of Default . . . . . . . . . . . . . . . . . . V-1
Section 5.02. Acceleration of Maturity; Rescission and Annulment . V-2
Section 5.03. Collection of Indebtedness and Suits for Enforcement by
Indenture Trustee . . . . . . . . . . . . . . . . . . V-3
Section 5.04. Remedies; Priorities . . . . . . . . . . . . . . . . V-5
Section 5.05. Optional Preservation of the Collateral . . . . . . . V-6
Section 5.06. Limitation of Suits . . . . . . . . . . . . . . . . . V-6
Section 5.07. Unconditional Rights of Noteholders To Receive
Principal and Interest. . . . . . . . . . . . . . . . V-7
Section 5.08. Restoration of Rights and Remedies . . . . . . . . . V-7
Section 5.09. Rights and Remedies Cumulative . . . . . . . . . . . V-7
Section 5.10. Delay or Omission Not a Waiver . . . . . . . . . . . V-8
Section 5.11. Control by Noteholders . . . . . . . . . . . . . . . V-8
Section 5.12. Waiver of Past Defaults . . . . . . . . . . . . . . . V-8
Section 5.13. Undertaking for Costs . . . . . . . . . . . . . . . . V-9
Section 5.14. Waiver of Stay or Extension Laws . . . . . . . . . . V-9
Section 5.15. Action on Notes . . . . . . . . . . . . . . . . . . . V-9
Section 5.16. Performance and Enforcement of Certain Obligations . V-9
ARTICLE VI
THE INDENTURE TRUSTEE
Section 6.01. Duties of Indenture Trustee . . . . . . . . . . . . VI-1
Section 6.02. Rights of Indenture Trustee . . . . . . . . . . . . VI-2
Section 6.03. Individual Rights of Indenture Trustee . . . . . . VI-2
Section 6.04. Indenture Trustee's Disclaimer . . . . . . . . . . VI-3
Section 6.05. Notice of Defaults . . . . . . . . . . . . . . . . VI-3
Section 6.06. Reports by Indenture Trustee to Holders . . . . . . VI-3
Section 6.07. Compensation and Indemnity . . . . . . . . . . . . VI-3
Section 6.08. Replacement of Indenture Trustee . . . . . . . . . VI-3
Section 6.09. Successor Indenture Trustee by Merger . . . . . . . VI-4
Section 6.10. Appointment of Co-Indenture Trustee or Separate
Indenture Trustee . . . . . . . . . . . . . . . . . VI-5
Section 6.11. Eligibility; Disqualification . . . . . . . . . . . VI-6
Section 6.12. Preferential Collection of Claims Against Issuer . VI-6
ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
Section 7.01. Issuer To Furnish Indenture Trustee Names and
Addresses of Noteholders. . . . . . . . . . . . . . VII-1
Section 7.02. Preservation of Information; Communications to
Noteholders . . . . . . . . . . . . . . . . . . . . VII-1
Section 7.03. Reports by Issuer . . . . . . . . . . . . . . . . . VII-1
Section 7.04. Reports by Indenture Trustee . . . . . . . . . . . VII-2
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 8.01. Collection of Money . . . . . . . . . . . . . . . VIII-1
Section 8.02. Trust Accounts; Distributions . . . . . . . . . . VIII-1
Section 8.03. General Provisions Regarding Accounts . . . . . . VIII-2
Section 8.04. Servicer's Monthly Statements. . . . . . . . . . VIII-3
Section 8.05. Release of Collateral . . . . . . . . . . . . . . VIII-3
Section 8.06. Opinion of Counsel . . . . . . . . . . . . . . . VIII-3
ARTICLE IX
SUPPLEMENTAL INDENTURES
Section 9.01. Supplemental Indentures Without Consent of
Noteholders . . . . . . . . . . . . . . . . . . . . IX-1
Section 9.02. Supplemental Indentures with Consent of Noteholders IX-2
Section 9.03. Execution of Supplemental Indentures . . . . . . . IX-3
Section 9.04. Effect of Supplemental Indentures . . . . . . . . . IX-3
Section 9.05. Conformity with Trust Indenture Act . . . . . . . . IX-3
Section 9.06. Reference in Notes to Supplemental Indentures . . . IX-3
Section 9.07. Amendments to Trust Agreement. . . . . . . . . . . IX-4
ARTICLE X
REDEMPTION OF NOTES
Section 10.01. Redemption . . . . . . . . . . . . . . . . . . . . . X-1
Section 10.02. Form of Redemption Notice . . . . . . . . . . . . . . X-1
Section 10.03. Notes Payable on Redemption Date . . . . . . . . . . X-2
ARTICLE XI
MISCELLANEOUS
Section 11.01. Compliance Certificates and Opinions, etc. . . . . XI-1
Section 11.02. Form of Documents Delivered to Indenture Trustee . XI-2
Section 11.03. Acts of Noteholders . . . . . . . . . . . . . . . . XI-3
Section 11.04. Notices, etc., to Indenture Trustee, Issuer and
Rating Agencies . . . . . . . . . . . . . . . . . . XI-3
Section 11.05. Notices to Noteholders; Waiver . . . . . . . . . . XI-4
Section 11.06. (Reserved) . . . . . . . . . . . . . . . . . . . . XI-4
Section 11.07. Conflict with Trust Indenture Act . . . . . . . . . XI-4
Section 11.08. Effect of Headings and Table of Contents . . . . . XI-5
Section 11.09. Successors and Assigns . . . . . . . . . . . . . . XI-5
Section 11.10. Separability . . . . . . . . . . . . . . . . . . . XI-5
Section 11.11. Benefits of Indenture . . . . . . . . . . . . . . . XI-5
Section 11.12. Legal Holidays . . . . . . . . . . . . . . . . . . XI-5
Section 11.13. GOVERNING LAW . . . . . . . . . . . . . . . . . . . XI-5
Section 11.14. Counterparts . . . . . . . . . . . . . . . . . . . XI-5
Section 11.15. Recording of Indenture . . . . . . . . . . . . . . XI-5
Section 11.16. Trust Obligation . . . . . . . . . . . . . . . . . XI-5
Section 11.17. No Petition . . . . . . . . . . . . . . . . . . . . XI-6
Section 11.18. Inspection . . . . . . . . . . . . . . . . . . . . XI-6
EXHIBITS
SCHEDULE A - Schedule of Home Loans
EXHIBIT A - Form of Notes
This Indenture, dated as of February 1, 1997, between CITYSCAPE HOME
LOAN OWNER TRUST 1997-1, a Delaware business trust, as Issuer (the "Issuer"),
and First Bank National Association, as Indenture Trustee (the "Indenture
Trustee"),
WITNESSETH THAT:
Each party hereto agrees as follows for the benefit of the other party
and for the equal and ratable benefit of the holders of the Issuer's Class
A-1 6.54% Home Loan Asset Backed Notes (the "Class A-1 Notes"),
---------------
Class A-2 6.50% Home Loan Asset Backed Notes (the "Class A-2 Notes"),
---------------
Class A-3 6.63% Home Loan Asset Backed Notes (the "Class A-3 Notes"),
---------------
Class A-4 7.23% Home Loan Asset Backed Notes (the "Class A-4 Notes"),
---------------
Class M-1 7.58% Home Loan Asset Backed Notes (the "Class M-1 Notes") and
Class M-2 7.87% Home Loan Asset Backed Notes (the "Class M-2 Notes" and,
together with the Class A-1, Class A-2, Class A-3, Class A-4 and Class M-1
Notes, the "Notes"):
-----
GRANTING CLAUSE
Subject to the terms of this Indenture, the Issuer hereby Grants to the
Indenture Trustee at the Closing Date, as Indenture Trustee for the benefit
of the holders of the Notes, all of the Issuer's right, title and interest in
and to: (i) the Trust Estate (as defined in the Sale and Servicing
Agreement); (ii) all right, title and interest of the Issuer in the Sale and
Servicing Agreement (including the Issuer's right to cause the Transferor to
repurchase Home Loans from the Issuer under certain circumstances described
therein); (iii) all present and future claims, demands, causes of action and
choses in action in respect of any or all of the foregoing and all payments
on or under and all proceeds of every kind and nature whatsoever in respect
of any or all of the foregoing, including all proceeds of the conversion
thereof, voluntary or involuntary, into cash or other liquid property, all
cash proceeds, accounts, accounts receivable, notes, drafts, acceptances,
chattel paper, checks, deposit accounts, insurance proceeds, condemnation
awards, rights to payment of any and every kind and other forms of
obligations and receivables, instruments and other property which at any time
constitute all or part of or are included in the proceeds of any of the
foregoing; (iv) all funds on deposit from time to time in the Trust Accounts
(including the Certificate Distribution Account); and (v) all other property
of the Trust from time to time (collectively, the "Collateral").
----------
The foregoing Grant is made in trust to secure the payment of principal
of and interest on, and any other amounts owing in respect of, the Notes, and
to secure compliance with the provisions of this Indenture, all as provided
in this Indenture.
The Indenture Trustee, as Indenture Trustee on behalf of the holders of
the Notes, acknowledges such Grant, accepts the trusts hereunder and agrees
to perform its duties required in this Indenture to the best of its ability
to the end that the interests of the holders of the Notes may be adequately
and effectively protected. The Indenture Trustee agrees and acknowledges
that the Indenture Trustee's Home Loan Files will be held by the Custodian
for the benefit of the Indenture Trustee in St. Paul, Minnesota. The
Indenture Trustee further agrees and acknowledges that each other item of
Collateral that is physically delivered to the Indenture Trustee will be held
by the Indenture Trustee in St. Paul, Minnesota.
ARTICLE I
Definitions
Section 1.01. Definitions. For all purposes of this Indenture,
-----------
except as otherwise expressly provided herein or unless the context otherwise
requires, capitalized terms not otherwise defined herein shall have the
meanings assigned to such terms in the Sale and Servicing Agreement. All
other capitalized terms used herein shall have the meanings specified herein.
"Act" has the meaning specified in Section 11.03(a).
--- ----------------
"Administration Agreement" means the Administration Agreement dated
------------------------
as of February 1, 1997, among the Administrator, the Issuer and the Indenture
Trustee.
"Administrator" means First Bank National Association, a national
-------------
banking association, or any successor Administrator under the Administration
Agreement.
"Affiliate" means, with respect to any specified Person, any other
---------
Person controlling or controlled by or under common control with such
specified Person. For the purposes of this definition, "control" when used
with respect to any Person means the power to direct the management and
policies of such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Authorized Officer" means, with respect to the Issuer, any officer
------------------
of the Owner Trustee who is authorized to act for the Owner Trustee in
matters relating to the Issuer and who is identified on the list of
Authorized Officers delivered by the Owner Trustee to the Indenture Trustee
on the Closing Date (as such list may be modified or supplemented from time
to time thereafter) and, so long as the Administration Agreement is in
effect, any Assistant Vice President or more senior officer of the
Administrator who is authorized to act for the Administrator in matters
relating to the Issuer and to be acted upon by the Administrator pursuant to
the Administration Agreement and who is identified on the list of Authorized
Officers delivered by the Administrator to the Indenture Trustee on the
Closing Date (as such list may be modified or supplemented from time to time
thereafter).
"Available Collection Amount" shall have the meaning set forth in the
---------------------------
Sale and Servicing Agreement.
"Basic Documents" means the Certificate of Trust, the Trust
---------------
Agreement, this Indenture, the Sale and Servicing Agreement, the
Administration Agreement, the Custodial Agreement, the Note Depository
Agreement, the Certificate Depository Agreement and other documents and
certificates delivered in connection therewith.
"Book-Entry Notes" means a beneficial interest in the Class A-1,
----------------
Class A-2, Class A-3, Class A-4, Class M-1 or Class M-2 Notes, ownership and
transfers of which shall be made through book entries by a Clearing Agency as
described in Section 2.10.
------------
"Business Day" means any day other than (i) a Saturday or a Sunday,
------------
or (ii) a day on which banking institutions in New York City or the city in
which the corporate trust office of the Indenture Trustee is located are
authorized or obligated by law or executive order to be closed.
"Certificate Depository Agreement" has the meaning specified in
--------------------------------
Section 1.01 of the Trust Agreement.
- ------------
"Certificate of Trust" means the certificate of trust of the Issuer
--------------------
substantially in the form of Exhibit B to the Trust Agreement.
---------
"Class A-1 Notes", "Class A-2 Notes", "Class A-3 Notes", "Class A-4
--------------- --------------- --------------- ---------
Notes", "Class M-1 Notes" and "Class M-2 Notes" shall each have the meaning
- ----- --------------- _______________
assigned thereto on the second preceding page hereof.
"Clearing Agency" means an organization registered as a "clearing
---------------
agency" pursuant to Section 17A of the Exchange Act.
"Clearing Agency Participant" means a broker, dealer, bank, other
---------------------------
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with
the Clearing Agency.
"Closing Date" means February 14, 1997.
------------
"Code" means the Internal Revenue Code of 1986, as amended from time
----
to time, and Treasury Regulations promulgated thereunder.
"Collateral" has the meaning specified in the Granting Clause of this
----------
Indenture.
"Company" means Cityscape Corp., a New York corporation or any
-------
successor in interest thereto.
"Corporate Trust Office" means the principal office of the Indenture
----------------------
Trustee at which at any particular time its corporate trust business shall be
administered, which office at date of execution of this Agreement is located
at 180 East Fifth Street, St. Paul, Minnesota 55101; Attention: Corporate
Trust Department, or at such other address as the Indenture Trustee may
designate from time to time by notice to the Noteholders and the Issuer, or
the principal corporate trust office of any successor Indenture Trustee at
the address designated by such successor Indenture Trustee by notice to the
Noteholders and the Issuer.
"DCR" means, Duff & Phelps Credit Rating Co., or any successor
---
thereto.
"Default" means any occurrence that is, or with notice or the lapse
-------
of time or both would become, an Event of Default.
"Definitive Notes" has the meaning specified in Section 2.12.
---------------- ------------
"Depositor" shall mean Financial Asset Securities Corp., a Delaware
---------
corporation, in its capacity as depositor under the Sale and Servicing
Agreement, and its successor in interest.
"Depository Institution" means any depository institution or trust
----------------------
company, including the Indenture Trustee, that (a) is incorporated under the
laws of the United States of America or any State thereof, (b) is subject to
supervision and examination by federal or state banking authorities and
(c) has outstanding unsecured commercial paper or other short-term unsecured
debt obligations that are rated A-1 by Standard & Poor's, Fitch and DCR (or
comparable ratings if S&P, Fitch and DCR are not the Rating Agencies).
"Distribution Date" means the 25th day of any month or if such 25th
-----------------
day is not a Business Day, the first Business Day immediately following such
day, commencing in March 1997.
"Due Period" means, with respect to any Distribution Date and any
----------
Class of Notes, the calendar month immediately preceding the month of such
Distribution Date.
"Event of Default" has the meaning specified in Section 5.01.
---------------- ------------
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
------------
"Executive Officer" means, with respect to any corporation, the Chief
-----------------
Executive Officer, Chief Operating Officer, Chief Financial Officer,
President, Executive Vice President, any Vice President, the Secretary or the
Treasurer of such corporation; and with respect to any partnership, any
general partner thereof.
"Fitch" means Fitch Investors Service, L.P., or any successor
-----
thereto.
"Grant" means mortgage, pledge, bargain, sell, warrant, alienate,
-----
remise, release, convey, assign, transfer, create, and grant a lien upon and
a security interest in and right of set-off against, deposit, set over and
confirm pursuant to this Indenture. A Grant of the Collateral or of any
other agreement or instrument shall include all rights, powers and options
(but none of the obligations) of the granting party thereunder, including the
immediate and continuing right to claim for, collect, receive and give
receipt for principal and interest payments in respect of the Collateral and
all other moneys payable thereunder, to give and receive notices and other
communications, to make waivers or other agreements, to exercise all rights
and options, to bring Proceedings in the name of the granting party or
otherwise, and generally to do and receive anything that the granting party
is or may be entitled to do or receive thereunder or with respect thereto.
"Holder" or "Noteholder" means the Person in whose name a Note is
------ ----------
registered on the Note Register.
"Indenture Trustee" means First Bank National Association, a national
-----------------
banking corporation, as Indenture Trustee under this Indenture, or any
successor Indenture Trustee under this Indenture.
"Independent" means, when used with respect to any specified Person,
-----------
that the Person (a) is in fact independent of the Issuer, any other obligor
on the Notes, the Seller and any Affiliate of any of the foregoing Persons,
(b) does not have any direct financial interest or any material indirect
financial interest in the Issuer, any such other obligor, the Seller or any
Affiliate of any of the foregoing Persons and (c) is not connected with the
Issuer, any such other obligor, the Seller or any Affiliate of any of the
foregoing Persons as an officer, employee, promoter, underwriter, trustee,
partner, director or person performing similar functions.
"Independent Certificate" means a certificate or opinion to be
-----------------------
delivered to the Indenture Trustee under the circumstances described in, and
otherwise complying with, the applicable requirements of Section
-------
11.01, made by an Independent appraiser or other expert appointed by an
- -----
Issuer Order and approved by the Indenture Trustee in the exercise of
reasonable care, and such opinion or certificate shall state that the signer
has read the definition of "Independent" in this Indenture and that the
signer is Independent within the meaning thereof.
"Interest Distribution Amount" means, on any Distribution Date, the
----------------------------
sum of (i) the Noteholders' Interest Distributable Amount and (ii) the
Certificateholders' Interest Distributable Amount.
"Issuer" means Cityscape Home Loan Owner Trust 1997-1 until a
------
successor replaces it and, thereafter, means the successor and, for purposes
of any provision contained herein and required by the TIA, each other obligor
on the Notes.
"Issuer Order" and "Issuer Request" mean a written order or request
------------ --------------
signed in the name of the Issuer by any one of its Authorized Officers and
delivered to the Indenture Trustee.
"Maturity Date" means with respect to any Class of Notes, the
-------------
Distribution Date in March 2018.
"Note" means a Class A-1 Note, Class A-2 Note, Class A-3 Note, Class
----
A-4 Note, Class M-1 Note or Class M-2 Note, as applicable.
"Note Depository Agreement" means the agreement dated February 14,
-------------------------
1997, among the Issuer, the Administrator, the Indenture Trustee and The
Depository Trust Company, as the initial Clearing Agency, relating to the
Book Entry Notes.
"Note Distribution Account" shall have the meaning set forth in the
-------------------------
Sale and Servicing Agreement.
"Note Interest Rate" means, with respect to any Class of Notes, the
------------------
applicable per annum rate specified below (computed on the basis of a 360-day
year assumed to consist of twelve 30-day months):
Class A-1: 6.54%
Class A-2: 6.50%
Class A-3: 6.63%
Class A-4: 7.23%
Class M-1: 7.58%
Class M-2: 7.87%
"Note Owner" means, with respect to a Book-Entry Note, the Person who
----------
is the beneficial owner of such Book-Entry Note, as reflected on the books of
the Clearing Agency or on the books of a Person maintaining an account with
such Clearing Agency (directly as a Clearing Agency Participant or as an
indirect participant, in each case in accordance with the rules of such
Clearing Agency).
"Note Register" and "Note Registrar" have the respective meanings
------------- --------------
specified in Section 2.03.
------------
"Officer's Certificate" means a certificate signed by any Authorized
---------------------
Officer of the Issuer or the Administrator, under the circumstances described
in, and otherwise complying with, the applicable requirements of Section
-------
11.01, and delivered to the Indenture Trustee. Unless otherwise
- -----
specified, any reference in this Indenture to an Officer's Certificate shall
be to an Officer's Certificate of any Authorized Officer of the Issuer or the
Administrator.
"Opinion of Counsel" means one or more written opinions of counsel
------------------
who may, except as otherwise expressly provided in this Indenture, be
employees of or counsel to the Issuer and who shall be satisfactory to the
Indenture Trustee, and which opinion or opinions shall be addressed to the
Indenture Trustee, as Indenture Trustee, and shall comply with any applicable
requirements of Section 11.01 and shall be in form and
-------------
substance satisfactory to the Indenture Trustee.
"Outstanding" means, with respect to any Note and as of the date of
-----------
determination, any Note theretofore authenticated and delivered under this
Indenture except:
(i) Notes theretofore canceled by the Note Registrar or delivered
to the Note Registrar for cancellation;
(ii) Notes or portions thereof the payment for which money in the
necessary amount has been theretofore deposited with the Indenture
Trustee or any Paying Agent in trust for the Holders of such Notes
(provided, however, that if such Notes are to be redeemed, notice of
such redemption has been duly given pursuant to this Indenture or
provision for such notice has been made, satisfactory to the Indenture
Trustee);
(iii) Notes in exchange for or in lieu of which other Notes
have been authenticated and delivered pursuant to this Indenture unless
proof satisfactory to the Indenture Trustee is presented that any such
Notes are held by a bona fide purchaser; provided, that in determining
whether the Holders of the requisite Outstanding Amount of the Notes
have given any request, demand, authorization, direction, notice,
consent, or waiver hereunder or under any Basic Document, Notes owned by
the Issuer, any other obligor upon the Notes, the Seller or any
Affiliate of any of the foregoing Persons shall be disregarded and
deemed not to be Outstanding, except that, in determining whether the
Indenture Trustee shall be protected in relying upon any such request,
demand, authorization, direction, notice, consent, or waiver, only Notes
that the Indenture Trustee knows to be so owned shall be so disregarded.
Notes so owned that have been pledged in good faith may be regarded as
Outstanding if the pledgee establishes to the satisfaction of the
Indenture Trustee the pledgee's right so to act with respect to such
Notes and that the pledgee is not the Issuer, any other obligor upon the
Notes, the Seller or any Affiliate of any of the foregoing Persons; and
(iv) Notes for which the related Maturity Date has occurred.
"Outstanding Amount" means the aggregate principal amount of all
------------------
Notes, or Class of Notes, as applicable, Outstanding at the date of
determination.
"Owner Trustee" means Wilmington Trust Company, not in its individual
-------------
capacity but solely as Owner Trustee under the Trust Agreement, or any
successor Owner Trustee under the Trust Agreement.
"Paying Agent" means the Indenture Trustee or any other Person that
------------
meets the eligibility standards for the Indenture Trustee specified in
Section 6.11 and is authorized by the Issuer to make payments to and
- ------------
distributions from the Note Distribution Account, including payment of
principal of or interest on the Notes on behalf of the Issuer.
"Payment Date" means any Distribution Date.
------------
"Person" means any individual, corporation, estate, partnership,
------
joint venture, association, joint stock company, trust (including any
beneficiary thereof), unincorporated organization, limited liability company,
limited liability partnership, or government or any agency or political
subdivision thereof.
"Predecessor Note" means, with respect to any particular Note, every
----------------
previous Note evidencing all or a portion of the same debt as that evidenced
by such particular Note; and, for the purpose of this definition, any Note
authenticated and delivered under Section 2.04 in
------------
lieu of a mutilated, lost, destroyed or stolen Note shall be deemed to
evidence the same debt as the mutilated, lost, destroyed or stolen Note.
"Proceeding" means any suit in equity, action at law or other
----------
judicial or administrative proceeding.
"Rating Agency Condition" means, with respect to any applicable
-----------------------
action, that each Rating Agency shall have been given 10 days (or such
shorter period as is acceptable to each Rating Agency) prior notice thereof
and that each of the Rating Agencies shall have notified the Depositor, the
Servicer and the Issuer in writing that such action will not result in a
reduction or withdrawal of the then current rating of the Notes.
"Rating Agency" means any or all of (i) Standard & Poor's, (ii) DCR,
-------------
or (iii) Fitch. If no such organization or successor is any longer in
existence, "Rating Agency" shall be a nationally recognized statistical
rating organization or other comparable Person rating the Notes.
"Record Date" means, as to each Distribution Date, the last Business
-----------
Day of the month immediately preceding the month in which such Distribution
Date occurs.
"Redemption Date" means in the case of a redemption of the Notes
---------------
pursuant to Section 10.01 or a payment to Noteholders pursuant to Section
------------- -------
10.03, the Distribution Date specified by the Servicer or the Issuer pursuant
- -----
to Section 10.01 or 10.03, as applicable.
----------------------
"Registered Holder" means the Person in whose name a Note is
-----------------
registered on the Note Register on the applicable Record Date.
"Required Distribution Amount" shall have the meaning set forth in
----------------------------
the Sale and Servicing Agreement.
"Responsible Officer" means, with respect to the Indenture Trustee,
-------------------
any officer within the Corporate Trust Office of the Indenture Trustee,
including any Vice President, Assistant Vice President, Assistant Treasurer,
Assistant Secretary or any other officer of the Indenture Trustee customarily
performing functions similar to those performed by any of the above
designated officers and also, with respect to a particular matter, any other
officer to whom such matter is referred because of such officer's knowledge
of and familiarity with the particular subject.
"Sale and Servicing Agreement" means the Sale and Servicing Agreement
----------------------------
dated as of February 1, 1997, among the Issuer, Financial Asset Securities
Corp., as Depositor, and Cityscape Corp., as Transferor and Servicer, and
First Bank National Association, as Indenture Trustee and Co-Owner Trustee.
"Schedule of Home Loans" means the listing of the Home Loans set
----------------------
forth in Schedule A, as supplemented as of any date on which a Deleted
----------
Home Loan has been repurchased from the Trust or substituted with a Qualified
Home Loan pursuant to Section 3.05 of the Sale and Servicing
------------
Agreement.
"Securities Act" means the Securities Act of 1933, as amended.
--------------
"Servicer" shall mean Cityscape Corp. in its capacity as servicer
--------
under the Sale and Servicing Agreement, and any Successor Servicer
thereunder.
"Standard & Poor's means Standard & Poor's Ratings Group, a division
-----------------
of The McGraw-Hill Companies, Inc or any successor thereto.
"State" means any one of the States of the United States of America
-----
or the District of Columbia.
"Successor Servicer" has the meaning specified in Section 3.07(e).
------------------ ---------------
"Termination Price" means in the case of a redemption of the Notes
-----------------
pursuant to Section 10.01, an amount equal to (i) the then outstanding
-------------
Class Principal Balances of the Notes plus accrued and unpaid interest
thereon to but excluding the Redemption Date, plus any unpaid Trust Fees and
Expenses and any unreimbursed Servicing Advances (including, if applicable,
Nonrecoverable Servicing Advances).
"Transferor" means Cityscape Corp. and any successor thereto under
----------
the Sale and Servicing Agreement.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939
------------------- ---
as in force on the date hereof, unless otherwise specifically provided.
"UCC" means, unless the context otherwise requires, the Uniform
---
Commercial Code, as in effect in the relevant jurisdiction, as amended from
time to time.
(b) Except as otherwise specified herein or as the context may
otherwise require, capitalized terms used but not otherwise defined herein
have the respective meanings set forth in the Sale and Servicing Agreement
for all purposes of this Indenture.
"indenture security holder" means a Noteholder.
-------------------------
"indenture to be qualified" means this Indenture.
-------------------------
"indenture trustee" or "institutional trustee" means the Indenture
----------------- ---------------------
Trustee.
"obligor" on the indenture securities means the Issuer and any other
-------
obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined in the TIA,
defined by TIA reference to another statute or defined by Commission rule
have the meaning assigned to them by such definitions.
Section 1.02. Rules of Construction. Unless the context otherwise
---------------------
requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning assigned
to it in accordance with generally accepted accounting principles as in
effect from time to time;
(iii) "or" is not exclusive;
(iv) "including" means including without limitation;
(v) words in the singular include the plural and words in the plural
include the singular; and
(vi) any agreement, instrument or statute defined or referred to herein
or in any instrument or certificate delivered in connection herewith means
such agreement, instrument or statute as from time to time amended, modified
or supplemented (as provided in such agreements) and includes (in the case of
agreements or instruments) references to all attachments thereto and
instruments incorporated therein; references to a Person are also to its
permitted successors and assigns.
ARTICLE II
THE NOTES
Section 2.01. Form. The Notes shall be designated as the "Cityscape
----
Home Loan Owner Trust 1997-1 Asset Backed Notes, Series 1997-1". Each Class
of Notes shall be in substantially the form set forth in Exhibit A
---------
hereto, with such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture, and may have such
letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may, consistently herewith, be determined by
the officers executing such Notes, as evidenced by their execution thereof.
Any portion of the text of any Note may be set forth on the reverse thereof,
with an appropriate reference thereto on the face of the Note.
The Definitive Notes shall be typewritten, printed, lithographed or
engraved or produced by any combination of these methods, all as determined
by the officers executing such Notes, as evidenced by their execution of such
Notes.
Each Note shall be dated the date of its authentication. The terms of
the Notes are set forth in Exhibit A. The terms of each Class of Notes
---------
are part of the terms of this Indenture.
Section 2.02. Execution, Authentication, Delivery and Dating. The
----------------------------------------------
Notes shall be executed on behalf of the Issuer by an Authorized Officer of
the Owner Trustee or the Administrator. The signature of any such Authorized
Officer on the Notes may be manual or facsimile.
Notes bearing the manual or facsimile signature of individuals who were
at any time Authorized Officers of the Owner Trustee or the Administrator
shall bind the Issuer, notwithstanding that such individuals or any of them
have ceased to hold such offices prior to the authentication and delivery of
such Notes or did not hold such offices at the date of such Notes.
Subject to the satisfaction of the conditions set forth in Section
-------
2.08, the Indenture Trustee shall upon Issuer Order authenticate and
- ----
deliver the six Classes of Notes for original issue in the following
principal amounts: Class A-1, $36,650,000; Class A-2, $10,000,000; Class A-
3, $15,350,000; Class A-4, $20,714,000; Class M-1, $17,703,000; Class M-2,
$11,609,000. The aggregate principal amounts of such Classes of Notes
outstanding at any time may not exceed such respective amounts.
The Notes that are authenticated and delivered by the Indenture Trustee
to or upon the order of the Issuer on the Closing Date shall be dated
February 14, 1997. All other Notes that are authenticated after the Closing
Date for any other purpose under the Indenture shall be dated the date of
their authentication. The Notes shall be issuable as registered Notes in the
minimum denomination of $100,000 and integral multiples of $1,000 in excess
thereof.
No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Note a
certificate of authentication substantially in the form provided for herein
executed by the Indenture Trustee by the manual signature of one of its
authorized signatories, and such certificate upon any Note shall be
conclusive evidence, and the only evidence, that such Note has been duly
authenticated and delivered hereunder.
Section 2.03. Registration; Registration of Transfer and Exchange.
---------------------------------------------------
The Issuer shall cause to be kept a register (the "Note Register") in
-------------
which, subject to such reasonable regulations as it may prescribe, the Issuer
shall provide for the registration of Notes and the registration of transfers
of Notes. The Indenture Trustee initially shall be the "Note Registrar" for
the purpose of registering Notes and transfers of Notes as herein provided.
Upon any resignation of any Note Registrar, the Issuer shall promptly appoint
a successor or, if it elects not to make such an appointment, assume the
duties of Note Registrar.
If a Person other than the Indenture Trustee is appointed by the Issuer
as Note Registrar, the Issuer will give the Indenture Trustee prompt written
notice of the appointment of such Note Registrar and of the location, and any
change in the location, of the Note Register, and the Indenture Trustee shall
have the right to inspect the Note Register at all reasonable times and to
obtain copies thereof, and the Indenture Trustee shall have the right to rely
upon a certificate executed on behalf of the Note Registrar by an Executive
Officer thereof as to the names and addresses of the Holders of the Notes and
the principal amounts and number of such Notes.
Upon surrender for registration of transfer of any Note at the office or
agency of the Issuer to be maintained as provided in Section 3.02, the
------------
Issuer shall execute, and the Indenture Trustee shall authenticate and the
Noteholder shall obtain from the Indenture Trustee, in the name of the
designated transferee or transferees, one or more new Notes of the same Class
in any authorized denominations, of a like aggregate principal amount.
At the option of the Holder, Notes may be exchanged for other Notes of
the same Class in any authorized denominations, of a like aggregate principal
amount, upon surrender of the Notes to be exchanged at such office or agency.
Whenever any Notes are so surrendered for exchange, the Issuer shall execute,
and the Indenture Trustee shall authenticate and the Noteholder shall obtain
from the Indenture Trustee, the Notes which the Noteholder making the
exchange is entitled to receive.
All Notes issued upon any registration of transfer or exchange of Notes
shall be the valid obligations of the Issuer, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of transfer or
exchange shall be duly endorsed by, or be accompanied by a written instrument
of transfer in form satisfactory to the Indenture Trustee duly executed by,
the Holder thereof or such Holder's attorney duly authorized in writing, with
such signature guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar, which requirements include membership or
participation in the Securities Transfer Agent's Medallion Program ("STAMP")
or such other "signature guarantee program" as may be determined by the Note
Registrar in addition to, or in substitution for, STAMP, all in accordance
with the Exchange Act.
No service charge shall be made to a Holder for any registration of
transfer or exchange of Notes, but the Issuer may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed
in connection with any registration of transfer or exchange of Notes, other
than exchanges pursuant to Section 2.04 or Section 9.06 not
------------ ------------
involving any transfer.
The preceding provisions of this Section notwithstanding, the Issuer
shall not be required to make and the Note Registrar need not register
transfers or exchanges of Notes selected for redemption or of any Note for a
period of 15 days preceding the due date for any payment with respect to such
Note.
Section 2.04. Mutilated, Destroyed, Lost or Stolen Notes. If (i)
------------------------------------------
any mutilated Note is surrendered to the Indenture Trustee, or the Indenture
Trustee receives evidence to its satisfaction of the destruction, loss or
theft of any Note, and (ii) there is delivered to the Indenture Trustee such
security or indemnity as may be reasonably required by it to hold the Issuer
and the Indenture Trustee harmless, then, in the absence of notice to the
Issuer, the Note Registrar or the Indenture Trustee that such Note has been
acquired by a bona fide purchaser, an Authorized Officer of the Owner Trustee
or the Administrator on behalf of the Issuer shall execute, and upon its
request the Indenture Trustee shall authenticate and deliver, in exchange for
or in lieu of any such mutilated, destroyed, lost or stolen Note, a
replacement Note of the same Class; provided, however, that if any such
destroyed, lost or stolen Note, but not a mutilated Note, shall have become
or within seven days shall be due and payable, or shall have been called for
redemption, instead of issuing a replacement Note, the Issuer may pay such
destroyed, lost or stolen Note when so due or payable or upon the Redemption
Date without surrender thereof. If, after the delivery of such replacement
Note or payment of a destroyed, lost or stolen Note pursuant to the proviso
to the preceding sentence, a bona fide purchaser of the original Note in lieu
of which such replacement Note was issued presents for payment such original
Note, the Issuer and the Indenture Trustee shall be entitled to recover such
replacement Note (or such payment) from the Person to whom it was delivered
or any Person taking such replacement Note from such Person to whom such
replacement Note was delivered or any assignee of such Person, except a bona
fide purchaser, and shall be entitled to recover upon the security or
indemnity provided therefor to the extent of any loss, damage, cost or
expense incurred by the Issuer or the Indenture Trustee in connection
therewith.
Upon the issuance of any replacement Note under this Section, the Issuer
may require the payment by the Holder of such Note of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other reasonable expenses (including the fees and expenses of
the Indenture Trustee) connected therewith.
Every replacement Note issued pursuant to this Section in replacement of
any mutilated, destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Issuer, whether or not the
mutilated, destroyed, lost or stolen Note shall be at any time enforceable by
anyone, and shall be entitled to all the benefits of this Indenture equally
and proportionately with any and all other Notes duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Notes.
Section 2.05. Persons Deemed Owner. Prior to due presentment for
--------------------
registration of transfer of any Note, the Issuer, the Indenture Trustee and
any agent of the Issuer or the Indenture Trustee may treat the Person in
whose name any Note is registered (as of the day of determination) as the
owner of such Note for the purpose of receiving payments of principal of and
interest, if any, on such Note and for all other purposes whatsoever, whether
or not such Note be overdue, and none of the Issuer, the Indenture Trustee or
any agent of the Issuer or the Indenture Trustee shall be affected by notice
to the contrary.
Section 2.06. Payment of Principal and Interest; Defaulted Interest.
-----------------------------------------------------
(a) Each Class of Notes shall accrue interest at the related Note Interest
Rate, and such interest shall be payable on each Distribution Date as
specified in Exhibit A hereto, subject to Section 3.01. Any
------------
installment of interest or principal, if any, payable on any Note that is
punctually paid or duly provided for by the Issuer on the applicable
Distribution Date shall be paid to the Person in whose name such Note (or one
or more Predecessor Notes) is registered on the Record Date by check mailed
first-class postage prepaid to such Person's address as it appears on the
Note Register on such Record Date, except that, unless Definitive Notes have
been issued pursuant to Section 2.12, with respect to Notes
------------
registered on the Record Date in the name of the nominee of the Clearing
Agency (initially, such nominee to be Cede & Co.), payment will be made by
wire transfer in immediately available funds to the account designated by
such nominee and except for the final installment of principal payable with
respect to such Note on a Distribution Date or on the applicable Maturity
Date for such Class of Notes (and except for the Termination Price for any
Note called for redemption pursuant to Section 10.01), which shall be payable
-------------
as provided below. The funds represented by any such checks returned
undelivered shall be held in accordance with Section 3.03.
------------
(b) The principal of each Note shall be payable in installments on
each Distribution Date as provided in the forms of the Notes set forth
in Exhibit A hereto. Notwithstanding the foregoing, the entire unpaid
---------
principal amount of the Notes of a Class of Notes shall be due and payable,
if not previously paid, on the earlier of (i) the applicable Maturity Date of
such Class, (ii) the Redemption Date or (iii) the date on which an Event of
Default shall have occurred and be continuing, if the Indenture Trustee or
the Holders of Notes representing not less than a majority of the Outstanding
Amount of the Notes have declared the Notes to be immediately due and payable
in the manner provided in Section 5.02. All principal payments on each
------------
Class of Notes shall be made pro rata to the Noteholders of such Class
entitled thereto. The Indenture Trustee shall notify the Person in
whose name a Note is registered at the close of business on the Record
Date preceding the Distribution Date on which the Issuer expects that
the final installment of principal of and interest on such Note will
be paid. Such notice shall be mailed or transmitted by facsimile prior
to such final Distribution Date and shall specify that such final installment
will be payable only upon presentation and surrender of such Note and shall
specify the place where such Note may be presented and surrendered for
payment of such installment. Notices in connection with redemptions of Notes
shall be mailed to Noteholders as provided in Section 10.02.
-------------
Section 2.07. Cancellation. All Notes surrendered for payment,
------------
registration of transfer, exchange or redemption shall, if surrendered to any
Person other than the Indenture Trustee, be delivered to the Indenture
Trustee and shall be promptly canceled by the Indenture Trustee. The Issuer
may at any time deliver to the Indenture Trustee for cancellation any Notes
previously authenticated and delivered hereunder which the Issuer may have
acquired in any manner whatsoever, and all Notes so delivered shall be
promptly canceled by the Indenture Trustee. No Notes shall be authenticated
in lieu of or in exchange for any Notes canceled as provided in this Section,
except as expressly permitted by this Indenture. All canceled Notes may be
held or disposed of by the Indenture Trustee in accordance with its standard
retention or disposal policy as in effect at the time unless the Issuer shall
direct by an Issuer Order that they be destroyed or returned to it; provided,
that such Issuer Order is timely and the Notes have not been previously
disposed of by the Indenture Trustee.
Section 2.08. Conditions Precedent to the Authentication of the
-------------------------------------------------
Initial Issuance of Notes. On or prior to the Closing Date, the Notes
- -------------------------
may be authenticated by the Indenture Trustee, upon Issuer Request and upon
receipt by the Indenture Trustee of the following:
(a) An Issuer Order authorizing the execution and authentication of
such Notes by the Issuer.
(b) All of the items of Collateral which shall be delivered to the
Indenture Trustee or its designee.
(c) An executed counterpart of the Trust Agreement.
(d) An Opinion of Counsel dated as of the Closing Date addressed to the
Indenture Trustee to the effect that:
(i) all instruments furnished to the Indenture Trustee as
conditions precedent to the authentication of the Notes by the Indenture
Trustee pursuant to the Indenture conform to the requirements of this
Indenture and constitute all the documents required to be delivered
hereunder for the Indenture Trustee to authenticate the Notes;
(ii) all conditions precedent provided for in this Indenture
relating to the authentication of the Notes have been complied with;
(iii) the Owner Trustee has power and authority to execute,
deliver and perform its obligations under the Trust Agreement;
(iv) the Issuer has been duly formed, is validly existing as a
business trust under the laws of the State of Delaware, 12 Del. C.
Section 3801, et seq., and has power, authority and legal right to
execute and deliver this Indenture, the Administration Agreement and the
Sale and Servicing Agreement;
(v) assuming due authorization, execution and delivery thereof by
the Indenture Trustee, the Indenture is the valid, legal and binding
obligation of the Issuer, enforceable in accordance with its terms,
subject to bankruptcy, insolvency, reorganization, arrangement,
moratorium, fraudulent or preferential conveyance and other similar laws
of general application affecting the rights of creditors generally and
to general principles of equity (regardless of whether such enforcement
is considered in a proceeding in equity or at law);
(vi) the Notes, when executed and authenticated as provided herein
and delivered against payment therefor, will be the valid, legal and
binding obligations of the Issuer pursuant to the terms of this
Indenture, entitled to the benefits of this Indenture, and will be
enforceable in accordance with their terms, subject to bankruptcy,
insolvency, reorganization, arrangement, moratorium, fraudulent or
preferential conveyance and other similar laws of general application
affecting the rights of creditors generally and to general principles of
equity (regardless of whether such enforcement is considered in a
proceeding in equity or at law);
(vii) the Trust Agreement authorizes the Issuer to Grant the
Collateral to the Indenture Trustee as security for the Notes and the
Owner Trustee has taken all necessary action under the Trust Agreement
to Grant the Collateral to the Indenture Trustee;
(viii) this Indenture has been duly qualified under the Trust
Indenture Act of 1939;
(ix) this Indenture, together with the Grant of the Collateral to
the Indenture Trustee, creates a valid security interest in the
Collateral in favor of the Indenture Trustee for the benefit of the
Noteholders;
(x) such action has been taken with respect to delivery of
possession of the Collateral, and with respect to the execution and
filing of this Indenture and any financing statements as are necessary
to make effective and to perfect a first priority security interest
created by this Indenture in the Collateral in favor of the Indenture
Trustee, except that with respect to the Debt Instruments, possession of
such Debt Instruments must be maintained by the Indenture Trustee or an
agent of the Indenture Trustee (other than the Issuer), an Affiliate of
the Issuer, or a "securities intermediary," as defined in Section 8.102
of the UCC, an agent of the Indenture Trustee; and
(xi) no authorization, approval or consent of any governmental body
having jurisdiction in the premises which has not been obtained by the
Issuer is required to be obtained by the Issuer for the valid issuance
and delivery of the Notes, except that no opinion need be expressed with
respect to any such authorizations, approvals or consents as may be
required under any state securities "blue sky" laws.
(e) An Officer's Certificate dated as of the Closing Date complying
with the requirements of Section 11.01 and stating that:
-------------
(i) the Issuer is not in Default under this Indenture and the
issuance of the Notes applied for will not result in any breach of any
of the terms, conditions or provisions of, or constitute a default
under, the Trust Agreement, any indenture, mortgage, deed of trust or
other agreement or instrument to which the Issuer is a party or by which
it is bound, or any order of any court or administrative agency entered
in any proceeding to which the Issuer is a party or by which it may be
bound or to which it may be subject, and that all conditions precedent
provided in this Indenture relating to the authentication and delivery
of the Notes applied for have been complied with;
(ii) the Issuer is the owner of all of the Home Loans, has not
assigned any interest or participation in the Home Loans (or, if any
such interest or participation has been assigned, it has been released)
and has the right to Grant all of the Home Loans to the Indenture
Trustee;
(iii) the Issuer has Granted to the Indenture Trustee all of
its right, title, and interest in the Collateral, and has delivered or
caused the same to be delivered to the Indenture Trustee;
(iv) attached thereto are true and correct copies of letters signed
by Standard & Poor's, Fitch and DCR confirming that the Class A-1, Class
A-2, Class A-3 and Class A-4 Notes have been rated "AAA" and letters
signed by Standard & Poor's and DCR confirming that the Class M-1 Notes
have been rated "AA", the Class M-2 Notes have been rated "A" and the
Certificates have been rated "BBB+"; and
(v) all conditions precedent provided for in this Indenture
relating to the authentication of the Notes have been complied with.
Section 2.09. Release of Collateral. (a) Except as otherwise
---------------------
provided in subsections (b) and (c) hereof and Section 11.01 and the
--------------
terms of the Basic Documents, the Indenture Trustee shall release property
from the lien of this Indenture only upon receipt of an Issuer Request
accompanied by an Officer's Certificate, an Opinion of Counsel and
Independent Certificates in accordance with TIA Sections 314(c) and 314(d)(l)
or an Opinion of Counsel in lieu of such Independent Certificates to the
effect that the TIA does not require any such Independent Certificates.
(b) Notwithstanding clause (a) above, the Servicer in accordance with
Accepted Servicing Procedures, on behalf of the Issuer, shall be entitled to
obtain a release from the lien of this Indenture for any Home Loan and the
related Mortgaged Property at any time (i) after a payment by the Transferor
or the Issuer of the Purchase Price of the Home Loan, (ii) after a Qualified
Substitute Home Loan is substituted for such Home Loan and payment of the
Substitution Adjustment, if any, (iii) after liquidation of the Home Loan in
accordance with Section 4.02 of the Sale and Servicing Agreement and the
deposit of all Recoveries thereon in the Collection Account, or (iv) upon the
termination of a Home Loan (due to, among other causes, a prepayment in full
of the Home Loan and sale or other disposition of the related Mortgaged
Property), if the Issuer delivers to the Indenture Trustee an Issuer Request
(A) identifying the Home Loan and the related Mortgaged Property to be
released, (B) requesting the release thereof, (C) setting forth the amount
deposited in the Collection Account with respect thereto, and (D) certifying
that the amount deposited in the Collection Account (x) equals the Purchase
Price of the Home Loan, in the event a Home Loan and the related Mortgaged
Property are being released from the lien of this Indenture pursuant to item
(i) above, (y) equals the Substitution Adjustment related to the Qualified
Substitute Home Loan and the Deleted Home Loan released from the lien of the
Indenture pursuant to item (ii) above, or (z) equals the entire amount of
Recoveries received with respect to such Home Loan and the related Mortgaged
Property in the event of a release from the lien of this Indenture pursuant
to items (iii) or (iv) above.
(c) The Indenture Trustee shall, if requested by the Servicer,
temporarily release or cause the Custodian to temporarily release to the
Servicer the Indenture Trustee's Home Loan File pursuant to the provisions of
Section 7.02 of the Sale and Servicing Agreement upon compliance by the
Servicer of the provisions thereof provided that the Indenture Trustee's Home
Loan File shall have been stamped to signify the Issuer's pledge to the
Indenture Trustee under the Indenture.
Section 2.10. Book-Entry Notes. The Notes, upon original issuance,
----------------
will be issued in the form of typewritten Notes representing the Book-Entry
Notes, to be delivered to The Depository Trust Company, the initial Clearing
Agency, by, or on behalf of, the Issuer. The Book-Entry Notes shall be
registered initially on the Note Register in the name of Cede & Co., the
nominee of the initial Clearing Agency, and no Owner thereof will receive a
definitive Note representing such Note Owner's interest in such Note, except
as provided in Section 2.12. Unless and until definitive, fully registered
------------
Notes (the "Definitive Notes") have been issued to such Note Owners pursuant
to Section 2.12:
------------
(i) the provisions of this Section shall be in full force and
effect;
(ii) the Note Registrar and the Indenture Trustee shall be entitled
to deal with the Clearing Agency for all purposes of this Indenture
(including the payment of principal of and interest on the Notes and the
giving of instructions or directions hereunder) as the sole holder of
the Notes, and shall have no obligation to the Note Owners;
(iii) to the extent that the provisions of this Section
conflict with any other provisions of this Indenture, the provisions of
this Section shall control;
(iv) the rights of Note Owners shall be exercised only through the
Clearing Agency and shall be limited to those established by law and
agreements between such Note Owners and the Clearing Agency and/or the
Clearing Agency Participants pursuant to the Note Depository Agreement.
Unless and until Definitive Notes are issued pursuant to Section 2.12,
------------
the initial Clearing Agency will make transfers among the Clearing
Agency Participants and receive and transmit payments of principal of
and interest on the Notes to such Clearing Agency Participants; and
(v) whenever this Indenture requires or permits actions to be
taken based upon instructions or directions of Holders of Notes
evidencing a specified percentage of the Outstanding Amount of the
Notes, the Clearing Agency shall be deemed to represent such percentage
only to the extent that it has received instructions to such effect from
Note Owners and/or Clearing Agency Participants owning or representing,
respectively, such required percentage of the beneficial interest in the
Notes and has delivered such instructions to the Indenture Trustee.
Section 2.11. Notices to Clearing Agency. Whenever a notice or
--------------------------
other communication to the Noteholders is required under this Indenture,
unless and until Definitive Notes shall have been issued to such Note Owners
pursuant to Section 2.12, the Indenture Trustee shall give all such
------------
notices and communications specified herein to be given to Holders of the
Notes to the Clearing Agency, and shall have no obligation to such Note
Owners.
Section 2.12. Definitive Notes. If (i) the Administrator advises
----------------
the Indenture Trustee in writing that the Clearing Agency is no longer
willing or able to properly discharge its responsibilities with respect to
the Book-Entry Notes and the Administrator is unable to locate a qualified
successor, (ii) the Administrator at its option advises the Indenture Trustee
in writing that it elects to terminate the book-entry system through the
Clearing Agency or (iii) after the occurrence of an Event of Default, Owners
of the Book-Entry Notes representing beneficial interests aggregating at
least a majority of the Outstanding Amount of such Notes advise the Clearing
Agency in writing that the continuation of a book-entry system through the
Clearing Agency is no longer in the best interests of such Note Owners, then
the Clearing Agency shall notify all Note Owners and the Indenture Trustee of
the occurrence of such event and of the availability of Definitive Notes to
Note Owners requesting the same. Upon surrender to the Indenture Trustee of
the typewritten Notes representing the Book-Entry Notes by the Clearing
Agency, accompanied by registration instructions, the Issuer shall execute
and the Indenture Trustee shall authenticate the Definitive Notes in
accordance with the instructions of the Clearing Agency. None of the Issuer,
the Note Registrar or the Indenture Trustee shall be liable for any delay in
delivery of such instructions and may conclusively rely on, and shall be
protected in relying on, such instructions. Upon the issuance of Definitive
Notes, the Indenture Trustee shall recognize the Holders of the Definitive
Notes as Noteholders.
Section 2.13. Tax Treatment. The Issuer has entered into this
-------------
Indenture, and the Notes will be issued, with the intention that, for all
purposes, the Notes will qualify as indebtedness of the Issuer secured by the
Collateral. The Issuer, by entering into this Indenture, and each
Noteholder, by its acceptance of a Note (and each Note Owner by its
acceptance of an interest in the applicable Book-Entry Note), agree to treat
the Notes for all purposes as indebtedness of the Issuer.
ARTICLE III
COVENANTS
Section 3.01. Payment of Principal and Interest. The Issuer will
---------------------------------
duly and punctually pay (or will cause to be duly and punctually paid) the
principal of and interest, if any, on the Notes in accordance with the terms
of the Notes and this Indenture. Without limiting the foregoing, subject to
and in accordance with Section 8.02(c), the Issuer will cause
---------------
to be distributed all amounts on deposit in the Note Distribution Account on
each Distribution Date deposited therein pursuant to the Sale and Servicing
Agreement (i) for the benefit of the Class A-1 Notes, to the Class A-1
Noteholders, (ii) for the benefit of the Class A-2 Notes, to the Class A-2
Noteholders, (iii) for the benefit of the Class A-3 Notes, to the Class A-3
Noteholders, (iv) for the benefit of the Class A-4 Notes, to the Class A-4
Noteholders, (v) for the benefit of the Class M-1 Notes, to the Class M-1
Noteholders, and (vi) for the benefit of the Class M-2 Notes, to the Class M-
2 Noteholders. Amounts properly withheld under the Code by any Person from a
payment to any Noteholder of interest and/or principal shall be considered as
having been paid by the Issuer to such Noteholder for all purposes of this
Indenture.
The Notes shall be non-recourse obligations of the Issuer and shall be
limited in right of payment to amounts available from the Collateral, as
provided in this Indenture. The Issuer shall not otherwise be liable for
payments on the Notes. If any other provision of this Indenture shall be
deemed to conflict with the provisions of this Section 3.01, the
------------
provisions of this Section 3.01 shall control.
------------
Section 3.02. Maintenance of Office or Agency. The Issuer will or
-------------------------------
will cause the Administrator to maintain in St. Paul, Minnesota an office or
agency where Notes may be surrendered for registration of transfer or
exchange, and where notices and demands to or upon the Issuer in respect of
the Notes and this Indenture may be served. The Issuer hereby initially
appoints the Administrator to serve as its agent for the foregoing purposes
and to serve as Paying Agent with respect to the Notes and the Certificates.
The Issuer will give prompt written notice to the Indenture Trustee of the
location, and of any change in the location, of any such office or agency.
If at any time the Issuer shall fail to maintain any such office or agency or
shall fail to furnish the Indenture Trustee with the address thereof, such
surrenders, notices and demands may be made or served at the Corporate Trust
Office, and the Issuer hereby appoints the Indenture Trustee as its agent to
receive all such surrenders, notices and demands.
Section 3.03. Money for Payments To Be Held in Trust. As provided
--------------------------------------
in Section 8.02(a) and (b), all payments of amounts due and payable with
---------------
respect to any Notes that are to be made from amounts withdrawn from the
Collection Account and the Note Distribution Account pursuant to Section
-------
8.02(c) shall be made on behalf of the Issuer by the Indenture Trustee
- ------
or by the Paying Agent, and no amounts so withdrawn from the Collection
Account and the Note Distribution Account for payments of Notes shall
be paid over to the Issuer except as provided in this Section.
On or before the Business Day preceding each Distribution Date and
Redemption Date, the Paying Agent shall deposit or cause to be deposited in
the Note Distribution Account an aggregate sum sufficient to pay the amounts
due on such Distribution Date or Redemption Date under the Notes, such sum to
be held in trust for the benefit of the Persons entitled thereto, and (unless
the Paying Agent is the Indenture Trustee) shall promptly notify the
Indenture Trustee of its action or failure so to act.
Any Paying Agent shall be appointed by Issuer Order with written notice
thereof to the Indenture Trustee. Any Paying Agent appointed by the Issuer
shall be a Person who would be eligible to be Indenture Trustee hereunder as
provided in Section 6.11. The Issuer shall not appoint any
------------
Paying Agent (other than the Indenture Trustee) which is not, at the time of
such appointment, a Depository Institution.
The Issuer will cause each Paying Agent other than the Administrator to
execute and deliver to the Indenture Trustee an instrument in which such
Paying Agent shall agree with the Indenture Trustee (and if the Indenture
Trustee acts as Paying Agent, it hereby so agrees), subject to the provisions
of this Section, that such Paying Agent will:
(i) hold all sums held by it for the payment of amounts due with
respect to the Notes in trust for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or otherwise
disposed of as herein provided and pay such sums to such Persons as
herein provided;
(ii) give the Indenture Trustee notice of any default by the Issuer
(or any other obligor upon the Notes) of which it has actual knowledge
in the making of any payment required to be made with respect to the
Notes;
(iii) at any time during the continuance of any such default,
upon the written request of the Indenture Trustee, forthwith pay to the
Indenture Trustee all sums so held in trust by such Paying Agent;
(iv) immediately resign as a Paying Agent and forthwith pay to the
Indenture Trustee all sums held by it in trust for the payment of Notes
if at any time it ceases to meet the standards required to be met by a
Paying Agent at the time of its appointment; and
(v) comply with all requirements of the Code with respect to the
withholding from any payments made by it on any Notes of any applicable
withholding taxes imposed thereon and with respect to any applicable
reporting requirements in connection therewith; provided, however, that
with respect to withholding and reporting requirements applicable to
original issue discount (if any) on the Notes, the Issuer shall have
first provided the calculations pertaining thereto to the Indenture
Trustee.
The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, by
Issuer Order direct any Paying Agent to pay to the Indenture Trustee all sums
held in trust by such Paying Agent, such sums to be held by the Indenture
Trustee upon the same trusts as those upon which the sums were held by such
Paying Agent; and upon such payment by any Paying Agent to the Indenture
Trustee, such Paying Agent shall be released from all further liability with
respect to such money.
Subject to applicable laws with respect to escheat of funds or abandoned
property, any money held by the Indenture Trustee or any Paying Agent in
trust for the payment of any amount due with respect to any Note and
remaining unclaimed for two years after such amount has become due and
payable shall be discharged from such trust and be paid to the Issuer on
Issuer Request; and the Holder of such Note shall thereafter, as an unsecured
general creditor, look only to the Issuer for payment thereof (but only to
the extent of the amounts so paid to the Issuer), and all liability of the
Indenture Trustee or such Paying Agent with respect to such trust money shall
thereupon cease; provided, however, that the Indenture Trustee or such Paying
Agent, before being required to make any such repayment, shall at the expense
and direction of the Issuer cause to be published once, in a newspaper
published in the English language, customarily published on each Business Day
and of general circulation in The City of New York, notice that such money
remains unclaimed and that, after a date specified therein, which shall not
be less than 30 days from the date of such publication, any unclaimed balance
of such money then remaining will be repaid to the Issuer. The Indenture
Trustee shall also adopt and employ, at the expense and direction of the
Issuer, any other reasonable means of notification of such repayment
(including, but not limited to, mailing notice of such repayment to Holders
whose Notes have been called but have not been surrendered for redemption or
whose right to or interest in moneys due and payable but not claimed is
determinable from the records of the Indenture Trustee or of any Paying
Agent, at the last address of record for each such Holder).
Section 3.04. Existence. (a) Subject to Section 3.04(b), the
--------- ---------------
Issuer will keep in full effect its existence, rights and franchises as a
business trust under the laws of the State of Delaware (unless it becomes, or
any successor Issuer hereunder is or becomes, organized under the laws of any
other State or of the United States of America, in which case the Issuer will
keep in full effect its existence, rights and franchises under the laws of
such other jurisdiction) and will obtain and preserve its qualification to do
business in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of this Indenture, the
Notes and the Collateral.
(b) Any successor to the Owner Trustee appointed pursuant to Section
10.2 of the Trust Agreement shall be the successor Owner Trustee under this
Indenture without the execution or filing of any paper, instrument or further
act to be done on the part of the parties hereto.
(c) Upon any consolidation or merger of or other succession to the
Owner Trustee or Co-Owner Trustee, the Person succeeding to the Owner Trustee
or Co-Owner Trustee under the Trust Agreement may exercise every right and
power of the Owner Trustee or Co-Owner Trustee under this Indenture with the
same effect as if such Person had been named as the Owner Trustee or Co-Owner
Trustee herein.
Section 3.05. Protection of Collateral. The Issuer will from time
------------------------
to time execute and deliver all such supplements and amendments hereto and
all such financing statements, continuation statements, instruments of
further assurance and other instruments, and will take such other action
necessary or advisable to:
(i) provide further assurance with respect to the Grant of all or
any portion of the Collateral;
(ii) maintain or preserve the lien and security interest (and the
priority thereof) of this Indenture or carry out more effectively the
purposes hereof;
(iii) perfect, publish notice of or protect the validity of any
Grant made or to be made by this Indenture;
(iv) enforce any rights with respect to the Collateral; or
(v) preserve and defend title to the Collateral and the rights of
the Indenture Trustee and the Noteholders in such Collateral against the
claims of all persons and parties.
The Issuer hereby designates the Administrator its agent and
attorney-in-fact to execute any financing statement, continuation statement
or other instrument required to be executed pursuant to this Section 3.05.
------------
Section 3.06. Annual Opinions as to Collateral.
--------------------------------
On or before February 15 in each calendar year, beginning in 1998, the
Issuer shall furnish to the Indenture Trustee an Opinion of Counsel either
stating that, in the opinion of such counsel, such action has been taken with
respect to the recording, filing, re-recording and refiling of this
Indenture, any indentures supplemental hereto and any other requisite
documents and with respect to the execution and filing of any financing
statements and continuation statements as is necessary to maintain the lien
and security interest created by this Indenture and reciting the details of
such action or stating that in the opinion of such counsel no such action is
necessary to maintain such lien and security interest. Such Opinion of
Counsel shall also describe the recording, filing, re-recording and refiling
of this Indenture, any indentures supplemental hereto and any other requisite
documents and the execution and filing of any financing statements and
continuation statements that will, in the opinion of such counsel, be
required to maintain the lien and security interest of this Indenture until
February 15th of the following calendar year.
Section 3.07. Performance of Obligations; Servicing of Home Loans.
---------------------------------------------------
(a) The Issuer will not take any action and will use its best efforts not to
permit any action to be taken by others that would release any Person from
any of such Person's material covenants or obligations under any instrument
or agreement included in the Collateral or that would result in the
amendment, hypothecation, subordination, termination or discharge of, or
impair the validity or effectiveness of, any such instrument or agreement,
except as expressly provided in this Indenture, the Sale and Servicing
Agreement or such other instrument or agreement.
(b) The Issuer may contract with or otherwise obtain the assistance of
other Persons (including, without limitation, the Administrator under the
Administration Agreement) to assist it in performing its duties under this
Indenture, and any performance of such duties by a Person identified to the
Indenture Trustee in an Officer's Certificate of the Issuer shall be deemed
to be action taken by the Issuer. Initially, the Issuer has contracted with
the Servicer and the Administrator to assist the Issuer in performing its
duties under this Indenture. The Administrator must at all times be the same
person as the Indenture Trustee.
(c) The Issuer will punctually perform and observe all of its
obligations and agreements contained in this Indenture, the Basic Documents
and in the instruments and agreements included in the Collateral, including
but not limited to (i) filing or causing to be filed all UCC financing
statements and continuation statements required to be filed by the terms of
this Indenture and the Sale and Servicing Agreement and (ii) recording or
causing to be recorded all Mortgages, Assignments of Mortgage, all
intervening Assignments of Mortgage and all assumption and modification
agreements required to be recorded by the terms of the Sale and Servicing
Agreement, in accordance with and within the time periods provided for in
this Indenture and/or the Sale and Servicing Agreement, as applicable.
Except as otherwise expressly provided therein, the Issuer shall not waive,
amend, modify, supplement or terminate any Basic Document or any provision
thereof without the consent of the Indenture Trustee and the Holders of at
least a majority of the Outstanding Amount of the Notes.
(d) If the Issuer shall have knowledge of the occurrence of an Event of
Default under the Sale and Servicing Agreement, the Issuer shall promptly
notify the Indenture Trustee and the Rating Agencies thereof, and shall
specify in such notice the action, if any, the Issuer is taking with respect
of such default. If such an Event of Default shall arise from the failure of
the Servicer to perform any of its duties or obligations under the Sale and
Servicing Agreement with respect to the Home Loans, the Issuer shall take all
reasonable steps available to it to remedy such failure.
(e) As promptly as possible after the giving of notice of termination
to the Servicer of the Servicer's rights and powers pursuant to Section 10.01
of the Sale and Servicing Agreement, the Issuer shall appoint a successor
servicer (the "Successor Servicer"), and such
------------------
Successor Servicer shall accept its appointment by a written assumption in a
form acceptable to the Indenture Trustee. In the event that a Successor
Servicer has not been appointed and accepted its appointment at the time when
the Servicer ceases to act as Servicer, the Indenture Trustee without further
action shall automatically be appointed the Successor Servicer. The
Indenture Trustee may resign as the Servicer by giving written notice of such
resignation to the Issuer and in such event will be released from such duties
and obligations, such release not to be effective until the date a new
servicer enters into a servicing agreement with the Issuer as provided below.
Upon delivery of any such notice to the Issuer, the Issuer shall obtain a new
servicer as the Successor Servicer under the Sale and Servicing Agreement.
Any Successor Servicer other than the Indenture Trustee shall (i) satisfy the
criteria specified in Section 9.04(b) of the Sale and Servicing Agreement and
(ii) enter into a servicing agreement with the Issuer having substantially
the same provisions as the provisions of the Sale and Servicing Agreement
applicable to the Servicer. If within 30 days after the delivery of the
notice referred to above, the Issuer shall not have obtained such a new
servicer, the Indenture Trustee may appoint, or may petition a court of
competent jurisdiction to appoint, a Successor Servicer. In connection with
any such appointment, the Indenture Trustee may make such arrangements for
the compensation of such successor as it and such successor shall agree,
subject to the limitations set forth below and in the Sale and Servicing
Agreement, and in accordance with Section 10.02 of the Sale and
-------------
Servicing Agreement, the Issuer shall enter into an agreement with such
successor for the servicing of the Home Loans (such agreement to be in
form and substance satisfactory to the Indenture Trustee). The servicing
fee paid to any Successor Servicer shall not be in excess of the Servicing
Fee being paid to the initial Servicer. If the Indenture Trustee shall
succeed to the Servicer's duties as servicer of the Home Loans as provided
herein, it shall do so in its individual capacity and not in its capacity as
Indenture Trustee and, accordingly, the provisions of Article VI hereof shall
----------
be inapplicable to the Indenture Trustee in its duties as successor
Servicer and the servicing of the Home Loans. In case the Indenture
Trustee shall become successor Servicer under the Sale and Servicing
Agreement, the Indenture Trustee shall be entitled to appoint as Servicer
any one of its Affiliates, provided that it shall be fully liable for the
actions and omissions of such Affiliate in such capacity as Successor
Servicer.
(f) Upon any termination of the Servicer's rights and powers pursuant
to the Sale and Servicing Agreement, the Issuer shall promptly notify the
Indenture Trustee. As soon as a successor Servicer is appointed, the Issuer
shall notify the Indenture Trustee of such appointment, specifying in such
notice the name and address of such successor Servicer.
(g) Without derogating from the absolute nature of the assignment
granted to the Indenture Trustee under this Indenture or the rights of the
Indenture Trustee hereunder, the Issuer agrees (i) that it will not, without
the prior written consent of the Indenture Trustee, amend, modify, waive,
supplement, terminate or surrender, or agree to any amendment, modification,
supplement, termination, waiver or surrender of, the terms of any Collateral
(except to the extent otherwise provided in the Sale and Servicing Agreement)
or the Basic Documents, or waive timely performance or observance by the
Servicer or the Depositor under the Sale and Servicing Agreement; and (ii)
that any such amendment shall not (A) increase or reduce in any manner the
amount of, or accelerate or delay the timing of, distributions that are
required to be made for the benefit of the Noteholders or (B) reduce the
aforesaid percentage of the Notes that is required to consent to any such
amendment, without the consent of the Holders of all the Outstanding Notes.
If any such amendment, modification, supplement or waiver shall be so
consented to by the Indenture Trustee, the Issuer agrees, promptly following
a request by the Indenture Trustee to do so, to execute and deliver, in its
own name and at its own expense, such agreements, instruments, consents and
other documents as the Indenture Trustee may deem necessary or appropriate in
the circumstances.
Section 3.08. Negative Covenants. So long as any Notes are
------------------
Outstanding, the Issuer shall not:
(i) except as expressly permitted by this Indenture or the Sale
and Servicing Agreement (including but not limited to the Servicer's
rights as set forth therein), sell, transfer, exchange or otherwise
dispose of any of the properties or assets of the Issuer, including
those included in the Collateral, unless directed to do so by the
Indenture Trustee;
(ii) claim any credit on, or make any deduction from the principal
or interest payable in respect of, the Notes (other than amounts
properly withheld from such payments under the Code) or assert any claim
against any present or former Noteholder by reason of the payment of the
taxes levied or assessed upon any part of the Collateral;
(iii) engage in any business or activity other than as
permitted by the Trust Agreement or other than in connection with, or
relating to, the issuance of Notes pursuant to this Indenture, or amend
the Trust Agreement as in effect on the Closing Date other than in
accordance with Section 11.1 thereof,
------------
(iv) issue debt obligations under any other indenture;
(v) incur or assume any indebtedness or guaranty any indebtedness
of any Person, except for such indebtedness as may be incurred by the
Issuer in connection with the issuance of the Notes pursuant to this
Indenture;
(vi) dissolve or liquidate in whole or in part or merge or
consolidate with any other Person;
(vii) (A) permit the validity or effectiveness of this
Indenture to be impaired, or permit the lien of this Indenture to be
amended, hypothecated, subordinated, terminated or discharged, or permit
any Person to be released from any covenants or obligations with respect
to the Notes under this Indenture except as may be expressly permitted
hereby, (B) permit any lien, charge, excise, claim, security interest,
mortgage or other encumbrance (other than the lien of this Indenture)
to be created on or extend to or otherwise arise upon or burden the
Collateral or any part thereof or any interest therein or the proceeds
thereof (other than tax liens, mechanics' liens and other liens that
arise by operation of law, in each case on any of the Mortgaged
Properties and arising solely as a result of an action or omission of
the related Obligor) or (C) permit the lien of this Indenture not to
constitute a valid first priority (other than with respect to any such
tax, mechanics' or other lien) security interest in the Collateral;
(viii) remove the Administrator without cause unless the Rating
Agency Condition shall have been satisfied in connection with such
removal; or
(ix) take any other action or fail to take any action which may
cause the Issuer to be taxable as (a) an association pursuant to Section
7701 of the Code and the corresponding regulations or (b) as a taxable
mortgage pool pursuant to Section 7701(i) of the Code and the
corresponding regulations.
Section 3.09. Annual Statement as to Compliance. The Issuer will
---------------------------------
deliver to the Indenture Trustee, within 120 days after the end of each
fiscal year of the Issuer (commencing with the fiscal year 1998), an
Officer's Certificate stating, as to the Authorized Officer signing such
Officer's Certificate, that:
(i) a review of the activities of the Issuer during such year and
of its performance under this Indenture has been made under such
Authorized Officer's supervision; and
(ii) to the best of such Authorized Officer's knowledge, based on
such review, the Issuer has complied with all conditions and covenants
under this Indenture throughout such year, or, if there has been a
default in its compliance with any such condition or covenant,
specifying each such default known to such Authorized Officer and the
nature and status thereof.
Section 3.10. Covenants of the Issuer. All covenants of the Issuer
-----------------------
in this Indenture are covenants of the Issuer and are not covenants of the
Owner Trustee. The Owner Trustee is, and any successor Owner Trustee under
the Trust Agreement will be, entering into this Indenture solely as Owner
Trustee under the Trust Agreement and not in its respective individual
capacity, and in no case whatsoever shall the Owner Trustee or any such
successor Owner Trustee be personally liable on, or for any loss in respect
of, any of the statements, representations, warranties or obligations of the
Issuer hereunder, as to all of which the parties hereto agree to look solely
to the property of the Issuer.
Section 3.11. Servicer's Obligations. The Issuer shall cause the
----------------------
Servicer to comply with Sections 5.01, 6.01, 7.07 and Article IX of the
------------------------- ----------
Sale and Servicing Agreement.
Section 3.12. Restricted Payments. The Issuer shall not, directly
-------------------
or indirectly, (i) pay any dividend or make any distribution (by reduction of
capital or otherwise), whether in cash, property, securities or a combination
thereof, to the Owner Trustee or any owner of a beneficial interest in the
Issuer or otherwise with respect to any ownership or equity interest or
security in or of the Issuer or to the Servicer, (ii) redeem, purchase,
retire or otherwise acquire for value any such ownership or equity interest
or security or (iii) set aside or otherwise segregate any amounts for any
such purpose; provided, however, that the Issuer may make, or cause to be
made, (x) distributions to the Servicer, the Indenture Trustee, the Owner
Trustee, the Securityholders and the holders of the Residual Interest as
contemplated by, and to the extent funds are available for such purpose
under, the Sale and Servicing Agreement or the Trust Agreement and (y)
payments to the Indenture Trustee pursuant to Section 1(a)(ii) of the
Administration Agreement. The Issuer will not, directly or indirectly, make
or cause to be made payments to or distributions from the Collection Account
except in accordance with this Indenture and the Basic Documents.
Section 3.13. Treatment of Notes as Debt for Tax Purposes. The
-------------------------------------------
Issuer shall, and shall cause the Administrator to, treat the Notes as
indebtedness for all purposes.
Section 3.14. Notice of Events of Default. The Issuer shall give
---------------------------
the Indenture Trustee and the Rating Agencies prompt written notice of each
Event of Default hereunder, each default on the part of the Servicer or the
Transferor of its obligations under the Sale and Servicing Agreement and each
default on the part of the Transferor of its obligations under the Loan
Purchase Agreement.
Section 3.15. Further Instruments and Acts. Upon request of the
----------------------------
Indenture Trustee, the Issuer will execute and deliver such further
instruments and do such further acts as may be reasonably necessary or proper
to carry out more effectively the purpose of this Indenture.
ARTICLE IV
SATISFACTION AND DISCHARGE
Section 4.01. Satisfaction and Discharge of Indenture. This
---------------------------------------
Indenture shall cease to be of further effect with respect to the Notes
(except as to (i) rights of registration of transfer and exchange, (ii)
substitution of mutilated, destroyed, lost or stolen Notes, (iii) rights of
Noteholders to receive payments of principal thereof and interest thereon,
(iv) Sections 3.03, 3.04, 3.05, 3.08 and 3.10 hereof, (v) the
-------------------------------
rights, obligations and immunities of the Indenture Trustee hereunder
(including the rights of the Indenture Trustee under Section 6.07 and the
------------
obligations of the Indenture Trustee under Section 4.02) and (vi) the
------------
rights of Noteholders as beneficiaries hereof with respect to the property so
deposited with the Indenture Trustee payable to all or any of them), and the
Indenture Trustee, on demand of and at the expense of the Issuer, shall
execute proper instruments acknowledging satisfaction and discharge of this
Indenture with respect to the Notes, when all of the following have occurred:
(A) either
(1) all Notes theretofore authenticated and delivered (other than (i) Notes
that have been destroyed, lost or stolen and that have been replaced or
paid as provided in Section 2.04 and (ii) Notes for whose payment money
------------
has theretofore been deposited in trust or segregated and held in trust
by the Issuer and thereafter repaid to the Issuer or discharged from
such trust, as provided in Section 3.03) have been delivered to the
------------
Indenture Trustee for cancellation; or
(2) all Notes not theretofore delivered to the Indenture Trustee for
cancellation
a. have become due and payable,
b. will become due and payable within one year following the Maturity
Date applicable to the Class M-2 Notes, or
c. are to be called for redemption within one year under arrangements
satisfactory to the Indenture Trustee for the giving of notice of
redemption by the Indenture Trustee in the name, and at the
expense, of the Issuer, and the Issuer, in the case of a. or b.
above, has irrevocably deposited or caused to be irrevocably
deposited with the Indenture Trustee cash or direct obligations of
or obligations guaranteed by the United States of America (which
will mature prior to the date such amounts are payable), in trust
for such purpose, in an amount sufficient to pay and discharge the
entire indebtedness on such Notes not theretofore delivered to the
Indenture Trustee for cancellation when due to the applicable
Maturity Date of such Class of Notes or Redemption Date (if Notes
shall have been called for redemption pursuant to Section 10.01),
-------------
as the case may be; and
(B) the later of (a) eighteen months after payment in full of all
outstanding obligations under the Securities, (b) the payment in full of all
unpaid Trust Fees and Expenses and (c) the date on which the Issuer has paid
or caused to be paid all other sums payable hereunder by the Issuer; and
(C) the Issuer has delivered to the Indenture Trustee an Officer's
Certificate, an Opinion of Counsel and (if required by the TIA or the
Indenture Trustee) an Independent Certificate from a firm of certified public
accountants, each meeting the applicable requirements of Section 11.01(i) and,
----------------
subject to Section 11.02, each stating that all conditions precedent herein
-------------
provided for relating to the satisfaction and discharge of this Indenture with
respect to the Notes have been complied with.
Section 4.02. Application of Trust Money. All moneys deposited with
--------------------------
the Indenture Trustee pursuant to Sections 3.03 and 4.01 hereof shall be
-----------------------
held in trust and applied by it, in accordance with the provisions of the
Notes, the Sale and Servicing Agreement and this Indenture, to the payment,
either directly or through any Paying Agent, as the Indenture Trustee may
determine, to the Holders of the particular Notes for the payment or
redemption of which such moneys have been deposited with the Indenture
Trustee, of all sums due and to become due thereon for principal and
interest; but such moneys need not be segregated from other funds except to
the extent required herein or in the Sale and Servicing Agreement or required
by law.
Section 4.03. Repayment of Moneys Held by Paying Agent. In
----------------------------------------
connection with the satisfaction and discharge of this Indenture with respect
to the Notes, all moneys then held by any Paying Agent other than the
Indenture Trustee under the provisions of this Indenture with respect to such
Notes shall, upon demand of the Issuer, be paid to the Indenture Trustee to
be held and applied according to Section 3.03 and thereupon
------------
such Paying Agent shall be released from all further liability with respect
to such moneys.
ARTICLE V
REMEDIES
Section 5.01. Events of Default. "Event of Default,"wherever used
-----------------
herein, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order of
any court or any order, rule or regulation of any administrative or
governmental body):
(a) default in the payment of any interest on any Note when the
same becomes due and payable, and continuance of such default for a period of
five (5) days; or
(b) default in the payment of the principal of or any installment
of the principal of any Note when the same becomes due and payable, and
continuance of such default for a period of five (5) days; or
(c) default in the observance or performance of any covenant or
agreement of the Issuer made in this Indenture (other than a covenant or
agreement, a default in the observance or performance of which is elsewhere
in this Section specifically dealt with), or any representation or warranty
of the Issuer made in this Indenture, the Sale and Servicing Agreement or in
any certificate or other writing delivered pursuant hereto or in connection
herewith proving to have been incorrect in any material respect as of the
time when the same shall have been made, and such default shall continue or
not be cured, or the circumstance or condition in respect of which such
misrepresentation or warranty was incorrect shall not have been eliminated or
otherwise cured, for a period of 30 days after there shall have been given,
by registered or certified mail, to the Issuer by the Indenture Trustee or to
the Issuer and the Indenture Trustee by the Holders of at least 25% of the
Outstanding Amount of the Notes, a written notice specifying such default or
incorrect representation or warranty and requiring it to be remedied and
stating that such notice is a notice of Default hereunder; or
(d) default in the observance or performance of any covenant or
agreement of the Company made in the Trust Agreement or any representation or
warranty of the Company made in the Trust Agreement, proving to have been
incorrect in any material respect as of the time when the same shall have
been made, and such default shall continue or not be cured, or the
circumstance or condition in respect of which such misrepresentation or
warranty was incorrect shall not have been eliminated or otherwise cured, for
a period of 30 days after there shall have been given, by registered or
certified mail, to the Issuer by the Indenture Trustee or to the Issuer and
the Indenture Trustee by the Holders of at least 25% of the Outstanding
Amount of the Notes, a written notice specifying such default or incorrect
representation or warranty and requiring it to be remedied and stating that
such notice is a notice of Default hereunder;
(e) the filing of a decree or order for relief by a court having
jurisdiction in the premises in respect of the Issuer or any substantial part
of the Collateral in an involuntary case under any applicable federal or
state bankruptcy, insolvency or other similar law now or hereafter in effect,
or appointing a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of the Issuer or for any substantial part of
the Collateral, or ordering the winding-up or liquidation of the Issuer's
affairs, and such decree or order shall remain unstayed and in effect for a
period of 60 consecutive days; or
(f) the commencement by the Issuer of a voluntary case under any
applicable federal or state bankruptcy, insolvency or other similar law now
or hereafter in effect, or the consent by the Issuer to the entry of an order
for relief in an involuntary case under any such law, or the consent by the
Issuer to the appointment or taking possession by a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar official of the Issuer
or for any substantial part of the Collateral, or the making by the Issuer of
any general assignment for the benefit of creditors, or the failure by the
Issuer generally to pay its debts as such debts become due, or the taking of
any action by the Issuer in furtherance of any of the foregoing.
The Issuer shall deliver to the Indenture Trustee, within five days
after the occurrence thereof, written notice in the form of an Officer's
Certificate of any event which with the giving of notice and the lapse of
time would become an Event of Default under clauses (c) and (d) above, its
-------------------
status and what action the Issuer is taking or proposes to take with respect
thereto.
Section 5.02. Acceleration of Maturity; Rescission and Annulment.
--------------------------------------------------
If an Event of Default should occur and be continuing, then and in every such
case the Indenture Trustee, at the direction or upon the prior written
consent of the Holders of Notes representing not less than a majority of the
Outstanding Amount of the Notes may declare all the Notes to be immediately
due and payable, by a notice in writing to the Issuer (and to the Indenture
Trustee if given by Noteholders), and upon any such declaration the unpaid
principal amount of such Notes, together with accrued and unpaid interest
thereon through the date of acceleration, shall become immediately due and
payable.
At any time after such declaration of acceleration of maturity has been
made and before a judgment or decree for payment of the money due has been
obtained by the Indenture Trustee as hereinafter in this Article V
---------
provided, the Holders of Notes representing a majority of the Outstanding
Amount of the Notes, by written notice to the Issuer and the Indenture
Trustee, may rescind and annul such declaration and its consequences if:
(a) the Issuer has paid or deposited with the Indenture Trustee a sum
sufficient to pay:
1. all payments of principal of and interest on all Notes and all
other amounts that would then be due hereunder or upon such
Notes if the Event of Default giving rise to such acceleration
had not occurred; and
2. all sums paid or advanced by the Indenture Trustee hereunder
and the reasonable compensation, expenses, disbursements and
advances of the Indenture Trustee and its agents and counsel;
and
(b) all Events of Default, other than the nonpayment of the principal
of the Notes that has become due solely by such acceleration, have been cured
or waived as provided in Section 5.12.
------------
No such rescission shall affect any subsequent default or impair any
right consequent thereto.
Section 5.03. Collection of Indebtedness and Suits for Enforcement
----------------------------------------------------
by Indenture Trustee.
- --------------------
(a) The Issuer covenants that if (i) a default occurs in the
payment of any interest on any Note when the same becomes due and
payable, and such default continues for a period of five days, or (ii) a
default occurs in the payment of the principal of or any installment of
the principal of any Note when the same becomes due and payable, and
such default continues for a period of five days, the Issuer shall, upon
demand of the Indenture Trustee, pay to the Indenture Trustee, for the
benefit of the Holders of the Notes, the whole amount then due and
payable on such Notes for principal and interest, with interest upon the
overdue principal and, to the extent payment at such rate of interest
shall be legally enforceable, upon overdue installments of interest at
the respective Note Interest Rates and in addition thereto such further
amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses,
disbursements and advances of the Indenture Trustee and its agents and
counsel.
(b) In case the Issuer shall fail forthwith to pay such amounts
upon such demand, the Indenture Trustee may, and shall at the direction
of the majority of the Holders of the Notes, institute a Proceeding for
the collection of the sums so due and unpaid, and may prosecute such
Proceeding to judgment or final decree, and may enforce the same against
the Issuer or other obligor upon such Notes and collect in the manner
provided by law out of the property of the Issuer or other obligor upon
such Notes, wherever situated, the moneys adjudged or decreed to be
payable.
(c) If an Event of Default occurs and is continuing, the Indenture
Trustee may and shall at the direction of the majority of the Holders of
the Notes, as more particularly provided in Section 5.04, in its
------------
discretion, proceed to protect and enforce its rights and the rights
of the Noteholders, by such appropriate Proceedings as the Indenture
Trustee shall deem most effective to protect and enforce any such rights,
whether for the specific enforcement of any covenant or agreement in this
Indenture or in aid of the exercise of any power granted herein, or to
enforce any other proper remedy or legal or equitable right vested in the
Indenture Trustee by this Indenture or by law.
(d) In case there shall be pending, relative to the Issuer or any
other obligor upon the Notes or any Person having or claiming an
ownership interest in the Collateral, Proceedings under Title 11 of the
United States Code or any other applicable federal or state bankruptcy,
insolvency or other similar law, or in case a receiver, assignee or
trustee in bankruptcy or reorganization, liquidator, sequestrator or
similar official shall have been appointed for or taken possession of
the Issuer or its property or such other obligor or Person, or in case
of any other comparable judicial Proceedings relative to the Issuer or
other obligor upon the Notes, or to the creditors or property of the
Issuer or such other obligor, the Indenture Trustee, irrespective of
whether the principal of any Notes shall then be due and payable as
therein expressed or by declaration or otherwise and irrespective of
whether the Indenture Trustee shall have made any demand pursuant to the
provisions of this Section, shall be entitled and empowered by
intervention in such Proceedings or otherwise:
(i) to file and prove a claim or claims for the whole amount of
principal and interest owing and unpaid in respect of the Notes and to file
such other papers or documents as may be necessary or advisable in order to
have the claims of the Indenture Trustee (including any claim for reasonable
compensation to the Indenture Trustee, each predecessor Indenture Trustee,
and its agents, attorneys and counsel, and for reimbursement of all expenses
and liabilities incurred, and all advances made, by the Indenture Trustee and
each predecessor Indenture Trustee, except as a result of negligence or bad
faith) and of the Noteholders allowed in such Proceedings;
(ii) unless prohibited by applicable law and regulations, to vote on
behalf of the Holders of Notes in any election of a trustee, a standby
trustee or Person performing similar functions in any such Proceedings;
(iii) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute all amounts received with
respect to the claims of the Noteholders and the Indenture Trustee on their
behalf; and
(iv) to file such proofs of claim and other papers or documents as may
be necessary or advisable in order to have the claims of the Indenture
Trustee or the Holders of Notes allowed in any judicial proceedings relative
to the Issuer, its creditors and its property; and any trustee, receiver,
liquidator, custodian or other similar official in any such Proceeding is
hereby authorized by each of such Noteholders to make payments to the
Indenture Trustee and, in the event that the Indenture Trustee shall consent
to the making of payments directly to such Noteholders, to pay to the
Indenture Trustee such amounts as shall be sufficient to cover reasonable
compensation to the Indenture Trustee, each predecessor Indenture Trustee and
their respective agents, attorneys and counsel, and all other expenses and
liabilities incurred, and all advances made, by the Indenture Trustee and
each predecessor Indenture Trustee except as a result of negligence or bad
faith.
(e) Nothing herein contained shall be deemed to authorize the
Indenture Trustee to authorize or consent to or vote for or accept or
adopt on behalf of any Noteholder any plan of reorganization,
arrangement, adjustment or composition affecting the Notes or the rights
of any Holder thereof or to authorize the Indenture Trustee to vote in
respect of the claim of any Noteholder in any such proceeding except, as
aforesaid, to vote for the election of a trustee in bankruptcy or
similar Person.
(f) All rights of action and of asserting claims under this
Indenture, or under any of the Notes, may be enforced by the Indenture
Trustee without the possession of any of the Notes or the production
thereof in any trial or other Proceedings relative thereto, and any such
action or Proceedings instituted by the Indenture Trustee shall be
brought in its own name as trustee of an express trust, and any recovery
of judgment, subject to the payment of the expenses, disbursements and
compensation of the Indenture Trustee, each predecessor Indenture
Trustee and their respective agents and attorneys, shall be for the
ratable benefit of the Holders of the Notes.
(g) In any Proceedings brought by the Indenture Trustee (and also
any Proceedings involving the interpretation of any provision of this
Indenture to which the Indenture Trustee shall be a party), the
Indenture Trustee shall be held to represent all the Noteholders, and it
shall not be necessary to make any Noteholder a party to any such
Proceedings.
Section 5.04. Remedies; Priorities.
--------------------
(a) If an Event of Default shall have occurred and be continuing,
the Indenture Trustee may and at the direction of a majority of the
Holders of the Notes shall do one or more of the following (subject to
Section 5.05):
------------
(i) institute Proceedings in its own name and as trustee of an express
trust for the collection of all amounts then payable on the Notes or under
this Indenture with respect thereto, whether by declaration or otherwise,
enforce any judgment obtained, and collect from the Issuer and any other
obligor upon such Notes moneys adjudged due;
(ii) institute Proceedings from time to time for the complete or partial
foreclosure of this Indenture with respect to the Collateral;
(iii) exercise any remedies of a secured party under the UCC and
take any other appropriate action to protect and enforce the rights and
remedies of the Indenture Trustee or the Noteholders; and
(iv) sell the Collateral or any portion thereof or rights or interest
therein in a commercially reasonable manner, at one or more public or private
sales called and conducted in any manner permitted by law; provided,
however, that the Indenture Trustee may not sell or otherwise liquidate the
Collateral following an Event of Default, unless (A) the Holders of 100% of
the Outstanding Amount of the Notes consent thereto, (B) the proceeds of such
sale or liquidation distributable to the Noteholders are sufficient to
discharge in full all amounts then due and unpaid upon such Notes for
principal and interest or (C) the Indenture Trustee determines that the
Collateral will not continue to provide sufficient funds for the payment of
principal of and interest on the Notes as they would have become due if the
Notes had not been declared due and payable, and the Indenture Trustee
obtains the consent of Holders of 66-2/3% of the Outstanding Amount of the
Notes. In determining such sufficiency or insufficiency with respect to
clause (B) and (C), the Indenture Trustee may, but need not, obtain and rely
upon an opinion of an Independent investment banking or accounting firm of
national reputation as to the feasibility of such proposed action and as to
the sufficiency of the Collateral for such purpose.
(b) If the Indenture Trustee collects any money or property
pursuant to this Article V, it shall pay out the money or property in
---------
the following order:
FIRST: to the Indenture Trustee for the Indenture Trustee Fee then
due and any costs or expenses incurred by it in connection with the
enforcement of the remedies provided for in this Article V and to the
Owner Trustee for the Owner Trustee Fee then due;
SECOND: to the Servicer for the Servicing Fee then due and unpaid;
THIRD: to the Custodian for the Custodian Fee then due and unpaid;
FOURTH: to the Servicer for any amounts then due and payable as
Servicing Advances and the Nonrecoverable Servicing Advances under the
Sale and Servicing Agreement;
FIFTH: to Noteholders for amounts due and unpaid on the Notes for
interest, pro rata, according to the amounts due and payable on the
Notes for interest;
SIXTH: to Noteholders for amounts due and unpaid on the Notes for
principal, pro rata among the Holders of each Class of Notes, according
to the amounts due and payable and in the order and priorities set forth
in Sections 5.01(c) and (d) of the Sale and Servicing Agreement, until
the Class Principal Balance of each such Class is reduced to zero;
SEVENTH: to the Owner Trustee or Co-Owner Trustee, as applicable,
for amounts required to be distributed to the Certificateholders
pursuant to the Trust Agreement; and
EIGHTH: to the Owner Trustee or Co-Owner Trustee, as applicable,
for any amounts to be distributed, pro rata, to the holders of the
Residual Interest.
The Indenture Trustee may fix a record date and payment date for any
payment to be made to the Noteholders pursuant to this Section. At least 15
days before such record date, the Indenture Trustee shall mail to each
Noteholder and the Issuer a notice that states the record date, the payment
date and the amount to be paid.
Section 5.05. Optional Preservation of the Collateral. If the Notes
---------------------------------------
have been declared to be due and payable under Section 5.02 following an
------------
Event of Default and such declaration and its consequences have not been
rescinded and annulled, the Indenture Trustee may, but need not, elect to
maintain possession of the Collateral. It is the desire of the parties
hereto and the Noteholders that there be at all times sufficient funds for
the payment of principal of and interest on the Notes, and the Indenture
Trustee shall take such desire into account when determining whether or not
to maintain possession of the Collateral. In determining whether to maintain
possession of the Collateral, the Indenture Trustee may, but need not, obtain
and rely upon an opinion of an Independent investment banking or accounting
firm of national reputation as to the feasibility of such proposed action and
as to the sufficiency of the Collateral for such purpose.
Section 5.06. Limitation of Suits. No Holder of any Note shall have
-------------------
any right to institute any Proceeding, judicial or otherwise, with respect to
this Indenture or for the appointment of a receiver or trustee, or for any
other remedy hereunder, unless:
(a) such Holder has previously given written notice to the
Indenture Trustee of a continuing Event of Default;
(b) the Holders of not less than 25% of the Outstanding Amount of
the Notes have made written request to the Indenture Trustee to
institute such Proceeding in respect of such Event of Default in its own
name as Indenture Trustee hereunder;
(c) such Holder or Holders have offered to the Indenture Trustee
reasonable indemnity against the costs, expenses and liabilities to be
incurred in complying with such request;
(d) the Indenture Trustee for 60 days after its receipt of such
notice, request and offer of indemnity has failed to institute such
Proceedings; and
(e) no direction inconsistent with such written request has been
given to the Indenture Trustee during such 60-day period by the Holders
of a majority of the Outstanding Amount of the Notes.
It is understood and intended that no one or more Holders of Notes shall
have any right in any manner whatever by virtue of, or by availing of, any
provision of this Indenture to affect, disturb or prejudice the rights of any
other Holders of Notes or to obtain or to seek to obtain priority or
preference over any other Holders or to enforce any right under this
Indenture, except in the manner herein provided.
In the event the Indenture Trustee shall receive conflicting or
inconsistent requests and indemnity from two or more groups of Holders of
Notes, each representing less than a majority of the Outstanding Amount of
the Notes, the Indenture Trustee in its sole discretion may determine what
action, if any, shall be taken, notwithstanding any other provisions of this
Indenture.
Section 5.07. Unconditional Rights of Noteholders To Receive
----------------------------------------------
Principal and Interest. Notwithstanding any other provisions in this
- ----------------------
Indenture, the Holder of any Note shall have the right, which is absolute and
unconditional, to receive payment of the principal of and interest, if any,
on such Note on or after the applicable Maturity Date thereof expressed in
such Note or in this Indenture (or, in the case of redemption, on or after
the Redemption Date) and to institute suit for the enforcement of any such
payment, and such right shall not be impaired without the consent of such
Holder.
Section 5.08. Restoration of Rights and Remedies. If the Indenture
----------------------------------
Trustee or any Noteholder has instituted any Proceeding to enforce any right
or remedy under this Indenture and such Proceeding has been discontinued or
abandoned for any reason or has been determined adversely to the Indenture
Trustee or to such Noteholder, then and in every such case the Issuer, the
Indenture Trustee and the Noteholders shall, subject to any determination in
such Proceeding, be restored severally and respectively to their former
positions hereunder, and thereafter all rights and remedies of the Indenture
Trustee and the Noteholders shall continue as though no such Proceeding had
been instituted.
Section 5.09. Rights and Remedies Cumulative. No right or remedy
------------------------------
herein conferred upon or reserved to the Indenture Trustee or to the
Noteholders is intended to be exclusive of any other right or remedy, and
every right and remedy shall, to the extent permitted by law, be cumulative
and in addition to every other right and remedy given hereunder or now or
hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent
the concurrent assertion or employment of any other appropriate right or
remedy.
Section 5.10. Delay or Omission Not a Waiver. No delay or omission
------------------------------
of the Indenture Trustee or any Holder of any Note to exercise any right or
remedy accruing upon any Default or Event of Default shall impair any such
right or remedy or constitute a waiver of any such Default or Event of
Default or an acquiescence therein. Every right and remedy given by this
Article V or by law to the Indenture Trustee or to the Noteholders may be
exercised from time to time, and as often as may be deemed expedient, by the
Indenture Trustee or by the Noteholders, as the case may be.
Section 5.11. Control by Noteholders. The Holders of a majority of
----------------------
the Outstanding Amount of the Notes shall have the right to direct the time,
method and place of conducting any Proceeding for any remedy available to the
Indenture Trustee with respect to the Notes or exercising any trust or power
conferred on the Indenture Trustee; provided that:
(a) such direction shall not be in conflict with any rule of law
or with this Indenture;
(b) subject to the express terms of Section 5.04, any direction
------------
to the Indenture Trustee to sell or liquidate the Collateral shall be by
Holders of Notes representing not less than 100% of the Outstanding Amount of
the Notes;
(c) if the conditions set forth in Section 5.05 have been
------------
satisfied and the Indenture Trustee elects to retain the Collateral pursuant
to such Section, then any direction to the Indenture Trustee by Holders of
Notes representing less than 100% of the Outstanding Amount of the Notes to
sell or liquidate the Collateral shall be of no force and effect; and
(d) the Indenture Trustee may take any other action deemed proper
by the Indenture Trustee that is not inconsistent with such direction.
Notwithstanding the rights of the Noteholders set forth in this Section,
subject to Section 6.01, the Indenture Trustee need not take any action that it
------------
determines might involve it in liability or might materially adversely affect
the rights of any Noteholders not consenting to such action.
Section 5.12. Waiver of Past Defaults. Prior to the declaration of
-----------------------
the acceleration of the maturity of the Notes as provided in Section 5.02,
------------
the Holders of Notes representing not less than a majority of the Outstanding
Amount of the Notes may waive any past Default or Event of Default and its
consequences except a Default (a) in the payment of principal of or interest
on any of the Notes or (b) in respect of a covenant or provision hereof that
cannot be modified or amended without the consent of the Holder of each Note.
In the case of any such waiver, the Issuer, the Indenture Trustee and the
Holders of the Notes shall be restored to their former positions and rights
hereunder, respectively; but no such waiver shall extend to any subsequent or
other Default or impair any right consequent thereto.
Upon any such waiver, such Default shall cease to exist and be deemed to
have been cured and not to have occurred, and any Event of Default arising
therefrom shall be deemed to have been cured and not to have occurred, for
every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other Default or Event of Default or impair any right
consequent thereto.
Section 5.13. Undertaking for Costs. All parties to this Indenture
---------------------
agree, and each Holder of any Note by such Holder's acceptance thereof shall
be deemed to have agreed, that any court may in its discretion require, in
any suit for the enforcement of any right or remedy under this Indenture, or
in any suit against the Indenture Trustee for any action taken, suffered or
omitted by it as Indenture Trustee, the filing by any party litigant in such
suit of an undertaking to pay the costs of such suit, and that such court may
in its discretion assess reasonable costs, including reasonable attorneys'
fees, against any party litigant in such suit, having due regard to the
merits and good faith of the claims or defenses made by such party litigant;
but the provisions of this Section shall not apply to (a) any suit instituted
by the Indenture Trustee, (b) any suit instituted by any Noteholder, or group
of Noteholders, in each case holding in the aggregate more than 10% of the
Outstanding Amount of the Notes or (c) any suit instituted by any Noteholder
for the enforcement of the payment of principal of or interest on any Note on
or after the respective due dates expressed in such Note and in this
Indenture (or, in the case of redemption, on or after the Redemption Date).
Section 5.14. Waiver of Stay or Extension Laws. The Issuer
--------------------------------
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, or plead or in any manner whatsoever, claim or take the
benefit or advantage of, any stay or extension law wherever enacted, now or
at any time hereafter in force, that may affect the covenants or the
performance of this Indenture; and the Issuer (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it will not hinder, delay or impede the execution of
any power herein granted to the Indenture Trustee, but will suffer and permit
the execution of every such power as though no such law had been enacted.
Section 5.15. Action on Notes. The Indenture Trustee's right to
---------------
seek and recover judgment on the Notes or under this Indenture shall not be
affected by the seeking, obtaining or application of any other relief under
or with respect to this Indenture. Neither the lien of this Indenture nor
any rights or remedies of the Indenture Trustee or the Noteholders shall be
impaired by the recovery of any judgment by the Indenture Trustee against the
Issuer or by the levy of any execution under such judgment upon any portion
of the Collateral or upon any of the assets of the Issuer. Any money or
property collected by the Indenture Trustee shall be applied in accordance
with Section 5.04(b).
---------------
Section 5.16. Performance and Enforcement of Certain Obligations.
--------------------------------------------------
(a) Promptly following a request from the Indenture Trustee to do so
and at the Administrator's expense, the Issuer shall take all such lawful
action as the Indenture Trustee may request to compel or secure the
performance and observance by the Seller and the Servicer, as applicable, of
each of their obligations to the Issuer under or in connection with the Sale
and Servicing Agreement, and to exercise any and all rights, remedies, powers
and privileges lawfully available to the Issuer under or in connection with
the Sale and Servicing Agreement to the extent and in the manner directed by
the Indenture Trustee, including the transmission of notices of default on
the part of the Seller or the Servicer thereunder and the institution of
legal or administrative actions or proceedings to compel or secure
performance by the Seller or the Servicer of each of their obligations under
the Sale and Servicing Agreement.
(b) If an Event of Default has occurred and is continuing, the
Indenture Trustee may, and at the direction (which direction shall be in
writing or by telephone, confirmed in writing promptly thereafter) of the
Holders of 66-2/3% of the Outstanding Amount of the Notes shall, exercise all
rights, remedies, powers, privileges and claims of the Issuer against the
Seller or the Servicer under or in connection with the Sale and Servicing
Agreement, including the right or power to take any action to compel or
secure performance or observance by the Seller or the Servicer, as the case
may be, of each of their obligations to the Issuer thereunder and to give any
consent, request, notice, direction, approval, extension, or waiver under the
Sale and Servicing Agreement, and any right of the Issuer to take such action
shall be suspended.
ARTICLE VI
THE INDENTURE TRUSTEE
Section 6.01. Duties of Indenture Trustee. (a) If an Event of
---------------------------
Default has occurred and is continuing, the Indenture Trustee shall exercise
the rights and powers vested in it by this Indenture and use the same degree
of care and skill in their exercise as a prudent person would exercise or use
under the circumstances in the conduct of such person's own affairs.
(b) Except during the continuance of an Event of Default:
(i) the Indenture Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture and no implied
covenants or obligations shall be read into this Indenture against the
Indenture Trustee; and
(ii) in the absence of bad faith on its part, the Indenture Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Indenture Trustee and conforming to the requirements of this Indenture;
however, the Indenture Trustee shall examine the certificates and opinions to
determine whether or not they conform to the requirements of this Indenture.
(c) The Indenture Trustee may not be relieved from liability for its
own negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b) of this
Section;
(ii) the Indenture Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer unless it is proved that the
Indenture Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Indenture Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 5.11.
------------
(d) Every provision of this Indenture that in any way relates to the
Indenture Trustee is subject to paragraphs (a), (b), (c) and (g) of this
--------------------------------
Section.
(e) The Indenture Trustee shall not be liable for interest on any money
received by it except as the Indenture Trustee may agree in writing with the
Issuer.
(f) Money held in trust by the Indenture Trustee shall be segregated
from other funds except to the extent permitted by law or the terms of this
Indenture or the Sale and Servicing Agreement.
(g) No provision of this Indenture shall require the Indenture Trustee
to expend or risk its own funds or otherwise incur 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 to believe that
repayment of such funds or adequate indemnity against such risk or liability
is not reasonably assured to it; provided, however, that the Indenture Trustee
-------- -------
shall not refuse or fail to perform any of its duties hereunder solely as a
result of nonpayment of its normal fees and expenses and further provided
that nothing in this Section 6.01(g) shall be construed to limit the exercise
---------------
by the Indenture Trustee of any right or remedy permitted under this Indenture
or otherwise in the event of the Issuer's failure to pay the Indenture
Trustee's fees and expenses pursuant to Section 6.07. In determining that such
------------
repayment or indemnity is not reasonably assured to it, the Indenture Trustee
must consider not only the likelihood of repayment or indemnity by or on behalf
of the Issuer but also the likelihood of repayment or indemnity from amounts
payable to it from the Collateral pursuant to Section 6.07.
------------
(h) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Indenture Trustee
shall be subject to the provisions of this Section and to the provisions of
the TIA.
Section 6.02. Rights of Indenture Trustee.
---------------------------
(a) The Indenture Trustee may rely on any document believed by it to
be genuine and to have been signed or presented by the proper person. The
Indenture Trustee need not investigate any fact or matter stated in the
document.
(b) Before the Indenture Trustee acts or refrains from acting, it may
require an Officer's Certificate or an Opinion of Counsel. The Indenture
Trustee shall not be liable for any action it takes or omits to take in good
faith in reliance on an Officer's Certificate or Opinion of Counsel.
(c) The Indenture Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys or a custodian or nominee.
(d) The Indenture Trustee shall not be liable for (i) any action it
takes or omits to take in good faith which it believes to be authorized or
within its rights or powers; provided, however, that such action or omission
by the Indenture Trustee does not constitute willful misconduct, negligence
or bad faith; or (ii) any willful misconduct or negligence on the part of the
Custodian.
(e) The Indenture Trustee may consult with counsel, and the advice or
opinion of counsel with respect to legal matters relating to this Indenture
and the Notes shall be full and complete authorization and protection from
liability in respect to any action taken, omitted or suffered by it hereunder
in good faith and in accordance with the advice or opinion of such counsel.
Section 6.03. Individual Rights of Indenture Trustee. The Indenture
--------------------------------------
Trustee in its individual or any other capacity may become the owner or
pledgee of Notes and may otherwise deal with the Issuer or its Affiliates
with the same rights it would have if it were not Indenture Trustee. Any
Paying Agent, Note Registrar, co-registrar or co-paying agent may do the same
with like rights. However, the Indenture Trustee must comply with Sections
--------
6.11 and 6.12.
- -------------
Section 6.04. Indenture Trustee's Disclaimer. The Indenture Trustee
------------------------------
shall not be responsible for and makes no representation as to the validity
or adequacy of this Indenture or the Notes, shall not be accountable for the
Issuer's use of the proceeds from the Notes, or responsible for any statement
of the Issuer in the Indenture or in any document issued in connection with
the sale of the Notes or in the Notes other than the Indenture Trustee's
certificate of authentication.
Section 6.05. Notice of Defaults. If a Default occurs and is
------------------
continuing and if it is known to a Responsible Officer of the Indenture
Trustee, the Indenture Trustee shall mail to each Noteholder notice of the
Default within 90 days after it occurs. Except in the case of a Default in
payment of principal of or interest on any Note (including payments pursuant
to the mandatory redemption provisions of such Note), the Indenture Trustee
may withhold the notice if and so long as a committee of its Responsible
Officers in good faith determines that withholding the notice is in the
interests of Noteholders.
Section 6.06. Reports by Indenture Trustee to Holders. The
---------------------------------------
Indenture Trustee shall deliver to each Noteholder such information as may be
required to enable such holder to prepare its federal and state income tax
returns.
Section 6.07. Compensation and Indemnity. As compensation for its
--------------------------
services hereunder, the Indenture Trustee shall be entitled to receive, on
each Distribution Date, the Indenture Trustee's Fee pursuant to Section
-------
8.02(c) hereof (which compensation shall not be limited by any law on
- -------
compensation of a trustee of an express trust) and shall be entitled to
reimbursement for all reasonable out-of-pocket expenses incurred or made by
it, including costs of collection, in addition to the compensation for its
services. Such expenses shall include the reasonable compensation and
expenses, disbursements and advances of the Indenture Trustee's agents,
counsel, accountants and experts. The Issuer agrees to cause the Transferor
to indemnify the Indenture Trustee against any and all loss, liability or
expense (including attorneys' fees) incurred by it in connection with the
administration of this trust and the performance of its duties hereunder.
The Indenture Trustee shall notify the Issuer and the Transferor promptly of
any action or claim for which the Indenture Trustee (the "Indemnified Party")
may seek indemnity. In case any such action is brought against the
Indemnified Party and it notifies the Transferor (the "Indemnifying Party"),
of the commencement thereof, the Indemnifying Party shall be entitled to
participate therein and, to the extent that, by written notice delivered to
the Indemnified Party promptly after receiving the aforesaid notice from such
Indemnified Party, the Indemnifying Party elects to assume the defense
thereof, it may participate with counsel satisfactory to such Indemnified
Party; provided, however, that if the defendants in any such action
-------- -------
include both the Indemnified Party and the Indemnifying Party and the
Indemnified Party or parties shall have reasonably concluded that there
may be legal defenses available to it or them and/or other Indemnified
Parties that are different from or additional to those available to the
Indemnifying Party, the Indemnified Party or parties shall have the right to
select separate counsel to assert such legal defenses and to otherwise
participate in the defense of such action on behalf of such Indemnified Party
or parties. Upon receipt of notice from the Indemnifying Party to such
Indemnified Party of its election so to assume the defense of such action and
approval by the Indemnified Party of such counsel, the Indemnifying Party
shall not be liable to such Indemnified Party under this paragraph for any
legal or other expenses subsequently incurred by such Indemnified Party in
connection with the defense thereof, unless (i) the Indemnified Party shall
have employed separate counsel (plus any local counsel) in connection with
the assertion of legal defenses in accordance with the proviso to the
immediately preceding sentence, (ii) the Indemnifying Party shall not have
employed counsel satisfactory to the Indemnified Party to represent the
Indemnified Party within a reasonable time after notice of commencement of
the action or (iii) the Indemnifying Party has authorized the employment of
counsel for the Indemnified Party at the expense of the Indemnifying Party.
No party shall be liable for contribution with respect to any action or claim
settled without its consent, which shall not be unreasonably withheld.
Failure by the Indenture Trustee to so notify the Issuer and the Servicer
shall not relieve the Issuer of its obligations hereunder. Neither the
Issuer nor the Transferor need reimburse any expense or indemnify against any
loss, liability or expense incurred by the Indenture Trustee through the
Indenture Trustee's own willful misconduct, negligence or bad faith.
The Issuer's payment obligations to the Indenture Trustee pursuant to
this Section shall survive the discharge of this Indenture. When the
Indenture Trustee incurs expenses after the occurrence of a Default specified
in Section 5.01(e) or (f) with respect to the Issuer, the expenses are
----------------------
intended to constitute expenses of administration under Title 11 of the
United States Code or any other applicable federal or state bankruptcy,
insolvency or similar law.
Section 6.08. Replacement of Indenture Trustee. No resignation or
--------------------------------
removal of the Indenture Trustee and no appointment of a successor Indenture
Trustee shall become effective until the acceptance of appointment by the
successor Indenture Trustee pursuant to this Section. The Indenture Trustee
may resign at any time by so notifying the Issuer. The Holders of a majority
in Outstanding Amount of the Notes may remove the Indenture Trustee by so
notifying the Indenture Trustee and may appoint a successor Indenture
Trustee. The Issuer shall remove the Indenture Trustee if:
(a) the Indenture Trustee fails to comply with Section 6.11;
------------
(b) the Indenture Trustee is adjudged a bankrupt or insolvent;
(c) a receiver or other public officer takes charge of the
Indenture Trustee or its property; or
(d) the Indenture Trustee otherwise becomes incapable of acting.
If the Indenture Trustee resigns or is removed or if a vacancy exists in
the office of Indenture Trustee for any reason (the Indenture Trustee in such
event being referred to herein as the retiring Indenture Trustee), the Issuer
shall promptly appoint a successor Indenture Trustee.
A successor Indenture Trustee shall deliver a written acceptance of its
appointment to the retiring Indenture Trustee and to the Issuer. Thereupon
the resignation or removal of the retiring Indenture Trustee shall become
effective, and the successor Indenture Trustee shall have all the rights,
powers and duties of the Indenture Trustee under this Indenture. The
successor Indenture Trustee shall mail a notice of its succession to
Noteholders. The retiring Indenture Trustee shall promptly transfer all
property held by it as Indenture Trustee to the successor Indenture Trustee.
If a successor Indenture Trustee does not take office within 60 days
after the retiring Indenture Trustee resigns or is removed, the retiring
Indenture Trustee, the Issuer or the Holders of a majority in Outstanding
Amount of the Notes may petition any court of competent jurisdiction for the
appointment of a successor Indenture Trustee.
If the Indenture Trustee fails to comply with Section 6.11, any
------------
Noteholder may petition any court of competent jurisdiction for the removal
of the Indenture Trustee and the appointment of a successor Indenture
Trustee.
Notwithstanding the replacement of the Indenture Trustee pursuant to
this Section, the Issuer's and the Administrator's obligations under Section
-------
6.07 shall continue for the benefit of the retiring Indenture Trustee.
- ----
Section 6.09. Successor Indenture Trustee by Merger. If the
-------------------------------------
Indenture Trustee consolidates with, merges or converts into, or transfers
all or substantially all its corporate trust business or assets to, another
corporation or banking association, the resulting, surviving or transferee
corporation without any further act shall be the successor Indenture Trustee;
provided, that such corporation or banking association shall be otherwise
qualified and eligible under Section 6.11. The Indenture Trustee shall
------------
provide the Rating Agencies written notice of any such transaction.
In case at the time such successor or successors by merger, conversion
or consolidation to the Indenture Trustee shall succeed to the trusts created
by this Indenture any of the Notes shall have been authenticated but not
delivered, any such successor to the Indenture Trustee may adopt the
certificate of authentication of any predecessor trustee, and deliver such
Notes so authenticated; and in case at that time any of the Notes shall not
have been authenticated, any successor to the Indenture Trustee may
authenticate such Notes either in the name of any predecessor hereunder or in
the name of the successor to the Indenture Trustee; and in all such cases
such certificates shall have the full force which it is anywhere in the Notes
or in this Indenture provided that the certificate of the Indenture Trustee
shall have.
Section 6.10. Appointment of Co-Indenture Trustee or Separate
-----------------------------------------------
Indenture Trustee.
- -----------------
(a) Notwithstanding any other provisions of this Indenture, at any
time, for the purpose of meeting any legal requirement of any jurisdiction in
which any part of the Collateral may at the time be located, the Indenture
Trustee shall have the power and may execute and deliver all instruments to
appoint one or more Persons to act as a co-trustee or co-trustees, or
separate trustee or separate trustees, of all or any part of the Trust, and
to vest in such Person or Persons, in such capacity and for the benefit of
the Noteholders, such title to the Collateral, or any part hereof, and,
subject to the other provisions of this Section, such powers, duties,
obligations, rights and trusts as the Indenture Trustee may consider
necessary or desirable. No co-trustee or separate trustee hereunder shall be
required to meet the terms of eligibility as a successor trustee under
Section 6.11 and no notice to Noteholders of the appointment of any
- ------------
co-trustee or separate trustee shall be required under Section 6.08 hereof.
------------
(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions
and conditions:
(i) all rights, powers, duties and obligations conferred or imposed
upon the Indenture Trustee shall be conferred or imposed upon and exercised
or performed by the Indenture Trustee and such separate trustee or co-trustee
jointly (it being understood that such separate trustee or co-trustee is not
authorized to act separately without the Indenture Trustee joining in such
act), except to the extent that under any law of any jurisdiction in which
any particular act or acts are to be performed the Indenture Trustee shall be
incompetent or unqualified to perform such act or acts, in which event such
rights, powers, duties and obligations (including the holding of title to the
Collateral or any portion thereof in any such jurisdiction) shall be
exercised and performed singly by such separate trustee or co-trustee, but
solely at the direction of the Indenture Trustee;
(ii) no trustee hereunder shall be personally liable by reason of any
act or omission of any other trustee hereunder; and
(iii) the Indenture Trustee may at any time accept the resignation
of or remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Indenture 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 VI. 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, jointly
with the Indenture Trustee, subject to all the provisions of this Indenture,
specifically including every provision of this Indenture relating to the
conduct of, affecting the liability of, or affording protection to, the
Indenture Trustee. Every such instrument shall be filed with the Indenture
Trustee.
(d) Any separate trustee or co-trustee may at any time constitute the
Indenture Trustee its agent or attorney-in-fact with full power and
authority, to the extent not prohibited by law, to do any lawful act under or
in respect of this Agreement on its behalf and in its name. If any separate
trustee or co-trustee shall die, become incapable of acting, resign or be
removed, all of its estates, properties, rights, remedies and trusts shall
vest in and be exercised by the Indenture Trustee, to the extent permitted by
law, without the appointment of a new or successor trustee.
Section 6.11. Eligibility; Disqualification. The Indenture Trustee
-----------------------------
shall at all times satisfy the requirements of TIA Section 310(a). The
Indenture Trustee shall have a combined capital and surplus of at least
$50,000,000 as set forth in its most recent published annual report of
condition. The Indenture Trustee shall comply with TIA Section 310(b),
including the optional provision permitted by the second sentence of TIA
Section 310(b)(9); provided, however, that there shall be excluded from the
operation of TIA Section 310(b)(1) any indenture or indentures under which
other securities of the Issuer are outstanding if the requirements for such
exclusion set forth in TIA Section 310(b)(1) are met.
Section 6.12. Preferential Collection of Claims Against Issuer. The
------------------------------------------------
Indenture Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). An Indenture Trustee who
has resigned or been removed shall be subject to TIA Section 311(a) to the
extent indicated.
ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
Section 7.01. Issuer To Furnish Indenture Trustee Names and
---------------------------------------------
Addresses of Noteholders. The Issuer will furnish or cause to be
- ------------------------
furnished to the Indenture Trustee (a) not more than five days after the
earlier of (i) each Record Date and (ii) three months after the last Record
Date, a list, in such form as the Indenture Trustee may reasonably require,
of the names and addresses of the Holders of Notes as of such Record Date,
(b) at such other times as the Indenture Trustee may request in writing,
within 30 days after receipt by the Issuer of any such request, a list of
similar form and content as of a date not more than 10 days prior to the time
such list is furnished; provided, however, that so long as the Indenture
Trustee is the Note Registrar, no such list shall be required to be
furnished.
Section 7.02. Preservation of Information; Communications to
----------------------------------------------
Noteholders.
- -----------
(a) The Indenture Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of the Holders of Notes
contained in the most recent list furnished to the Indenture Trustee as
provided in Section 7.01 and the names and addresses of Holders of Notes
------------
received by the Indenture Trustee in its capacity as Note Registrar. The
Indenture Trustee may destroy any list furnished to it as provided in such
Section 7.01 upon receipt of a new list so furnished.
- ------------
(b) Noteholders may communicate pursuant to TIA Section 312(b) with
other Noteholders with respect to their rights under this Indenture or under
the Notes.
(c) The Issuer, the Indenture Trustee and the Note Registrar shall have
the protection of TIA Section 312(c).
Section 7.03. Reports by Issuer.
-----------------
(a) The Issuer shall:
(i) file with the Indenture Trustee, within 15 days after the Issuer is
required to file the same with the Commission, copies of the annual reports
and of the information, documents and other reports (or copies of such
portions of any of the foregoing as the Commission may from time to time by
rules and regulations prescribe) that the Issuer may be required to file with
the Commission pursuant to Section 13 or 15(d) of the Exchange Act;
(ii) file with the Indenture Trustee and the Commission in accordance
with the rules and regulations prescribed from time to time by the Commission
such additional information, documents and reports with respect to compliance
by the Issuer with the conditions and covenants of this Indenture as may be
required from time to time by such rules and regulations; and
(iii) supply to the Indenture Trustee (and the Indenture Trustee
shall transmit by mail to all Noteholders described in TIA Section 313(c))
such summaries of any information, documents and reports required to be filed
by the Issuer pursuant to clauses (i) and (ii) of this Section 7.03(a)
---------------
and by rules and regulations prescribed from time to time by the Commission.
(b) Unless the Issuer otherwise determines, the fiscal year of the
Issuer shall end on December 31 of each year.
Section 7.04. Reports by Indenture Trustee. If required by TIA
----------------------------
Section 313(a), within 60 days after each February 1, beginning with February
1, 1998, the Indenture Trustee shall mail to each Noteholder as required by
TIA Section 313(c) a brief report dated as of such date that complies with
TIA Section 313(a). The Indenture Trustee also shall comply with TIA Section
313(b).
A copy of each report at the time of its mailing to Noteholders shall be
filed by the Indenture Trustee with the Commission and each securities
exchange, if any, on which the Notes are listed. The Issuer shall notify the
Indenture Trustee if and when the Notes are listed on any securities
exchange.
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 8.01. Collection of Money.
-------------------
General. Except as otherwise expressly provided herein, the
-------
Indenture Trustee may demand payment or delivery of, and shall receive and
collect, directly and without intervention or assistance of any fiscal agent
or other intermediary, all money and other property payable to or receivable
by the Indenture Trustee pursuant to this Indenture. The Indenture Trustee
shall apply all such money received by it as provided in this Indenture.
Except as otherwise expressly provided in this Indenture, if any default
occurs in the making of any payment or performance under any agreement or
instrument that is part of the Collateral, the Indenture Trustee may take
such action as may be appropriate to enforce such payment or performance,
including the institution and prosecution of appropriate Proceedings. Any
such action shall be without prejudice to any right to claim a Default or
Event of Default under this Indenture and any right to proceed thereafter as
provided in Article V.
---------
Section 8.02. Trust Accounts; Distributions.
-----------------------------
(a) On or prior to the Closing Date, the Issuer shall cause the
Servicer to establish and maintain, in the name of the Indenture Trustee for
the benefit of the Noteholders, or the Co-Owner Trustee for the benefit of
the Certificateholders, the Trust Accounts as provided in Article V of the
---------
Sale and Servicing Agreement. The Indenture Trustee or Co-Owner Trustee
shall deposit amounts into the Trust Accounts in accordance with the
terms hereof, the Sale and Servicing Agreement and the Servicer's Monthly
Remittance Report.
(b) On or before the third Business Day prior to each Distribution
Date, the Indenture Trustee shall withdraw from the Collection Account, the
Available Collection Amount pursuant to Section 5.01(b)(3) of the Sale and
Servicing Agreement and shall deposit such amount into the Note Distribution
Account. No later than the second Business Day prior to each Distribution
Date, to the extent funds are available in the Note Distribution Account, the
Indenture Trustee shall either retain funds in the Note Distribution Account
or make the withdrawals from the Note Distribution Account and deposits into
the other Trust Accounts for distribution on such Distribution Date as
required pursuant to Section 5.01(c) of the Sale and Servicing Agreement.
(c) On each Distribution Date and Redemption Date, to the extent funds
are available in the Note Distribution Account, the Indenture Trustee shall
make the following distributions from the amounts on deposit in the Note
Distribution Account in the following order of priority (except as otherwise
provided in Section 5.04(b)):
---------------
(i) (A) to the Servicer, an amount equal to the Servicing
Compensation (net of any amounts retained prior to deposit into the
Collection Account pursuant to Section 5.01(b)(1) of the Sale and
Servicing Agreement) and all unpaid Servicing Compensation from prior
due periods, (B) to the Indenture Trustee, an amount equal to the
Indenture Trustee Fee and all unpaid Indenture Trustee Fees from prior
Due Periods, (C) to the Owner Trustee, an amount equal to the Owner
Trustee Fee and all unpaid Owner Trustee Fees from prior Due Periods,
and (D) to the Custodian, an amount equal to the Custodian Fee and all
unpaid Custodian Fees from prior Due Periods; and
(ii) to the Noteholders, the amounts set forth in Sections 5.01(d)
and (e) of the Sale and Servicing Agreement.
(d) On each Distribution Date and each Redemption Date, to the extent
of the interest of the Indenture Trustee in the Certificate Distribution
Account (as described in Section 5.08(a) of the Sale and Servicing
Agreement), the Indenture Trustee hereby authorizes the Owner Trustee, the
Co-Owner Trustee or the Paying Agent, as applicable, to make the
distributions from the Certificate Distribution Account as required pursuant
to Sections 5.01(d) and (e) of the Sale and Servicing Agreement.
Section 8.03. General Provisions Regarding Accounts.
-------------------------------------
(a) So long as no Default or Event of Default shall have occurred and
be continuing, all or a portion of the funds in the Trust Accounts shall be
invested in Permitted Investments and reinvested by the Indenture Trustee at
the direction of the Servicer in accordance with the provisions of Article V
---------
of the Sale and Servicing Agreement. All income or other gain from
investments of moneys deposited in the Trust Accounts shall be deposited
by the Indenture Trustee into the Note Distribution Account, and any
loss resulting from such investments shall be charged to such account.
The Servicer will not direct the Indenture Trustee to make any investment of
any funds or to sell any investment held in any of the Trust Accounts unless
the security interest Granted and perfected in such account will continue to
be perfected in such investment or the proceeds of such sale, in either case
without any further action by any Person, and, in connection with any
direction to the Indenture Trustee to make any such investment or sale, if
requested by the Indenture Trustee, the Issuer shall deliver to the Indenture
Trustee an Opinion of Counsel, acceptable to the Indenture Trustee, to such
effect.
(b) Subject to Section 6.01(c), the Indenture Trustee shall not in
---------------
any way be held liable by reason of any insufficiency in any of the Trust
Accounts resulting from any loss on any Eligible Investment included therein
except for losses attributable to the Indenture Trustee's failure to make
payments on such Eligible Investments issued by the Indenture Trustee, in its
commercial capacity as principal obligor and not as trustee, in accordance
with their terms.
(c) If (i) the Servicer shall have failed to give investment directions
for any funds on deposit in the Trust Accounts to the Indenture Trustee by
11:00 a.m. Eastern Time (or such other time as may be agreed by the Issuer
and Indenture Trustee) on any Business Day or (ii) a Default or Event of
Default shall have occurred and be continuing with respect to the Notes but
the Notes shall not have been declared due and payable pursuant to Section
-------
5.02 or (iii) if such Notes shall have been declared due and payable
- ----
payable following an Event of Default, amounts collected or receivable from
the Collateral are being applied in accordance with Section 5.05 as
------------
if there had not been such a declaration, then the Indenture Trustee shall,
to the fullest extent practicable, invest and reinvest funds in the Trust
Accounts in one or more Eligible Investments.
Section 8.04. Servicer's Monthly Statements.
-----------------------------
On each Distribution Date, the Indenture Trustee shall deliver the
Servicer's Monthly Statement (as defined in the Sale and Servicing Agreement)
with respect to such Distribution Date to DTC and the Rating Agencies.
Section 8.05. Release of Collateral.
---------------------
(a) Subject to the payment of its fees and expenses pursuant to Section
-------
6.07, the Indenture Trustee may, and when required by the provisions of this
- ----
Indenture shall, execute instruments to release property from the lien of
this Indenture, or convey the Indenture Trustee's interest in the same,
in a manner and under circumstances that are not inconsistent with the
provisions of this Indenture. No party relying upon an instrument executed
by the Indenture Trustee as provided in this Article VIII shall be bound
------------
to ascertain the Indenture Trustee's authority, inquire into the satisfaction
of any conditions precedent or see to the application of any moneys.
(b) The Indenture Trustee shall, at such time as there are no Notes
Outstanding and all sums due to the Certificateholders pursuant to Section
5.01(c) and (d) of the Sale and Servicing Agreement, the Servicer pursuant to
Section 8.02(c)(i)(A) hereof, the Indenture Trustee pursuant to Section
- --------------------- -------
8.02(c)(i)(B) hereof, the Owner Trustee pursuant to Section 8.02(c)(i)(C)
- ------------- ---------------------
hereof and the Custodian pursuant to Section 8.02(c)(i)(D) hereof have
---------------------
been paid, release any remaining portion of the Collateral that secured
the Notes from the lien of this Indenture and release to the Issuer or
any other Person entitled thereto any funds then on deposit in the
Trust Accounts. The Indenture Trustee shall release property from the
lien of this Indenture pursuant to this Subsection (b) only upon receipt
--------------
of an Issuer Request accompanied by an Officer's Certificate, an Opinion
of Counsel and (if required by the TIA) Independent Certificates in
accordance with TIA Sections 314(c) and 314(d)(1) meeting the applicable
requirements of Section 11.01.
-------------
Section 8.06. Opinion of Counsel. The Indenture Trustee shall
------------------
receive at least seven days notice (or such shorter period of time as may be
agreed upon by the parties hereto) when requested by the Issuer to take any
action pursuant to Section 8.05(a), accompanied by copies of any
---------------
instruments involved, and the Indenture Trustee shall also require, as a
condition to such action, an Opinion of Counsel, in form and substance
satisfactory to the Indenture Trustee, stating the legal effect of any such
action, outlining the steps required to complete the same, and concluding
that all conditions precedent to the taking of such action have been complied
with and such action will not materially and adversely impair the security
for the Notes or the rights of the Noteholders in contravention of the
provisions of this Indenture; provided, however, that such Opinion of Counsel
shall not be required to express an opinion as to the fair value of the
Collateral. Counsel rendering any such opinion may rely, without independent
investigation, on the accuracy and validity of any certificate or other
instrument delivered to the Indenture Trustee in connection with any such
action.
ARTICLE IX
SUPPLEMENTAL INDENTURES
Section 9.01. Supplemental Indentures Without Consent of
------------------------------------------
Noteholders.
- -----------
(a) Without the consent of the Holders of any Notes but with prior
notice to the Rating Agencies, the Issuer and the Indenture Trustee, when
authorized by an Issuer Order, at any time and from time to time, may enter
into one or more indentures supplemental hereto (which shall conform to the
provisions of the Trust Indenture Act as in force at the date of the
execution thereof), in form satisfactory to the Indenture Trustee, for any of
the following purposes:
(i) to correct or amplify the description of any property at any time
subject to the lien of this Indenture, or better to assure, convey and
confirm unto the Indenture Trustee any property subject or required to be
subjected to the lien of this Indenture, or to subject to the lien of this
Indenture additional property;
(ii) to evidence the succession, in compliance with the applicable
provisions hereof, of another person to the Issuer, and the assumption by any
such successor of the covenants of the Issuer herein and in the Notes
contained;
(iii) to add to the covenants of the Issuer, for the benefit of the
Holders of the Notes, or to surrender any right or power herein conferred
upon the Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any property to or
with the Indenture Trustee;
(v) to cure any ambiguity, to correct or supplement any provision
herein or in any supplemental indenture that may be inconsistent with any
other provision herein or in any supplemental indenture or to make any other
provisions with respect to matters or questions arising under this Indenture
or in any supplemental indenture; provided, that such action shall not
adversely affect the interests of the Holders of the Notes;
(vi) to evidence and provide for the acceptance of the appointment
hereunder by a successor trustee with respect to the Notes and to add to or
change any of the provisions of this Indenture as shall be necessary to
facilitate the administration of the trusts hereunder by more than one
trustee, pursuant to the requirements of Article VI; or
----------
(vii) to modify, eliminate or add to the provisions of this
Indenture to such extent as shall be necessary to effect the qualification of
this Indenture under the TIA or under any similar federal statute hereafter
enacted and to add to this Indenture such other provisions as may be
expressly required by the TIA.
The Indenture Trustee is hereby authorized to join in the execution of
any such supplemental indenture and to make any further appropriate
agreements and stipulations that may be therein contained.
(b) The Issuer and the Indenture Trustee, when authorized by an Issuer
Order, may, also without the consent of any of the Holders of the Notes but
with prior consent of the Rating Agencies, enter into an indenture or
indentures supplemental hereto for the purpose of adding any provisions to,
or changing in any manner or eliminating any of the provisions of, this
Indenture or of modifying in any manner the rights of the Holders of the
Notes under this Indenture; provided, however, that such action shall not, as
evidenced by (i) an Opinion of Counsel or (ii) satisfaction of the Rating
Agency Condition, adversely affect in any material respect the interests of
any Noteholder.
Section 9.02. Supplemental Indentures with Consent of Noteholders.
---------------------------------------------------
The Issuer and the Indenture Trustee, when authorized by an Issuer Order,
also may, with prior consent of the Rating Agencies, and with the consent of
the Holders of not less than a majority of the Outstanding Amount of the
Notes, by Act of such Holders delivered to the Issuer and the Indenture
Trustee, enter into an indenture or indentures supplemental hereto for the
purpose of adding any provisions to, or changing in any manner or eliminating
any of the provisions of, this Indenture or of modifying in any manner the
rights of the Holders of the Notes under this Indenture; provided, however,
that no such supplemental indenture shall, without the consent of the Holder
of each Outstanding Note affected thereby:
(a) change the date of payment of any installment of principal of or
interest on any Note, or reduce the principal amount thereof, the interest
rate thereon or the Termination Price with respect thereto, change the
provisions of this Indenture relating to the application of collections on,
or the proceeds of the sale of, the Collateral to payment of principal of or
interest on the Notes, or change any place of payment where, or the coin or
currency in which, any Note or the interest thereon is payable, or impair the
right to institute suit for the enforcement of the provisions of this
Indenture requiring the application of funds available therefor, as provided
in Article V, to the payment of any such amount due on the Notes on or after
the respective due dates thereof (or, in the case of redemption, on or after
the Redemption Date);
(b) reduce the percentage of the Outstanding Amount of the Notes, the
consent of the Holders of which is required for any such supplemental
indenture, or the consent of the Holders of which is required for any waiver
of compliance with certain provisions of this Indenture or certain defaults
hereunder and their consequences provided for in this Indenture;
(c) modify or alter the provisions of the proviso to the definition of
the term "Outstanding";
(d) reduce the percentage of the Outstanding Amount of the Notes
required to direct the Indenture Trustee to direct the Issuer to sell or
liquidate the Collateral pursuant to Section 5.04;
------------
(e) modify any provision of this Section except to increase any
percentage specified herein or to provide that certain additional provisions
of this Indenture or the Basic Documents cannot be modified or waived without
the consent of the Holder of each Outstanding Note affected thereby;
(f) modify any of the provisions of this Indenture in such manner as to
affect the calculation of the amount of any payment of interest or principal
due on any Note on any Distribution Date (including the calculation of any of
the individual components of such calculation) or to affect the rights of the
Holders of Notes to the benefit of any provisions for the mandatory
redemption of the Notes contained herein; or
(g) permit the creation of any lien ranking prior to or on a parity
with the lien of this Indenture with respect to any part of the Collateral
or, except as otherwise permitted or contemplated herein, terminate the lien
of this Indenture on any property at any time subject hereto or deprive the
Holder of any Note of the security provided by the lien of this Indenture.
The Indenture Trustee may in its discretion determine whether or not any
Notes would be affected by any supplemental indenture and any such
determination shall be conclusive upon the Holders of all Notes, whether
theretofore or thereafter authenticated and delivered hereunder. The
Indenture Trustee shall not be liable for any such determination made in good
faith.
In connection with requesting the consent of the Noteholders pursuant to
this Section, the Indenture Trustee shall mail to the Holders of the Notes to
which such amendment or supplemental indenture relates a notice setting forth
in general terms the substance of such supplemental indenture. It shall not
be necessary for any Act of Noteholders under this Section to approve the
particular form of any proposed supplemental indenture, but it shall be
sufficient if such Act shall approve the substance thereof.
Section 9.03. Execution of Supplemental Indentures. In executing,
------------------------------------
or permitting the additional trusts created by, any supplemental indenture
permitted by this Article IX or the modification thereby of the trusts
created by this Indenture, the Indenture Trustee shall be entitled to
receive, and subject to Sections 6.01 and 6.02, shall be fully protected
----------------------
in relying upon, an Opinion of Counsel stating that the execution of such
supplemental indenture is authorized or permitted by this Indenture. The
Indenture Trustee may, but shall not be obligated to, enter into any such
supplemental indenture that affects the Indenture Trustee's own rights,
duties, liabilities or immunities under this Indenture or otherwise.
Section 9.04. Effect of Supplemental Indentures. Upon the execution
---------------------------------
of any supplemental indenture pursuant to the provisions hereof, this
Indenture shall be and shall be deemed to be modified and amended in
accordance therewith with respect to the Notes affected thereby, and the
respective rights, limitations of rights, obligations, duties, liabilities
and immunities under this Indenture of the Indenture Trustee, the Issuer and
the Holders of the Notes shall thereafter be determined, exercised and
enforced hereunder subject in all respects to such modifications and
amendments, and all the terms and conditions of any such supplemental
indenture shall be and be deemed to be part of the terms and conditions of
this Indenture for any and all purposes.
Section 9.05. Conformity with Trust Indenture Act. Every amendment
-----------------------------------
of this Indenture and every supplemental indenture executed pursuant to this
Article IX shall conform to the requirements of the Trust Indenture
- ----------
Act as then in effect so long as this Indenture shall then be qualified under
the Trust Indenture Act.
Section 9.06. Reference in Notes to Supplemental Indentures. Notes
---------------------------------------------
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article IX may, and if required by the Indenture Trustee
----------
shall, bear a notation in form approved by the Indenture Trustee as to any
matter provided for in such supplemental indenture. If the Issuer or the
Indenture Trustee shall so determine, new Notes so modified as to conform,
in the opinion of the Indenture Trustee and the Issuer, to any such
supplemental indenture may be prepared and executed by the Issuer and
authenticated and delivered by the Indenture Trustee in exchange for
Outstanding Notes.
Section 9.07. Amendments to Trust Agreement.
-----------------------------
Subject to Section 11.1 of the Trust Agreement, the Indenture Trustee
shall, upon Issuer Order, consent to any proposed amendment to the Trust
Agreement or an amendment to or waiver of any provision of any other document
relating to the Trust Agreement, such consent to be given without the
necessity of obtaining the consent of the Holders of any Notes upon
satisfaction of the requirements under Section 11.1 of the Trust Agreement.
Nothing in this Section shall be construed to require that any Person
obtain the consent of the Indenture Trustee to any amendment or waiver or any
provision of any document where the making of such amendment or the giving of
such waiver without obtaining the consent of the Indenture Trustee is not
prohibited by this Indenture or by the terms of the document that is the
subject of the proposed amendment or waiver.
ARTICLE X
REDEMPTION OF NOTES
Section 10.01. Redemption.
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The Majority Residual Interest Holders (as defined in the Trust
Agreement) may, at their option, effect an early redemption of the Notes on
or after any Distribution Date on which the Pool Principal Balance declines
to 10% or less of the Original Pool Principal Balance. The Majority Residual
Interest Holders shall effect such early redemption by purchasing the Home
Loans at a price equal to the Termination Price.
Any such redemption by the Majority Residual Interest Holders shall be
accomplished by the Majority Residual Interest Holders' depositing or causing
to be deposited into the Collection Account by 10:00 A.M. New York City time
on the third Business Day prior to the Redemption Date the amount of the
Termination Price. On the same day that the Termination Price is deposited
into the Collection Account, the Termination Price and any amounts then on
deposit in the Collection Account (other than any amounts not required to
have been deposited therein pursuant to Section 5.01(b)(1) of the Sale
------------------
and Servicing Agreement) shall be transferred to the Note Distribution
Account for distribution to the Noteholders on the Redemption Date;
and any amounts received with respect to the Home Loans and Foreclosure
Properties subsequent to such transfer shall belong to the Servicer.
For purposes of calculating the Required Distribution Amount for the
Redemption Date, amounts transferred to the Note Distribution Account
pursuant to the immediately preceding sentence on the Determination Date
immediately preceding such final Distribution Date shall in all cases be
deemed to have been received during the related Due Period, and such transfer
shall be made pursuant to Section 5.01(c) of the Sale and Servicing Agreement.
---------------
The Servicer or the Issuer shall furnish the Rating Agencies notice of
any such redemption in accordance with Section 10.02.
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Section 10.02. Form of Redemption Notice.
-------------------------
(a) Notice of redemption under Section 10.01 shall be given by the
-------------
Indenture Trustee by first-class mail, postage prepaid, or by facsimile
mailed or transmitted not later than 10 days prior to the applicable
Redemption Date to each Holder of Notes, as of the close of business on the
Record Date preceding the applicable Redemption Date, at such Holder's
address or facsimile number appearing in the Note Register.
All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Termination Price; and
(iii) the place where such Notes are to be surrendered for payment
of the Termination Price (which shall be the office or agency of the Issuer
to be maintained as provided in Section 3.02).
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Notice of redemption of the Notes shall be given by the Indenture
Trustee in the name of the Issuer and at the expense of the Servicer.
Failure to give notice of redemption, or any defect therein, to any Holder of
any Note shall not impair or affect the validity of the redemption of any
other Note.
Section 10.03. Notes Payable on Redemption Date; Provision for
-----------------------------------------------
Payment of Indenture Trustee. The Notes or portions thereof to be
- ----------------------------
redeemed shall, following notice of redemption as required by Section
-------
10.02 (in the case of redemption pursuant to Section 10.01), on the
- ----- -------------
Redemption Date become due and payable at the Termination Price and (unless
the Issuer shall default in the payment of the Termination Price) no interest
shall accrue on the Termination Price for any period after the date to which
accrued interest is calculated for purposes of calculating the Termination
Price. The Issuer may not redeem the Notes unless, (i) all outstanding
obligations under the Notes have been paid in full and (ii) the Indenture
Trustee has been paid all amounts to which it is entitled hereunder.
ARTICLE XI
MISCELLANEOUS
Section 11.01. Compliance Certificates and Opinions, etc.
------------------------------------------
(i) Upon any application or request by the Issuer to the Indenture
Trustee to take any action under any provision of this Indenture (except with
respect to the Servicer's servicing activity in the ordinary course of its
business), the Issuer shall furnish to the Indenture Trustee (i) an Officer's
Certificate stating that all conditions precedent, if any, provided for in
this Indenture relating to the proposed action have been complied with, (ii)
an Opinion of Counsel stating that in the opinion of such counsel all such
conditions precedent, if any, have been complied with and (iii) (if required
by the TIA) an Independent Certificate from a firm of certified public
accountants meeting the applicable requirements of this Section, except that,
in the case of any such application or request as to which the furnishing of
such documents is specifically required by any provision of this Indenture,
no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture shall include:
(1) a statement that each signatory of such certificate or opinion has
read or has caused to be read such covenant or condition and the
definitions herein relating thereto;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in
such certificate or opinion are based;
(3) a statement that, in the opinion of each such signatory, such
signatory has made such examination or investigation as is
necessary to enable such signatory to express an informed opinion
as to whether or not such covenant or condition has been complied
with; and
(4) a statement as to whether, in the opinion of each such signatory,
such condition or covenant has been complied with.
(ii) Except with respect to the servicing of the Home Loans in the
ordinary course of servicing, whenever the Issuer is required to furnish to
the Indenture Trustee an Officer's Certificate certifying or stating the
opinion of any signer thereof as to the matters described in clause (i)
above, the Issuer shall also deliver to the Indenture Trustee an Independent
Certificate as to the same matters, if the fair value to the Issuer of the
securities to be so deposited and of all other such securities made the basis
of any such withdrawal or release since the commencement of the then-current
fiscal year of the Issuer, as set forth in the certificates delivered
pursuant to clause (i) above and this clause (ii), is 10% or more of the
Outstanding Amount of the Notes, but such a certificate need not be furnished
with respect to any securities so deposited, if the fair value thereof to the
Issuer as set forth in the related Officer's Certificate is less than $25,000
or less than one percent of the Outstanding Amount of the Notes.
(iii) Except with respect to the servicing of the Home Loans in the
ordinary course of servicing, whenever any property or securities are to be
released from the lien of this Indenture, the Issuer shall also furnish to
the Indenture Trustee an Officer's Certificate certifying or stating the
opinion of each person signing such certificate as to the fair value (within
90 days of such release) of the property or securities proposed to be
released and stating that in the opinion of such person the proposed release
will not impair the security under this Indenture in contravention of the
provisions hereof.
(iv) Except with respect to the servicing of the Home Loans in the
ordinary course of servicing, whenever the Issuer is required to furnish to
the Indenture Trustee an Officer's Certificate certifying or stating the
opinion of any signer thereof as to the matters described in clause (iii)
above, the Issuer shall also furnish to the Indenture Trustee an Independent
Certificate as to the same matters if the fair value of the property or
securities and of all other property, other than securities released from the
lien of this Indenture since the commencement of the then-current calendar
year, as set forth in the certificates required by clause (iii) above and
this clause (iv), equals 10% or more of the Outstanding Amount of the Notes,
but such certificate need not be furnished in the case of any release of
property or securities if the fair value thereof as set forth in the related
Officer's Certificate is less than $25,000 or less than one percent of the
then Outstanding Amount of the Notes.
Section 11.02. Form of Documents Delivered to Indenture Trustee. In
------------------------------------------------
any case where several matters are required to be certified by, or covered by
an opinion of, any specified Person, it is not necessary that all such
matters be certified by, or covered by the opinion of, only one such Person,
or that they be so certified or covered by only one document, but one such
Person may certify or give an opinion with respect to some matters and one or
more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Issuer may be
based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by, counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which such officer's
certificate or opinion is based are erroneous. Any such certificate of an
Authorized Officer or Opinion of Counsel may be based, insofar as it relates
to factual matters, upon a certificate or opinion of, or representations by,
an officer or officers of the Servicer, the Seller, the Issuer or the
Administrator, stating that the information with respect to such factual
matters is in the possession of the Servicer, the Seller, the Issuer or the
Administrator, unless such counsel knows, or in the exercise of reasonable
care should know, that the certificate or opinion or representations with
respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Whenever in this Indenture, in connection with any application or
certificate or report to the Indenture Trustee, it is provided that the
Issuer shall deliver any document as a condition of the granting of such
application, or as evidence of the Issuer's compliance with any term hereof,
it is intended that the truth and accuracy, at the time of the granting of
such application or at the effective date of such certificate or report (as
the case may be), of the facts and opinions stated in such document shall in
such case be conditions precedent to the right of the Issuer to have such
application granted or to the sufficiency of such certificate or report. The
foregoing shall not, however, be construed to affect the Indenture Trustee's
right to rely upon the truth and accuracy of any statement or opinion
contained in any such document as provided in Article VI.
- ----------
Section 11.03. Acts of Noteholders. (a) Any request, demand,
-------------------
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be given or taken by Noteholders may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Noteholders in person or by agents duly appointed in writing; and except
as herein otherwise expressly provided such action shall become effective
when such instrument or instruments are delivered to the Indenture Trustee,
and, where it is hereby expressly required, to the Issuer. Such instrument
or instruments (and the action embodied therein and evidenced thereby) are
herein sometimes referred to as the "Act" of the Noteholders signing such
instrument or instruments. Proof of execution of any such instrument or of a
writing appointing any such agent shall be sufficient for any purpose of this
Indenture and (subject to Section 6.01) conclusive in favor of the Indenture
------------
Trustee and the Issuer, if made in the manner provided in this Section.
(b) The fact and date of the execution by any person of any such
instrument or writing may be proved in any manner that the Indenture Trustee
deems sufficient.
(c) The ownership of Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Notes shall bind the Holder of
every Note issued upon the registration thereof or in exchange therefor or in
lieu thereof, in respect of anything done, omitted or suffered to be done by
the Indenture Trustee or the Issuer in reliance thereon, whether or not
notation of such action is made upon such Note.
Section 11.04. Notices, etc., to Indenture Trustee, Issuer and
-----------------------------------------------
Rating Agencies. Any request, demand, authorization, direction, notice,
- ---------------
consent, waiver or Act of Noteholders or other documents provided or
permitted by this Indenture shall be in writing and if such request, demand,
authorization, direction, notice, consent, waiver or act of Noteholders is to
be made upon, given or furnished to or filed with:
(a) the Indenture Trustee by any Noteholder or by the Issuer shall be
sufficient for every purpose hereunder if made, given, furnished or filed in
writing to or with the Indenture Trustee at its Corporate Trust Office, or
(b) the Issuer by the Indenture Trustee or by any Noteholder shall be
sufficient for every purpose hereunder if in writing and mailed first-class,
postage prepaid to the Issuer addressed to: Cityscape Home Loan Owner Trust
1997-1, in care of Wilmington Trust Company, Rodney Square North, 1100 North
Market Street, Wilmington, Delaware 19890, Attention: Emmett R. Harmon, or
at any other address previously furnished in writing to the Indenture Trustee
by the Issuer or the Administrator. The Issuer shall promptly transmit any
notice received by it from the Noteholders to the Indenture Trustee.
Notices required to be given to the Rating Agencies by the Issuer, the
Indenture Trustee or the Owner Trustee shall be in writing, personally
delivered or mailed by certified mail, return receipt requested, to (i) in
the case of DCR, at the following address: Duff & Phelps Credit Rating, 17
State Street (12th Floor), New York, New York 10004, (ii) in the case of
Fitch, at the following address: Fitch Investor's Service, One State Street
Plaza, New York, New York 10004, and (iii) in the case of Standard & Poor's,
at the following address: Standard & Poor's Ratings Group, 26 Broadway (15th
Floor), New York, New York 10004, Attention of Asset Backed Surveillance
Department; or as to each of the foregoing, at such other address as shall be
designated by written notice to the other parties.
Section 11.05. Notices to Noteholders; Waiver. Where this Indenture
------------------------------
provides for notice to Noteholders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class, postage prepaid to each Noteholder affected by such
event, at his address as it appears on the Note Register, not later than the
latest date, and not earlier than the earliest date, prescribed for the
giving of such notice. In any case where notice to Noteholders is given by
mail, neither the failure to mail such notice nor any defect in any notice so
mailed to any particular Noteholder shall affect the sufficiency of such
notice with respect to other Noteholders, and any notice that is mailed in
the manner herein provided shall conclusively be presumed to have been duly
given.
Where this Indenture provides for notice in any manner, such notice may
be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Noteholders shall be filed with the Indenture
Trustee but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service as a result
of a strike, work stoppage or similar activity, it shall be impractical to
mail notice of any event to Noteholders when such notice is required to be
given pursuant to any provision of this Indenture, then any manner of giving
such notice as shall be satisfactory to the Indenture Trustee shall be deemed
to be a sufficient giving of such notice.
Where this Indenture provides for notice to the Rating Agencies, failure
to give such notice shall not affect any other rights or obligations created
hereunder, and shall not under any circumstance constitute a Default or Event
of Default.
Section 11.06. (Reserved).
Section 11.07. Conflict with Trust Indenture Act. If any provision
---------------------------------
hereof limits, qualifies or conflicts with another provision hereof that is
required to be included in this Indenture by any of the provisions of the
Trust Indenture Act, such required provision shall control.
The provisions of TIA Sections 310 through 317 that impose duties on any
person (including the provisions automatically deemed included herein unless
expressly excluded by this Indenture) are a part of and govern this
Indenture, whether or not physically contained herein.
Section 11.08. Effect of Headings and Table of Contents. The
----------------------------------------
Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
Section 11.09. Successors and Assigns. All covenants and agreements
----------------------
in this Indenture and the Notes by the Issuer shall bind its successors and
assigns, whether so expressed or not. All agreements of the Indenture
Trustee in this Indenture shall bind its successors, co-trustees and agents.
Section 11.10. Separability. In case any provision in this
------------
Indenture or in the Notes shall be invalid, illegal or unenforceable, the
validity, legality, and enforceability of the remaining provisions shall not
in any way be affected or impaired thereby.
Section 11.11. Benefits of Indenture. Nothing in this Indenture or
---------------------
in the Notes, express or implied, shall give to any Person, other than the
parties hereto and their successors hereunder, and the Noteholders, and any
other party secured hereunder, and any other Person with an ownership
interest in any part of the Collateral, any benefit or any legal or equitable
right, remedy or claim under this Indenture.
Section 11.12. Legal Holidays. In any case where the date on which
--------------
any payment is due shall not be a Business Day, then (notwithstanding any
other provision of the Notes or this Indenture) payment need not be made on
such date, but may be made on the next succeeding Business Day with the same
force and effect as if made on the date on which nominally due, and no
interest shall accrue for the period from and after any such nominal date.
Section 11.13. GOVERNING LAW. THIS INDENTURE SHALL BE CONSTRUED IN
-------------
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 11.14. Counterparts. This Indenture may be executed in any
------------
number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
Section 11.15. Recording of Indenture. If this Indenture is subject
----------------------
to recording in any appropriate public recording offices, such recording is
to be effected by the Issuer and at its expense accompanied by an Opinion of
Counsel (which may be counsel to the Indenture Trustee or any other counsel
reasonably acceptable to the Indenture Trustee) to the effect that such
recording is necessary either for the protection of the Noteholders or any
other Person secured hereunder or for the enforcement of any right or remedy
granted to the Indenture Trustee under this Indenture.
Section 11.16. Trust Obligation. No recourse may be taken, directly
----------------
or indirectly, with respect to the obligations of the Issuer, the Owner
Trustee or the Indenture Trustee on the Notes or under this Indenture or any
certificate or other writing delivered in connection herewith or therewith,
against (i) the Indenture Trustee or the Owner Trustee in its individual
capacity, (ii) any owner of a beneficial interest in the Issuer or (iii) any
partner, owner, beneficiary, agent, officer, director, employee or agent of
the Indenture Trustee or the Owner Trustee in its individual capacity, any
holder of a beneficial interest in the Issuer, the Owner Trustee or the
Indenture Trustee or of any successor or assign of the Indenture Trustee or
the Owner Trustee in its individual capacity, except as any such Person may
have expressly agreed (it being understood that the Indenture Trustee and the
Owner Trustee have no such obligations in their individual capacity) and
except that any such partner, owner or beneficiary shall be fully liable, to
the extent provided by applicable law, for any unpaid consideration for
stock, unpaid capital contribution or failure to pay any installment or call
owing to such entity. For all purposes of this Indenture, in the performance
of any duties or obligations of the Issuer hereunder, the Owner Trustee shall
be subject to, and entitled to the benefits of, the terms and provisions of
Article VI, VII and VIII of the Trust Agreement.
- ------------------------
Section 11.17. No Petition. The Indenture Trustee, by entering into
-----------
this Indenture, and each Noteholder, by accepting a Note, hereby covenant and
agree that they will not at any time institute against the Seller, the
Servicer, or the Issuer, or join in any institution against the Seller, the
Servicer, or the Issuer of, any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings, or other proceedings under any United
States federal or state bankruptcy or similar law in connection with any
obligations relating to the Notes, this Indenture or any of the Basic
Documents.
Section 11.18. Inspection. The Issuer agrees that, on reasonable
----------
prior notice, it will permit any representative of the Indenture Trustee,
during the Issuer's normal business hours, to examine all the books of
account, records, reports and other papers of the Issuer, to make copies and
extracts therefrom, to cause such books to be audited by Independent
certified public accountants, and to discuss the Issuer's affairs, finances
and accounts with the Issuer's officers, employees, and Independent certified
public accountants, all at such reasonable times and as often as may be
reasonably requested. The Indenture Trustee shall and shall cause its
representatives to hold in confidence all such information except to the
extent disclosure may be required by law (and all reasonable applications for
confidential treatment are unavailing) and except to the extent that the
Indenture Trustee may reasonably determine that such disclosure is consistent
with its obligations hereunder.
Section 11.19. Conflicts of Interest. In performing its duties as
---------------------
Administrator pursuant to the Administration Agreement, the Indenture Trustee
shall not be liable for any potential conflict of interest related to its
performance as Indenture Trustee hereunder.
IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have caused
this Indenture to be duly executed by their respective officers, thereunto
duly authorized and duly attested, all as of the day and year first above
written.
CITYSCAPE HOME LOAN OWNER TRUST 1997-1
By: Wilmington Trust Company
not in its individual capacity but
solely as Owner Trustee
By:______________________________________
Name:
Title:
FIRST BANK NATIONAL ASSOCIATION,
as Indenture Trustee
By:______________________________________
Name:
Title:
STATE OF NEW YORK
COUNTY OF NEW YORK
BEFORE ME, the undersigned authority, a Notary Public in and for said
county and state, on this day personally appeared
___________________________, known to me to be the person and officer whose
name is subscribed to the foregoing instrument and acknowledged to me that
the same was the act of the said WILMINGTON TRUST COMPANY, not in its
individual capacity, but solely as Owner Trustee on behalf of CITYSCAPE HOME
LOAN OWNER TRUST 1997-1, a Delaware business trust, and that such person
executed the same as the act of said business trust for the purpose and
consideration therein expressed, and in the capacities therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this ____ day of February, 1997.
--------------------------------------------
Notary Public in and for the State of New York
(Seal)
My commission expires:
- --------------------
STATE OF NEW YORK
COUNTY OF NEW YORK
BEFORE ME, the undersigned authority, a Notary Public in and for said
county and state, on this day personally appeared __________________________,
known to me to be the person and officer whose name is subscribed to the
foregoing instrument and acknowledged to me that the same was the act of
FIRST BANK NATIONAL ASSOCIATION, a national banking association, and that
such person executed the same as the act of said corporation for the purpose
and consideration therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this ____ day of February, 1997.
--------------------------------------------
Notary Public in and for the State of New York
(Seal)
My commission expires:
- --------------------
SCHEDULE A
Schedule of Home Loans
EXHIBIT A
FORM OF NOTE
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
$( )
No. ( ) CUSIP NO. ( )
CITYSCAPE HOME LOAN OWNER TRUST 1997-1
CLASS ( ) ( )% ASSET BACKED NOTES
CITYSCAPE HOME LOAN OWNER TRUST 1997-1, a business trust organized and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to CEDE & CO., or
registered assigns, the principal sum of _________________________________
_______________________ payable on each Distribution Date in an amount equal
to the result obtained by multiplying (i) a fraction the numerator of which
is the initial principal amount of this Class ( ) Note and the denominator
of which is the aggregate principal amount of all Class ( ) Notes by (ii)
the aggregate amount, if any, payable from the Note Distribution Account in
respect of principal on the Class ( ) Notes pursuant to Section 5.01 of the
Sale and Servicing Agreement dated as of February 1, 1997, between the
Issuer, Financial Asset Securities Corp., as Depositor (the "Depositor")
Cityscape Corp., as Transferor and Servicer ("Cityscape") and First Bank
National Association, a national banking association, as Indenture Trustee
(the "Indenture Trustee") and the Co-Owner Trustee; provided, however, that
the entire unpaid principal amount of this Note shall be due and payable on
the earlier of (i) the Distribution Date occurring in March 2018 (the "Final
Maturity Date"), (ii) the Redemption Date, if any, pursuant to Section 10.01
of the Indenture dated as of February 1, 1997, between the Issuer and the
Indenture Trustee or (iii) the date on which an Event of Default shall have
occurred and be continuing, if the Indenture Trustee or the Holders of Notes
representing not less than a majority of the Outstanding Amount of the Notes
have declared the Notes to be immediately due and payable in the manner
provided in Section 5.02 of the Indenture. Capitalized terms used but not
defined herein are defined in Article I of the Indenture, which also contains
rules as to construction that shall be applicable herein.
The Issuer will pay interest on this Note at the rate per annum shown
above on each Distribution Date until the principal of this Note is paid or
made available for payment in full, on the principal amount of this Note
outstanding on the preceding Distribution Date (after giving effect to all
payments of principal made on the preceding Distribution Date). Interest on
this Note will accrue for each Distribution Date during the calendar month
preceding such Distribution Date (each, a "Due Period"). Interest will be
computed on the basis of a 360-day year of twelve 30-day months. Such
principal of and interest on this Note shall be paid in the manner specified
on the reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the
Issuer with respect to this Note shall be applied first to interest due and
payable on this Note as provided above and then to the unpaid principal of
this Note.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set
forth on the face of this Note.
Unless the certificate of authentication hereon has been executed by the
Indenture Trustee whose name appears below by manual signature, this Note
shall not be entitled to any benefit under the Indenture referred to on the
reverse hereof, or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer, as of the date set forth
below.
Date: February , 1997
CITYSCAPE HOME LOAN OWNER TRUST 1997-1
By: Wilmington Trust Company,
not in its individual capacity but
solely as Owner Trustee under the
Trust Agreement
By: _____________________________________
Authorized Signatory
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
Date: February , 1997
FIRST BANK NATIONAL ASSOCIATION,
not in its individual capacity but
solely as Indenture Trustee,
By: ___________________________________
Authorized Signatory
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its Class ( ) ( )% Home Loan Asset Backed Notes (herein
called the "Class ( ) Notes"), all issued under the Indenture, to which
Indenture and all indentures supplemental thereto reference is hereby made
for a statement of the respective rights and obligations thereunder of the
Issuer, the Indenture Trustee and the Holders of the Notes. The Class ( )
Notes are subject to all terms of the Indenture.
The Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes, the Class
A-4 Notes, the Class M-1 Notes and the Class M-2 Notes (collectively, the
"Notes") are and will be secured by the collateral pledged as security
therefor as provided in the Indenture.
Principal of the Class ( ) Notes will be payable on each Distribution
Date in an amount described on the face hereof. "Distribution Date" means
the 25th day of each month, or, if any such date is not a Business Day, the
next succeeding Business Day, commencing in March 1997.
As described above, the entire unpaid principal amount of this Note
shall be due and payable on the earlier of the Final Maturity Date and the
Redemption Date, if any, pursuant to Section 10.01 of the Indenture.
-------------
Notwithstanding the foregoing, the entire unpaid principal amount of the
Notes shall be due and payable on the date on which an Event of Default shall
have occurred and be continuing and the Indenture Trustee, at the direction
or upon the prior written consent of the Holders of the Notes representing
not less than a majority of the Outstanding Amount of the Notes have declared
the Notes to be immediately due and payable in the manner provided in Section
5.02 of the Indenture. All principal payments on the Class ( ) Notes shall
be made pro rata to the holders of the Class ( ) Notes entitled thereto.
Payments of interest on this Note due and payable on each Distribution
Date, together with the installment of principal, if any, to the extent not
in full payment of this Note, shall be made by check mailed to the Person
whose name appears as the Registered Holder of this Note (or one or more
Predecessor Notes) on the Note Register as of the close of business on each
Record Date, except that with respect to Notes registered on the Record Date
in the name of the nominee of the Clearing Agency (initially, such nominee to
be Cede & Co.), payments will be made by wire transfer in immediately
available funds to the account designated by such nominee. Such checks shall
be mailed to the Person entitled thereto at the address of such Person as it
appears on the Note Register as of the applicable Record Date without
requiring that this Note be submitted for notation of payment. Any reduction
in the principal amount of this Note (or any one or more Predecessor Notes)
effected by any payments made on any Distribution Date shall be binding upon
all future Holders of this Note and of any Note issued upon the registration
of transfer hereof or in exchange hereof or in lieu hereof, whether or not
noted hereon. If funds are expected to be available, as provided in the
Indenture, for payment in full of the then remaining unpaid principal amount
of this Note on a Distribution Date, then the Indenture Trustee, in the name
of and on behalf of the Issuer, will notify the Person who was the Registered
Holder hereof as of the Record Date preceding such Distribution Date by
notice mailed or transmitted by facsimile prior to such Distribution Date,
and the amount then due and payable shall be payable only upon presentation
and surrender of this Note at the Indenture Trustee's principal Corporate
Trust Office or at the office of the Indenture Trustee's agent appointed for
such purposes located in The City of New York.
As provided in the Indenture and the Sale and Servicing Agreement, the
Class ( ) Notes may be redeemed (a) in whole, but not in part, at the
option of the Majority Residual Interest Holder, on any Distribution Date on
and after the date on which the Pool Principal Balance is less than or equal
to 10% of the Original Pool Principal Balance.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered on the Note
Register upon surrender of this Note for registration of transfer at the
office or agency designated by the Issuer pursuant to the Indenture, duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Indenture Trustee duly executed by, the Holder hereof or
such Holder's attorney duly authorized in writing, with such signature
guaranteed by an "eligible guarantor institution" meeting the requirements of
the Note Registrar, which requirements include membership or participation in
the Securities Transfer Agent's Medallion Program ("STAMP") or such other
"signature guarantee program" as may be determined by the Note Registrar in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended, and thereupon one or more new
Notes of authorized denominations and in the same aggregate principal amount
will be issued to the designated transferee or transferees. No service
charge will be charged for any registration of transfer or exchange of this
Note, but the Issuer may be required to pay a sum sufficient to cover any tax
or other governmental charge that may be imposed in connection with any such
registration of transfer or exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note, covenants and agrees that
no recourse may be taken, directly or indirectly, with respect to the
obligations of the Issuer, the Owner Trustee or the Indenture Trustee on the
Notes or under the Indenture or any certificate or other writing delivered in
connection therewith, against (i) the Indenture Trustee or the Owner Trustee
in its individual capacity, (ii) any owner of a beneficial interest in the
Issuer or (iii) any partner, owner, beneficiary, agent, officer, director or
employee of the Indenture Trustee or the Owner Trustee in its individual
capacity, any holder of a beneficial interest in the Issuer, the Owner
Trustee or the Indenture Trustee or of any successor or assign of the
Indenture Trustee or the Owner Trustee in its individual capacity, except as
any such Person may have expressly agreed and except that any such partner,
owner or beneficiary shall be fully liable, to the extent provided by
applicable law, for any unpaid consideration for stock, unpaid capital
contribution or failure to pay any installment or call owing to such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note, covenants and agrees by
accepting the benefits of the Indenture that such Noteholder or Note Owner
will not at any time institute against the Transferor or the Issuer, or join
in any institution against the Transferor or the Issuer of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings under any
United States federal or state bankruptcy or similar law in connection with
any obligations relating to the Notes, the Indenture or the Basic Documents.
The Issuer has entered into the Indenture and this Note is issued with
the intention that, for federal, state and local income, single business and
franchise tax purposes, the Notes will qualify as indebtedness of the Issuer
secured by the Trust Estate. Each Noteholder, by acceptance of a Note (and
each Note Owner by acceptance of a beneficial interest in a Note), agrees to
treat the Notes for federal, state and local income, single business and
franchise tax purposes as indebtedness of the Issuer.
Prior to the due presentment for registration of transfer of this Note,
the Issuer, the Indenture Trustee and any agent of the Issuer or the
Indenture Trustee may treat the Person in whose name this Note (as of the day
of determination or as of such other date as may be specified in the
Indenture) is registered as the owner hereof for all purposes, whether or not
this Note be overdue, and none of the Issuer, the Indenture Trustee or any
such agent shall be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Holders of Notes representing a
majority of the Outstanding Amount of all Notes at the time Outstanding. The
Indenture also contains provisions permitting the Holders of Notes
representing specified percentages of the Outstanding Amount of the Notes, on
behalf of the Holders of all the Notes, to waive compliance by the Issuer
with certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Holder
of this Note (or any one or more Predecessor Notes) shall be conclusive and
binding upon such Holder and upon all future Holders of this Note and of any
Note issued upon the registration of transfer hereof or in exchange hereof or
in lieu hereof whether or not notation of such consent or waiver is made upon
this Note. The Indenture also permits the Indenture Trustee to amend or
waive certain terms and conditions set forth in the Indenture without the
consent of Holders of the Notes issued thereunder.
The term "Issuer" as used in this Note includes any successor to the
Issuer under the Indenture.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the
laws of the State of New York, without reference to its conflict of law
provisions, and the obligations, rights and remedies of the parties hereunder
and thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note
at the times, place and rate, and in the coin or currency herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Basic Documents, none of the Issuer in its individual
capacity, the Owner Trustee in its individual capacity, any owner of a
beneficial interest in the Issuer, or any of their respective partners,
beneficiaries, agents, officers, directors, employees or successors or
assigns shall be personally liable for, nor shall recourse be had to any of
them for, the payment of principal of or interest on this Note or performance
of, or omission to perform, any of the covenants, obligations or
indemnifications contained in the Indenture. The Holder of this Note by its
acceptance hereof agrees that, except as expressly provided in the Basic
Documents, in the case of an Event of Default under the Indenture, the Holder
shall have no claim against any of the foregoing for any deficiency, loss or
claim therefrom; provided, however, that nothing contained herein shall be
taken to prevent recourse to, and enforcement against, the assets of the
Issuer for any and all liabilities, obligations and undertakings contained in
the Indenture or in this Note.
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee:
- ---------------
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto:
- --------------------------------------------------------------------------
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints , attorney, to transfer said Note on the books kept for
registration thereof, with full power of substitution in the premises.
Dated:_____________________
*/
---------------------------------------
Signature Guaranteed:
*/
---------------------------------------
- -------------------------------------
*/ NOTICE: The signature to this assignment must correspond with the name of
the registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatever. Such
signature must be guaranteed by an "eligible guarantor institution" meeting
the requirements of the Note Registrar, which requirements include
membership or participation in STAMP or such other "signature guarantee
program" as may be determined by the Note Registrar in addition to, or in
substitution for, STAMP, all in accordance with the Securities Exchange Act
of 1934, as amended.
