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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) June 26, 1997
FINANCIAL ASSET SECURITIES CORP., (as depositor under the Pooling
and Servicing Agreement, dated as of June 9, 1997, relating to the
Cityscape Home Equity Loan Trust 1997-C, Home Equity Pass-Through
Certificates, Series 1997-C).
FINANCIAL ASSET SECURITIES CORP.
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(Exact name of registrant as specified in its charter)
Delaware 333-29381 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 June 26, 1997, Financial Asset Securities Corp. (the "Company")
entered into a Pooling and Servicing Agreement, dated as of June 9, 1997, by
and among, the Company, as depositor, Cityscape Corp., as seller and
servicer, and First Bank National Association, as trustee, relating to the
Cityscape Home Equity Loan Owner Trust 1997-C, Home Equity Pass-Through
Certificates, Series 1997-C. The Pooling and Servicing Agreement is annexed
hereto as Exhibit 99.1.
Item 7. Financial Statements, Pro Forma Financial
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Information and Exhibits.
------------------------
(a) Not applicable.
(b) Not applicable.
(c) Exhibits:
99.1 Pooling and Servicing Agreement
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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Name: Peter McMullin
Title: Vice President
Dated: August 6, 1997
Exhibit Index
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Exhibit Page
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99.1 Pooling and Servicing Agreement
EXECUTION COPY
FINANCIAL ASSET SECURITIES CORP.,
Depositor
CITYSCAPE CORP.,
Seller and Servicer
and
FIRST BANK NATIONAL ASSOCIATION,
Trustee
POOLING AND SERVICING AGREEMENT
Dated as of June 9, 1997
_________________________________
CITYSCAPE HOME EQUITY LOAN TRUST, SERIES 1997-C
HOME EQUITY LOAN PASS-THROUGH CERTIFICATES
TABLE OF CONTENTS
Section Page
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ARTICLE I
DEFINITIONS
SECTION 1.01. Defined Terms . . . . . . . . . . . . . . . . . . . . 2
1933 Act . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2/28 LIBOR Mortgage Loan . . . . . . . . . . . . . . . . . . . 2
Accepted Servicing Procedures . . . . . . . . . . . . . . . . . 2
Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Accrual Period . . . . . . . . . . . . . . . . . . . . . . . . 2
Additional Servicing Compensation . . . . . . . . . . . . . . . 3
Addition Notice . . . . . . . . . . . . . . . . . . . . . . . . 3
Adjustment Date . . . . . . . . . . . . . . . . . . . . . . . . 3
Aggregate Senior Certificate Principal Balance . . . . . . . . 3
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Allocable Loss Amount . . . . . . . . . . . . . . . . . . . . . 3
Allocable Loss Amount Priority . . . . . . . . . . . . . . . . 3
Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Available Funds . . . . . . . . . . . . . . . . . . . . . . . . 3
Available Funds Cap . . . . . . . . . . . . . . . . . . . . . . 3
Balloon Mortgage Loan . . . . . . . . . . . . . . . . . . . . . 4
Balloon Payment . . . . . . . . . . . . . . . . . . . . . . . . 4
Bankruptcy Code . . . . . . . . . . . . . . . . . . . . . . . . 4
BIF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Book-Entry Certificates . . . . . . . . . . . . . . . . . . . . 4
Business Day . . . . . . . . . . . . . . . . . . . . . . . . . 4
Call Option Date . . . . . . . . . . . . . . . . . . . . . . . 4
Capitalized Interest Account . . . . . . . . . . . . . . . . . 4
Capitalized Interest Requirement . . . . . . . . . . . . . . . 4
Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Certificate Account . . . . . . . . . . . . . . . . . . . . . . 5
Certificateholder or Holder . . . . . . . . . . . . . . . . . . 5
Certificate Owner . . . . . . . . . . . . . . . . . . . . . . . 5
Certificate Principal Balance . . . . . . . . . . . . . . . . . 5
Certificate Register . . . . . . . . . . . . . . . . . . . . . 5
Cityscape . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Civil Relief Act . . . . . . . . . . . . . . . . . . . . . . . 5
Class . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Class A-1 Certificate . . . . . . . . . . . . . . . . . . . . . 5
Class A-1 Certificateholder . . . . . . . . . . . . . . . . . . 6
Class A-1 Pass-Through Margin . . . . . . . . . . . . . . . . . 6
Class A-2 Certificate . . . . . . . . . . . . . . . . . . . . . 6
Class A-2 Certificateholder . . . . . . . . . . . . . . . . . . 6
Class A-3 Certificate . . . . . . . . . . . . . . . . . . . . . 6
Class A-3 Certificateholder . . . . . . . . . . . . . . . . . . 6
Class A-4 Certificate . . . . . . . . . . . . . . . . . . . . . 6
Class A-4 Certificateholder . . . . . . . . . . . . . . . . . . 6
Class A-4 Priority Excess Distribution Amount . . . . . . . . . 6
Class A-4 Priority General Distribution Amount . . . . . . . . 6
Class A-4 Priority Percentage . . . . . . . . . . . . . . . . . 7
Class A-4 Pro Rata Excess Distribution Amount . . . . . . . . . 7
Class A-4 Pro Rata General Distribution Amount . . . . . . . . 7
Class A-5 Certificate . . . . . . . . . . . . . . . . . . . . . 7
Class A-5 Certificateholder . . . . . . . . . . . . . . . . . . 7
Class B Certificate . . . . . . . . . . . . . . . . . . . . . . 7
Class B-1A Certificate . . . . . . . . . . . . . . . . . . . . 7
Class B-1A Certificateholder . . . . . . . . . . . . . . . . . 7
Class B-1F Certificate . . . . . . . . . . . . . . . . . . . . 7
Class B-1F Certificateholder . . . . . . . . . . . . . . . . . 8
Class B Optimal Principal Balance . . . . . . . . . . . . . . . 8
Class Certificate Principal Balance . . . . . . . . . . . . . . 8
Class M-1 Certificate . . . . . . . . . . . . . . . . . . . . . 8
Class M-1 Optimal Principal Balance . . . . . . . . . . . . . . 8
Class M-1A Certificate . . . . . . . . . . . . . . . . . . . . 8
Class M-1A Certificateholder . . . . . . . . . . . . . . . . . 9
Class M-1F Certificate . . . . . . . . . . . . . . . . . . . . 9
Class M-1F Certificateholder . . . . . . . . . . . . . . . . . 9
Class M-2 Certificate . . . . . . . . . . . . . . . . . . . . . 9
Class M-2 Optimal Principal Balance . . . . . . . . . . . . . . 9
Class M-2A Certificate . . . . . . . . . . . . . . . . . . . . 9
Class M-2A Certificateholder . . . . . . . . . . . . . . . . . 9
Class M-2F Certificate . . . . . . . . . . . . . . . . . . . . 9
Class M-2F Certificateholder . . . . . . . . . . . . . . . . . 9
Class R-I Certificate . . . . . . . . . . . . . . . . . . . . . 9
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . 10
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Collection Account . . . . . . . . . . . . . . . . . . . . . . 10
Corporate Trust Office . . . . . . . . . . . . . . . . . . . . 10
Cram Down Loss . . . . . . . . . . . . . . . . . . . . . . . . 10
Cut-Off Date . . . . . . . . . . . . . . . . . . . . . . . . . 10
Cut-Off Date Loan Balance . . . . . . . . . . . . . . . . . . . 10
DCR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Definitive Certificates . . . . . . . . . . . . . . . . . . . . 10
Deleted Mortgage Loan . . . . . . . . . . . . . . . . . . . . . 10
Delinquency Advance . . . . . . . . . . . . . . . . . . . . . . 10
Delinquency Percentage . . . . . . . . . . . . . . . . . . . . 10
Delinquency Report . . . . . . . . . . . . . . . . . . . . . . 11
Delinquent . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Depositor . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Depository . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Depository Agreement . . . . . . . . . . . . . . . . . . . . . 11
Depository Participant . . . . . . . . . . . . . . . . . . . . 11
Determination Date . . . . . . . . . . . . . . . . . . . . . . 11
Directly Operate . . . . . . . . . . . . . . . . . . . . . . . 11
Disqualified Organization . . . . . . . . . . . . . . . . . . . 12
Distribution Account . . . . . . . . . . . . . . . . . . . . . 12
Distribution Date . . . . . . . . . . . . . . . . . . . . . . . 12
Due Date . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Due Period . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Eligible Account . . . . . . . . . . . . . . . . . . . . . . . 12
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Estate in Real Property . . . . . . . . . . . . . . . . . . . . 13
FDIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
FHLMC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Final Recovery Determination . . . . . . . . . . . . . . . . . 13
First Lien . . . . . . . . . . . . . . . . . . . . . . . . . . 13
First Mortgage Loan . . . . . . . . . . . . . . . . . . . . . . 13
Fitch . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
FNMA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
General Excess Available Amount . . . . . . . . . . . . . . . . 13
Gross Margin . . . . . . . . . . . . . . . . . . . . . . . . . 13
Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Group I . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Group I Certificate . . . . . . . . . . . . . . . . . . . . . . 13
Group I Closing Date Deposit . . . . . . . . . . . . . . . . . 14
Group I Interest Remittance Amount . . . . . . . . . . . . . . 14
Group I Mortgage Loans . . . . . . . . . . . . . . . . . . . . 14
Group II . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Group II Certificate . . . . . . . . . . . . . . . . . . . . . 14
Group II Closing Date Deposit . . . . . . . . . . . . . . . . . 14
Group II Interest Remittance Amount . . . . . . . . . . . . . . 14
Group II Mortgage Loans . . . . . . . . . . . . . . . . . . . . 15
Group II Pass-Through Margin . . . . . . . . . . . . . . . . . 15
Group Principal Balance . . . . . . . . . . . . . . . . . . . . 15
Independent . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Independent Contractor . . . . . . . . . . . . . . . . . . . . 15
Initial Adjustment Date . . . . . . . . . . . . . . . . . . . . 16
Initial Cut-Off Date . . . . . . . . . . . . . . . . . . . . . 16
Initial Mortgage Loans . . . . . . . . . . . . . . . . . . . . 16
Initial Mortgage Rate . . . . . . . . . . . . . . . . . . . . . 16
Interest Determination Date . . . . . . . . . . . . . . . . . . 16
Interest Distributable Amount . . . . . . . . . . . . . . . . . 16
Late Collection . . . . . . . . . . . . . . . . . . . . . . . . 16
LIBOR Business Day . . . . . . . . . . . . . . . . . . . . . . 16
LIBOR Mortgage Loan . . . . . . . . . . . . . . . . . . . . . . 16
Lien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Lifetime Cap . . . . . . . . . . . . . . . . . . . . . . . . . 16
Liquidation Proceeds . . . . . . . . . . . . . . . . . . . . . 16
Liquidation Report . . . . . . . . . . . . . . . . . . . . . . 17
Loan Balance . . . . . . . . . . . . . . . . . . . . . . . . . 17
Loan-to-Value Ratio . . . . . . . . . . . . . . . . . . . . . . 17
Loss Reimbursement Deficiency . . . . . . . . . . . . . . . . . 17
Majority Certificateholders . . . . . . . . . . . . . . . . . . 17
Majority Class R Certificateholders . . . . . . . . . . . . . . 17
Maximum Group I Collateral Amount . . . . . . . . . . . . . . . 17
Maximum Group II Collateral Amount . . . . . . . . . . . . . . 17
Maximum Mortgage Rate . . . . . . . . . . . . . . . . . . . . . 17
Mezzanine Certificate . . . . . . . . . . . . . . . . . . . . . 17
Minimum Mortgage Rate . . . . . . . . . . . . . . . . . . . . . 17
Monthly Interest Distributable Amount . . . . . . . . . . . . . 17
Monthly Payment . . . . . . . . . . . . . . . . . . . . . . . . 18
Mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Mortgage File . . . . . . . . . . . . . . . . . . . . . . . . . 18
Mortgage Index . . . . . . . . . . . . . . . . . . . . . . . . 18
Mortgage Loan . . . . . . . . . . . . . . . . . . . . . . . . . 18
Mortgage Loan Schedule . . . . . . . . . . . . . . . . . . . . 18
Mortgage Note . . . . . . . . . . . . . . . . . . . . . . . . . 20
Mortgage Rate . . . . . . . . . . . . . . . . . . . . . . . . . 20
Mortgaged Property . . . . . . . . . . . . . . . . . . . . . . 20
Mortgagor . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Net Mortgage Rate . . . . . . . . . . . . . . . . . . . . . . . 20
Net Recovery Proceeds . . . . . . . . . . . . . . . . . . . . . 20
New Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Nonrecoverable Delinquency Advance . . . . . . . . . . . . . . 20
Nonrecoverable Servicing Advance . . . . . . . . . . . . . . . 21
Officers' Certificate . . . . . . . . . . . . . . . . . . . . . 21
One-Month LIBOR . . . . . . . . . . . . . . . . . . . . . . . . 21
Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . 21
Optimal Principal Balance . . . . . . . . . . . . . . . . . . . 22
Original Class Certificate Principal Balance . . . . . . . . . 22
Original Pre-Funding Amount . . . . . . . . . . . . . . . . . . 22
OTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Overcollateralization Deficiency Amount . . . . . . . . . . . . 22
Overcollateralization Target Amount . . . . . . . . . . . . . . 22
Overcollateralized Amount . . . . . . . . . . . . . . . . . . . 23
Pass-Through Rate . . . . . . . . . . . . . . . . . . . . . . . 23
Percentage Interest . . . . . . . . . . . . . . . . . . . . . . 23
Periodic Rate Cap . . . . . . . . . . . . . . . . . . . . . . . 23
Permitted Investments . . . . . . . . . . . . . . . . . . . . . 23
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Pre-Funding Account . . . . . . . . . . . . . . . . . . . . . . 24
Pre-Funding Amount . . . . . . . . . . . . . . . . . . . . . . 24
Pre-Funding Earnings . . . . . . . . . . . . . . . . . . . . . 24
Pre-Funding Period . . . . . . . . . . . . . . . . . . . . . . 25
Prepayment Assumption . . . . . . . . . . . . . . . . . . . . . 25
Prepayment Interest Shortfall . . . . . . . . . . . . . . . . . 25
Principal Prepayment . . . . . . . . . . . . . . . . . . . . . 25
Principal Remittance Amount . . . . . . . . . . . . . . . . . . 25
Property Insurance Proceeds . . . . . . . . . . . . . . . . . . 25
Pro Rata Pre-Funding Distribution Amount . . . . . . . . . . . 25
Prospectus Supplement . . . . . . . . . . . . . . . . . . . . . 25
Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . 25
Qualified Substitute Mortgage Loan . . . . . . . . . . . . . . 26
Rating Agency . . . . . . . . . . . . . . . . . . . . . . . . . 26
Realized Loss . . . . . . . . . . . . . . . . . . . . . . . . . 26
Realized Loss Percentage . . . . . . . . . . . . . . . . . . . 26
Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Reference Banks . . . . . . . . . . . . . . . . . . . . . . . . 27
Regular Certificate . . . . . . . . . . . . . . . . . . . . . . 27
Regular Pre-Funding Distribution Amount . . . . . . . . . . . . 27
Regular Principal Distribution Amount . . . . . . . . . . . . . 27
REMIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
REMIC Provisions . . . . . . . . . . . . . . . . . . . . . . . 27
REMIC Trust . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Remittance Report . . . . . . . . . . . . . . . . . . . . . . . 28
Rents from Real Property . . . . . . . . . . . . . . . . . . . 28
REO Disposition . . . . . . . . . . . . . . . . . . . . . . . . 28
REO Property . . . . . . . . . . . . . . . . . . . . . . . . . 28
Request for Release . . . . . . . . . . . . . . . . . . . . . . 28
Reserve Interest Rate . . . . . . . . . . . . . . . . . . . . . 28
Residential Dwelling . . . . . . . . . . . . . . . . . . . . . 28
Responsible Officer . . . . . . . . . . . . . . . . . . . . . . 28
Rolling Delinquency Percentage . . . . . . . . . . . . . . . . 29
S&P . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SAIF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Second Loan-to-Value Ratio . . . . . . . . . . . . . . . . . . 29
Second Mortgage Loan . . . . . . . . . . . . . . . . . . . . . 29
Senior Certificate . . . . . . . . . . . . . . . . . . . . . . 29
Senior Certificateholder . . . . . . . . . . . . . . . . . . . 29
Senior Credit Enhancement Percentage . . . . . . . . . . . . . 29
Senior Optimal Principal Balance . . . . . . . . . . . . . . . 29
Senior Principal Distribution Amount . . . . . . . . . . . . . 29
Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Servicer Default . . . . . . . . . . . . . . . . . . . . . . . 30
Servicer Information . . . . . . . . . . . . . . . . . . . . . 30
Servicer Remittance Date . . . . . . . . . . . . . . . . . . . 30
Servicer Remittance Report . . . . . . . . . . . . . . . . . . 30
Servicer Termination Trigger Event . . . . . . . . . . . . . . 30
Servicing Account . . . . . . . . . . . . . . . . . . . . . . . 30
Servicing Advances . . . . . . . . . . . . . . . . . . . . . . 30
Servicing Fee . . . . . . . . . . . . . . . . . . . . . . . . . 30
Servicing Fee Rate . . . . . . . . . . . . . . . . . . . . . . 30
Servicing Officer . . . . . . . . . . . . . . . . . . . . . . . 31
Simple Interest Loan . . . . . . . . . . . . . . . . . . . . . 31
Six-Month LIBOR . . . . . . . . . . . . . . . . . . . . . . . . 31
Small Mixed-Use/Multifamily Property . . . . . . . . . . . . . 31
Startup Date . . . . . . . . . . . . . . . . . . . . . . . . . 31
Stepdown Date . . . . . . . . . . . . . . . . . . . . . . . . . 31
Stepdown Trigger Event . . . . . . . . . . . . . . . . . . . . 32
Stepup Rolling Delinquency Test . . . . . . . . . . . . . . . . 32
Stepup Trigger Event . . . . . . . . . . . . . . . . . . . . . 32
Stepup Cumulative Loss Test . . . . . . . . . . . . . . . . . . 32
Subsequent Cut-Off Date Deposit . . . . . . . . . . . . . . . . 32
Subsequent Mortgage Loans . . . . . . . . . . . . . . . . . . . 32
Subsequent Transfer Date . . . . . . . . . . . . . . . . . . . 32
Subsequent Transfer Agreement . . . . . . . . . . . . . . . . . 32
Sub-Servicer . . . . . . . . . . . . . . . . . . . . . . . . . 33
Sub-Servicing Account . . . . . . . . . . . . . . . . . . . . . 33
Sub-Servicing Agreement . . . . . . . . . . . . . . . . . . . . 33
Substitution Shortfall Amount . . . . . . . . . . . . . . . . . 33
Tax Matters Person . . . . . . . . . . . . . . . . . . . . . . 33
Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Termination Price . . . . . . . . . . . . . . . . . . . . . . . 33
Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Trust Estate . . . . . . . . . . . . . . . . . . . . . . . . . 33
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Trustee's Fee . . . . . . . . . . . . . . . . . . . . . . . . . 33
Trustee's Fee Rate . . . . . . . . . . . . . . . . . . . . . . 34
Underwriters . . . . . . . . . . . . . . . . . . . . . . . . . 34
United States Person or U.S. Person . . . . . . . . . . . . . . 34
Uninsured Cause . . . . . . . . . . . . . . . . . . . . . . . . 34
Unpaid Interest Shortfall Amount . . . . . . . . . . . . . . . 34
Unutilized Funding Amount . . . . . . . . . . . . . . . . . . . 34
Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Voting Rights . . . . . . . . . . . . . . . . . . . . . . . . . 34
Written Order to Authenticate . . . . . . . . . . . . . . . . . 35
SECTION 1.02. Accounting . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE II
ESTABLISHMENT OF THE TRUST;
PURCHASE AND SALE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES . . . . . . . . . 36
SECTION 2.01. Establishment of the Trust . . . . . . . . . . . . . 36
SECTION 2.02. Purchase and Sale of Mortgage Loans . . . . . . . . . 36
SECTION 2.03. Grant of Security Interest . . . . . . . . . . . . . 36
SECTION 2.04. Document Delivery Requirements . . . . . . . . . . . 37
SECTION 2.05. Acceptance by Trustee . . . . . . . . . . . . . . . . 40
SECTION 2.06. Repurchase or Substitution of Mortgage Loans by
Cityscape or the Servicer . . . . . . . . . . . . . . 41
SECTION 2.07. Representations and Warranties with Respect to the
Mortgage Loans . . . . . . . . . . . . . . . . . . . 44
SECTION 2.08. Representations and Warranties of Cityscape . . . . . 54
SECTION 2.09. Representations, Warranties and Covenants of the
Servicer . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 2.10. Representations and Warranties of the Depositor . . . 59
SECTION 2.11. Execution of Certificates . . . . . . . . . . . . . . 61
SECTION 2.12. Miscellaneous REMIC Provisions . . . . . . . . . . . 61
SECTION 2.13. Subsequent Transfers. . . . . . . . . . . . . . . . . 62
SECTION 2.14. Mandatory Prepayment . . . . . . . . . . . . . . . . 64
ARTICLE III
ADMINISTRATION AND SERVICING
OF THE TRUST
SECTION 3.01. Administration of the Trust; Servicing of the
Mortgage Loans . . . . . . . . . . . . . . . . . . . 65
SECTION 3.02. Sub-Servicing Agreements Between Servicer and Sub-
Servicers . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 3.03. Termination of Sub-Servicing Agreement . . . . . . . 69
SECTION 3.04. Liability of the Servicer . . . . . . . . . . . . . . 69
SECTION 3.05. No Contractual Relationship Between Sub-Servicers
and Trustee or Certificateholders . . . . . . . . . . 69
SECTION 3.06. Assumption or Termination of Sub-Servicing
Agreements by Trustee . . . . . . . . . . . . . . . . 70
SECTION 3.07. Collection of Certain Mortgage Loan Payments . . . . 70
SECTION 3.08. Sub-Servicing Accounts . . . . . . . . . . . . . . . 70
SECTION 3.09. Collection of Taxes, Assessments and Similar Items;
Servicing Accounts . . . . . . . . . . . . . . . . . 71
SECTION 3.10. Collection Account . . . . . . . . . . . . . . . . . 71
SECTION 3.11. Withdrawals from the Collection Account . . . . . . . 73
SECTION 3.12. Investment of Funds in the Accounts . . . . . . . . . 74
SECTION 3.13. Maintenance of Hazard Insurance and Errors and
Omissions and Fidelity Coverage . . . . . . . . . . . 76
SECTION 3.14. Enforcement of Due-on-Sale Clauses; Assumption
Agreements . . . . . . . . . . . . . . . . . . . . . 77
SECTION 3.15. Realization upon Defaulted Mortgage Loans . . . . . . 78
SECTION 3.16. Trustee to Cooperate; Release of Mortgage Files . . . 80
SECTION 3.17. Servicing Compensation . . . . . . . . . . . . . . . 81
SECTION 3.18. Reports to the Trustee; Collection Account
Statements . . . . . . . . . . . . . . . . . . . . . 82
SECTION 3.19. Statement as to Compliance and Financial Statements . 82
SECTION 3.20. Independent Public Accountants' Servicing Report . . 83
SECTION 3.21. Access to Certain Documentation . . . . . . . . . . . 83
SECTION 3.22. Title, Management and Disposition of REO Property . . 83
SECTION 3.23. Prepayment Interest Shortfalls . . . . . . . . . . . 85
SECTION 3.24. First Liens . . . . . . . . . . . . . . . . . . . . . 85
SECTION 3.25. Indemnification . . . . . . . . . . . . . . . . . . . 86
SECTION 3.26. Certain Procedures Relating to Successor Sub-
Servicers and Successor Servicers . . . . . . . . . . 86
SECTION 3.27. Reports to the Securities and Exchange Commission . . 87
ARTICLE IV
FLOW OF FUNDS
SECTION 4.01. Establishment of Accounts . . . . . . . . . . . . . . 88
SECTION 4.02. (Reserved.) . . . . . . . . . . . . . . . . . . . . . 88
SECTION 4.03. Deposits into, and Transfers Among, the Accounts . . 88
SECTION 4.04. Flow of Funds and Distributions . . . . . . . . . . . 88
SECTION 4.05. Statements to Certificateholders . . . . . . . . . . 94
SECTION 4.06. Remittance Reports; Delinquency Advances by the
Servicer and Insurance Claims . . . . . . . . . . . . 98
SECTION 4.07. Compliance with Withholding Requirements . . . . . . 99
SECTION 4.08. Pre-Funding Account and Capitalized Interest
Account . . . . . . . . . . . . . . . . . . . . . . . 99
SECTION 4.09. Allocation of Losses . . . . . . . . . . . . . . . . 100
ARTICLE V
THE CERTIFICATES
SECTION 5.01. The Certificates . . . . . . . . . . . . . . . . . . 101
SECTION 5.02. Registration of Transfer and Exchange of
Certificates . . . . . . . . . . . . . . . . . . . . 101
SECTION 5.03. Mutilated, Destroyed, Lost or Stolen Certificates . . 104
SECTION 5.04. Persons Deemed Certificateholders . . . . . . . . . . 104
SECTION 5.05. Book-Entry Certificates . . . . . . . . . . . . . . . 105
SECTION 5.06. Notices to Depository . . . . . . . . . . . . . . . . 105
SECTION 5.07. Definitive Certificates . . . . . . . . . . . . . . . 106
ARTICLE VI
CITYSCAPE, THE DEPOSITOR AND THE SERVICER
SECTION 6.01. Liability of Cityscape, the Depositor and the
Servicer . . . . . . . . . . . . . . . . . . . . . . 107
SECTION 6.02. Merger or Consolidation of Cityscape or the
Servicer . . . . . . . . . . . . . . . . . . . . . . 107
SECTION 6.03. Limitation on Liability of Cityscape, the Depositor,
the Servicer and Others . . . . . . . . . . . . . . . 107
SECTION 6.04. Limitation on Resignation of the Servicer; No
Assignment or Delegation of Duties by Servicer . . . 108
SECTION 6.05. Rights of Cityscape, the Depositor, the
Certificateholders and Others in Respect of the
Servicer . . . . . . . . . . . . . . . . . . . . . . 109
SECTION 6.06. Eligibility Requirements for Servicer . . . . . . . . 109
ARTICLE VII
DEFAULT
SECTION 7.01. Servicer Defaults; Certain Matters Affecting the
Servicer . . . . . . . . . . . . . . . . . . . . . . 110
SECTION 7.02. Trustee to Act; Appointment of Successor . . . . . . 112
SECTION 7.03. Notification to Mortgagors and Certificateholders . . 113
SECTION 7.04. Additional Remedies of Trustee upon Servicer
Defaults . . . . . . . . . . . . . . . . . . . . . . 114
SECTION 7.05. Waiver of Servicer Defaults . . . . . . . . . . . . . 114
SECTION 7.06. Survivability of Servicer Liabilities . . . . . . . . 114
ARTICLE VIII
CONCERNING THE TRUSTEE
SECTION 8.01. Duties of Trustee . . . . . . . . . . . . . . . . . . 115
SECTION 8.02. Certain Matters Affecting the Trustee . . . . . . . . 116
SECTION 8.03. Trustee Not Liable for Certificates or Mortgage
Loans . . . . . . . . . . . . . . . . . . . . . . . . 117
SECTION 8.04. Trustee May Own Certificates . . . . . . . . . . . . 117
SECTION 8.05. Expenses of Trustee . . . . . . . . . . . . . . . . . 118
SECTION 8.06. Trustee Eligibility Requirements . . . . . . . . . . 118
SECTION 8.07. Resignation and Removal of the Trustee . . . . . . . 118
SECTION 8.08. Successor Trustee . . . . . . . . . . . . . . . . . . 119
SECTION 8.09. Merger or Consolidation of Trustee . . . . . . . . . 120
SECTION 8.10. Appointment of Co-Trustee or Separate Trustee . . . . 120
SECTION 8.11. Trustee Records . . . . . . . . . . . . . . . . . . . 121
SECTION 8.12. Appointment of Office or Agency . . . . . . . . . . . 121
SECTION 8.13. Exercise of Trustee Powers by Certificateholders . . 121
ARTICLE IX
(RESERVED)
ARTICLE X
TERMINATION
SECTION 10.01. Termination . . . . . . . . . . . . . . . . . . . . . 123
SECTION 10.02. Additional Termination Requirements . . . . . . . . . 125
ARTICLE XI
MISCELLANEOUS PROVISIONS
SECTION 11.01. Amendment . . . . . . . . . . . . . . . . . . . . . . 126
SECTION 11.02. Recordation of Agreement; Counterparts . . . . . . . 127
SECTION 11.03. Limitation on Rights of Certificateholders . . . . . 127
SECTION 11.04. Governing Law; Jurisdiction . . . . . . . . . . . . . 128
SECTION 11.05. Notices . . . . . . . . . . . . . . . . . . . . . . . 128
SECTION 11.06. Severability of Provisions . . . . . . . . . . . . . 128
SECTION 11.07. Article and Section References . . . . . . . . . . . 129
SECTION 11.08. Notice to the Rating Agencies . . . . . . . . . . . . 129
SECTION 11.09. Further Assurances . . . . . . . . . . . . . . . . . 130
SECTION 11.10. Benefits of Agreement . . . . . . . . . . . . . . . . 130
SECTION 11.11. Acts of Certificateholders . . . . . . . . . . . . . 130
SECTION 11.12. Tax Matters Person . . . . . . . . . . . . . . . . . 130
EXHIBITS:
- --------
Exhibit A Forms of Senior Certificates
Exhibit B-1 Forms of Mezzanine Certificates
Exhibit B-2 Forms of Class B Certificates
Exhibit C Forms of Class R Certificates
Exhibit D Mortgage Loan Schedule
Exhibit E-1 Request for Release (for Trustee)
Exhibit E-2 Request for Release (Mortgage Loans Paid in Full)
Exhibit F-1 Form of Trustee's Initial Certification
Exhibit F-2 Form of Trustee's Final Certification
Exhibit F-3 Form of Trustee's Quarterly Certification
Exhibit G Form of Collection Account Certification
Exhibit H Form of Liquidation Report
Exhibit I Form of Collection Account Activity Report
Exhibit J Form of Transfer Certification
Exhibit K Form of Class R Certificate Transfer Affidavit
Exhibit L Form of Written Order to Authenticate
Exhibit M Cityscape's Underwriting Guidelines
Exhibit N Depository Agreement
Exhibit O Form of Servicer Request for Reimbursement
This Pooling and Servicing Agreement is dated as of June 9, 1997
(the "Agreement"), among FINANCIAL ASSET SECURITIES CORP., as depositor (the
"Depositor"), CITYSCAPE CORP., as seller (in such capacity, the "Seller" or
"Cityscape") and servicer (in such capacity, the "Servicer"), and FIRST BANK
NATIONAL ASSOCIATION, as trustee (the "Trustee").
PRELIMINARY STATEMENT:
WHEREAS, Cityscape is in the business of originating or purchasing
from others certain mortgage loans, including the Mortgage Loans;
WHEREAS, the Depositor has purchased Mortgage Loans from the Seller
and wishes to establish a trust administered by the Trustee, which trust will
(i) purchase the Mortgage Loans from the Depositor, with the result that the
entire beneficial ownership of the Mortgage Loans will be in the Trust
Estate, and (ii) issue pass-through certificates which in the aggregate will
evidence the entire beneficial ownership in the Trust Estate, with the result
that, following such purchase from the Depositor, the Trustee will hold legal
title to the Trust Estate and the Certificateholders will hold beneficial
title to the Trust Estate; and
WHEREAS, the Servicer wishes to service the Mortgage Loans on the
terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, Cityscape, the Depositor, the Servicer and the Trustee agree as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Defined Terms.
Whenever used in this Agreement or in the Preliminary Statement,
the 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, except that calculations in
respect of interest on the Class A-1 Certificates and the Group II
Certificates shall be made on the basis of the actual number of days elapsed
over 360 days.
"1933 Act": The Securities Act of 1933, as amended.
"2/28 LIBOR Mortgage Loan": A LIBOR Mortgage Loan whose Mortgage
Rate remains fixed for 24 months after origination thereof before becoming
subject to the semi-annual adjustment applicable to LIBOR Mortgage Loans.
"Accepted Servicing Procedures": Servicing procedures that meet at
least the same standards the Servicer would follow in servicing first and
second lien residential mortgage 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
Mortgage Loans and to the reliance placed by the Certificateholders on the
Servicer for the servicing of the Mortgage Loans but without regard to:
(i) any relationship that the Servicer, any Sub-Servicer or any
affiliate of the Servicer or any Sub-Servicer may have with the related
Mortgagor;
(ii) the ownership of any Certificate by the Servicer or any
affiliate of the Servicer;
(iii) the Servicer's obligation to make Delinquency Advances or
Servicing Advances; or
(iv) the Servicer's or any Sub-Servicer's right to receive
compensation for its services hereunder with respect to any particular
transaction.
"Account": Any of the Collection Account, Certificate Account,
Distribution Account, Pre-Funding Account and Capitalized Interest Account.
"Accrual Period": With respect to the Group I Certificates (other
than the Class A-1 Certificates) and the first Distribution Date, the 21-day
period from and including June 10, 1997 to and including June 30, 1997. With
respect to the Group I Certificates (other than the Class A-1 Certificates)
and any subsequent Distribution Date, the calendar month preceding the month
of such Distribution Date (such calendar month assumed for purposes of this
definition to have 30 days). With respect to the Class A-1 Certificates and
the Group II Certificates and the first Distribution Date, the period
commencing on the Closing Date and ending on the day immediately preceding
such Distribution Date. With respect to the Class A-1 Certificates and the
Group II Certificates and any subsequent Distribution Date, the period
commencing on the immediately preceding Distribution Date and ending on the
day immediately preceding such subsequent Distribution Date.
"Additional Servicing Compensation": As defined in Section 3.17
hereof.
"Addition Notice": For any date during the Pre-Funding Period, a
notice (which may be verbal or written) given to the Rating Agencies and the
Trustee pursuant to Section 2.13(b) hereof.
"Adjustment Date": As to each Group II Mortgage Loan, a date on
which the related Mortgage Rate may adjust, as provided in the related
Mortgage Note.
"Aggregate Senior Certificate Principal Balance": With respect to
any Distribution Date and Group I, the aggregate of the Class Certificate
Principal Balances of the Group I Senior Certificates. With respect to any
Distribution Date and Group II, the Class Certificate Principal Balance of
the Class A-5 Certificates.
"Agreement": This Pooling and Servicing Agreement and all
amendments hereof and supplements hereto.
"Allocable Loss Amount": With respect to each Distribution Date
and each Group, the excess, if any, of (a) the aggregate of the Class
Certificate Principal Balances of all Classes of Regular Certificates of such
Group (after giving effect to all distributions on such Distribution Date)
over (b) the related Group Principal Balance as of the end of the preceding
Due Period.
"Allocable Loss Amount Priority": With respect to any Distribution
Date and each Group, sequentially, to the Class B Certificates, the Class M-2
Certificates and the Class M-1 Certificates of such Group, in that order.
"Assignment": An assignment of Mortgage, notice of transfer or
equivalent instrument, in recordable form, which is sufficient under the laws
of the jurisdiction wherein the related Mortgaged Property is located to
reflect of record the sale or transfer of the Mortgage to the assignee
thereof (or, if such sale or transfer is to the Trustee, then to the Trustee
for the benefit of Certificateholders), 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 Funds": With respect to each Group and any Distribution
Date, the sum of all amounts on deposit in the Distribution Account with
respect to such Group on such Distribution Date after giving effect to the
transfer described in Section 4.04(a)(ii).
"Available Funds Cap": With respect to any Distribution Date and
the Class A-1 Certificates and each Class of Group II Certificates, the rate
per annum equal to the product of (a) (i) in the case of the Class A-1
Certificates, the weighted average of the Mortgage Rates on the Group I
Mortgage Loans that were outstanding as of the first day of the related Due
Period and (ii) in the case of each Class of Group II Certificates, the
weighted average of the Mortgage Rates on the Group II Mortgage Loans that
were outstanding as of the first day of the related Due Period, net of the
sum of (A) the Servicing Fee Rate and (B) the Trustee's Fee Rate and (b) a
fraction the numerator of which is 30 and the denominator of which is the
actual number of days elapsed in the related Accrual Period.
"Balloon Mortgage Loan": Any Mortgage Loan that provided on the
date of origination for scheduled monthly payments in level amounts
substantially lower than the amount of the final scheduled payment.
"Balloon Payment": With respect to any Balloon Mortgage Loan, as
of any date of determination, the Monthly Payment payable on the stated
maturity date of such Mortgage Loan.
"Bankruptcy Code": The Bankruptcy Code, as amended (Title 11 to
the United States Code).
"BIF": The Bank Insurance Fund of the FDIC.
"Book-Entry Certificates": Any of the Certificates that shall be
registered in the name of the Depository or its nominee, the ownership of
which is reflected on the books of the Depository or on the books of a Person
maintaining an account with the Depository (directly, as a "Depository
Participant", or indirectly, as an indirect participant in accordance with
the rules of the Depository and as described in Section 5.05 hereof). On the
Closing Date, all the Certificates shall be Book-Entry Certificates.
"Business Day": Any day other than a Saturday, a Sunday or a day
on which banking or savings institutions in The City of New York or in the
city in which the corporate trust office of the Trustee is located are
authorized or obligated by law or executive order to be closed.
"Call Option Date": With respect to each Group, the first
Distribution Date on which the Group Principal Balance of such Group is less
than or equal to 10% of the Maximum Collateral Amount for such Group.
"Capitalized Interest Account": The Capitalized Interest Account
established in accordance with Section 4.01 hereof and maintained by the
Trustee.
"Capitalized Interest Requirement": With respect to the
Distribution Date in July 1997, (A) the product of (a) a fraction, the
numerator of which is the Pre-Funding Amount on the Closing Date and the
denominator of which is the sum of the Pre-Funding Amount on the Closing Date
and the Group I Principal Balance on the Closing Date and (b) the aggregate
Monthly Interest Distributable Amount for each Class of Regular Certificates
in Group I for the respective Accrual Periods minus (B) in the case of any
Subsequent Loan transferred to the Trust during the related Due Period that
has a Monthly Payment due on any day in the period beginning after the
related Cut-Off Date and ending on the last day of such Due Period, the
amount of any interest due for such Subsequent Loan and minus (C) any Pre-
Funding Earnings for the related Due Period.
With respect to the Distribution Date in August 1997, (A) the product of
(a) a fraction, the numerator of which is the Pre-Funding Amount on the first
day of the related Due Period and the denominator of which is the sum of the
Pre-Funding Amount on the first day of the related Due Period and the Group I
Principal Balance on the first day of the related Due Period and (b) the
percentage equivalent of fraction the numerator of which is the aggregate
Monthly Interest Distributable Amount for each Class of Regular Certificates
in Group I for the respective Accrual Periods minus (B) any Pre-Funding
Earnings for the related Due Period and minus (C) in the case of any
Subsequent Loan transferred to the Trust during the related Due Period that
has a Monthly Payment due on any day in the period beginning after the
related Cut-Off Date and ending on the last day of such Due Period, the
amount of any interest due for such Subsequent Loan.
With respect to the Distribution Date in September 1997, (A) the product
of (a) the Pre-Funding Amount on the first day of the related Due Period the
denominator of which is the sum of the Pre-Funding Amount on the first day of
the related Due Period and the Group I Principal Balance on the first day of
the related Due Period and (b) the aggregate Monthly Interest Distributable
Amount for each Class of Regular Certificates in Group I for the respective
Accrual Periods minus (B) any Pre-Funding Earnings for the related Due Period
and minus (C) in the case of any Subsequent Loan transferred to the Trust
during the related Due Period that has a Monthly Payment due on any day in
the period beginning after the related Cut-Off Date and ending on the last
day of such Due Period, the amount of any interest due for such Subsequent
Loan.
"Certificate": Any Regular Certificate or Class R Certificate.
"Certificate Account": The trust account or accounts created and
maintained by the Trustee pursuant to Section 4.01 hereof which shall be
entitled "Certificate Account, First Bank National Association, as Trustee,
in trust for the registered Certificateholders of Cityscape Home Equity Loan
Trust, Series 1997-C", and which must be an Eligible Account.
"Certificateholder or Holder": The Person in whose name a
Certificate is registered in the Certificate Register, except that a
Disqualified Organization or non-U.S. Person shall not be a Holder of a Class
R Certificate for any purpose hereof.
"Certificate Owner": With respect to each Book-Entry Certificate,
any beneficial owner thereof.
"Certificate Principal Balance": With respect to any date of
determination and a Regular Certificate of any Class, the product of (i) the
Percentage Interest represented by such Regular Certificate and (ii) the
Class Certificate Principal Balance of such Class as of such date of
determination.
"Certificate Register": The register maintained pursuant to
Section 5.02 hereof.
"Cityscape": Cityscape Corp., a corporation organized under the
laws of the State of New York, or its successor in interest, in its capacity
as the seller of the Mortgage Loans. Cityscape is also recognized in certain
states as Cityscape Mortgage Corp.
"Civil Relief Act": The Soldiers' and Sailors' Civil Relief Act of
1940, as amended.
"Class": Collectively, Certificates which have the same priority
of payment and bear the same class designation and the form of which is
identical except for variation in the Percentage Interest evidenced thereby.
"Class A-1 Certificate": Any one of the Class A-1 Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit A, executed by the Trustee and authenticated and delivered by the
Trustee, representing the right to distributions as set forth herein and
therein, and evidencing an interest designated as a "regular interest" in the
Group I REMIC Trust for purposes of the REMIC Provisions.
"Class A-1 Certificateholder": Any Holder of a Class A-1
Certificate.
"Class A-1 Pass-Through Margin": With respect to the Class A-1
Certificates, on each Distribution Date, 0.14% (14 basis points) per annum.
"Class A-2 Certificate": Any one of the Class A-2 Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit A, executed by the Trustee and authenticated and delivered by the
Trustee, representing the right to distributions as set forth herein and
therein, and evidencing an interest designated as a "regular interest" in the
Group I REMIC Trust for purposes of the REMIC Provisions.
"Class A-2 Certificateholder": Any Holder of a Class A-2
Certificate.
"Class A-3 Certificate": Any one of the Class A-3 Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit A, executed by the Trustee and authenticated and delivered by the
Trustee, representing the right to distributions as set forth herein and
therein, and evidencing an interest designated as a "regular interest" in the
Group I REMIC Trust for purposes of the REMIC Provisions.
"Class A-3 Certificateholder": Any Holder of a Class A-3
Certificate.
"Class A-4 Certificate": Any one of the Class A-4 Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit A, executed by the Trustee and authenticated and delivered by the
Trustee, representing the right to distributions as set forth herein and
therein, and evidencing an interest designated as a "regular interest" in the
Group I REMIC Trust for purposes of the REMIC Provisions.
"Class A-4 Certificateholder": Any Holder of a Class A-4
Certificate.
"Class A-4 Priority Excess Distribution Amount": With respect to
any Distribution Date, the lesser of (A) the product of (x) the applicable
Class A-4 Priority Percentage for such Distribution Date and (y) the Class
A-4 Pro Rata Excess Distribution Amount for such Distribution Date and (B)
the least of (x) the General Excess Available Amount for Group I, (y) the
amount, if any, by which the Aggregate Senior Certificate Principal Balance
for Group I (after giving effect to any reduction thereof pursuant to
paragraphs (B) and (C) of Section 4.04(b)(I) on such Distribution Date)
exceeds the Senior Optimal Principal Balance for Group I for such
Distribution Date and (z) the Group I Overcollateralization Deficiency Amount
for such Distribution Date.
"Class A-4 Priority General Distribution Amount": With respect to
any Distribution Date, the lesser of (A) the product of (x) the Class A-4
Priority Percentage for such Distribution Date and (y) the Class A-4 Pro Rata
General Distribution Amount for such Distribution Date and (B) the Senior
Principal Distribution Amount with respect to Group I for such Distribution
Date.
"Class A-4 Priority Percentage": With respect to each Distribution
Date, the applicable percentage specified below:
Distribution Date Priority Percentage
----------------- -------------------
July 1997 - June 2000 0%
July 2000 - June 2002 45%
July 2002 - June 2003 80%
July 2003 - June 2004 100%
July 2004 and thereafter 300%
"Class A-4 Pro Rata Excess Distribution Amount": With respect to
any Distribution Date, an amount equal to the product of (x) a fraction, the
numerator of which is the Certificate Principal Balance of the Class A-4
Certificates immediately prior to such Distribution Date and the denominator
of which is the Aggregate Senior Certificate Principal Balance for Group I
immediately prior to such Distribution Date and (y) the least of (1) the
General Excess Available Amount for Group I, (2) the amount, if any, by which
the Aggregate Senior Certificate Principal Balance for Group I (after giving
effect to any reduction thereof pursuant to paragraphs (B) and (C) of Section
4.04(b)(I) on such Distribution Date) exceeds the Senior Optimal Principal
Balance for Group I for such Distribution Date and (3) the Group I
Overcollateralization Deficiency Amount for such Distribution Date.
"Class A-4 Pro Rata General Distribution Amount": With respect to
any Distribution Date, an amount equal to the product of (x) a fraction, the
numerator of which is the Certificate Principal Balance of the Class A-4
Certificates immediately prior to such Distribution Date and the denominator
of which is the Aggregate Senior Certificate Principal Balance for Group I
immediately prior to such Distribution Date and (y) the Senior Principal
Distribution Amount for Group I for such Distribution Date.
"Class A-5 Certificate": Any one of the Class A-5 Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit A, executed by the Trustee and authenticated and delivered by the
Trustee, representing the right to distributions as set forth herein and
therein, and evidencing an interest designated as a "regular interest" in the
Group II REMIC Trust for purposes of the REMIC Provisions.
"Class A-5 Certificateholder": Any Holder of a Class A-5
Certificate.
"Class B Certificate": A Class B-1F Certificate or a Class B-1A
Certificate, as the case may be.
"Class B-1A Certificate": Any one of the Class B-1A Certificates
as designated on the face thereof substantially in the form annexed hereto as
Exhibit B-2, executed by the Trustee and authenticated and delivered by the
Trustee, representing the right to distributions as set forth herein and
therein, and evidencing an interest designated as a "regular interest" in the
Group II REMIC Trust for purposes of the REMIC Provisions.
"Class B-1A Certificateholder": Any Holder of a Class B-1A
Certificate.
"Class B-1F Certificate": Any one of the Class B-1F Certificates
as designated on the face thereof substantially in the form annexed hereto as
Exhibit B-2, executed by the Trustee and authenticated and delivered by the
Trustee, representing the right to distributions as set forth herein and
therein, and evidencing an interest designated as a "regular interest" in the
Group I REMIC Trust for purposes of the REMIC Provisions.
"Class B-1F Certificateholder": Any Holder of a Class B-1F
Certificate.
"Class B Optimal Principal Balance": With respect to each Group
and any Distribution Date prior to the Stepdown Date or any Distribution Date
on which a Stepdown Trigger Event has occurred and is continuing, zero. With
respect to each Group and any other Distribution Date, the related Group
Principal Balance as of the last day of the Due Period that precedes such
Distribution Date minus the sum of (i) the aggregate of the Class Certificate
Principal Balances of the Senior Certificates and Mezzanine Certificates of
such Group (after taking into account any distributions made on such
Distribution Date in reduction of such Class Certificate Principal Balances
prior to such determination) and (ii) the Overcollateralization Target Amount
for such Group for such Distribution Date; provided, however, that any
Group's Class B Optimal Principal Balance shall never be less than zero or
greater than the Original Class Certificate Principal Balance of the Class B
Certificates of such Group.
"Class Certificate Principal Balance": With respect to any Class
of Regular Certificates and any date of determination, the Original Class
Certificate Principal Balance of such Class reduced by the sum of (i) all
amounts actually distributed in respect of principal of such Class on all
prior Distribution Dates and (ii) with respect to any Mezzanine Certificates
and any Class B Certificates, all related Allocable Loss Amounts applied in
reduction of principal of such Certificates on all prior Distribution Dates.
"Class M-1 Certificate": A Class M-1F Certificate or a Class M-1A
Certificate, as the case may be.
"Class M-1 Optimal Principal Balance": With respect to each Group
and any Distribution Date prior to the Stepdown Date or any Distribution Date
on which a Stepdown Trigger Event has occurred and is continuing, zero. With
respect to each Group and any other Distribution Date, the related Group
Principal Balance as of the last day of the Due Period that precedes such
Distribution Date minus the sum of (i) the aggregate of the Class Certificate
Principal Balances of the Senior Certificates of such Group (after taking
into account any distributions made on such Distribution Date in reduction of
the Class Certificate Principal Balances of such Classes of Senior
Certificates prior to such determination) and (ii) the greater of (a) the sum
of (1)(x) in the case of Group I, 16.50% of such Group Principal Balance or
(y) in the case of Group II, 20.00% of such Group Principal Balance and (2)
the Overcollateralization Target Amount for such Group for such Distribution
Date (calculated without giving effect to the proviso in the definition
thereof) and (b) 0.50% of the related Maximum Collateral Amount; provided,
however, that any Group's Class M-1 Optimal Principal Balance shall never be
less than zero or greater than the Original Class Certificate Principal
Balance of the Class M-1 Certificates of such Group.
"Class M-1A Certificate": Any one of the Class M-1A Certificates
as designated on the face thereof substantially in the form annexed hereto as
Exhibit B-1, executed by the Trustee and authenticated and delivered by the
Trustee, representing the right to distributions as set forth herein and
therein, and evidencing an interest designated as a "regular interest" in the
Group II REMIC Trust for purposes of the REMIC Provisions.
"Class M-1A Certificateholder": Any Holder of a Class M-1A
Certificate.
"Class M-1F Certificate": Any one of the Class M-1F Certificates
as designated on the face thereof substantially in the form annexed hereto as
Exhibit B-1, executed by the Trustee and authenticated and delivered by the
Trustee, representing the right to distributions as set forth herein and
therein, and evidencing an interest designated as a "regular interest" in the
Group I REMIC Trust for purposes of the REMIC Provisions.
"Class M-1F Certificateholder": Any Holder of a Class M-1F
Certificate.
"Class M-2 Certificate": A Class M-2F Certificate or a Class M-2A
Certificate, as the case may be.
"Class M-2 Optimal Principal Balance": With respect to each Group
and any Distribution Date prior to the Stepdown Date or any Distribution Date
on which a Stepdown Trigger Event has occurred and is continuing, zero. With
respect to each Group and any other Distribution Date, the related Group
Principal Balance as of the last day of the Due Period that precedes such
Distribution Date minus the sum of (i) the aggregate of the Class Certificate
Principal Balances of the Senior Certificates and the Class M-1 Certificates
of such Group (after taking into account any distributions made on such
Distribution Date in reduction of such Class Certificate Principal Balances
prior to such determination) and (ii) the greater of (a) the sum of (1)(x) in
the case of Group I, 7.00% of such Group Principal Balance or (y) in the case
of Group II, 8.50% of such Group Principal Balance and (2) the
Overcollateralization Target Amount for such Group for such Distribution Date
(calculated without giving effect to the proviso in the definition thereof)
and (b) 0.50% of the related Maximum Collateral Amount; provided, however,
that any Group's Class M-2 Optimal Principal Balance shall never be less than
zero or greater than the Original Class Certificate Principal Balance of the
Class M-2 Certificates of such Group.
"Class M-2A Certificate": Any one of the Class M-2A Certificates
as designated on the face thereof substantially in the form annexed hereto as
Exhibit B-1, executed by the Trustee and authenticated and delivered by the
Trustee, representing the right to distributions as set forth herein and
therein, and evidencing an interest designated as a "regular interest" in the
Group II REMIC Trust for purposes of the REMIC Provisions.
"Class M-2A Certificateholder": Any Holder of a Class M-2A
Certificate.
"Class M-2F Certificate": Any one of the Class M-2F Certificates
as designated on the face thereof substantially in the form annexed hereto as
Exhibit B-1, executed by the Trustee and authenticated and delivered by the
Trustee, representing the right to distributions as set forth herein and
therein, and evidencing an interest designated as a "regular interest" in the
Group I REMIC Trust for purposes of the REMIC Provisions.
"Class M-2F Certificateholder": Any Holder of a Class M-2F
Certificate.
"Class R Certificate": A Class R-I or a Class R-II Certificate, as
the case may be.
"Class R-I Certificate": Any one of the Class R-I Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit C, executed, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and therein, and evidencing an
interest designated as the "residual interest" in the Group I REMIC Trust for
the purposes of the REMIC Provisions.
"Class R-II Certificate": Any of the Class R-II Certificates as
designated on the face thereof, substantially in the form annexed hereto as
Exhibit C, executed, authenticated and delivered by the Trustee, representing
the right to distribution as set forth herein and therein, and evidencing an
interest designated as the "residual interest" in the Group II REMIC Trust
for the purposes of the REMIC Provisions.
"Closing Date": June 26, 1997.
"Code": The Internal Revenue Code of 1986 as it may be amended
from time to time.
"Collection Account": The account or accounts created and
maintained pursuant to Section 3.10(a) hereof, which shall be entitled
"Collection Account, First Bank National Association, as Trustee, in trust
for the registered Certificateholders of Cityscape Home Equity Loan Trust,
Series 1997-C", and which must be an Eligible Account.
"Corporate Trust Office": The principal corporate trust office of
the Trustee at which at any particular time its corporate trust business with
respect to the Certificates shall be administered, which office at the date
of the execution of this instrument is located at 180 East Fifth Street, St.
Paul, Minnesota 55101, Attention: Structured Finance/Cityscape 1997-C, or
at such other address as the Trustee may designate from time to time by
notice to the Certificateholders, Cityscape, the Depositor and the Servicer.
"Cram Down Loss": With respect to a Mortgage Loan, the amount of
reduction of such Mortgage Loan's Loan Balance resulting from an order issued
by a court of appropriate jurisdiction in an insolvency proceeding. A "Cram
Down Loss" shall be deemed to have occurred on the date of issuance of such
order.
"Cut-Off Date": With respect to the Initial Mortgage Loans, the
Initial Cut-Off Date. With respect to any Subsequent Mortgage Loan, the
close of business on the date designated as such in the related Subsequent
Transfer Agreement.
"Cut-Off Date Loan Balance": As to any Mortgage Loan, the
outstanding principal balance thereof as of the applicable Cut-Off Date.
"DCR": Duff & Phelps Credit Rating Co.
"Definitive Certificates": As defined in Section 5.05 hereof.
"Deleted Mortgage Loan": A Mortgage Loan replaced or to be
replaced by one or more Qualified Substitute Mortgage Loans.
"Delinquency Advance": As defined in Section 4.06(b) hereof.
"Delinquency Percentage": With respect to any Distribution Date,
the related Due Period and each Group, the fraction, expressed as a
percentage, the numerator of which is the aggregate of the Loan Balances of
all Mortgage Loans in such Group that are 60 or more days Delinquent, in
foreclosure or relating to REO Properties as of the close of business on the
last day of such Due Period, and the denominator of which is the Group
Principal Balance of such Group as of the close of business on the last day
of such Due Period.
"Delinquency Report": The monthly report described in Section
3.18(a) hereof.
"Delinquent": A Mortgage 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 due. A Mortgage 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, and similarly for "60 days Delinquent,"
"90 days Delinquent" and so on.
"Depositor": Financial Asset Securities Corp., a Delaware
corporation, or any successor in interest.
"Depository": The initial Depository shall be The Depository Trust
Company, whose nominee is Cede & Co., or any other organization registered as
a "clearing agency" pursuant to Section 17A of the Securities Exchange Act of
1934, as amended. The Depository shall initially be the registered Holder of
the Book-Entry Certificates. The Depository shall at all times be a
"clearing corporation" as defined in Section 8-102(3) of the Uniform
Commercial Code of the State of New York.
"Depository Agreement": With respect to any Book-Entry
Certificates, the agreement among the Depositor, the Trustee and the initial
Depository, to be dated on or about June 26, 1997 and substantially in the
form of Exhibit N.
"Depository Participant": A broker, dealer, bank or other
financial institution or other person for whom from time to time a Depository
effects book-entry transfers and pledges of securities deposited with the
Depository.
"Determination Date": With respect to any Distribution Date, the
close of business on the fourteenth day of the calendar month in which such
Distribution Date occurs or, if such fourteenth day is not a Business Day,
the close of business on the Business Day immediately preceding such
fourteenth day.
"Directly Operate": With respect to any REO Property, the
furnishing or rendering of services to the tenants thereof, the management or
operation of such REO Property, the holding of such REO Property primarily
for sale to customers, the performance of any construction work thereon or
any use of such REO Property in a trade or business conducted by the Trust
other than through an Independent Contractor; provided, however, that the
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Trustee (or the Servicer on behalf of the Trustee) shall not be considered to
Directly Operate an REO Property solely because the Trustee (or the Servicer
on behalf of the Trustee) establishes rental terms, chooses tenants, enters
into or renews leases, deals with taxes and insurance, or makes decisions as
to repairs or capital expenditures with respect to such REO Property.
"Disqualified Organization": A "disqualified organization" under
Section 860E of the Code, which as of the Closing Date is any of: (i) the
United States, any state or political subdivision thereof, any foreign
government, any international organization, or any agency or instrumentality
of any of the foregoing, (ii) any organization (other than a cooperative
described in Section 521 of the Code) which is exempt from the tax imposed by
Chapter 1 of the Code unless such organization is subject to the tax imposed
by Section 511 of the Code or (iii) any organization described in Section
1381(a)(2)(C) of the Code or (iv) any other Person so designated by the
Trustee based upon an Opinion of Counsel provided by nationally recognized
counsel to the Trustee that the holding of an ownership interest in a Class R
Certificate by such Person may cause the Trust Estate or any Person having an
ownership interest in any Class of Certificates (other than such Person) to
incur liability for any federal tax imposed under the Code that would not
otherwise be imposed but for the transfer of an ownership interest in the
Class R Certificate to such Person. A corporation will not be treated as an
instrumentality of the United States or of any state or political subdivision
thereof, if all of its activities are subject to tax and, a majority of its
board of directors is not selected by a governmental unit. The term "United
States", "state" and "international organizations" shall have the meanings
set forth in Section 7701 of the Code.
"Distribution Account": The trust account or accounts created and
maintained by the Trustee pursuant to Section 4.01 which shall be entitled
"Distribution Account, First Bank National Association, as Trustee, in trust
for the registered Certificateholders of Cityscape Home Equity Loan Trust,
Series 1997-C" and which must be an Eligible Account.
"Distribution Date": The 25th day of any calendar month, or if
such 25th day is not a Business Day, the Business Day immediately following
such 25th day, commencing on July 25, 1997.
"Due Date": With respect to each Mortgage Loan and any
Distribution Date, the day of the calendar month preceding the calendar month
in which such Distribution Date occurs on which the Monthly Payment for such
Mortgage Loan was due, exclusive of any days of grace.
"Due Period": With respect to the initial Distribution Date, the
period from and including June 10, 1997 through and including June 30, 1997.
With respect to any subsequent Distribution Date, the calendar month
preceding the calendar month in which such Distribution Date occurs.
"Eligible Account": Either (A) a segregated account or accounts
maintained with an institution whose deposits are insured by the BIF or the
SAIF of the FDIC, the unsecured and uncollateralized long-term debt
obligations of which shall be rated "A" or better by S&P, DCR and Fitch or
the short-term debt obligations of which shall be rated "D-1" or better by
DCR, "F-1+" or better by Fitch, and in one of S&P's two highest short-term
rating categories by S&P, and which is any of (i) a federal savings
association duly organized, validly existing and in good standing under the
federal banking laws, (ii) an institution duly organized, validly existing
and in good standing under the applicable banking laws of any state, (iii) a
national banking association duly organized, validly existing and in good
standing under the federal banking laws and (iv) a principal subsidiary of a
bank holding company or (B) a segregated trust account maintained with the
trust department of a federal or state chartered depository institution or
trust company, having capital and surplus of not less than $100,000,000,
acting in its fiduciary capacity. Any Eligible Account maintained by the
Trustee shall comply with the provisions of clause (B) hereof.
"ERISA": The Employee Retirement Income Security Act of 1974, as
amended.
"Estate in Real Property": A fee simple estate or a leasehold
estate in a parcel of real property.
"FDIC": Federal Deposit Insurance Corporation or any successor
thereto.
"FHLMC": Federal Home Loan Mortgage Corporation or any successor
thereto.
"Final Recovery Determination": A determination by the Servicer
with respect to any defaulted Mortgage Loan or REO Property (other than a
Mortgage Loan purchased or replaced by Cityscape or the Servicer pursuant to
Section 2.06 or 3.15(c) hereof) that all Net Recovery Proceeds and other
payments or recoveries that the Servicer, in its reasonable judgment, expects
to be finally recoverable have been recovered or that the Servicer, in its
reasonable judgment as evidenced by an Officers' Certificate which
accompanies the related Liquidation Report in the form of Exhibit H hereto,
believes the cost of obtaining any additional recoveries would exceed the
amount of such recoveries. The Servicer shall maintain records, prepared by
a Servicing Officer, of each Final Recovery Determination.
"First Lien": With respect to any Second Mortgage Loan, the
mortgage loan relating to the corresponding Mortgaged Property having a first
priority lien.
"First Mortgage Loan": Any Mortgage Loan that is secured by a
first lien on or first priority security interest in the related Mortgaged
Property.
"Fitch": Fitch Investors Service, L.P.
"FNMA": Federal National Mortgage Association or any successor
thereto.
"General Excess Available Amount": With respect to each
Distribution Date and Group I, the amount, if any, by which the Group I
Available Funds for such Distribution Date exceeds the aggregate amount
distributed on such Distribution Date pursuant to paragraphs (A), (B) and (C)
of Section 4.04(b)(I) hereof. With respect to each Distribution Date and
Group II, the amount, if any, by which the Group II Available Funds for such
Distribution Date exceeds the aggregate amount distributed on such
Distribution Date pursuant to paragraphs (A) and (B) of Section 4.04(b)(II)
hereof.
"Gross Margin": With respect to each Group II Mortgage Loan, the
percentage set forth in the related Mortgage Note to be added to the Mortgage
Index for use in determining the Mortgage Rate on each Adjustment Date, and
which is set forth in the Mortgage Loan Schedule.
"Group": Either of Group I or Group II, as the context requires.
"Group I": With respect to the Mortgage Loans, the Group I
Mortgage Loans, and with respect to the Certificates, the Group I
Certificates. When the words "Group I" immediately precede another defined
term herein, the application of such term will be limited to the Group I
Mortgage Loans and/or the Group I Certificates and/or the Group I REMIC
Trust.
"Group I Certificate": Any of the Class A-1, Class A-2, Class A-3,
Class A-4, Class M-1F, Class M-2F and Class B-1F Certificates.
"Group I Closing Date Deposit": With respect to the Distribution
Date in July 1997 and the Group I Certificates, $109,923.55.
"Group I Interest Remittance Amount": With respect to the Servicer
Remittance Date in July 1997, $522,676.01 (which amount includes the Group I
Closing Date Deposit relating to the related Distribution Date). With
respect to each Servicer Remittance Date thereafter, an amount with respect
to interest equal to (i) the product of (a) the sum of (x) the aggregate of
the Loan Balances of the Group I Mortgage Loans as of the opening of business
on the first day of the calendar month preceding the calendar month in which
such Servicer Remittance Date occurs and (y) the aggregate of the Loan
Balances of all Subsequent Mortgage Loans that were transferred to the Trust
during such preceding calendar month and that have Monthly Payments due
between the day following the related Cut-Off Date and the last day of such
month and (b) one-twelfth of the difference between (1) the weighted average
of the Mortgage Rates of such Group I Mortgage Loans (or, if applicable, such
lower rates as may be in effect for the Group I Mortgage Loans pursuant to
application of the Civil Relief Act) as of the opening of business on the
first day of the calendar month preceding the calendar month in which such
Servicer Remittance Date occurs and (2) the Servicing Fee Rate, minus
(ii) the amount, if any, by which (a) the aggregate of the Prepayment
Interest Shortfalls resulting from Principal Prepayments on Group I Mortgage
Loans during the Due Period beginning on the first day of the calendar month
preceding the calendar month in which such Servicer Remittance Date occurs
exceeds (b) the aggregate Servicing Fee received by the Servicer with respect
to the Group I Mortgage Loans for such Due Period.
"Group I Mortgage Loans": Each Mortgage Loan sold, transferred and
assigned to the Trust pursuant to Section 2.02, Section 2.06 or Section 2.13
hereof as from time to time is held as a part of the Trust, the Mortgage
Loans so held being identified in the Mortgage Loan Schedule for Group I
Mortgage Loans, notwithstanding foreclosure or other acquisition of title of
the related Mortgaged Property.
"Group II": With respect to the Mortgage Loans, the Group II
Mortgage Loans, and with respect to the Certificates, the Group II
Certificates. When the words "Group II" immediately precede another defined
term herein, the application of such term will be limited to the Group II
Mortgage Loans and/or the Group II Certificates and/or the Group II REMIC
Trust.
"Group II Certificate": Any of the Class A-5, Class M-1A, Class M-
2A and Class B-1A Certificates.
"Group II Closing Date Deposit": With respect to the Distribution
Date in July 1997 and the Group II Certificates, $642,952.02.
"Group II Interest Remittance Amount": With respect to the
Servicer Remittance Date in July 1997, $751,475.84 (which amount includes the
Group II Closing Date Deposit relating to the related Distribution Date).
With respect to each Servicer Remittance Date thereafter, an amount with
respect to interest equal to (i) the product of (a) the aggregate of the Loan
Balances of the Group II Mortgage Loans as of the opening of business on the
first day of the calendar month preceding the calendar month in which such
Servicer Remittance Date occurs and (b) one-twelfth of the difference between
(1) the weighted average of the Mortgage Rates of such Group II Mortgage
Loans (or, if applicable, such lower rates as may be in effect for the
Group II Mortgage Loans pursuant to application of the Civil Relief Act) as
of the opening of business on the first day of the calendar month preceding
the calendar month in which such Servicer Remittance Date occurs and (2) the
Servicing Fee Rate, minus (ii) the amount, if any, by which (a) the aggregate
of the Prepayment Interest Shortfalls resulting from Principal Prepayments on
Group II Mortgage Loans during the Due Period beginning on the first day of
the calendar month preceding the calendar month in which such Servicer
Remittance Date occurs exceeds (b) the aggregate Servicing Fee received by
the Servicer with respect to the Group II Mortgage Loans for such Due Period.
"Group II Mortgage Loans": Each Mortgage Loan sold, transferred
and assigned to the Trust pursuant to Section 2.02 or Section 2.06 hereof as
from time to time is held as a part of the Trust, the Mortgage Loans so held
being identified in the Mortgage Loan Schedule as Group II Mortgage Loans,
notwithstanding foreclosure or other acquisition of title of the related
Mortgaged Property.
"Group II Pass-Through Margin": With respect to the Class A-5
Certificates, on each Distribution Date on or before the Call Option Date,
0.24% (24 basis points) per annum, and on each Distribution Date after the
Call Option Date, 0.48% (48 basis points) per annum. With respect to the
Class M-1A Certificates, on each Distribution Date on or before the Call
Option Date, 0.50% (50 basis points) per annum, and on each Distribution Date
after the Call Option Date, 0.75% (75 basis points) per annum. With respect
to the Class M-2A Certificates, on each Distribution Date on or before the
Call Option Date, 0.70% (70 basis points) per annum, and on each Distribution
Date after the Call Option Date, 1.05% (105 basis points) per annum. With
respect to the Class B-1A Certificates, on each Distribution Date on or
before the Call Option Date, 1.10% (110 basis points) per annum, and on each
Distribution Date after the Call Option Date, 1.65% (165 basis points) per
annum.
"Group Principal Balance": With respect to any date of
determination and each Group, the aggregate of the Loan Balances of the
Mortgage Loans of such Group as of the end of the immediately preceding Due
Period; provided, however, that the Group 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 the last day of the related Due Period.
"Independent": When used with respect to any specified Person, any
such Person who (i) is in fact independent of Cityscape, the Depositor, the
Servicer and the Underwriters, (ii) does not have any direct financial
interest or any material indirect financial interest in Cityscape, the
Depositor, the Servicer or in any affiliate of any of them, and (iii) is not
connected with Cityscape, the Depositor, the Servicer or the Underwriters as
an officer, employee, promoter, underwriter, trustee, partner, director or
Person performing similar functions.
"Independent Contractor": Either (i) any Person (other than the
Servicer, the Depositor and Cityscape) that would be an "independent
contractor" with respect to the Trust within the meaning of Section 856(d)(3)
of the Code if the Trust were a real estate investment trust (except that the
ownership tests set forth in that section shall be considered to be met by
any Person that owns, directly or indirectly, 35 percent or more of any Class
of Certificates), so long as the Trust does not receive or derive any income
from such Person and provided that the relationship between such Person and
the Trust is at arm's length, all within the meaning of Treasury Regulation
Section 1.856-4(b)(5), or (ii) any other Person (including the Servicer, the
Depositor and Cityscape), if the Trustee and the Certificateholders have each
received an Opinion of Counsel to the effect that the taking of any action in
respect of any REO Property by such Person, subject to any conditions therein
specified, that is otherwise herein contemplated to be taken by an
Independent Contractor will not cause such REO Property to cease to qualify
as "foreclosure property" within the meaning of Section 860G(a)(8) of the
Code (determined without regard to the exception applicable for purposes of
Section 860D(a) of the Code), or cause any income realized in respect of such
REO Property to fail to qualify as Rents from Real Property.
"Initial Adjustment Date": As to each Group II Mortgage Loan, the
first Adjustment Date following the origination of such Mortgage Loan.
"Initial Cut-Off Date": The close of business on June 9, 1997.
"Initial Certificate Principal Balance": With respect to any
Regular Certificate, the amount designated "Initial Certificate Principal
Balance" on the face thereof.
"Initial Mortgage Loans": The Mortgage Loans delivered by the
Depositor on the Closing Date.
"Initial Mortgage Rate": As to each Group II Mortgage Loan, the
Mortgage Rate in effect prior to the Initial Adjustment Date.
"Interest Determination Date": With respect to the Class A-1
Certificates and the Group II Certificates and each Accrual Period after the
initial Accrual Period, the second LIBOR Business Day preceding the
commencement of such Accrual Period.
"Interest Distributable Amount": With respect to each Class of
Regular Certificates and each Distribution Date, the sum of the Monthly
Interest Distributable Amount and the Unpaid Interest Shortfall Amount for
such Class for such Distribution Date.
"Late Collection": With respect to any Mortgage Loan and the
Monthly Payment due thereon during any Due Period, all amounts received
subsequent to the Determination Date immediately following such Due Period,
whether as a late payment of such Monthly Payment or as Property Insurance
Proceeds, Liquidation Proceeds or otherwise, which represent the late payment
or collection of such Monthly Payment.
"LIBOR Business Day": Any day on which banks in London, England
and The City of New York are open and conducting transactions in foreign
currency and exchange.
"LIBOR Mortgage Loan": Any Group II Mortgage Loan, including the
2/28 LIBOR Mortgage Loans, the Mortgage Rate of which is subject to semi-
annual adjustment on the Adjustment Dates specified in the related Mortgage
Note and whose Mortgage Index is Six-Month LIBOR.
"Lien": As defined in Section 2.07(b) hereof.
"Lifetime Cap": With respect to each Group II Mortgage Loan, the
percentage set forth in the related Mortgage Note to be added to the initial
Mortgage Rate thereof to determine such Mortgage Loan's Maximum Mortgage
Rate.
"Liquidation Proceeds": The amount (other than Property Insurance
Proceeds) received by the Servicer in connection with (i) the taking of all
or a part of a Mortgaged Property by exercise of the power of eminent domain
or condemnation or (ii) the liquidation of a defaulted Mortgage Loan through
a trustee's sale, foreclosure sale, REO Disposition or otherwise.
"Liquidation Report": The report in the form of Exhibit H annexed
hereto delivered by the Servicer pursuant to Section 3.15(e) hereof.
"Loan Balance": With respect to each Mortgage Loan and any date of
determination, the outstanding principal balance thereof calculated in
accordance with the terms of the related Mortgage Note minus the aggregate
amount of any Cram Down Losses relating to such principal balance and
allocated thereto prior to such date; provided, however, that the Loan
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Balance for any Mortgage Loan upon which a Final Recovery Determination has
been made shall be zero as of the last day of the Due Period in which such
Final Recovery Determination was made, and at all times thereafter.
"Loan-to-Value Ratio": With respect to any Mortgage Loan, the
fraction, expressed as a percentage, the numerator of which is the Loan
Balance of the related Mortgage Loan on the date of origination of such
Mortgage Loan or the Loan Balance of such Mortgage Loan at the time of such
purchase, plus, in the case of a Second Mortgage Loan, the outstanding
principal balance of the related First Lien on such date of origination or
purchase, as the case may be, of the Mortgage Loan, and the denominator of
which is the Value of the related Mortgaged Property.
"Loss Reimbursement Deficiency": With respect to any Distribution
Date and any Class of the Class M-1, Class M-2 or Class B Certificates of a
Group, the amount of Allocable Loss Amounts for the related Group applied to
the reduction of the Class Certificate Principal Balance of such Class and
not reimbursed pursuant to Section 4.04(b) hereof as of such Distribution
Date.
"Majority Certificateholders": The Holders of Certificates
evidencing at least 51% of the Voting Rights.
"Majority Class R Certificateholders": With respect to each Group,
the Holders of Class R Certificates evidencing at least a 51% Percentage
Interest in the Class R Certificates of such Group.
"Maximum Group I Collateral Amount": The sum of (i) the Loan
Balances of all Group I Initial Mortgage Loans as of the Initial Cut-Off Date
and (ii) the Loan Balances of all Subsequent Mortgage Loans as of the
applicable Cut-Off Dates.
"Maximum Group II Collateral Amount": The aggregate Loan Balances
of all Group II Mortgage Loans as of the Cut-Off Date.
"Maximum Mortgage Rate": With respect to each Group II Mortgage
Loan, the maximum rate of interest permitted pursuant to the related Mortgage
Note.
"Mezzanine Certificate": A Class M-1 Certificate or Class M-2
Certificate, as the case may be.
"Minimum Mortgage Rate": With respect to each Group II Mortgage
Loan, the minimum rate of interest set forth in the related Mortgage Note.
"Monthly Interest Distributable Amount": With respect to each
Class of Regular Certificates and each Distribution Date, the amount of
interest accrued during the related Accrual Period at the related
Pass-Through Rate on the Class Certificate Principal Balances of such Class
immediately prior to such Distribution Date (or, in the case of the first
Distribution Date, on the Closing Date).
"Monthly Payment": With respect to any Mortgage Loan, the
scheduled monthly payment of principal and interest on such Mortgage Loan
which is payable by a Mortgagor from time to time under the related Mortgage
Note, determined after giving effect to any reduction in the amount of
interest collectible from the related Mortgagor as a result of the
application of the Civil Relief Act.
"Mortgage": The mortgage, deed of trust or other instrument
creating a first lien on or first priority security interest in, or, in the
case of certain Group I Mortgage Loans, a second lien on or second priority
security interest in, a Mortgaged Property securing a Mortgage Note.
"Mortgage File": The mortgage documents listed in Section 2.04
hereof pertaining to a particular Mortgage Loan and any additional documents
required to be added to the Mortgage File pursuant to this Agreement.
"Mortgage Index": Six-Month LIBOR.
"Mortgage Loan": Each mortgage loan sold, transferred and assigned
to the Trust pursuant to Section 2.02, Section 2.06 and Section 2.13 hereof
as from time to time is held as a part of the Trust, the Mortgage Loans so
held being identified in the Mortgage Loan Schedule. Any mortgage loan
which, although intended by the parties hereto to have been, and which
purportedly was, sold to the Trust by the Depositor (as indicated by Exhibit
D), that in fact was not transferred and assigned to the Trust for any reason
whatsoever, shall nevertheless be considered a "Mortgage Loan" for all
purposes of this Agreement. As applicable, "Mortgage Loan" shall be deemed
to refer to the related REO Property. The term "Mortgage Loan" includes both
Initial Mortgage Loans and Subsequent Mortgage Loans.
"Mortgage Loan Schedule": As of any date, the list of Mortgage
Loans included in the Trust on such date, attached hereto as Exhibit D (as
such list may be amended from time to time), which list shall set forth the
following information with respect to each Mortgage Loan:
(i) the loan number;
(ii) the Mortgagor's name;
(iii) the street address of the Mortgaged Property, including
the city, state and five-digit ZIP code;
(iv) the type of Mortgaged Property;
(v) the Mortgage Rate as of the Cut-Off Date;
(vi) the occupancy status;
(vii) the original term;
(viii) as of the Cut-Off Date, the remaining number of months to
stated maturity;
(ix) the original principal balance;
(x) as of the Cut-Off Date, the paid through date;
(xi) the amount of the Monthly Payment as of the Cut-Off Date;
(xii) the unpaid principal balance as of the Cut-Off Date;
(xiii) the Loan-to-Value Ratio;
(xiv) the stated maturity date;
(xv) the Due Date;
(xvi) the Value, if available;
(xvii) the lien priority of the Mortgage Loan;
(xviii) the Net Mortgage Rate as of the Cut-Off Date;
(xix) the origination date;
(xx) Cityscape loan grade;
(xxi) balloon amortization, which is the number of months it
would take a Mortgagor making timely and equal payments without any
reference to the Balloon Payment and the number of scheduled months
which the Mortgagor has to pay off such Mortgage Loan including the
Balloon Payment (e.g., "360 months due in 180 months");
(xxii) an indication as to the related Group;
(xxiii) with respect to each Group II Mortgage Loan, the Initial
Mortgage Rate;
(xxiv) with respect to each Group II Mortgage Loan, the next
Adjustment Date after the Cut-Off Date;
(xxv) with respect to each Group II Mortgage Loan, the Maximum
Mortgage Rate;
(xxvi) with respect to each Group II Mortgage Loan, the Minimum
Mortgage Rate; and
(xxvii) with respect to each Group II Mortgage Loan, the Gross
Margin.
Such schedule shall also set forth the total of the amounts described under
(xii) above for all of the Mortgage Loans as of the specified date. Such
schedule may be in the form of more than one list, which list or lists may
have one or more attachments, collectively setting forth all of the
information required. Such list of information contained in a Mortgage Loan
Schedule shall also be provided to the Trustee in a computer-readable format
on a tape or disk. The Mortgage Loan Schedule shall be amended from time to
time by the Trustee in accordance with Section 2.06 and Section 2.13 hereof.
With respect to any Qualified Substitute Mortgage Loan, the amounts described
in clauses (viii) and (xii), and, in the case of any Qualified Substitute
Mortgage Loan that has an adjustable Mortgage Rate, clauses (v), (x), (xi),
(xviii) and (xxiv), shall also be set forth as of the date of substitution.
"Mortgage Note": The original executed note or other evidence of
indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage
Loan.
"Mortgage Rate": With respect to each Mortgage Loan, the fixed or
adjustable annual rate, as applicable, at which interest accrues on such
Mortgage Loan (subject to any reduction in such rate resulting from an order
issued by a court of appropriate jurisdiction in an insolvency proceeding),
as provided in the related Mortgage Note and as shown or described as of the
Cut-Off Date on the Mortgage Loan Schedule.
"Mortgaged Property": The underlying property securing a Mortgage
Loan, including any REO Property, consisting of an estate in Real Property
improved by a Residential Dwelling.
"Mortgagor": The obligor or obligors on a Mortgage Note.
"Net Mortgage Rate": With respect to each Mortgage Loan, a rate of
interest per annum equal to the Mortgage Rate minus the Servicing Fee Rate.
"Net Recovery Proceeds": The amount of any gross Property
Insurance Proceeds or Liquidation Proceeds received with respect to any
Mortgage Loan or REO Property minus the sum of (i) all unreimbursed Servicing
Advances, if any, with respect to such Mortgage Loan, (ii) all accrued
interest on such Mortgage Loan at the applicable Net Mortgage Rate from the
Due Date as to which interest was last paid by the related Mortgagor through
the Due Date in the calendar month preceding the month in which Net Recovery
Proceeds are required to be distributed on such Mortgage Loan, (iii) all
accrued and unpaid Servicing Fees, if any, and (iv) without duplication,
liquidation expenses.
"New Lease": Any lease of REO Property entered into on behalf of
the Trust, including any lease renewed or extended on behalf of the Trust if
the Trust has the right to renegotiate the terms of such lease.
"Nonrecoverable Delinquency Advance": Any Delinquency Advance
(x) previously made and not previously reimbursed to the Servicer or (y)
proposed to be made in respect of a Mortgage Loan or REO Property that the
Servicer determines will not, or, in the case of a proposed Delinquency
Advance, would not, be recovered from Late Collections, Property Insurance
Proceeds or Liquidation Proceeds on such Mortgage Loan or REO Property. The
determination by the Servicer that it has made a Nonrecoverable Delinquency
Advance or that any proposed Delinquency Advance, if made, would constitute a
Nonrecoverable Delinquency Advance shall be evidenced by a certification of a
Servicing Officer delivered by the Servicer to the Trustee no later than the
Business Day following such determination and, in turn, by the Trustee to
Cityscape, the Depositor and the Rating Agencies no later than the Business
Day following the Trustee's receipt thereof.
"Nonrecoverable Servicing Advance": Any Servicing Advance (x)
previously made and not previously reimbursed to the Servicer or (y) proposed
to be made in respect of a Mortgage Loan or REO Property that the Servicer
determines will not, or, in the case of a proposed Servicing Advance, would
not, be recovered from Late Collections, Property Insurance Proceeds or
Liquidation Proceeds on such Mortgage Loan or REO Property. The
determination by the Servicer that it has made a Nonrecoverable Servicing
Advance or that any proposed Servicing Advance, if made, would constitute a
Nonrecoverable Servicing Advance shall be evidenced by a certification of a
Servicing Officer delivered by the Servicer to the Trustee no later than the
Business Day following such determination and, in turn, by the Trustee to
Cityscape, the Depositor and the Rating Agencies no later than the Business
Day following the Trustee's receipt thereof.
"Officers' Certificate": With respect to Cityscape or the
Servicer, a certificate signed by the Chairman of the Board, the President or
a vice president (however denominated), and by the Treasurer or the Secretary
of Cityscape or the Servicer, as the case may be.
"One-Month LIBOR": With respect to each Accrual Period other than
the initial Accrual Period, the rate determined by the Trustee on the related
Interest Determination Date on the basis of the offered rates of the
Reference Banks for one-month United States dollar deposits, as such rates
appear on the Telerate Screen 3750, as of 11:00 a.m. (London time) on such
Interest Determination Date. The One-Month LIBOR value for the initial
Accrual Period shall be 5.6875% per annum. On each Interest Determination
Date, One-Month LIBOR for the related Accrual Period will be established by
the Trustee as follows:
(i) If on such Interest Determination Date two or more Reference
Banks provide such offered quotations, One-Month LIBOR for the
related Accrual Period shall be the arithmetic mean of such
offered quotations (rounded upwards if necessary to the
nearest whole multiple of 1/16 of 1%); and
(ii) If on such Interest Determination Date fewer than two
Reference Banks provide such offered quotations, One-Month
LIBOR for the related Accrual Period shall be the higher of
(i) One-Month LIBOR as determined on the previous Interest
Determination Date and (ii) the Reserve Interest Rate.
"Opinion of Counsel": A written opinion of counsel, who (unless
such Opinion of Counsel is required to be an Independent Opinion of Counsel)
may be counsel for Cityscape, the Depositor, the Trustee or the Servicer
(including, except as otherwise expressly provided in this Agreement, the in-
house general counsel for Cityscape, the Servicer, the Depositor, the Trustee
or any Certificateholder, as the case may be), and who shall be reasonably
acceptable to the parties to which such opinion is addressed; except that any
opinion of counsel relating to (a) qualification of the Trust as a REMIC or
compliance with the REMIC Provisions must be an opinion of counsel who is a
tax counsel experienced in REMIC matters, and (b) the qualification of any
account required to be maintained pursuant to this Agreement as an Eligible
Account or the resignation of the Servicer pursuant to 6.04 hereof must be
delivered by an Independent counsel who is counsel experienced in federal
income tax matters.
"Optimal Principal Balance": With respect to each Group and any
Distribution Date, the Class B Optimal Principal Balance, Class M-1 Optimal
Principal Balance, Class M-2 Optimal Principal Balance or Senior Optimal
Principal Balance, as the context requires.
"Original Class Certificate Principal Balance": With respect to
any Class of Regular Certificates, the corresponding amounts set forth
opposite such Class below:
Class A-1: $39,600,000
Class A-2: $27,500,000
Class A-3: $12,438,000
Class A-4: $7,800,000
Class A-5: $78,527,000
Class M-1F: $6,659,000
Class M-2F: $4,867,000
Class M-1A: $9,268,000
Class M-2A: $5,609,000
Class B-1F: $3,586,076
Class B-1A: $4,145,924
"Original Pre-Funding Amount": $22,266,299.36.
"OTS": The Office of Thrift Supervision or any successor.
"Overcollateralization Deficiency Amount": With respect to any
Distribution Date and each Group, the amount, if any, by which the
Overcollateralization Target Amount for such Group exceeds the related
Overcollateralized Amount on such Distribution Date (such Overcollateralized
Amount to be calculated after giving effect to all prior distributions on all
Classes of Certificates on such Distribution Date pursuant to paragraphs (A),
(B) and (C) of Section 4.04(b)(I) hereof, in the case of Group I, or
paragraphs (A) and (B) of Section 4.04(b)(II) hereof, in the case of Group
II).
"Overcollateralization Target Amount": With respect to Group I and
(a) any Distribution Date occurring prior to the related Stepdown Date, an
amount equal to (i) 1.5% of the Maximum Group I Collateral Amount if a Stepup
Trigger Event is not occurring and (ii) 4.0% of such Maximum Collateral
Amount if a Stepup Trigger Event is occurring; and (b) with respect to any
Distribution Date on or after such Stepdown Date, an amount equal to (iii)
3.0% of the Group Principal Balance as of the end of the related Due Period
if a Stepup Trigger Event is not occurring and (iv) 8.0% of such Group
Principal Balance if a Stepup Trigger Event is occurring; provided, however,
that such Group's Overcollateralization Target Amount shall in no event be
less than 0.50% of the Maximum Group I Collateral Amount. With respect to
Group II and (x) any Distribution Date occurring prior to the related
Stepdown Date, an amount equal to (i) 2.0% of the Maximum Group II Collateral
Amount if a Stepup Trigger Event is not occurring and (ii) 5.0% of such
Maximum Collateral Amount if a Stepup Trigger Event is occurring; and (y) any
Distribution Date on or after such Stepdown Date, an amount equal to (iii)
4.0% of the Group Principal Balance as of the end of the related Due Period
if a Stepup Trigger Event is not occurring and (iv) 10.0% of such Group
Principal Balance if a Stepup Trigger Event is occurring; provided, however,
that such Group's Overcollateralization Target Amount shall in no event be
less than 0.50% of the Maximum Group II Collateral Amount.
"Overcollateralized Amount": With respect to any Distribution Date
and each Group, the amount, if any, by which (A) the related Group Principal
Balance on the last day of the immediately preceding Due Period exceeds (B)
the aggregate of the Class Certificate Principal Balances of the Regular
Certificates of such Group as of such Distribution Date after giving effect
to all distributions to be made on such Certificates on such Distribution
Date.
"Pass-Through Rate": Class A-1: *
Class A-2: 6.78% per annum
Class A-3: 7.38% per annum
Class A-4: 7.00% per annum
Class A-5: xx% per annum
Class M-1F: 7.24% per annum
Class M-2F: 7.48% per annum
Class M-1A: **
Class M-2A: **
Class B-1F: 7.83% per annum
Class B-1A: **
- -----------------
/*/As to each Class A-1 Certificate and any Distribution Date, the rate per
annum equal to the lesser of (a) One-Month LIBOR on the related Interest
Determination Date plus 0.14% and (b) the related Available Funds Cap. For
the Initial Distribution Date, the Pass-Through Rate on the Class A-1
Certificates is 5.8275% per annum.
/**/As to the each Class of Group II Certificates and any Distribution Date,
the rate per annum equal to the lesser of (a) One-Month LIBOR on the related
Interest Determination Date, plus the related Group II Pass-Through Margin
and (b) the related Available Funds Cap. For the initial Distribution Date,
the Pass-Through Rates on the Class A-5 Certificates, Class M-1A
Certificates, Class M-2A Certificates and Class B-1A Certificates are,
respectively, 5.9275%, 6.1875%, 6.3875% and 6.7875% per annum.
"Percentage Interest": With respect to any Certificate (other than
a Class R Certificate), a fraction, expressed as a percentage, the numerator
of which is the Initial Certificate Principal Balance represented by such
Certificate and the denominator of which is the Original Class Certificate
Principal Balance of the related Class. With respect to a Class R
Certificate, the portion of the Class evidenced thereby, expressed as a
percentage, as stated on the face of such Certificate; provided, however,
that the sum of all such percentages for the Class R Certificates of each
Group totals 100%.
"Periodic Rate Cap": In the case of a Group II Mortgage Loan, the
provision in the related Group II Mortgage Note that limits permissible
increases and decreases in the Mortgage Rate on any Adjustment Date to not
more than the percentage set forth in such Group II Mortgage Note.
"Permitted Investments": As used herein, Permitted Investments
shall include the following:
(i) direct general obligations of, or obligations fully and
unconditionally guaranteed as to the timely payment of principal and
interest by, the United States or any agency or instrumentality thereof,
provided such obligations are backed by the full faith and credit of the
United States, Federal Housing Administration debentures, FHLMC senior
debt obligations, and FNMA senior debt obligations, but excluding any of
such securities whose terms do not provide for payment of a fixed dollar
amount upon maturity or call for redemption;
(ii) federal funds, certificates of deposit, time and demand
deposits and banker's acceptances (in each case having original
maturities of not more than 365 days) of any bank or trust company
incorporated under the laws of the United States or any state thereof,
provided that the short-term debt obligations of such bank or trust
company at the date of acquisition thereof have been rated "A-1+" by
S&P, "D-1" by DCR and "F-1+" by Fitch;
(iii) deposits of any bank or savings association which has combined
capital, surplus and undivided profits of at least $100,000,000 which
deposits are held up to the applicable limits insured by the BIF or the
SAIF of the FDIC and a rating, with respect to its long-term, unsecured
debt obligations, of "A" by S&P, DCR and Fitch;
(iv) commercial paper (having original maturities of not more than
180 days) rated "A-1+" by S&P, "D-1" by DCR and "F-1+" by Fitch;
(v) investments in money market funds rated "AAAm" or "AAAm-G" by
S&P and "AAA" by Fitch (if rated by Fitch);
provided, however, that no instrument described hereunder shall evidence
either the right to receive (a) only interest with respect to obligations
underlying such instrument or (b) both principal and interest payments
derived from obligations underlying such instrument and the interest and
principal payments with respect to such instrument 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
hereunder 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. Permitted Investments shall mature not later than the Business Day
prior to the earliest date on which such monies may be needed to make
payments.
"Person": Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Pre-Funding Account": The account created and maintained by the
Trustee pursuant to Section 4.01 hereof.
"Pre-Funding Amount": With respect to any date, the amount on
deposit in the Pre-Funding Account as of such date (net of any reinvestment
earnings thereon).
"Pre-Funding Earnings": With respect to the July 1997 Distribution
Date, the actual investment earnings earned on amounts on deposit in the Pre-
Funding Account during the period from June 26, 1997 through and including
June 30, 1997; with respect to the August 1997 Distribution Date, the actual
investment earnings earned on amounts on deposit in the Pre-Funding Account
during the period from July 1, 1997 through and including July 31, 1997; and
with respect to the August 1997 Distribution Date, the actual investment
earnings earned on amounts on deposit in the Pre-Funding Account during the
period from August 1, 1997 through and including August 31, 1997 (in all
cases as calculated by the Trustee pursuant to Section 2.13(c) hereof).
"Pre-Funding Period": The period commencing on the Closing Date
and ending on the earliest to occur of (i) the date on which the amount on
deposit in the Pre-Funding Account (exclusive of any investment earnings) is
less than $100,000, (ii) the date on which any Servicer Default occurs and
(iii) August 31, 1997.
"Prepayment Assumption": As defined in the Prospectus Supplement.
"Prepayment Interest Shortfall": With respect to any Servicer
Remittance Date, for each Mortgage Loan that was the subject during the
related Due Period of a Principal Prepayment an amount equal to the excess,
if any, of (i) a full month's interest on the amount of such Principal
Prepayment at a rate per annum equal to the Mortgage Rate (or at such lower
rate as may be in effect for such Mortgage Loan pursuant to application of
the Civil Relief Act) minus the Servicing Fee Rate over (ii) the amount of
interest actually remitted by the Mortgagor in connection with such Principal
Prepayment less the Servicing Fee for such Mortgage Loan in such month.
"Principal Prepayment": Any payment of principal made by the
Mortgagor on a Mortgage Loan which is received in advance of its scheduled
Due Date and which is not accompanied by an amount of interest representing
the full amount of scheduled interest due on any Due Date in any month or
months subsequent to the month of prepayment.
"Principal Remittance Amount": As defined in Section 3.11(i)(B)
hereof.
"Property Insurance Proceeds": Proceeds of any title policy,
hazard policy or other insurance policy covering a Mortgage Loan, to the
extent such proceeds are received by the Servicer and are not to be applied
to the restoration of the related Mortgaged Property or released to the
Mortgagor in accordance with Accepted Servicing Procedures, subject to the
terms and conditions of the related Mortgage Note and Mortgage.
"Pro Rata Pre-Funding Distribution Amount": With respect to the
Distribution Date immediately following the Due Period in which the end of
the Pre-Funding Period occurs, (i) the Unutilized Funding Amount, if such
amount is greater than or equal to $100,000, and (ii) zero, if such amount is
less than $100,000.
"Prospectus Supplement": That certain Prospectus Supplement dated
on or about June 24, 1997 relating to the public offering of the Regular
Certificates.
"Purchase Price": With respect to any Mortgage Loan required to be
purchased pursuant to Section 2.06 hereof or to be purchased pursuant to
Section 3.15(c) hereof and as confirmed by an Officers' Certificate, an
amount equal to the sum, without duplication, of (i) 100% of the Loan Balance
as of the date of purchase, (ii) interest from the date interest was last
paid by the Mortgagor through the day before the Due Date in the calendar
month in which such purchase occurs, at a rate per annum equal to the
applicable Net Mortgage Rate (or, if Cityscape is not the Servicer at the
time of such purchase, at the applicable Mortgage Rate), (iii) any
unreimbursed Servicing Advances allocable to such Mortgage Loan and (iv) in
the event the Mortgage Loan is required to be purchased pursuant to Section
2.06 hereof, expenses reasonably incurred or to be incurred by the Servicer
or the Trustee in respect of the breach or defect giving rise to the purchase
obligation, including any reasonable expenses arising out of the enforcement
of the purchase obligation.
"Qualified Substitute Mortgage Loan": A mortgage loan substituted
for a Deleted Mortgage Loan pursuant to the terms of this Agreement which
must, on the date of such substitution, (i) have an outstanding principal
balance (when taken together with any other Qualified Substitute Mortgage
Loan being substituted for such Deleted Mortgage Loan), after deduction of
all scheduled payments of principal due in the month of substitution, not in
excess of and not substantially less than the unpaid principal balance of the
Deleted Mortgage Loan or Loans as of the date of substitution, (ii) have a
Mortgage Rate not less than (and not more than one percentage point in excess
of) the Mortgage Rate of the Deleted Mortgage Loan, (iii) have a remaining
term to maturity not more than two years greater than (and not more than two
years less than) that of the Deleted Mortgage Loan, (iv) have a Loan-to-Value
Ratio equal to or lower than the Loan-to-Value Ratio of the Deleted Mortgage
Loan as of such date, (v) satisfy the criteria set forth from time to time in
the definition of "qualified replacement mortgage" at Section 860G(a)(4) of
the Code, (vi) have the same or a superior lien priority as the Deleted
Mortgage Loan, (vii) comply as of the date of substitution with each
representation and warranty set forth in Section 2.07 hereof, (viii) have the
same or better property type as the Deleted Mortgage Loan, (ix) have the same
or better occupancy status, (x) be of the same or of a better credit quality
(determined in accordance with Cityscape's credit underwriting guidelines as
attached hereto as Exhibit M) as the Mortgage Loan being replaced, (xi) have
a Second Loan-to-Value Ratio equal to or greater than the Second Loan-to-
Value Ratio of the Deleted Mortgage Loan (if applicable), (xii) if the
Deleted Mortgage Loan is a Group I Mortgage Loan, have a fixed Mortgage Rate,
(xiii) if the Deleted Mortgage Loan is a Group II Mortgage Loan, (a) have a
Maximum Mortgage Rate no lower than (and not more than two percentage points
higher than) the Maximum Mortgage Rate of the Deleted Mortgage Loan, and have
a Minimum Mortgage Rate no lower than (and not more than one percentage point
higher than) the Minimum Mortgage Rate of the Deleted Mortgage Loan, (b) have
the same Mortgage Index and Periodic Rate Cap as that of the Deleted Mortgage
Loan and a Gross Margin that is (x) not less than that of the Deleted
Mortgage Loan and (y) if Group II Mortgage Loans having an aggregate
outstanding principal balance equaling 1% or more of the aggregate principal
balance of the Group II Mortgage Loans as of the Cut-off Date have become
Deleted Mortgage Loans, not more than two percentage points more than that of
the Deleted Mortgage Loan, (c) have Adjustment Dates that are no less
frequent than the Adjustment Dates of the Deleted Mortgage Loan and (d) will
not permit conversion of the related adjustable Mortgage Rate to a fixed
Mortgage Rate. In the event that one or more mortgage loans are proposed to
be substituted for one or more Deleted Mortgage Loans, the tests set forth in
clauses (i), (ii), (iii), (iv), (xi) and (xiii)(a) above may be met on a
weighted average basis or other aggregate basis (based on the mortgage loans
substituted in any one Due Period) acceptable to the Rating Agencies. The
Rating Agencies may waive any of the foregoing tests provided that any such
substitution shall not adversely affect the status of the Group I Mortgage
Loans as a REMIC.
"Rating Agency": Each of S&P, DCR and Fitch.
"Realized Loss": As to any Mortgage Loan on which a Final Recovery
Determination has been made, the amount, if any, by which the Loan Balance of
such Mortgage Loan as of the date of such Final Recovery Determination
exceeds the Net Recovery Proceeds allocable to such Loan Balance for such
Mortgage Loan.
"Realized Loss Percentage": As to any Distribution Date and each
Group, the fraction, expressed as a percentage, the numerator of which is the
amount of cumulative Realized Losses on the Mortgage Loans in such Group from
the Initial Cut-Off Date through the end of the related Due Period and the
denominator of which is the Maximum Collateral Amount of such Group.
"Record Date": With respect to each Distribution Date, the last
Business Day of the month immediately preceding the month in which such
Distribution Date occurs.
"Reference Banks": Bankers Trust Company, Barclay's Bank Plc, The
Bank of Tokyo and National Westminster Bank Plc; provided, however, that if
any of the foregoing banks are not suitable to serve as a Reference Bank,
then any leading banks selected by the Trustee which are engaged in
transactions in United States dollar deposits in the international
Eurocurrency market (i) with an established place of business in London,
England, (ii) not controlling, under the control of or under common control
with the Depositor or any affiliate thereof, (iii) whose quotations appear on
the Telerate Screen 3750 on the relevant Interest Determination Date and (iv)
which have been designated as such by the Trustee.
"Regular Certificate": As to each Group, any of the Senior
Certificates, Class M-1 Certificates, Class M-2 Certificates and Class B
Certificates of such Group.
"Regular Pre-Funding Distribution Amount": With respect to the
Distribution Date immediately following the Due Period in which the end of
the Funding Period occurs, (i) the Unutilized Funding Amount, if such amount
is less than $100,000, and (ii) zero, if such amount is greater than or equal
to $100,000.
"Regular Principal Distribution Amount": With respect to each
Group and any Distribution Date, an amount equal to the lesser of:
(A) the aggregate of the Class Certificate Principal Balances of
the Classes of Regular Certificates of such Group immediately prior to
such Distribution Date; and
(B) the sum of (i) each scheduled payment of principal collected
on the Mortgage Loans of such Group by the Servicer in the related Due
Period, (ii) all partial and full principal prepayments of such Mortgage
Loans applied by the Servicer during such Due Period, (iii) the
principal portion of all Net Liquidation Proceeds, Insurance Proceeds
and Released Mortgaged Property Proceeds received with respect to such
Group during such Due Period, (iv) that portion of the Purchase Price,
received during such Due Period, representing principal of any
repurchased Mortgage Loan of such Group; (v) the principal portion of
any Substitution Shortfall Amount with respect to such Group required to
be deposited in the Collection Account during such Due Period, (vi) in
the case of Group I, on the Distribution Date immediately following the
Due Period in which the end of the Pre-Funding Period occurs, the
Regular Pre-Funding Distribution Amount, if any, and (vii) on the
Distribution Date on which the Trust is to be terminated pursuant to
Section 10.01 hereof, that portion of the Termination Price that
represents principal and relates to such Group.
"REMIC": A "real estate mortgage investment conduit" within the
meaning of Section 860D of the Code.
"REMIC Provisions": Provisions of the federal income tax law
relating to real estate mortgage investment conduits which appear at Section
860A through 860G of Subchapter M of Chapter 1 of the Code, and related
provisions, and regulations and rulings promulgated thereunder, as the
foregoing may be in effect from time to time.
"REMIC Trust": Each of (i) the assets consisting of the Trust
Estate relating to the Group I Mortgage Loans except for the Pre-Funding
Account and the Capitalized Interest Account and (ii) the assets consisting
of the Trust Estate relating to the Group II Mortgage Loans.
"Remittance Report": A report prepared by the Trustee pursuant to
Section 4.06(a) hereof.
"Rents from Real Property": With respect to any REO Property,
gross income of the character described in Section 856(d) of the Code.
"REO Disposition": The receipt by the Servicer of all Liquidation
Proceeds, Property Insurance Proceeds and other payments or recoveries
(including proceeds of a final sale) which the Servicer expects to be finally
recoverable from the sale or other disposition of the related REO Property.
"REO Property": A Mortgaged Property acquired by the Servicer in
the name of the Trustee on behalf of the Certificateholders through
foreclosure or deed in lieu of foreclosure, as described in Section 3.22
hereof.
"Request for Release": A release signed by a Servicing Officer, in
the form of Exhibit E-1 or Exhibit E-2 attached hereto.
"Reserve Interest Rate": With respect to any Interest
Determination Date, the rate per annum that the Trustee determines to be
either (i) the arithmetic mean (rounded upwards if necessary to the nearest
whole multiple of 1/16 of 1%) of the one-month United States dollar lending
rates which banks in The City of New York selected by the Trustee are quoting
on the relevant Interest Determination Date to the principal London offices
of leading banks in the London interbank market or (ii) in the event that the
Trustee can determine no such arithmetic mean, the lowest one-month United
States dollar lending rate which such New York banks selected by the Trustee
are quoting on such Interest Determination Date to leading European banks.
"Residential Dwelling": Any one of the following: (i) a detached
or semi-detached single-family dwelling, (ii) a two- to four-unit dwelling,
(iii) a townhouse, (iv) a unit in a condominium or a planned unit
development, none of which is a co-operative unit or a mobile home, but which
may be a pre-fabricated or manufactured unit affixed to a permanent
foundation or (v) a Small Mixed-Use/Multifamily Property where generally at
least 60% of the gross income arises from residential purposes in accordance
with Cityscape's Underwriting Guidelines attached hereto as Exhibit M.
"Responsible Officer": When used with respect to the Trustee, the
Chairman or Vice Chairman of the Board of Directors, the President, any vice
president, any assistant vice president, the Secretary, any assistant
secretary, the Treasurer, any assistant treasurer, the Controller and any
assistant controller or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above
designated officers and also to whom, with respect to a particular matter,
such matter is referred because of such officer's knowledge of and
familiarity with the particular subject.
"Rolling Delinquency Percentage": With respect to any Distribution
Date and each Group, the average of the Delinquency Percentages for such
Group with respect to the last day of each of the three immediately preceding
Due Periods.
"S&P": Standard & Poor's Rating Services, a division of The
McGraw-Hill Companies, Inc., and its successors, and, if such division shall
for any reason no longer perform the functions of a securities rating agency,
"S&P" shall be deemed to refer to any other "nationally recognized rating
organization," as set forth on the most current list of such organizations
released by the Securities and Exchange Commission.
"SAIF": The Savings Association Insurance Fund of the FDIC.
"Second Loan-to-Value Ratio": With respect to any Mortgage Loan
and any date of determination, the fraction, expressed as a percentage, the
numerator of which is the unpaid principal balance of the second lien on the
related Mortgaged Property and the denominator of which is the Value of such
Mortgaged Property.
"Second Mortgage Loan": Any Mortgage Loan that is secured by a
second lien on or second priority security interest in the related Mortgaged
Property.
"Senior Certificate": With respect to Group I, a Class A-1,
Class A-2, Class A-3 or Class A-4 Certificate. With respect to Group II, a
Class A-5 Certificate.
"Senior Certificateholder": Any Holder of a Senior Certificate.
"Senior Credit Enhancement Percentage": With respect to each Group
and any Distribution Date, the percentage obtained by dividing (i) the sum of
(a) the aggregate of the Class Certificate Principal Balances of the
Mezzanine Certificates and the Class B Certificates of such Group and (b) the
Overcollateralized Amount for such Group, in each case after giving effect to
the distributions of principal on such Distribution Date, by (ii) the Group
Principal Balance of such Group as of the end of the related Due Period.
"Senior Optimal Principal Balance": With respect to each Group and
any Distribution Date prior to the Stepdown Date or any Distribution Date on
which a Stepdown Trigger Event has occurred and is continuing, zero. With
respect to each Group and any other Distribution Date, the related Group
Principal Balance as of the last day of the Due Period that precedes such
Distribution Date minus the greater of (a) the sum of (1)(x) in the case of
Group I, 29.50% of such Group Principal Balance or (y) in the case of Group
II, 39.00% of such Group Principal Balance and (2) the Overcollateralization
Target Amount for such Group for such Distribution Date (calculated without
giving effect to the proviso in the definition thereof) and (b) 0.50% of the
related Maximum Collateral Amount; provided however, that any Group's Senior
Optimal Principal Balance shall never be less than zero or greater than the
Aggregate Senior Certificate Principal Balance for such Group as of the
Closing Date.
"Senior Principal Distribution Amount": With respect to each Group
and any Distribution Date, the lesser of the (i) Regular Principal
Distribution Amount for such Group for such Distribution Date and (ii) the
amount, if any, by which the Aggregate Senior Certificate Principal Balance
for such Group for such Distribution Date (in the case of Group I, after
giving effect to distributions made on such Distribution Date pursuant to
Section 4.04(b)(I)(B) hereof) exceeds the related Senior Optimal Principal
Balance for such Distribution Date.
"Servicer": Cityscape Corp., a corporation organized under the
laws of New York, or its successor in interest, in its capacity as Servicer
of the Mortgage Loans, which term shall also include any successor servicer
appointed hereunder.
"Servicer Default": One or more of the events described in Section
7.01 hereof.
"Servicer Information": Any information contained in a Liquidation
Report, a Servicer Remittance Report or a Delinquency Report.
"Servicer Remittance Date": With respect to any Distribution Date,
the fifth Business Day preceding such Distribution Date.
"Servicer Remittance Report": The monthly report described in
Section 3.18(a) hereof.
"Servicer Termination Trigger Event": With respect to each Group
(i) for any Distribution Date occurring in or prior to June 1999, the related
Realized Loss Percentage is more than 2.08% or 2.43%, (ii) for any subsequent
Distribution Date occurring in or prior to June 2000, the related Realized
Loss Percentage is more than 3.56% or 4.16%, (iii) for any subsequent
Distribution Date occurring in or prior to June 2001, the related Realized
Loss Percentage is more than 4.75% or 5.55%, (iv) for any subsequent
Distribution Date occurring in or prior to June 2002, the related Realized
Loss Percentage is more than 5.64% or 6.59%, or (v) for any subsequent
Distribution Date occurring in or after July 2002, the related Realized Loss
Percentage is 5.94% or 6.94%, in each case with respect to the Group I
Mortgage Loans and Group II Mortgage Loans, respectively.
"Servicing Account": The account or accounts created and
maintained pursuant to Section 3.09 hereof.
"Servicing Advances": The costs and expenses incurred by the
Servicer in connection with (i) the preservation, restoration and protection
of a Mortgaged Property or REO Property, (ii) any enforcement or judicial
proceedings, including foreclosures, (iii) the management (including
reasonable fees in connection therewith) and liquidation of any REO Property,
(iv) the payment of any taxes, assessments or insurance premiums, and the
performance of its obligations under Sections 3.01(b)(ii), 3.09, 3.13,
3.15(a) and 3.22 hereof, and (v) in connection with the liquidation of a
Mortgage Loan, expenditures relating to the purchase or maintenance of the
related First Lien pursuant to Section 3.24 hereof.
"Servicing Fee": With respect to each Mortgage Loan and any Due
Period, an amount equal to one month's interest (or in the event of any
payment of interest which accompanies a Principal Prepayment in full made by
the Mortgagor during such calendar month, interest for the number of days
covered by such payment of interest) at the Servicing Fee Rate on the
outstanding Loan Balance of such Mortgage Loan at the beginning of such Due
Period. A portion of such Servicing Fee may be paid to any Sub-Servicer as
its servicing compensation. The Servicing Fee with respect to each Group's
Mortgage Loans shall be payable from the funds specified in Section 3.17
hereof only to the extent related to such Group.
"Servicing Fee Rate": With respect to each Mortgage Loan and Due
Period a rate per annum equal to 0.50%.
"Servicing Officer": Any officer of the Servicer or any Sub-
Servicer involved in, or responsible for, the administration and servicing of
the Mortgage Loans, whose name and specimen signature appear on a list of
servicing officers furnished to the Trustee by the Servicer or such Sub-
Servicer, as such list may from time to time be amended. There shall at no
time be fewer than two Servicing Officers.
"Simple Interest Loan": A mortgage loan that accrues interest in
accordance with the "simple interest" method.
"Six-Month LIBOR": As to certain of the Group II Mortgage Loans,
the index for the adjustment of the Mortgage Rate set forth as such in the
related Mortgage Note, such index being equal to the average of the London
interbank offered rates for six-month United States dollar deposits in the
London market.
"Small Mixed-Use/Multifamily Property": A Mortgaged Property with
improvements generally consisting of up to four residential dwelling units
and which may include up to three non-residential units, provided that at
least 50% of the units in any such improvement are residential dwelling
units.
"Startup Date": June 26, 1997.
"Stepdown Date": With respect to each Group, the earlier of
(X) the first Distribution Date occurring after June 2000 as to which
all of the following conditions have been satisfied:
(1) related the Group Principal Balance has been reduced to
an amount less than or equal to (i) 50% of the related Maximum
Collateral Amount;
(2) no Stepdown Trigger Event is continuing with respect to
such Group; and
(3) the Trustee determines (before actual distributions are
made on such Distribution Date) that, if effect were given to all
distributions of principal to be made on such date (assuming that
the Stepdown Date has occurred), the Aggregate Senior Certificate
Principal Balance of such Group would be reduced on such date to
the excess of (i) the Group Principal Balance for such Group as of
the last day of the related Due Period over (ii) the greater of (a)
the sum of (1) (x) in the case of Group I, 29.50% of such Group
Principal Balance or (y) in the case of Group II, 39.00% of such
Group Principal Balance and (2) the related Overcollateralization
Target Amount for such Distribution Date (such
Overcollateralization Target Amount to be calculated (x) as if such
Distribution Date were occurring on or after the related Stepdown
Date and (y) without giving effect to (A) in the case of Group I,
the proviso in clause (i) of the definition of
"Overcollateralization Target Amount" or (B) in the case of Group
II, the proviso in clause (ii) of such definition and (b) 0.50% of
the related Maximum Collateral Amount; and
(Y) the Distribution Date on which the Aggregate Senior Certificate
Principal Balance for such Group equals zero.
"Stepdown Trigger Event": With respect to any Distribution Date
and each Group, the Group Delinquency Percentage exceeds 50% of the Senior
Credit Enhancement Percentage for such Group for such Distribution Date
(assuming, for purposes of calculating the Senior Credit Enhancement
Percentage, that distributions are made on such Distribution Date and no
Stepdown Trigger Event has occurred).
"Stepup Rolling Delinquency Test": With respect to each Group, a
determination as to whether (i) for any Distribution Date occurring in or
prior to September 1998, the related Rolling Delinquency Percentage is more
than 13.5% or 14.0%, (ii) for any subsequent Distribution Date occurring in
or prior to December 1999, the related Rolling Delinquency Percentage is more
than 15.0% or 15.0% or (iii) for any Distribution Date occurring in or after
January 2000, the related Rolling Delinquency Percentage is more than 17.0%
or 17.0%, in each case, with respect to the Group I Mortgage Loans and the
Group II Mortgage Loans, respectively.
"Stepup Trigger Event": With respect to each Group, the occurrence
on any Distribution Date of either of the following: (i) the Stepup
Cumulative Loss Test is met or (ii) the Stepup Rolling Delinquency Test is
met.
"Stepup Cumulative Loss Test": With respect to each Group, a
determination as to whether (i) for any Distribution Date occurring in or
prior to June 1999, the related Realized Loss Percentage is more than 1.44%
or 1.66%, (ii) for any subsequent Distribution Date occurring in or prior to
June 2000, the related Realized Loss Percentage is more than 2.48% or 2.85%,
(iii) for any subsequent Distribution Date occurring in or prior to June
2001, the related Realized Loss Percentage is more than 3.30% or 3.80%, (iv)
for any subsequent Distribution Date occurring in or prior to June 2002, the
related Realized Loss Percentage is more than 3.92% or 4.51%, or (v) for any
subsequent Distribution Date occurring in or after July 2002, the related
Realized Loss Percentage is more than 4.13% or 4.75%, in each case, with
respect to the Group I Mortgage Loans and the Group II Mortgage Loans,
respectively.
"Subsequent Cut-Off Date Deposit": With respect to any Subsequent
Transfer Date and any Subsequent Mortgage Loan transferred to the Trust
during any month which does not have a Monthly Payment due until the second
Due Period following such month, an amount equal to the product of (a) the
Loan Balance of such Subsequent Mortgage Loan on the related Cut-Off Date and
(b) one-twelfth of the Net Mortgage Rate on such Subsequent Mortgage Loan.
"Subsequent Mortgage Loans": The Mortgage Loans to be sold to the
Trust for inclusion in Group I pursuant to Section 2.13 of this Agreement and
the Subsequent Transfer Agreement, which shall be listed on the mortgage loan
schedule attached to the Subsequent Transfer Agreement.
"Subsequent Transfer Date": The date specified in each Subsequent
Transfer Agreement, provided that in no event shall there be more than five
such Subsequent Transfer Dates.
"Subsequent Transfer Agreement": Each Subsequent Transfer
Agreement executed by the Trustee (solely in its capacity as Trustee and not
in its individual capacity) and the Seller substantially in the form of
Exhibit P hereto, by which Subsequent Mortgage Loans are sold and assigned to
the Trust.
"Sub-Servicer": Any Person with which the Servicer has entered
into a Sub-Servicing Agreement and which meets the qualifications of a Sub-
Servicer pursuant to Section 3.02 hereof.
"Sub-Servicing Account": An account established by a Sub-Servicer
which meets the requirements set forth in Section 3.08 hereof and is
otherwise acceptable to the Servicer.
"Sub-Servicing Agreement": The written contract between the
Servicer and a Sub-Servicer and any successor Sub-Servicer relating to
servicing and administration of certain Mortgage Loans as provided in Section
3.02 hereof.
"Substitution Shortfall Amount": As defined in Section 2.06(d)
hereof.
"Tax Matters Person": Each Tax Matters Person appointed pursuant
to Section 11.12 hereof.
"Tax Returns": The federal income tax return on Internal Revenue
Service Form 1066, U.S. Real Estate Mortgage Investment Conduit Income Tax
Return, including Schedule Q thereto, Quarterly Notice to Residual Interest
Holders of the REMIC Taxable Income or Net Loss Allocation, or any successor
forms, to be filed on behalf of each REMIC Trust in its capacity as a REMIC
under the REMIC Provisions, together with any and all other information
reports or returns that may be required to be furnished to the
Certificateholders of the related Group or filed with the Internal Revenue
Service or any other governmental taxing authority under any applicable
provisions of federal, state or local tax laws.
"Termination Price": As defined in Section 10.01(b) hereof.
"Trust": Cityscape Home Equity Loan Trust, Series 1997-C, the
trust created hereunder.
"Trust Estate": The corpus of the trust created hereunder,
consisting of: (i) such Mortgage Loans as from time to time are subject to
this Agreement, together with the Mortgage Files relating thereto, and
together with all collections thereon and proceeds thereof, (ii) any REO
Property, together with all collections thereon and proceeds thereof, (iii)
the Trustee's rights with respect to the Mortgage Loans under all insurance
policies required to be maintained pursuant to this Agreement and any
proceeds thereof, (iv) the rights and remedies of the Trustee against any
Person making any representation or warranty to the Trustee hereunder, to the
extent provided herein and (v) each Account, together with such assets that
are deposited therein from time to time and any investments thereof, together
with any and all income, proceeds and payments with respect thereto.
"Trustee": First Bank National Association, a national banking
association, or any successor trustee appointed as herein provided.
"Trustee's Fee": With respect to any Distribution Date and each
Group, the product of (x) one-twelfth of the Trustee's Fee Rate and (y) the
aggregate of the Loan Balances of all Mortgage Loans in such Group as of the
opening of business on the first day of the related Due Period.
"Trustee's Fee Rate": With respect to any Distribution Date, the
greater of (x) 0.01125% per annum and (y) a fraction, expressed as a per-
annum percentage, whose numerator is $7,700 and whose denominator is the
aggregate of the Loan Balances of all Mortgage Loans as of the opening of
business on the first day of the related Due Period.
"Underwriters": Greenwich Capital Markets, Inc. and Prudential
Securities Incorporated, as underwriters with respect to the Regular
Certificates.
"United States Person or U.S. Person": A citizen or resident of
the United States, a corporation, partnership or other entity created or
organized in, or under the laws of, the United States or any political
subdivision thereof, or an estate the income of which from sources without
the United States is includible in gross income for United States federal
income tax purposes regardless of its connection with the conduct of a trade
or business within the United States, 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. The term "United States" shall have the
meaning set forth in Section 7701 of the Code or successor provisions.
"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
Section 3.13 hereof.
"Unpaid Interest Shortfall Amount": With respect to each Class of
Regular Certificates and the first Distribution Date, zero. With respect to
each Class of Regular Certificates and any Distribution Date after the first
Distribution Date, the amount, if any, by which (A) the sum of (i) the
Monthly Interest Distributable Amount for such Class for the immediately
preceding Distribution Date and (ii) the outstanding Unpaid Interest
Shortfall Amount, if any, for such Class for such preceding Distribution Date
exceeds (B) the aggregate amount distributed on the Certificates of such
Class in respect of interest pursuant to clause (A) of this definition on
such preceding Distribution Date, plus interest on the amount of interest due
but not paid on the Certificates of such Class on such preceding Distribution
Date, to the extent permitted by law, at the Pass-Through Rate for such Class
for the related Accrual Period.
"Unutilized Funding Amount": The Pre-Funding Amount immediately
after the end of the Pre-Funding Period.
"Value": With respect to any Mortgaged Property, the value thereof
as determined by an independent appraisal made at the time of the origination
of the related Mortgage Loan; except that, with respect to any Mortgage Loan
that is a purchase money mortgage loan, the lesser of (i) the value thereof
as determined by an independent appraisal made at the time of the origination
of such Mortgage Loan and (ii) the sales price of the related Mortgaged
Property.
"Voting Rights": The portion of the voting rights of all of the
Certificates which is allocated to any Certificate. Except as otherwise
expressly provided for herein, on any date on which any Regular Certificates
of a Group are outstanding, all of the Voting Rights related to such Group
shall be allocated among Holders of such Certificates in proportion to such
Certificates' respective Certificate Principal Balances as of such date;
provided, however, that any Certificate registered in the name of the
Servicer, the Depositor or the Trustee or any of their respective affiliates
shall not be included in the calculation of Voting Rights; when none of the
Regular Certificates of a Group are outstanding, 100% of the Voting Rights
shall be allocated among Holders of the related Class of Class R Certificates
in accordance with such Holders' respective Percentage Interests in the
Certificates of such Class.
"Written Order to Authenticate": A written order in the form of
Exhibit L hereto by which the Depositor directs the Trustee to issue the
Certificates.
SECTION 1.02. Accounting.
Unless otherwise specified herein, for the purpose of any
definition or calculation, whenever amounts are required to be netted,
subtracted or added or any distributions are taken into account such
definition or calculation and any related definitions or calculations shall
be determined without duplication of such functions.
ARTICLE II
ESTABLISHMENT OF THE TRUST;
PURCHASE AND SALE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
SECTION 2.01. Establishment of the Trust.
The Depositor does hereby establish, pursuant to the further
provisions of this Agreement and the laws of the State of New York, an
express trust to be known, for convenience, as "Cityscape Home Equity Loan
Trust, Series 1997-C" and does hereby appoint First Bank National Association
as Trustee in accordance with the provisions of this Agreement.
SECTION 2.02. Purchase and Sale of Mortgage Loans.
The Depositor, concurrently with the execution and delivery hereof,
does hereby sell, transfer, assign, set over and otherwise convey to the
Trust without recourse, but subject to the terms of this Agreement, all
right, title and interest of the Depositor, including any security interest
therein for the benefit of the Depositor, in and to (i) the Mortgage Loans
identified on the Mortgage Loan Schedule delivered on the Closing Date,
including, without limitation, all principal outstanding as of the Cut-Off
Date and interest payments due after the Cut-Off Date and (ii) the other
assets of the Trust Estate.
In consideration of such sale of the Mortgage Loans, the Trustee
shall pay to the Depositor the purchase price.
SECTION 2.03. Grant of Security Interest.
In the event that any conveyance pursuant to Section 2.02 hereof is
deemed by a court of competent jurisdiction to be a loan, the parties intend
that the Depositor shall be deemed to have granted to the Trustee on behalf
of the Certificateholders a security interest in the related Mortgage Loans,
including, without limitation, all interest accrued thereon and that this
Agreement shall constitute a security agreement under applicable law. The
Depositor and the Trustee shall, to the extent consistent with this
Agreement, take such actions as may be necessary to ensure that, if this
Agreement were deemed to create a security interest in the Mortgage Loans,
such security interest would be deemed to be a perfected security interest of
first priority under applicable law and will be maintained as such throughout
the term of the Agreement.
Except as may otherwise expressly be provided herein, none of
Cityscape, the Depositor, the Servicer or the Trustee shall (and the Servicer
shall ensure that no Sub-Servicer shall) assign, sell, dispose of or transfer
any interest in the Trust Estate or any portion thereof, or permit the Trust
Estate or any portion thereof to be subject to any lien, claim, mortgage,
security interest, pledge or other encumbrance of any other Person.
In the event that the parties hereto have failed to transfer the
entire legal ownership in and to each Mortgage Loan to the Trust Estate, the
parties hereto intend that this document operate to transfer the entire
equitable ownership interest in and to each Mortgage Loan to the Trust
Estate.
SECTION 2.04. Document Delivery Requirements.
(a) In connection with each conveyance pursuant to Section 2.02
hereof, Cityscape does hereby agree to deliver to, and deposit with, the
Trustee, no later than two Business Days prior to the Closing Date or related
Subsequent Transfer Date, as the case may be, the following documents or
instruments with respect to each Mortgage Loan (a "Mortgage File") so
transferred and assigned:
(i) the original Mortgage Note, endorsed in blank or in the
following form: "Pay to the order of First Bank National Association, as
Trustee under the Pooling and Servicing Agreement, dated as of June 9,
1997, Cityscape Home Equity Loan Trust, Series 1997-C, without
recourse", with all prior and intervening endorsements showing a
complete chain of endorsement from the originator of the Mortgage Loan
to Cityscape; provided, however, that in the case of Loan No. 55000249
(borrower - Kim) a lost note affidavit may be substituted for the
original Mortgage Note;
(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 Cityscape 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 Cityscape 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 the Mortgage,
acceptable for recording except with respect to any currently
unavailable recording information, from Cityscape to the Trustee in
blank or in the following form: "First Bank National Association, as
Trustee under the Pooling and Servicing Agreement, dated as of June 9,
1997, Cityscape Home Equity Loan Trust, Series 1997-C";
(iv) the original Assignment and any intervening Assignments of the
Mortgage, with evidence of recording thereon, showing a complete chain
of assignment from origination of the Mortgage Loan to Cityscape (or, if
any such Assignment has not been returned from the applicable public
recording office or is not otherwise available, a copy of such
Assignment certified by a Responsible Officer of Cityscape 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 Cityscape (or, if
Cityscape did not originate such Mortgage Loan, the originator thereof)
to be a true and complete copy of the original, of each assumption,
modification, written assurance or substitution agreement, if any;
(vi) an original, or a copy certified by Cityscape to be a true and
complete copy of the original, of a lender's title insurance policy, or
if a lender's title policy has not been issued as of the Closing Date or
the Subsequent Transfer Date, as the case may be, of a commitment
(binder) (including any marked additions thereto or deletions therefrom)
to issue such policy;
(vii) any of: (A) an original hazard insurance policy; (B) a
certificate of insurance issued by the related insurer or its agent as
to such policy; or (C) an Officers' Certificate of Cityscape certifying
that a hazard insurance policy is in effect as to the Mortgaged Property
(in which case such Officers' Certificate shall be accompanied by a copy
of such hazard insurance policy); and
(viii) If any Mortgaged Property is in an area identified in the
Federal Register by the Federal Emergency Management Agency as having
special flood hazards, a flood insurance policy in a form meeting the
requirements of the current guidelines of the Federal Insurance
Administration, if obtainable with respect to such Mortgaged Property,
is in effect with respect to such Mortgaged Property with a generally
acceptable carrier in an amount representing coverage not less than the
least of (A) the outstanding principal balance of the related Mortgage
Loan (together , in the case of a Second Mortgage Loan, with the
outstanding principal balance of the First Lien), (B) the minimum amount
required to compensate for damage or loss on a replacement cost basis or
(C) the maximum amount of insurance that is available under the Flood
Disaster Protection Act of 1973.
(b) With respect to any Mortgage referred to in Section
2.04(a)(ii) above as to which the original Mortgage is not available as of
the Closing Date or the Subsequent Transfer Date, as the case may be, and
with respect to any Assignment referred to in Section 2.04(a)(iii) or
2.04(a)(iv) above as to which the original Assignment is not available as of
the Closing Date or the Subsequent Transfer Date, as the case may be,
Cityscape shall deliver, prior to the Closing Date or the Subsequent Transfer
Date, as the case may be, a copy of such Mortgage or such Assignment, as the
case may be, certified by Cityscape to be a true and complete copy, to the
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, or where the original
Assignment is unavailable a copy thereof certified by the applicable public
recording office, to the Trustee within five Business Days after receipt
thereof by Cityscape but in no event later than 360 days (or such longer
period as any one Rating Agency may approve in writing with respect to
specific Mortgage Loans upon the request of Cityscape) following the date of
origination of the related Mortgage Loan or the date of such Assignment to
Cityscape, as the case may be. The failure of Cityscape to deliver to the
Trustee (x) any original Mortgage under Section 2.04(a)(ii) above (or where
the original is unavailable a copy thereof certified by the applicable public
recording office) or (y) any original Assignment under Section 2.04(a)(iii)
above 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 (or such longer period as any one Rating Agency may approve in
writing with respect to specific Mortgage Loans upon the request of
Cityscape).
The Trustee shall promptly (and in no event later than five
Business Days following the Closing Date and each Subsequent Transfer Date)
submit for recording, at Cityscape's own expense, in the appropriate public
office for real property records, each original Assignment referred to in
Section 2.04(a)(iii) above, as well as each original Assignment referred to
in Section 2.04(a)(iv) above that was not previously submitted for recording.
With respect to any original Assignment referred to in Section 2.04(a)(iii)
above as to which the related recording information is unavailable within
five Business Days following the Closing Date or the Subsequent Transfer
Date, as the case may be, such original Assignment shall be submitted for
recording within five Business Days after receipt of such information but in
no event later than 90 days (or such longer period, up to an additional 90
days, as any one Rating Agency may approve and any longer period as approved
by any one Rating Agency and by the Majority Certificateholders in writing
with respect to specific Mortgage Loans upon the request of Cityscape) after
the Closing Date or any Subsequent Transfer Date. Cityscape shall deliver
each recorded Assignment referred to in Section 2.04(a)(iii) above or, where
the original is unavailable, a copy thereof certified by the applicable
public recording office to be a true and complete copy of the original, to
the Trustee no later than the earlier of (i) five Business Days after receipt
thereof and (ii) within 360 days after the Closing Date or any Subsequent
Transfer Date (or such longer period as any one Rating Agency may approve in
writing with respect to specific Mortgage Loans upon the request of
Cityscape). Any failure of Cityscape to deliver to the Trustee, prior to the
expiration of such 360-day period (or any such longer period as any one
Rating Agency may have approved in accordance with the terms set forth
above), any such recorded Assignment, or such certified copy if such recorded
Assignment 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 is lost or
returned unrecorded because of a defect therein, Cityscape shall promptly
prepare a substitute Assignment or cure such defect, as the case may be, and
thereafter cause each such Assignment to be duly recorded.
The Trustee shall promptly upon receipt thereof (and in any event
no longer than 30 days following the Closing Date or the Subsequent Transfer
Date, as the case may be), with respect to each Mortgage Note and Assignment
of Mortgage delivered in blank in accordance with Section 2.04(a)(i) and
(iii) above, respectively, endorse each such Mortgage Note and assign each
such Assignment 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 or any Subsequent Transfer Date (or such
longer period as any one Rating Agency may approve in writing with respect to
specific Mortgage Loans upon the request of Cityscape)), deliver to the
Trustee (a) the original recorded Mortgage in those instances where a
certified copy thereof was delivered to the Trustee; (b) the original
recorded Assignment or Assignments of the Mortgage showing a complete chain
of assignment from the originator of the Mortgage Loan to Cityscape in those
instances where certified copies thereof were delivered to the Trustee; (c)
the original policy of title insurance or a copy certified by Cityscape to be
a true and complete copy in those instances where a commitment (binder)
(including any marked additions thereto or deletions therefrom) to issue such
policy was delivered to the Trustee; and (d) any other original documents
constituting a part of a Mortgage File received with respect to any Mortgage
Loan, including, but not limited to, any original documents evidencing an
assumption or modification of any Mortgage Loan.
In the event that any Rating Agency approves in writing any
extension of time for delivery of any document as provided for in this
Section 2.04(b), a copy of such written approval shall be sent to the Trustee
and the other Rating Agencies.
All original documents relating to the Mortgage Loans that are not
delivered to the Trustee are and shall be held by Cityscape or the Servicer,
as the case may be, in trust for the benefit of the Trustee on behalf of the
Certificateholders. In the event that any such original document is required
pursuant to the terms of this Section 2.04 to be a part of a Mortgage File,
such document shall be delivered promptly to the Trustee. Any original
document that is not required pursuant to the terms of this Section to be a
part of a Mortgage File delivered to or held by the Trustee shall be
delivered promptly to the Servicer.
In connection with the delivery of documentation provided by this
Section 2.04, Cityscape hereby appoints the 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 Mortgage File to cure any deficiencies in such
documentation.
If Cityscape has not delivered all required documentation with
respect to any Mortgage Loan within the time periods, if any, specified in
this Agreement, Cityscape shall be required to take action with respect to
such Mortgage Loan as and to the extent provided in Section 2.06 hereof.
SECTION 2.05. Acceptance by Trustee.
The Trustee agrees to acknowledge (i) receipt by it on the Closing
Date, in good faith without notice of adverse claims, subject to the
provisions of Sections 2.02 and 2.04 hereof and to any exceptions noted on
the Trustee's certification in the form annexed hereto as Exhibit F-1 to be
delivered to Cityscape, the Depositor and the Servicer on the Closing Date,
of (x) the documents referred to in Section 2.04(a)(i), (ii), (iii) and (iv)
above (except that such documents may be endorsed in blank upon receipt) with
respect to the Mortgage Loans listed on the Mortgage Loan Schedule to be
delivered to the Trustee on the Closing Date and (y) the Certificate Account,
the Capitalized Interest Account and the Pre-Funding Account (and, in each
case, the amounts on deposit therein) and (ii) the assignment to it of all
the other assets included in clauses (i) and (iii) of the definition of
"Trust Estate" herein, and the Trustee declares that it will hold such
documents and such other documents constituting the Mortgage Files as are
delivered to it, and all such assets and such other assets included in the
definition of "Trust Estate" as are delivered to it, in trust for the
exclusive use and benefit of all present and future Certificateholders.
Within 10 Business Days after the Closing Date the Trustee shall
deliver to Cityscape, the Depositor and the Servicer a Final Certification in
the form annexed hereto as Exhibit F-2, with any applicable exceptions noted
thereon.
After the delivery of the final certification, the Trustee shall
provide to the Servicer, Cityscape and the Depositor, no less frequently than
quarterly, updated certifications, a form of which is attached hereto as
Exhibit F-3, indicating the then current status of exceptions until all such
exceptions have been eliminated.
If, in the process of reviewing the Mortgage Files and making or
preparing the certifications referred to above, the Trustee finds any
document or documents constituting a part of a Mortgage File to be missing or
defective in any material respect or, at the end of any 360-day period (or
any later period approved as provided in Section 2.04(b) hereof, notice of
which approval has been provided to the Trustee in writing (if such approval
is made by a Rating Agency)) referenced above, finds that all recorded
Assignments and all original Mortgages or certified copies thereof have not
been delivered to it, the Trustee shall promptly so notify Cityscape, the
Depositor, the Rating Agencies and the Servicer. In performing any such
review, the Trustee may conclusively rely on Cityscape as to the purported
genuineness of any such document and any signature thereon. It is understood
that the scope of the Trustee's review of the items delivered to the Trustee
pursuant to this Section 2.05, unless otherwise expressly stated, shall be
limited solely to confirming that the documents listed in this Section 2.05
have been executed and received, relate to the Mortgage Loans listed in the
Mortgage Loan Schedule and conform as to the loan number and address and
description thereof in the Mortgage Loan Schedule. In addition, upon the
discovery by Cityscape, the Depositor, the Servicer, the Rating Agencies or
the Trustee of a breach of any of the representations and warranties made by
Cityscape pursuant to Sections 2.07 and 2.08 hereof (and any of the
conditions in Section 2.13 hereof with respect to the Subsequent Mortgage
Loans) in respect of any Mortgage Loan which materially adversely affects the
value of such Mortgage Loan or the interests of the Certificateholders in
such Mortgage 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 Mortgage Loan becomes 90 days Delinquent, the
Servicer shall make, or cause to be made, a reasonable investigation to
determine whether such Mortgage Loan satisfied the representations and
warranties of Cityscape set forth in Section 2.07 hereof as of the Closing
Date or the related Subsequent Transfer Date; provided, however, that only
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one such investigation shall be required for any Mortgage Loan or Subsequent
Mortgage Loan.
If Cityscape has not delivered all required documentation with
respect to any Mortgage Loan within the time periods specified in this
Agreement (as such may have been extended pursuant to Section 2.04(b)
hereof), Cityscape shall be required to take action with respect to such
Mortgage Loan or Subsequent Mortgage Loan as and to the extent provided in
Section 2.06 hereof.
SECTION 2.06. Repurchase or Substitution of Mortgage Loans by
Cityscape or the Servicer.
(a) Upon discovery or receipt of notice of any materially
defective document in, or that a required document is missing (after
expiration of the applicable time period set forth in Section 2.04 hereof)
from, a Mortgage File, the Trustee shall promptly notify Cityscape, the
Depositor, the Rating Agencies and the Servicer of such defect or missing
document and request that Cityscape deliver such missing document or cure
such defect within 90 days after the date on which Cityscape was notified of
such missing document or defect and, if Cityscape does not, deliver such
missing document or cure such defect in all material respects during such
period, Cityscape shall repurchase the related Mortgage Loan from the Trust
at the Purchase Price promptly but no later than 10 days after the end of
such period. The Purchase Price for the repurchased Mortgage Loan shall be
deposited into the Collection Account by Cityscape, and the Trustee, upon (i)
receipt of an Officers' 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 Cityscape the related Mortgage File and shall
execute and deliver such instruments of transfer or assignment as are
furnished by Cityscape, in each case without recourse, as shall be reasonably
necessary to vest in Cityscape any Mortgage Loan released pursuant hereto,
and the Trustee shall have no further responsibility or liability (except as
to its own negligence or willful misconduct) with regard to such Mortgage
File and such Mortgage Loan.
In lieu of repurchasing any such Mortgage Loan as provided above,
Cityscape may cause such Mortgage Loan to be removed from the Trust (in which
case it shall become a Deleted Mortgage Loan) and substitute one or more
Qualified Substitute Mortgage Loans in the manner and subject to the
limitations set forth in Section 2.06(d) hereof.
(b)(i) Except as otherwise provided in Section 2.06(e) hereof,
within 60 days after the earlier of discovery by Cityscape or receipt of
notice by Cityscape of the breach of any representation or warranty of
Cityscape set forth in Section 2.07 or Section 2.08 hereof with respect to
any Mortgage Loan (notwithstanding that such representation and warranty was
made to Cityscape's best knowledge) or the failure of any of the conditions
set forth in Section 2.13 hereof with respect to any Subsequent Mortgage
Loans, Cityscape shall (x) cure such breach in all material respects or (y)
subject to the restrictions set forth in Section 2.06(d) hereof repurchase
the Mortgage Loan from the Trustee at the Purchase Price or (z) remove such
Mortgage Loan from the Trust (in which case it shall become a Deleted
Mortgage Loan) and substitute one or more Qualified Substitute Mortgage Loans
in the manner and subject to the limitations set forth in Section 2.06(d)
hereof. If any such breach is a breach of any of the representations and
warranties included in subsection (m), (w), (y), (cc), (dd), (ll), (mm), (uu)
(zz), (ccc) or (eee) of Section 2.07 hereof (to the extent the
representations and warranties in such subsections relate to statistical
information as to the characteristics of the Initial Mortgage Loans in the
aggregate), and Cityscape is unable to cure such breach, Cityscape shall
repurchase or substitute the smallest number of Mortgage Loans as shall be
required to make such representation or warranty true and correct. The
Purchase Price for any repurchased Mortgage Loan shall be deposited into the
Collection Account by Cityscape, and the Trustee, upon (i) receipt of an
Officers' Certificate of Cityscape as to the making of such deposit and (ii)
confirmation that such deposit has been made, shall release or cause to be
released to Cityscape the related Mortgage File and shall execute and deliver
such instruments of transfer or assignment as furnished by Cityscape, in each
case without recourse, as shall be necessary to vest in Cityscape title to
any Mortgage Loan released pursuant hereto.
(ii) If any Mortgagor on a Mortgage Loan fails to make the first
payment (not including any payments withheld from loan proceeds) as
determined in accordance with the terms of the related Mortgage Note within
90 days after the Due Date of such first payment, Cityscape shall, prior to
the Determination Date related to the next succeeding Distribution Date,
repurchase such Mortgage Loan from the Trustee at the Purchase Price.
(c) Within 60 days after the earlier of discovery by the Servicer
or receipt of notice by the Servicer of the breach of any representation,
warranty or covenant of the Servicer set forth in Section 2.09 hereof, which
breach materially and adversely affects the value of any Mortgage Loan or the
interests of the Certificateholders therein, the Servicer shall (i) cure such
breach in all material respects or (ii) subject to the restrictions set forth
in Section 2.06(d) hereof, purchase any affected Mortgage Loan from the Trust
at the Purchase Price. The Purchase Price for the purchased Mortgage Loan
shall be deposited by the Servicer into the Collection Account, and the
Trustee, upon (i) receipt of an Officers' Certificate of the Servicer as to
the making of such deposit and (ii) confirmation that such deposit has been
made, shall release or cause to be released to the Servicer the related
Mortgage File and shall execute and deliver such instruments of transfer or
assignment as furnished by Cityscape, in each case without recourse, as shall
be necessary to vest in the Servicer title to any Mortgage Loan released
pursuant hereto.
(d)(i) No purchase or repurchase of any Mortgage Loan shall occur
if Cityscape or the Servicer delivers (at its own expense) to the Trustee an
Independent Opinion of Counsel, addressed to the Trustee, to the effect that
such purchase or repurchase of such Mortgage Loan will (x) result in the
imposition of taxes on a "prohibited transaction" for the related REMIC Trust
as defined in Section 860F of the Code, (y) result in the imposition of taxes
on contributions to the Trust under Section 860G(d) of the Code or (z) cause
the related REMIC Trust to fail to qualify as a REMIC at any time that the
Certificates are outstanding. Cityscape or the Servicer, whichever is the
entity delivering the Independent Opinion of Counsel described in the
preceding sentence, shall indemnify and hold harmless the Trust for any
Realized Loss occurring on a Mortgage Loan which Cityscape or the Servicer
does not purchase or repurchase due to the delivery of such Independent
Opinion of Counsel.
Notwithstanding the provisions of this subsection (i) of Section
2.06(d), if either Cityscape or the Servicer delivers an Opinion of Counsel
stating that the proposed purchase or repurchase of a Mortgage Loan by
Cityscape or the Servicer would result in the imposition of the taxes
described in clauses (x) or (y) of this subsection (i) and that such proposed
purchase or repurchase would not cause the related REMIC Trust to fail to
qualify as a REMIC at any time that the Certificates are outstanding,
Cityscape or the Servicer (A) may purchase or repurchase such Mortgage Loan
and (B) shall pay any of the taxes described in clauses (x) and (y) of this
subsection (i) which are imposed as result of such purchase or repurchase.
(ii) Any substitution of Qualified Substitute Mortgage Loans for
Deleted Mortgage Loans made pursuant to Section 2.06(a) or Section 2.06(b)
hereof must be effected prior to the date that is two years after the Startup
Date or such other period as may be specified therefor in the REMIC
Provisions.
With respect to any Deleted Mortgage Loan for which Cityscape
substitutes a Qualified Substitute Mortgage Loan or Loans, such substitution
shall be effected by Cityscape by delivering to the Trustee for such
Qualified Substitute Mortgage Loan or Loans the Mortgage Note, the Mortgage,
the related Assignment, and such other documents and agreements, with all
necessary endorsements thereon, as are required by Section 2.04 hereof,
together with an Officers' Certificate providing that each such Qualified
Substitute Mortgage Loan satisfies the definition thereof and specifying the
Substitution Shortfall Amount (as described below), if any, in connection
with such substitution. The Trustee shall acknowledge receipt of such
Qualified Substitute Mortgage Loan or Loans and, within five Business Days
thereafter, shall review such documents (or shall cause such documents to be
reviewed) as specified in Section 2.04 hereof and shall deliver to Cityscape,
the Depositor and the Servicer, with respect to such Qualified Substitute
Mortgage Loan or Loans, a certification substantially similar to that made by
the Trustee in the second paragraph of Section 2.05 hereof. Within one year
after the date of substitution, the Trustee shall deliver to Cityscape, the
Depositor and the Servicer a certification in the form of Exhibit F-3 hereto
with respect to such Qualified Substitute Mortgage Loan or Loans pursuant to
Section 2.05 hereof. Monthly Payments due with respect to Qualified
Substitute Mortgage Loans in the month of substitution are not part of the
Trust Estate and will be retained by Cityscape. For the month of
substitution, distributions to Certificateholders will reflect the Monthly
Payment due on such Deleted Mortgage Loan on or before the Due Date of such
Deleted Mortgage Loan in the month of substitution, and Cityscape shall
thereafter be entitled to retain all amounts subsequently received in respect
of such Deleted Mortgage Loan. Cityscape shall give or cause to be given
written notice to the Certificateholders and the Depositor that such
substitution has taken place, and the Trustee shall amend the Mortgage Loan
Schedule to reflect the removal of such Deleted Mortgage Loan from the Trust
and the substitution of the Qualified Substitute Mortgage Loan or Loans.
Upon such substitution, such Qualified Substitute Mortgage Loan or Loans
shall be subject to the terms of this Agreement in all respects, including,
but not limited to, the representations and warranties set forth in Section
2.07 hereof, as of the date of substitution.
For any month in which Cityscape substitutes one or more Qualified
Substitute Mortgage Loans for one or more Deleted Mortgage Loans, the Trustee
will determine, based upon information supplied by the Servicer, and inform
Cityscape of, the amount (the "Substitution Shortfall Amount"), if any, by
which the aggregate unpaid principal balance of all such Qualified Substitute
Mortgage Loans as of the date of substitution is less than the aggregate
unpaid principal balance of all such Deleted Mortgage Loans as of such date
plus the aggregate amount of all unreimbursed Servicing Advances and
Delinquency Advances relating to such Deleted Mortgage Loans as of such date.
On the date of such substitution, Cityscape will deposit or cause to be
deposited from Cityscape's own funds into the Collection Account pursuant to
Section 3.10(a)(viii) hereof an amount equal to the Substitution Shortfall
Amount, if any, without reimbursement therefor, and the Trustee, upon (i)
receipt of (A) the related Qualified Substitute Mortgage Loan or Loans and
(B) an Officers' Certificate of Cityscape as to the deposit of such
Substitution Shortfall Amount into the Collection Account and (ii)
confirmation that such deposit has been made, shall release or cause to be
released to Cityscape the related Mortgage File or Files and shall execute
and deliver such instruments of transfer or assignment as are furnished by
Cityscape, in each case without recourse, as shall be necessary to vest in
Cityscape title to any Deleted Mortgage Loan released pursuant hereto and the
Trustee shall have no further responsibility or liability (except as to its
own acts) with regard to such Mortgage Loan.
Notwithstanding any contrary provision of this Agreement, with
respect to any Mortgage Loan, no substitution pursuant to this Section 2.06
shall be made unless Cityscape obtains an Independent Opinion of Counsel,
addressed to the Trustee, Cityscape, the Depositor and the Servicer, to the
effect that such substitution would not (i) result in the imposition of taxes
on "prohibited transactions" of the related REMIC Trust, as defined in
Section 860F of the Code, (ii) result in the imposition of taxes on
contributions to the Trust under Section 860G(d) of the Code, or (iii) cause
the related REMIC Trust to fail to qualify as a REMIC at any time that any
Certificates are outstanding.
(e) Upon discovery by Cityscape, the Depositor, the Servicer or
the Trustee that any Mortgage Loan does not constitute a "qualified mortgage"
within the meaning of Section 860G(a)(3) of the Code, the Person discovering
such fact shall promptly (and in any event within five Business Days after
the discovery) give written notice thereof to the other Persons set forth in
this sentence. In connection therewith, Cityscape shall repurchase the
affected Mortgage Loan within 60 days after the earlier of such discovery by
Cityscape and the receipt of notice thereof in the same manner as would be
required in the event of an uncured breach of representation or warranty
contained in Section 2.07 hereof. The Trustee shall reconvey to Cityscape
the Mortgage Loan to be released pursuant hereto in the same manner, and on
the same terms and conditions, as it would reconvey a Mortgage Loan
repurchased for breach of a representation or warranty contained in Section
2.07 hereof.
SECTION 2.07. Representations and Warranties with Respect to the
Mortgage Loans.
Cityscape hereby represents and warrants to the Depositor, the
Trustee and the Certificateholders, with respect to each Mortgage Loan as of
the Closing Date and with respect to each Subsequent Mortgage Loan as of the
related Subsequent Transfer Date, or as of such other date specifically
provided herein (except that with respect to any Qualified Substitute
Mortgage Loan such representations and warranties shall be as of the date of
substitution and made by Cityscape or the Servicer, whichever is making the
substitution), that:
(a) The information set forth in the Mortgage Loan Schedule relating to
the Mortgage Loans is complete, true and correct as of the applicable Cut-Off
Date;
(b) The Mortgage Note and the Mortgage are not assigned or pledged by
Cityscape to a Person other than the Trust, and immediately prior to the
transfer of the Mortgage Loans from Cityscape to the Depositor, Cityscape had
good and marketable title thereto, and was the sole owner and holder of the
Mortgage Loan free and clear of any and all liens, claims, encumbrances,
participation interests, equities, pledges, charges or security interests of
any nature (collectively, 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 Mortgage Loan as herein
contemplated, the Trustee shall have good title to, and will be the sole
legal owner of, each Mortgage Loan free and clear of any Lien;
(c) The Mortgage is a valid and existing lien on the property therein
described, and the Mortgaged Property is free and clear of all encumbrances
and liens having priority over the lien of the Mortgage, except (i) liens for
real estate taxes and special assessments not yet due and payable, (ii) in
the case of a Mortgaged Property that is a condominium or an individual unit
in a planned unit development, liens for common charges permitted by statute,
and (iii) in the case of a Second Mortgage Loan, the lien securing the
related First Lien. Any security agreement, chattel mortgage or equivalent
document related to the Mortgage and delivered to the Trustee establishes in
Cityscape a valid and subsisting lien on the property described therein, and
Cityscape has full right to sell and assign the same to the Trustee;
(d) The terms of the Mortgage Note and the Mortgage have not been
impaired, altered or modified in any respect which would have any adverse
effect on the Certificateholders, except by a written instrument which has
been recorded, if necessary to protect the interests of the
Certificateholders, and which has been delivered to the Trustee. The
substance of any such alteration or modification is reflected in the Mortgage
Loan Schedule;
(e) No instrument of release or waiver has been executed in connection
with the Mortgage Loan, and no Mortgagor has been released, in whole or in
part, except in connection with an assumption agreement which has been
approved by the primary mortgage guaranty insurer, if any, and which has been
delivered to the Trustee;
(f) Except with respect to delinquencies described in clause (m)
hereof, no Mortgagor is in default in complying with the terms of the
Mortgage Note or the Mortgage and there exists no event which, with the
passage of time or notice or both, would constitute a default thereunder, and
Cityscape has not waived any default, breach, violation or event of
acceleration except that Cityscape may have accepted late payments. At
origination all taxes, governmental assessments, insurance premiums, or
water, sewer and municipal charges and rents under all ground leases which
previously became due and owing have been paid, and each Mortgage Note and/or
the related Mortgage obligate the related Mortgagor to pay all similar
amounts as they become due. Cityscape has not advanced funds, or induced,
solicited or knowingly received any advance of funds by a party other than
the Mortgagor, directly or indirectly, for the payment of any amount required
by the Mortgage, except for interest accruing from the date of the Mortgage
Note or date of disbursement of the Mortgage proceeds, whichever is more
recent, to the day which precedes by one month the Due Date of the first
installment of principal and interest;
(g) There is no proceeding pending or, to the best of Cityscape's
knowledge, threatened for the total or partial condemnation of the Mortgaged
Property, nor is such a proceeding currently occurring, and such property is
undamaged by waste, fire, water, earthquake or earth movement, windstorm,
flood, tornado, or otherwise, so as to affect adversely the value of the
Mortgaged Property as security for the Mortgage Loan or the use for which the
premises were intended;
(h) There are no mechanics' or similar liens or claims which have been
filed for work, labor or material (and no rights are outstanding that under
law could give rise to such lien) affecting the Mortgaged Property which are,
or may be, liens prior or equal to, or coordinate with, the lien of the
Mortgage except those that are stated in the title insurance policy and for
which related losses are affirmatively insured against by such policy;
(i) All of the improvements that were included for the purpose of
determining the Value of the Mortgaged Property lie wholly within the
boundaries and building restriction lines of such property, and no
improvements on adjoining properties encroach upon the Mortgaged Property
except those that are stated in the title insurance policy and for which
related losses are affirmatively insured against by such policy;
(j) (Reserved.)
(k) No improvement located on or being part of the Mortgaged Property
is in violation of any applicable zoning law or regulation. All inspections,
licenses and certificates required to be made or issued with respect to all
occupied portions of the Mortgaged Property and, with respect to the use and
occupancy of the same, including, but not limited to, certificates of
occupancy and fire underwriting certificates, have been made or obtained from
the appropriate authorities and the Mortgaged Property is lawfully occupied
under applicable law;
(l) All parties that have had any interest in the Mortgage Loan,
whether as mortgagee, assignee, pledgee or otherwise, are (or, during the
period in which they held and disposed of such interest, were) (1) in
compliance with any and all licensing requirements of the United States and
of the laws of the state wherein the Mortgaged Property is located that are
applicable to such parties, and (2)(A) organized under the laws of such
state, or (B) qualified to do business in such state or exempt from such
qualification in a manner so as not to affect adversely the enforceability of
such Mortgage Loan, or (C) federal savings associations or national banks
having principal offices in such state, or (D) not doing business in such
state;
(m) As of the Cut-Off Date, no more than 2.34% of the Initial Mortgage
Loans in Group I or and no more than 1.89% of the Mortgage Loans in Group II,
each measured by Cut-Off Date Loan Balances, were 30 days or more Delinquent,
and none of the Mortgage Loans was 60 days or more Delinquent;
(n) The Mortgage File contains each of the documents and instruments
specified to be included therein duly executed and in due and proper form and
each such document or instrument is in a form generally acceptable to prudent
institutional mortgage lenders that regularly originate or purchase mortgage
loans comparable to the Mortgage Loans for sale to prudent investors in the
secondary market that invest in mortgage loans such as the Mortgage Loans;
(o) The Mortgage Note and the related Mortgage are genuine, and each is
the legal, valid and binding obligation of the maker thereof, enforceable in
accordance with its terms, 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). All parties to the Mortgage
Note and the Mortgage had legal capacity (and, with respect to any Mortgage
Loan secured by a Small Mixed-Use/Multifamily Property, such party had full
power and authority and had been duly authorized) to execute the Mortgage
Note and the Mortgage, and each Mortgage Note and Mortgage has been duly and
properly executed by such parties. The Mortgagor is a natural person (except
with respect to Mortgage Loans secured by Small Mixed-Use/Multifamily
Properties) who is a party to the Mortgage Note and the Mortgage in an
individual capacity, and not in the capacity of a trustee or otherwise;
(p) Any and all requirements of any federal, state or local law,
including, without limitation, usury, truth-in-lending, real estate
settlement procedures, consumer credit protection, equal credit opportunity
or disclosure laws, applicable to the Mortgage Loan have been complied with,
and Cityscape has and shall maintain in its possession, available for the
Trustee's inspection, and shall deliver to the Trustee upon demand, evidence
of compliance with all such requirements;
(q) The proceeds of the Mortgage Loan have been fully disbursed, there
is no requirement for future advances thereunder and any and all requirements
as to completion of any on-site or off-site improvements and as to
disbursements of any escrow funds therefor have been complied with. All
costs, fees and expenses incurred in making, closing or recording the
Mortgage Loan were paid;
(r) Any future advances made after the date of origination of each
Mortgage Loan but prior to the Cut-Off Date have been consolidated with the
outstanding principal amount secured by the related Mortgage, and the secured
principal amount, as consolidated, bears a single interest rate and single
repayment term reflected on the Mortgage Loan Schedule. The lien of the
Mortgage securing the consolidated principal amount is expressly insured as
having first lien priority, except in the case of a Second Mortgage Loan
where such lien is expressly insured as having second lien priority subject
only to the lien of the related First Lien, by a title insurance policy or an
endorsement to the policy insuring the mortgagee's consolidated interest.
The consolidated principal amount does not exceed the original principal
amount of the Mortgage Loan. Cityscape shall not be obligated to make future
advances after the Cut-Off Date;
(s) Each Mortgage Loan is covered by an ALTA mortgage title insurance
policy or such other form of policy acceptable to FNMA or FHLMC, issued by
and constituting the valid and binding obligation of a title insurer
generally acceptable to prudent mortgage lenders, which regularly originate
or purchase mortgage loans comparable to the Mortgage Loans for sale to
prudent investors in the secondary market that invest in mortgage loans such
as the Mortgage Loans, and qualified to do business in the jurisdiction
wherein the Mortgaged Property is located, insuring Cityscape, its successors
and assigns, as to the first priority lien of the Mortgage in the case of a
First Mortgage Loan and the second priority lien of the Mortgage in the case
of a Second Mortgage Loan, in the original principal amount of the Mortgage
Loan. Cityscape is the sole payee of such mortgage title insurance policy,
the assignment to the Trustee of Cityscape's interest in such mortgage title
insurance policy does not require the consent of or notification to the
insurer or the same has been obtained, and such mortgage title insurance
policy is in full force and effect and will be in full force and effect and
inure to the benefit of the Trustee upon the consummation of the transactions
contemplated by this Agreement. No claims have been made under such mortgage
title insurance policy and no prior holder of the related Mortgage, including
Cityscape, has done, by act or omission, anything that would impair the
coverage of such mortgage title insurance policy;
(t) All improvements upon the Mortgaged Property are insured by an
insurer who meets FNMA and/or FHLMC guidelines against loss by fire, hazards
of extended coverage and such other hazards as are customary in the area
where the Mortgaged Property is located pursuant to insurance policies
conforming to the requirements of Section 3.13 hereof. If the Mortgaged
Property was, at the time of origination of the related Mortgage 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
representing coverage described in Section 3.13 hereof. 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 Cityscape, its successors and assigns, as mortgagee. All
premiums thereon have been paid. The Mortgage obligates the Mortgagor
thereunder to maintain all such insurance at the Mortgagor's cost and
expense, and upon the Mortgagor's failure to do so, authorizes the holder of
the Mortgage to obtain and maintain such insurance at the Mortgagor's cost
and expense and to seek reimbursement therefor from the Mortgagor;
(u) The Mortgage Loan is not subject to any right of rescission, set-
off, counterclaim or defense, including the defense of usury, nor will the
operation of any of the terms of the Mortgage Note or the Mortgage, or the
exercise of any right thereunder, render either the Mortgage Note or the
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 with respect thereto;
(v) The Mortgage Loans were originated or purchased and re-underwritten
by Cityscape in accordance with Cityscape's underwriting guidelines attached
hereto as Exhibit M. No Mortgage Loan has been modified except as such
modification may be reflected in the related Mortgage File;
(w) The Mortgage Loan is a closed-end First Mortgage Loan or closed-end
Second Mortgage Loan having an original term of not more than 30 years to
maturity. Except with respect to any Balloon Mortgage Loan, each Mortgage
Loan is payable in equal monthly installments of principal and interest which
would be sufficient, in the absence of late payments, to fully amortize such
loan within the term thereof, beginning no later than 60 days after
disbursement of the proceeds of the Mortgage Loan and, if the Mortgage Loan
is a Group I Mortgage Loan, bears a fixed interest rate for the term of the
Mortgage Loan. As of the Cut-Off Date, approximately 45.54% of the Initial
Mortgage Loans in Group I (measured by Group I Cut-Off Date Loan Balance) are
Balloon Mortgage Loans each of which generally has an original term of not
less than fifteen (15) years and which provides for level monthly payments
generally based on a thirty (30) year amortization schedule and a final
Monthly Payment substantially greater than the preceding Monthly Payments;
none of the Mortgage Loans in Group II is a Balloon Mortgage Loan;
(x) The Mortgage contains a customary provision for the acceleration of
the payment of the unpaid principal balance of the Mortgage Loan in the event
the related Mortgaged Property is sold without the prior consent of the
holder of the Mortgage;
(y) With respect to approximately 89.12% of the Initial Mortgage Loans
in Group I and approximately 95.02% of the Mortgage Loans in Group II, each
measured by Cut-Off Date Loan Balances, at the time that each such Mortgage
Loan was originated the related Mortgagor represented that such Mortgagor
would occupy the related Mortgaged Property as such Mortgagor's primary
residence, and Cityscape has no reason to believe that such representation of
the Mortgagor is no longer true. No Mortgage Loan is a construction loan.
Each Mortgaged Property is lawfully occupied under applicable law;
(z) The Mortgage Note is not and has not been secured by any
collateral, pledged account or other security except the lien of the
corresponding Mortgage and the security interest of any applicable security
agreement or chattel mortgage referred to in Section 2.07(c) hereof;
(aa) The Mortgage contains customary and enforceable provisions which
render the rights and remedies of the holder thereof adequate for the
realization against the Mortgaged Property of the benefits of the security,
including, (i) in the case of a Mortgage designated as a deed of trust, by
trustee's sale, and (ii) otherwise by judicial or non-judicial foreclosure.
Other than applicable homestead provisions which may delay the realization
against the Mortgaged Property, or exemptions that may arise in the event a
petition under the Bankruptcy Code is filed with respect to the Mortgagor,
there is no homestead or other exemption available to the Mortgagor that
would interfere with the right to sell the Mortgaged Property at a trustee's
sale or the right to foreclose the Mortgage;
(bb) With respect to each Mortgage constituting a deed of trust, a
trustee, duly qualified under applicable law to serve as such, has been
properly designated and currently so serves and is named in such Mortgage,
and no fees or expenses are or will become payable by the Trustee or the
Certificateholders to the trustee under the deed of trust, except in
connection with a trustee's sale after default by the Mortgagor, which fees
and expenses shall constitute Servicing Advances;
(cc) The Mortgaged Property is located in the state identified in the
Mortgage Loan Schedule and consists of at least one parcel of real property
with a one-family residence erected thereon, a two- to four-family dwelling,
a Small Mixed-Use/Multifamily Property or an individual condominium unit;
provided, however, that no residence or dwelling is a co-operative unit or
- -------- -------
a mobile home, but which may be a pre-fabricated or manufactured unit affixed
to a permanent foundation. As of the Cut-Off Date with respect to the
aggregate Loan Balance of all Initial Mortgage Loans in Group I, (i) not more
than 12.89% are secured by real property improved by two- to four-family
dwellings; (ii) not more than 1.29% are secured by real property improved by
individual condominium units; (iii) at least 83.40% are secured by real
property with a detached or attached single-family residence erected thereon;
(iv) not more than 1.0% are subject to a ground lease and the remainder of
the Group I Mortgaged Properties are fee simple estates; (v) not more than
2.0% are subject to a leasehold mortgage; (vi) not more than 15.31% are
Second Mortgage Loans; (vii) not more than 2.42% are secured by small mixed-
use Mortgaged Properties; (viii) none is secured by multifamily Mortgaged
Properties; (ix) not more than 16.85% have been originated under a non-income
verification program; and (x) each Group I Mortgage Loan secured by a Small
Mixed-Use/Multifamily Property is a first lien on such Mortgaged Property;
and with respect to each Group I Mortgaged Property subject to a ground
lease: (i) the current ground lessor has been identified and all ground rents
which have previously become due and owing have been paid, (ii) the ground
lease term extends, or is automatically renewable, for at least five years
beyond the maturity date of the related Mortgage Loan, (iii) the ground lease
has been duly executed and recorded, (iv) the amount of the ground rent and
any increases therein are clearly identified in the lease and are for
predetermined amounts at predetermined times, (v) the ground rent payment is
included in the Mortgagor's monthly payment as an expense item, (vi) the
Trust has the right to cure defaults on the ground lease and (vii) the terms
and conditions of the leasehold do not prevent the free and absolute
marketability of such Mortgaged Property. As of the Cut-Off Date with
respect to the aggregate Loan Balance of all Mortgage Loans in Group II, (i)
not more than 9.79% are secured by real property improved by two- to four-
family dwellings; (ii) not more than 3.16% are secured by real property
improved by individual condominium units; (iii) at least 87.05% are secured
by real property with a detached or attached single-family residence erected
thereon; (iv) not more than 0.50% are subject to a ground lease and the
remainder of the Group II Mortgaged Properties are fee simple estates; (v) no
Group II Mortgage Loan is subject to a leasehold mortgage; (vi) none of the
Group II Mortgage Loans is a Second Mortgage Loan; (vii) none of the Group II
Mortgage Loans is secured by a Small Mixed-Use Multifamily Property; and
(viii) not more than 14.96% have been originated under a non-income
verification program; and with respect to each Group II Mortgaged Property
subject to a ground lease: (i) the current ground lessor has been identified
and all ground rents which have previously become due and owing have been
paid, (ii) the ground lease term extends, or is automatically renewable, for
at least five years beyond the maturity date of the related Mortgage Loan,
(iii) the ground lease has been duly executed and recorded, (iv) the amount
of the ground rent and any increases therein are clearly identified in the
lease and are for predetermined amounts at predetermined times, (v) the
ground rent payment is included in the Obligor's monthly payment as an
expense item, (vi) the Trust has the right to cure defaults on the ground
lease and (vii) the terms and conditions of the leasehold do not prevent the
free and absolute marketability of such Mortgaged Property.
(dd) The Loan-to-Value Ratio as of the date of origination of each
Group I Initial Mortgage Loan and each Group II Mortgage Loan was not more
than 98.71% and 97.50% respectively; the weighted average Loan-to-Value
Ratios of the Group I Initial Mortgage Loans and the Group II Mortgage Loans
are approximately 73.89% and 76.86%, respectively;
(ee) (Reserved.)
(ff) There exist no deficiencies with respect to escrow deposits and
payments, if such are required, for which customary arrangements for
repayment thereof have not been made, and no escrow deposits or payments of
other charges or payments due Cityscape have been capitalized under the
Mortgage or the related Mortgage Note;
(gg) No Mortgage Loan was originated under a buydown plan;
(hh) Other than as provided by this Agreement, there is no obligation on
the part of Cityscape or any other party to make payments in addition to
those made by the Mortgagor;
(ii) Subject to the provisions of Section 2.04 hereof, the Mortgage
Note, the Mortgage, the Assignment of the Mortgage and any other documents
required to be delivered have been delivered to the Trustee. Cityscape is in
possession of a complete Mortgage File, except those documents delivered to
the Trustee, and there are no custodial agreements in effect adversely
affecting the right or ability of Cityscape to make the document deliveries
required hereby. Each original Mortgage was recorded, and all subsequent
Assignments of the original Mortgage have been recorded in the appropriate
jurisdictions wherein such recordation is necessary to perfect the lien
thereof as against creditors of Cityscape (subject to the provisions of
Section 2.04 hereof with respect to Mortgages and Assignments which are in
the process of being recorded);
(jj) No Mortgage Loan was selected for inclusion under this Agreement on
any basis which was intended to have a material adverse effect on the
Certificateholders;
(kk) No Mortgage Loan has a shared appreciation or other contingent
interest feature;
(ll) No more than 0.64% and 1.84% for each of Group I and Group II,
respectively, of the aggregate Loan Balance of all the Mortgage Loans as of
the Cut-Off Date are secured by Mortgaged Properties located within any
single five-digit ZIP code area;
(mm) The weighted average Mortgage Rate of all the Mortgage Loans as of
the Cut-Off Date was approximately 11.67% and 10.40% for each of Group I and
Group II, respectively, and no Mortgage Rate for any Mortgage Loan was
greater than 17.15% and 15.50% for each of Group I and Group II,
respectively, or less than 7.85% and 5.99% for each of Group I and Group II,
respectively;
(nn) With respect to each Second Mortgage Loan:
(i) if the related First Lien provides for negative amortization
the Loan-to-Value Ratio was calculated at the maximum principal balance
of such First Lien that could result upon application of such negative
amortization feature;
(ii) either no consent for the Second Mortgage Loan is required by
the holder of the related First Lien or such consent has been obtained
and is contained in the Mortgage File; and
(iii) no notice of default with respect to the related First
Lien has been delivered to Cityscape that has not been cured;
(oo) Cityscape has caused or will cause to be performed any and all acts
required to be performed to preserve the rights and remedies of the Trustee
in any insurance policies applicable to the Mortgage Loans, including,
without limitation, any necessary notifications of insurers, assignments of
policies or interests therein, and establishments of co-insured, joint loss
payee and mortgagee rights in favor of the Trustee;
(pp) All amounts received after the Cut-Off Date (and all interest
payments received on or before the Cut-Off Date that are due after the Cut-
Off Date) with respect to the Mortgage Loans to which Cityscape is not
entitled are, as of the Closing Date, in the Collection Account;
(qq) Each Initial Mortgage Loan conforms and all Initial Mortgage Loans
in the aggregate conform, and each Subsequent Mortgage Loan will conform and
all Subsequent Mortgage Loans in the aggregate will conform, to the
descriptions thereof to be set forth in the Prospectus Supplement (subject to
the variances specified therein);
(rr) A full appraisal on forms approved by FNMA or FHLMC was performed
in connection with the origination of the related Mortgage Loan. Each
appraisal meets guidelines that would be generally acceptable to prudent
mortgage lenders that regularly originate or purchase mortgage loans
comparable to the Mortgage Loans for sale to prudent investors in the
secondary market that invest in mortgage loans such as the Mortgage Loans;
(ss) To the best of Cityscape's knowledge, no Mortgaged Property was, as
of the Cut-Off Date, located within a one-mile radius of any site listed in
the National Priorities List as defined under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, or on any
similar state list of hazardous waste sites which are known to contain any
hazardous substance or hazardous waste;
(tt) None of the Mortgage Loans is subject to a bankruptcy plan;
(uu) No more than 1.95% and 3.77% of the aggregate Loan Balances of all
the Mortgage Loans measured by Cut-Off Date Loan Balances for each of Group I
and Group II, respectively, relate to Mortgage Loans originated or purchased
under Cityscape's limited documentation program;
(vv) To the best of Cityscape's knowledge, no statement, report or other
document constituting a part of the Mortgage File contains any untrue
statement of fact or omits to state a fact necessary to make the statements
contained therein not misleading;
(ww) The range of points financed or "net funded" on Mortgage Loans
originated after January 1, 1994 is 0% to 13.0%;
(xx) Each Mortgage Loan constitutes a "qualified mortgage" within the
meaning of Section 860G(a)(3) of the Code;
(yy) Cityscape has the full authority to sell and transfer each Mortgage
Note and Mortgage and such transfer and sale will not impair the
enforceability of any Mortgage;
(zz) With respect to each Mortgage Loan secured by a Mortgaged Property
which is a Small Mixed-Use/Multifamily Property, (i) such Mortgaged Property
is in compliance with all environmental laws, statutes, ordinances,
regulations, orders, rules, decrees and similar requirements of federal,
state, municipal and any other governmental authorities relating thereto,
(ii) no hazardous material or oil was or is incorporated in, stored on,
transported to or from, or disposed of on or from (except if the same was or
is in compliance with all laws, ordinances and regulations pertaining
thereto), the Mortgaged Property, (iii) neither Cityscape nor, to the best of
its knowledge, any Mortgagor has received notification from any federal,
state or other governmental authority of any potential, known or threatened
release of hazardous material on or from the Mortgaged Property or any
potential or known liability that has resulted in or may result in a lien on
the Mortgaged Property, (iv) the Mortgaged Property is a separate tax parcel,
separate and apart from any other property owned by the Mortgagor or any
other Person; (v) the liability and rent coverage insurance is consistent
with Accepted Servicing Procedures and (vi) except for no more than 5.00% of
such Mortgage Loans, the security documentation includes an assignment of
leases and rents. For purposes of this representation, the term hazardous
(a) shall have the meaning defined under any applicable federal, state,
municipal or other jurisdictions' laws, rules or regulations and (b) shall
include asbestos;
(aaa) The information set forth in the Mortgage Loan Schedule
relating to any Subsequent Mortgage Loan will be complete, true and correct
in all material respects as of the related Cut-Off Date;
(bbb) With respect to each Mortgaged Property subject to a land
trust (a "Land Trust Mortgage"), (i) a trustee, duly qualified under
applicable law to serve as such, has been properly designated and currently
so serves and is named as such in the land trust agreement and such trustee
is named in the Land Trust Mortgage as Mortgagor; (ii) all fees and expenses
of the land trustee which have previously become due and owing have been paid
and no fees or expenses are or will become payable by the Certificateholders
or the Trust to the land trustee under the land trust agreement; (iii) the
beneficiary is solely obligated to pay any fees and expenses of the land
trustee and the priority of the lien of the Land Trust Mortgage is not and
will not be primed by the land trustee; (iv) the beneficiary is obligated to
make payments under the related promissory note and will have personal
liability for deficiency judgments; (v) the related Land Trust Mortgage
together with each assignment of beneficial interest relating thereto was
made in compliance with the related land trust agreement, was validly entered
into by the related land trustee or beneficiary and did not, does not
currently, and will not in the future, violate any provision of such land
trust agreement or any agreement between or among the beneficiaries of such
land trust; (vi) the assignment of the beneficial interest relating to such
Land Trust Mortgage was accepted by, and noted in the records of the
respective land trust trustee, subsequent assignments of such beneficial
interest in whole or in part have not been made, and such subsequent
assignments of such beneficial interest or any part thereof are not permitted
pursuant to a written agreement between the respective beneficiary and the
related mortgagee, until the expiration of the promissory note in such land
trust; (vii) the Land Trust Mortgage is either the first or second lien on
the related Mortgaged Property; no liens are in place against the beneficial
interests, or any part thereof, of such Land Trust Mortgage or collateral
assignment of beneficial interest, which liens are superior (except for First
Liens with respect to Second Mortgage Loans) to the interest held by
Cityscape, and the beneficial interest, or any part thereof, of any Land
Trust Mortgage; (viii) the terms and conditions of the land trust agreement
do not prevent the free and absolute marketability of the Mortgaged Property;
and (ix) each Land Trust Mortgage contains, and will contain, a "due-on-sale"
provision permitting the mortgagee under the Mortgage Note and Land Trust
Mortgage to foreclose or otherwise exercise remedies thereunder upon a
transfer of the beneficial interest in the related Mortgaged Property;
(ccc) All of the Group II Mortgage Loans are LIBOR Mortgage Loans;
approximately 34.45% of the LIBOR Mortgage Loans are 2/28 LIBOR Mortgage
Loans. With respect to each Group II Mortgage Loan on each Adjustment Date,
the Mortgage Rate will be adjusted to equal the related Mortgage Index plus
the related Gross Margin, rounded to the nearest 0.125%, subject to the
applicable Periodic Rate Cap, applicable Maximum Mortgage Rate and applicable
Minimum Mortgage Rate. With respect to each Group II Mortgage Loan, all of
the adjustments to the Mortgage Rate, to the amount of the Monthly Payment
and to the principal balance thereof have been made in accordance with the
terms of the related Mortgage Note and applicable law; the Mortgage Notes for
the Group II Mortgage Loans provide that in no event shall the Mortgage Rate
of any Group II Mortgage Loan increase or decrease on any Adjustment Date by
more than (i) 1.0% per annum with respect to 96.39% of the LIBOR Mortgage
Loans or (ii) 1.5% per annum with respect to 3.61% of the LIBOR Mortgage
Loans; no more than 1.00% of the Group I Mortgage Loans are Simple Interest
Loans; none of the Group II Mortgage Loans is a Simple Interest Loan; Group
II Mortgage Loans representing approximately 91.28%, 0.08%, 0.65% and 7.99%
of the Group II Cut-Off Date Loan Balance have Lifetime Caps of 6.00%, 6.45%,
6.50% and 7.00%, respectively;
(ddd) Each Group II Mortgage Loan has an initial Adjustment Date no
later than June 1, 1999;
(eee) The Gross Margins on the Group II Mortgage Loans range from
2.75% to 11.60% and the weighted average of such Gross Margins as of the
Cut-off Date was approximately 7.18%.
(fff) Each of the Mortgage Loans (other than the Simple Interest
Loans) provides for the calculation of interest on the basis of a 360-day
year consisting of twelve 30-day months; each of the Simple Interest Loans
provides for the calculation of interest on the basis of the actual number of
days elapsed in a year consisting of 365 or 366 days, as applicable;
(ggg) No Mortgage Note relating to a Group II Mortgage Loan contains
a provision permitting the Mortgagor thereunder, at his option, to convert
the related Mortgage Rate from an adjustable interest rate to a fixed
interest rate; and
(hhh) No Mortgage Note provides for negative amortization.
It is understood and agreed that the representations and warranties
set forth in this Section 2.07 shall survive delivery of the respective
Mortgage Files to the Trustee and shall inure to the benefit of the
Depositor, the Certificateholders and the Trustee, notwithstanding any
restrictive or qualified endorsement or assignment. Upon discovery by any of
Cityscape, the Depositor, the Servicer or the Trustee of a breach of any of
the foregoing representations and warranties that materially and adversely
affects the value of any Mortgage Loan or the interests of the
Certificateholders therein (without giving effect to any qualification
contained in such representation or warranty relating to Cityscape's
knowledge), the party discovering such breach shall give prompt written
notice to the other parties, and in no event later than two Business Days
after the date of such discovery. It is understood and agreed that the
obligations of Cityscape set forth in Section 2.06(b) hereof to cure any
breach or to substitute for or repurchase a defective Mortgage Loan
constitute the sole remedies available to the Certificateholders, the
Servicer or the Trustee respecting a breach of the representations and
warranties contained in this Section 2.07.
SECTION 2.08. Representations and Warranties of Cityscape.
Cityscape hereby represents and warrants to the Trustee, the
Certificateholders and the Depositor that as of the Closing Date (and as of
each Subsequent Transfer Date) or as of such date specifically provided
herein:
(a) Cityscape 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 the Mortgage Loans, to own its property, to carry on
its business as currently conducted and 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 Cityscape and
its performance of and compliance with the terms of this Agreement will
not violate Cityscape'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 Cityscape is a party or which may be applicable to Cityscape or
any of its assets;
(c) Cityscape 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 Trustee and the Depositor, constitutes a valid, legal
and binding obligation of Cityscape, 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) Cityscape is not in violation of, and the execution and
delivery of this Agreement by Cityscape 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 other governmental
agency having jurisdiction, which violation would materially and
adversely affect the condition (financial or otherwise) or operations of
Cityscape 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, Cityscape pending or, to the knowledge of Cityscape, threatened,
before any court, administrative agency or other tribunal (A) that, if
determined adversely, would prohibit its entering into this Agreement or
render the Certificates invalid, (B) seeking to prevent the issuance of
the Certificates 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
Cityscape of its obligations under, or the validity or enforceability
of, this Agreement or the Certificates;
(f) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by Cityscape of, or compliance by Cityscape 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) Cityscape did not sell the Mortgage Loans to the Trust with
any intent to hinder, delay or defraud any of its creditors; Cityscape
will not be rendered insolvent as a result of the sale of the Mortgage
Loans to the Trust;
(h) As of the Closing Date, or, with respect to each Subsequent
Mortgage Loan, as of the related Subsequent Transfer Date, Cityscape had
good title to, and was the sole owner of, each Initial Mortgage Loan (or
Subsequent Mortgage Loan, as the case may be) 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, Cityscape will have taken all steps necessary so
that the Trust will have good title to, and will be the sole owner of,
each Mortgage Loan free and clear of any Lien (except for such Liens as
may exist consistent with the representations and warranties made in
Sections 2.07(c) and (h) hereof);
(i) Cityscape acquired title to the Mortgage Loans in good faith,
without notice of any adverse claim;
(j) The collection practices used by Cityscape with respect to the
Mortgage Loans have been, in all material respects, legal, proper,
prudent and customary in the non-conforming mortgage servicing business;
(k) No Officers' Certificate, statement, report or other document
prepared by Cityscape 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 transfer, assignment and conveyance of the Mortgage Notes
and the Mortgages by Cityscape pursuant to this Agreement are not
subject to the bulk transfer laws or any similar statutory provisions in
effect in any applicable jurisdiction;
(m) Cityscape 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 Cityscape to
conduct its business or perform its obligations hereunder;
(n) Cityscape 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 Cityscape prior to the date
hereof;
(o) As of the date of the Prospectus Supplement, the information
under the captions "SUMMARY OF TERMS--The Mortgage Loan Groups," "--
Underwriting Standards," "--Servicing," "RISK FACTORS--Yield, Prepayment
and Maturity Considerations--Prepayment Considerations and Risks," "--
Balloon Mortgage Loans," "--Second Mortgage Loans," "--Underwriting
Standards, Limited Operating History and Potential Delinquencies," "--
Geographic Concentration," "--Mixed-Use Properties," "--Purchased
Mortgage Loans," "CITYSCAPE'S PORTFOLIO OF MORTGAGE LOANS," "CITYSCAPE
CORP." and "THE MORTGAGE LOAN GROUPS" in the Prospectus Supplement will
contain no untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; and
(p) Neither Cityscape nor the Trust is 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 2.08 shall survive delivery of the respective
Mortgage Files to the Trustee and shall inure to the benefit of the
Certificateholders, the Depositor, the Servicer and the Trustee. Upon
discovery by any of Cityscape, the Depositor, the Servicer or the Trustee of
a breach of any of the foregoing representations and warranties that
materially and adversely affects the value of any Mortgage Loan or the
interests of the Certificateholders 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 Cityscape set forth in Section 2.06(b) hereof to cure any
breach or to substitute for or repurchase an affected Mortgage Loan shall
constitute the sole remedies available to the Certificateholders, the
Servicer or the Trustee respecting a breach of the representations and
warranties contained in this Section 2.08.
SECTION 2.09. Representations, Warranties and Covenants of the
Servicer.
The Servicer hereby represents and warrants to and covenants with
the Trustee, the Certificateholders, the Depositor and Cityscape 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 Mortgage 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 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 other 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 Certificates invalid, (B) seeking to prevent the
issuance of the Certificates 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 Certificates;
(f) The Servicer will examine each Sub-Servicing Agreement and
will be familiar with the terms thereof. Each designated Sub-Servicer
and the terms of each Sub-Servicing Agreement will be required to comply
with the provisions of Section 3.02 hereof. The terms of any Sub-
Servicing 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 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;
(h) The Servicer believes that the Servicing Fee Rate provides a
reasonable level of base compensation to the Servicer for servicing the
Mortgage Loans on the terms set forth herein;
(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) As of the date of the Prospectus Supplement, the information
under the caption "CITYSCAPE CORP." in the Prospectus Supplement will
contain no untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(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; and
(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 2.09 shall survive delivery of the
respective Mortgage Files to the Trustee and shall inure to the benefit of
the Depositor, the Certificateholders and the Trustee. Upon discovery by any
of Cityscape, the Depositor, the Servicer or the Trustee of a breach of any
of the foregoing representations, warranties and covenants that materially
and adversely affects the value of any Mortgage Loan or the interests of the
Certificateholders 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 Servicer set
forth in (x) Section 2.06(c) hereof to cure any breach or to purchase an
affected Mortgage Loan, (y) Section 2.06(d)(i) hereof to indemnify and hold
harmless the Trust and (z) Section 3.25 hereof to indemnify and hold harmless
Cityscape, the Trustee, the Depositor and the Certificateholders shall
constitute the sole remedies available to Cityscape, the Certificateholders,
the Depositor or the Trustee respecting a breach of the representations,
warranties and covenants contained in this Section 2.09.
SECTION 2.10. Representations and Warranties of the Depositor.
The Depositor hereby represents and warrants to Cityscape, the
Trustee and the Certificateholders, as of the Closing Date or as of such date
specifically provided herein, that:
(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 currently 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 certificate 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 Trustee,
Cityscape 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 other 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 Certificates invalid, (B) seeking to prevent the
issuance of the Certificates 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 Certificates;
(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 Mortgage 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
Mortgage Loans to the Trust;
(i) As of the Closing Date, the Depositor had good title to, and
was the sole owner of, each Mortgage 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 Mortgage Loan free and clear of any Lien (except for such Liens
as may exist consistent with the representations and warranties made in
Sections 2.07(c) and (h) hereof);
(j) The Depositor acquired title to each of the Mortgage 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 Mortgage Notes
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.
It is understood and agreed that the representations, warranties
and covenants set forth in this Section 2.10 shall survive delivery of the
respective Mortgage Files to the Trustee and shall inure to the benefit of
the Servicer, the Trustee and the Certificateholders. Upon discovery by any
of Cityscape, the Depositor, the Servicer or a Responsible Officer of the
Trustee who must have actual knowledge of a breach of any of the
representations and warranties set forth in this Section 2.10(g), (h), (i)
and (j) with respect to any Mortgage Loan which materially and adversely
affects the value of any Mortgage Loan or the interests of the
Certificateholders 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 2.11. Execution of Certificates.
(a) The Trustee acknowledges (x) the assignment to the Trust of
the Mortgage Loans and the delivery to it of the Mortgage Files relating
thereto, subject to the provisions of Section 2.04 hereof, (y) the receipt of
$22,266,299.36 for deposit into the Pre-Funding Account, $109,923.55 in
respect of the Group I Closing Date Deposit, $642,952.02 in respect of the
Group II Closing Date Deposit and $254,310.21 for deposit into the
Capitalized Interest Account and, concurrently with such delivery, has
executed, authenticated and delivered to or upon the order of the Depositor,
in exchange for such property, receipt of which is hereby acknowledged,
Certificates in authorized denominations evidencing ownership of the Trust.
(b) In connection with the issuance of the original Certificates,
the Depositor shall furnish the Trustee with a Written Order to Authenticate
in the form set forth as Exhibit L hereto (a) directing the Trustee to issue
the original Certificates to the Persons designated in the Written Order to
Authenticate and (b) informing the Trustee of the Percentage Interest with
respect to the original Regular Certificates and Class R Certificates.
SECTION 2.12. Miscellaneous REMIC Provisions.
(a) The Regular Certificates of each Group are hereby designated
as "regular interests" in the related REMIC Trust for purposes of Section
860G(a)(1) of the Code and the Class R Certificates of each Group as the
single class of "residual interests" in the related REMIC Trust for purposes
of Section 860G(a)(2) of Subchapter M of Chapter 1 of Subtitle A of the Code.
(b) The Closing Date is hereby designated as the "startup day" of
each REMIC Trust within the meaning of Section 860G(a)(9) of the Code.
(c) Each REMIC Trust shall, for federal income tax purposes,
maintain books on a calendar year basis and report income on an accrual
basis.
(d) Each REMIC Trust shall elect to be treated as a REMIC under
Section 860D of the Code. Any inconsistencies or ambiguities in this
Agreement or in the administration of each REMIC Trust shall be resolved in a
manner that preserves the validity of such election to be treated as a REMIC.
The Pre-Funding Account and Capitalized Interest Account shall not
be part of the segregated pools of assets which together constitute the REMIC
Trusts, although such Accounts shall constitute part of the Trust Estate.
(e) With respect to each REMIC Trust, the Trustee shall provide to
the Internal Revenue Service (the "IRS") and to the Person described in
Section 860E(e)(3) and (6) of the Code the information described in Treasury
Regulation Section 1.860D-1(b)(5)(ii), or any successor regulation thereto
and the Trustee shall be reimbursed by such Person for the cost of providing
such information. Such information will be provided in the manner described
in Treasury Regulation Section 1.860E-2(a)(5), or any successor regulation
thereto. The Trustee shall have no responsibility or liability for incorrect
information supplied to the IRS where such information was supplied to the
Trustee by the Servicer, and the Trustee shall have no responsibility or
liability for information required to be supplied to the IRS and not so
supplied where such information was known to the Servicer and not supplied by
it despite the Trustee's request for such information.
(f) The assumed final Distribution Dates for the Group I and Group
II Certificates are as follows:
Class A-1: April 25, 2012
Class A-2: July 25, 2017
Class A-3: July 25, 2028
Class A-4: July 25, 2028
Class A-5: July 25, 2028
Class M-1F: July 25, 2028
Class M-2F: July 25, 2028
Class M-1A: July 25, 2028
Class M-2A: July 25, 2028
Class B-1F: July 25, 2028
Class B-1A: July 25, 2028
SECTION 2.13. Subsequent Transfers.
(a) Subject to the satisfaction of the conditions set forth in
Article II hereof and paragraph (b) below and pursuant to the terms of the
related Subsequent Transfer Agreement, in consideration of the Trustee's
delivery on each Subsequent Transfer Date to or upon the order of the Seller
of all or a portion of the balance of funds in the Pre-Funding Account, the
Seller shall on such Subsequent Transfer Date sell, transfer, assign, set
over and otherwise convey without recourse to the Trustee, all of the
Seller's right, title and interest in and to each related Subsequent Mortgage
Loan listed in the Mortgage Loan Schedule delivered by the Seller on such
Subsequent Transfer Date for inclusion in Group I, including (i) the related
Loan Balance, all interest payments due after the related Subsequent Cut-Off
Date and all collections in respect of principal received after such
Subsequent Cut-Off Date; (ii) any real property that secured such Subsequent
Mortgage Loan and that has been acquired by foreclosure or deed in lieu of
foreclosure; (iii) its interest in any insurance policies in respect of such
Subsequent Mortgage Loan; and (iv) all proceeds of the foregoing to the
Trustee. The transfer by the Seller to the Trustee of the Subsequent
Mortgage Loans set forth in the Subsequent Mortgage Loan Schedule shall be
absolute and shall be intended by all parties hereto to be treated as a sale
by the Seller to the Trust. If the assignment and transfer of the Subsequent
Mortgage Loans and the other property specified in this Section 2.13 from the
Seller to the Trust pursuant to this Agreement is held or deemed not to be a
sale or is held or deemed to be a pledge of security for a loan, the Seller
intends that the rights and obligations of the parties shall be established
pursuant to the terms of this Agreement and that, in such event, (i) the
Seller shall be deemed to have granted and does hereby grant to the Trustee
as of each Subsequent Transfer Date a perfected, first priority security
interest in the entire right, title and interest of the Seller in and to the
related Subsequent Mortgage Loans and all other property conveyed to the
Trustee pursuant to this Section 2.13 and all proceeds thereof, and (ii) this
Agreement shall constitute a security agreement under applicable law. The
amount released from the Pre-Funding Account shall be one hundred percent
(100%) of the aggregate of the applicable Cut-Off Date Loan Balances of the
Subsequent Mortgage Loans so transferred.
(b) The Trustee shall contribute from the Pre-Funding Account
funds in an amount equal to one hundred percent (100%) of the aggregate of
the applicable Cut-Off Date Loan Balances of the Subsequent Mortgage Loans so
transferred to the Trust and use such cash to purchase the Subsequent
Mortgage Loans on behalf of the Trustee, along with the other property and
rights related thereto described in paragraph (a) above only upon the
satisfaction of each of the following conditions on or prior to each
Subsequent Transfer Date:
(i) the Seller shall have provided the Trustee and the Rating
Agencies with an Addition Notice, which notice shall be given not less
than two Business Days prior to such Subsequent Transfer Date and shall
designate the Subsequent Mortgage Loans to be sold to the Trust and the
aggregate Cut-Off Date Loan Balance of such Mortgage Loans;
(ii) the Seller shall have deposited in the Collection Account (A)
all principal collected after such Cut-Off Date and interest payments
due after such Cut-Off Date but collected on or before such Cut-Off Date
in respect of each Subsequent Mortgage Loan and (B) the related
Subsequent Cut-Off Date Deposit;
(iii) the Seller shall have delivered an Officer's Certificate
to the Trustee confirming that, as of each Subsequent Transfer Date, the
Seller was not insolvent, nor would it be made insolvent by such
transfer, nor was it aware of any pending insolvency;
(iv) the Pre-Funding Period shall not have ended;
(v) the Seller shall have delivered to the Trustee an Officer's
Certificate confirming the satisfaction of each condition precedent
specified in this paragraph (b) and in the related Subsequent Transfer
Agreement;
(vi) the Seller shall have delivered an Officer's Certificate to
the Trustee confirming that the representations and warranties of the
Seller pursuant to Section 2.07 hereof (other than subsections (m), (w),
(y), (cc), (dd), (ll), (mm), (uu) (zz), (ccc) and (eee) to the extent
the representations and warranties in such subsections relate to
statistical information as to the characteristics of the Initial
Mortgage Loans in the aggregate) and Section 2.08 hereof are true and
correct with respect to the Seller and the Subsequent Mortgage Loans, as
applicable, as of the Subsequent Transfer Date;
(vii) the Seller shall have provided the Rating Agencies and
the Trustee with an Opinion of Counsel relating to the sale of the
Subsequent Mortgage Loans to the Trustee;
(viii) the Trust shall not purchase a Subsequent Mortgage Loan
unless the Seller obtains the prior written consent of each Rating
Agency, which consent may not be unreasonably withheld;
(ix) (reserved); and
(x) in connection with the transfer and assignment of the
Subsequent Mortgage Loans, the Seller shall satisfy the document
delivery requirements set forth in Section 2.04 hereof.
(c) In connection with each Subsequent Transfer Date and on the
related Distribution Date, the Trustee shall determine (i) the amount and
correct dispositions of the Capitalized Interest Requirement and Pre-Funding
Account Earnings for such Distribution Date in accordance with the provisions
of this Agreement and (ii) any other necessary matters in connection with the
administration of the Pre-Funding Account and of the Capitalized Interest
Account. In the event that any amounts are released by the Trustee from the
Pre-Funding Account or from the Capitalized Interest Account as a result of
calculation error, the Trustee shall not be liable therefor, and the Seller
shall immediately repay such amounts to the Trustee.
(d) The Trustee shall acknowledge receipt on each Subsequent
Transfer Date of the Subsequent Mortgage Loans delivered to it on such date
and within five Business Days after such receipt shall, as specified in
Section 2.04 hereof, review the documents required to be delivered pursuant
to Section 2.13(b)(x) hereof (or shall cause such documents to be reviewed)
and shall deliver to Cityscape, the Depositor and the Servicer, with respect
to such Subsequent Mortgage Loans, a certification substantially similar to
the one prepared by the Trustee pursuant to the second paragraph of Section
2.05 hereof. After the delivery of each such certification, the Trustee
shall provide to the Servicer, Cityscape and the Depositor, no less
frequently than quarterly, updated certifications in the form attached hereto
as Exhibit F-3, indicating the then current status of exceptions to the
Mortgage Files of the related Subsequent Mortgage Loans until all such
exceptions have been eliminated.
SECTION 2.14. Mandatory Prepayment.
Any Unutilized Funding Amount shall be distributed to Holders of
the Group I Certificates in accordance with Section 4.08 hereof on the
Distribution Date immediately following the Due Period in which the end of
the Funding Period occurs.
ARTICLE III
ADMINISTRATION AND SERVICING
OF THE TRUST
SECTION 3.01. Administration of the Trust; Servicing of the
Mortgage Loans.
(a) The parties hereto intend that each REMIC Trust shall
constitute, and that the affairs of each REMIC Trust shall be conducted so as
to qualify it as, a REMIC in accordance with the REMIC Provisions. In
furtherance of such intention, each of the parties hereto covenants and
agrees that it shall not knowingly take any actions or omit to take any
actions that would disqualify either Group for REMIC election or status and
the Trustee covenants and agrees that it shall act, in its capacity as agent
of the Tax Matters Person, as agent for each REMIC Trust and as agent of the
"tax matters person" (as defined in the REMIC Provisions) and that in such
capacity it shall: (i) prepare or cause to be prepared, execute and file, in
a timely manner, an annual Tax Return and any other Tax Return required to be
filed by the Trust established hereunder using a calendar year as the taxable
year for each REMIC Trust established hereunder; (ii) in each related first
such Tax Return, make (or cause to be made) an election with respect to the
related Group satisfying the requirements of the REMIC Provisions, on behalf
of the Trust, to be treated as a REMIC; (iii) prepare and forward, or cause
to be prepared and forwarded, to the Certificateholders all information,
reports or Tax Returns required with respect to each REMIC Trust as, when and
in the form required to be provided to the Certificateholders and to the
Internal Revenue Service and any other relevant governmental taxing authority
in accordance with the REMIC Provisions and any other applicable federal,
state or local laws, including, without limitation, information reports
relating to "original issue discount" as defined in the Code based upon the
Prepayment Assumption and calculated by using the "Issue Price" (within the
meaning of Section 1275 of the Code) of the Certificates of the related
Class; (iv) not knowingly take any action or omit to take any action that
would cause the termination of the REMIC status of each REMIC Trust, except
as provided under this Agreement; (v) pay, from the sources specified in the
last paragraph of this Section 3.01(a), the amount of any and all other
federal, state and local taxes imposed on each REMIC Trust, its assets or
transactions, including, without limitation, the tax on "prohibited
transactions" imposed by Section 860F of the Code, the tax on "contributions"
imposed by Section 860G(d) of the Code and the tax on "net income from
foreclosure property" imposed by Section 860G(c) of the Code when and as the
same shall be due and payable (but such obligation shall not prevent the
Trustee or any other appropriate Person from contesting any such tax in
appropriate proceedings and shall not prevent the Trustee from withholding
payment of such tax, if permitted by law, pending the outcome of such
proceedings); (vi) represent the Trust in any administrative or judicial
proceedings relating to an examination or audit by any governmental taxing
authority, request an administrative adjustment as to a taxable year of the
Trust, enter into settlement agreements with any governmental taxing agency,
extend any statute of limitations relating to any tax item of the Trust, and
otherwise act on behalf of the Trust in relation to any tax matter involving
the Trust; (vii) comply with all statutory or regulatory requirements with
regard to its conduct of activities pursuant to the foregoing clauses of this
Section 3.01(a), including, without limitation, providing all notices and
other information to the Internal Revenue Service and Holders of Class R
Certificates required of a "tax matters person" pursuant to subtitle F of the
Code and the Treasury Regulations thereunder; and (viii) make available
information necessary for the computation of any tax imposed (A) on a
transferor of residual interests to certain Disqualified Organizations or
(B) on pass-through entities, any interest in which is held by a Disqualified
Organization. The obligations of the Trustee pursuant to this Section
3.01(a) shall survive the termination or discharge of this Agreement.
In order to enable the Trustee to perform its duties as set forth
herein, Cityscape shall provide or cause to be provided to the Trustee or its
designee, within ten (10) days after the Closing Date, all information or
data that the Trustee or its designee reasonably determines to be relevant
for tax purposes as to the valuations and offering prices of the
Certificates, including, without limitation, the price, yield, Prepayment
Assumption and projected cash flows of the Certificates and the Mortgage
Loans. Thereafter, Cityscape shall provide to the Trustee, promptly upon
request therefor, any such additional information or data that the Trustee
may from time to time reasonably request in order to enable the Trustee to
perform its duties as set forth herein. Cityscape shall indemnify the
Trustee and hold it harmless for any loss, liability, damage, claim or
expense of the Trustee arising from any failure of it to provide, or to cause
to be provided, on a timely basis in response to the reasonable requests of
the Trustee made pursuant to this paragraph, accurate information or data to
the Trustee. The indemnification provisions hereunder shall survive the
termination of this Agreement.
In the event that any tax is imposed on "prohibited transactions"
of either REMIC Trust as defined in Section 860F(a)(2) of the Code, on the
"net income from foreclosure property" of either REMIC Trust as defined in
Section 860G(c) of the Code, on any gain recognized by either REMIC Trust
pursuant to Section 860F(c) of the Code, on any contribution to either REMIC
Trust after the Startup Date pursuant to Section 860G(d) of the Code, or any
other tax is imposed, if not paid as otherwise provided for herein, such tax
shall be paid by (i) the Trustee, if any such tax arises out of or results
from the willful malfeasance, bad faith or negligence in the performance by
the Trustee of any of its obligations under this Section 3.01(a), (ii) the
Servicer or the Depositor, as applicable, if such tax arises out of or
results from a breach by the Servicer or the Depositor of any of their
respective obligations under this Agreement or (iii) in all other cases, or
in the event that the Trustee, the Servicer or the Depositor fails to honor
its obligations under the preceding clauses (i) or (ii), any such tax will be
paid with amounts otherwise to be distributed to the Holders of the related
Class R Certificates pursuant to Section 4.04(b)(V) hereof or, in the event
of an insufficiency in such amounts, such tax shall be paid directly by such
Class R Certificateholders.
(b)(i) The Servicer shall service and administer the Mortgage
Loans in accordance with the terms of this Agreement and the respective
Mortgage Loans and in accordance with the instructions of the Trustee.
Unless otherwise specified herein with respect to specific obligations
of the Servicer, the Servicer shall service and administer the Mortgage
Loans in the best interests of and for the benefit of the Holders in
accordance with Accepted Servicing Procedures. To the extent consistent
with the foregoing, the Servicer also shall seek to maximize the timely
and complete recovery of principal and interest on the Mortgage Notes.
Subject only to the above-described servicing standards and the terms of
this Agreement and the respective Mortgage Loans, the Servicer shall
have full power and authority, acting alone and/or through Sub-Servicers
as provided in Section 3.02 hereof, to do or cause to be done any and
all things in connection with such servicing and administration which it
may deem necessary or desirable. The Servicer shall promptly notify the
Depositor, the Trustee and each Rating Agency in writing of (A) any
event, circumstance or occurrence which may materially and adversely
affect the ability of the Servicer to service any Mortgage Loan or
otherwise to perform and carry out its duties, responsibilities and
obligations under and in accordance with this Agreement and (B) any
attempt by a court or by a regulatory authority of which it has actual
knowledge to assert jurisdiction over the Trust.
Without limiting the generality of the foregoing, the Servicer, in its
own name or in the name of a Sub-Servicer, is hereby authorized and
empowered, when the Servicer believes it appropriate in its best
judgment and subject to the requirements of Section 3.07 hereof, to
execute and deliver, on behalf of the Certificateholders and the Trust
or any of them, and upon notice to the 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
Mortgage 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 Certificateholders. The
Servicer shall service and administer the Mortgage Loans in accordance
with applicable state and federal law and shall provide to the
Mortgagors any reports required to be provided to them thereby. Subject
to Section 3.16 hereof, the Trustee shall execute, at the written
direction of the Servicer, any limited or special powers of attorney and
other documents reasonably acceptable to the Trustee to enable the
Servicer or any Sub-Servicer to carry out their servicing and
administrative duties hereunder, including, without limitation, limited
or special powers of attorney with respect to any REO Property, and the
Trustee shall not be accountable, or have any liability, for the actions
of the Servicer or any Sub-Servicers under such powers of attorney.
(ii) Subject to Section 3.24 hereof and in accordance with the
standards of the preceding paragraph, the Servicer shall make, or cause
to be made, Servicing Advances as necessary for the purpose of effecting
the payment of taxes, assessments and insurance premiums on the
Mortgaged Properties which Servicing Advances shall be made in a timely
fashion so as to not adversely affect the value of the Mortgaged
Property or the interests of the Certificateholders and which Servicing
Advances shall be reimbursable in the first instance from related
collections from the Mortgagors pursuant to Section 3.09 hereof, and
further as provided in Section 3.11 hereof; provided, however, that the
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Servicer shall not be required to make any Nonrecoverable Servicing Advance,
as evidenced by a certification of a Servicing Officer delivered to the
Trustee. Any cost incurred by the Servicer or by Sub-Servicers in effecting
the timely payment of taxes, assessments and insurance premiums on a
Mortgaged Property shall not, for the purpose of calculating distributions to
Certificateholders, be added to the Loan Balance of the related Mortgage
Loan, notwithstanding that the terms of such Mortgage Loan so permit.
(iii) Notwithstanding anything in this Agreement to the contrary,
the Servicer shall not make any future advances to the Mortgagor with
respect to a Mortgage Loan, and the Servicer shall not permit any
modification with respect to any Mortgage Loan that would change the
Mortgage Rate, reduce or increase the principal balance or change the
maturity date on such Mortgage Loan, unless the Mortgagor is in default
with respect to the Mortgage Loan or such default is, in the judgment of
the Servicer, imminent.
(iv) All accounting and loan servicing records pertaining to each
Mortgage Loan shall be maintained in such manner as will permit the
Trustee, the Depositor, the Certificateholders or their duly authorized
representatives and designees to examine and audit and make legible
reproductions of records during reasonable business hours. All such
records shall be maintained until the termination of this Agreement or
such longer period as is required under applicable law, including, but
not limited to, all transaction registers and loan ledger histories.
The Servicer may delegate its responsibilities under this
Agreement; provided, however, that no such delegation shall release the
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Servicer from the responsibilities or liabilities arising under this
Agreement.
The Servicer's rights and obligations hereunder relate to each
Group of Mortgage Loans. If the Servicer is terminated solely with respect
to one Group of Mortgage Loans pursuant to Section 7.01 hereof, such
Servicer's rights and obligations with respect to the remaining Group shall
continue in full force and effect and a Successor Servicer shall be appointed
pursuant to Section 7.02 hereof with respect to the Group as to which the
rights and obligations of such Servicer shall have been terminated. Any such
Successor Servicer with respect to one Group only shall have the same rights
and obligations with respect to such Group that the initial Servicer had with
respect to such Group, and all terms and provisions herein relating to the
Servicer shall be deemed to relate to each Servicer solely with respect to
the applicable Group, including the related Mortgage Loans and
Certificateholders.
SECTION 3.02. Sub-Servicing Agreements Between Servicer and Sub-
Servicers.
(a) The Servicer may enter into Sub-Servicing Agreements with Sub-
Servicers that (i) are authorized to transact business in the state or states
wherein the Mortgaged Properties related to the Mortgage Loans to be serviced
are situated, if and to the extent required by applicable law to enable the
Sub-Servicer to perform its obligations hereunder and under the Sub-Servicing
Agreement, (ii) have been designated an approved seller-servicer by FHLMC or
FNMA for first- and second-lien mortgage loans, (iii) have equity of at least
$5,000,000, as determined in accordance with generally accepted accounting
principles and (iv) are approved pursuant to the provisions of Section 3.26
hereof. The Servicer shall give the Trustee and the Rating Agencies prompt
notice of any such Sub-Servicing Agreements. Each Sub-Servicing Agreement
must impose on the Sub-Servicer requirements conforming to the provisions set
forth in Section 3.08 hereof and provide for servicing of the Mortgage Loans
in a manner consistent with the terms of this Agreement and be approved in
writing by the Rating Agencies. The Servicer and the Sub-Servicers may enter
into and make amendments to the Sub-Servicing Agreements or enter into
different forms of Sub-Servicing Agreements; provided, however, that any such
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amendments or different forms shall be consistent with and not violate the
provisions of this Agreement.
(b) As part of its servicing activities hereunder, the Servicer,
for the benefit of the Trustee, the Depositor and the Certificateholders,
shall enforce the obligations of each Sub-Servicer under the related Sub-
Servicing Agreement, including, without limitation, any obligation of the
Sub-Servicer to make advances in respect of delinquent Mortgage Loans as
required by the Sub-Servicing Agreement. Such enforcement, including,
without limitation, the legal prosecution of claims, termination of Sub-
Servicing Agreements and the pursuit of other appropriate remedies, shall be
in such form and carried out to such extent and at such time as the Servicer,
in its good faith business judgment, would require were it the owner of the
related Mortgage 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 Mortgage Loans, or
(ii) from a specific recovery of costs, expenses or attorneys' fees against
the Person against which such enforcement is directed. Anything contained in
this Agreement which restricts or prohibits the Servicer's right to
reimbursement or indemnity shall not apply to any reimbursement or indemnity
of the Servicer by any Sub-Servicer.
SECTION 3.03. Termination of Sub-Servicing Agreement.
The Servicer shall be entitled to terminate any Sub-Servicing
Agreement and the rights and obligations of any Sub-Servicer pursuant to any
Sub-Servicing Agreement in accordance with the terms and conditions of such
Sub-Servicing Agreement. In the event of termination of any Sub-Servicer,
and unless a successor Sub-Servicer shall otherwise have been appointed
pursuant to Section 3.26 hereof, all servicing obligations of such Sub-
Servicer shall be assumed simultaneously by the Servicer without any
additional act or deed on the part of such Sub-Servicer or the Servicer, and
the Servicer shall service directly the related Mortgage Loans.
Each Sub-Servicing Agreement shall include the provision that such
agreement may immediately be terminated by the Trustee in the event that the
Servicer shall, for any reason, no longer be the Servicer (including
termination due to a Servicer Default). In no event shall any Sub-Servicing
Agreement require the Trustee, as Successor Servicer, for any reason
whatsoever, to pay compensation to a Sub-Servicer in order to terminate such
Sub-Servicer.
SECTION 3.04. Liability of the Servicer.
Notwithstanding any Sub-Servicing Agreement, any of the provisions
of this Agreement relating to agreements or arrangements between the Servicer
and a Sub-Servicer, including, without limitation, any provisions to the
effect that the Sub-Servicer is acting for the benefit of the
Certificateholders, or reference to actions taken through a Sub-Servicer or
otherwise, the Servicer shall remain obligated and primarily liable to the
Trustee and the Certificateholders for the servicing and administration of
the Mortgage Loans in accordance with the provisions of this Article III
without diminution of such obligation or liability by virtue of such Sub-
Servicing Agreements or arrangements, or by virtue of indemnification from
the Sub-Servicer and to the same extent and under the same terms and
conditions as if the Servicer alone were servicing and administering the
Mortgage Loans. The Servicer shall be entitled to enter into any agreement
with a Sub-Servicer for indemnification of the Servicer by such Sub-Servicer
and nothing contained in this Agreement shall be deemed to limit or modify
such indemnification.
SECTION 3.05. No Contractual Relationship Between Sub-Servicers
and Trustee or Certificateholders.
Any Sub-Servicing Agreement that may be entered into and any
transactions or services relating to the Mortgage Loans involving a Sub-
Servicer in its capacity as such and not as an originator shall be deemed to
be between the Sub-Servicer and the Servicer alone, and the Trustee and the
Certificateholders shall not be deemed parties thereto and shall have no
claims, rights, obligations, duties or liabilities with respect to the Sub-
Servicer except as set forth in Section 3.06 hereof notwithstanding any
provisions hereof or in any Sub-Servicing Agreement to the effect that the
Sub-Servicer is acting for the benefit of the Certificateholders. The
Servicer shall be solely liable for all fees owed by it to any Sub-Servicer,
irrespective of whether the Servicer's compensation pursuant to this
Agreement is sufficient to pay such fees.
SECTION 3.06. Assumption or Termination of Sub-Servicing
Agreements by Trustee.
In the event the Servicer shall for any reason no longer be the
Servicer (including by reason of a Servicer Default), the Trustee or any
designee consented to by the Majority Certificateholders shall thereupon
assume all of the rights and obligations of the Servicer under each Sub-
Servicing Agreement that the Servicer may have entered into, unless the
Trustee elects to terminate any Sub-Servicing Agreement and provided that the
Trustee shall not be required to assume any obligation to pay compensation to
any Sub-Servicer in order to terminate any such Sub-Servicer. To the extent
any Sub-Servicing Agreement is not so terminated, the Trustee, its designee
or the successor servicer for the Trustee appointed pursuant to Section 7.02
hereof shall be deemed to have assumed all of the Servicer's interest therein
and to have replaced the Servicer as a party to each Sub-Servicing Agreement
to the same extent as if each Sub-Servicing Agreement had been assigned to
the assuming party, except that the Servicer shall not thereby be relieved of
any liability or obligations under any Sub-Servicing Agreement with regard to
events occurring prior to the date the Servicer ceased to be the servicer
hereunder.
The Servicer at its expense shall, upon request of the Trustee,
promptly deliver to the assuming party all documents and records relating to
each Sub-Servicing Agreement and the Mortgage 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 Sub-Servicing
Agreements to the assuming party.
SECTION 3.07. Collection of Certain Mortgage Loan Payments.
The Servicer shall make reasonably diligent efforts to collect all
payments called for under the terms and provisions of the Mortgage 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 Mortgage Note 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;
provided, however, that such extension shall not result in the imposition of
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a tax on a "prohibited transaction" of the Trust or affect the qualification
of the Trust as a REMIC. Notwithstanding anything in this Agreement to the
contrary, the Servicer shall not permit any additional extension or
modification with respect to any Mortgage Loan other than that permitted by
the immediately preceding sentence unless the Mortgage Loan is in default or,
in the judgment of the Servicer, default is imminent.
No such extension or modification shall affect the amortization of
any Mortgage Loan for the purposes of any computation hereunder. In the
event of any such extension or modification, the Servicer shall make timely
Delinquency Advances on the related Mortgage Loan during the period of such
extension or modification.
SECTION 3.08. Sub-Servicing Accounts.
In those cases where a Sub-Servicer is servicing a Mortgage Loan
pursuant to a Sub-Servicing Agreement, the Sub-Servicer will be required to
establish and maintain one or more accounts (collectively, the "Sub-Servicing
Account"). The Sub-Servicing Account shall be an Eligible Account. The
Sub-Servicer will be required to deposit into the Sub-Servicing Account no
later than the first Business Day after receipt all proceeds of Mortgage
Loans received by the Sub-Servicer, less its servicing compensation to the
extent permitted by the Sub-Servicing Agreement, and to remit such proceeds
to the Servicer for deposit in the Collection Account not later than the
second Business Day following receipt thereof by the Sub-Servicer.
Notwithstanding anything in this Section 3.08 to the contrary, the Sub-
Servicer shall only be able to withdraw funds from the Sub-Servicing Account
for the purpose of remitting such funds to the Servicer for deposit into the
Collection Account. The Servicer shall require the Sub-Servicer to cause any
collection agent of the Sub-Servicer to send a copy to the Servicer of each
statement of Monthly Payments collected by or on behalf of the Sub-Servicer
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 Sub-Servicer into the Collection Account for the same period. For
purposes of this Agreement other than Section 3.10 hereof, the Servicer shall
be deemed to have received payments on the Mortgage Loans on the date on
which the Sub-Servicer receives such payments.
SECTION 3.09. Collection of Taxes, Assessments and Similar Items;
Servicing Accounts.
The Servicer may and, if required by the Servicer, the Sub-
Servicers shall, establish and maintain one or more accounts (each, a
"Servicing Account"), into which any collections from the Mortgagors (or
related advances from Sub-Servicers) for the payment of taxes, assessments,
hazard insurance premiums and comparable items for the account of the
Mortgagors 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 Sub-Servicer to the extent provided in the related Sub-Servicing
Agreement) out of related collections for any advances made pursuant to
Section 3.01(b) hereof (with respect to taxes, assessments and insurance
premiums) and Section 3.13, hereof (with respect to hazard insurance);
(iii) refund to Mortgagors any sums as may be determined to be overages; (iv)
pay interest, if required and as described below, to Mortgagors on balances
in the Servicing Accounts; or (v) clear and terminate the Servicing Accounts
at the termination of this Agreement in accordance with Section 10.01 hereof.
As part of its servicing duties, the Servicer or Sub-Servicers shall pay to
the Mortgagors 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 Trustee, the
Depositor or any Certificateholder therefor. Upon request of the Trustee or
Cityscape, the Servicer shall cause the bank, savings association or other
depository for each Servicing Account to forward to the Trustee copies of
such statements or reports as the Trustee, the Depositor, the Underwriters or
any Certificateholder shall reasonably request.
SECTION 3.10. Collection Account.
(a) The Servicer shall establish and maintain one or more accounts
to conform to the definition of Collection Account, held in the name of the
Cityscape Home Equity Loan Trust, Series 1997-C on behalf of the Trustee in
trust for the benefit of the Certificateholders, as their interests may
appear. The establishment of the Collection Account shall be evidenced by a
certification of the Servicer in the form attached hereto as Exhibit G. The
Servicer shall deposit or cause to be deposited into the Collection Account
as soon as practicable, but in no event later than the close of business on
the second Business Day after its receipt thereof (or, if applicable, on or
prior to the date otherwise specified herein), the following payments and
collections received or required to be made by it subsequent to the Cut-Off
Date (other than the amounts described in the penultimate paragraph of this
Section 3.10(a) due and owing on or prior to the Cut-Off Date):
(i) all payments on account of principal, including Principal
Prepayments, on the Mortgage Loans in each Group;
(ii) all payments on account of interest on each Mortgage Loan in
each Group;
(iii) any Delinquency Advances with respect to Mortgage Loans in
each Group, as required pursuant to Section 4.06 hereof;
(iv) any amounts required to be deposited pursuant to Section 3.23
hereof by the Servicer in connection with any Prepayment Interest
Shortfalls in respect of the Mortgage Loans in each Group;
(v) with respect to each Mortgage Loan, all Liquidation Proceeds
and Property Insurance Proceeds, if any, in respect thereof, net of
(w) all related unreimbursed Servicing Advances and Delinquency
Advances, if any, (x) all related accrued and unpaid Servicing Fees, if
any, (y) the amount, if any, by which the Net Recovery Proceeds, if any,
in respect thereof exceeds the related Loan Balance, and (z) without
duplication, all related liquidation expenses;
(vi) any amounts required to be deposited by the Servicer pursuant
to the fourth paragraph of Section 3.13 hereof in respect of any blanket
policy deductibles;
(vii) all Purchase Prices paid by Cityscape or the Servicer in
respect of the Mortgage Loans in each Group;
(viii) all Substitution Shortfall Amounts paid by Cityscape or the
Servicer in respect of the Mortgage Loans in each Group; and
(ix) any amounts required to be deposited by the Servicer pursuant
to subsection (b) below in respect of investment losses.
For purposes of the immediately preceding sentence, the Cut-Off Date with
respect to any Qualified Substitute Mortgage Loan shall be deemed to be the
date of substitution, but the unpaid principal balance of such Qualified
Substitute Mortgage Loan shall not include the principal portion of any
Monthly Payment made, or the scheduled principal portion of any Monthly
Payment that was due to be made but was not received by the Servicer, in such
month of substitution.
The Servicer shall maintain a record of all deposits to the
Collection Account on a Group-by-Group basis.
Notwithstanding any other provision herein, the amounts of
principal collected and interest payments due on the Mortgage Loans on or
before the Cut-Off Date need not be deposited into the Collection Account by
the Servicer.
The foregoing requirements for deposit in the Collection Account
shall be exclusive, it being understood and agreed that, without limiting the
generality of the foregoing, payments in the nature of prepayment or late
payment charges, penalty interest, extension fees, modification fees,
assumption fees or insufficient-funds charges need not be deposited by the
Servicer into the Collection Account.
(b) Not later than 12:00 noon, New York time, on each Servicer
Remittance Date the Servicer shall deposit in the Collection Account the
amount of any net loss incurred in connection with the investment of funds in
the Collection Account since the prior Servicer Remittance Date; such amounts
shall be funded from the Servicer's own funds without any right to
reimbursement. The Servicer shall give prompt notice to each of the Rating
Agencies and the Underwriters of the amount of any such net loss.
(c) Funds in the Collection Account shall be invested in Permitted
Investments in accordance with the provisions set forth in Section 3.12
hereof. The Servicer shall give notice to the Trustee, the Underwriters, the
Certificateholders, Cityscape and the Depositor of the location of the
Collection Account on or before the Closing Date, and prior to any change
thereof.
(d) Funds held in the Collection Account at any time may be
delivered by the Servicer to the Trustee for deposit in the Certificate
Account and for all purposes of this Agreement shall be deemed to be a part
of the Collection Account.
SECTION 3.11. Withdrawals from the Collection Account.
The Servicer, or the Trustee at the written request of the
Servicer, shall, from time to time, make withdrawals from the Collection
Account for any of the following purposes:
(i) to deposit into the Certificate Account prior to 12:00 noon,
New York time, on the second Business Day immediately preceding each
Distribution Date (after having received Delinquency Advances for such
period):
(A) with respect to each Group, the related Interest
Remittance Amount; and
(B) with respect to each Group, an amount with respect to
principal (with respect to such Group, the "Principal Remittance
Amount") equal to (I) the sum, without duplication, of the amounts
described in Section 3.10(a)(i) for such Group, Section 3.10(a)(v)
for such Group remaining after prior application thereof to all
accrued and unpaid interest on the related Mortgage Loan (but not
in excess of the then-outstanding Loan Balance of the related
Mortgage Loan), Section 3.10(a)(vi) for such Group (insofar as such
amounts relate to principal), Section 3.10(a)(vii) for such Group
(insofar as such amounts relate to principal) and Section
3.10(a)(viii) for such Group (insofar as such amounts relate to
principal), in each case to the extent actually received in the
related Due Period, minus (II) the amounts described in clause
(iii) of this Section 3.11 for such Group (insofar as such amounts
relate to principal) withdrawn by the Servicer from the Collection
Account since the prior Servicer Remittance Date (or, in the case
of the first Servicer Remittance Date, since the Closing Date);
(ii) to pay to the Servicer (x) when collected on the related
Mortgage Loan, all recovered and previously unreimbursed Delinquency
Advances, Servicing Advances, prepayment penalties and, as servicing
compensation, the Servicing Fee, (y) any interest or investment income
earned on funds deposited in the Collection Account (net of investment
losses) and (z) all amounts in the nature of prepayment or late payment
charges, penalty interest, extension fees, modification fees, assumption
fees or insufficient-funds charges;
(iii) to pay to the Servicer or Cityscape, as the case may be, with
respect to each Mortgage Loan that has previously been purchased or
replaced pursuant to Section 2.06 or Section 3.15(c) hereof all amounts
received thereon in any month subsequent to the month of such purchase
or substitution, as the case may be;
(iv) to reimburse the Servicer for any Delinquency Advance or
Servicing Advance previously made that the Servicer has determined to be
a Nonrecoverable Delinquency Advance or a Nonrecoverable Servicing
Advance;
(v) to reimburse the Servicer or the Trustee, as the case may be,
for expenses reasonably incurred in respect of the breach or defect
giving rise to the purchase obligation under Section 2.06 hereof that
were included in the Purchase Price of the Mortgage Loan, including any
expenses arising out of the enforcement of the purchase obligation, but
only to the extent included in the related Purchase Price;
(vi) to pay to the Servicer the excess, if any, of any Net Recovery
Proceeds over the Loan Balance of the related Mortgage Loan, to the
extent any such excess was deposited into the Collection Account;
(vii) to withdraw any amount not required to be deposited into the
Collection Account, which amount shall include all interest payments as
to which the related Due Date occurs on or prior to the Cut-Off Date;
(viii) to clear and terminate the Collection Account pursuant to
Section 10.01 hereof;
(ix) in the event of a prepayment or satisfaction of a Mortgage
Loan, to pay the refunds and expenses to which the Mortgagor is entitled
as set forth on requests submitted by the Servicer, which requests shall
be substantially in the form of Exhibit O attached hereto; and
(x) to reimburse Cityscape, the Depositor and the Servicer for
losses, liabilities, costs and expenses reimbursable to them pursuant to
Section 6.03 hereof.
SECTION 3.12. Investment of Funds in the Accounts.
(a) The Servicer may direct in writing any depository institution
maintaining the Collection Account, Certificate Account, Distribution
Account, Pre-Funding Account or Capitalized Interest Account to invest the
funds held therein in one or more Permitted Investments bearing interest or
sold at a discount, and maturing, unless payable on demand, (i) if such
Permitted Investments are not obligations of the institution maintaining the
account from which the funds are required to be withdrawn, no later than the
Business Day immediately preceding the earliest date on which such funds may
be required to be withdrawn from such account pursuant to this Agreement but
in no event later than the Business Day immediately preceding the next
Distribution Date, and (ii) if such Permitted Investments are obligations of
the institution maintaining the account from which the funds are required to
be withdrawn, no later than the earliest date on which such funds may be
required to be withdrawn from such account pursuant to this Agreement or, in
the case of the Pre-Funding Account and the Capitalized Interest Account, the
date on which the Seller so designates, but in no event later than the next
Distribution Date. All such Permitted Investments shall be held to maturity,
unless payable on demand.
If the Servicer, with respect to the Collection Account,
Certificate Account, Distribution Account, Pre-Funding Account or Capitalized
Interest Account, does not provide investment directions to the depository
institution with respect to the funds on deposit therein, such funds shall be
invested in the Permitted Investments specified in clause (v) of the
definition thereof, which may be administered by an affiliate of such
depository institution.
Any investment of funds on deposit in any Account shall be made in
the name of the Trustee, in trust for the benefit of the Certificateholders.
With respect to any Account held by the Trustee, the Trustee shall have sole
control (except with respect to investment direction) over each such
investment, and any certificate or other instrument evidencing any such
investment shall be delivered directly to the Trustee or its agent, together
with any document of transfer necessary to transfer title to such investment
to the Trustee or its nominee. In the event amounts from funds on deposit in
any Account are at any time invested in a Permitted Investment payable on
demand, the Trustee shall:
(x) consistent with any notice required to be given thereunder,
demand that payment thereon be made on the last day such Permitted
Investment may otherwise mature hereunder in an amount equal to the
lesser of (1) all amounts then payable thereunder and (2) the amount
required to be withdrawn on such date; and
(y) demand payment of all amounts due thereunder promptly by a
Responsible Officer of the Trustee having actual knowledge that such
Permitted Investment would not constitute a Permitted Investment.
(b) All net income and net gain realized from investment of funds
deposited in the Collection Account shall be for the benefit of the Servicer
and shall be subject to its withdrawal in accordance with Section 3.11
hereof. Net income or net gain realized from investment of funds deposited
in the Certificate Account shall be treated in accordance with Section
4.04(a) hereof.
(c) Except as otherwise expressly provided in this Agreement, if
any default occurs in the making of a payment due under any Permitted
Investment, or if a default occurs in any other performance required under
any Permitted Investment, the Trustee shall take such action as it is
directed in writing by the Servicer or Cityscape, as appropriate, to take in
order to enforce such payment or performance, including the initiation and
prosecution of appropriate proceedings; provided, however, that the Trustee
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shall be indemnified and reimbursed for any related costs, expenses, losses
or liabilities as provided in Section 8.05 hereof.
SECTION 3.13. Maintenance of Hazard Insurance and Errors and
Omissions and Fidelity Coverage.
The Servicer shall cause to be maintained for each Mortgage Loan,
with insurers meeting FNMA or FHLMC guidelines, hazard insurance with
extended coverage on the related Mortgaged Property in an amount which is at
least equal to the least of (a) the Loan Balance of such Mortgage Loan and
any First Lien, (b) the maximum insurable value of such Mortgaged Property
and (c) the amount necessary to compensate fully for any damage or loss to
the improvements which are a part of such property on a replacement cost
basis, in each case in an amount not less than such amount as is necessary to
avoid the application of any co-insurance clause contained in the related
hazard insurance policy. The Servicer shall also cause to be maintained, on
each Mortgaged Property that has become an REO Property, fire insurance with
extended coverage in an amount which is at least equal to the lesser of (i)
the maximum insurable value of such Mortgaged Property and (ii) the sum of
(a) the Loan Balance of the related Mortgage Loan and any First Lien at the
time such Mortgaged Property became an REO Property, (b) accrued interest at
the Mortgage Rate as of the time such Mortgaged Property became an REO
Property and (c) related Servicing Advances as of the time such Mortgaged
Property became an REO Property, in each case in an amount not less than such
amount as is necessary to avoid the application of any co-insurance clause
contained in the related fire insurance policy.
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 related
Mortgaged Property or amounts to be released to the Mortgagor in accordance
with Accepted Servicing Procedures, subject to the terms and conditions of
the related Mortgage and Mortgage Note) shall be deposited into the
Collection Account, subject to withdrawal pursuant to Section 3.11 hereof.
Any cost incurred by the Servicer in maintaining any such insurance
shall not, for the purpose of calculating distributions to
Certificateholders, be added to the Loan Balance of the related Mortgage
Loan, notwithstanding that the terms of such Mortgage Loan so permit. It is
understood and agreed that no earthquake or other additional insurance is to
be required of any Mortgagor 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 REO Property is located
at the time of origination of the Mortgage 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 least of (i) the sum of the Loan Balance of the related
Mortgage Loan and any First 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).
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 hazard losses on all of the
Mortgage Loans, it shall conclusively be deemed to have satisfied its
obligations as set forth in the first two sentences of this Section 3.13, it
being understood and agreed that such 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 Mortgage Loans, in which case
the Servicer shall, in the event that there shall not have been maintained on
the related Mortgaged Property or REO Property a policy complying with the
first two sentences of this Section 3.13, and there shall have been one or
more losses which would have been covered by such policy, deposit into the
Collection Account from its own funds the amount not otherwise payable under
the blanket policy because of such deductible clause without any right of
reimbursement therefor. In connection with its activities as administrator
and servicer of the Mortgage Loans, the Servicer agrees to prepare and
present, on behalf of itself, the Trustee and the Certificateholders, claims
under any such blanket policy in a timely fashion in accordance with the
terms of such policy.
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 either of them were the purchaser of the
Mortgage Loans. The Servicer shall also maintain a fidelity bond in the form
and amount that would meet the requirements of FNMA or FHLMC if either of
them were the purchaser of the Mortgage Loans. The Servicer shall be deemed
to have complied with this provision if an affiliate of the Servicer has such
errors and omissions and fidelity bond coverage and, by the terms of such
insurance policy or fidelity bond, the coverage afforded thereunder extends
to the Servicer. Any such errors and omissions policy and fidelity bond
shall not be canceled without thirty days' prior written notice to the
Trustee. Upon the request of the Trustee or any Certificateholder, 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 3.14. Enforcement of Due-on-Sale Clauses; Assumption
Agreements.
(a) 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 Mortgagor (whether by
absolute conveyance or by contract of sale, and whether or not the Mortgagor
remains or is to remain liable under the Mortgage Note and/or the Mortgage),
exercise its rights to accelerate the maturity of such Mortgage 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 Mortgage 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 Mortgage
Note and, to the extent permitted by applicable state law, the Mortgagor
remains liable thereon. The Servicer is also authorized to enter into a
substitution of liability agreement with such person, pursuant to which the
original Mortgagor is released from liability and such person is substituted
as the Mortgagor and becomes liable under the Mortgage Note; provided,
however, that no such substitution shall be effective unless such person
satisfies the underwriting criteria of the Servicer as of the date of
substitution which shall not be less restrictive than such criteria as set
forth in Exhibit M hereof. 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 Mortgage Note (including, but not limited to, the related Mortgage 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 Trustee that any such substitution or assumption agreement has been
completed by forwarding to the Trustee the original copy of such substitution
or assumption agreement, which copy shall be added to the related Mortgage
File and shall, for all purposes, be considered a part of such Mortgage File
to the same extent as all other documents and instruments constituting a part
thereof.
Notwithstanding the foregoing paragraph or any other provision
of this Agreement, the Servicer shall not be deemed to be in default, breach
or any other violation of its obligations hereunder by reason of any
assumption of a Mortgage Loan by operation of law or by the terms of the
Mortgage Note 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 3.14, 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 3.15. Realization upon Defaulted Mortgage Loans.
(a) The Servicer shall, consistent with the servicing standards
set forth in Section 3.01(b) hereof, foreclose upon or otherwise comparably
convert the ownership of properties securing such of the Mortgage Loans as
come into and continue in default and as to which no satisfactory
arrangements can be made for collection of delinquent payments pursuant to
Section 3.07 hereof. In connection with realization upon defaulted Mortgage
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 policies required to be maintained hereunder with respect to the
related Mortgage Loans. The Servicer shall be responsible for all costs and
expenses incurred by it in any such proceedings; provided, however, that such
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costs and expenses will be recoverable as Servicing Advances by the Servicer
as contemplated in this Section 3.15.
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 (a
copy of which certificate shall be delivered to each Rating Agency), that
such foreclosure or restoration, as the case may be, will increase the
proceeds of liquidation of the related Mortgage Loan after reimbursement to
itself for Servicing Advances. Any Servicing Advances made with respect to a
Mortgage Loan shall be recoverable by the Servicer only from recoveries on
such Mortgage Loan except to the extent such Servicing Advance is deemed a
Nonrecoverable Servicing Advance.
(b) Prior to conducting any sale in a foreclosure proceeding or
accepting a deed in lieu of foreclosure with respect to any Mortgaged
Property, the Servicer shall cause a review to be performed, in accordance
with Accepted Servicing Procedures, on the 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 under it, or is near, hazardous or toxic
material or waste. If such review reveals that the Mortgaged Property has on
it or under it, or is near, hazardous or toxic material or waste, or if such
review reveals any other environmental problem, the Servicer shall provide a
copy of the related report with an attached certification of a Responsible
Officer that, based on an analysis of all available information (including
cleanup costs and liability claims) at the time, it is the best judgment of
such Responsible Officer that such foreclosure will increase Net Recovery
Proceeds to the Trustee. The Trustee shall promptly forward such report and
certification to the Certificateholders.
(c) The Servicer may at its option purchase from the Trust any
Mortgage Loan which is 90 days or more Delinquent and will, in the Servicer's
in good faith determination (evidence of such determination to be delivered
in writing to the Trustee and Cityscape prior to purchase), otherwise become
subject to foreclosure proceedings, with such purchase to be effected at a
price equal to the Purchase Price; provided, however, that the aggregate Loan
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Balance of Mortgage Loans that may be purchased by the Servicer pursuant to
this Section 3.15(c) shall not exceed an amount equal to 10% of the Aggregate
Maximum Collateral Amount. The Purchase Price for any Mortgage Loan
purchased hereunder shall be deposited into the Collection Account and the
Trustee, upon (i) receipt of an Officer's Certificate of the Servicer as to
the making of such deposit and (ii) confirmation that such deposit has been
made, shall release or cause to be released to the Servicer the related
Mortgage File and shall execute and deliver such instruments of transfer or
assignment as are furnished by the Servicer, in each case without recourse,
as shall be necessary to vest in the Servicer title to any Mortgage Loan
released pursuant hereto, and the Trustee shall have no further
responsibility or liability (except as to its own acts) with regard to such
Mortgage Loan.
(d) Unless otherwise required pursuant to the Mortgage Note or
applicable law, any Property Insurance Proceeds or Liquidation Proceeds
received with respect to a Mortgage Loan or REO Property (other than any such
proceeds received in connection with a purchase by the Class R
Certificateholders of all the Mortgage Loans and REO Properties in the Trust
Estate pursuant to Section 10.01 hereof) will be allocated in the following
order of priority, in each case to the extent of available funds: first, to
pay property taxes and assessments; second, to reimburse the Servicer or any
Sub-Servicer for any related unreimbursed Servicing Advances and any related
unreimbursed Delinquency Advances theretofore funded by the Servicer or any
Sub-Servicer from its own funds, in each case, with respect to the related
Mortgage Loan; third, to accrued and unpaid interest on the Loan Balance of
the Mortgage Loan at the Mortgage Rate (or at such lesser rate as may be in
effect for such Mortgage Loan pursuant to application of the Civil Relief
Act), to the date of the Final Recovery Determination if one has been made,
or to the Due Date in the Due Period prior to the Distribution Date on which
such amounts are to be distributed if a Final Recovery Determination has not
been made, minus any accrued and unpaid Servicing Fees with respect to such
Mortgage Loan; fourth, to the extent of the Loan Balance of the Mortgage Loan
outstanding immediately prior to the receipt of such proceeds, as a recovery
of principal of the related Mortgage Loan; and fifth, to any prepayment or
late payment charges or penalty interest payable in connection with the
receipt of such proceeds and to all other fees and charges due and payable
with respect to such Mortgage Loan.
(e) The Servicer shall deliver to the Trustee, Cityscape and each
of the Rating Agencies on each Servicer Remittance Date a Liquidation Report
in the form annexed as Exhibit H hereto as well as an electromagnetic tape in
computer readable format (along with the Officers' Certificate referenced in
the definition of Final Recovery Determination) with respect to each Mortgage
Loan as to which the Servicer makes a Final Recovery Determination during the
related Due Period.
SECTION 3.16. Trustee to Cooperate; Release of Mortgage Files.
Upon the payment in full of any Mortgage Loan of a Servicing
Officer 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 Trustee by a certification of a Servicing Officer in the form of
Exhibit E-2 (which certification shall include a statement to the effect that
all amounts received or to be received in connection with such payment which
are required to be deposited into the Collection Account pursuant to Section
3.10 hereof have been or will be so deposited) and shall request delivery to
it of the Mortgage File. Upon receipt of such certification and request, the
Trustee shall promptly release the related Mortgage File to the Servicer.
The Servicer shall provide for preparation of the appropriate instrument of
satisfaction covering any Mortgage Loan which is paid in full and the Trustee
shall cooperate in the execution and return of such instrument and 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 Account or shall be otherwise chargeable to the Trust,
the Trustee or the Certificateholders.
From time to time and as appropriate for the servicing or
foreclosure of any Mortgage Loan, the Trustee shall, upon request of the
Servicer and delivery to the Trustee of a Request for Release in the form of
Exhibit E-1, release the related Mortgage File to the Servicer, and the
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 Mortgage File to the Trustee when the need
therefor by the Servicer no longer exists, unless the Mortgage Loan has been
liquidated and the Liquidation Proceeds or Property Insurance Proceeds
relating to the Mortgage Loan (net of the amounts, if any, described in
clauses (w), (x), (y) and (z) of Section 3.10(a)(v) hereof) have been
deposited in the Collection Account or the Mortgage 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
Trustee a certificate of a Servicing Officer certifying as to the name and
address of the Person to which such Mortgage 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 Mortgage 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 Trustee to the Servicer.
Upon written certification of a Servicing Officer, the 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 Mortgagor on the Mortgage Note or Mortgage or to
obtain a deficiency judgment, or to enforce any other remedies or rights
provided by the Mortgage Note or Mortgage or otherwise available at law or in
equity. Each such certification shall include a request that such pleadings
or documents be executed by the Trustee and a statement as to the reason such
documents or pleadings are required and that the execution and delivery
thereof by the 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.
SECTION 3.17. Servicing Compensation.
As compensation for the activities of the Servicer hereunder, the
Servicer shall be entitled to the Servicing Fee, subject to Section 3.23
hereof, with respect to each Mortgage Loan in the Group with respect to which
such Servicer is then acting as Servicer hereunder, payable from payments of
interest, Property Insurance Proceeds or Liquidation Proceeds in respect of
such Mortgage Loan and from amounts distributable in accordance with Section
4.04(b)(IV). The right to receive the Servicing Fee may not be transferred
in whole or in part except in connection with the transfer of all of the
Servicer's responsibilities and obligations under this Agreement with respect
to either Group or both Groups, as applicable, although any portion thereof
may be paid to a Sub-Servicer as provided in the related Sub-Servicing
Agreement.
Additional servicing compensation in the form of Net Recovery
Proceeds in excess of the Loan Balance of the related Mortgage Loan (if
permitted by applicable law), prepayment charges, penalty interest,
assumption fees, modification fees, insufficient-funds charges, late payment
charges or otherwise shall be retained by the Servicer only to the extent
such fees or charges are received by the Servicer (such amounts, "Additional
Servicing Compensation"). The Servicer shall also be entitled pursuant to
Section 3.11(a)(ii) hereof to interest or other investment income earned from
the investment of funds on deposit in the Collection Account as additional
servicing compensation. The Servicer shall be required to pay all expenses
incurred by it in connection with its servicing activities hereunder
(including, without limitation, (x) payment of premiums for the insurance
required by Section 3.13 hereof, to the extent such premiums are not paid by
the related Mortgagors or by a Sub-Servicer and (y) servicing compensation of
each Sub-Servicer) and shall not be entitled to reimbursement therefor except
as specifically provided herein.
SECTION 3.18. Reports to the Trustee; Collection Account
Statements.
(a) On or before each Determination Date, the Servicer shall
deliver to the Trustee (i) a computer-readable magnetic tape setting forth
the payments and collections received with respect to the Mortgage Loans
during the Due Period for the month immediately preceding the month in which
such Determination Date occurs (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) - (H), inclusive, of Section 4.05 hereof
for the month immediately preceding the month in which such Determination
Date occurs and such other information as the Trustee may request in order to
fulfill its Obligations hereunder (such report, a "Delinquency Report").
(b) If funds in the Collection Account during a Due Period have
been invested in investments other than bank deposits of the depository
institution maintaining the Collection Account or money market funds (as
described in the definition of Permitted Investments), then, on or before the
related Distribution Date, the Servicer shall forward to the Trustee and
Cityscape a statement in the form annexed hereto as Exhibit I setting forth
the activity in the Collection Account during the preceding calendar month.
SECTION 3.19. Statement as to Compliance and Financial Statements.
The Servicer will deliver to the Trustee, the Depositor and
Cityscape not later than 90 days following the end of each fiscal year
(beginning with the 1997 fiscal year) 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 officer 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 Underwriters on reasonable prior notice to inspect the
Servicer's servicing facilities during normal business hours for the purpose
of satisfying Depositor that the Servicer has the ability to service the
Mortgage 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 Mortgage Loans and (iv) the
performance of the obligations of any Sub-Servicer under the related Sub-
Servicing Agreement, in each case as the Trustee or the Depositor may
reasonably request from time to time.
SECTION 3.20. Independent Public Accountants' Servicing Report.
Not later than 90 days following the end of each fiscal year
(beginning with the 1997 fiscal year) 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, Cityscape and the Depositor to the effect that such firm has
examined certain documents and records relating to the servicing of the
Mortgage Loans under this Agreement or of mortgage loans under pooling and
servicing agreements (including the Mortgage 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 Attestation 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
Sub-Servicers, 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 Sub-Servicer.
SECTION 3.21. Access to Certain Documentation.
The Servicer shall provide to the OTS, the FDIC and any other
federal or state banking or insurance regulatory authority that may exercise
authority over any Certificateholder, access to the documentation regarding
the Mortgage Loans required by applicable state and federal laws and
regulations. The Servicer shall similarly provide to the Trustee and the
Depositor such access to the documentation regarding the Mortgage Loans as
such Persons may reasonably require. Such access shall in each case be
afforded without charge, but only upon reasonable request and during normal
business hours at the offices of the Servicer or of a Sub-Servicer, as
applicable, designated by it.
SECTION 3.22. Title, Management and Disposition of REO Property.
(a) The deed or certificate of sale of any REO Property shall be
taken in the name of the Trust on behalf of the Certificateholders. The
Servicer, on behalf of the Trust, shall sell any REO Property within two
years after the Trust acquires ownership of such REO Property for purposes of
Section 860G(a)(8) of the Code, unless the Servicer has delivered to the
Trustee and the Depositor an Independent Opinion of Counsel, addressed to the
Trustee, the Depositor and the Servicer, to the effect that holding such REO
Property for more than two years after its acquisition will not result in the
imposition of taxes on "prohibited transactions" of the Trust as defined in
Section 860F of the Code or cause the related REMIC Trust to fail to qualify
as a REMIC under federal law at any time that any Certificates are
outstanding. The Servicer shall manage, conserve, protect and operate each
REO Property for the Certificateholders solely for the purpose of its prompt
disposition and sale in a manner which does not cause such REO Property to
fail to qualify as "foreclosure property" within the meaning of Section
860G(a)(8) of the Code or result in the receipt by the REMIC of any "income
from non-permitted assets" within the meaning of Section 860F(a)(2)(B) of the
Code or any "net income from foreclosure property" which is subject to
taxation under the REMIC Provisions.
(b) The Servicer shall have full power and authority, subject only
to the specific requirements and prohibitions of this Agreement, to do any
and all things in connection with any REO Property as are consistent with the
manner in which the Servicer manages and operates similar property owned by
the Servicer or any of its affiliates, all on such terms and for such period
as the Servicer deems to be in the best interests of Certificateholders.
Notwithstanding the foregoing, the Servicer shall not:
(i) permit the Trust to enter into, renew or extend any New Lease
with respect to any REO Property, if the New Lease by its terms will
give rise to any income that does not constitute Rents from Real
Property;
(ii) permit any amount to be received or accrued under any New
Lease other than amounts that will constitute Rents from Real Property;
(iii) authorize or permit any construction on any REO Property,
other than the completion of a building or other improvement thereon,
and then only if more than ten percent of the construction of such
building or other improvement was completed before default on the
related Mortgage Loan became imminent, all within the meaning of Section
856(e)(4)(B) of the Code; or
(iv) allow any Person to Directly Operate any REO Property on any
date more than 90 days after its date of acquisition by the Trust;
unless, in any such case, the Servicer has obtained an Independent Opinion of
Counsel, addressed to itself and the Trustee, to the effect that such action
will not cause such REO Property to fail to qualify as "foreclosure property"
within the meaning of Section 860G(a)(8) of the Code at any time that it is
held by the Trust, in which case the Servicer may take such actions as are
specified in such Opinion of Counsel.
The Servicer may contract with any Independent Contractor for the
operation and management of any REO Property, provided that:
(i) the terms and conditions of any such contract shall not be
inconsistent herewith;
(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 REO
Property, including those listed above and 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 3.22(b) 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 to the Trustee on behalf of the Certificateholders with
respect to the operation and management of any such REO 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 REO 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 be solely liable for all fees owed
by it to any such Independent Contractor; provided, however, that the amount,
if any, by which such fees with respect to any Due Period exceed the
Servicer's compensation for such Due Period pursuant to Section 3.17 shall
constitute Servicing Advances, reimbursable to the Servicer to the extent
provided in Section 3.11.
(c) Subject to the time constraints set forth in Section 3.22(a),
each liquidation of an REO 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 its general servicing
activities, and the resulting Liquidation Proceeds shall be distributed in
accordance with Section 3.15(d).
(d) The Servicer shall prepare and file reports of foreclosure and
abandonment in accordance with Section 6050J of the Code and shall provide
written notice to the Trustee by February 15 of each year that such reports
have been filed or that no filing was required.
SECTION 3.23. Prepayment Interest Shortfalls.
The Servicer shall deposit into the Collection Account on or before
12:00 noon, New York time, on each Servicer Remittance Date an amount equal
to the lesser of (i) the aggregate of the Prepayment Interest Shortfalls
resulting from Principal Prepayments during the related Due Period and (ii)
its aggregate Servicing Fee received in such Due Period.
SECTION 3.24. First Liens.
Subject to the remainder of this Section 3.24, if the Servicer is
notified that any holder of a First Lien has accelerated or intends to
accelerate the obligations secured by the First Lien, or has declared or
intends to declare a default under the mortgage or the promissory note
secured thereby, or has filed or intends to file an election to have the
Mortgaged Property sold or foreclosed, the Servicer shall take, on behalf of
the Trust, whatever actions are necessary to protect the interests of the
Certificateholders, and/or to preserve the security of the related Mortgage
Loan, subject to the application of the REMIC Provisions. The Servicer shall
advance the necessary funds to cure the default or reinstate the First Lien,
if such advance would have the effect of increasing the Net Recovery
Proceeds.
No advance shall be required to be made under this Section 3.24 if
such advance would, if made, constitute a Nonrecoverable Servicing Advance.
SECTION 3.25. Indemnification.
(a) The Servicer shall indemnify Cityscape, the Trust, the
Depositor and the 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 Mortgage Loans in compliance with the terms of
this Agreement; provided, however, that if the Servicer is not liable
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pursuant to the provisions of Section 6.03 hereof for its failure to perform
its duties and service the Mortgage Loans in compliance with the terms of
this Agreement, then the provisions of this Section 3.25 shall have no force
and effect with respect to such failure.
(b) Cityscape, the Depositor or the 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 Mortgage Loans
in compliance with the terms of this Agreement. The Servicer shall promptly
notify the Trustee and the Depositor of any claim of which it has been
notified pursuant to this Section 3.25 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 in writing
or be in default on its obligations hereunder. Any failure by an Indemnified
Party to comply with the provisions of this Section 3.25 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.
SECTION 3.26. Certain Procedures Relating to Successor Sub-
Servicers and Successor Servicers.
(a) In the event that any Sub-Servicer is to be terminated, the
Servicer shall appoint a successor Sub-Servicer (it being acknowledged that
the Servicer is obligated to service the Mortgage Loan directly pursuant to
Section 3.03 hereof if no successor Sub-Servicer is appointed pursuant to
this Section 3.26(a)).
(b) In the event that the Servicer is to be replaced, the Trustee
shall appoint a successor Servicer (it being acknowledged that the Trustee is
obligated to act as successor Servicer pursuant to Section 7.02 hereof, if no
other successor Servicer is appointed pursuant to this Section 3.26(b)).
(c) In connection with any change in the Servicer's servicing
software, the Servicer shall promptly deliver to the Trustee an Officers'
Certificate detailing the substance of such change and the Servicer shall
cooperate fully with the Trustee in any manner that the Trustee reasonably
deems necessary with respect to such change, to the extent such change
affects the ability of the Trustee to perform its obligations hereunder.
SECTION 3.27. Reports to the Securities and Exchange Commission.
The Trustee shall, on behalf of the Trust, cause to be filed with the
Securities and Exchange Commission any periodic reports required to be filed
under the provisions of the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the Securities and Exchange Commission
thereunder. Upon the request of the Trustee, each of the Seller, the
Servicer and the Depositor shall cooperate with the Trustee in the
preparation of any such report and shall provide to the Trustee in a timely
manner all such information or documentation as the Trustee may reasonably
request in connection with the performance of its duties and obligations
under this Section.
ARTICLE IV
FLOW OF FUNDS
SECTION 4.01. Establishment of Accounts.
The Trustee shall establish on the Closing Date, and thereafter
maintain, the Certificate Account, the Distribution Account, the Capitalized
Interest Account and the Pre-Funding Account, each of which shall conform to
the definition of Eligible Account and shall be held by the Trustee for the
benefit of the Certificateholders.
SECTION 4.02. (Reserved.)
SECTION 4.03. Deposits into, and Transfers Among, the Accounts.
(a) The Trustee shall deposit into the Certificate Account, upon
receipt, the Group I Interest Remittance Amount and the Group II Interest
Remittance Amount, the Principal Remittance Amount with respect to each
Group, the Termination Price received by the Trustee in connection with a
termination of the Trust pursuant to Article X hereof and any amounts
transferred from either the Pre-Funding Account or the Capitalized Interest
Account pursuant to Section 4.08 hereof. Records with respect to all amounts
deposited into the Accounts shall be maintained on a Group-by-Group basis.
(b) Prior to 1:00 p.m. New York time on any Distribution Date, the
Trustee shall make all transfers required in order to make the payments
required pursuant to Section 4.04 hereof.
SECTION 4.04. Flow of Funds and Distributions.
(a) No later than 1:00 p.m., New York time, on each Distribution
Date (or as described below), the Trustee shall apply the amounts on deposit
in the Certificate Account in the following order of priority:
(i) first, from amounts then on deposit in the Certificate Account
with respect to each Group, the Trustee shall pay itself the Trustee's
Fee then due with respect to each such Group; and
(ii) second, the Trustee shall transfer all remaining amounts then
on deposit in the Certificate Account to the Distribution Account.
(b) On each Distribution Date, the Trustee shall distribute the
Available Funds for each Group in the following order of priority (except
that distributions pursuant to Section 4.04(b)(I) shall be deemed made
concurrently with distributions pursuant to Section 4.04(b)(II)):
(I)(A) from Group I Available Funds for such Distribution Date:
(i) concurrently, to each Class of Group I Senior Certificates,
the Interest Distributable Amount for such Class for such Distribution
Date (any insufficiency being allocated among the Classes of Group I
Senior Certificates in proportion to such Classes' respective Interest
Distributable Amounts for such Distribution Date); and
(ii) sequentially, to the Class M-1F, Class M-2F and Class B-1F
Certificates, in that order, the related Monthly Interest Distributable
Amount for such Distribution Date;
(B) on the Distribution Date immediately following the Due Period
in which the end of the Pre-Funding Period occurs, the Pro Rata Pre-
Funding Distribution Amount, if any, to the Group I Certificates, pro
rata, on the basis of their respective Class Certificate Principal
Balances as of the Closing Date;
(C) from the lesser of (1) that portion of the Group I Available
Funds remaining after making the distributions in paragraphs (A) and (B)
of this Section 4.04(b)(I) and (2) the Group I Regular Principal
Distribution Amount:
(i) to the Class A-4 Certificates, the Class A-4 Priority General
Distribution Amount up to the amount necessary to reduce the Class
Certificate Principal Balance of the Class A-4 Certificates to zero;
(ii) sequentially, to the Class A-1, Class A-2, Class A-3 and
Class A-4 Certificates, in that order, until the respective Class
Certificate Principal Balances thereof are reduced to zero, the amount,
if any, by which (a) the Aggregate Senior Certificate Principal Balance
for Group I (after giving effect to any reduction thereof pursuant to
paragraphs (B) and (C)(i) of this Section 4.04(b)(I) on such
Distribution Date) exceeds (b) the related Senior Optimal Principal
Balance for such Distribution Date;
(iii) to the Class M-1F Certificates, the amount, if any, by
which (a) the Class Certificate Principal Balance thereof exceeds (b)
the related Class M-1 Optimal Principal Balance for such Distribution
Date;
(iv) to the Class M-2F Certificates, the amount, if any, by which
(a) the Class Certificate Principal Balance thereof exceeds (b) the
related Class M-2 Optimal Principal Balance for such Distribution Date;
and
(v) to the Class B-1F Certificates, the amount, if any, by which
(a) the Class Certificate Principal Balance thereof exceeds (b) the
related Class B Optimal Principal Balance for such Distribution Date;
(D) from the General Excess Available Amount for Group I for such
Distribution Date:
(i) the Overcollateralization Deficiency Amount, if any, for Group
I, payable as follows:
(1) to the Class A-4 Certificates, the Class A-4 Priority
Excess Distribution Amount up to the amount necessary to reduce the
Class Certificate Principal Balance of the Class A-4 Certificates
(after giving effect to any reduction thereof on such Distribution
Date pursuant to paragraphs (B) and (C) above);
(2) sequentially, to the Class A-1, Class A-2, Class A-3 and
Class A-4 Certificates, in that order, until the respective Class
Certificate Principal Balances thereof are reduced to zero, the
amount necessary to reduce the Aggregate Senior Certificate
Principal Balance for Group I (after giving effect to any reduction
thereof pursuant to paragraphs (B), (C) and (D)(i)(1) of this
Section 4.04(b)(I) on such Distribution Date) to the related Senior
Optimal Principal Balance for such Distribution Date;
(3) to the Class M-1F Certificates, the amount necessary to
reduce the Class Certificate Principal Balance thereof (after
giving effect to any reduction thereof on such Distribution Date
pursuant to paragraphs (B) and (C) above) to the related Class M-1
Optimal Principal Balance for such Distribution Date;
(4) to the Class M-2F Certificates, the amount necessary to
reduce the Class Certificate Principal Balance thereof (after
giving effect to any reduction thereof on such Distribution Date
pursuant to paragraphs (B) and (C) above) to the related Class M-2
Optimal Principal Balance for such Distribution Date; and
(5) to the Class B-1F Certificates, the amount necessary to
reduce the Class Certificate Principal Balance thereof (after
giving effect to any reduction thereof on such Distribution Date
pursuant to paragraphs (B) and (C) above) to the related Class B
Optimal Principal Balance for such Distribution Date;
(ii) to the Class M-1F Certificates, the related Unpaid Interest
Shortfall Amount for such Distribution Date;
(iii) to the Class M-1F Certificates, the related Loss
Reimbursement Deficiency, if any, for such Distribution Date;
(iv) to the Class M-2F Certificates, the related Unpaid Interest
Shortfall Amount for such Distribution Date;
(v) to the Class M-2F Certificates, the related Loss Reimbursement
Deficiency, if any, for such Distribution Date;
(vi) to the Class B-1F Certificates, the related Unpaid Interest
Shortfall Amount for such Distribution Date; and
(vii) to the Class B-1F Certificates, the related Loss
Reimbursement Deficiency, if any, for such Distribution Date;
(II)(A) from Group II Available Funds for such Distribution Date:
(i) to the Class A-5 Certificates, the related Interest
Distributable Amount for such Distribution Date; and
(ii) sequentially, to the Class M-1A, Class M-2A and Class B-1A
Certificates, in that order, the related Monthly Interest Distributable
Amount for such Distribution Date;
(B) from the lesser of (1) that portion of the Group II Available
Funds remaining after making the distributions in Section 4.04(b)(II)(A)
and (2) the Group II Regular Principal Distribution Amount:
(i) to the Class A-5 Certificates, the amount necessary to reduce
the Class Certificate Principal Balance thereof to the related Senior
Optimal Principal Balance for such Distribution Date;
(ii) to the Class M-1A Certificates, the amount necessary to reduce
the Class Certificate Principal Balance thereof to the related Class M-1
Optimal Principal Balance for such Distribution Date;
(iii) to the Class M-2A Certificates, the amount necessary to
reduce the Class Certificate Principal Balance thereof to the related
Class M-2 Optimal Principal Balance for such Distribution Date; and
(iv) to the Class B-1A Certificates, the amount necessary to reduce
the Class Certificate Principal Balance thereof to the related Class B
Optimal Principal Balance for such Distribution Date;
(C) from the General Excess Available Amount for Group II for such
Distribution Date:
(i) the Overcollateralization Deficiency Amount, if any, for Group
II, payable as follows:
(1) to the Class A-5 Certificates, the amount necessary to
reduce the Class Certificate Principal Balance thereof (after
giving effect to any reduction thereof on such Distribution Date
pursuant to paragraph (B) above) to the related Senior Optimal
Principal Balance for such Distribution Date;
(2) to the Class M-1A Certificates, the amount necessary to
reduce the Class Certificate Principal Balance thereof (after
giving effect to any reduction thereof on such Distribution Date
pursuant to paragraph (B) above) to the related Class M-1 Optimal
Principal Balance for such Distribution Date;
(3) to the Class M-2A Certificates, the amount necessary to
reduce the Class Certificate Principal Balance thereof (after
giving effect to any reduction thereof on such Distribution Date
pursuant to paragraph (B) above) to the related Class M-2 Optimal
Principal Balance for such Distribution Date; and
(4) to the Class B-1A Certificates, the amount necessary to
reduce the Class Certificate Principal Balance thereof (after
giving effect to any reduction thereof on such Distribution Date
pursuant to paragraph (B) above) to the related Class B Optimal
Principal Balance for such Distribution Date;
(ii) to the Class M-1A Certificates, the related Unpaid Interest
Shortfall Amount for such Distribution Date;
(iii) to the Class M-1A Certificates, the related Loss
Reimbursement Deficiency, if any, for such Distribution Date;
(iv) to the Class M-2A Certificates, the related Unpaid Interest
Shortfall Amount for such Distribution Date;
(v) to the Class M-2A Certificates, the related Loss Reimbursement
Deficiency, if any, for such Distribution Date;
(vi) to the Class B-1A Certificates, the related Unpaid Interest
Shortfall Amount for such Distribution Date; and
(vii) to the Class B-1A Certificates, the related Loss
Reimbursement Deficiency, if any, for such Distribution Date;
(III) to the Servicer, from the amount, if any, remaining in the
Distribution Account with respect to the Group I Mortgage Loans after the
distributions in clause (I) above are made, the amount of any Delinquency
Advances and Servicing Advances with respect to the Group I Mortgage Loans
not previously reimbursed pursuant to Section 3.11(ii) hereof;
(IV) to the Servicer, from the amount, if any, remaining in the
Distribution Account with respect to the Group II Mortgage Loans after the
distributions in clause (II) above are made, the amount of any Delinquency
Advances and Servicing Advances with respect to the Group II Mortgage Loans
not previously reimbursed pursuant to Section 3.11(ii) hereof;
(V) to the Servicer, from the amount, if any, remaining in the
Distribution Account with respect to the Group I Mortgage Loans after the
distributions in clauses (I) and (III) above are made, payment pursuant to
Section 3.17 hereof of any portion of the Servicing Fee with respect to the
Group I Mortgage Loans not previously paid pursuant to Section 3.11(ii)
hereof; and
(VI) to the Servicer, from the amount, if any, remaining in the
Distribution Account with respect to the Group II Mortgage Loans after the
distributions in clauses (II) and (IV) above are made, payment pursuant to
Section 3.17 hereof of any portion of the Servicing Fee with respect to the
Group II Mortgage Loans not previously paid pursuant to Section 3.11(ii)
hereof;
(VII) to the Class R-I Certificates, the amount, if any, remaining in
the Distribution Account with respect to the Group I Mortgage Loans after the
distributions in clauses (I) , (III) and (V) above are made; and
(VIII) to the Class R-II Certificates, the amount, if any, remaining in
the Distribution Account with respect to the Group II Mortgage Loans after
the distributions in clauses (II), (IV) and (VI) above are made.
(c) Notwithstanding paragraphs (I) and (II) of Section 4.04(b)
above, if the aggregate of the Class Certificate Principal Balances of the
Senior Certificates of a Group on any Distribution Date would exceed the
Group Principal Balance of such Group after giving effect to distributions to
be made on such Distribution Date, then all amounts distributable as
principal of such Senior Certificates on such Distribution Date shall be
allocated concurrently to the outstanding Classes of such Senior
Certificates, pro rata, on the basis of their respective Class Certificate
Principal Balances.
(d) Whenever in the administration of the Trust the Trustee comes
into possession of money or other property not otherwise required to be paid
to the Holders of the Regular Certificates, the Servicer or any other Person,
or not required to be otherwise applied at any time pursuant to the
provisions of this Agreement, the Trustee shall promptly distribute such
money or other property to the related class of Class R Certificateholders
pro rata.
(e) Payments to the Certificateholders of each Class on each
Distribution Date will be made to the Certificateholders of the respective
Class of record on the related Record Date (other than as provided in Section
4.04(g) or Section 10.01 hereof respecting the final distribution on such
Class), and shall be made to each such Certificateholder (x) by wire transfer
of immediately available funds to the account of such Certificateholder at a
bank or other entity having appropriate facilities therefor, if such
Certificateholder is the registered owner of a Class R Certificate, or the
registered owner of a Class of Regular Certificates evidencing a Percentage
Interest aggregating at least 10% hereof, and shall have so notified the
Trustee in writing in the case of the first Distribution Date, by the Closing
Date, and, in the case of all subsequent Distribution Dates, at least five
Business Days prior to the Record Date immediately prior to such Distribution
Date; or (y) otherwise by check mailed by first class mail to the address of
such Certificateholder appearing in the Certificate Register.
(f) The rights of the Certificateholders to receive distributions
from the proceeds of the Trust in respect of the Certificates, and all
interests of the Certificateholders in and to such distributions, shall be as
set forth in this Agreement. In no event shall the Holders of any Class of
Certificates, the Trustee, Cityscape, the Depositor or the Servicer in any
way be responsible or liable to the Holders of any other Class of
Certificates in respect of amounts properly previously distributed on the
Certificates.
(g) Except as otherwise provided in Section 10.01 hereof, whenever
the Trustee expects that the final distribution with respect to any Class of
Certificates will be made on the next Distribution Date, the Trustee shall,
no later than four days prior to the related Distribution Date, send, by
overnight delivery or by registered mail, to each Holder on such date of such
Class of Certificates a notice to the effect that:
(i) the Trustee expects that the final distribution with respect
to such Class of Certificates will be made on such Distribution Date and
requests that such Holder send its Certificates to the Trustee
immediately following such final Distribution Date, and
(ii) no interest shall accrue on such Certificates from and after
the end of the related Due Period, and upon the Trustee's making of such
final distribution with respect to such Class of Certificates, such
Certificates will be absolutely null and void and of no further effect
thereafter.
(h) (Reserved.)
(i) With respect to each Account, the Servicer shall deliver to
the Trustee for deposit into the Certificate Account the amount of any losses
incurred in connection with the investment of funds in such Account within
one Business Day after receipt from the Trustee of notice of any such losses.
The Trustee shall not be responsible for and shall be indemnified by the
Servicer against any expenses or liability incurred with respect to such
investment losses.
SECTION 4.05. Statements to Certificateholders.
On each Distribution Date the Trustee shall forward by mail to each
Holder of a Regular Certificate a statement, parts of which shall be based
upon Servicer Information and upon which the Trustee shall conclusively rely,
without independent verification, as to the distributions made on such
Distribution Date, setting forth the following information:
(a) the amount of the distributions, separately identified, with
respect to the Regular Certificates;
(b) the amount of such distributions allocable to principal,
separately identifying the aggregate amount of any Principal Prepayments
and monthly scheduled payments of principal for each Group or other
recoveries of principal included therein and separately identifying any
Overcollateralization Deficiency Amounts for each Group;
(c) the amount of such distributions allocable to interest and the
calculation thereof;
(d) the Group Principal Balance for each Group as of the end of
the related Due Period;
(e) the Class Certificate Principal Balance of each Regular
Certificate (including information based on a Certificate in the
original principal amount of $1,000) after giving effect to any payment
of principal on such Distribution Date;
(f) the Available Funds Cap for the Class A-1 Certificates and for
the Group II Certificates;
(g) the Overcollateralization Target Amount for each Group as of
such Distribution Date;
(h) the Overcollateralization Deficiency Amount, if any, for each
Group after giving effect to the distribution of principal on such
Distribution Date;
(i) the amount, if any, of Realized Losses for each Group for the
related Due Period;
(j) the Overcollateralized Amount for each Group, if any,
remaining after giving effect to all distributions on such Distribution
Date;
(k) the Unpaid Interest Shortfall Amount, if any, for each Class
of Regular Certificates;
(l) the total of any Substitution Shortfall Amounts or Purchase
Price amounts paid or received by the Servicer with respect to the
related Due Period for each Group;
(m) the weighted average Mortgage Rate of the Mortgage Loans for
each Group as of the last day of the calendar month preceding the month
of such Distribution Date;
(n) the current weighted average of the remaining terms of the
Mortgage Loans for each Group;
(o) the amount of Servicing Fee paid to or retained by the
Servicer with respect to each Group;
(p) the amount of Trustee's Fee paid to the Trustee with respect
to each Group;
(q) the amount of Advances for the related Due Period with respect
to each Group;
(r) the number of Mortgage Loans outstanding for each Group;
(s) the cumulative number and Loan Balances of liquidated Mortgage
Loans for each Group;
(t) the amount of cumulative Realized Losses and its percentage of
the Maximum Collateral Amount for each Group;
(u) the aggregate of the Loan Balances of the Group I Mortgage
Loans secured by Small Mixed-Use/MultiFamily Properties and the
aggregate of the Loan Balances of the remaining Group I Mortgage Loans;
(v) the current outstanding aggregate Loan Balances of the
Mortgage Loans for each Group as of the last day of the related Due
Period;
(w) the original Cut-Off Date Loan Balance of each Mortgage Loan
which was modified or extended pursuant to Section 2.11 or 3.07 hereof;
(x) the Remittance Report (as defined in Section 4.06 hereof);
(y) the Regular Principal Distribution Amount for each Group for
such Distribution Date;
(z) the statement or report of all earnings on and withdrawals
from the Capitalized Interest Account and the Pre-Funding Account;
(aa) the Class A-4 Priority General Distribution Amount and the
Class A-4 Priority Excess Distribution Amount for such Distribution
Date;
(bb) with respect to each Group, the Allocable Loss Amounts, if
any, allocated to each class of the Mezzanine and Subordinate
Certificates of such Group;
(cc) whether a Stepdown Trigger Event or Stepup Trigger Event has
occurred and is continuing;
(dd) the Optimal Principal Balance of each class of Regular
Certificates;
(ee) the Pass-Through Rate for the Class A-1 Certificates and for
each class of Group II Certificates for such Distribution Date; and
(ff) the amount on deposit in the Pre-Funding Account and in the
Capitalized Interest Account.
Items (a), (b) and (c) above shall also be presented on the basis
of a certificate having a $1,000 denomination.
In addition, on each Distribution Date the Trustee shall distribute
to each Holder, together with the information described above, the following
information based solely upon Servicer Information provided to the Trustee
pursuant to Section 3.18(a) hereof upon which the Trustee may conclusively
rely without independent verification:
(A) the number of, and aggregate Loan Balances (including the
percent of the aggregate Loan Balances of such Mortgage Loans to the
aggregate Loan Balances of all Mortgage Loans) of, Mortgage Loans (i)
30-59 days delinquent, (ii) 60-89 days delinquent and (iii) 90 days or
more delinquent (which statistics shall include Mortgage Loans in
foreclosure and bankruptcy but which shall exclude REO Properties), as
of the close of business on the last day of the calendar month next
preceding such Distribution Date and the aggregate Loan Balances of all
Mortgage Loans as of such date;
(B) the number of, and aggregate Loan Balances of, all Mortgage
Loans in foreclosure proceedings (other than any Mortgage Loans
described in clause (C) below) and the percent of the aggregate Loan
Balances of such Mortgage Loans to the aggregate Loan Balances of all
Mortgage Loans, all as of the close of business on the last day of the
calendar month next preceding such Distribution Date;
(C) the number of, and the aggregate Loan Balances of, the
Mortgage Loans in bankruptcy proceedings (other than any Mortgage Loans
described in clause (B) above) and the percent of the aggregate Loan
Balances of such Mortgage Loans to the aggregate Loan Balances of all
Mortgage Loans, all as of the close of business on the last day of the
calendar month next preceding such Distribution Date;
(D) the number of REO Properties, the aggregate Loan Balances of
the related Mortgage Loans, the book value of such REO Properties and
the percent of the aggregate Loan Balances of such Mortgage Loans to the
aggregate Loan Balances of all Mortgage Loans, all as of the close of
business on the last day of the calendar month next preceding such
Distribution Date;
(E) for each Mortgage Loan which is an REO Property, the Loan
Balance of such Mortgage Loan, the loan number of such Mortgage Loan,
the Value of the Mortgaged Property, the value established by any new
appraisal, the estimated cost of disposing of the Mortgage Loan and the
amount of any unreimbursed Delinquency Advances and Servicing Advances;
(F) for each Mortgage Loan which is in foreclosure, the Loan
Balance of such Mortgage Loan, the Value of the Mortgaged Property, the
Loan-to-Value Ratio as of the date of origination, and 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, based
on the original Value;
(G) the principal balance of each Mortgage Loan that was modified
or extended pursuant to Section 2.10 or 3.01 hereof; and
(H) the outstanding Loan Balance of the then largest Group II
Mortgage Loan.
The information provided in clauses (A) through (G) above shall be
provided on a Group-by-Group basis. Within a reasonable period of time
(which shall not be more than 45 days) after the end of each calendar year,
the Trustee shall furnish to each Person who at any time during the calendar
year was a Holder of a Regular Certificate a statement containing the
information set forth in subclauses (a) through (c) above, aggregated for
such calendar year or applicable portion thereof during which such Person was
a Certificateholder. Such obligation of the Trustee shall be deemed to have
been satisfied to the extent that substantially comparable information shall
be provided by the Trustee pursuant to any requirements of the Code as are
from time to time in force.
On each Distribution Date the Trustee shall forward to the
Depositor, Cityscape, each Holder of a Class R Certificate and the Servicer a
copy of the reports forwarded to the Regular Certificateholders on such
Distribution Date, and a report of the amounts, if any, actually distributed
with respect to the Class R Certificates of the related Group on such
Distribution Date.
Within a reasonable period of time after the end of each calendar
year, the Trustee shall furnish to any Person who at any time during the
calendar year was a Holder of a Class R Certificate 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 Certificateholder.
The Trustee upon written request shall forward to any
Certificateholder within five Business Days after the furnishing or receipt
thereof by the Trustee, as the case may be, copies of any (i) directions,
notices, certificates, opinions or reports furnished hereunder by the Trustee
to the Servicer, Cityscape, the Depositor or the Rating Agencies,
(ii) directions, notices, certificates, reports, opinions or any other
information or document furnished to the Trustee by the Servicer, Cityscape,
the Depositor or the Rating Agencies and (iii) anything requested in writing
by any Certificateholder which the Trustee otherwise sends to some other
Person pursuant to this Agreement (excluding, however, routine items sent to
Mortgagors, taxing or local property records authorities and similar items)
which, in the case of clause (iii), such Certificateholder is not otherwise
receiving; provided, however, that any such documents or information
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requested under clause (iii) shall be at the expense of the requesting
Certificateholder; and provided, further, that the Trustee shall not be
-------- -------
required to provide any document or information which it is otherwise legally
prohibited from providing.
SECTION 4.06. Remittance Reports; Delinquency Advances by the
Servicer and Insurance Claims.
(a) The Trustee shall, not later than four Business Days prior to
each Distribution Date, prepare and furnish by telecopy to Cityscape and the
Servicer a statement (with respect to such Distribution Date, the "Remittance
Report") setting forth, with respect to each Group: (i) the Monthly Interest
Distributable Amount and the Unpaid Interest Shortfall Amount, if any, for
each Class of such Group and the Regular Principal Distribution Amount for
such Group, in each case for such Distribution Date; (ii) the amount of
Delinquency Advances for such Group made by the Servicer for such Group in
respect of the related Distribution Date, the aggregate amount of Delinquency
Advances outstanding after giving effect to such Delinquency Advances, and
the aggregate amount of Nonrecoverable Delinquency Advances for such Group in
respect of such Distribution Date; (iii) the aggregate amount of payments in
respect of Prepayment Interest Shortfalls for such Group deposited in the
Collection Account by the Servicer on the related Servicer Remittance Date
pursuant to Section 3.23 hereof; and (iv) the amount allocated to the payment
of any Overcollateralization Deficiency Amount for such Group on such
Distribution Date and the related Overcollateralized Amount after giving
effect to all distributions on such Distribution Date.
(b) On or before 12:00 noon, New York time, on the Servicer
Remittance Date, the Servicer shall deposit into the Collection Account, for
inclusion in the Group I Interest Remittance Amount and Group II Interest
Remittance Amount, as applicable, on such Servicer Remittance Date, in
immediately available funds, the amount necessary to make the sum of (i) the
amount then on deposit in the Collection Account with respect to interest
collections received on the Mortgage Loans that were due during the
immediately preceding Due Period (or, in the case of any Subsequent Mortgage
Loans, due during the period commencing with the day after the related
Cut-Off Date and ending on the last day of the Due Period preceding such
Servicer Remittance Date), (ii) with respect to the July 1997 Distribution
Date, the Closing Date Deposit relating to such Distribution Date and Group,
and (iii) with respect to any Subsequent Transfer Date, any Subsequent Cut-
Off Date Deposit relating to the related Distribution Date, if applicable,
equal to the related Group Interest Remittance Amount with respect to such
Due Period, after taking into account all amounts in respect of Prepayment
Interest Shortfalls paid by the Servicer pursuant to Section 3.23 hereof (any
such deposit made by the Servicer, a "Delinquency Advance"). The Servicer is
permitted to fund its payment of Delinquency Advances from amounts then on
deposit in the Collection Account representing collections on the Mortgage
Loans relating to the then-current or any subsequent Due Period; any such
amounts shall be replaced by Servicer on or prior to the next Servicer
Remittance Date. The Servicer shall be required to make Delinquency Advances
from its own funds (subject to reimbursement from subsequent collections on
the Mortgage Loans, when available) to the extent that such amounts in the
Collection Account are insufficient.
(c) The obligation of the Servicer to make Delinquency Advances
(other than Nonrecoverable Delinquency Advances) is mandatory with respect to
any Mortgage Loan or REO Property, and shall continue until a Final Recovery
Determination or an REO Disposition in connection therewith or the purchase
or repurchase thereof from the Trust pursuant to any applicable provision of
this Agreement.
SECTION 4.07. Compliance with Withholding Requirements.
Notwithstanding any other provision of this Agreement, the Trustee
shall comply with all federal withholding requirements respecting payments to
Certificateholders of interest or original issue discount that the Trustee
reasonably believes are applicable under the Code. The consent of
Certificateholders shall not be required for such withholding. In the event
the Trustee does withhold any amount from interest or original issue discount
payments or advances thereof to any Certificateholder pursuant to federal
withholding requirements, the Trustee shall indicate to such
Certificateholders the amount withheld. Any amounts so withheld shall be
deemed to have been distributed to the related Certificateholders for all
purposes of this Agreement.
SECTION 4.08. Pre-Funding Account and Capitalized Interest
Account.
(a) The Trustee has heretofore established or caused to be
established and shall hereafter maintain or cause to be maintained a separate
account denominated a Pre-Funding Account, which is and shall continue to be
an Eligible Account in the name of the Trustee and shall be designated "First
Bank National Association, as Trustee of the Cityscape Home Equity Loan Trust
1997-C Pre-Funding Account". The Pre-Funding Account shall be treated as an
"outside reserve fund" under applicable Treasury regulations and shall not be
part of the REMIC. Any investment earnings on the Pre-Funding Account shall
be treated as owned by the Seller and will be taxable to the Seller.
The Trustee has heretofore established or caused to be established
and shall hereafter maintain or cause to be maintained a separate account
denominated a Capitalized Interest Account, which is and shall continue to be
an Eligible Account in the name of the Trustee and shall be designated "First
Bank National Association, as Trustee of the Cityscape Home Equity Loan Trust
Series 1997-C Capitalized Interest Account". The Capitalized Interest
Account shall be treated as an "outside reserve fund" under applicable
Treasury regulations and shall not be part of either REMIC Trust. Any
investment earnings on the Capitalized Interest Account shall be treated as
owned by the Seller and will be taxable to the Seller.
The amount on deposit in the Pre-Funding Account and the Capital-
ized Interest Account shall be invested in Eligible Investments in accordance
with the provisions of Section 3.12 hereof.
(b) On the Closing Date, the Seller shall cause to be deposited in
the Pre-Funding Account and in the Capitalized Interest Account the amounts
of $22,266,299.36 and $254,310.21, respectively.
(c) On each Subsequent Transfer Date, upon satisfaction of the
conditions set forth in Section 2.13 hereof, the Trustee shall withdraw from
the Pre-Funding Account an amount equal to 100% of the aggregate of the Cut-
Off Date Loan Balances of the Subsequent Mortgage Loans sold to the Trust for
inclusion in Group I on such Subsequent Transfer Date and pay such amount to
or upon the order of the Seller.
(d) On the Business Day prior to the Distribution Date immediately
following the Due Period in which the Pre-Funding Period ends, the Trustee
shall (i) withdraw the Unutilized Funding Amount, if any, from the Pre-
Funding Account, (ii) promptly deposit such amount in the Certificate Account
and (iii) distribute such amount on such Distribution Date. If the
Unutilized Funding Amount equals or exceeds $100,000, the Trustee shall
distribute it to Holders of the Group I Certificates, pro rata, on the basis
of the respective Original Class Certificate Principal Balances of the Group
I Certificates pursuant to Section 4.04(b)(I)(B) hereof. If the Unutilized
Funding Amount is less than $100,000, such amount shall be distributed as
part of the Regular Principal Distribution Amount pursuant to Section 4.04(b)
hereof.
The amount deposited in the Certificate Account pursuant to the
preceding paragraph shall be net of any Pre-Funding Earnings.
(e) On the Business Day prior to each Distribution Date, through
the Distribution Date immediately following the Due Period in which the
Pre-Funding Period ends, the Trustee shall transfer from the Pre-Funding
Account to the Certificate Account the Pre-Funding Earnings, if any,
applicable to such Distribution Date.
(f) On the Business Day prior to each Distribution Date, through
the Distribution Date immediately following the Due Period in which the
Pre-Funding Period ends, the Trustee shall transfer from the Capitalized
Interest Account to the Certificate Account the Capitalized Interest
Requirement, if any, for such Distribution Date.
(g) All amounts, if any, remaining in the Capitalized Interest
Account on the Distribution Date following the Due Period in which the Pre-
Funding Period ends shall be transferred to the Seller on such date.
SECTION 4.09. Allocation of Losses.
On each Distribution Date, any Allocable Loss Amount for each Group
shall be applied to the reduction of the Class Certificate Principal Balances
of the Class B Certificates, the Class M-1 Certificates and the Class M-2
Certificates of such Group in accordance with the Allocable Loss Amount
Priority. Under no circumstances shall the Class Certificate Principal
Balance of any Class of Senior Certificates be reduced on account of any
Allocable Loss Amount.
ARTICLE V
THE CERTIFICATES
SECTION 5.01. The Certificates.
The Certificates consist of the Regular Certificates and the
Class R Certificates. The Certificates in the aggregate will represent the
entire beneficial ownership interest in the Mortgage Loans and all other
assets included in the Trust Estate.
The Certificates will be substantially in the forms annexed hereto
as Exhibits A, B and C. Each Class of Regular Certificates shall be issued
upon original issuance as Definitive Certificates. The Class R Certificates
shall be issued at all times as Definitive Certificates. The Regular
Certificates are issuable only in denominations of $100,000 and integral
multiples of $1,000 in excess thereof (except that one certificate of each
such Class may be issued in a denomination exceeding $100,000 but otherwise
not corresponding to such formulation). The Class R Certificates of each
Group are issuable only in denominations representing Percentage Interests of
at least 10%.
Upon original issue, the Certificates shall be executed,
authenticated and delivered by the Trustee upon the Written Order to
Authenticate and upon receipt of the documents specified in Section 2.04
hereof. The Certificates shall be executed by manual or facsimile signature
on behalf of the Trustee by an authorized signatory. Certificates bearing
the manual or facsimile signatures of individuals who were at any time the
proper officers of the Trustee shall bind the Trustee, notwithstanding that
such individuals or any of them shall have ceased to hold such offices prior
to the authentication and delivery of such Certificates or did not hold such
offices at the date of such Certificates. No Certificate shall be entitled
to any benefit under this Agreement or be valid for any purpose, unless there
appears on such Certificate a certificate of authentication substantially in
the form provided herein executed by the Trustee by manual signature, and
such certificate of authentication shall be conclusive evidence, and the only
evidence, that such Certificate has been duly authenticated and delivered
hereunder. All Certificates shall be dated the date of their authentication.
Interest shall accrue on the Group I Certificates (other than the
Class A-1 Certificates) on the basis of a 360-day year consisting of twelve
30-day months, except as otherwise provided herein. Interest shall accrue on
the Class A-1 Certificates and the Group II Certificates on the actual number
of days in each Accrual Period and a 360-day year, except as otherwise
provided herein.
SECTION 5.02. Registration of Transfer and Exchange of
Certificates.
(a) The Trustee shall cause to be kept at the office or agency
appointed by the Trustee in accordance with the provisions of Section 8.12
hereof a Certificate Register in which, subject to such reasonable
regulations as it may prescribe, the Trustee shall provide for the
registration of Certificates and of transfers and exchanges of Certificates
as herein provided. The Depositor and each Certificateholder shall have the
right to inspect the Certificate Register or to obtain a copy thereof at all
reasonable times, and to rely conclusively upon a certificate of the Trustee
as to the information set forth in the Certificate Register. The Trustee
shall furnish or cause to be furnished to the Depositor and to any
Certificateholder a listing of the names and addresses of the
Certificateholders on reasonable request.
(b) (i) The Class R Certificates have not been registered or
qualified under the 1933 Act or any state securities laws or
"blue sky" laws. No transfer, sale, pledge or other
disposition of any Class R Certificate shall be made unless
such disposition is made pursuant to an effective registration
statement under the 1933 Act and effective registration or
qualification under applicable state securities laws or "blue
sky" laws, or is made in a transaction which does not require
such registration or qualification. In the event that a
transfer is to be made in reliance upon an exemption from the
1933 Act, the Trustee shall not register such transfer unless:
(A) each Class R Certificateholder desiring to effect such
disposition and such Class R Certificateholder's
prospective transferee certifies to the Trustee in
writing the facts surrounding such disposition, which
certification shall be substantially in the form of
Exhibit J hereto; or
(B) the Class R Certificateholder desiring to effect such
disposition delivers to the Trustee an Opinion of Counsel
satisfactory to the Trustee that such transfer may be
made pursuant to an exemption from the 1933 Act, which
Opinion of Counsel shall not be an expense of the
Trustee.
None of Cityscape, the Depositor, the Servicer or the Trustee
is obligated under this Agreement to register the Class R
Certificates under the 1933 Act or any other securities law or
to take any action not otherwise required under this Agreement
to permit the transfer of Class R Certificates without such
registration or qualification. Any Class R Certificateholder
desiring to effect such transfer shall, and does hereby agree
to, promptly indemnify and reimburse the Trustee, Cityscape,
the Depositor and the Servicer for costs and expenses incurred
in connection with any liability that results if the transfer
is not so exempt or is not made in accordance with such
applicable federal and state laws.
(ii) Notwithstanding anything to the contrary herein, the Trustee
shall not register the acquisition or transfer of any
Mezzanine Certificate, Subordinate Certificate or Class R
Certificate unless it shall have received (a) a
representation, in form substantially identical to the one set
forth in Exhibit J hereto, to the effect that the acquiror or
transferee of such Certificate is not an employee benefit plan
or arrangement subject to Section 406 of ERISA or a plan
subject to Section 4975 of the Code, or a Person acting on
behalf of any such plan or arrangement or using the assets of
any such plan or arrangement to effect such acquisition or
transfer or (b) if the acquiror is an insurance company, a
representation that the acquiror is an insurance company that
is purchasing such Certificate with funds contained in an
"insurance company general account" (as such term is defined
in Section V(e) of Prohibited Transaction Class Exemption 95-
60 ("PTCE 95-60")) and that the acquisition and holding of
such Certificates are covered under PTCE 95-60. The
representations described above shall be deemed to have been
made to the Trustee by the acquiror's or transferee's
acceptance of a Mezzanine Certificate, Subordinate Certificate
or Class R Certificate. In the event that such representation
is violated, such attempted transfer or acquisition shall be
void and of no effect.
(c) Notwithstanding anything to the contrary contained herein,
except for the transfer on the Closing Date of the Class R Certificates to
Cityscape, prior to registration of any transfer, sale or other disposition
of a Class R Certificate, the proposed transferee shall provide to the
Servicer, Cityscape, the Class R Certificateholders and the Trustee: (i) an
affidavit substantially in the form of Exhibit K hereto to the effect that
such transferee is not a Disqualified Organization or a non-U.S. Person or an
agent (including a broker, nominee or middleman) of a non-U.S. Person or a
Disqualified Organization; and (ii) a certificate which acknowledges that (A)
each Class R Certificate has been designated as a residual interest in a
REMIC, (B) the transferee will include in its income the entire net income of
the related REMIC Trust and that such income may be an "excess inclusion", as
defined in the Code, that, with certain exceptions, cannot be offset by other
losses or benefits from any tax exemption, (C) the transferee expects to have
the financial means to satisfy all of its tax obligations including those
relating to holding Class R Certificates, and (D) no purpose of the
acquisition of a Class R Certificate is to avoid or impede the assessment or
collection of tax. Notwithstanding the registration in the Certificate
Register of any transfer, sale or other disposition of a Class R Certificate
to a Disqualified Organization or a non-U.S. Person or an agent (including a
broker, nominee or middleman) of a Disqualified Organization or a non-U.S.
Person, such registration shall be deemed to be of no legal force or effect
whatsoever and such Person shall not be deemed to be a Certificateholder for
any purpose hereunder, including, but not limited to, the receipt of
distributions in respect of such Class R Certificate. If any purported
transfer shall be in violation of the provisions of this Section 5.02(c),
then the prior Holder of the Class R Certificate purportedly transferred
shall, upon discovery that the transfer of the Class R Certificate was not in
fact permitted by this Section 5.02(c), be restored to all rights as Holder
thereof retroactive to the date of the purported transfer of the Class R
Certificate. The Trustee, the Depositor (except in its capacity as
transferor of such Certificate), Cityscape and the Servicer shall have no
liability to any Person for any registration or transfer of a Class R
Certificate that is not permitted by this Section 5.02(c) or for making
payments due on such Class R Certificate to the purported Holder thereof or
taking any other action with respect to such purported Holder under the
provisions of this Agreement if the Trustee, Cityscape and the Servicer have
received the affidavit and certificate referenced above. The prior Holder
shall be entitled to recover from any purported Holder of a Class R
Certificate that was in fact not a permitted transferee under this Section
5.02(c) at the time it became a Holder, all payments made on the Class R
Certificate to such purported Holder. The Holder of a Class R Certificate,
by its acceptance thereof, shall be deemed for all purposes to have consented
to the provisions of this Section 5.02(c) and to any amendment of this
Agreement deemed necessary by counsel to Cityscape to ensure that the
transfer of a Class R Certificate to a Disqualified Organization or any other
Person will not cause the related REMIC Trust to cease to qualify as a REMIC
or cause the imposition of a tax upon such REMIC Trust.
(d) Subject to the preceding paragraphs, upon surrender for
registration of transfer of any Certificate (duly endorsed, or accompanied by
an executed assignment, as specified in the Certificate) at any agency or
office appointed by the Trustee for such purpose pursuant to Section 8.12
hereof, the Trustee or its agent shall execute, authenticate and deliver, in
the name of the designated transferee or transferees, one or more new
Certificates of the same Class of a like aggregate Percentage Interest.
(e) At the option of the Certificateholders, each Certificate may
be exchanged for other Certificates of the same Class with authorized
denominations and a like aggregate Percentage Interest, upon surrender of
such Certificate to be exchanged at any office or agency appointed by the
Trustee for such purpose pursuant to Section 8.12 hereof. Whenever any
Certificates are so surrendered for exchange the Trustee shall execute,
authenticate and deliver the Certificates which the Certificateholder making
the exchange is entitled to receive. Every Certificate presented or
surrendered for transfer or exchange shall (if so required by the Trustee or
its agent) be duly endorsed by, or be accompanied by an assignment in the
form attached to the Certificate or by a written instrument of transfer in a
form reasonably satisfactory to the Trustee duly executed by, the Holder
thereof or his attorney duly authorized in writing.
(f) No service charge to the Certificateholders shall be made for
any transfer or exchange of Certificates, but the Trustee 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 Certificates.
(g) All Certificates surrendered for transfer and exchange shall
be canceled and destroyed by the Trustee in accordance with its customary
procedures.
(h) The Trustee shall not register any Regular Certificate in the
name of the Trust, the Servicer, Cityscape, any Sub-Servicer or any of their
respective affiliates, and the Trustee may require any prospective transferee
of any Regular Certificate to certify that it is not such an affiliate.
SECTION 5.03. Mutilated, Destroyed, Lost or Stolen Certificates.
If (i) any mutilated Certificate is surrendered to the Trustee or
the Trustee receives evidence to its satisfaction of the destruction, loss or
theft of any Certificate, and (ii) there is delivered to the Trustee such
security or indemnity (provided that an unsecured letter of indemnity in a
form reasonably satisfactory to the Trustee from a Holder which is an
insurance company having long-term unsecured debt which is rated at least
investment grade (or having a comparable claim-paying ability rating) and
having a minimum net worth of $100,000,000 shall satisfy such requirement) as
may be required by them to save each of them harmless, then, in the absence
of actual knowledge by a Responsible Officer of the Trustee that such
Certificate has been acquired by a bona fide purchaser, the Trustee shall
execute, authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a new Certificate of the
same Class and of like denomination and Percentage Interest. Upon the
issuance of any new Certificate under this Section, the Trustee may require
the payment of a sum sufficient to cover any tax or other governmental charge
that may be imposed in relation thereto and any other expenses (including the
fees and expenses of the Trustee) connected therewith. Any replacement
Certificate issued pursuant to this Section shall constitute complete and
indefeasible evidence of ownership in the Trust, as if originally issued,
whether or not the lost, stolen or destroyed Certificate shall be found at
any time.
SECTION 5.04. Persons Deemed Certificateholders.
Cityscape, the Depositor, the Servicer, the Trustee and any agent
of any of them may treat the Person in whose name any Certificate is
registered in the Certificate Register as the Certificateholder for the
purpose of receiving distributions pursuant to Section 4.04 hereof and for
all other purposes whatsoever, and none of Cityscape, the Depositor, the
Servicer, the Trustee or any agent of any of them shall be affected by notice
to the contrary.
SECTION 5.05. Book-Entry Certificates.
At such time, if any, as any Class of Regular Certificates shall be
registered on the Certificate Register in the name of the Depository or its
nominee, such Class shall be issued in the form of one or more typewritten
Certificates representing Book-Entry Certificates to be delivered to the
Depository by or on behalf of the Depositor. Any Certificate Owner owning a
beneficial interest Book-Entry Certificates shall be entitled to receive
definitive, fully registered Certificates ("Definitive Certificates")
-----------------------
representing such Certificate Owner's interest in such Certificates pursuant
to Section 5.07 hereof. Following the issuance of Book-Entry Certificates
with respect to any Regular Certificates and until such time, if any, as
Definitive Certificates shall have been issued to the Certificate Owners of
such Certificates:
(a) the provisions of this Section 5.05 shall be in full force and
effect;
(b) the Depositor, the Servicer and the Trustee may deal with the
Depository and the Depository Participants for all purposes (including the
making of distributions) as the authorized representative of the respective
Certificate Owners of such Certificates;
(c) the rights of the respective Certificate Owners of such
Certificates shall be exercised only through the Depository and the
Depository Participants and shall be limited to those established by law and
agreements between the Owners of such Certificates and the Depository and/or
the Depository Participants. Pursuant to the Depository Agreement, with
respect to any Book-Entry Certificates, the Depository will make book-entry
transfers among the Depository Participants and receive and transmit
distributions of principal and interest on such Certificates to such
Depository Participants;
(d) the Depository may collect its usual and customary fees,
charges and expenses from its Depository Participants;
(e) the Trustee may rely, and shall be fully protected in relying,
upon information furnished by the Depository with respect to its Depository
Participants; and
(f) to the extent that the provisions of this Section 5.05
conflict with any other provisions of this Agreement, the provisions of this
Section 5.05 shall control.
For purposes of any provision of this Agreement requiring or
permitting actions with the consent of, or at the direction of, Holders of
Certificates evidencing a specified percentage of the Voting Rights, such
consent or direction may be given by a combination of Certificate Owners
(acting through the Depository and the Depository Participants) owning Book-
Entry Certificates, and Certificateholders owning Definitive Certificates,
evidencing in the aggregate such specified percentage of the Voting Rights.
SECTION 5.06. Notices to Depository.
Whenever any notice or other communication is required to be given
to Holders of any Class of Certificates represented in whole or in part by
Book-Entry Certificates, the Trustee shall, with respect to such Book-Entry
Certificates, give all such notices and communications to the Depository
rather than to the related Certificate Owners.
SECTION 5.07. Definitive Certificates.
After any issuance of Regular Certificates as Book-Entry
Certificates, upon the request of any Certificate Owner that its interest in
such Book-Entry Certificates be exchanged for Definitive Certificates, such
Certificate Owner, upon presentation of appropriate documentation to the
Trustee as required by this Article V and subject to the rules and procedures
of the Depository, shall be entitled to be issued one or more Definitive
Certificates in an aggregate denomination equal to that of such Book-Entry
Certificates. Additionally, after any issuance of Regular Certificates as
Book-Entry Certificates, if (a) the Depositor advises the Trustee that the
Depository is no longer willing or able to discharge properly its
responsibilities under the Depository Agreement with respect to such
Certificates and the Trustee or the Depositor is unable to locate a qualified
successor, (b) the Depositor, at its sole option, advises the Trustee that it
elects to terminate the book-entry system with respect to such Certificates
through the Depository or (c) after the occurrence and continuation of a
Servicer Default, Certificate Owners of any Class of Certificates evidencing
at least 51% of the Percentage Interests represented by the Book-Entry
Certificates of such Class advise the Trustee and the Depository in writing
through the Depository Participants that the continuation of a book-entry
system with respect to such Certificates through the Depository (or its
successor) is no longer in the best interests of the Certificate Owners with
respect to such Certificates, then the Trustee shall notify all Certificate
Owners of the availability of Definitive Certificates to Certificate Owners
requesting the same.
The Depositor shall provide the Trustee with an adequate inventory
of certificates to facilitate the issuance and transfer of Definitive
Certificates. Upon surrender to the Trustee of any Book-Entry Certificates
by the Depository, accompanied by registration instructions from the
Depository for registration, the Trustee shall execute, authenticate and
deliver the Definitive Certificates that are to replace such Book-Entry
Certificates. Neither the Depositor nor the Trustee shall be liable for any
delay in delivery of such instructions and each may conclusively rely on, and
shall be protected in relying on, such instructions. Upon the issuance of
such Definitive Certificates, all references herein to obligations imposed
upon or to be performed by the Depository shall be deemed to be imposed upon
and performed by the Trustee, to the extent applicable with respect to such
Definitive Certificates, and the Trustee shall recognize the Holders of such
Definitive Certificates as Certificateholders hereunder.
ARTICLE VI
CITYSCAPE, THE DEPOSITOR AND THE SERVICER
SECTION 6.01. Liability of Cityscape, the Depositor and the
Servicer.
Cityscape, the Depositor and the Servicer each shall be severally
liable in accordance herewith only to the extent of the obligations
specifically imposed by this Agreement and undertaken herein by Cityscape,
the Depositor and the Servicer, respectively.
SECTION 6.02. Merger or Consolidation of Cityscape or the
Servicer.
Subject to the following paragraph, Cityscape will keep in full
effect its existence, rights and franchises as a corporation under the laws
of the jurisdiction of its incorporation. The Servicer will keep in full
effect its existence, rights and franchises as a corporation organized under
the laws of the State of New York (or under the laws of such other
jurisdiction as may in the future issue a charter for the Servicer).
Cityscape and the Servicer each will (and the Servicer will require each Sub-
Servicer in the related Sub-Servicing Agreement to) obtain and preserve its
qualification to do business as a foreign corporation in each jurisdiction in
which such qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, the Certificates or any of the Mortgage
Loans and to perform its respective duties under this Agreement.
Cityscape or the Servicer may be merged or consolidated with or
into any Person, or transfer all or substantially all of its assets to any
Person, in which case any Person resulting from any merger or consolidation
to which Cityscape or the Servicer shall be a party, or any Person succeeding
to the business of Cityscape or the Servicer, shall be the successor of
Cityscape or the Servicer, as the case may be, hereunder, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding; provided,
--------
however, that the successor or surviving Person to the Servicer shall satisfy
- -------
the requirements of Sections 6.06 and 7.02 hereof with respect to the
qualifications of a successor Servicer.
SECTION 6.03. Limitation on Liability of Cityscape, the Depositor,
the Servicer and Others.
None of Cityscape, the Depositor or the Servicer or any of the
directors, officers, employees or agents of Cityscape, the Depositor or the
Servicer, or members or affiliates of the Depositor shall be under any
liability to the Trust or the Certificateholders for any action taken, or for
refraining from the taking of any action, in good faith pursuant to this
Agreement, or for errors in judgment; provided, however, that this provision
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shall not protect Cityscape, 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 Cityscape, 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 duties of the Servicer, the
Depositor or Cityscape, as the case may be, or by reason of reckless
disregard of obligations and duties of the Servicer, the Depositor or
Cityscape, as the case may be, hereunder. Cityscape, the Depositor, the
Servicer and any director, officer, employee or agent of Cityscape, 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.
The Servicer, Cityscape and the Depositor and any director,
officer, employee or agent of the Servicer, Cityscape or the Depositor and
any member or affiliate of 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 Certificates, other than any loss, liability or expense related to any
specific Mortgage Loan or Mortgage Loans (except to the extent any such loss,
liability or expense is 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, none of Cityscape, the Depositor or 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
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Cityscape, the Depositor or the Servicer may, with the prior consent of the
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 Certificateholders
hereunder. In such event, the legal expenses and costs of such action, and
any liability resulting therefrom, shall be expenses, costs and liabilities
of the Trust, and Cityscape, the Depositor and the Servicer shall be entitled
to be reimbursed therefor out of the Collection Account.
SECTION 6.04. Limitation on Resignation of the Servicer; No
Assignment or Delegation of Duties by Servicer.
The Servicer shall not resign from the obligations and duties
hereby imposed on it except upon determination that its duties hereunder are
no longer permissible under applicable law. Any such determination pursuant
to 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 Trustee. No resignation of the Servicer
shall become effective until the Trustee or a successor servicer, appointed
pursuant to the provisions of Section 3.26(b) hereof and satisfying the
requirements of Sections 6.06 and 7.02 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 (except as permitted by Section 3.02 hereof) 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 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 6.05. Rights of Cityscape, the Depositor, the
Certificateholders and Others in Respect of the
Servicer.
The Servicer shall (and shall require any Sub-Servicer in the
related Sub-Servicing Agreement to) afford Cityscape the Depositor, the
Trustee and any Regular Certificateholder which has a greater than 10%
Percentage Interest in the related Class and any representative or agent of
the foregoing, upon reasonable prior notice, during normal business hours,
access to all records maintained by the Servicer in respect of its rights and
obligations hereunder and access to officers of the Servicer and each Sub-
Servicer responsible for such obligations. Upon request and at such
requesting party's expense, the Servicer shall furnish to Cityscape, the
Depositor, any Certificateholder and the Trustee the Servicer's most recent
publicly available financial statements and each Sub-Servicer's most recent
financial statements (annual or quarterly statements, as the case may be) and
such other information reasonably relating to their capacity to perform their
obligations under this Agreement as the Servicer or such Sub-Servicer
possesses.
To the extent such information is not otherwise available to the
public, Cityscape, the Depositor, the Certificateholders, the Servicer (with
respect to information of any Sub-Servicer) and the Trustee shall not
disseminate any information obtained pursuant to the preceding two sentences
without the written consent of the Servicer or the Sub-Servicer (only with
respect to information of such Sub-Servicer) except as required pursuant to
this Agreement or to the extent that it is necessary to do so (i) in working
with legal counsel, auditors, taxing authorities or other governmental
agencies for reasons consistent with the performance of their respective
duties or (ii) pursuant to any law, rule, regulation, order, judgment, writ,
injunction or decree of any court or governmental authority, or as may be
required in any report submitted to any regulatory body, having jurisdiction
over Cityscape, the Depositor, the Servicer, the Trustee, any
Certificateholder or the Trust Estate, as the case may be, and in any case,
Cityscape, the Depositor, the Servicer (with respect to information of any
Sub-Servicer) or the Trustee, as the case may be, shall use its best efforts
to assure the confidentiality of any such disseminated non-public
information.
SECTION 6.06. Eligibility Requirements for Servicer.
The Servicer hereunder shall at all times be a corporation or a
state-chartered or national bank acceptable to the Trustee. The Servicer
shall be organized and doing business under the laws of the United States of
America or any state thereof or the District of Columbia and have, except in
the case of the original Servicer, having equity of at least $25,000,000 (or
such lower level as may be acceptable to the Trustee). In case at any time
the Servicer shall cease to be eligible in accordance with the provisions of
this Section 6.06, the Servicer shall resign immediately in the manner and
with the effect specified in Section 7.02(a) hereof.
ARTICLE VII
DEFAULT
SECTION 7.01. Servicer Defaults; Certain Matters Affecting the
Servicer.
(a) "Servicer Default", wherever used herein, means any one of the
following events:
(i) any failure by the Servicer to deposit into the Collection
Account and the Certificate Account any amount (other than a Delinquency
Advance required to be made from its own funds) that it is required to
deposit under the terms of this Agreement, which failure continues
unremedied for a period of two Business Days after the date upon which
such payment was required to be remitted or paid; or
(ii) any failure on the part of the Servicer duly to observe or
perform in any material respect any other of the covenants or agreements
on the part of the Servicer contained in the Certificates or in this
Agreement, which failure continues unremedied for a period of 30 days
after the first date on which (x) a Servicing Officer has knowledge of
such failure or (y) written notice of such failure, requiring the same
to be remedied, shall have been given to a Servicing Officer by
Cityscape, the Majority Certificateholders, the Depositor or the
Trustee; or
(iii) a decree or order for relief of a court or agency or
supervisory authority having jurisdiction in the premises in an
involuntary case under any present or future federal or state
bankruptcy, insolvency or similar law or the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment of
debt, marshalling of assets and liabilities or similar proceeding, 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 45 days; or
(iv) the Servicer shall consent to the appointment of a conservator
or receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings of or
relating to the Servicer or of or relating to all or substantially all
of its property; or
(v) the Servicer shall admit in writing its inability to pay its
debts generally as they become due, file a petition to take advantage of
any applicable insolvency or reorganization statute, make an assignment
for the benefit of its creditors, or voluntarily suspend payment of its
obligations; or
(vi) if Cityscape is the Servicer, any failure of Cityscape to
repurchase, or substitute a Qualified Substitute Mortgage Loan for, any
Mortgage Loan as required by Section 2.06 hereof; or
(vii) any failure of the Servicer to pay any Delinquency Advance or
any amount in respect of Prepayment Interest Shortfalls on any Servicer
Remittance Date required to be made from its own funds pursuant to
Section 3.23 or 4.06 hereof, respectively, which failure continues
unremedied for a period of one Business Day; or
(viii) (reserved.); or
(ix) either (a) the Servicer fails to make any payment due with
respect to recourse debt or other obligations which such debt or
obligations have an aggregate principal balance of $750,000 or more; or
(b) the occurrence of any event or the existence of any condition, the
effect of which is to cause (or permit one or more Persons to cause)
$750,000 or more of recourse debt or other obligations of the Servicer
to become due before their stated maturity or before their regularly
scheduled dates of payment, in each case, so long as such failure, event
or condition shall be continuing and shall not have been waived by the
Person or Persons entitled to performance; or
(x) the rendering against the Servicer of a final judgment, decree
or order for the payment of money in excess of $750,000 which is
uninsured, and the continuance of such judgment, decree or order
unsatisfied and in effect for any period of 60 consecutive days without
a stay of execution; or
(xi) the stockholders' equity of the Servicer calculated in
accordance with generally accepted accounting principles is less than
$20,000,000; or
(xii) a Servicer Termination Trigger Event is occurring; or
(xiii) the merger, consolidation or other combination of the Servicer
with or into any other entity, unless (1) the Servicer is the surviving
entity of such combination or (2) the surviving entity is a corporation
or a national or state-chartered bank or a national banking association
that is (x) organized and doing business under the laws of any state or
the United States or any state thereof or the District of Columbia and
(y) acceptable to the Majority Class R Certificateholders.
If a Servicer Default shall occur, then, and in each and every such
case, so long as such Servicer Default shall not have been remedied, the
Trustee, at the direction of the Majority Certificateholders with respect to
the related Group may, by notice in writing to the Servicer, the Trustee, the
Depositor, Cityscape and each related Certificateholder, terminate all of the
rights and obligations of the Servicer in its capacity as Servicer with
respect to either Group or both Groups, as applicable under this Agreement,
to the extent permitted by law, and in and to the related Mortgage Loans and
the proceeds thereof.
On and after the receipt by the Servicer of any such written
notice, all authority and power of the Servicer under this Agreement, whether
with respect to the Certificates (other than as a Holder of any Certificate)
or the Mortgage Loans of one or both Groups, as applicable, or otherwise,
shall pass to and be vested in the Trustee or other successor Servicer
appointed pursuant to Section 3.26 hereof and, without limitation, the
Trustee or such other successor Servicer is hereby authorized and empowered,
as attorney-in-fact or otherwise, to execute and deliver, on behalf of and at
the expense of the Servicer, any and all documents and other instruments and
to do or accomplish all other acts or things necessary or appropriate to
effect the purposes of such notice of termination, whether to complete the
transfer and endorsement or assignment of the related Mortgage Loans and
related documents, or otherwise.
The Servicer agrees promptly (and in any event no later than ten
Business Days subsequent to such notice) to provide the successor Servicer
with all documents and records requested by it to enable it to assume the
functions of the Servicer under this Agreement with respect to the related
Group or Groups, and to cooperate with the successor Servicer in effecting
the termination of the Servicer's responsibilities and rights under this
Agreement, including, without limitation, the transfer within one Business
Day, to the successor Servicer or its designee for administration, of all
cash amounts which shall at the time be or should have been credited by the
Servicer to any Account, or which shall thereafter be received with respect
to the related Mortgage Loans or any related REO Property (provided, however,
that the Servicer shall continue to be entitled
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to receive all amounts accrued or owing to it under this Agreement on or
prior to the date of such termination, whether in respect of Delinquency
Advances or otherwise and shall continue to be entitled to the benefit of
Section 6.03 hereof, notwithstanding such termination).
For purposes of this Section 7.01, the Trustee shall not be deemed
to have knowledge of a Servicer Default unless a Responsible Officer of the
Trustee has actual knowledge thereof or unless written notice of any event
which is in fact such a Servicer Default is received at the notice address of
the Trustee provided herein and such notice references the Certificates,
Cityscape, the Depositor, the Trust or this Agreement.
(b) All rights of action under this Agreement or under any of the
Certificates, enforceable by the Servicer on behalf of Trustee, may be
enforced by it without the possession of any of the Certificates, or the
production thereof at the trial or other proceeding relating thereto, and any
such suit, action or proceeding instituted by the Servicer on behalf of
Trustee shall be brought in its name for the benefit of all the Holders of
such Certificates, subject to the provisions of this Agreement.
SECTION 7.02. Trustee to Act; Appointment of Successor.
On and after the day the Servicer receives a notice of termination
pursuant to Section 7.01 hereof or on and after the day the Servicer becomes
ineligible to act as Servicer due to an inability to meet the eligibility
requirements of Section 6.07 hereof, and unless a successor Servicer other
than the Trustee shall have been appointed pursuant to Section 3.26 hereof,
the Trustee shall be the successor in all respects to the Servicer in its
capacity as Servicer under this Agreement with respect to the related Group
or Groups and the transactions set forth or provided for herein and shall be
subject to all the responsibilities, duties and liabilities relating thereto
and arising thereafter placed on the Servicer (except for any representations
or warranties of the Servicer and any obligation to repurchase a Mortgage
Loan for any reason hereunder) by the terms and provisions hereof, including,
without limitation, the Servicer's obligations to make Delinquency Advances
pursuant to Section 4.06 hereof (but only to the extent that it determines
that such Delinquency Advance would not be a Nonrecoverable Delinquency
Advance) and payments of Prepayment Interest Shortfalls pursuant to Section
3.23 hereof (including, if the Servicer was terminated in connection with a
Servicer Default described in Section 7.01(a)(vii) hereof, the Delinquency
Advance(s) and/or Prepayment Interest Shortfalls not made by the Servicer
which resulted in such termination); provided, however, that if the Trustee
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is prohibited by law or regulation (as evidenced by an Independent Opinion of
Counsel) from obligating itself to make advances regarding delinquent
Mortgage Loans, then the Trustee shall not be obligated to make Delinquency
Advances or payments in respect of Prepayment Interest Shortfalls; and
provided, further, that any failure to perform such duties or
- -------- -------
responsibilities caused by the Servicer's failure to provide the documents
and records required by Section 7.01 hereof shall not be considered a default
by the Trustee as successor to the Servicer hereunder.
Notwithstanding the above, if the Trustee shall be unable to so act
as successor Servicer or if the Trustee is prohibited by law from making
advances regarding delinquent Mortgage Loans or making payments in respect of
Prepayment Interest Shortfalls, and in such event that the procedures
described in Section 3.26 hereof have not commenced within a reasonable
period of time, then the Trustee shall petition a court of competent
jurisdiction to appoint, as the successor to the Servicer under this
Agreement in the assumption of all or any part of the responsibilities,
duties or liabilities of the Servicer under this Agreement, any established
mortgage loan servicing institution qualified to service mortgage loans such
as the Mortgage Loans which meets the eligibility requirements of Section
6.07 hereof.
In connection with such appointment made by such court, the Trustee
may make such arrangements for the compensation of such successor out of
payments on Mortgage Loans as it and such successor shall agree; provided,
--------
however, that no such compensation shall be in excess of that permitted the
- -------
Servicer as such hereunder. Cityscape, the Trustee and such successor shall
take such action, consistent with this Agreement, as shall be necessary to
effect any such succession. Upon a successor Servicer's acceptance of its
appointment by such court, the Trustee shall notify in writing Cityscape,
each Certificateholder, the Depositor and each Rating Agency of such
appointment.
No appointment of a successor to the Servicer under this Agreement
shall be effective until the assumption by the successor to the Servicer of
all the responsibilities, duties and liabilities hereunder with respect to
the related Group or Groups, except as otherwise provided herein.
Any successor to the Servicer, other than a successor appointed by
a court of competent jurisdiction upon the petition of the Trustee, shall be
entitled to receive, as compensation therefor, the Servicing Fee, calculated
at a servicing fee rate to be agreed upon at the time between such successor
and Cityscape (it being acknowledged that the Trustee as Successor Servicer
shall be entitled to the Servicing Fee Rate provided for herein), but not in
excess of the Servicing Fee Rate, and all funds relating to the Mortgage
Loans which the Servicer would have been entitled to if the Servicer had
continued to act hereunder.
The successor Servicer (other than the Trustee) shall be solely
liable for all costs and expenses associated with the transfer of servicing
to such successor Servicer, other than the costs and expenses of sending to
the successor Servicer any Mortgage Loan files and records held by the
Servicer being replaced, for which costs and expenses the Servicer being
replaced shall have sole responsibility.
SECTION 7.03. Notification to Mortgagors and Certificateholders.
(a) Upon any such termination pursuant to Section 7.02 hereof or
the appointment of a successor to the Servicer, the Trustee shall, at the
expense of the Servicer, give prompt written notice thereof to the related
Certificateholders at their respective addresses appearing in the Certificate
Register and to the related Mortgagors at their respective addresses
appearing in the Mortgage Loan Schedule.
(b) Within three Business Days after the occurrence of any event
which constitutes or which, with notice or lapse of time or both, would
constitute a Servicer Default, the Trustee shall transmit by mail, at the
expense of the Servicer, to all Holders of Certificates of the related Group,
notice of any Servicer Default actually known to a Responsible Officer of the
Trustee.
SECTION 7.04. Additional Remedies of Trustee upon Servicer
Defaults.
Upon any Servicer Default, the Trustee shall have the right, in its
own name and as Trustee, to take all actions now or hereafter existing at
law, in equity or by statute to enforce its rights and remedies and to
protect the interests, and enforce the rights and remedies, of the
Certificateholders (including the institution and prosecution of all
judicial, administrative and other proceedings and the filings of proofs of
claim and debt in connection therewith). No remedy provided for by this
Agreement shall be exclusive of any other remedy, and each and every remedy
shall be cumulative and in addition to any other remedy and no delay or
omission to exercise any right or remedy shall impair any such right or
remedy or shall be deemed to be a waiver of any Servicer Default.
SECTION 7.05. Waiver of Servicer Defaults.
The Majority Certificateholders may waive any Servicer Default and
its consequences, except that a default in the making of any required deposit
into the Collection Account or the Certificate Account that would result in a
failure by the Trustee to make any required distribution on the Certificates
may be waived only by all of the Certificateholders of the related Group.
Upon any waiver of a past Servicer Default, such Servicer Default shall cease
to exist, and any Servicer 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 Servicer Default or impair any right
consequent thereto except to the extent expressly so waived. Notice of any
such waiver shall be given by the Trustee to each Rating Agency and to all
Certificateholders of the related Group.
SECTION 7.06. Survivability of Servicer Liabilities.
Notwithstanding anything herein to the contrary, upon termination
of the Servicer hereunder, any liabilities of the Servicer which accrued
prior to such termination shall survive such termination.
ARTICLE VIII
CONCERNING THE TRUSTEE
SECTION 8.01. Duties of Trustee.
The Trustee, prior to the occurrence of a Servicer Default and
after the curing of all Servicer Defaults which may have occurred, undertakes
to perform such duties and only such duties as are specifically set forth in
this Agreement. During a Servicer Default, the Trustee shall exercise such
of the rights and powers vested in it by this Agreement, and use the same
degree of care and skill in their exercise, as a prudent person would
exercise or use under the circumstances in the conduct of such person's own
affairs. Any permissive right of the Trustee enumerated in this Agreement
shall not be construed as a duty.
The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments
furnished to the Trustee which are specifically required to be furnished
pursuant to any provision of this Agreement, shall examine them to determine
whether they are in the form specified in this Agreement.
The Trustee may, in accordance with its duties hereunder, do all
things necessary and proper as may be required in connection with any
secondary mortgage licensing laws and similar requirements, including, but
not limited, to consenting to jurisdiction, and the appointment of agents for
service of process, in jurisdictions in which the Mortgaged Properties are
located.
No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent
failure to act or its own willful misconduct; provided, however, that:
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(i) Prior to the occurrence of a Servicer Default, and after the
curing of all such Servicer Defaults which may have occurred, the duties
and obligations of the Trustee shall be determined solely by the express
provisions of this Agreement, the Trustee shall not be liable except for
the performance of such duties and obligations as are specifically set
forth in this Agreement, no implied covenants or obligations shall be
read into this Agreement against the Trustee and, in the absence of bad
faith on the part of the Trustee, the Trustee may conclusively rely, as
to the truth of the statements and the correctness of the opinions
contained therein (including, but not limited to, Servicer Information),
upon any certificates or opinions furnished to the Trustee that are in
the forms specified in this Agreement;
(ii) The Trustee shall not be personally liable for an error of
judgment made in good faith by a Responsible Officer or Responsible
Officers of the Trustee, unless it shall be proved that the Trustee was
negligent in ascertaining the pertinent facts; and
(iii) The Trustee shall not be liable with respect to any action
taken, suffered or omitted to be taken by it in good faith in accordance
with the direction of the Majority Certificateholders issued to the
Trustee pursuant to Section 8.13 hereof.
The Trustee shall, upon receipt of the request substantially in the form
of Exhibit O attached hereto, prepare, issue and forward to the Servicer
checks for refunds and expenses indicated on such request.
SECTION 8.02. Certain Matters Affecting the Trustee.
(a) Except as otherwise provided in Section 8.01 hereof:
(i) The Trustee may request and rely upon and shall be protected
in acting or refraining from acting upon any resolution, Officers'
Certificate, certificate of auditors or any other certificate,
statement, instrument, opinion, report, notice, request, consent, order,
appraisal, bond or other paper or document (including, but not limited
to, Servicer Information) reasonably believed by it to be genuine and to
have been signed or presented by the proper party or parties;
(ii) The Trustee may consult with counsel and any Opinion of
Counsel shall be full and complete authorization and protection in
respect of any action taken or suffered or omitted by it hereunder in
good faith and in accordance with such Opinion of Counsel;
(iii) The Trustee shall be under no obligation to exercise any of
the trusts or powers vested in it by this Agreement or to make any
investigation of matters arising hereunder to institute, conduct or
defend any litigation hereunder or in relation hereto at the request,
order or direction of any of the Certificateholders, pursuant to the
provisions of this Agreement, unless such Certificateholders shall have
offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which may be incurred therein or thereby
(provided that an unsecured letter of indemnity in a form reasonably
satisfactory to the Trustee from a Holder which is an insurance company
having long-term unsecured debt that is rated at least investment grade
(or has a comparable claim-paying ability rating) and having a minimum
net worth of $100,000,000 shall satisfy such requirement); nothing
contained herein shall, however, relieve the Trustee of the obligation,
upon the occurrence of a Servicer Default of which the Trustee has
actual knowledge (which has not been cured or waived), to exercise such
of the rights and powers vested in it by this Agreement, and to use the
same degree of care and skill in their exercise as a prudent person
would exercise or use under the circumstances in the conduct of such
person's own affairs;
(iv) The Trustee shall not be personally liable for any action
taken, suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon
it by this Agreement;
(v) Prior to the occurrence of a Servicer Default hereunder and
after the curing of all Servicer Defaults which may have occurred, the
Trustee shall not be bound to make any investigation into the facts or
matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, bond or
other paper or document, unless requested in writing to do so by the
Majority Certificateholders; provided, however, that if the payment of
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the costs, expenses or liabilities likely to be incurred by it in the making
of such investigation is, in the opinion of the Trustee, not reasonably
assured to the Trustee by the security afforded to it by the terms of this
Agreement, the Trustee may require reasonable indemnity (provided that an
unsecured letter of indemnity in a form reasonably satisfactory to the
Trustee from a Holder which is an insurance company having long-term
unsecured debt which is rated at least investment grade (or having a
comparable claim-paying ability rating) and having a minimum net worth of
$100,000,000 shall satisfy such requirement) against such expense or
liability as a condition to taking any such action. The reasonable expense
of every such examination shall be paid by the Servicer or, if paid by the
Trustee, shall be repaid by the Servicer upon demand;
(vi) The Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents
or attorneys; and
(vii) The Trustee shall not be personally liable for any loss
resulting from the investment of funds at the direction of the Servicer
or Cityscape held in any Account; provided, however, that the Trustee
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shall be personally liable on any investment on which the Trustee or an
affiliate thereof is the obligor and has defaulted.
(b) Following the Closing Date, and except as otherwise provided
in this Agreement, the Trustee shall not knowingly accept any contribution of
assets to the Trust unless it shall have been provided with an Opinion of
Counsel at the expense of the party delivering such assets acceptable to it
to the effect that the inclusion of such assets in either REMIC Trust will
not cause such REMIC Trust to fail to qualify as a REMIC at any time that any
Certificates are outstanding or subject the Trust to any tax under the REMIC
Provisions or other applicable provisions of federal, state and local law or
ordinances.
(c) All rights of action under this Agreement or under any of the
Certificates, enforceable by the Trustee, may be enforced by it without the
possession of any of the Certificates, or the production thereof at the trial
or other proceeding relating thereto, and any such suit, action or proceeding
instituted by the Trustee shall be brought in its name for the benefit of all
the Holders of such Certificates, subject to the provisions of this
Agreement.
SECTION 8.03. Trustee Not Liable for Certificates or Mortgage
Loans.
The recitals contained herein and in the Certificates (other than
the signature on the Certificates) shall be taken as the statements of
Cityscape, and the Trustee assumes no responsibility for their correctness.
The Trustee makes no representations or warranties as to the validity or
sufficiency of this Agreement or of the Certificates (other than the
signature of the Trustee on the Certificates) or of any Mortgage Loan or
related document. The Trustee shall not be accountable for the use or
application by Cityscape, the Depositor, the Servicer of any of the
Certificates or of the proceeds of such Certificates, or for the use or
application of any funds paid to Cityscape, the Depositor or the Servicer in
respect of the Mortgage Loans or for the use or application of any funds
deposited into or withdrawn from the Collection Account by the Servicer.
SECTION 8.04. Trustee May Own Certificates.
The Trustee in its individual capacity or any other capacity may
become the owner or pledgee of Certificates with the same rights it would
have if it were not Trustee.
SECTION 8.05. Expenses of Trustee.
The Trustee's Fee shall be paid as described in Section 4.04
hereof. In addition, Cityscape covenants and agrees to pay or reimburse the
Trustee, upon request, for all reasonable expenses, disbursements and
advances incurred or made by the Trustee, and any director, officer, employee
or agent acting for and on behalf of the Trustee, in accordance with any of
the provisions of this Agreement (including the reasonable compensation and
the expenses and disbursements of its counsel and of all persons not
regularly in its employ, whether or not such expenses are incurred in
connection with any Opinion of Counsel obtained or permitted to be obtained
by the Trustee) except any such expense, disbursement or advance as may arise
from its negligence or bad faith. The Trustee and any director, officer,
employee or agent of the Trustee shall be indemnified by Cityscape and held
harmless against any loss, liability or expense incurred in connection with
or relating to this Agreement or the Certificates, or the performance of any
of the Trustee's duties hereunder, other than any loss, liability or expense
incurred by reason of willful misfeasance, bad faith or negligence in the
performance of duties hereunder; provided, however, that with respect to any
--------such loss, liability or expense, the-
- ------ Trustee shall have given to Cityscape, the Depositor, the Servicer and
the Certificateholders written notice thereof promptly after the Trustee
shall have knowledge thereof. Such indemnity shall survive the termination
or discharge of this Agreement and the resignation or removal of the Trustee.
SECTION 8.06. Trustee Eligibility Requirements.
The Trustee hereunder shall at all times be a corporation or a
national or state-chartered bank or a national banking association that is
not an affiliate of Cityscape or the Servicer, organized and doing business
under the laws of the United States of America or any state thereof or the
District of Columbia, authorized under such laws to exercise corporate trust
powers, having a combined capital and surplus of at least $100,000,000 and
subject to supervision or examination by federal or state authority. If such
corporation or association publishes reports of conditions at least annually,
pursuant to law or to the requirements of the aforesaid supervising or
examining authority, then for the purposes of this Section 8.06 the combined
capital and surplus of such corporation, bank or association shall be deemed
to be its combined capital and surplus as set forth in its most recent report
of conditions so published. In case at any time any Trustee shall cease to
be eligible in accordance with the provisions of this Section 8.06, the
Trustee shall resign immediately in the manner and with the effect specified
in Section 8.07 hereof. The corporation, bank or association serving as
Trustee may have normal banking and trust relationships with Cityscape and
the Servicer and the respective affiliates.
SECTION 8.07. Resignation and Removal of the Trustee.
The Trustee may at any time resign and be discharged from the
trusts hereby created by giving written notice thereof to Cityscape, the
Depositor, the Servicer and to all Certificateholders. Upon receiving such
notice of any such resignation, the Servicer shall select a successor Trustee
and shall present such party to the Majority Certificateholders and upon
their joint approval such party shall promptly be appointed successor trustee
by written instrument, in duplicate, which instrument shall be delivered to
the resigning Trustee and to the successor trustee. A copy of such
instrument shall be delivered to the Certificateholders and Cityscape by the
Servicer. If no successor trustee shall have been so appointed and accepted
appointment within 30 days after the giving of such notice of resignation,
the resigning Trustee may petition any court of competent jurisdiction for
the appointment of a successor trustee.
If at any time the Trustee shall cease to be eligible in accordance
with the provisions of Section 8.06 hereof and shall fail to resign after
written request therefor, or if at any time the Trustee shall become
incapable of acting, or shall be adjudged bankrupt or insolvent, or a
receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then
the Servicer shall solicit and present to the Majority Certificateholders a
written instrument removing the Trustee and appointing a successor trustee
and, upon their joint written approval, such instrument shall be delivered to
the Trustee so removed and to the successor trustee. A copy of such
instrument shall be delivered to the Certificateholders and Cityscape by the
Servicer.
The Majority Certificateholders may at any time remove the Trustee
and appoint a successor by written instrument or instruments, in triplicate,
signed by such Holders or their attorneys-in-fact duly authorized, one
complete set of which instruments shall be delivered to Cityscape, one
complete set to the Trustee so removed and one complete set to the successor
so appointed. A copy of such instrument shall be delivered to the
Certificateholders, the Servicer and Cityscape by the Trustee.
Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section 8.07
shall not become effective until acceptance of appointment by the successor
trustee as provided in Section 8.08 hereof.
SECTION 8.08. Successor Trustee.
Any successor trustee appointed as provided in Section 8.07 hereof
shall execute, acknowledge and deliver to the Certificateholders, the
Servicer and to its predecessor trustee an instrument accepting such
appointment hereunder, and thereupon the resignation or removal of the
predecessor trustee shall become effective and such successor trustee,
without any further act, deed or conveyance, shall become fully vested with
all the rights, powers, duties and obligations of its predecessor hereunder,
with the like effect as if originally named as trustee herein. The
predecessor trustee shall deliver to the successor trustee all Mortgage Files
and related documents and statements held by it hereunder (other than any
Mortgage Files at the time held by a custodian, which shall become the agent
of any successor trustee hereunder), and Cityscape, the Servicer and the
predecessor trustee shall execute and deliver such instruments and do such
other things as may reasonably be required for more fully and certainly
vesting and confirming in the successor trustee all such rights, powers,
duties and obligations.
No successor trustee shall accept appointment as provided in this
Section 8.08 unless at the time of such acceptance such successor trustee
shall be eligible under the provisions of Section 8.06 hereof.
Upon acceptance of appointment by a successor trustee as provided
in this Section 8.08, the predecessor trustee shall mail notice of the
succession of such trustee hereunder to each Holder of Certificates at their
respective addresses as shown in the Certificate Register and to each Rating
Agency. If the predecessor trustee fails to mail such notice within ten (10)
days after acceptance of appointment by the successor trustee, the successor
trustee shall cause such notice to be mailed at the expense of the
predecessor trustee.
The Trustee shall not be liable for the acts or omissions to act of
any successor Trustee appointed hereunder.
SECTION 8.09. Merger or Consolidation of Trustee.
Any corporation, bank or association into which the Trustee may be
merged or converted or with which it may be consolidated or any corporation
or association resulting from any merger, conversion or consolidation to
which the Trustee shall be a party, or any corporation, bank or association
succeeding to the business of the Trustee, shall be the successor of the
Trustee hereunder, provided such corporation, bank or association shall be
eligible under the provisions of Section 8.06 hereof, without the execution
or filing of any paper or any further act on the part of any of the parties
hereto.
SECTION 8.10. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions hereof, at any time for the
purpose of meeting any legal requirements of any jurisdiction in which any
part of the Trust Estate or property securing the same may at the time be
located, the Trustee shall have the power and shall execute and deliver all
instruments to appoint one or more Persons approved by the Trustee to act as
co-trustee or co-trustees, jointly with the Trustee, or separate trustee or
separate trustees, of all or any part of the Trust Estate, and to vest in
such Person or Persons, in such capacity, such title to the Trust Estate, or
any part thereof, and, subject to the other provisions of this Section 8.10,
such powers, duties, obligations, rights and trusts as Cityscape and the
Trustee may consider necessary or desirable. If the Trustee shall not have
joined in such appointment within 15 days after the receipt by it of a
request so to do, the Holders of 25% of the Voting Rights shall have the
power to make such appointment. No co-trustee or separate trustee hereunder
shall be required to meet the terms of eligibility as a successor trustee
under Section 8.06 hereof and no notice to Holders of Certificates of the
appointment of co-trustee(s) or separate trustee(s) shall be required under
Section 8.08 hereof.
In the case of any appointment of a co-trustee or separate trustee
pursuant to this Section 8.10, all rights, powers, duties and obligations
conferred or imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or co-trustee
jointly, except to the extent that, under any law of any jurisdiction in
which any particular act or acts are to be performed by the Trustee (whether
as Trustee hereunder or as successor to the Servicer hereunder), the Trustee
shall be incompetent or unqualified to perform such act or acts, in which
event such rights, powers, duties and obligations (including the holding of
title to the Trust or any portion thereof in any such jurisdiction) shall be
exercised and performed by such separate trustee or co-trustee at the
direction of the Trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-
trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement
and the conditions of this Article VIII. Each separate trustee and co-
trustee, upon its acceptance of the trusts conferred, shall be vested with
the estates or property specified in its instrument of appointment, either
jointly with the Trustee or separately, as may be provided therein, subject
to all the provisions of this Agreement, specifically including every
provision of this Agreement relating to the conduct of, affecting the
liability of, or affording protection to, the Trustee. Every such instrument
shall be filed with the Trustee.
Any separate trustee or co-trustee may, at any time, constitute
the Trustee, its agent or attorney-in-fact with full power and authority, to
the extent not prohibited by law, to do any lawful act under or in respect of
this Agreement on its behalf and in its name. If any separate trustee or co-
trustee shall die, become incapable of acting, resign or be removed, all of
its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
SECTION 8.11. Trustee Records.
The Trustee shall afford Cityscape, the Depositor, the Servicer and
each Certificateholder, upon reasonable notice during normal business hours,
access to all records maintained by the Trustee in respect of its duties
hereunder and access to officers of the Trustee responsible for performing
such duties, such inspection to take place at 180 East Fifth Street, St.
Paul, Minnesota 55101 or such other place as designated by the Trustee.
Upon request, the Trustee shall furnish the Servicer and any requesting
Certificateholder with its most recent financial statements. The Trustee
shall cooperate fully with Cityscape, the Servicer and such Certificateholder
and shall make available to Cityscape, the Servicer and such
Certificateholder for review and copying such books, documents or records as
may be requested with respect to the Trustee's duties hereunder. Cityscape,
the Servicer and the Certificateholders shall not have any responsibility or
liability for any action or failure to act by the Trustee and are not
obligated to supervise the performance of the Trustee under this Agreement or
otherwise.
SECTION 8.12. Appointment of Office or Agency.
The Trustee designates its office at 180 East Fifth Street, St.
Paul, Minnesota 55101 as its agency where the Certificates may be
surrendered for registration of transfer or exchange and presented for final
distribution. The Trustee designates its offices at 180 East Fifth Street,
St. Paul, Minnesota 55101, as the office at which notices and demands to or
upon the Trustee in respect of the Certificates may be served and will notify
the Certificateholders of any change in the location of such office or
agency.
SECTION 8.13. Exercise of Trustee Powers by Certificateholders.
Subject to the provisions of this Article VIII, the Majority
Certificateholders may direct the time, method and place of conducting any
proceeding relating to the Trust or the Certificates or for any remedy
available to the Trustee in its capacity as Trustee (and not in its
individual capacity) with respect to the Certificates or exercising any trust
or power conferred on the Trustee with respect to the Certificates of the
Trust; provided, however, that:
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(i) such direction shall not be in conflict with any
rule of law or with this Agreement; and
(ii) the Trustee shall have been provided with indemnity
satisfactory to it (provided that an unsecured letter of indemnity
in a form reasonably satisfactory to the Trustee from a Holder
which is an insurance company having long-term unsecured debt that
is rated at least investment grade (or having a comparable claim-
paying ability rating) and having a minimum net worth of
$100,000,000 shall satisfy such requirement).
ARTICLE IX
(RESERVED)
ARTICLE X
TERMINATION
SECTION 10.01. Termination.
(a) Subject to Section 10.02 hereof, this Agreement shall
terminate upon notice to the Trustee of either: (i) the later of the
distribution to Certificateholders of the final payment or collection with
respect to the last Mortgage Loan (or advances of same by the Servicer), or
the disposition of all funds with respect to the last Mortgage Loan and the
remittance of all funds due hereunder and the payment of all amounts due and
payable to the Trustee or (ii) mutual consent of the Servicer, Cityscape and
each and every Certificateholder in writing; provided, however, that in no
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event shall the Trust established by this Agreement terminate later than the
earlier of (i) twenty-one years after the death of the last surviving lineal
descendant of John D. Rockefeller, Sr., the late President of Standard Oil
Corporation, alive as of the date hereof, and (ii) July 31, 2029.
(b) Subject to Section 10.02 hereof, the Majority Class R
Certificateholders of each Group may, at their option, terminate this
Agreement with respect to such Group on any Distribution Date following the
Call Option Date with respect to such Group by purchasing, on the Servicer
Remittance Date preceding such Distribution Date, all of the outstanding
Mortgage Loans and REO Properties of such Group at a price equal to the sum
of (x) the greater of (i) 100% of the Loan Balance of each such outstanding
Mortgage Loan and each such REO Property as of the last day of the preceding
Due Period and (ii) the fair market value (disregarding accrued interest) of
such Mortgage Loans and REO Properties, determined as the average of three
written bids (copies of which shall be delivered to the Trustee and the
Servicer) made by nationally recognized dealers, (y) 30 days' interest
thereon at a rate equal to the Mortgage Rate (or such lesser rate as may be
in effect due to the application of the Civil Relief Act) and (z) the
aggregate amount of (i) all unreimbursed Delinquency Advances, (ii) all
unreimbursed Servicing Advances relating only to such Mortgage Loans and REO
Properties relating to such Group then held as part of the Trust Estate and
(iii) any accrued and unpaid Servicing Fees relating to such Group (such sum,
the "Termination Price").
(c) Subject to Section 10.02 hereof, the Servicer may, at its
option, terminate this Agreement with respect to each Group on any
Distribution Date with respect to which the Group Principal Balance of such
Group as of the end of the related Due Period is less than or equal to 5% of
the Aggregate Maximum Collateral Amount of such Group by purchasing, on the
Servicer Remittance Date preceding such Distribution Date, all of the
outstanding Mortgage Loans and REO Properties relating to such Group at a
price equal to the Termination Price.
(d) In connection with any such purchase pursuant to either
paragraph (b) or (c) above, the Servicer shall deposit into the Certificate
Account all amounts then on deposit in the Collection Account (less amounts
permitted to be withdrawn by the Servicer pursuant to Section 3.11 hereof),
which deposit shall be deemed to have occurred immediately preceding such
purchase.
Any such purchase shall be accomplished by the deposit of the
Termination Price into the Certificate Account on the applicable Servicer
Remittance Date, which amount shall be applied to the distributions to be
made on the Distribution Date immediately following such Servicer Remittance
Date. Upon such deposit of the Termination Price, the Trustee shall pay the
Servicer the amount described in clause (z) of the definition of "Termination
Price" from the amounts on deposit in the Certificate Amount.
(e) In connection with any such purchase pursuant to either
paragraph (b) or (c) above, the party or parties effecting such purchase
shall (i) at its or their own expense, provide to the Trustee an Opinion of
Counsel experienced in federal income tax matters, in form and substance
satisfactory to the Trustee, to the effect that such purchase constitutes a
"Qualified Liquidation" of the related REMIC Trust, as such term is defined
in the REMIC Provisions, and (ii) give the Trustee and the Servicer (if the
purchaser is not the Servicer) at least 60 days' prior written notice of its
or their intent to exercise such option. The Class R Certificateholders of
the related Group and the Servicer shall at the time discuss future servicing
arrangements for the Mortgage Loans.
(f) Notice of any termination, specifying the Distribution Date
upon which the Trust will terminate shall, after the Trustee's receipt of any
such notice, be given promptly by the Trustee by letter to the
Certificateholders by first class mail or overnight delivery during the month
of such final distribution two Business Days after the Determination Date in
such month, specifying (i) the Distribution Date upon which final payment of
the Certificates will be made and (ii) the amount of any such final payment.
(g) In the event that not all of the Class R Certificateholders of
the related Group pay the Termination Price, the non-purchasing Class R
Certificateholder shall not be entitled to, and the Trustee shall not
distribute to such non-purchasing Class R Certificateholder, any of the
remaining Mortgage Loans, REO Properties or Mortgage Files, or any amount in
excess of the amount such Class R Certificateholder would have been entitled
to receive on such Distribution Date had such termination not occurred.
(h) Each Holder is required, and hereby agrees, to return to the
Trustee any Certificate with respect to which the Trustee has made the final
distribution due thereon. Any such Certificate as to which the Trustee has
made the final distribution thereon shall be deemed canceled and shall no
longer be outstanding for any purpose of this Agreement, whether or not such
Certificate is ever returned to the Trustee.
(i) In the event that any amount due to any Regular
Certificateholder remains unclaimed, the Trustee shall, at its expense, use
its best efforts to contact each such Regular Certificateholder by mail or
telephone and if such efforts fail shall cause to be published once, in the
eastern edition of The Wall Street Journal, notice that such money remains
unclaimed. Such funds shall remain uninvested and shall not accrue any
interest. If, within two years after such publication, such amount remains
unclaimed, the party or parties effecting the purchase pursuant to either
clause (b) or (c) above shall be entitled to all unclaimed funds and other
assets which remain subject hereto and the Trustee, upon transfer of such
funds, shall be discharged of any responsibility for such funds, and the
Certificateholders shall look to such party for payment.
(j) Following any purchase by the party or parties effecting the
purchase pursuant to either clause (b) or (c) above, the Trustee shall
promptly release to such party or parties the Mortgage Files for the
remaining Mortgage Loans, and the Trustee shall execute all assignments,
endorsements and other instruments necessary to effect such transfer as are
furnished by such party or parties.
SECTION 10.02. Additional Termination Requirements.
(a) In the event that the purchase of the Mortgage Loans of a
Group as provided in Section 10.01 hereof occurs, the Trust shall be
terminated with respect to such Group in accordance with the following
additional requirements, unless the party or parties effecting such purchase
obtains at its or their own expense and delivers or deliver to the Trustee an
Opinion of Counsel, addressed to Cityscape, the Servicer and the Trustee, to
the effect that the failure of such REMIC Trust to comply with the
requirements of this Section 10.02 will not (x) result in the imposition of
taxes on "prohibited transactions" of such REMIC Trust as defined in Section
860F of the Code or (y) cause such REMIC Trust to fail to qualify as a REMIC
at any time that any Certificates are outstanding:
(i) Within 90 days prior to the time of the making of the final
payment on the Certificates of a Group, the Trustee, on behalf the
related REMIC Trust, shall adopt a plan of complete liquidation of such
REMIC Trust, meeting the requirements of a qualified liquidation under
Section 860F of the Code and any regulations thereunder and shall
specify the first day of such period in a statement attached to such
REMIC Trust's final Tax Returns pursuant to Treasury Regulations
Section 1.860F1;
(ii) At or after the time of adoption of such a plan of complete
liquidation and at or prior to the time of making of the final payment
on the Certificates of a Group, the Servicer, with the cooperation of
the Trustee, shall conduct a sale of the assets of the Trust Estate
relating to such Group to the purchasing party or parties for cash; and
(iii) At the time of the making of the final payment on the
Certificates of a Group, the Trustee shall distribute or credit, or
cause to be distributed or credited, to the purchasing party or parties
all cash on hand in any Account not required to be paid to the Servicer,
the Regular Certificateholders of such Group, or any other Person, and
the Trust shall terminate with respect to such Group at that time.
(b) By their acceptance of Class R Certificates, the related
Holders thereof hereby agree to authorize the Trustee on behalf of the
related REMIC Trust to adopt a plan of complete liquidation of such REMIC
Trust, which authorization shall be binding upon all successor Class R
Certificateholders of such Group.
ARTICLE XI
MISCELLANEOUS PROVISIONS
SECTION 11.01. Amendment.
This Agreement may be amended from time to time by Cityscape, the
Depositor, the Servicer and the Trustee; and without the consent of the
Certificateholders, (i) to cure any ambiguity, (ii) to correct or supplement
any provisions herein which may be defective or inconsistent with any other
provisions herein or (iii) to make any other provisions with respect to
matters or questions arising under this Agreement which shall not be
inconsistent with the provisions of this Agreement; provided, however, that
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any such action listed in clause (i) through (iii) above shall not, as
evidenced by an Independent Opinion of Counsel delivered to the Servicer and
the Trustee, adversely affect in any respect the interests of any
Certificateholder.
In addition, this Agreement may be amended from time to time by
Cityscape, the Depositor, the Servicer and the Trustee with the consent of
the Majority Certificateholders for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions of this
Agreement or of modifying in any manner the rights of the Holders of
Certificates; provided, however, that no such amendment or waiver shall
-------- -------
(x) reduce in any manner the amount of, or delay the timing of, payments
required to be distributed on any Certificate without the consent of the
Holder of such Certificate, (y) adversely affect in any material respect the
interests of the Holders of any Class of Certificates in a manner other than
as described in clause (x) above, without the consent of the Holders of
Certificates of such Class evidencing at least a 66% Percentage Interest in
such Class, or (z) reduce the percentage of Voting Rights required by clause
(y) above without the consent of the Holders of all Certificates of such
Class then outstanding.
Notwithstanding any provision of this Agreement to the contrary,
the Trustee shall not consent to any amendment to this Agreement unless it
shall have first received an Independent Opinion of Counsel to the effect
that such amendment will not result in the imposition of a tax on either
REMIC Trust pursuant to the REMIC Provisions or cause either REMIC Trust to
fail to qualify as a REMIC at any time that any Certificates are outstanding.
Promptly after the execution of any such amendment the Trustee
shall furnish, at the expense of the Person that requested the amendment if
such Person is Cityscape or the Servicer (but in no event at the expense of
the Trustee), otherwise at the expense of the Trust, a copy of such amendment
and the Opinion of Counsel referred to in the immediately preceding paragraph
to the Servicer, each Certificateholder and each Rating Agency.
It shall not be necessary for the consent of Certificateholders
under this Section 11.01 to approve the particular form of any proposed
amendment; instead it shall be sufficient if such consent shall approve the
substance thereof. The manner of obtaining such consents and of evidencing
the authorization of the execution thereof by Certificateholders shall be
subject to such reasonable regulations as the Trustee may prescribe.
The Trustee may, but shall not be obligated to, enter into any
amendment pursuant to this 11.01 Section that affects its rights, duties and
immunities under this Agreement or otherwise.
SECTION 11.02. Recordation of Agreement; Counterparts.
To the extent permitted by applicable law, this Agreement is
subject to recordation in all appropriate public offices for real property
records in all the counties or other comparable jurisdictions in which any or
all of the properties subject to the Mortgages are situated, and in any other
appropriate public recording office or elsewhere, such recordation to be
effected by the Servicer at the expense of the Trust, to the effect that such
recordation materially and beneficially affects the interests of the
Certificateholders.
For the purpose of facilitating the recordation of this Agreement
as herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts
shall be deemed to be an original, and such counterparts shall together
constitute but one and the same instrument.
SECTION 11.03. Limitation on Rights of Certificateholders.
The death or incapacity of any Certificateholder shall not (i)
operate to terminate this Agreement or the Trust, (ii) entitle such
Certificateholder'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 the Trust, or (iii) otherwise affect the rights, obligations and
liabilities of the parties hereto or any of them.
Except as expressly provided for herein, no Certificateholder shall
have any right to vote or in any manner otherwise control the operation and
management of the Trust, or the obligations of the parties hereto, nor shall
anything herein set forth or contained in the terms of the Certificates be
construed so as to constitute the Certificateholders from time to time as
partners or members of an association; nor shall any Certificateholder be
under any liability to any third person by reason of any action taken by the
parties to this Agreement pursuant to any provision hereof.
No Certificateholder shall have any right by virtue of any
provision of this Agreement to institute any suit, action or proceeding in
equity or at law upon or under or with respect to this Agreement, unless such
Holder previously shall have given to the Trustee a written notice of default
and of the continuance thereof, as hereinbefore provided, and unless also the
Holders of Certificates entitled to at least 25% of the Voting Rights shall
have made written request upon the Trustee to institute such action, suit or
proceeding in its own name as Trustee hereunder and shall have offered to the
Trustee such reasonable indemnity (provided that an unsecured letter of
indemnity in a form reasonably satisfactory to the Trustee from a Holder
which is an insurance company having long-term unsecured debt which is rated
at least investment grade (or having a comparable claim-paying ability
rating) and having a minimum net worth of $100,000,000 shall satisfy such
requirement) as it may require against the costs, expenses and liabilities to
be incurred therein or thereby, and the Trustee for 15 days after its receipt
of such notice, request and offer of indemnity, shall have neglected or
refused to institute any such action, suit or proceeding. It is understood
and intended, and expressly covenanted by each Certificateholder with every
other Certificateholder and the Trustee, that no one or more Holders of
Certificates shall have any right in any manner whatever by virtue of any
provision of this Agreement to affect, disturb or prejudice the rights of the
Holders of any other of such Certificates, or to obtain or seek to obtain
priority over or preference to any other such Holder, which priority or
preference is not otherwise provided for herein, or to enforce any right
under this Agreement, except in the manner herein provided and for the equal,
ratable and common benefit of all Certificateholders. For the protection and
enforcement of the provisions of this Section 11.03 each and every
Certificateholder and the Trustee shall be entitled to such relief as can be
given either at law or in equity.
SECTION 11.04. Governing Law; Jurisdiction.
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. With respect to
any claim arising out of this Agreement each party irrevocably submits to the
exclusive jurisdiction of the courts of the State of New York and the United
States District Court located in the Borough of Manhattan in The City of New
York, and each party irrevocably waives any objection which it may have at
any time to the laying of venue of any suit, action or proceeding arising out
of or relating hereto brought in any such courts, irrevocably waives any
claim that any such suit, action or proceeding brought in any such court has
been brought in any inconvenient forum and further irrevocably waives the
right to object, with respect to such claim, suit, action or proceeding
brought in any such court, that such court does not have jurisdiction over
such party, provided that service of process has been made by any lawful
means.
SECTION 11.05. Notices.
All directions, demands and notices hereunder shall be in writing
and shall be deemed to have been duly given (except as otherwise provided in
Section 11.12 hereof) if personally delivered at or mailed by first class
mail, postage prepaid, or by express delivery service, to (a) in the case of
Cityscape and the Servicer, 565 Taxter Road, Elmsford, New York 10523-2300
(telecopy number (914) 592-7101), or such other address or telecopy number as
may hereafter be furnished to the Depositor and the Trustee in writing by
Cityscape, (b) in the case of the Trustee, First Bank National Association,
180 East Fifth Street, 2nd Floor, St. Paul, Minnesota 55101, Attention:
Structured Finance/Cityscape 1997-C (telecopy number (612) 244-0089), or such
other address or telecopy number as may hereafter be furnished to the
Depositor, Cityscape and the Servicer in writing by the Trustee, and (c) in
the case of the Depositor, Financial Asset Securities Corp., 600 Steamboat
Road, Greenwich, Connecticut 06830, Attention: General Counsel, (203) 625-
6065 (telecopy number (203) 629-4571), or such other address or telecopy
number as may be furnished to Cityscape, the Servicer and the Trustee in
writing by the Depositor. Any notice required or permitted to be mailed to a
Certificateholder shall be given by first class mail, postage prepaid, at the
address of such Holder as shown in the Certificate Register. Notice of any
Servicer Default shall be given by telecopy and by certified mail. Any
notice so mailed within the time prescribed in this Agreement shall be
conclusively presumed to have duly been given when mailed, whether or not the
Certificateholder receives such notice. A copy of any notice required to be
telecopied hereunder shall also be mailed to the appropriate party in the
manner set forth above.
SECTION 11.06. Severability of Provisions.
If any one or more of the covenants, agreements, provisions or
terms of this Agreement shall for any reason whatsoever be held invalid, then
such covenants, agreements, provisions or terms shall be deemed severable
from the remaining covenants, agreements, provisions or terms of this
Agreement and shall in no way affect the validity or enforceability of the
other provisions of this Agreement or of the Certificates or the rights of
the Holders thereof.
SECTION 11.07. Article and Section References.
All article and section references used in this Agreement, unless
otherwise provided, are to articles and sections in this Agreement.
SECTION 11.08. Notice to the Rating Agencies.
(a) Each of the Trustee and the Servicer shall be obligated to use
its best reasonable efforts promptly to provide notice to the Rating Agencies
with respect to each of the following of which a Responsible Officer of the
Trustee or Servicer, as the case may be, has actual knowledge:
(i) any material change or amendment to this Agreement;
(ii) the occurrence of any Servicer Default that has not been cured
or waived;
(iii) the resignation or termination of the Servicer or the
Trustee;
(iv) the final payment to Holders of the Certificates of any Class;
(v) any change in the location of any Account; and
(vi) if the Trustee is acting as successor Servicer pursuant to
Section 7.02 hereof, any event that would result in the inability of the
Trustee to make Delinquency Advances.
(b) In addition, (i) the Trustee shall promptly furnish to each
Rating Agency copies of the following:
(A) each annual report to Certificateholders described in Section
4.05 hereof; and
(B) each Statement to Certificateholders described in Section 4.05
hereof; and
(ii) the Servicer shall promptly furnish to each Rating Agency copies of the
following:
(C) each annual statement as to compliance described in Section
3.19 hereof;
(D) each annual independent public accountants' servicing report
described in Section 3.20 hereof;
(E) each Collection Account Statement described in Section 3.18
hereof; and
(F) each notice delivered pursuant to Section 7.01(a) hereof which
relates to the fact that the Servicer has not made a Delinquency
Advance.
Any such notice pursuant to this Section 11.08 shall be in writing
and shall be deemed to have been duly given if personally delivered or mailed
by first class mail, postage prepaid, or by express delivery service to
Standard & Poor's Ratings Services, 26 Broadway, 15th Floor, New York, New
York 10004-1064, Attention: Mortgage Surveillance Group; Duff & Phelps Credit
Rating Co., 55 East Monroe Street, 35th Floor, Chicago, Illinois 60603,
Attention: MBS Monitoring; and Fitch Investors Service, L.P., One State
Street Plaza, New York, New York 10004, Attention: Glenn Costello.
SECTION 11.09. Further Assurances.
Notwithstanding any other provision of this Agreement, neither the
Regular Certificateholders nor the Trustee shall have any obligation to
consent to any amendment or modification of this Agreement unless they have
been provided reasonable security or indemnity against their out-of-pocket
expenses (including reasonable attorneys' fees) to be incurred in connection
therewith.
SECTION 11.10. Benefits of Agreement.
Nothing in this Agreement or in the Certificates, expressed or
implied, shall give to any Person, other than the Certificateholders and the
parties hereto and their successors hereunder, any benefit or any legal or
equitable right, remedy or claim under this Agreement.
SECTION 11.11. Acts of Certificateholders.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Agreement to be given or
taken by the Certificateholders may be embodied in and evidenced by one or
more instruments of substantially similar tenor signed by such
Certificateholders in person or by agent duly appointed in writing; and such
action shall become effective when such instrument or instruments are
delivered to the Trustee, Cityscape and the Servicer. Such instrument or
instruments (and the action embodied therein and evidenced thereby) are
herein sometimes referred to as the "act" of the Certificateholders 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 Agreement and conclusive in favor of the Trustee and the Trust, if made
in the manner provided in this Section 11.11.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of a notary public or other officer
authorized by law to take acknowledgments of deeds, certifying that the
individual signing such instrument or writing acknowledged to him the
execution thereof. Whenever such execution is by a signer acting in a
capacity other than his or her individual capacity, such certificate or
affidavit shall also constitute sufficient proof of his authority.
(c) Any request, demand, authorization, direction, notice,
consent, waiver or other action by any Certificateholder shall bind every
future Holder of such Certificate and the holder of every Certificate issued
upon the registration of transfer thereof or in exchange therefor or in lieu
thereof, in respect of anything done, omitted or suffered to be done by the
Trustee or the Trust in reliance thereon, whether or not notation of such
action is made upon such Certificate.
SECTION 11.12. Tax Matters Person.
So long as Cityscape owns a 100% Percentage Interest in the Class R
Certificates of a Group, Cityscape shall act as the Tax Matters Person for
the related REMIC Trust for all purposes of the Code. The Tax Matters Person
shall perform, or cause to be performed, such duties, and shall take, or
cause to be taken, such actions as are required to be performed or taken by a
"tax matters person" under the Code. Cityscape, as Tax Matters Person,
hereby appoints the Trustee to act as agent of the Tax Matters Person. If
Cityscape hereafter transfers ownership of a Percentage Interest in the
Class R Certificates of a Group to a third party, Cityscape may appoint such
third party to be the Tax Matters Person for such REMIC Trust.
IN WITNESS WHEREOF, Cityscape, the Depositor, the Servicer and the
Trustee have caused their names to be signed hereto by their respective
officers thereunto duly authorized, all as of the day and year first above
written.
FINANCIAL ASSET SECURITIES CORP.,
as Depositor
By: /s/ Peter McMullin
---------------------------
Name: Peter McMullin
Title: Vice President
CITYSCAPE CORP.,
as Seller and Servicer
By: /s/ Cheryl P. Carl
---------------------------
Name: Cheryl P. Carl
Title: Senior Vice President
FIRST BANK NATIONAL ASSOCIATION,
as Trustee
By: /s/ Lynn M. Steiner
---------------------------
Name: Lynn M. Steiner
Title: Assistant Vice President
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 25th day of June, 1997 before me, a notary public in and for
said State, personally appeared Peter McMullin known to me to be a Vice
President of Financial Asset Securities Corp., a Delaware corporation that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
---------------------------------------
Notary Public
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 25th day of June, 1997 before me, a notary public in and for
said State, personally appeared Cheryl P. Carl known to me to be a Senior
Vice President of Cityscape Corp., a corporation that executed the within
instrument, and also known to me to be the person who executed it on behalf
of said corporation, and acknowledged to me that such corporation executed
the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
___________________________
Notary Public
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 25th day of June, 1997 before me, a notary public in and for
said State, personally appeared Lynn M. Steiner, known to me to be an
Assistant Vice President of First Bank National Association, a national
banking association that executed the within instrument, and also known to me
to be the person who executed it on behalf of said association, and
acknowledged to me that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
---------------------------------------
Notary Public
