- ----------------------------------------------------------------------------
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) November 30, 1998
FINANCIAL ASSET SECURITIES CORP., (as depositor under the Trust
Agreement, dated as of November 1, 1998, relating to the City Capital
Home Loan Trust 1998-4, Asset Backed Notes, Series 1998-4).
FINANCIAL ASSET SECURITIES CORP.
(Exact name of registrant as specified in its charter)
Delaware 333-44067 06-1442101
- ------------------------------- ------------ -------------------
(State or Other Jurisdiction of (Commission (I.R.S. Employer
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) 622-2700
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<PAGE>
Item 5. Other Events.
On November 30, 1998, City Capital Home Loan Trust 1998-4 (the "Trust"),
a Delaware statutory business trust, for which Financial Asset Securities
Corp. (the "Company") acting as depositor, issued $168,173,000 Class A
Asset-Backed Notes, Series 1998-4 (the "Notes").
In connection with the offering of the Notes, the Company entered into a
Deposit Trust Agreement dated as of November 1, 1998 (the "Trust Agreement"),
among the Company, as depositor, Wilmington Trust Company, as owner trustee,
Norwest Bank Minnesota, National Association ("Norwest"), as trust paying
agent, and City National Bank of West Virginia, as servicer. The Trust entered
into an Indenture dated as of November 1, 1998 (the "Indenture") between the
Trust, as issuer, and Norwest, as indenture trustee and as administrator and
custodian.
In connection with the offering of the Notes, the Company is filing
herewith as Exhibits, the Trust Agreement, the Indenture and additional
material contracts in connection with such offering.
<PAGE>
Item 7. Financial Statements, Pro Forma Financial
Information and Exhibits.
(a) Not applicable.
(b) Not applicable.
(c) Exhibit:
4.1 Indenture dated as of November 1, 1998.
10.1 Deposit Trust Agreement dated as of November 1, 1998.
10.2 Home Loan Sale Agreement made as of November 1, 1998.
10.3 Servicing Agreement dated as of November 1, 1998.
10.4 Financial Guaranty Insurance Policy dated November 30, 1998.
<PAGE>
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/ John Paul Graham
-------------------------
Name: John Paul Graham
Title: Vice President
Dated: November 30, 1998
<PAGE>
Exhibit Index
Exhibit Page
4.1 Indenture dated as of November 1, 1998.
10.1 Deposit Trust Agreement dated as of November 1, 1998.
10.2 Home Loan Sale Agreement made as of November 1, 1998.
10.3 Servicing Agreement dated as of November 1, 1998.
10.4 Financial Guaranty Insurance Policy dated November 30, 1998.
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DEPOSIT TRUST AGREEMENT
AMONG
FINANCIAL ASSET SECURITIES CORP.,
AS DEPOSITOR,
WILMINGTON TRUST COMPANY,
AS OWNER TRUSTEE
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
AS TRUST PAYING AGENT,
AND
CITY NATIONAL BANK OF WEST VIRGINIA,
AS SERVICER
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CITY CAPITAL HOME LOAN TRUST 1998-4
ASSET-BACKED NOTES
SERIES 1998-4
DATED AS OF NOVEMBER 1, 1998
<PAGE>
<TABLE>
TABLE OF CONTENTS
<CAPTION>
<S> <C>
ARTICLE I DEFINITIONS.............................................................................................1
Section 1.1. Capitalized Terms...........................................................................1
-----------------
Section 1.2. Other Definitional Provisions...............................................................5
-----------------------------
ARTICLE II ORGANIZATION...........................................................................................5
Section 2.1. Name........................................................................................5
----
Section 2.2. Office......................................................................................6
------
Section 2.3. Purposes and Powers.........................................................................6
-------------------
Section 2.4. Appointment of Owner Trustee................................................................6
----------------------------
Section 2.5. Initial Capital Contribution of Owner Trust Estate..........................................6
--------------------------------------------------
Section 2.6. Declaration of Trust........................................................................7
--------------------
Section 2.7. Liability of the Holders....................................................................7
------------------------
Section 2.8. Title to Trust Property.....................................................................7
-----------------------
Section 2.9. Situs of Trust..............................................................................8
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Section 2.10. Representations and Warranties of the Depositor; Covenant of the Depositor.................8
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Section 2.11. Federal Income Tax Provisions.............................................................10
-----------------------------
ARTICLE III CERTIFICATES AND TRANSFER OF INTERESTS...............................................................13
Section 3.1. Initial Ownership..........................................................................13
-----------------
Section 3.2. The Certificates...........................................................................13
----------------
Section 3.3. Execution, Authentication and Delivery of Trust Certificates...............................13
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Section 3.4. Registration of Transfer and Exchange of Trust Certificates................................13
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Section 3.5. Mutilated, Destroyed, Lost or Stolen Certificates..........................................14
-------------------------------------------------
Section 3.6. Persons Deemed Owners......................................................................15
---------------------
Section 3.7. Access to List of Holders' Names and Addresses.............................................15
----------------------------------------------
Section 3.8. Maintenance of Office or Agency............................................................15
-------------------------------
Section 3.9. Appointment of Trust Paying Agent..........................................................15
---------------------------------
Section 3.10. Restrictions on Transfer of Certificates..................................................16
-----------------------------------------
ARTICLE IV ACTIONS BY OWNER TRUSTEE..............................................................................18
Section 4.1. Prior Notice to Holders with Respect to Certain Matters....................................18
-------------------------------------------------------
Section 4.2. Action by Holders with Respect to Bankruptcy...............................................20
--------------------------------------------
Section 4.3. Restrictions on Holders'Power..............................................................20
-----------------------------
Section 4.4. Majority Control...........................................................................20
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ARTICLE V APPLICATION OF TRUST FUNDS; CERTAIN DUTIES.............................................................20
Section 5.1. Establishment of Certificate Distribution Account..........................................20
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Section 5.2. Application of Trust Funds.................................................................21
--------------------------
Section 5.3. Method of Payment..........................................................................22
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Section 5.4. Segregation of Moneys; No Interest.........................................................22
----------------------------------
ARTICLE VI AUTHORITY AND DUTIES OF OWNER TRUSTEE.................................................................22
Section 6.1. General Authority..........................................................................22
-----------------
Section 6.2. General Duties.............................................................................22
--------------
Section 6.3. Action upon Instruction....................................................................23
-----------------------
Section 6.4. No Duties Except as Specified in this Agreement, the Basic Documents or Any Instructions...24
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Section 6.5. No Action Except Under Specified Documents or Instructions.................................24
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Section 6.6. Restrictions...............................................................................24
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ARTICLE VII CONCERNING THE OWNER TRUSTEE.........................................................................25
Section 7.1. Acceptance of Trusts and Duties............................................................25
-------------------------------
Section 7.2. Furnishing of Documents....................................................................26
-----------------------
Section 7.3. Representations and Warranties.............................................................26
------------------------------
Section 7.4. Reliance; Advice of Counsel................................................................27
---------------------------
Section 7.5. Not Acting in Individual Capacity..........................................................27
---------------------------------
Section 7.6. Owner Trustee Not Liable for Certificates or Home Loans....................................28
-------------------------------------------------------
Section 7.7. Owner Trustee May Own Certificates and Notes...............................................28
--------------------------------------------
Section 7.8. Licenses...................................................................................28
--------
ARTICLE VIII COMPENSATION OF OWNER TRUSTEE.......................................................................28
Section 8.1. Owner Trustee's Fees and Expenses..........................................................28
---------------------------------
Section 8.2. Indemnification............................................................................29
---------------
Section 8.3. Payments to the Owner Trustee..............................................................30
-----------------------------
ARTICLE IX TERMINATION OF TRUST AGREEMENT........................................................................30
Section 9.1. Termination of Trust Agreement.............................................................30
------------------------------
ARTICLE X SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES.................................................31
Section 10.1. Eligibility Requirements for Owner Trustee................................................31
------------------------------------------
Section 10.2. Resignation or Removal of Owner Trustee...................................................31
---------------------------------------
Section 10.3. Successor Owner Trustee...................................................................32
-----------------------
Section 10.4. Merger or Consolidation of Owner Trustee..................................................32
----------------------------------------
Section 10.5. Appointment of Co-Trustee or Separate Trustee.............................................33
---------------------------------------------
ARTICLE XI CONTRIBUTION OF HOME LOANS............................................................................34
Section 11.1. Agreement to Contribute and Convey........................................................34
----------------------------------
Section 11.2. Conveyance of Home Loans..................................................................34
------------------------
Section 11.3. Assignment of Related Rights and Remedies.................................................35
-----------------------------------------
Section 11.4. Closing...................................................................................36
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Section 11.5. Servicing.................................................................................36
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Section 11.6. Grant of a Security Interest..............................................................36
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ARTICLE XII MISCELLANEOUS........................................................................................37
Section 12.1. Supplements and Amendments................................................................37
--------------------------
Section 12.2. No Legal Title to Owner Trust Estate in Holders...........................................38
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Section 12.3. Limitations on Rights of Others...........................................................39
-------------------------------
Section 12.4. Notices...................................................................................39
-------
Section 12.5. Severability..............................................................................40
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Section 12.6. Separate Counterparts.....................................................................40
---------------------
Section 12.7. Successors and Assigns....................................................................40
----------------------
Section 12.8. No Petition...............................................................................40
-----------
Section 12.9. No Recourse...............................................................................40
-----------
Section 12.10. Headings.................................................................................40
--------
Section 12.11. GOVERNING LAW............................................................................41
-------------
Section 12.12. Grant of Certificateholder Rights to Note Insurer........................................41
-------------------------------------------------
Section 12.13. Third Party Beneficiary..................................................................41
-----------------------
Section 12.14. Suspension and Termination of Note Insurer's Rights......................................42
---------------------------------------------------
</TABLE>
Exhibit A Form of Certificate
Exhibit B Form of Certificate of Trust
Exhibit C Form of Transferee Certificate
Exhibit D Fees and Expenses of the Owner Trustee
Exhibit E Home Loan Schedule
Exhibit F Form of Cross-Receipt
<PAGE>
DEPOSIT TRUST AGREEMENT
This DEPOSIT TRUST AGREEMENT, dated as of November 1, 1998, among
FINANCIAL ASSET SECURITIES CORP., a Delaware corporation, as Depositor (the
"Depositor"), WILMINGTON TRUST COMPANY, a Delaware banking corporation, as Owner
Trustee (the "Owner Trustee"), NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, a
national banking association, as Trust Paying Agent (in such capacity, the
"Trust Paying Agent"), and CITY NATIONAL BANK OF WEST VIRGINIA, as Servicer (the
"Servicer"), is entered into for the limited purposes set forth herein.
ARTICLE I
DEFINITIONS
SECTION 1.1. CAPITALIZED TERMS.
-----------------
For all purposes of this Agreement, the following terms shall have the
meanings set forth below:
"ACCOUNTS" shall mean, collectively, the Collection Account and the
Note Account.
"AGREEMENT" shall mean this Deposit Trust Agreement, as may be amended
and supplemented from time to time.
"ANNUAL TAX REPORTS" shall have the meaning assigned thereto in Section
2.11(k).
"BASIC DOCUMENTS" shall mean this Agreement, the Servicing Agreement,
the Home Loan Sale Agreement, the Insurance Agreement, the Custodial Agreement,
and the Indenture.
"BUSINESS DAY" shall mean any day other than (i) a Saturday or Sunday
or (ii) a day that is either a legal holiday or a day on which banking
institutions in the State of New York, the State of West Virginia, the State of
Delaware, the State of Maryland, the State of Minnesota, or the state in which
the Trust Paying Agent's office from which payments will be made to
Certificateholders are authorized or obligated by law, regulation or executive
order to be closed.
"BUSINESS TRUST STATUTE" shall mean Chapter 38 of Title 12 of I the
Delaware Code, 12 Del. Code Section 3801 et seq., as the same may be amended
from time to time.
"CAPITAL ACCOUNT" shall have the meaning assigned thereto in Section
2.11(a).
"CERTIFICATE" shall mean a certificate evidencing the beneficial
interest of a Certificateholder in the Trust, substantially in the form attached
hereto as Exhibit A.
---------
"CERTIFICATE DISTRIBUTION ACCOUNT" shall have the meaning assigned to
such term in Section 5.1.
"CERTIFICATE OF TRUST" shall mean the Certificate of Trust in the form
of Exhibit B to be filed for the Trust pursuant to Section 3810(a) of the
---------
Business Trust Statute.
"CERTIFICATE REGISTER" and "CERTIFICATE REGISTRAR" shall mean the
register mentioned and the registrar appointed pursuant to Section 3.4.
"CERTIFICATEHOLDER" or "HOLDER" shall mean a Person in whose name a
Certificate is registered.
"CLOSING DATE" shall mean November 30, 1998.
"CODE" shall mean the Internal Revenue Code of 1986, as amended, and,
where appropriate in context, Treasury Regulations promulgated thereunder.
"COLLECTION ACCOUNT" shall have the meaning assigned thereto in the
Servicing Agreement.
"CORPORATE TRUST OFFICE" shall mean, with respect to the Owner Trustee,
the principal corporate trust office of the Owner Trustee located at Rodney
Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001; or at
such other address in the State of Delaware as the Owner Trustee may designate
by notice to the Certificateholders and the Depositor, or the principal
corporate trust office of any successor Owner Trustee (the address (which shall
be in the State of Delaware) of which the successor owner trustee will notify
the Certificateholder and the Depositor).
"CUSTODIAL AGREEMENT" shall mean the Custodial Agreement, dated as of
November 1, 1998, between the Indenture Trustee and the Custodian.
"CUSTODIAN" shall mean Norwest Bank Minnesota, National Association.
"DEPOSITOR" shall mean Financial Asset Securities Corp., a Delaware
corporation.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"EXPENSES" shall have the meaning assigned to such term in Section 8.2.
"HOLDER NONRECOURSE DEBT MINIMUM GAIN" shall have the meaning set forth
for "partner nonrecourse debt minimum gain" in Treasury Regulations Section
1.704-2(i)(2). A Holder's share of Holder Nonrecourse Debt Minimum Gain shall be
determined in accordance with Treasury Regulations Section 1.704-2(i)(5).
"HOME LOAN SALE AGREEMENT" shall mean that certain Home Loan Sale
Agreement, dated as of November 1, 1998, among City National Bank of West
Virginia, as Seller, City Capital Markets Corporation, as Transferor, and the
Depositor.
"INDENTURE" shall mean the Indenture, dated as of November 1, 1998, by
and among the Issuer, and Norwest Bank Minnesota, National Association, as
Indenture Trustee, Note Administrator and Custodian.
"INDENTURE TRUSTEE" means Norwest Bank Minnesota, National Association,
as Indenture Trustee under the Indenture.
"INSURANCE AGREEMENT" means the Insurance Agreement, dated as of
November 1, 1998, among MBIA Insurance Corporation, as Insurer, the Issuer, City
National Bank of West Virginia, as Seller and Servicer, City Capital Markets
Corporation, as Transferor, the Depositor, Greenwich Capital Financial Products,
Inc., and Norwest Bank Minnesota, National Association, as Master Servicer and
Indenture Trustee.
"INSURANCE POLICY" shall mean the financial guaranty insurance policy
issued by the Note Insurer for the benefit of the holders of the Notes.
"ISSUER" shall mean City Capital Home Loan Trust 1998-4, the Delaware
business trust created pursuant to this Agreement.
"NON-U.S. PERSON" shall mean an individual, corporation, partnership or
other person other than a citizen or resident of the United States, a
corporation, partnership or other entity (treated as a corporation or
partnership for federal income tax purposes) created or organized in or under
the laws of the United States, any state thereof, or the District of Columbia,
an estate that is subject to U.S. federal income tax regardless of the source of
its income or a trust if (i) a court in the United States is able to exercise
primary supervision over the administration of the trust and (ii) one or more
United States persons have the authority to control all substantial decisions of
the trust.
"NOTE ACCOUNT" shall have the meaning assigned thereto in the
Indenture.
"NOTE INSURER" shall mean MBIA Insurance Corporation, a New York stock
insurance company.
"NOTE INSURER DEFAULT" shall have the meaning assigned to such term in
the Indenture.
"NOTES" shall mean the Issuer's Asset-Backed Notes, Series 1998-4.
"OWNER TRUST ESTATE" shall mean the contribution of $1 referred to in
Section 2.5 hereof plus any additional contributions made pursuant to Article
XI.
"OWNER TRUSTEE" shall mean Wilmington Trust Company, a Delaware banking
corporation, not in its individual capacity but solely as owner trustee under
this Agreement, and any successor owner trustee hereunder.
"PAYMENT DATE" shall mean the twenty-fifth day of each month or, if
such twenty-fifth day is not a Business Day, the next succeeding Business Day,
commencing December 28, 1998.
"PERCENTAGE INTEREST" shall mean with respect to any Certificate the
percentage portion of all of the Trust Interest evidenced thereby as stated on
the face of such Certificate.
"PERMITTED INVESTMENTS" shall have the meaning assigned to such term in
the Indenture.
"PROSPECTIVE HOLDER" shall have the meaning set forth in Section
3.10(a).
"RATING AGENCY CONDITION" means, with respect to any action to which a
Rating Agency Condition applies, that each Rating Agency shall have been given
10 days (or such shorter period as is acceptable to each Rating Agency) prior
notice thereof and that each of the Rating Agencies shall have notified the
Depositor, the Servicer, the Note Insurer, the Owner Trustee, and the Issuer in
writing that such action will not result in a reduction or withdrawal of the
then current "implied" rating of the Notes that it maintains without taking into
account the Note Insurance.
"RECORD DATE" shall mean as to each Payment Date the last Business Day
of the month immediately preceding the month in which such Payment Date occurs.
"SERVICING AGREEMENT" shall mean the Servicing Agreement dated as of
November 1, 1998, among the Trust, as Issuer, City National Bank of West
Virginia, as Servicer, and Norwest Bank Minnesota, National Association, as
Indenture Trustee and Master Servicer.
"SECRETARY OF STATE" shall mean the Secretary of State of the State of
Delaware.
"TAXABLE YEAR" shall have the meaning assigned thereto in Section
2.11(j).
"TAX MATTERS PARTNER" shall have the meaning assigned thereto in
Section 2.11(l).
"TRANSFEROR" shall mean City Capital Markets Corporation, a Delaware
corporation.
"TREASURY REGULATIONS" shall mean regulations, including proposed or
temporary regulations, promulgated under the Code. References herein to specific
provisions of proposed or temporary regulations shall include analogous
provisions of final Treasury Regulations or other successor Treasury
Regulations.
"TRUST" shall mean the trust established by this Agreement.
"TRUST INTEREST" shall mean the right to receive, on each Payment Date,
distributions of the amounts, if any, released to the Issuer pursuant to Section
8.02(d) of the Indenture or pursuant to Section 2.05 of the Servicing Agreement.
"TRUST MINIMUM GAIN" shall have the meaning set forth for "partnership
minimum gain" in Treasury Regulations 1.704-2(b)(2) and 1.704-2(d). In
accordance with Treasury Regulations Section 1.704-2(d), the amount of Trust
Minimum Gain is determined by first computing, for each nonrecourse liability of
the Trust, any gain the Trust would realize if it disposed of the property
subject to that liability for no consideration other than full satisfaction of
the liability, and then aggregating the separately computed gains. A Holder's
share of Trust Minimum Gain shall be determined in accordance with Treasury
Regulations Section 1.704-2(g)(1).
"TRUST PAYING AGENT" shall mean any paying agent or co-paying agent
appointed pursuant to Section 3.9 and authorized by the Owner Trustee to make
payments to and distributions from the Certificate Distribution Account.
SECTION 1.2. OTHER DEFINITIONAL PROVISIONS.
-----------------------------
(a) Capitalized terms used herein and not otherwise defined herein have the
meanings assigned to them in the Servicing Agreement or, if not defined therein,
in the Indenture.
(b) All terms defined in this Agreement shall have the defined meanings
when used in any certificate or other document made or delivered pursuant hereto
unless otherwise defined therein.
(c) As used in this Agreement and in any certificate or other document made
or delivered pursuant hereto or thereto, accounting terms not defined in this
Agreement or in any such certificate or other document, and accounting terms
partly defined in this Agreement or in any such certificate or other document to
the extent not defined, shall have the respective meanings given to them under
generally accepted accounting principles. To the extent that the definitions of
accounting terms in this Agreement or in any such certificate or other document
are inconsistent with the meanings of such terms under generally accepted
accounting principles, the definitions contained in this Agreement or in any
such certificate or other document shall control.
(d) The words "hereof," "herein," "hereunder," and words of similar import
when used in this Agreement shall refer to this Agreement as a whole and not to
any particular provision of this Agreement; Section and Exhibit references
contained in this Agreement are references to Sections and Exhibits in or to
this Agreement unless otherwise specified; and the term "including" shall mean
"including without limitation."
(e) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as well
as to the feminine and neuter genders of such terms.
(f) Any agreement, instrument, or statute defined or referred to herein or
in any instrument or certificate delivered in connection herewith means such
agreement, instrument, or statute as from time to time amended, modified, or
supplemented and includes (in the case of agreements or instruments) references
to all attachments thereto and instruments incorporated therein; references to a
Person are also to its permitted successors and assigns.
ARTICLE II
ORGANIZATION
SECTION 2.1. NAME.
----
The Trust created hereby shall be known as "City Capital Home Loan
Trust 1998-4," in which name the Owner Trustee may conduct the business of the
Trust, make and execute contracts and other instruments on behalf of the Trust
and sue and be sued.
SECTION 2.2. OFFICE.
------
The office of the Trust shall be in care of the Owner Trustee at the
Corporate Trust Office or at such other address in Delaware as the Owner Trustee
may designate by written notice to the Certificateholders, the Note Insurer and
the Depositor.
SECTION 2.3. PURPOSES AND POWERS.
-------------------
The purpose of the Trust is to engage in the following activities:
(i) to issue the Notes pursuant to the Indenture and to sell such
Notes;
(ii) with the proceeds of the sale of the Notes, to pay the
organizational, start-up, and transactional expenses of the Trust and
to pay the balance to the Depositor pursuant to Article XI;
(iii) to assign, grant, transfer, pledge, mortgage, and convey
the Owner Trust Estate pursuant to the Indenture and to hold, manage,
and distribute to the Holders any portion of the Owner Trust Estate
released from the lien of, and remitted to the Trust pursuant to, the
Indenture;
(iv) to enter into and perform its obligations under the Basic
Documents to which it is or is to be a party;
(v) to engage in those activities, including entering into
agreements, that are necessary, suitable, or convenient to accomplish
the foregoing or are incidental thereto or connected therewith;
(vi) subject to compliance with the Basic Documents, to engage in
such other activities as may be required in connection with
conservation of the Owner Trust Estate and the making of distributions
and payments to the Holders and the Noteholders; and
(vii) to issue the Certificates pursuant to this Agreement.
The Trust is hereby authorized by the initial Certificateholders to engage in
the foregoing activities. The Trust shall not engage in any activity other than
in connection with the foregoing or other than as required or authorized by the
terms of this Agreement or the Basic Documents.
SECTION 2.4. APPOINTMENT OF OWNER TRUSTEE.
----------------------------
The Depositor hereby appoints the Owner Trustee as trustee of the Trust
effective as of the date hereof, to have all the rights, powers, and duties set
forth herein.
SECTION 2.5. INITIAL CAPITAL CONTRIBUTION OF OWNER TRUST ESTATE.
--------------------------------------------------
The Depositor hereby sells, assigns, transfers, conveys, and sets over
to the Owner Trustee, as of the date hereof, the sum of $1. The Owner Trustee
hereby acknowledges receipt in trust from the Depositor, as of the date hereof,
of the foregoing contribution, which shall constitute the initial Owner Trust
Estate and shall be deposited in the Certificate Distribution Account. The
Certificateholders shall pay organizational expenses of the Trust as they may
arise or shall, upon the request of the Owner Trustee, promptly reimburse the
Owner Trustee for any such expenses paid by the Owner Trustee.
SECTION 2.6. DECLARATION OF TRUST.
--------------------
The Owner Trustee hereby declares that it will hold the Owner Trust
Estate in trust upon and subject to the conditions set forth herein for the use
and benefit of the Holders, subject to the obligations of the Trust under the
Basic Documents. It is the intention of the parties hereto that the Trust
constitute a business trust under the Business Trust Statute and that this
Agreement constitute the governing instrument of such business trust. It is the
intention of the parties hereto that, solely for income and franchise tax
purposes, after issuance of the Certificates, the Trust shall be treated as a
partnership, with the assets of the partnership being the Home Loans and other
assets held by the Trust, the partners of the partnership being the holders of
the Certificates and the Notes being non-recourse debt of the partnership (or,
if there is only one Certificateholder, that the Trust shall be disregarded as
an entity separate from such Holder, with the assets held by the Trust being
treated as assets of the Holder and the Notes being treated as non-recourse debt
of the Holder). The parties agree that, unless otherwise required by appropriate
tax authorities or unless the Trust is disregarded as an entity separate from
its sole Certificateholder for income and franchise tax purposes, the Owner
Trustee will file or cause to be filed annual or other necessary returns,
reports, and other forms consistent with the characterization of the Trust as a
partnership for such tax purposes pursuant to Section 2.11(k). The parties agree
that no election will be made to treat the Trust or the Owner Trust Estate as a
real estate mortgage investment conduit as defined in Section 860D of the Code.
Effective as of the date hereof, the Owner Trustee shall have all rights,
powers, and duties set forth herein and in the Business Trust Statute with
respect to accomplishing the purposes of the Trust. The Owner Trustee shall file
the Certificate of Trust with the Secretary of State.
SECTION 2.7. LIABILITY OF THE HOLDERS.
------------------------
No Holder shall have any personal liability for any liability or
obligation of the Trust. The Certificates shall be fully paid and
non-assessable.
SECTION 2.8. TITLE TO TRUST PROPERTY.
-----------------------
(a) Subject to the Indenture, legal title to all of the Owner Trust
Estate shall be vested at all times in the Trust as a separate legal entity
except where applicable law in any jurisdiction requires title to any part of
the Owner Trust Estate to be vested in a trustee or trustees, in which case
title shall be deemed to be vested in the Owner Trustee and/or a separate
trustee, as the case may be.
(b) The Certificateholders shall not have legal title to any part of
the Owner Trust Estate. No transfer by operation of law or otherwise of any
interest of the Certificateholders shall operate to terminate this Agreement or
the trusts hereunder or entitle any transferee to an accounting or to the
transfer to it of any part of the Owner Trust Estate.
SECTION 2.9. SITUS OF TRUST.
--------------
The Trust will be located and administered in the State of Delaware.
All accounts maintained at a bank by the Owner Trustee on behalf of the Trust
shall be located in the States of Delaware, Minnesota, Maryland, California,
West Virginia, or New York. The Trust shall not have any employees; provided
however, nothing herein shall restrict or prohibit the Owner Trustee from having
employees within or without the State of Delaware. Payments will be received by
the Trust only in Delaware, New York, Minnesota, Maryland, California, or West
Virginia, and payments will be made by the Trust only from Delaware, New York,
Minnesota, Maryland, California, or West Virginia. The only office of the Trust
will be at the Corporate Trust Office in Delaware.
SECTION 2.10. REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR; COVENANT
---------------------------------------------------------
OF THE DEPOSITOR.
- ----------------
(a) The Depositor hereby represents and warrants to the Owner Trustee
and the Note Insurer that:
(i) The Depositor is duly organized and validly existing as a
corporation in good standing under the laws of the State of Delaware,
with power and authority to own its properties and to conduct its
business as such properties are currently owned and such business is
presently conducted.
(ii) The Depositor has the power and authority to execute and
deliver this Agreement and to carry out its terms; the Depositor has
full power and authority to transfer and assign the property to be
transferred and assigned to and deposited with the Trust and the
Depositor has duly authorized such transfer and assignment and deposit
to the Trust by all necessary corporate action; and the execution,
delivery and performance of this Agreement has been duly authorized by
the Depositor by all necessary corporate action.
(iii) The consummation of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof do not conflict
with, result in any breach of any of the terms and provisions of, or
constitute (with or without notice or lapse of time) a default under,
the certificate of incorporation or by-laws of the Depositor, or any
indenture, agreement, or other instrument to which the Depositor is a
party or by which it is bound; nor result in the creation or
imposition of any lien upon any of its properties pursuant to the
terms of any such indenture, agreement, or other instrument (other
than pursuant to the Basic Documents); nor violate any law or, to the
best of the Depositor's knowledge, any order, rule, or regulation
applicable to the Depositor of any court or of any Federal or state
regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over the Depositor or its
properties.
(iv) There are no actions, suits, proceedings, or investigations
pending or notice of which has been received in writing before any
court, regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over the Depositor or its
properties: (x) asserting the invalidity of this Agreement, (y)
seeking to prevent the consummation of any of the transactions
contemplated by this Agreement, or (z) seeking any determination or
ruling that should reasonably be expected to materially and adversely
affect the performance by the Depositor of its obligations under, or
the validity or enforceability of, this Agreement or have a material
adverse effect on the financial condition of the Depositor.
(v) The Depositor is not in violation of, and its execution and
delivery of this Agreement and its performance and compliance with the
terms of this Agreement will not constitute a violation of, any law,
any order, or decree of any court or arbiter, or any order,
regulation, or demand of any federal, state, or local governmental or
regulatory authority, which violation is likely to affect materially
and adversely either the ability of the Depositor to perform its
obligations under this Agreement or the financial condition of the
Depositor.
(vi) The Depositor has no knowledge of any recent adverse
financial condition or event with respect to itself that is likely to
materially and adversely affect its ability to perform its obligations
under this Agreement.
(vii) The Depositor has not failed to obtain any consent,
approval, authorization, or order of, and has not failed to cause any
registration or qualification with, any court or regulatory authority
or other governmental body having jurisdiction over the Depositor,
which consent, approval, authorization, order, registration, or
qualification is required for, and the absence of which would
materially and adversely affect, the legal and valid execution,
delivery, and performance of this Agreement by the Depositor. No
consent or approval of any other person or entity is necessary for the
Depositor to perform its obligations hereunder or, if any such consent
or approval is necessary, such consent or approval has previously been
obtained.
(viii) Assuming the accuracy of the representations and
warranties of the Seller and City Capital in Sections 4(a)(7) and
5(a)(vii), respectively, of the Home Loan Sale Agreement, immediately
prior to the transfer and assignment herein contemplated, either (x)
the Depositor held good title to, and was the sole owner of, each Home
Loan or (y) the Depositor had a valid security interest in each Home
Loan, in each case free and clear of any liens, pledges, encumbrances
or other security interests and immediately upon the transfer and
assignment of the Home Loans herein contemplated, the Trust will
acquire from the Depositor all of the Depositor's interest in the Home
Loans free and clear of any lien, pledge, encumbrance or other
security interest of any kind.
(b) The representations and warranties of City National Bank of West
Virginia with respect to the Home Loans set forth in Section 4 to the Home Loan
Sale Agreement are hereby incorporated by reference in their entirety and are
assigned to the Trust in lieu of any other representations and warranties of the
Depositor in respect of the Home Loans. Nothing herein shall be deemed to limit
in any respect either the representations and warranties of City National Bank
of West Virginia or the rights and remedies assigned by the Depositor to the
Trust against City National Bank of West Virginia on account of a breach thereof
under the Home Loan Sale Agreement.
(c) Except for the representations and warranties of the Depositor in
Section 2.10(a) hereof, the Depositor is transferring, selling and conveying the
Home Loans, without recourse to the Depositor and without representations or
warranties of any kind, express, or implied, by the Depositor, whether statutory
or otherwise, including, without limitation, any warranties of transfer,
merchantability, or fitness for a particular, or the Trust's intended, use, or
purposes.
(d) Each Certificateholder covenants with the Owner Trustee and the
Note Insurer that during the continuance of this Agreement, and while it holds
Certificates, it will comply in all respects with the provisions of its
certificate of incorporation in effect from time to time.
SECTION 2.11. FEDERAL INCOME TAX PROVISIONS.
-----------------------------
If the Trust is treated as a partnership (rather than disregarded as a
separate entity) for federal income tax purposes pursuant to Section 2.6, the
following provisions shall apply:
(a) A separate capital account (a "Capital Account") shall be
established and maintained for each Certificateholder in accordance with
Treasury Regulations Section 1.704-1(b)(2)(iv). No Certificateholder shall be
entitled to interest on its Capital Account or any capital contribution made by
such Holder to the Trust.
(b) Upon termination of the Trust pursuant to Article IX, any amounts
available for distribution to Holders shall be distributed to the Holders with
positive Capital Account balances in accordance with such balances. For purposes
of this Section 2.11(b), the Capital Account of each Holder shall be determined
after all adjustments made in accordance with this Section 2.11 resulting from
the Trust's operations and from all sales and dispositions of all or any part of
the assets of the Trust. Any distributions pursuant to this Section 2.11(b)
shall be made by the end of the Taxable Year in which the termination occurs
(or, if later, within 90 days after the date of the termination).
(c) No Certificateholder shall be required to restore any deficit
balance in its Capital Account. Furthermore, no Holder shall be liable for the
return of the Capital Account of, or of any capital contribution made to the
Trust by, another Holder.
(d) Profit and loss of the Trust for each Taxable Year shall be
allocated to the Certificateholders in accordance with their respective
Percentage Interests.
(e) Notwithstanding any provision to the contrary, (i) any expense of
the Trust that is a "nonrecourse deduction" within the meaning of Treasury
Regulations Section 1.704-2(b)(1) shall be allocated in accordance with the
Holders' respective Percentage Interests, (ii) any expense of the Trust that is
a "partner nonrecourse deduction" within the meaning of Treasury Regulations
Section 1.704-2(i)(2) shall be allocated in accordance with Treasury Regulations
Section 1.704-2(i)(1), (iii) if there is a net decrease in Trust Minimum Gain
within the meaning of Treasury Regulations Section 1.704-2(f)(1) for any Taxable
Year, items of gain and income shall be allocated among the Holders in
accordance with Treasury Regulations Section 1.704-2(f) and the ordering rules
contained in Treasury Regulations Section 1.704-2(j), and (iv) if there is a net
decrease in Holder Nonrecourse Debt Minimum Gain within the meaning of Treasury
Regulations Section 1.704-2(i)(4) for any Taxable Year, items of gain and income
shall be allocated among the Holders in accordance with Treasury Regulations
Section 1.704-2(i)(4) and the ordering rules contained in Treasury Regulations
Section 1.704-2(j). A Holder's "interest in partnership profits" for purposes of
determining its share of the nonrecourse liabilities of the Trust within the
meaning of Treasury Regulations Section 1.752-3(a)(3) shall be such Holder's
Percentage Interest.
(f) If a Holder receives in any Taxable Year an adjustment, allocation,
or distribution described in subparagraphs (4), (5), or (6) of Treasury
Regulations Section 1.704-1(b)(2)(ii)(d) that causes or increases a negative
balance in such Holder's Capital Account that exceeds the sum of such Holder's
shares of Trust Minimum Gain and Holder Nonrecourse Debt Minimum Gain, as
determined in accordance with Treasury Regulations Sections 1.704-2(g) and
1.704-2(i), such Holder shall be allocated specially for such Taxable Year (and,
if necessary, later Taxable Years) items of income and gain in an amount and
manner sufficient to eliminate such negative Capital Account balance as quickly
as possible as provided in Treasury Regulations Section 1.704-1(b)(2)(ii)(d).
After the occurrence of an allocation of income or gain to a Holder in
accordance with this Section 2.11(f), to the extent permitted by Regulations
Section 1.704-1(b), items of expense or loss shall be allocated to such Holder
in an amount necessary to offset the income or gain previously allocated to such
Holder under this Section 2.11(f).
(g) Loss shall not be allocated to a Holder to the extent that such
allocation would cause a deficit in such Holder's Capital Account (after
reduction to reflect the items described in Treasury Regulations Section
1.704-1(b)(2)(ii)(d)(4), (5) and (6)) to exceed the sum of such Holder's shares
of Trust Minimum Gain and Holder Nonrecourse Debt Minimum Gain. Any loss in
excess of that limitation shall be allocated to all the Holders in accordance
with their respective Percentage Interests. After the occurrence of an
allocation of loss to a Holder in accordance with this Section 2.11(g), to the
extent permitted by Treasury Regulations Section 1.704-1(b), profit shall be
allocated to such Holder in an amount necessary to offset the loss previously
allocated to such Holder under this Section 2.11(g).
(h) If a Holder transfers any part or all of its Percentage Interest
and the transferee is admitted as provided herein (a "Transferee Holder"), the
distributive shares of the various items of profit and loss allocable among the
Holders during such Taxable Year shall be allocated between the transferor and
the Transferee Holder (at the election of the Holders (including the transferor,
but excluding the Transferee Holder)) either (i) as if the Taxable Year had
ended on the date of the transfer or (ii) based on the number of days of such
Taxable Year that each was a Holder without regard to the results of Trust
activities in the respective portions of such Taxable Year in which the
transferor and Transferee Holder were Holders.
(i) "Profit" and "loss" and any items of income, gain, expense or loss
referred to in this Section 2.11 shall be determined in accordance with federal
income tax accounting principles as modified by Treasury Regulations Section
1.704-1(b)(2)(iv), except that profits and losses shall not include items of
income, gain, and expense that are specially allocated pursuant to Sections
2.11(e), 2.11(f) or 2.11(g) hereof. All allocations of income, profits, gains,
expenses, and losses (and all items contained therein) for federal income tax
purposes shall be identical to all allocations of such items set forth in this
Section 2.11, except as otherwise required by Section 704(c) of the Code and
Section 1.704-1(b)(4) of the Treasury Regulations.
(j) The taxable year of the Trust (the "Taxable Year") shall be the
calendar year or such other taxable year as may be required by Section 706(b) of
the Code.
(k) At the Trust's expense, the Owner Trustee shall (i) prepare, or
cause to be prepared, and file such tax returns relating to the Trust (including
a partnership information return, IRS Form 1065) as are required by applicable
federal, state, and local law, (ii) cause such returns to be signed in the
manner required by law, (iii) make such elections as may from time to time be
required or appropriate under any applicable law so as to maintain the Trust's
classification as a partnership for tax purposes, (iv) prepare and deliver, or
cause to be prepared and delivered, to the Holders, no later than 75 days after
the close of each Taxable Year, a Schedule K-1, a copy of the Trust's
informational tax return (IRS Form 1065), and such other reports (collectively,
the "Annual Tax Reports") setting forth in sufficient detail all such
information and data with respect to the transactions effected by or involving
the Trust during such Taxable Year as shall enable each Holder to prepare its
federal, state, and local income tax returns in accordance with the laws then
prevailing, and (v) collect, or cause to be collected, any withholding tax as
described in Section 5.2(c) with respect to income or distributions to
Certificateholders.
(l) The Holders shall designate a Holder as the tax matters partner for
the Trust within the meaning of Section 6231(a)(7) of the Code (the "Tax Matters
Partner"), and shall notify the Indenture Trustee, the Manager (as defined in
Section 5.2(d)) and the Owner Trustee in writing of the name and address of such
Tax Matters Partner. The Tax Matters Partner shall have the right and obligation
to take all actions authorized and required, respectively, by the Code for the
Tax Matters Partner. The Tax Matters Partner shall have the right to retain
professional assistance in respect of any audit or controversy proceeding
initiated with respect to the Trust by the Internal Revenue Service or any state
or local taxing authority, and all expenses and fees incurred by the Tax Matters
Partner on behalf of the Trust shall constitute expenses of the Trust. In the
event the Tax Matters Partner receives notice of a final partnership adjustment
under Section 6223(a)(2) of the Code, the Tax Matters Partner shall either (i)
file a court petition for judicial review of such adjustment within the period
provided under Section 6226(a) of the Code, a copy of which petition shall be
mailed to all other Holders on the date such petition is filed, or (ii) mail a
written notice to all other Holders, within such period, that describes the Tax
Matters Partner's reasons for determining not to file such a petition.
(m) Except as otherwise provided in this Section 2.11, the Holders
shall instruct the Owner Trustee as to whether to make any available election
under the Code or any applicable state or local tax law on behalf of the Trust.
Notwithstanding the foregoing, any Holder may request that the Owner Trustee
make an election under section 754 of the Code; provided that the requesting
Holder shall agree to bear the cost of preparing such election and any
additional accounting expenses of the Trust incurred as a result of such
election.
ARTICLE III
CERTIFICATES AND TRANSFER OF INTERESTS
SECTION 3.1. INITIAL OWNERSHIP.
-----------------
Upon the formation of the Trust by the contribution by the Depositor
pursuant to Section 2.5 and until the issuance of the Certificates, the
Depositor shall be the sole beneficiary of the Trust.
SECTION 3.2. THE CERTIFICATES.
----------------
The Certificates shall be issued without a principal amount and shall
evidence beneficial ownership interests in the Trust. The Certificates shall be
printed, lithographed, or engraved or may be produced in any other manner as is
reasonably acceptable to the Owner Trustee, as evidenced by its execution
thereof. The Certificates shall be executed on behalf of the Trust by manual or
facsimile signature of a Trust Officer of the Owner Trustee. Certificates
bearing the manual or facsimile signatures of individuals who were, at the time
when such signatures shall have been affixed, authorized to sign on behalf of
the Trust, shall be valid, notwithstanding that such individuals or any of them
shall have ceased to be so authorized prior to the authentication and delivery
of such Certificates or did not hold such offices at the date of authentication
and delivery of such Certificates.
A transferee of a Certificate shall become a Certificateholder, and
shall be entitled to the rights and subject to the obligations of a
Certificateholder hereunder upon such transferee's acceptance of a Certificate
duly registered in such transferee's name pursuant to Section 3.4.
SECTION 3.3. EXECUTION, AUTHENTICATION AND DELIVERY OF TRUST
---------------------------------------------------------
CERTIFICATES.
- ------------
Concurrently with the initial transfer of the Home Loans to the Trust
pursuant to Article XI hereof, the Owner Trustee shall cause the Certificates,
representing 100% of the Percentage Interests of the Trust Interest, to be
executed on behalf of the Trust, authenticated and delivered to the Transferor,
as designee of the Depositor. No Certificate shall entitle its holder to any
benefit under this Agreement, or shall be valid for any purpose, unless there
shall appear on such Certificate a certificate of authentication substantially
in the form set forth in Exhibit A, executed by the Owner Trustee or the Owner
Trustee's authenticating agent, by manual or facsimile signature; such
authentication shall constitute conclusive evidence that such Certificate shall
have been duly authenticated and delivered hereunder. All Certificates shall be
dated the date of their authentication.
SECTION 3.4. REGISTRATION OF TRANSFER AND EXCHANGE OF TRUST
---------------------------------------------------------
CERTIFICATES.
- ------------
The Certificate Registrar shall keep or cause to be kept, at the office
or agency maintained pursuant to Section 3.8, a Certificate Register in which,
subject to such reasonable regulations as it may prescribe, the Owner Trustee
shall provide for the registration of Certificates and of transfers and
exchanges of Certificates as herein provided. The Owner Trustee shall be the
initial Certificate Registrar.
Upon surrender for registration of transfer of any Certificate at the
office or agency maintained pursuant to Section 3.8, the Owner Trustee shall
execute, authenticate and deliver (or shall cause its authenticating agent to
authenticate and deliver), in the name of the designated transferee or
transferees, one or more new Certificates of a like Percentage Interest dated
the date of authentication by the Owner Trustee or any authenticating agent. At
the option of a Certificateholder, Certificates may be exchanged for other
Certificates of a like Percentage Interest upon surrender of the Certificates to
be exchanged at the office or agency maintained pursuant to Section 3.8.
Every Certificate presented or surrendered for registration of transfer
or exchange shall be accompanied by a written instrument of transfer in form
satisfactory to the Owner Trustee and the Certificate Registrar duly executed by
the Certificateholder or his attorney duly authorized in writing. In addition,
each Certificate presented or surrendered for registration of transfer and
exchange must be accompanied by a letter from the Prospective Holder certifying
as to the representations set forth in Section 3.10(a), (b), and (c). Each
Certificate surrendered for registration of transfer or exchange shall be
canceled and disposed of by the Owner Trustee in accordance with its customary
practice.
No service charge shall be made for any registration of transfer or
exchange of Certificates, but the Owner Trustee or the Certificate Registrar may
require payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer or exchange of Certificates.
The preceding provisions of this Section notwithstanding, the Owner
Trustee shall not make and the Certificate Registrar shall not register transfer
or exchanges of Certificates for a period of 15 days preceding the Payment Date
with respect to the Certificates.
SECTION 3.5. MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES.
-------------------------------------------------
If (a) any mutilated Certificate shall be surrendered to the
Certificate Registrar, or if the Certificate Registrar shall receive evidence to
its satisfaction of the destruction, loss, or theft of any Certificate and (b)
there shall be delivered to the Certificate Registrar and the Owner Trustee such
security or indemnity as may be required by them to save each of them harmless,
then in the absence of notice that such Certificate shall have been acquired by
a bona fide purchaser, and provided that the requirements of Section 8-405 of
the relevant Uniform Commercial Code have been met, the Owner Trustee on behalf
of the Trust shall execute and the Owner Trustee, or the Owner Trustee's
authenticating agent, shall authenticate and deliver, in exchange for or in lieu
of any such mutilated, destroyed, lost, or stolen Certificate, a new Certificate
of like Percentage Interest. In connection with the issuance of any new
Certificate under this Section, the Owner Trustee or the Certificate Registrar
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection therewith. Any duplicate
Certificate issued pursuant to this Section shall constitute conclusive evidence
of ownership in the Trust, as if originally issued, whether or not the lost,
stolen, or destroyed Certificate shall be found at any time.
SECTION 3.6. PERSONS DEEMED OWNERS.
---------------------
Each person by virtue of becoming a Certificateholder in accordance
with this Agreement shall be deemed to be bound by the terms of this Agreement.
Prior to due presentation of a Certificate for registration of transfer, the
Owner Trustee or the Certificate Registrar may treat the Person in whose name
any Certificate shall be registered in the Certificate Register as the owner of
such Certificate for the purpose of receiving distributions pursuant to Section
5.2 and for all other purposes whatsoever, and neither the Owner Trustee nor the
Certificate Registrar shall be bound by any notice to the contrary.
SECTION 3.7. ACCESS TO LIST OF HOLDERS' NAMES AND ADDRESSES.
----------------------------------------------
The Owner Trustee shall furnish or cause to be furnished to the
Servicer, the Depositor and the Trust Paying Agent no later than ten days prior
to each Payment Date, a list of the names and addresses of the
Certificateholders as of the most recent Record Date. If three or more
Certificateholders or one or more Holders of Certificates, together evidencing
Percentage Interests totaling not less than 25%, apply in writing to the Owner
Trustee, and such application states that the applicants desire to communicate
with other Certificateholders with respect to their rights under this Agreement
or under the Certificates and such application is accompanied by a copy of the
communication that such applicants propose to transmit, then the Owner Trustee
shall, within five Business Days after the receipt of such application, afford
such applicants access during normal business hours to the current list of
Certificateholders. Each Certificateholder, by receiving and holding a
Certificate, shall be deemed to have agreed not to hold any of the Depositor,
the Certificate Registrar, or the Owner Trustee accountable by reason of the
disclosure of its name and address, regardless of the source from which such
information was derived.
SECTION 3.8. MAINTENANCE OF OFFICE OR AGENCY.
-------------------------------
The Owner Trustee shall maintain an office or offices or agency or
agencies where Certificates may be surrendered for registration of transfer or
exchange and where notices and demands to or upon the Owner Trustee in respect
of the Certificates and the Basic Documents may be served. The Owner Trustee
initially designates Wilmington Trust Company as its principal corporate trust
office for such purposes. The Owner Trustee shall give prompt written notice to
the Depositor and to the Certificateholders of any change in the location of the
Certificate Register or any such office or agency.
SECTION 3.9. APPOINTMENT OF TRUST PAYING AGENT.
---------------------------------
The Owner Trustee hereby appoints Norwest Bank Minnesota, National
Association, as Trust Paying Agent under this Agreement. The Trust Paying Agent
shall make distributions to Certificateholders from the Certificate Distribution
Account pursuant to Section 5.2 and shall report to the Owner Trustee on the
Payment Date via facsimile transmission of a distribution statement the amounts
of such distributions to the Certificateholders. The Trust Paying Agent shall
have the revocable power to withdraw funds from the Certificate Distribution
Account for the purpose of making the distributions referred to above. In the
event that Norwest Bank Minnesota, National Association, shall no longer be the
Trust Paying Agent hereunder, the Owner Trustee shall appoint a successor to act
as Trust Paying Agent (which shall be a bank or trust company) acceptable to the
Certificateholders and the Note Insurer. The Owner Trustee shall cause such
successor Trust Paying Agent or any additional Trust Paying Agent appointed by
the Owner Trustee to execute and deliver to the Owner Trustee an instrument in
which such successor Trust Paying Agent or additional Trust Paying Agent shall
agree with the Owner Trustee that as Trust Paying Agent, such successor Trust
Paying Agent or additional Trust Paying Agent will hold all sums, if any, held
by it for payment to the Certificateholders in trust for the benefit of the
Certificateholders entitled thereto until such sums shall be paid to such
Certificateholders. After one year from the date of receipt, the Trust Paying
Agent shall promptly return all unclaimed funds to the Owner Trustee, and upon
removal of a Trust Paying Agent, such Trust Paying Agent shall also return all
funds in its possession to the Owner Trustee. The provisions of Sections 7.1,
7.3(b), 7.4, 8.1, and 10.2 as to resignations, shall apply to the Trust Paying
Agent to the same extent as if it were named therein and, to the extent
applicable, to any other paying agent appointed hereunder. Any reference in this
Agreement to the Trust Paying Agent shall include any co-paying agent unless the
context requires otherwise.
SECTION 3.10. RESTRICTIONS ON TRANSFER OF CERTIFICATES.
----------------------------------------
(a) Each prospective purchaser and any subsequent transferee of a
Certificate (each, a "Prospective Holder"), other than the Depositor and any
affiliate, shall represent and warrant, in writing, to the Owner Trustee and the
Certificate Registrar and any of their respective successors that:
(i) Such Person is (A) a "qualified institutional buyer" as
defined in Rule 144A under the Securities Act of 1933, as amended (the
"Securities Act"), and is aware that the seller of the Certificate may
be relying on the exemption from the registration requirements of the
Securities Act provided by Rule 144A and is acquiring such Certificate
for its own account or for the account of one or more qualified
institutional buyers for whom it is authorized to act, or (B) a Person
involved in the organization or operation of the Trust or an affiliate
of such Person within the meaning of Rule 3a-7 of the Investment
Company Act of 1940, as amended (including, but not limited to, the
Depositor and any affiliate).
(ii) Such Person understands that the Certificates have not been
and will not be registered under the Securities Act and may be
offered, sold, pledged, or otherwise transferred only to a person whom
the seller reasonably believes is (C) a qualified institutional buyer
or (D) a Person involved in the organization or operation of the Trust
or an affiliate of such Person, in a transaction meeting the
requirements of Rule 144A under the Securities Act and in accordance
with any applicable securities laws of any state of the United States.
(iii) Such Person understands that the Certificates bear a legend
to the following effect:
"THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), OR ANY STATE SECURITIES LAWS. THIS
CERTIFICATE MAY BE DIRECTLY OR INDIRECTLY OFFERED OR
SOLD OR OTHERWISE DISPOSED OF (INCLUDING PLEDGED) BY
THE HOLDER HEREOF ONLY TO (I) A "QUALIFIED
INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE
ACT, IN A TRANSACTION THAT IS REGISTERED UNDER THE ACT
AND APPLICABLE STATE SECURITIES LAWS OR THAT IS EXEMPT
FROM THE REGISTRATION REQUIREMENTS OF THE ACT PURSUANT
TO RULE 144A OR (II) A PERSON INVOLVED IN THE
ORGANIZATION OR OPERATION OF THE TRUST OR AN AFFILIATE
OF SUCH A PERSON WITHIN THE MEANING OF RULE 3a-7 OF THE
INVESTMENT COMPANY ACT OF 1940, AS AMENDED (INCLUDING,
BUT NOT LIMITED TO, CITY CAPITAL MARKETS CORPORATION)
IN A TRANSACTION THAT IS REGISTERED UNDER THE ACT AND
APPLICABLE STATE SECURITIES LAWS OR THAT IS EXEMPT FROM
THE REGISTRATION REQUIREMENTS OF THE ACT AND SUCH LAWS.
NO PERSON IS OBLIGATED TO REGISTER THIS CERTIFICATE
UNDER THE ACT OR ANY STATE SECURITIES LAWS."
(b) By its acceptance of a Certificate, each Prospective Holder agrees
and acknowledges that no legal or beneficial interest in all or any portion of
any Certificate may be transferred directly or indirectly to an entity that
holds certificates of beneficial interest as nominee to facilitate the clearance
and settlement of such securities through electronic book-entry changes in
Accounts of participating organizations (a "Book-Entry Nominee") and any such
purported transfer shall be void and have no effect.
(c) No transfer of this certificate or any beneficial interest therein
shall be made to any person unless the Owner Trustee has received a certificate
from the Transferee to the effect that such transferee (i) is not a person which
is an employee benefit plan, trust, or account subject to Title I of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA") or Section
4975 of the Code or a governmental plan, defined in Section 3(32) of ERISA
subject to any federal, state or local law which is, to a material extent,
similar to the foregoing provisions of ERISA or the Code (any such person being
a "plan") and (ii) is not an entity, including an insurance company separate
account or general account, whose underlying assets include plan assets by
reason of a plan's investment in the entity.
(d) The Owner Trustee shall not execute, and shall not countersign and
deliver, a Certificate in connection with any transfer thereof unless the
transferor shall have provided to the Owner Trustee a certificate, substantially
in the form attached as Exhibit C to this Agreement, signed by the transferee,
which certificate shall contain the consent of the transferee to any amendments
of this Agreement as may be required to effectuate further the foregoing
restrictions on transfer of the Certificates to Book-Entry Nominees, and an
agreement by the transferee that it will not transfer a Certificate without
providing to the Owner Trustee a certificate substantially in the form attached
as Exhibit C to this Agreement.
(e) The Certificates shall bear an additional legend referring to the
restrictions contained in paragraphs (b) through (d) above.
(f) Notwithstanding any of the foregoing, the Certificates shall not be
transferable without the prior written consent of the Note Insurer.
(g) Notwithstanding any of the foregoing, the Owner Trustee shall
assure that (i) the Certificates are transferable only in Percentage Interests
of 10% or more, (ii) no transfer of a Certificate shall be effected if, as a
result of such transfer, the Certificates would be deemed to be held by more
than 100 holders or beneficial owners within the meaning of Treasury Regulation
Section 1.7704-1(h)(1)(ii), (iii) the Certificates will not be listed or traded
on any established securities exchange market within the meaning of Treasury
Regulation Section 1.7704-1, and (iv) the Certificates are not held by any
Non-U.S. Persons.
ARTICLE IV
ACTIONS BY OWNER TRUSTEE
SECTION 4.1. PRIOR NOTICE TO HOLDERS WITH RESPECT TO CERTAIN
---------------------------------------------------------
MATTERS.
- -------
With respect to the following matters, the Owner Trustee shall not take
action, and the Certificateholders shall not direct the Owner Trustee to take
any action, unless at least 30 days before the taking of such action, the Owner
Trustee shall have notified the Certificateholders and the Note Insurer in
writing of the proposed action and neither the Certificateholders nor the Note
Insurer shall have notified the Owner Trustee in writing prior to the 30th day
after such notice is given that such Certificateholders and/or the Note Insurer
have withheld consent or the Certificateholders have provided alternative
direction (any direction by the Certificateholders shall require the prior
consent of the Note Insurer):
(a) the initiation of any claim or lawsuit by the Trust (except claims
or lawsuits brought in connection with the collection of the Home Loans) and the
compromise of any action, claim or lawsuit brought by or against the Trust
(except with respect to the aforementioned claims or lawsuits for collection of
the Home Loans); (b) the election by the Trust to file an amendment to the
Certificate of Trust (unless such amendment is required to be filed under the
Business Trust Statute);
(c) the amendment or other change to this Agreement or any Basic
Document in circumstances where the consent of any Holder or the Note Insurer is
required;
(d) the amendment or other change to this Agreement or any Basic
Document in circumstances where the consent of any Holder or the Note Insurer is
not required and such amendment materially adversely affects the interest of the
Certificateholders;
(e) the appointment pursuant to the Indenture of a successor Note
Registrar, Trust Paying Agent, or Indenture Trustee or pursuant to this
Agreement of a successor Certificate Registrar or Trust Paying Agent, or the
consent to the assignment by the Note Registrar, Paying Agent, or Indenture
Trustee or Certificate Registrar or Trust Paying Agent of its obligations under
the Indenture or this Agreement, as applicable.
(f) the consent to the calling or waiver of any default of any Basic
Document;
(g) the consent to the assignment by the Indenture Trustee or Servicer
of their respective obligations under any Basic Document;
(h) except as provided in Article IX hereof, dissolve, terminate or
liquidate the Trust in whole or in part;
(i) merge or consolidate the Trust with or into any other entity, or
convey or transfer all or substantially all of the Trust's assets to any other
entity;
(j) cause the Trust to incur, assume or guaranty any indebtedness other
than as set forth in this Agreement or the Basic Documents;
(k) do any act that conflicts with any other Basic Document;
(l) do any act which would make it impossible to carry on the ordinary
business of the Trust as described in Section 2.3 hereof;
(m) confess a judgment against the Trust;
(n) possess Trust assets, or assign the Trust's right to property, for
other than a Trust purpose;
(o) cause the Trust to lend any funds to any entity; or
(p) change the Trust's purpose and powers from those set forth in this
Trust Agreement.
In addition the Trust shall not commingle its assets with those of any
other entity. The Trust shall maintain its financial and accounting books and
records separate from those of any other entity. Except as expressly set forth
herein, the Trust shall pay its indebtedness, operating expenses, and
liabilities from its own funds, and the Trust shall not pay the indebtedness,
operating expenses, and liabilities of any other entity. The Trust shall
maintain appropriate minutes or other records of all appropriate actions and
shall maintain its office separate from the offices of the Depositor and City
National Bank of West Virginia.
The Owner Trustee shall not have the power, except upon the direction
of the Certificateholders with the consent of the Note Insurer, and to the
extent otherwise consistent with the Basic Documents, to (i) remove or replace
the Servicer or the Indenture Trustee, (ii) institute proceedings to have the
Trust declared or adjudicated bankrupt or insolvent, (iii) consent to the
institution of bankruptcy or insolvency proceedings against the Trust, (iv) file
a petition or consent to a petition seeking reorganization or relief on behalf
of the Trust under any applicable federal or state law relating to bankruptcy,
(v) consent to the appointment of a receiver, liquidator, assignee, trustee,
sequestrator, or any similar official of the Trust or a substantial portion of
the property of the Trust, (vi) make any assignment for the benefit of the
Trust's creditors, (vii) cause the Trust to admit in writing its inability to
pay its debts generally as they become due, and (viii) take any action, or cause
the Trust to take any action, in furtherance of any of the foregoing (any of the
above, a "Bankruptcy Action"). So long as the Indenture and the Insurance
Agreement remain in effect and no Note Insurer Default exists, no
Certificateholder shall have the power to take, and shall not take, any
Bankruptcy Action with respect to the Trust or direct the Owner Trustee to take
any Bankruptcy Action with respect to the Trust.
SECTION 4.2. ACTION BY HOLDERS WITH RESPECT TO BANKRUPTCY.
--------------------------------------------
The Owner Trustee shall not have the power to commence a voluntary
proceeding in bankruptcy relating to the Trust without the consent and approval
of the Note Insurer, the unanimous prior approval of all Certificateholders and
the Note Insurer and the delivery to the Owner Trustee by each such
Certificateholder of a certification that such Certificateholder reasonably
believes that the Trust is insolvent.
SECTION 4.3. RESTRICTIONS ON HOLDERS' POWER.
------------------------------
The Certificateholders shall not direct the Owner Trustee to take or
refrain from taking any action if such action or inaction would be contrary to
any obligation of the Trust or the Owner Trustee under this Agreement or any of
the Basic Documents or would be contrary to Section 2.3 nor shall the Owner
Trustee be obligated to follow any such direction, if given.
SECTION 4.4. MAJORITY CONTROL.
----------------
Except as expressly provided herein, any action that may be taken by
the Certificateholders under this Agreement may be taken by the Holders of
Certificates evidencing more than 50% of the Percentage Interest in the Trust
Interest and such action shall be binding upon all Certificateholders. Except as
expressly provided herein, any written notice of the Certificateholders
delivered pursuant to this Agreement shall be effective if signed by Holders of
Certificates evidencing more than 50% of the Percentage Interest in the Trust
Interest at the time of the delivery of such notice and such action shall be
binding upon all Certificateholders.
ARTICLE V
APPLICATION OF TRUST FUNDS; CERTAIN DUTIES
SECTION 5.1. ESTABLISHMENT OF CERTIFICATE DISTRIBUTION ACCOUNT.
-------------------------------------------------
The Owner Trustee shall cause the Trust Paying Agent, for the benefit
of the Certificateholders, to establish and maintain with Norwest Bank
Minnesota, National Association, for the benefit of the Owner Trustee one or
more Accounts that while the Trust Paying Agent holds such Account shall be
entitled "Certificate Distribution Account, Norwest Bank Minnesota, National
Association, as Trust Paying Agent, in trust for the Holders of Certificates
evidencing beneficial interests in City Capital Home Loan Trust 1998-4." Funds
shall be deposited in the Certificate Distribution Account as required by the
Indenture or, following satisfaction and release of the Indenture, by the
Servicing Agreement.
All of the right, title, and interest of the Owner Trustee in all funds
on deposit from time to time in the Certificate Distribution Account and in all
proceeds thereof shall be held for the benefit of the Certificateholders, the
Note Insurer, and such other persons entitled to distributions therefrom. Except
as otherwise expressly provided herein, the Certificate Distribution Account
shall be under the sole dominion and control of the Owner Trustee for the
benefit of the Certificateholders and the Note Insurer.
SECTION 5.2. APPLICATION OF TRUST FUNDS.
--------------------------
(a) On each Payment Date, the Trust Paying Agent shall distribute to
the Certificateholders, on the basis of their respective Percentage Interests,
all amounts then on deposit in the Certificate Distribution Account.
(b) On each Payment Date, the Trust Paying Agent shall send to
Certificateholders the statement provided to the Owner Trustee by the Indenture
Trustee pursuant to Section 2.08(d) of the Indenture with respect to such
Payment Date. If the Trust Paying Agent is an entity other than the Indenture
Trustee, the Owner Trustee shall provide a copy of such statement to the Trust
Paying Agent to enable it to perform its duties under this Section 5.2(b).
(c) In the event that any withholding tax is imposed under federal,
state, or local law on the Trust's payment (or allocations of income) to a
Certificateholder, such tax shall reduce the amount otherwise distributable to
such Certificateholder in accordance with this Section. The Owner Trustee, and
the Trust Paying Agent on its behalf, is hereby authorized and directed to
retain in the Certificate Distribution Account from amounts otherwise
distributable to the Certificateholders sufficient funds for the payment of any
tax that is legally owed by the Trust (but such authorization shall not prevent
the Owner Trustee from contesting any such tax in appropriate proceedings, and
withholding payment of such tax, if permitted by law, pending the outcome of
such proceedings). The Certificate Registrar will provide the Trust Paying Agent
with a statement indicating the amount of any such withholding tax. The amount
of any withholding tax imposed with respect to a Certificateholder shall be
treated as cash distributed to such Certificateholder at the time it is withheld
by the Trust and remitted to the appropriate taxing authority from the
Certificate Distribution Account at the direction of the Owner Trustee or the
Trust Paying Agent on its behalf. If there is a possibility that withholding tax
is payable with respect to a distribution (such as a distribution to a
Certificateholder who is a Non-U.S. Person), the Trust Paying Agent may in its
sole discretion withhold such amounts in accordance with this paragraph (c). In
the event that a Certificateholder wishes to apply for a refund of any such
withholding tax, the Owner Trustee and the Trust Paying Agent shall reasonably
cooperate with such Certificateholder in making such claim so long as such
Certificateholder agrees to reimburse the Owner Trustee for any out-of-pocket
expenses incurred.
(d) Notwithstanding anything to the contrary herein, at any time after
the Indenture is no longer in effect but while this Agreement remains in effect,
the Trust Paying Agent shall be entitled to receive, from the cash flow on the
Home Loans and prior to any payment to the Certificateholders on each Payment
Date, a reasonable fee on each Payment Date not to exceed the Indenture Trustee
Fee that would have been payable to the Indenture Trustee on such Payment Date
if the Indenture was still in effect.
SECTION 5.3. METHOD OF PAYMENT.
-----------------
Distributions required to be made to Certificateholders on any Payment
Date shall be made to each Certificateholder of record on the preceding Record
Date either by wire transfer, in immediately available funds, to the account of
such Holder at a bank or other entity having appropriate facilities therefor, if
such Certificateholder shall have provided to the Trust Paying Agent appropriate
written instructions at least five Business Days prior to such Payment Date, or,
if not, by check mailed to such Certificateholder at the address of such Holder
appearing in the Certificate Register.
SECTION 5.4. SEGREGATION OF MONEYS; NO INTEREST.
----------------------------------
Subject to Sections 5.1 and 5.2, moneys received by the Trust Paying
Agent hereunder and deposited into the Certificate Distribution Account will be
segregated and, if the Holders of more than 50% of the Certificates so direct,
shall be invested in Permitted Investments maturing no later than one Business
Day prior to the related Payment Date at the direction of such
Certificateholders. The Trust Paying Agent shall not be liable for payment of
any interest or losses in respect of such moneys. Investment gains shall be for
the account of and paid to the Certificateholders.
ARTICLE VI
AUTHORITY AND DUTIES OF OWNER TRUSTEE
SECTION 6.1. GENERAL AUTHORITY.
-----------------
The Owner Trustee is authorized and directed to execute and deliver or
cause to be executed and delivered the Notes, the Certificates, and the Basic
Documents to which the Trust is to be a party and each certificate or other
document attached as an exhibit to or contemplated by the Basic Documents to
which the Trust is to be a party and any amendment or other agreement or
instrument described in Article III, in each case, in such form as the Owner
Trustee shall approve, as evidenced conclusively by the Owner Trustee's
execution thereof. In addition, the Owner Trustee is authorized and directed, on
behalf of the Trust, to execute and deliver to the Authenticating Agent, the
Issuer Request and the Issuer Order referred to in Section 2.11 of the
Indenture, in such form as the Depositor shall approve, as evidenced
conclusively by the Owner Trustee's or the Depositor's execution thereof,
directly to the Authenticating Agent to authenticate and deliver Notes in the
aggregate principal amount of $168,173,000. In addition to the foregoing, the
Owner Trustee is authorized, but shall not be obligated, to take all actions
required of the Trust, pursuant to the Basic Documents.
SECTION 6.2. GENERAL DUTIES.
--------------
It shall be the duty of the Owner Trustee:
(a) To discharge (or cause to be discharged) all of its
responsibilities pursuant to the terms of this Agreement and the Basic Documents
to which the Trust is a party and to administer the Trust in the interest of the
Certificateholders, subject to the Basic Documents and in accordance with the
provisions of this Agreement; the Owner Trustee shall not be responsible for
taking any action with respect to the Indenture or any other of the Basic
Documents unless a Responsible Office of the Owner Trustee has actual knowledge
of the facts which require such action or has received written notice of the
need to take such action; the Owner Trustee shall not be responsible for any
matter regarding the Investment Company Act of 1940, as amended (or any
successor statute) or the rules or regulations thereunder; and
(b) To obtain and preserve the Issuer's qualification to do business in
each jurisdiction in which such qualification is or shall be necessary to
protect the validity and enforceability of the Indenture, the Notes, the Home
Loans, and each other instrument and agreement included in the Trust Estate.
SECTION 6.3. ACTION UPON INSTRUCTION.
-----------------------
(a) Subject to Article IV and in accordance with the terms of the Basic
Documents, the Certificateholders may by written instruction direct the Owner
Trustee in the management of the Trust but only to the extent consistent with
the limited purpose of the Trust. Such direction may be exercised at anytime by
written instruction of the Certificateholders pursuant to Article IV. Without
limiting the generality of the foregoing, the Owner Trustee shall act as
directed by the Certificateholders in connection with Note redemptions requested
by the Certificateholders, and shall take all actions and deliver all documents
that the Trust is required to take and deliver in accordance with Section 4.01
and Article X of the Indenture in order to effect any redemption requested by
the Certificateholders.
(b) The Owner Trustee shall not be required to take any action
hereunder or under any Basic Document if the Owner Trustee shall have reasonably
determined, or shall have been advised by counsel, that such action is likely to
result in liability on the part of the Owner Trustee or is contrary to the terms
hereof or of any Basic Document or is otherwise contrary to law.
(c) Whenever the Owner Trustee is unable to decide between alternative
courses of action permitted or required by the terms of this Agreement or under
any Basic Document, the Owner Trustee shall promptly give notice (in such form
as shall be appropriate under the circumstances) to the Certificateholders and
the Note Insurer requesting instruction from the Certificateholders as to the
course of action to be adopted, and to the extent the Owner Trustee acts in good
faith in accordance with any written instruction of the Certificateholders
received, the Owner Trustee shall not be liable on Account of such action to any
Person. If the Owner Trustee shall not have received appropriate instruction
within 10 days of such notice (or within such shorter period of time as
reasonably may be specified in such notice or may be necessary under the
circumstances) it may, but shall be under no duty to, take or refrain from
taking such action, not inconsistent with this Agreement or the Basic Documents,
as it shall deem to be in the best interests of the Certificateholders, and
shall have no liability to any Person for such action or inaction.
(d) In the event that the Owner Trustee is unsure as to the application
of any provision of this Agreement or any Basic Document or any such provision
is ambiguous as to its application, or is, or appears to be, in conflict with
any other applicable provision, or in the event that this Agreement permits any
determination by the Owner Trustee or is silent or is incomplete as to the
course of action that the Owner Trustee is required to take with respect to a
particular set of facts, the Owner Trustee may give notice (in such form as
shall be appropriate under the circumstances) to the Certificateholders
requesting instruction and, to the extent that the Owner Trustee acts or
refrains from acting in good faith in accordance with any such instruction
received, the Owner Trustee shall not be liable, on account of such action or
inaction, to any Person. If the Owner Trustee shall not have received
appropriate instruction within 10 days of such notice (or within such shorter
period of time as reasonably may be specified in such notice or may be necessary
under the circumstances) it may, but shall be under no duty to, take or refrain
from taking such action, not inconsistent with this Agreement or the Basic
Documents, as it shall deem to be in the best interests of the
Certificateholders, and shall have no liability to any Person for such action or
inaction.
SECTION 6.4. NO DUTIES EXCEPT AS SPECIFIED IN THIS AGREEMENT, THE BASIC
----------------------------------------------------------
DOCUMENTS OR ANY INSTRUCTIONS.
- -----------------------------
The Owner Trustee shall not have any duty or obligation to manage, make
any payment with respect to, register, record, sell, dispose of, or otherwise
deal with the Owner Trust Estate, or to otherwise take or refrain from taking
any action under, or in connection with, any document contemplated hereby to
which the Owner Trustee is a party, except as expressly provided by the terms of
this Agreement, any Basic Document, or in any document or written instruction
received by the Owner Trustee pursuant to Section 6.3; and no implied duties or
obligations shall be read into this Agreement or any Basic Document against the
Owner Trustee. The Owner Trustee shall have no responsibility for filing any
financing or continuation statement in any public office at any time or to
otherwise perfect or maintain the perfection of any security interest or lien
granted to it hereunder or to record this Agreement or any Basic Document. The
Owner Trustee nevertheless agrees that it will, at its own cost and expense,
promptly take all action as may be necessary to discharge any liens on any part
of the Owner Trust Estate that result from actions by, or claims against, the
Owner Trustee that are not related to the ownership or the administration of the
Owner Trust Estate.
SECTION 6.5. NO ACTION EXCEPT UNDER SPECIFIED DOCUMENTS OR
---------------------------------------------------------
INSTRUCTIONS.
- ------------
The Owner Trustee shall not manage, control, use, sell, dispose of, or
otherwise deal with any part of the Owner Trust Estate except (i) in accordance
with the powers granted to and the authority conferred upon the Owner Trustee
pursuant to this Agreement, (ii) in accordance with the Basic Documents, and
(iii) in accordance with any document or instruction delivered to the Owner
Trustee pursuant to Section 6.3.
SECTION 6.6. RESTRICTIONS.
------------
The Owner Trustee shall not take any action (a) that is inconsistent
with the purposes of the Trust set forth in Section 2.3 or (b) that, to the
actual knowledge of the Owner Trustee, would result in the Trust's becoming
taxable as a corporation for Federal income tax purposes. The Certificateholders
shall not direct the Owner Trustee to take action that would violate the
provisions of this Section.
ARTICLE VII
CONCERNING THE OWNER TRUSTEE
SECTION 7.1. ACCEPTANCE OF TRUSTS AND DUTIES.
-------------------------------
The Owner Trustee accepts the trusts hereby created and agrees to
perform its duties hereunder with respect to such trusts but only upon the terms
of this Agreement and the Basic Documents. There shall be no implied duties of
the Owner Trustee under this Agreement or under the Basic Documents. The Owner
Trustee also agrees to disburse all moneys actually received by it constituting
part of the Owner Trust Estate upon the terms of the Basic Documents and this
Agreement. The Owner Trustee shall not be answerable or accountable hereunder or
under any Basic Document under any circumstances, except (i) for its own willful
misconduct or negligence or (ii) in the case of the inaccuracy of any
representation or warranty contained in Section 7.3 expressly made by the Owner
Trustee. In particular, but not by way of limitation (and subject to the
exceptions set forth in the preceding sentence):
(a) the Owner Trustee shall not be liable for any error of judgment
made by a responsible officer of the Owner Trustee;
(b) the Owner Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in accordance with the instructions of the
Certificateholders;
(c) no provision of this Agreement or any Basic Document shall require
the Owner Trustee to expend or risk funds or otherwise incur any financial
liability in the performance of any of its rights or powers hereunder or under
any Basic Document if the Owner Trustee shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against such risk
or liability is not reasonably assured or provided to it;
(d) under no circumstances shall the Owner Trustee be liable for
indebtedness evidenced by or arising under any of the Basic Documents, including
the principal of and interest on the Notes;
(e) the Owner Trustee shall not be responsible for or in respect of the
validity or sufficiency of this Agreement or for the due execution hereof by the
Depositor or for the form, character, genuineness, sufficiency, value, or
validity of any of the Owner Trust Estate or for or in respect of the validity
or sufficiency of the Basic Documents, other than the certificate of
authentication on the Certificates, and the Owner Trustee shall in no event
assume or incur any liability, duty, or obligation to any Noteholder or to any
Certificateholder, other than as expressly provided for herein and in the Basic
Documents;
(f) the Owner Trustee shall not be liable for the default or misconduct
of the Seller, the Depositor, the Indenture Trustee, the Master Servicer or the
Servicer under any of the Basic Documents or otherwise and the Owner Trustee
shall have no obligation or liability to perform the obligations of the Trust
under this Agreement or the Basic Documents that are required to be performed by
the Indenture Trustee under the Indenture or the Servicer and the Master
Servicer under the Servicing Agreement; and
(g) the Owner Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Agreement, or to institute, conduct,
or defend any litigation under this Agreement or otherwise or in relation to
this Agreement or any Basic Document, at the request, order or direction of any
of the Certificateholders, unless such Certificateholders have offered to the
Owner Trustee security or indemnity satisfactory to it against the costs,
expenses, and liabilities that may be incurred by the Owner Trustee therein or
thereby. The right of the Owner Trustee to perform any discretionary act
enumerated in this Agreement or in any Basic Document shall not be construed as
a duty, and the Owner Trustee shall not be answerable for other than its gross
negligence or willful misconduct in the performance of any such act.
SECTION 7.2. FURNISHING OF DOCUMENTS.
-----------------------
The Owner Trustee shall furnish to the Certificateholders promptly upon
receipt of a written request therefor, duplicates or copies of all reports,
notices, requests, demands, certificates, financial statements, and any other
instruments furnished to the Owner Trustee under the Basic Documents. On behalf
of the Owner Trustee, the Depositor shall furnish to Noteholders promptly upon
written request therefor, copies of the Servicing Agreement and the Indenture.
SECTION 7.3. REPRESENTATIONS AND WARRANTIES.
------------------------------
(a) The Owner Trustee hereby represents and warrants to the Depositor
for the benefit of the Certificateholders, that:
(i) It is a banking corporation duly organized and validly
existing in good standing under the laws of the State of Delaware. It
has all requisite corporate power and authority to execute, deliver
and perform its obligations under this Agreement.
(ii) It has taken all corporate action necessary to authorize the
execution and delivery by it of this Agreement, and this Agreement
will be executed and delivered by one of its officers who is duly
authorized to execute and deliver this Agreement on its behalf.
(iii) Neither the execution nor the delivery by it of this
Agreement nor the consummation by it of the transactions contemplated
hereby nor compliance by it with any of the terms or provisions hereof
will contravene any Federal or Delaware law, governmental rule or
regulation governing the banking or trust powers of the Owner Trustee
or any judgment or order binding on it, or constitute any default
under its charter documents or by-laws.
(b) The Trust Paying Agent hereby represents and warrants to the
Depositor and the Note Insurer for the benefit of the Certificateholders, that:
(i) It is a banking association duly organized and validly
existing in good standing under the laws of the United States of
America. It has all requisite corporate power and authority to
execute, deliver, and perform its obligations under this Agreement.
(ii) It has taken all corporate action necessary to authorize the
execution and delivery by it of this Agreement, and this Agreement
will be executed and delivered by one of its officers who is duly
authorized to execute and deliver this Agreement on its behalf.
(iii) Neither the execution nor the delivery by it of this
Agreement nor the consummation by it of the transactions contemplated
hereby nor compliance by it with any of the terms or provisions hereof
will contravene any Federal law, governmental rule, or regulation
governing the banking or trust powers of the Trust Paying Agent or any
judgment or order binding on it, or constitute any default under its
charter documents or by-laws.
SECTION 7.4. RELIANCE; ADVICE OF COUNSEL.
---------------------------
(a) The Owner Trustee shall incur no liability to anyone in acting upon
any signature, instrument, notice, resolution, request, consent, order,
certificate, report, opinion, bond, or other document or paper believed by it to
be genuine and believed by it to be signed by the proper party or parties. The
Owner Trustee may accept a certified copy of a resolution of the board of
directors or other governing body of any corporate party as conclusive evidence
that such resolution has been duly adopted by such body and that the same is in
full force and effect. As to any fact or matter the method of the determination
of which is not specifically prescribed herein, the Owner Trustee may for all
purposes hereof rely on a certificate, signed by the president or any vice
president or by the treasurer or other authorized officers of the relevant
party, as to such fact or matter and such certificate shall constitute full
protection to the Owner Trustee for any action taken or omitted to be taken by
it in good faith in reliance thereon, including officers' certificates under the
Indenture.
(b) In the exercise or administration of the trusts hereunder and in
the performance of its duties and obligations under this Agreement or the Basic
Documents, the Owner Trustee (i) may act directly or through its agents or
attorneys pursuant to agreements entered into with any of them, and the Owner
Trustee shall not be liable for the conduct or misconduct of such agents or
attorneys if such agents or attorneys shall have been selected by the Owner
Trustee with reasonable care, and (ii) may consult with counsel, accountants,
and other skilled persons to be selected with reasonable care and employed by
it. The Owner Trustee shall not be liable for anything done, suffered, or
omitted in good faith by it in accordance with the written opinion or advice of
any such counsel, Accountants, or other such persons and not contrary to this
Agreement or any Basic Document.
SECTION 7.5. NOT ACTING IN INDIVIDUAL CAPACITY.
---------------------------------
Except as provided in this Article VII, in accepting the trusts hereby
created, Wilmington Trust Company acts solely as Owner Trustee hereunder and not
in its individual capacity, and all Persons having any claim against the Owner
Trustee by reason of the transactions contemplated by this Agreement or any
Basic Document shall look only to the Owner Trust Estate for payment or
satisfaction thereof.
SECTION 7.6. OWNER TRUSTEE NOT LIABLE FOR CERTIFICATES OR HOME LOANS.
-------------------------------------------------------
The recitals contained herein and in the Certificates (other than the
signature and countersignature of the Owner Trustee on the Certificates) shall
be taken as the statements of the Depositor, and the Owner Trustee assumes no
responsibility for the correctness thereof. The Owner Trustee makes no
representations as to the validity or sufficiency of this Agreement, of any
Basic Document, of the Certificates (other than the signature and
countersignature of the Owner Trustee on the Certificates and as specified in
Section 7.3), of the Notes, or of any Home Loans or related documents. The Owner
Trustee shall at no time have any responsibility or liability for or with
respect to the legality, validity, and enforceability of any Home Loan, or the
perfection and priority of any security interest created by any Home Loan or the
maintenance of any such perfection and priority, or for or with respect to the
sufficiency of the Owner Trust Estate or its ability to generate the payments to
be distributed to Certificateholders under this Agreement or the Noteholders
under the Indenture, including, without limitation, the existence, condition and
ownership of any Mortgaged Property, the existence and enforceability of any
insurance thereon, the existence and contents of any Home Loan on any computer
or other record thereof, the validity of the assignment of any Home Loan to the
Trust or of any intervening assignment, the completeness of any Home Loan, the
performance or enforcement of any Home Loan, the compliance by the Depositor or
the Servicer with any warranty or representation made under any Basic Document
or in any related document or the accuracy of any such warranty or
representation, or any action of the Indenture Trustee, the Master Servicer or
the Servicer or any subservicer taken in the name of the Owner Trustee.
SECTION 7.7. OWNER TRUSTEE MAY OWN CERTIFICATES AND NOTES.
--------------------------------------------
The Owner Trustee in its individual or any other capacity may become
the owner or pledgee of Certificates or Notes and may deal with the Depositor,
the Indenture Trustee, the Master Servicer and the Servicer in banking
transactions with the same rights as it would have if it were not Owner Trustee.
SECTION 7.8. LICENSES.
--------
The Owner Trustee shall cause the Trust to use its best efforts to
obtain and maintain the effectiveness of any licenses required in connection
with this Agreement and the Basic Documents and the transactions contemplated
hereby and thereby until such time as the Trust shall terminate in accordance
with the terms hereof.
ARTICLE VIII
COMPENSATION OF OWNER TRUSTEE
SECTION 8.1. OWNER TRUSTEE'S FEES AND EXPENSES.
---------------------------------
The Owner Trustee shall receive as compensation for its services
hereunder an annual fee as agreed upon before the date hereof between the
Indenture Trustee and the Owner Trustee. The Owner Trustee shall be entitled to
be reimbursed by City National Bank of West Virginia for the Owner Trustee's
other reasonable expenses hereunder, including the reasonable compensation,
expenses and disbursements of such agents, representatives, experts, and counsel
as the Owner Trustee may employ in connection with the exercise and performance
of its rights and its duties hereunder. Such fees and expenses are as set forth
in the fee agreement attached hereto as Exhibit D.
---------
SECTION 8.2. INDEMNIFICATION.
---------------
The Certificateholders shall be liable as obligor for, and shall
indemnify the Owner Trustee and the Trust Paying Agent and their respective
successors, assigns, agents, and servants (collectively, the "Indemnified
Parties") from and against, any and all liabilities, obligations, losses,
damages, taxes, claims, actions, and suits, and any and all reasonable costs,
expenses, and disbursements (including reasonable legal fees and expenses) of
any kind and nature whatsoever (collectively, "Expenses") which may at any time
be imposed on, incurred by, or asserted against any Indemnified Party in any way
relating to or arising out of this Agreement, the Basic Documents, the Owner
Trust Estate, the administration of the Owner Trust Estate, or the action or
inaction of the Owner Trustee or the Trust Paying Agent hereunder, except only
that the Certificateholders shall not be liable for or required to indemnify an
Indemnified Party from and against Expenses arising or resulting from any of the
matters described in the third sentence of Section 7.1. The indemnities
contained in this Section shall survive the resignation or termination of the
Owner Trustee or the Trust Paying Agent or the termination of this Agreement. In
any event of any claim, action or proceeding for which indemnity will be sought
pursuant to this Section, the Certificateholders will be entitled to participate
therein, with counsel selected by such Holders and reasonably satisfactory to
the Indemnified Parties, and after notice from Certificateholders to the
Indemnified Parties of its election to assume the defense thereof, the
Certificateholders shall not be liable to the Indemnified Party under this
Section 8.2 for any legal or other expenses subsequently incurred by such
Indemnified Party in connection with the defense of such action; provided,
however, that this sentence shall not be in effect if (1) the Certificateholders
shall not have employed counsel reasonably satisfactory to the Indemnified Party
to represent the Indemnified Party within a reasonable time after notice of
commencement of the action or (2) the Certificateholders shall have authorized
the employment of counsel for the Indemnified Party at the expense of the
Certificateholders. If the Certificateholders assume the defense of any such
proceeding, they shall be entitled to settle such proceeding without any
liability being assessed against any Indemnified Party or, if such settlement
provides for release of any such Indemnified Party without any liability being
assessed against any Indemnified Party in connection with all matters relating
to the proceeding which have been asserted against such Indemnified Party in
such proceeding by the other parties to such settlement, without the consent of
such Indemnified Party, but otherwise only with the consent of such Indemnified
Party. Certificateholders shall be liable for this indemnification obligation
pro rata, based upon their respective Percentage Interests.
SECTION 8.3. PAYMENTS TO THE OWNER TRUSTEE.
-----------------------------
Any amounts paid to the Owner Trustee or the Trust Paying Agent
pursuant to this Article VIII shall be deemed not to be a part of the Owner
Trust Estate immediately after such payment.
ARTICLE IX
TERMINATION OF TRUST AGREEMENT
SECTION 9.1. TERMINATION OF TRUST AGREEMENT.
------------------------------
(a) This Agreement (other than Article VIII) and the Trust shall
terminate and be of no further force or effect on the earlier of: (i) the final
payment or other liquidation of the Home Loans and the disposition of all REO
Properties and the remittance of all funds due hereunder with respect to such
Home Loans and REO Properties or the disposition of the Home Loans and REO
Properties at the direction of a majority of the Certificateholders, in either
case after the satisfaction and discharge of the Indenture pursuant to Section
4.01 of the Indenture; and (ii) the expiration of 21 years from the death of the
last survivor of the descendants of Joseph P. Kennedy (the late ambassador of
the United States to the Court of St. James's). The bankruptcy, liquidation,
dissolution, death, or incapacity of any Certificateholder or the Depositor
shall not (x) operate to terminate this Agreement or the Trust, (y) 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 all
or any part of the Trust or Owner Trust Estate, or (z) otherwise affect the
rights, obligations, and liabilities of the parties hereto.
(b) Except as provided in Section 9.1(a) above, none of the Depositor,
the Servicer, the Note Insurer or any Certificateholder shall be entitled to
revoke or terminate the Trust.
(c) Notice of any termination of the Trust, specifying the Payment Date
upon which the Certificateholders shall surrender their Certificates to the
Owner Trustee for payment of the final distributions and cancellation, shall be
given by the Owner Trustee to the Certificateholders, the Note Insurer, the
Rating Agencies and the Trust Paying Agent mailed within five Business Days of
receipt by the Owner Trustee of notice of such termination pursuant to Section
9.1(a) above, which notice given by the Owner Trustee shall state (i) the
Payment Date upon or with respect to which final payment of the Certificates
shall be made upon presentation and surrender of the Certificates at the office
of the Owner Trustee therein designated, (ii) the amount of any such final
payment, and (iii) that the Record Date otherwise applicable to such Payment
Date is not applicable, payments being made only upon presentation and surrender
of the Certificates at the office of the Owner Trustee therein specified. The
Owner Trustee shall give such notice to the Certificate Registrar (if other than
the Owner Trustee) and the Trust Paying Agent at the time such notice is given
to Certificateholders. The Owner Trustee shall give notice to the Trust Paying
Agent of each presentation and surrender of Certificates promptly, and the Trust
Paying Agent shall promptly cause to be distributed to the related
Certificateholders amounts distributable on such Payment Date pursuant to
Section 5.2(a).
(d) Upon the winding up of the Trust and its termination, the Owner
Trustee shall cause the Certificate of Trust to be canceled by filing a
certificate of cancellation with the Secretary of State in accordance with the
provisions of Section 3820 of the Business Trust Statute.
ARTICLE X
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
SECTION 10.1. ELIGIBILITY REQUIREMENTS FOR OWNER TRUSTEE.
------------------------------------------
The Owner Trustee shall at all times be a corporation satisfying the
provisions of Section 3807(a) of the Business Trust Statute; authorized to
exercise corporate powers; having a combined capital and surplus of at least
$50,000,000 and subject to supervision or examination by Federal or state
authorities; and having (or having a parent that has) a rating of at least
"Baa3" by Moody's and "A-1" by Standard & Poor's and being acceptable to the
Note Insurer. If such corporation shall publish reports of condition at least
annually, pursuant to law or to the requirements of the aforesaid supervising or
examining authority, then for the purpose of this Section, the combined capital
and surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In
case at any time the Owner Trustee shall cease to be eligible in accordance with
the provisions of this Section, the Owner Trustee shall resign immediately in
the manner and with the effect specified in Section 10.2.
SECTION 10.2. RESIGNATION OR REMOVAL OF OWNER TRUSTEE.
---------------------------------------
The Owner Trustee may at any time resign and be discharged from the
trusts hereby created by giving written notice thereof to the Servicer, the
Indenture Trustee, and the Note Insurer. Upon receiving such notice of
resignation, the Servicer shall promptly appoint a successor Owner Trustee
(acceptable to the Note Insurer) by written instrument, in duplicate, one copy
of which instrument shall be delivered to the resigning Owner Trustee and one
copy to the successor Owner Trustee. If no successor Owner Trustee shall have
been so appointed and have accepted appointment within 30 days after the giving
of such notice of resignation, the resigning Owner Trustee or the Note Insurer
may petition any court of competent jurisdiction for the appointment of a
successor Owner Trustee.
If at any time the Owner Trustee shall cease to be eligible in
accordance with the provisions of Section 10.1 and shall fail to resign after
written request therefor by the Certificateholders or the Servicer, or if at any
time the Owner Trustee shall be legally unable to act, or shall be adjudged
bankrupt or insolvent, or a receiver of the Owner Trustee or of its property
shall be appointed, or any public officer shall take charge or control of the
Owner Trustee or of its property or affairs for the purpose of rehabilitation,
conservation, or liquidation, then the Note Insurer, or the Certificateholders
or the Servicer with the consent of the Note Insurer, may remove the Owner
Trustee. If the Certificateholders or the Servicer or the Note Insurer shall
remove the Owner Trustee under the authority of the immediately preceding
sentence, the Note Insurer, or the Servicer with the consent of the Note
Insurer, shall promptly appoint a successor Owner Trustee by written instrument
in duplicate, one copy of which instrument shall be delivered to the outgoing
Owner Trustee so removed and one copy to the successor Owner Trustee and payment
of all fees owed to the outgoing Owner Trustee.
Any resignation or removal of the Owner Trustee and appointment of a
successor Owner Trustee pursuant to any of the provisions of this Section shall
not become effective until acceptance of appointment by the successor Owner
Trustee pursuant to Section 10.3 receipt of written approval by the Note Insurer
and payment of all fees and expenses owed to the outgoing Owner Trustee. The
Servicer shall provide notice of such resignation or removal of the Owner
Trustee to each of the Rating Agencies, the Indenture Trustee, the Trust Paying
Agent and the Note Insurer.
SECTION 10.3. SUCCESSOR OWNER TRUSTEE.
-----------------------
Any successor Owner Trustee appointed pursuant to Section 10.2 shall
execute, acknowledge, and deliver to the Servicer, the Depositor, the Indenture
Trustee, the Note Insurer, and to its predecessor Owner Trustee an instrument
accepting such appointment under this Agreement, and thereupon the resignation
or removal of the predecessor Owner Trustee shall become effective and such
successor Owner Trustee (if acceptable to the Note Insurer), without any further
act, deed, or conveyance, shall become fully vested with all the rights, powers,
duties, and obligations of its predecessor under this Agreement, with like
effect as if originally named as Owner Trustee. The predecessor Owner Trustee
shall upon payment of its fees and expenses deliver to the successor Owner
Trustee all documents and statements and moneys held by it under this Agreement;
and the Depositor and the predecessor Owner Trustee shall execute and deliver
such instruments and do such other things as may reasonably be required for
fully and certainly vesting and confirming in the successor Owner Trustee all
such rights, powers, duties, and obligations.
No successor Owner Trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor Owner Trustee shall
be eligible pursuant to Section 10.1.
Upon acceptance of appointment by a successor Owner Trustee pursuant to
this Section, the Servicer shall mail notice of the successor of such Owner
Trustee to all Certificateholders, the Indenture Trustee, the Trust Paying
Agent, the Noteholders, the Note Insurer and the Rating Agencies. If the
Servicer fails to mail such notice within 10 days after acceptance of
appointment by the successor Owner Trustee, the successor Owner Trustee shall
cause such notice to be mailed at the expense of the Depositor.
SECTION 10.4. MERGER OR CONSOLIDATION OF OWNER TRUSTEE.
----------------------------------------
Any corporation into which the Owner Trustee may be merged or converted
or with which it may be consolidated or any corporation resulting from any
merger, conversion, or consolidation to which the Owner Trustee shall be a
party, or any corporation succeeding to all or substantially all of the
corporate trust business of the Owner Trustee, shall be the successor of the
Owner Trustee hereunder, provided such corporation shall be eligible pursuant to
Section 10.1, without the execution or filing of any instrument or any further
act on the part of any of the parties hereto, anything herein to the contrary
notwithstanding; provided further that the Owner Trustee shall mail notice of
such merger or consolidation to the Rating Agencies.
SECTION 10.5. APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.
---------------------------------------------
Notwithstanding any other provisions of this Agreement, at any time,
for the purpose of meeting any legal requirements of any jurisdiction in which
any part of the Owner Trust Estate or any Mortgaged Property may at the time be
located, and for the purpose of performing certain duties and obligations of the
Owner Trustee with respect to the Trust and the Certificates, the Owner Trustee
shall have the power and shall execute and deliver all instruments to appoint
one or more Persons approved by the Owner Trustee and acceptable to the Note
Insurer to act as co-trustee, jointly with the Owner Trustee, or separate
trustee or separate trustees, of all or any part of the Owner Trust Estate, and
to vest in such Person, in such capacity, such title to the Trust, or any part
thereof, and, subject to the other provisions of this Section, such powers,
duties, obligations, rights, and trusts as the Note Insurer and the Owner
Trustee may consider necessary or desirable. No co-trustee or separate trustee
under this Agreement shall be required to meet the terms of eligibility as a
successor trustee pursuant to Section 10.1 and no notice of the appointment of
any co-trustee or separate trustee shall be required pursuant to Section 10.3.
Each separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provision and conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon the Owner Trustee shall be conferred upon and exercised
or performed by the Owner Trustee and such separate trustee or
co-trustee jointly (it being understood that such separate trustee or
co-trustee is not authorized to act separately without the Owner
Trustee joining in such act), except to the extent that under any law
of any jurisdiction in which any particular act or acts are to be
performed, the Owner Trustee shall be incompetent or unqualified to
perform such act or acts, in which event such rights, powers, duties,
and obligations (including the holding of title to the Trust or any
portion thereof in any such jurisdiction) shall be exercised and
performed singly by such separate trustee or co-trustee, but solely at
the direction of the Owner Trustee;
(ii) no trustee under this Agreement shall be personally liable
by reason of any act or omission of any other trustee under this
Agreement; and
(iii) the Owner Trustee may at any time accept the resignation of
or remove any separate trustee or co-trustee.
Any notice, request, or other writing given to the Owner Trustee shall
be deemed to have been given to the separate trustees and co-trustees, as if
given to each of them. Every instrument appointing any separate trustee or
co-trustee, other than this Agreement, shall refer to this Agreement and to the
conditions of this Article. Each separate trustee and co-trustee, upon its
acceptance of appointment, shall be vested with the estates specified in its
instrument of appointment, either jointly with the Owner Trustee or separately,
as may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Owner Trustee.
Each such instrument shall be filed with the Owner Trustee.
Any separate trustee or co-trustee may at any time appoint the Owner
Trustee as its Agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate 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
Owner Trustee, to the extent permitted by law, without the appointment of a new
or successor trustee.
ARTICLE XI
CONTRIBUTION OF HOME LOANS
SECTION 11.1. AGREEMENT TO CONTRIBUTE AND CONVEY.
----------------------------------
The Issuer acknowledges that the net proceeds from the sale of the
Notes ($168,378,147.70) will be paid to the Depositor or its designee, and the
Issuer will issue the Certificates to the order of the Depositor or its
designee, in consideration of the transfer of the Home Loans and the related
rights, title, and interests thereunder and the rights of the Depositor pursuant
to the Home Loan Sale Agreement (collectively, the "Consideration"). As and for
the Consideration and subject to the terms and conditions set forth herein, the
Depositor agrees to contribute and convey, and the Trust agrees to accept and
acquire, all of the Depositor's right, title, and interest in and to the Home
Loans identified on the schedule (the "Home Loan Schedule") annexed hereto as
Exhibit E. The Home Loan Schedule will set forth as to each Home Loan the items
- ---------
specified in the definition of "Home Loan Schedule" in the Indenture.
The aggregate of the principal balances of the Home Loans being
contributed and conveyed pursuant to this Agreement as of the close of business
on the Cut-off Date, after application of all payments of principal received in
respect of such Home Loans before the Cut-off Date (the "Initial Pool Principal
Balance"), is set forth on the Cross Receipt executed concurrently herewith in
the form of Exhibit F attached hereto (the "Cross Receipt"). Simultaneously with
---------
and in consideration of the Depositor's contribution, transfer, sale and
conveyance of the Home Loans to the Trust, the Trust shall cause the Notes to be
issued and delivered to the Depositor or its designee and the Certificates to be
issued to the order of the Depositor or its designee. The transfer and
conveyance of the Home Loans shall take place on the Closing Date.
SECTION 11.2. CONVEYANCE OF HOME LOANS.
------------------------
(a) Effective as of the Closing Date, subject only to receipt of the
Consideration and the delivery of the Home Loan File (as defined in the Home
Loan Sale Agreement) for each Home Loan pursuant to subsection (c) below, the
Depositor does hereby sell, contribute, assign, transfer, and otherwise convey
to the Trust, without recourse, representation, or warranty (other than as
expressly set forth in Section 2.10 (a) hereof), and the Trust does hereby
accept, assume, and acquire, all of the Depositor's right, title, and interest
in and to the Home Loans identified on the Home Loan Schedule, and the Trust
hereby assumes and agrees to perform and be bound by each and all of the
covenants, agreements, duties, and obligations of the Depositor arising under or
relating to such Home Loans.
(b) The Trust and its assignees shall be entitled to receive all
payments of principal and interest received on or with respect to the Home Loans
on and after the Cut-off Date, and all other recoveries of principal and
interest collected on or after the Cut-off Date and each of the rights of the
Depositor pursuant to representations, warranties, and indemnities in favor of
the Depositor contained in the Home Loan Sale Agreement.
(c) In connection with its contribution and conveyance of the Home
Loans pursuant to subsection (a) above, the terms of the Home Loan Sale
Agreement govern the delivery of the Home Loan Files to the Custodian, on behalf
of the Indenture Trustee, the Noteholders, and the Note Insurer, and the
Depositor assigns all of its rights under the Home Loan Sale Agreement to the
Trust.
(d) In connection with its conveyance of the Home Loans pursuant to
subsection (a) above, the Depositor shall deliver to the Trust or its designee
in respect of such Home Loans, on or before the Closing Date, all amounts, if
any, received on each Home Loan on and after the Cut-off Date held by or on
behalf of the Depositor.
(e) The Depositor shall, at any time upon the request of the Trust,
without limiting the obligations of the Depositor under this Agreement, execute,
acknowledge, and deliver all such additional documents and instruments and all
such further assurances and will do or cause to be done all such further acts
and things as may be proper or reasonably necessary to carry out the intent of
this Agreement.
SECTION 11.3. ASSIGNMENT OF RELATED RIGHTS AND REMEDIES.
-----------------------------------------
(a) Effective as of the Closing Date, subject only to delivery of the
Home Loan File for each Home Loan pursuant to Section 11.2(c) hereof, the
Depositor does hereby assign, transfer, and otherwise convey to the Trust,
without recourse, representation, or warranty (other than as expressly set forth
in Section 2.10(a) hereof), and the Trust does hereby accept, assume, and
acquire, to be held jointly and severally with the Depositor, all of the
Depositor's rights and remedies under the Home Loan Sale Agreement and the Trust
hereby assumes and agrees to perform and be bound by each and all of the
covenants and agreements of the Depositor arising under the Home Loan Sale
Agreement relating to such rights and remedies and the exercise or enforcement
thereof.
(b) Simultaneously with the exercise of any rights and remedies or any
notices given to City National Bank of West Virginia by the Trust under the Home
Loan Sale Agreement, the Trust shall give the Depositor, the Transferor and the
Note Insurer notice thereof, including, without limitation, copies of all
notices given to City National Bank of West Virginia.
(c) This Section 11.3 provides the sole remedies available to the
Trust, its successors and assignees, respecting any breach (i) of
representations and warranties with respect to the Home Loans to which reference
is made in Section 2.10(b) or (ii) on the part of the Depositor under Section
2.10 hereof.
SECTION 11.4. CLOSING.
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The closing of the conveyance of the Home Loans (the "Closing") shall
be held at the offices of Hunton & Williams, Riverfront Plaza, East Tower, 951
East Byrd Street, Richmond, Virginia 23219 at 10:00 a.m., Eastern time, on the
Closing Date.
The Closing shall be subject to each of the following conditions:
(a) All terms and conditions of this Agreement required to be complied
with on or before the Closing Date shall have been complied with and the
Depositor shall have the ability to comply with all terms and conditions and
perform all duties and obligations required to be complied with or performed
after the Closing Date.
(b) The Trust shall have paid all costs and expenses payable by it to
the Depositor or otherwise pursuant to this Agreement.
Both parties shall use their best efforts to perform their respective
obligations hereunder in a manner that will enable the Trust to acquire the Home
Loans on the Closing Date. Notwithstanding the foregoing, satisfaction by the
Depositor or Trust of its respective obligations under the foregoing provisions
of this Section 11.4 shall not be conditions precedent to the obligation of the
Depositor or Trust, respectively, to close the transactions contemplated by this
Agreement.
SECTION 11.5. SERVICING.
---------
As of the Cut-off Date, the Home Loans will be serviced by City
National Bank of West Virginia (in such capacity, the "Servicer") pursuant to
the terms of the Servicing Agreement.
SECTION 11.6. GRANT OF A SECURITY INTEREST.
----------------------------
It is the express intent of the parties hereto that the conveyance of
the Home Loans by the Depositor to the Trust as provided in Section 11.2(a)
hereof be, and be construed as, a complete and absolute transfer by the
Depositor to the Trust of all of the Depositor's right, title, and interest in
and to the Home Loans and not as a pledge of the Home Loans by the Depositor to
the Trust to secure a debt or other obligation of the Depositor. However, if,
notwithstanding the aforementioned intent of the parties, the Home Loans are
held to be property of the Depositor, then (a) it is the express intent of the
parties that such conveyance be deemed a pledge of the Home Loans by the
Depositor to the Trust to secure a debt or other obligation of the Depositor,
and (b) (i) this Agreement shall also be deemed to be a security agreement
within the meaning of Article 9 of the New York Uniform Commercial Code; (ii)
the conveyance provided for in Section 11.2(a) hereof shall be deemed to be a
grant by the Depositor to the Trust of a security interest in all of the
Depositor's right, title and interest in and to the Home Loans, and all amounts
payable to the holder of the Home Loans in accordance with the terms thereof,
and all proceeds of the conversion, voluntary, or involuntary, of the foregoing
into cash, instruments, securities, or other property, including without
limitation all such amounts, other than investment earnings from time to time
held or invested pursuant to and in accordance with the provisions of the
Servicing Agreement or the Indenture, as applicable, whether in the form of
cash, instruments, securities, or other property; (iii) the subsequent pledge of
the Home Loans by the Trust to the Indenture Trustee as contemplated by the
preamble hereto shall be deemed to be an assignment of any security interest
created hereunder; (iv) in the event that the Trust is disregarded as a separate
entity from the Depositor in the event of insolvency of the Depositor, the
Depositor also shall be deemed to have granted to the Indenture Trustee a
security interest in all of the Depositor's right, title and interest in and to
the Owner Trust Estate; (v) the possession by the Depositor or the Trust or any
of their respective agents, including, without limitation, the Indenture Trustee
or its agent, of the notes or other instruments evidencing the indebtedness of
the obligors under the related Home Loans (the "Mortgage Notes") and such other
items of property relating to the Home Loans as constitute instruments, money,
negotiable documents, or chattel paper shall be deemed to be "possession by the
secured party" for purposes of perfecting the security interest pursuant to
Section 9-305 of the New York Uniform Commercial Code; and (vi) notifications to
persons (other than the Indenture Trustee) holding such property, and
acknowledgments, receipts, or confirmations from persons holding such property,
shall be deemed notifications to, or acknowledgments, receipts, or confirmations
from, financial intermediaries, bailees, or agents (as applicable) of the
secured party for the purpose of perfecting such security interest under
applicable law. The Depositor and the Trust 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 Home Loans, or the
Owner Trust Estate, as the case may be, 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 this Agreement and the
Indenture.
ARTICLE XII
MISCELLANEOUS
SECTION 12.1. SUPPLEMENTS AND AMENDMENTS.
--------------------------
This Agreement may be amended by the Depositor, the Trust Paying Agent,
and the Owner Trustee, with the prior consent of the Note Insurer, and with
prior written notice to the Rating Agencies, but without the consent of any of
the Noteholders or the Certificateholders or the Indenture Trustee, to cure any
ambiguity, to correct or supplement any provisions in this Agreement, or for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of this Agreement or of modifying in any manner the rights of
the Noteholders or the Certificateholders; provided however, such action shall
not adversely affect in any material respect the interests of any Noteholder or
Certificateholder or the rights of the Note Insurer. An amendment described
above shall be deemed not to adversely affect in any material respect the
interests of any Noteholder or Certificateholder if the party requesting the
amendment satisfies the Rating Agency Condition with respect to such amendment.
This Agreement may also be amended from time to time by the Depositor,
the Trust Paying Agent, and the Owner Trustee, with the prior written consent of
the Rating Agencies and with the prior written consent of the Indenture Trustee,
the Note Insurer, the Holders (as defined in the Indenture) of Notes evidencing
more than 50% of the Outstanding Amount of the Notes, the Holders of
Certificates evidencing more than 50% of the Percentage Interests of the Trust
Interest and if the party requesting such amendment satisfies the Rating Agency
Condition with respect to such amendment, for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement or of modifying in any manner the rights of the Noteholders or
the Certificateholders; provided however, no such amendment shall (a) increase
or reduce in any manner the amount of, or accelerate or delay the timing of,
collections of payments on the Home Loans or distributions that shall be
required to be made for the benefit of the Noteholders, the Certificateholders
or the Note Insurer, or (b) reduce the aforesaid percentage of the Outstanding
Amount of the Notes or the Percentage Interests required to consent to any such
amendment, in either case of clause (a) or (b) without the consent of the
holders of all the outstanding Notes and the Note Insurer, and in the case of
clause (b) without the consent of the Holders of all the outstanding
Certificates.
Promptly after the execution of any such amendment or consent, the
Owner Trustee shall furnish written notification of the substance of such
amendment or consent to each Certificateholder, the Indenture Trustee, the Note
Insurer and each of the Rating Agencies.
It shall not be necessary for the consent of Certificateholders, the
Noteholders, or the Indenture Trustee pursuant to this Section to approve the
particular form of any proposed amendment or consent, but it shall be sufficient
if such consent shall approve the substance thereof. The manner of obtaining
such consents (and any other consents of Certificateholders provided for in this
Agreement or in any other Basic Document) and of evidencing the authorization of
the execution thereof by Certificateholders shall be subject to such reasonable
requirements as the Owner Trustee may prescribe.
Promptly after the execution of any amendment to the Certificate of
Trust, the Owner Trustee shall cause the filing of such amendment with the
Secretary of State.
Prior to the execution of any amendment to this Agreement or the
Certificate of Trust, the Owner Trustee shall be entitled to receive and rely
upon an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Agreement. The Owner Trustee may, but shall not
be obligated to, enter into any such amendment which affects the Owner Trustee's
own rights, duties, or immunities under this Agreement or otherwise.
SECTION 12.2. NO LEGAL TITLE TO OWNER TRUST ESTATE IN HOLDERS.
-----------------------------------------------
The Certificateholders shall not have legal title to any part of the
Owner Trust Estate. The Certificateholders shall be entitled to receive
distributions with respect to their undivided ownership interest therein only in
accordance with Articles V and IX. No transfer, by operation of law or
otherwise, of any right, title, or interest of the Certificateholders to and in
their ownership interest in the Owner Trust Estate shall operate to terminate
this Agreement or the trusts hereunder or entitle any transferee to an
Accounting or to the transfer to it of legal title to any part of the Owner
Trust Estate.
SECTION 12.3. LIMITATIONS ON RIGHTS OF OTHERS.
-------------------------------
The provisions of this Agreement are solely for the benefit of the
Owner Trustee, the Depositor, the Certificateholders, the Trust Paying Agent,
and to the extent expressly provided herein, the Indenture Trustee, the Note
Insurer, and the Noteholders, and nothing in this Agreement, whether express or
implied, shall be construed to give to any other Person any legal or equitable
right, remedy or claim in the Owner Trust Estate or under or in respect of this
Agreement or any covenants, conditions, or provisions contained herein. Nothing
in this section, however, shall alter or modify in any way, the fiduciary
obligations of the Owner Trustee to the Certificateholders pursuant to this
Agreement, and nothing in this section shall create any fiduciary obligation of
the Owner Trustee to any Person, other than to the Certificateholders.
SECTION 12.4. NOTICES.
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(a) Unless otherwise expressly specified or permitted by the terms
hereof, all communications provided for or permitted hereunder shall be in
writing and shall be deemed to have been given if (1) personally delivered, (2)
upon receipt by the intended recipient or three Business Days after mailing if
mailed by certified mail, postage prepaid (except that notice to the Owner
Trustee shall be deemed given only upon actual receipt by the Owner Trustee),
(3) sent by express courier delivery service and received by the intended
recipient, or (4) except with respect to notices sent to the Owner Trustee,
transmitted by telex or facsimile transmission (or any other type of electronic
transmission agreed upon by the parties and confirmed by a writing delivered by
any of the means described in (1), (2) or (3), at the following addresses: (i)
if to the Owner Trustee, its Corporate Trust Office; (ii) if to the Depositor,
Financial Asset Securities Corp., 600 Steamboat Road, Greenwich, Connecticut
06830, Attention: City Capital Home Loan Trust 1998-4, Telecopy No.: (203)
629-4640; (iii) if to the Note Insurer, MBIA Insurance Corporation, 113 King
Street, Armonk, New York 10504, Attention: Insured Portfolio Management-SF (City
Capital Home Loan Trust 1998-4), Telecopy No.: (914) 765-3810; (iv) if to the
Trust Paying Agent, Norwest Bank Minnesota, National Association, Sixth Street
and Marquette Avenue, Minneapolis, Minnesota 55479-0069, Attention: City Capital
Home Loan Trust 1998-4, Telecopy No.: (612) 667-9825, with a copy to Norwest at
11000 Broken Land Parkway, Columbia, Maryland 21044, Attention: City Capital
Home Loan Trust 1998-4, Telecopy No.: (410) 884-2363; (v) if to City National
Bank of West Virginia, to 25 Gatewater Road, Charleston, West Virginia 25313,
Attention: Michael D. Dean, Telecopy No.: (304) 769-1184 or, as to each such
party, at such other address as shall be designated by such party in a written
notice to each other party.
(b) Any notice required or permitted to be given to a Certificateholder
shall be given by first-class mail, postage prepaid, at the address of such
Certificateholder as shown in the Certificate Register. Any notice so mailed
within the time prescribed in this Agreement shall be conclusively presumed to
have been duly given, whether or not the Certificateholder receives such notice.
SECTION 12.5. SEVERABILITY.
------------
Any provision of this Agreement that is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
SECTION 12.6. SEPARATE COUNTERPARTS.
---------------------
This Agreement may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original,
but all such counterparts shall together constitute but one and the same
instrument.
SECTION 12.7. SUCCESSORS AND ASSIGNS.
----------------------
All covenants and agreements contained herein shall be binding upon,
and inure to the benefit of, the Depositor, the Note Insurer, the Owner Trustee,
and its successors and each owner and its successors and permitted assigns, all
as herein provided. Any request, notice, direction, consent, waiver, or other
instrument or action by a Certificateholder shall bind the successors and
assigns of such Certificateholder.
SECTION 12.8. NO PETITION.
-----------
The Owner Trustee, by entering into this Agreement, each
Certificateholder, by accepting a Certificate, and the Indenture Trustee and
each Noteholder by accepting the benefits of this Agreement, hereby covenant and
agree that they will not at any time institute against the Depositor or the
Trust, or join in any institution against the Depositor or the Trust of, any
bankruptcy, reorganization, arrangement, insolvency, or liquidation proceedings,
or other proceedings under any United States Federal or state bankruptcy or law
in connection with any obligations relating to the Certificates, the Notes, this
Agreement, or any of the Basic Documents.
SECTION 12.9. NO RECOURSE.
-----------
Each Certificateholder by accepting a Certificate acknowledges that
such Certificateholder's Certificate represents a beneficial interest in the
Trust only and does not represent an interest in or an obligation of the
Servicer, the Depositor, the Owner Trustee, or any Affiliate thereof and no
recourse may be had against such parties or their assets, except as may be
expressly set forth or contemplated in this Agreement, the Certificates, or the
Basic Documents.
SECTION 12.10. HEADINGS.
--------
The headings of the various Articles and Sections herein are for
convenience of reference only and shall not define or limit any of the terms or
provisions hereof.
SECTION 12.11. GOVERNING LAW.
-------------
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
SECTION 12.12. GRANT OF CERTIFICATEHOLDER RIGHTS TO NOTE INSURER.
-------------------------------------------------
(a) In consideration for the issuance of the Certificates and for the
guarantee of the Notes by the Note Insurer pursuant to the Insurance Policy, the
holders of the Certificates hereby grant to the Note Insurer the right to act as
the holder of 100% of the outstanding Certificates for the purpose of exercising
the rights of the Certificateholders under this Agreement without the consent of
the Certificateholders, including the voting rights of such holders hereunder,
but excluding those rights requiring the consent of all such holders under
Section 12.1 and any rights of such holders to distributions under Section
5.2(a); provided that the preceding grant of rights to the Note Insurer by the
holders of the Trust Interest shall be subject to Section 12.14. Nothing in this
section, however, shall alter or modify in any way, the fiduciary obligations of
the Owner Trustee to the Certificateholders pursuant to this Agreement, and
nothing in this section shall create any fiduciary obligation of the Owner
Trustee to any Person, other than to the Certificateholders.
(b) The rights of the Note Insurer to direct certain actions and
consent to certain actions of the Certificateholders hereunder will terminate at
such time as the Balance of the Notes has been reduced to zero and the Note
Insurer has been reimbursed for any amounts owed under the Insurance Policy and
the Insurance Agreement and the Note Insurer has no further obligation under the
Insurance Policy.
SECTION 12.13. THIRD PARTY BENEFICIARY.
-----------------------
The Note Insurer is an intended third-party beneficiary of this
Agreement, and this Agreement shall be binding upon and inure to the benefit of
the Note Insurer; provided that, notwithstanding the foregoing, for so long as a
Note Insurer Default is continuing with respect to its obligations under the
Insurance Policy, the Noteholders shall succeed to the Note Insurer's rights
hereunder. Without limiting the generality of the foregoing, all covenants and
agreements in this Agreement that expressly confer rights upon the Note Insurer
shall be for the benefit of and run directly to the Note Insurer, and the Note
Insurer shall be entitled to rely on and enforce such covenants to the same
extent as if it were a party to this Agreement. Nothing in this section,
however, shall alter or modify in any way, the fiduciary obligations of the
Owner Trustee to the Certificateholders pursuant to this Agreement, and nothing
in this section shall create any fiduciary obligation of the Owner Trustee to
any Person, other than to the Certificateholders.
SECTION 12.14. SUSPENSION AND TERMINATION OF NOTE INSURER'S RIGHTS.
---------------------------------------------------
During the continuation of a Note Insurer Default, rights granted or
reserved to the Note Insurer hereunder shall vest instead in the holders of the
Notes; provided that the Note Insurer shall be entitled to any distributions in
reimbursement of any amounts due and owing the Note Insurer under the Insurance
Agreement, and the Note Insurer shall retain those rights under Section 12.1 to
consent to any amendment of this Agreement.
At such time as either (i) the Note Balance of the Notes has been
reduced to zero or (ii) the Insurance Policy has been terminated and in either
case of (i) or (ii) the Note Insurer has been reimbursed for all amounts owed
under the Insurance Policy and the Insurance Agreement (and the Note Insurer no
longer has any obligation under the Insurance Policy, except for breach thereof
by the Note Insurer), then the rights and benefits granted or reserved to the
Note Insurer hereunder (including the rights to direct certain actions and
receive certain notices) shall terminate and the Certificateholders shall be
entitled to the exercise of such rights and to receive such benefits of the Note
Insurer following such termination to the extent that such rights and benefits
are applicable to the Certificateholders.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Deposit Trust
Agreement to be duly executed by their respective officers hereunto duly
authorized, as of the day and year first above written.
FINANCIAL ASSET SECURITIES CORP.,
as Depositor
By: /s/ John Paul Graham
------------------------------
Name: John Paul Graham
------------------------------
Title: Vice President
------------------------------
WILMINGTON TRUST COMPANY,
as Owner Trustee
By: /s/ Emmett R. Harmon
------------------------------
Authorized Signatory
CITY NATIONAL BANK OF WEST VIRGINIA,
as Servicer
By: /s/ Robert A. Henson
------------------------------
Name: Robert A. Henson
------------------------------
Title: Chief Financial Officer
------------------------------
<PAGE>
The Trust Paying Agent hereby acknowledges its appointment as Trust
Paying Agent under this Agreement and agrees to act in such capacity as
described herein.
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Trust Paying Agent
By: /s/ Randall S. Reider
------------------------------
Name: Randall S. Reider
------------------------------
Title: Assistant Vice President
------------------------------
Exhibit 10.1
- --------------------------------------------------------------------------------
DEPOSIT TRUST AGREEMENT
AMONG
FINANCIAL ASSET SECURITIES CORP.,
AS DEPOSITOR,
WILMINGTON TRUST COMPANY,
AS OWNER TRUSTEE
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
AS TRUST PAYING AGENT,
AND
CITY NATIONAL BANK OF WEST VIRGINIA,
AS SERVICER
- --------------------------------------------------------------------------------
CITY CAPITAL HOME LOAN TRUST 1998-4
ASSET-BACKED NOTES
SERIES 1998-4
DATED AS OF NOVEMBER 1, 1998
<PAGE>
<TABLE>
TABLE OF CONTENTS
<CAPTION>
<S> <C>
ARTICLE I DEFINITIONS.............................................................................................1
Section 1.1. Capitalized Terms...........................................................................1
-----------------
Section 1.2. Other Definitional Provisions...............................................................5
-----------------------------
ARTICLE II ORGANIZATION...........................................................................................5
Section 2.1. Name........................................................................................5
----
Section 2.2. Office......................................................................................6
------
Section 2.3. Purposes and Powers.........................................................................6
-------------------
Section 2.4. Appointment of Owner Trustee................................................................6
----------------------------
Section 2.5. Initial Capital Contribution of Owner Trust Estate..........................................6
--------------------------------------------------
Section 2.6. Declaration of Trust........................................................................7
--------------------
Section 2.7. Liability of the Holders....................................................................7
------------------------
Section 2.8. Title to Trust Property.....................................................................7
-----------------------
Section 2.9. Situs of Trust..............................................................................8
--------------
Section 2.10. Representations and Warranties of the Depositor; Covenant of the Depositor.................8
--------------------------------------------------------------------------
Section 2.11. Federal Income Tax Provisions.............................................................10
-----------------------------
ARTICLE III CERTIFICATES AND TRANSFER OF INTERESTS...............................................................13
Section 3.1. Initial Ownership..........................................................................13
-----------------
Section 3.2. The Certificates...........................................................................13
----------------
Section 3.3. Execution, Authentication and Delivery of Trust Certificates...............................13
------------------------------------------------------------
Section 3.4. Registration of Transfer and Exchange of Trust Certificates................................13
-----------------------------------------------------------
Section 3.5. Mutilated, Destroyed, Lost or Stolen Certificates..........................................14
-------------------------------------------------
Section 3.6. Persons Deemed Owners......................................................................15
---------------------
Section 3.7. Access to List of Holders' Names and Addresses.............................................15
----------------------------------------------
Section 3.8. Maintenance of Office or Agency............................................................15
-------------------------------
Section 3.9. Appointment of Trust Paying Agent..........................................................15
---------------------------------
Section 3.10. Restrictions on Transfer of Certificates..................................................16
-----------------------------------------
ARTICLE IV ACTIONS BY OWNER TRUSTEE..............................................................................18
Section 4.1. Prior Notice to Holders with Respect to Certain Matters....................................18
-------------------------------------------------------
Section 4.2. Action by Holders with Respect to Bankruptcy...............................................20
--------------------------------------------
Section 4.3. Restrictions on Holders'Power..............................................................20
-----------------------------
Section 4.4. Majority Control...........................................................................20
----------------
ARTICLE V APPLICATION OF TRUST FUNDS; CERTAIN DUTIES.............................................................20
Section 5.1. Establishment of Certificate Distribution Account..........................................20
-------------------------------------------------
Section 5.2. Application of Trust Funds.................................................................21
--------------------------
Section 5.3. Method of Payment..........................................................................22
-----------------
Section 5.4. Segregation of Moneys; No Interest.........................................................22
----------------------------------
ARTICLE VI AUTHORITY AND DUTIES OF OWNER TRUSTEE.................................................................22
Section 6.1. General Authority..........................................................................22
-----------------
Section 6.2. General Duties.............................................................................22
--------------
Section 6.3. Action upon Instruction....................................................................23
-----------------------
Section 6.4. No Duties Except as Specified in this Agreement, the Basic Documents or Any Instructions...24
----------------------------------------------------------------------------------------
Section 6.5. No Action Except Under Specified Documents or Instructions.................................24
----------------------------------------------------------
Section 6.6. Restrictions...............................................................................24
------------
ARTICLE VII CONCERNING THE OWNER TRUSTEE.........................................................................25
Section 7.1. Acceptance of Trusts and Duties............................................................25
-------------------------------
Section 7.2. Furnishing of Documents....................................................................26
-----------------------
Section 7.3. Representations and Warranties.............................................................26
------------------------------
Section 7.4. Reliance; Advice of Counsel................................................................27
---------------------------
Section 7.5. Not Acting in Individual Capacity..........................................................27
---------------------------------
Section 7.6. Owner Trustee Not Liable for Certificates or Home Loans....................................28
-------------------------------------------------------
Section 7.7. Owner Trustee May Own Certificates and Notes...............................................28
--------------------------------------------
Section 7.8. Licenses...................................................................................28
--------
ARTICLE VIII COMPENSATION OF OWNER TRUSTEE.......................................................................28
Section 8.1. Owner Trustee's Fees and Expenses..........................................................28
---------------------------------
Section 8.2. Indemnification............................................................................29
---------------
Section 8.3. Payments to the Owner Trustee..............................................................30
-----------------------------
ARTICLE IX TERMINATION OF TRUST AGREEMENT........................................................................30
Section 9.1. Termination of Trust Agreement.............................................................30
------------------------------
ARTICLE X SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES.................................................31
Section 10.1. Eligibility Requirements for Owner Trustee................................................31
------------------------------------------
Section 10.2. Resignation or Removal of Owner Trustee...................................................31
---------------------------------------
Section 10.3. Successor Owner Trustee...................................................................32
-----------------------
Section 10.4. Merger or Consolidation of Owner Trustee..................................................32
----------------------------------------
Section 10.5. Appointment of Co-Trustee or Separate Trustee.............................................33
---------------------------------------------
ARTICLE XI CONTRIBUTION OF HOME LOANS............................................................................34
Section 11.1. Agreement to Contribute and Convey........................................................34
----------------------------------
Section 11.2. Conveyance of Home Loans..................................................................34
------------------------
Section 11.3. Assignment of Related Rights and Remedies.................................................35
-----------------------------------------
Section 11.4. Closing...................................................................................36
-------
Section 11.5. Servicing.................................................................................36
---------
Section 11.6. Grant of a Security Interest..............................................................36
----------------------------
ARTICLE XII MISCELLANEOUS........................................................................................37
Section 12.1. Supplements and Amendments................................................................37
--------------------------
Section 12.2. No Legal Title to Owner Trust Estate in Holders...........................................38
-----------------------------------------------
Section 12.3. Limitations on Rights of Others...........................................................39
-------------------------------
Section 12.4. Notices...................................................................................39
-------
Section 12.5. Severability..............................................................................40
------------
Section 12.6. Separate Counterparts.....................................................................40
---------------------
Section 12.7. Successors and Assigns....................................................................40
----------------------
Section 12.8. No Petition...............................................................................40
-----------
Section 12.9. No Recourse...............................................................................40
-----------
Section 12.10. Headings...............................................................................40
--------
Section 12.11. GOVERNING LAW..........................................................................41
-------------
Section 12.12. Grant of Certificateholder Rights to Note Insurer......................................41
-------------------------------------------------
Section 12.13. Third Party Beneficiary................................................................41
-----------------------
Section 12.14. Suspension and Termination of Note Insurer's Rights....................................42
---------------------------------------------------
</TABLE>
Exhibit A Form of Certificate
Exhibit B Form of Certificate of Trust
Exhibit C Form of Transferee Certificate
Exhibit D Fees and Expenses of the Owner Trustee
Exhibit E Home Loan Schedule
Exhibit F Form of Cross-Receipt
<PAGE>
DEPOSIT TRUST AGREEMENT
This DEPOSIT TRUST AGREEMENT, dated as of November 1, 1998, among
FINANCIAL ASSET SECURITIES CORP., a Delaware corporation, as Depositor (the
"Depositor"), WILMINGTON TRUST COMPANY, a Delaware banking corporation, as Owner
Trustee (the "Owner Trustee"), NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, a
national banking association, as Trust Paying Agent (in such capacity, the
"Trust Paying Agent"), and CITY NATIONAL BANK OF WEST VIRGINIA, as Servicer (the
"Servicer"), is entered into for the limited purposes set forth herein.
ARTICLE I
DEFINITIONS
SECTION 1.1. CAPITALIZED TERMS.
-----------------
For all purposes of this Agreement, the following terms shall have the
meanings set forth below:
"ACCOUNTS" shall mean, collectively, the Collection Account and the
Note Account.
"AGREEMENT" shall mean this Deposit Trust Agreement, as may be amended
and supplemented from time to time.
"ANNUAL TAX REPORTS" shall have the meaning assigned thereto in Section
2.11(k).
"BASIC DOCUMENTS" shall mean this Agreement, the Servicing Agreement,
the Home Loan Sale Agreement, the Insurance Agreement, the Custodial Agreement,
and the Indenture.
"BUSINESS DAY" shall mean any day other than (i) a Saturday or Sunday
or (ii) a day that is either a legal holiday or a day on which banking
institutions in the State of New York, the State of West Virginia, the State of
Delaware, the State of Maryland, the State of Minnesota, or the state in which
the Trust Paying Agent's office from which payments will be made to
Certificateholders are authorized or obligated by law, regulation or executive
order to be closed.
"BUSINESS TRUST STATUTE" shall mean Chapter 38 of Title 12 of I the
Delaware Code, 12 Del. Code Section 3801 et seq., as the same may be amended
from time to time.
"CAPITAL ACCOUNT" shall have the meaning assigned thereto in Section
2.11(a).
"CERTIFICATE" shall mean a certificate evidencing the beneficial
interest of a Certificateholder in the Trust, substantially in the form attached
hereto as Exhibit A.
---------
"CERTIFICATE DISTRIBUTION ACCOUNT" shall have the meaning assigned to
such term in Section 5.1.
"CERTIFICATE OF TRUST" shall mean the Certificate of Trust in the form
of Exhibit B to be filed for the Trust pursuant to Section 3810(a) of the
---------
Business Trust Statute.
"CERTIFICATE REGISTER" and "CERTIFICATE REGISTRAR" shall mean the
register mentioned and the registrar appointed pursuant to Section 3.4.
"CERTIFICATEHOLDER" or "HOLDER" shall mean a Person in whose name a
Certificate is registered.
"CLOSING DATE" shall mean November 30, 1998.
"CODE" shall mean the Internal Revenue Code of 1986, as amended, and,
where appropriate in context, Treasury Regulations promulgated thereunder.
"COLLECTION ACCOUNT" shall have the meaning assigned thereto in the
Servicing Agreement.
"CORPORATE TRUST OFFICE" shall mean, with respect to the Owner Trustee,
the principal corporate trust office of the Owner Trustee located at Rodney
Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001; or at
such other address in the State of Delaware as the Owner Trustee may designate
by notice to the Certificateholders and the Depositor, or the principal
corporate trust office of any successor Owner Trustee (the address (which shall
be in the State of Delaware) of which the successor owner trustee will notify
the Certificateholder and the Depositor).
"CUSTODIAL AGREEMENT" shall mean the Custodial Agreement, dated as of
November 1, 1998, between the Indenture Trustee and the Custodian.
"CUSTODIAN" shall mean Norwest Bank Minnesota, National Association.
"DEPOSITOR" shall mean Financial Asset Securities Corp., a Delaware
corporation.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"EXPENSES" shall have the meaning assigned to such term in Section 8.2.
"HOLDER NONRECOURSE DEBT MINIMUM GAIN" shall have the meaning set forth
for "partner nonrecourse debt minimum gain" in Treasury Regulations Section
1.704-2(i)(2). A Holder's share of Holder Nonrecourse Debt Minimum Gain shall be
determined in accordance with Treasury Regulations Section 1.704-2(i)(5).
"HOME LOAN SALE AGREEMENT" shall mean that certain Home Loan Sale
Agreement, dated as of November 1, 1998, among City National Bank of West
Virginia, as Seller, City Capital Markets Corporation, as Transferor, and the
Depositor.
"INDENTURE" shall mean the Indenture, dated as of November 1, 1998, by
and among the Issuer, and Norwest Bank Minnesota, National Association, as
Indenture Trustee, Note Administrator and Custodian.
"INDENTURE TRUSTEE" means Norwest Bank Minnesota, National Association,
as Indenture Trustee under the Indenture.
"INSURANCE AGREEMENT" means the Insurance Agreement, dated as of
November 1, 1998, among MBIA Insurance Corporation, as Insurer, the Issuer, City
National Bank of West Virginia, as Seller and Servicer, City Capital Markets
Corporation, as Transferor, the Depositor, Greenwich Capital Financial Products,
Inc., and Norwest Bank Minnesota, National Association, as Master Servicer and
Indenture Trustee.
"INSURANCE POLICY" shall mean the financial guaranty insurance policy
issued by the Note Insurer for the benefit of the holders of the Notes.
"ISSUER" shall mean City Capital Home Loan Trust 1998-4, the Delaware
business trust created pursuant to this Agreement.
"NON-U.S. PERSON" shall mean an individual, corporation, partnership or
other person other than a citizen or resident of the United States, a
corporation, partnership or other entity (treated as a corporation or
partnership for federal income tax purposes) created or organized in or under
the laws of the United States, any state thereof, or the District of Columbia,
an estate that is subject to U.S. federal income tax regardless of the source of
its income or a trust if (i) a court in the United States is able to exercise
primary supervision over the administration of the trust and (ii) one or more
United States persons have the authority to control all substantial decisions of
the trust.
"NOTE ACCOUNT" shall have the meaning assigned thereto in the
Indenture.
"NOTE INSURER" shall mean MBIA Insurance Corporation, a New York stock
insurance company.
"NOTE INSURER DEFAULT" shall have the meaning assigned to such term in
the Indenture.
"NOTES" shall mean the Issuer's Asset-Backed Notes, Series 1998-4.
"OWNER TRUST ESTATE" shall mean the contribution of $1 referred to in
Section 2.5 hereof plus any additional contributions made pursuant to Article
XI.
"OWNER TRUSTEE" shall mean Wilmington Trust Company, a Delaware banking
corporation, not in its individual capacity but solely as owner trustee under
this Agreement, and any successor owner trustee hereunder.
"PAYMENT DATE" shall mean the twenty-fifth day of each month or, if
such twenty-fifth day is not a Business Day, the next succeeding Business Day,
commencing December 28, 1998.
"PERCENTAGE INTEREST" shall mean with respect to any Certificate the
percentage portion of all of the Trust Interest evidenced thereby as stated on
the face of such Certificate.
"PERMITTED INVESTMENTS" shall have the meaning assigned to such term in
the Indenture.
"PROSPECTIVE HOLDER" shall have the meaning set forth in Section
3.10(a).
"RATING AGENCY CONDITION" means, with respect to any action to which a
Rating Agency Condition applies, that each Rating Agency shall have been given
10 days (or such shorter period as is acceptable to each Rating Agency) prior
notice thereof and that each of the Rating Agencies shall have notified the
Depositor, the Servicer, the Note Insurer, the Owner Trustee, and the Issuer in
writing that such action will not result in a reduction or withdrawal of the
then current "implied" rating of the Notes that it maintains without taking into
account the Note Insurance.
"RECORD DATE" shall mean as to each Payment Date the last Business Day
of the month immediately preceding the month in which such Payment Date occurs.
"SERVICING AGREEMENT" shall mean the Servicing Agreement dated as of
November 1, 1998, among the Trust, as Issuer, City National Bank of West
Virginia, as Servicer, and Norwest Bank Minnesota, National Association, as
Indenture Trustee and Master Servicer.
"SECRETARY OF STATE" shall mean the Secretary of State of the State of
Delaware.
"TAXABLE YEAR" shall have the meaning assigned thereto in Section
2.11(j).
"TAX MATTERS PARTNER" shall have the meaning assigned thereto in
Section 2.11(l).
"TRANSFEROR" shall mean City Capital Markets Corporation, a Delaware
corporation.
"TREASURY REGULATIONS" shall mean regulations, including proposed or
temporary regulations, promulgated under the Code. References herein to specific
provisions of proposed or temporary regulations shall include analogous
provisions of final Treasury Regulations or other successor Treasury
Regulations.
"TRUST" shall mean the trust established by this Agreement.
"TRUST INTEREST" shall mean the right to receive, on each Payment Date,
distributions of the amounts, if any, released to the Issuer pursuant to Section
8.02(d) of the Indenture or pursuant to Section 2.05 of the Servicing Agreement.
"TRUST MINIMUM GAIN" shall have the meaning set forth for "partnership
minimum gain" in Treasury Regulations 1.704-2(b)(2) and 1.704-2(d). In
accordance with Treasury Regulations Section 1.704-2(d), the amount of Trust
Minimum Gain is determined by first computing, for each nonrecourse liability of
the Trust, any gain the Trust would realize if it disposed of the property
subject to that liability for no consideration other than full satisfaction of
the liability, and then aggregating the separately computed gains. A Holder's
share of Trust Minimum Gain shall be determined in accordance with Treasury
Regulations Section 1.704-2(g)(1).
"TRUST PAYING AGENT" shall mean any paying agent or co-paying agent
appointed pursuant to Section 3.9 and authorized by the Owner Trustee to make
payments to and distributions from the Certificate Distribution Account.
SECTION 1.2. OTHER DEFINITIONAL PROVISIONS.
-----------------------------
(a) Capitalized terms used herein and not otherwise defined herein have the
meanings assigned to them in the Servicing Agreement or, if not defined therein,
in the Indenture.
(b) All terms defined in this Agreement shall have the defined meanings
when used in any certificate or other document made or delivered pursuant hereto
unless otherwise defined therein.
(c) As used in this Agreement and in any certificate or other document made
or delivered pursuant hereto or thereto, accounting terms not defined in this
Agreement or in any such certificate or other document, and accounting terms
partly defined in this Agreement or in any such certificate or other document to
the extent not defined, shall have the respective meanings given to them under
generally accepted accounting principles. To the extent that the definitions of
accounting terms in this Agreement or in any such certificate or other document
are inconsistent with the meanings of such terms under generally accepted
accounting principles, the definitions contained in this Agreement or in any
such certificate or other document shall control.
(d) The words "hereof," "herein," "hereunder," and words of similar import
when used in this Agreement shall refer to this Agreement as a whole and not to
any particular provision of this Agreement; Section and Exhibit references
contained in this Agreement are references to Sections and Exhibits in or to
this Agreement unless otherwise specified; and the term "including" shall mean
"including without limitation."
(e) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as well
as to the feminine and neuter genders of such terms.
(f) Any agreement, instrument, or statute defined or referred to herein or
in any instrument or certificate delivered in connection herewith means such
agreement, instrument, or statute as from time to time amended, modified, or
supplemented and includes (in the case of agreements or instruments) references
to all attachments thereto and instruments incorporated therein; references to a
Person are also to its permitted successors and assigns.
ARTICLE II
ORGANIZATION
SECTION 2.1. NAME.
----
The Trust created hereby shall be known as "City Capital Home Loan
Trust 1998-4," in which name the Owner Trustee may conduct the business of the
Trust, make and execute contracts and other instruments on behalf of the Trust
and sue and be sued.
SECTION 2.2. OFFICE.
------
The office of the Trust shall be in care of the Owner Trustee at the
Corporate Trust Office or at such other address in Delaware as the Owner Trustee
may designate by written notice to the Certificateholders, the Note Insurer and
the Depositor.
SECTION 2.3. PURPOSES AND POWERS.
-------------------
The purpose of the Trust is to engage in the following activities:
(i) to issue the Notes pursuant to the Indenture and to sell such
Notes;
(ii) with the proceeds of the sale of the Notes, to pay the
organizational, start-up, and transactional expenses of the Trust and
to pay the balance to the Depositor pursuant to Article XI;
(iii) to assign, grant, transfer, pledge, mortgage, and convey
the Owner Trust Estate pursuant to the Indenture and to hold, manage,
and distribute to the Holders any portion of the Owner Trust Estate
released from the lien of, and remitted to the Trust pursuant to, the
Indenture;
(iv) to enter into and perform its obligations under the Basic
Documents to which it is or is to be a party;
(v) to engage in those activities, including entering into
agreements, that are necessary, suitable, or convenient to accomplish
the foregoing or are incidental thereto or connected therewith;
(vi) subject to compliance with the Basic Documents, to engage in
such other activities as may be required in connection with
conservation of the Owner Trust Estate and the making of distributions
and payments to the Holders and the Noteholders; and
(vii) to issue the Certificates pursuant to this Agreement.
The Trust is hereby authorized by the initial Certificateholders to engage in
the foregoing activities. The Trust shall not engage in any activity other than
in connection with the foregoing or other than as required or authorized by the
terms of this Agreement or the Basic Documents.
SECTION 2.4. APPOINTMENT OF OWNER TRUSTEE.
----------------------------
The Depositor hereby appoints the Owner Trustee as trustee of the Trust
effective as of the date hereof, to have all the rights, powers, and duties set
forth herein.
SECTION 2.5. INITIAL CAPITAL CONTRIBUTION OF OWNER TRUST ESTATE.
--------------------------------------------------
The Depositor hereby sells, assigns, transfers, conveys, and sets over
to the Owner Trustee, as of the date hereof, the sum of $1. The Owner Trustee
hereby acknowledges receipt in trust from the Depositor, as of the date hereof,
of the foregoing contribution, which shall constitute the initial Owner Trust
Estate and shall be deposited in the Certificate Distribution Account. The
Certificateholders shall pay organizational expenses of the Trust as they may
arise or shall, upon the request of the Owner Trustee, promptly reimburse the
Owner Trustee for any such expenses paid by the Owner Trustee.
SECTION 2.6. DECLARATION OF TRUST.
--------------------
The Owner Trustee hereby declares that it will hold the Owner Trust
Estate in trust upon and subject to the conditions set forth herein for the use
and benefit of the Holders, subject to the obligations of the Trust under the
Basic Documents. It is the intention of the parties hereto that the Trust
constitute a business trust under the Business Trust Statute and that this
Agreement constitute the governing instrument of such business trust. It is the
intention of the parties hereto that, solely for income and franchise tax
purposes, after issuance of the Certificates, the Trust shall be treated as a
partnership, with the assets of the partnership being the Home Loans and other
assets held by the Trust, the partners of the partnership being the holders of
the Certificates and the Notes being non-recourse debt of the partnership (or,
if there is only one Certificateholder, that the Trust shall be disregarded as
an entity separate from such Holder, with the assets held by the Trust being
treated as assets of the Holder and the Notes being treated as non-recourse debt
of the Holder). The parties agree that, unless otherwise required by appropriate
tax authorities or unless the Trust is disregarded as an entity separate from
its sole Certificateholder for income and franchise tax purposes, the Owner
Trustee will file or cause to be filed annual or other necessary returns,
reports, and other forms consistent with the characterization of the Trust as a
partnership for such tax purposes pursuant to Section 2.11(k). The parties agree
that no election will be made to treat the Trust or the Owner Trust Estate as a
real estate mortgage investment conduit as defined in Section 860D of the Code.
Effective as of the date hereof, the Owner Trustee shall have all rights,
powers, and duties set forth herein and in the Business Trust Statute with
respect to accomplishing the purposes of the Trust. The Owner Trustee shall file
the Certificate of Trust with the Secretary of State.
SECTION 2.7. LIABILITY OF THE HOLDERS.
------------------------
No Holder shall have any personal liability for any liability or
obligation of the Trust. The Certificates shall be fully paid and
non-assessable.
SECTION 2.8. TITLE TO TRUST PROPERTY.
-----------------------
(a) Subject to the Indenture, legal title to all of the Owner Trust
Estate shall be vested at all times in the Trust as a separate legal entity
except where applicable law in any jurisdiction requires title to any part of
the Owner Trust Estate to be vested in a trustee or trustees, in which case
title shall be deemed to be vested in the Owner Trustee and/or a separate
trustee, as the case may be.
(b) The Certificateholders shall not have legal title to any part of
the Owner Trust Estate. No transfer by operation of law or otherwise of any
interest of the Certificateholders shall operate to terminate this Agreement or
the trusts hereunder or entitle any transferee to an accounting or to the
transfer to it of any part of the Owner Trust Estate.
SECTION 2.9. SITUS OF TRUST.
--------------
The Trust will be located and administered in the State of Delaware.
All accounts maintained at a bank by the Owner Trustee on behalf of the Trust
shall be located in the States of Delaware, Minnesota, Maryland, California,
West Virginia, or New York. The Trust shall not have any employees; provided
however, nothing herein shall restrict or prohibit the Owner Trustee from having
employees within or without the State of Delaware. Payments will be received by
the Trust only in Delaware, New York, Minnesota, Maryland, California, or West
Virginia, and payments will be made by the Trust only from Delaware, New York,
Minnesota, Maryland, California, or West Virginia. The only office of the Trust
will be at the Corporate Trust Office in Delaware.
SECTION 2.10. REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR; COVENANT
---------------------------------------------------------
OF THE DEPOSITOR.
- ----------------
(a) The Depositor hereby represents and warrants to the Owner Trustee
and the Note Insurer that:
(i) The Depositor is duly organized and validly existing as a
corporation in good standing under the laws of the State of Delaware,
with power and authority to own its properties and to conduct its
business as such properties are currently owned and such business is
presently conducted.
(ii) The Depositor has the power and authority to execute and
deliver this Agreement and to carry out its terms; the Depositor has
full power and authority to transfer and assign the property to be
transferred and assigned to and deposited with the Trust and the
Depositor has duly authorized such transfer and assignment and deposit
to the Trust by all necessary corporate action; and the execution,
delivery and performance of this Agreement has been duly authorized by
the Depositor by all necessary corporate action.
(iii) The consummation of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof do not conflict
with, result in any breach of any of the terms and provisions of, or
constitute (with or without notice or lapse of time) a default under,
the certificate of incorporation or by-laws of the Depositor, or any
indenture, agreement, or other instrument to which the Depositor is a
party or by which it is bound; nor result in the creation or
imposition of any lien upon any of its properties pursuant to the
terms of any such indenture, agreement, or other instrument (other
than pursuant to the Basic Documents); nor violate any law or, to the
best of the Depositor's knowledge, any order, rule, or regulation
applicable to the Depositor of any court or of any Federal or state
regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over the Depositor or its
properties.
(iv) There are no actions, suits, proceedings, or investigations
pending or notice of which has been received in writing before any
court, regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over the Depositor or its
properties: (x) asserting the invalidity of this Agreement, (y)
seeking to prevent the consummation of any of the transactions
contemplated by this Agreement, or (z) seeking any determination or
ruling that should reasonably be expected to materially and adversely
affect the performance by the Depositor of its obligations under, or
the validity or enforceability of, this Agreement or have a material
adverse effect on the financial condition of the Depositor.
(v) The Depositor is not in violation of, and its execution and
delivery of this Agreement and its performance and compliance with the
terms of this Agreement will not constitute a violation of, any law,
any order, or decree of any court or arbiter, or any order,
regulation, or demand of any federal, state, or local governmental or
regulatory authority, which violation is likely to affect materially
and adversely either the ability of the Depositor to perform its
obligations under this Agreement or the financial condition of the
Depositor.
(vi) The Depositor has no knowledge of any recent adverse
financial condition or event with respect to itself that is likely to
materially and adversely affect its ability to perform its obligations
under this Agreement.
(vii) The Depositor has not failed to obtain any consent,
approval, authorization, or order of, and has not failed to cause any
registration or qualification with, any court or regulatory authority
or other governmental body having jurisdiction over the Depositor,
which consent, approval, authorization, order, registration, or
qualification is required for, and the absence of which would
materially and adversely affect, the legal and valid execution,
delivery, and performance of this Agreement by the Depositor. No
consent or approval of any other person or entity is necessary for the
Depositor to perform its obligations hereunder or, if any such consent
or approval is necessary, such consent or approval has previously been
obtained.
(viii) Assuming the accuracy of the representations and
warranties of the Seller and City Capital in Sections 4(a)(7) and
5(a)(vii), respectively, of the Home Loan Sale Agreement, immediately
prior to the transfer and assignment herein contemplated, either (x)
the Depositor held good title to, and was the sole owner of, each Home
Loan or (y) the Depositor had a valid security interest in each Home
Loan, in each case free and clear of any liens, pledges, encumbrances
or other security interests and immediately upon the transfer and
assignment of the Home Loans herein contemplated, the Trust will
acquire from the Depositor all of the Depositor's interest in the Home
Loans free and clear of any lien, pledge, encumbrance or other
security interest of any kind.
(b) The representations and warranties of City National Bank of West
Virginia with respect to the Home Loans set forth in Section 4 to the Home Loan
Sale Agreement are hereby incorporated by reference in their entirety and are
assigned to the Trust in lieu of any other representations and warranties of the
Depositor in respect of the Home Loans. Nothing herein shall be deemed to limit
in any respect either the representations and warranties of City National Bank
of West Virginia or the rights and remedies assigned by the Depositor to the
Trust against City National Bank of West Virginia on account of a breach thereof
under the Home Loan Sale Agreement.
(c) Except for the representations and warranties of the Depositor in
Section 2.10(a) hereof, the Depositor is transferring, selling and conveying the
Home Loans, without recourse to the Depositor and without representations or
warranties of any kind, express, or implied, by the Depositor, whether statutory
or otherwise, including, without limitation, any warranties of transfer,
merchantability, or fitness for a particular, or the Trust's intended, use, or
purposes.
(d) Each Certificateholder covenants with the Owner Trustee and the
Note Insurer that during the continuance of this Agreement, and while it holds
Certificates, it will comply in all respects with the provisions of its
certificate of incorporation in effect from time to time.
SECTION 2.11. FEDERAL INCOME TAX PROVISIONS.
-----------------------------
If the Trust is treated as a partnership (rather than disregarded as a
separate entity) for federal income tax purposes pursuant to Section 2.6, the
following provisions shall apply:
(a) A separate capital account (a "Capital Account") shall be
established and maintained for each Certificateholder in accordance with
Treasury Regulations Section 1.704-1(b)(2)(iv). No Certificateholder shall be
entitled to interest on its Capital Account or any capital contribution made by
such Holder to the Trust.
(b) Upon termination of the Trust pursuant to Article IX, any amounts
available for distribution to Holders shall be distributed to the Holders with
positive Capital Account balances in accordance with such balances. For purposes
of this Section 2.11(b), the Capital Account of each Holder shall be determined
after all adjustments made in accordance with this Section 2.11 resulting from
the Trust's operations and from all sales and dispositions of all or any part of
the assets of the Trust. Any distributions pursuant to this Section 2.11(b)
shall be made by the end of the Taxable Year in which the termination occurs
(or, if later, within 90 days after the date of the termination).
(c) No Certificateholder shall be required to restore any deficit
balance in its Capital Account. Furthermore, no Holder shall be liable for the
return of the Capital Account of, or of any capital contribution made to the
Trust by, another Holder.
(d) Profit and loss of the Trust for each Taxable Year shall be
allocated to the Certificateholders in accordance with their respective
Percentage Interests.
(e) Notwithstanding any provision to the contrary, (i) any expense of
the Trust that is a "nonrecourse deduction" within the meaning of Treasury
Regulations Section 1.704-2(b)(1) shall be allocated in accordance with the
Holders' respective Percentage Interests, (ii) any expense of the Trust that is
a "partner nonrecourse deduction" within the meaning of Treasury Regulations
Section 1.704-2(i)(2) shall be allocated in accordance with Treasury Regulations
Section 1.704-2(i)(1), (iii) if there is a net decrease in Trust Minimum Gain
within the meaning of Treasury Regulations Section 1.704-2(f)(1) for any Taxable
Year, items of gain and income shall be allocated among the Holders in
accordance with Treasury Regulations Section 1.704-2(f) and the ordering rules
contained in Treasury Regulations Section 1.704-2(j), and (iv) if there is a net
decrease in Holder Nonrecourse Debt Minimum Gain within the meaning of Treasury
Regulations Section 1.704-2(i)(4) for any Taxable Year, items of gain and income
shall be allocated among the Holders in accordance with Treasury Regulations
Section 1.704-2(i)(4) and the ordering rules contained in Treasury Regulations
Section 1.704-2(j). A Holder's "interest in partnership profits" for purposes of
determining its share of the nonrecourse liabilities of the Trust within the
meaning of Treasury Regulations Section 1.752-3(a)(3) shall be such Holder's
Percentage Interest.
(f) If a Holder receives in any Taxable Year an adjustment, allocation,
or distribution described in subparagraphs (4), (5), or (6) of Treasury
Regulations Section 1.704-1(b)(2)(ii)(d) that causes or increases a negative
balance in such Holder's Capital Account that exceeds the sum of such Holder's
shares of Trust Minimum Gain and Holder Nonrecourse Debt Minimum Gain, as
determined in accordance with Treasury Regulations Sections 1.704-2(g) and
1.704-2(i), such Holder shall be allocated specially for such Taxable Year (and,
if necessary, later Taxable Years) items of income and gain in an amount and
manner sufficient to eliminate such negative Capital Account balance as quickly
as possible as provided in Treasury Regulations Section 1.704-1(b)(2)(ii)(d).
After the occurrence of an allocation of income or gain to a Holder in
accordance with this Section 2.11(f), to the extent permitted by Regulations
Section 1.704-1(b), items of expense or loss shall be allocated to such Holder
in an amount necessary to offset the income or gain previously allocated to such
Holder under this Section 2.11(f).
(g) Loss shall not be allocated to a Holder to the extent that such
allocation would cause a deficit in such Holder's Capital Account (after
reduction to reflect the items described in Treasury Regulations Section
1.704-1(b)(2)(ii)(d)(4), (5) and (6)) to exceed the sum of such Holder's shares
of Trust Minimum Gain and Holder Nonrecourse Debt Minimum Gain. Any loss in
excess of that limitation shall be allocated to all the Holders in accordance
with their respective Percentage Interests. After the occurrence of an
allocation of loss to a Holder in accordance with this Section 2.11(g), to the
extent permitted by Treasury Regulations Section 1.704-1(b), profit shall be
allocated to such Holder in an amount necessary to offset the loss previously
allocated to such Holder under this Section 2.11(g).
(h) If a Holder transfers any part or all of its Percentage Interest
and the transferee is admitted as provided herein (a "Transferee Holder"), the
distributive shares of the various items of profit and loss allocable among the
Holders during such Taxable Year shall be allocated between the transferor and
the Transferee Holder (at the election of the Holders (including the transferor,
but excluding the Transferee Holder)) either (i) as if the Taxable Year had
ended on the date of the transfer or (ii) based on the number of days of such
Taxable Year that each was a Holder without regard to the results of Trust
activities in the respective portions of such Taxable Year in which the
transferor and Transferee Holder were Holders.
(i) "Profit" and "loss" and any items of income, gain, expense or loss
referred to in this Section 2.11 shall be determined in accordance with federal
income tax accounting principles as modified by Treasury Regulations Section
1.704-1(b)(2)(iv), except that profits and losses shall not include items of
income, gain, and expense that are specially allocated pursuant to Sections
2.11(e), 2.11(f) or 2.11(g) hereof. All allocations of income, profits, gains,
expenses, and losses (and all items contained therein) for federal income tax
purposes shall be identical to all allocations of such items set forth in this
Section 2.11, except as otherwise required by Section 704(c) of the Code and
Section 1.704-1(b)(4) of the Treasury Regulations.
(j) The taxable year of the Trust (the "Taxable Year") shall be the
calendar year or such other taxable year as may be required by Section 706(b) of
the Code.
(k) At the Trust's expense, the Owner Trustee shall (i) prepare, or
cause to be prepared, and file such tax returns relating to the Trust (including
a partnership information return, IRS Form 1065) as are required by applicable
federal, state, and local law, (ii) cause such returns to be signed in the
manner required by law, (iii) make such elections as may from time to time be
required or appropriate under any applicable law so as to maintain the Trust's
classification as a partnership for tax purposes, (iv) prepare and deliver, or
cause to be prepared and delivered, to the Holders, no later than 75 days after
the close of each Taxable Year, a Schedule K-1, a copy of the Trust's
informational tax return (IRS Form 1065), and such other reports (collectively,
the "Annual Tax Reports") setting forth in sufficient detail all such
information and data with respect to the transactions effected by or involving
the Trust during such Taxable Year as shall enable each Holder to prepare its
federal, state, and local income tax returns in accordance with the laws then
prevailing, and (v) collect, or cause to be collected, any withholding tax as
described in Section 5.2(c) with respect to income or distributions to
Certificateholders.
(l) The Holders shall designate a Holder as the tax matters partner for
the Trust within the meaning of Section 6231(a)(7) of the Code (the "Tax Matters
Partner"), and shall notify the Indenture Trustee, the Manager (as defined in
Section 5.2(d)) and the Owner Trustee in writing of the name and address of such
Tax Matters Partner. The Tax Matters Partner shall have the right and obligation
to take all actions authorized and required, respectively, by the Code for the
Tax Matters Partner. The Tax Matters Partner shall have the right to retain
professional assistance in respect of any audit or controversy proceeding
initiated with respect to the Trust by the Internal Revenue Service or any state
or local taxing authority, and all expenses and fees incurred by the Tax Matters
Partner on behalf of the Trust shall constitute expenses of the Trust. In the
event the Tax Matters Partner receives notice of a final partnership adjustment
under Section 6223(a)(2) of the Code, the Tax Matters Partner shall either (i)
file a court petition for judicial review of such adjustment within the period
provided under Section 6226(a) of the Code, a copy of which petition shall be
mailed to all other Holders on the date such petition is filed, or (ii) mail a
written notice to all other Holders, within such period, that describes the Tax
Matters Partner's reasons for determining not to file such a petition.
(m) Except as otherwise provided in this Section 2.11, the Holders
shall instruct the Owner Trustee as to whether to make any available election
under the Code or any applicable state or local tax law on behalf of the Trust.
Notwithstanding the foregoing, any Holder may request that the Owner Trustee
make an election under section 754 of the Code; provided that the requesting
Holder shall agree to bear the cost of preparing such election and any
additional accounting expenses of the Trust incurred as a result of such
election.
ARTICLE III
CERTIFICATES AND TRANSFER OF INTERESTS
SECTION 3.1. INITIAL OWNERSHIP.
-----------------
Upon the formation of the Trust by the contribution by the Depositor
pursuant to Section 2.5 and until the issuance of the Certificates, the
Depositor shall be the sole beneficiary of the Trust.
SECTION 3.2. THE CERTIFICATES.
----------------
The Certificates shall be issued without a principal amount and shall
evidence beneficial ownership interests in the Trust. The Certificates shall be
printed, lithographed, or engraved or may be produced in any other manner as is
reasonably acceptable to the Owner Trustee, as evidenced by its execution
thereof. The Certificates shall be executed on behalf of the Trust by manual or
facsimile signature of a Trust Officer of the Owner Trustee. Certificates
bearing the manual or facsimile signatures of individuals who were, at the time
when such signatures shall have been affixed, authorized to sign on behalf of
the Trust, shall be valid, notwithstanding that such individuals or any of them
shall have ceased to be so authorized prior to the authentication and delivery
of such Certificates or did not hold such offices at the date of authentication
and delivery of such Certificates.
A transferee of a Certificate shall become a Certificateholder, and
shall be entitled to the rights and subject to the obligations of a
Certificateholder hereunder upon such transferee's acceptance of a Certificate
duly registered in such transferee's name pursuant to Section 3.4.
SECTION 3.3. EXECUTION, AUTHENTICATION AND DELIVERY OF TRUST
---------------------------------------------------------
CERTIFICATES.
- ------------
Concurrently with the initial transfer of the Home Loans to the Trust
pursuant to Article XI hereof, the Owner Trustee shall cause the Certificates,
representing 100% of the Percentage Interests of the Trust Interest, to be
executed on behalf of the Trust, authenticated and delivered to the Transferor,
as designee of the Depositor. No Certificate shall entitle its holder to any
benefit under this Agreement, or shall be valid for any purpose, unless there
shall appear on such Certificate a certificate of authentication substantially
in the form set forth in Exhibit A, executed by the Owner Trustee or the Owner
Trustee's authenticating agent, by manual or facsimile signature; such
authentication shall constitute conclusive evidence that such Certificate shall
have been duly authenticated and delivered hereunder. All Certificates shall be
dated the date of their authentication.
SECTION 3.4. REGISTRATION OF TRANSFER AND EXCHANGE OF TRUST
---------------------------------------------------------
CERTIFICATES.
- ------------
The Certificate Registrar shall keep or cause to be kept, at the office
or agency maintained pursuant to Section 3.8, a Certificate Register in which,
subject to such reasonable regulations as it may prescribe, the Owner Trustee
shall provide for the registration of Certificates and of transfers and
exchanges of Certificates as herein provided. The Owner Trustee shall be the
initial Certificate Registrar.
Upon surrender for registration of transfer of any Certificate at the
office or agency maintained pursuant to Section 3.8, the Owner Trustee shall
execute, authenticate and deliver (or shall cause its authenticating agent to
authenticate and deliver), in the name of the designated transferee or
transferees, one or more new Certificates of a like Percentage Interest dated
the date of authentication by the Owner Trustee or any authenticating agent. At
the option of a Certificateholder, Certificates may be exchanged for other
Certificates of a like Percentage Interest upon surrender of the Certificates to
be exchanged at the office or agency maintained pursuant to Section 3.8.
Every Certificate presented or surrendered for registration of transfer
or exchange shall be accompanied by a written instrument of transfer in form
satisfactory to the Owner Trustee and the Certificate Registrar duly executed by
the Certificateholder or his attorney duly authorized in writing. In addition,
each Certificate presented or surrendered for registration of transfer and
exchange must be accompanied by a letter from the Prospective Holder certifying
as to the representations set forth in Section 3.10(a), (b), and (c). Each
Certificate surrendered for registration of transfer or exchange shall be
canceled and disposed of by the Owner Trustee in accordance with its customary
practice.
No service charge shall be made for any registration of transfer or
exchange of Certificates, but the Owner Trustee or the Certificate Registrar may
require payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer or exchange of Certificates.
The preceding provisions of this Section notwithstanding, the Owner
Trustee shall not make and the Certificate Registrar shall not register transfer
or exchanges of Certificates for a period of 15 days preceding the Payment Date
with respect to the Certificates.
SECTION 3.5. MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES.
-------------------------------------------------
If (a) any mutilated Certificate shall be surrendered to the
Certificate Registrar, or if the Certificate Registrar shall receive evidence to
its satisfaction of the destruction, loss, or theft of any Certificate and (b)
there shall be delivered to the Certificate Registrar and the Owner Trustee such
security or indemnity as may be required by them to save each of them harmless,
then in the absence of notice that such Certificate shall have been acquired by
a bona fide purchaser, and provided that the requirements of Section 8-405 of
the relevant Uniform Commercial Code have been met, the Owner Trustee on behalf
of the Trust shall execute and the Owner Trustee, or the Owner Trustee's
authenticating agent, shall authenticate and deliver, in exchange for or in lieu
of any such mutilated, destroyed, lost, or stolen Certificate, a new Certificate
of like Percentage Interest. In connection with the issuance of any new
Certificate under this Section, the Owner Trustee or the Certificate Registrar
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection therewith. Any duplicate
Certificate issued pursuant to this Section shall constitute conclusive evidence
of ownership in the Trust, as if originally issued, whether or not the lost,
stolen, or destroyed Certificate shall be found at any time.
SECTION 3.6. PERSONS DEEMED OWNERS.
---------------------
Each person by virtue of becoming a Certificateholder in accordance
with this Agreement shall be deemed to be bound by the terms of this Agreement.
Prior to due presentation of a Certificate for registration of transfer, the
Owner Trustee or the Certificate Registrar may treat the Person in whose name
any Certificate shall be registered in the Certificate Register as the owner of
such Certificate for the purpose of receiving distributions pursuant to Section
5.2 and for all other purposes whatsoever, and neither the Owner Trustee nor the
Certificate Registrar shall be bound by any notice to the contrary.
SECTION 3.7. ACCESS TO LIST OF HOLDERS' NAMES AND ADDRESSES.
----------------------------------------------
The Owner Trustee shall furnish or cause to be furnished to the
Servicer, the Depositor and the Trust Paying Agent no later than ten days prior
to each Payment Date, a list of the names and addresses of the
Certificateholders as of the most recent Record Date. If three or more
Certificateholders or one or more Holders of Certificates, together evidencing
Percentage Interests totaling not less than 25%, apply in writing to the Owner
Trustee, and such application states that the applicants desire to communicate
with other Certificateholders with respect to their rights under this Agreement
or under the Certificates and such application is accompanied by a copy of the
communication that such applicants propose to transmit, then the Owner Trustee
shall, within five Business Days after the receipt of such application, afford
such applicants access during normal business hours to the current list of
Certificateholders. Each Certificateholder, by receiving and holding a
Certificate, shall be deemed to have agreed not to hold any of the Depositor,
the Certificate Registrar, or the Owner Trustee accountable by reason of the
disclosure of its name and address, regardless of the source from which such
information was derived.
SECTION 3.8. MAINTENANCE OF OFFICE OR AGENCY.
-------------------------------
The Owner Trustee shall maintain an office or offices or agency or
agencies where Certificates may be surrendered for registration of transfer or
exchange and where notices and demands to or upon the Owner Trustee in respect
of the Certificates and the Basic Documents may be served. The Owner Trustee
initially designates Wilmington Trust Company as its principal corporate trust
office for such purposes. The Owner Trustee shall give prompt written notice to
the Depositor and to the Certificateholders of any change in the location of the
Certificate Register or any such office or agency.
SECTION 3.9. APPOINTMENT OF TRUST PAYING AGENT.
---------------------------------
The Owner Trustee hereby appoints Norwest Bank Minnesota, National
Association, as Trust Paying Agent under this Agreement. The Trust Paying Agent
shall make distributions to Certificateholders from the Certificate Distribution
Account pursuant to Section 5.2 and shall report to the Owner Trustee on the
Payment Date via facsimile transmission of a distribution statement the amounts
of such distributions to the Certificateholders. The Trust Paying Agent shall
have the revocable power to withdraw funds from the Certificate Distribution
Account for the purpose of making the distributions referred to above. In the
event that Norwest Bank Minnesota, National Association, shall no longer be the
Trust Paying Agent hereunder, the Owner Trustee shall appoint a successor to act
as Trust Paying Agent (which shall be a bank or trust company) acceptable to the
Certificateholders and the Note Insurer. The Owner Trustee shall cause such
successor Trust Paying Agent or any additional Trust Paying Agent appointed by
the Owner Trustee to execute and deliver to the Owner Trustee an instrument in
which such successor Trust Paying Agent or additional Trust Paying Agent shall
agree with the Owner Trustee that as Trust Paying Agent, such successor Trust
Paying Agent or additional Trust Paying Agent will hold all sums, if any, held
by it for payment to the Certificateholders in trust for the benefit of the
Certificateholders entitled thereto until such sums shall be paid to such
Certificateholders. After one year from the date of receipt, the Trust Paying
Agent shall promptly return all unclaimed funds to the Owner Trustee, and upon
removal of a Trust Paying Agent, such Trust Paying Agent shall also return all
funds in its possession to the Owner Trustee. The provisions of Sections 7.1,
7.3(b), 7.4, 8.1, and 10.2 as to resignations, shall apply to the Trust Paying
Agent to the same extent as if it were named therein and, to the extent
applicable, to any other paying agent appointed hereunder. Any reference in this
Agreement to the Trust Paying Agent shall include any co-paying agent unless the
context requires otherwise.
SECTION 3.10. RESTRICTIONS ON TRANSFER OF CERTIFICATES.
----------------------------------------
(a) Each prospective purchaser and any subsequent transferee of a
Certificate (each, a "Prospective Holder"), other than the Depositor and any
affiliate, shall represent and warrant, in writing, to the Owner Trustee and the
Certificate Registrar and any of their respective successors that:
(i) Such Person is (A) a "qualified institutional buyer" as
defined in Rule 144A under the Securities Act of 1933, as amended (the
"Securities Act"), and is aware that the seller of the Certificate may
be relying on the exemption from the registration requirements of the
Securities Act provided by Rule 144A and is acquiring such Certificate
for its own account or for the account of one or more qualified
institutional buyers for whom it is authorized to act, or (B) a Person
involved in the organization or operation of the Trust or an affiliate
of such Person within the meaning of Rule 3a-7 of the Investment
Company Act of 1940, as amended (including, but not limited to, the
Depositor and any affiliate).
(ii) Such Person understands that the Certificates have not been
and will not be registered under the Securities Act and may be
offered, sold, pledged, or otherwise transferred only to a person whom
the seller reasonably believes is (C) a qualified institutional buyer
or (D) a Person involved in the organization or operation of the Trust
or an affiliate of such Person, in a transaction meeting the
requirements of Rule 144A under the Securities Act and in accordance
with any applicable securities laws of any state of the United States.
(iii) Such Person understands that the Certificates bear a legend
to the following effect:
"THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), OR ANY STATE SECURITIES LAWS. THIS
CERTIFICATE MAY BE DIRECTLY OR INDIRECTLY OFFERED OR
SOLD OR OTHERWISE DISPOSED OF (INCLUDING PLEDGED) BY
THE HOLDER HEREOF ONLY TO (I) A "QUALIFIED
INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE
ACT, IN A TRANSACTION THAT IS REGISTERED UNDER THE ACT
AND APPLICABLE STATE SECURITIES LAWS OR THAT IS EXEMPT
FROM THE REGISTRATION REQUIREMENTS OF THE ACT PURSUANT
TO RULE 144A OR (II) A PERSON INVOLVED IN THE
ORGANIZATION OR OPERATION OF THE TRUST OR AN AFFILIATE
OF SUCH A PERSON WITHIN THE MEANING OF RULE 3a-7 OF THE
INVESTMENT COMPANY ACT OF 1940, AS AMENDED (INCLUDING,
BUT NOT LIMITED TO, CITY CAPITAL MARKETS CORPORATION)
IN A TRANSACTION THAT IS REGISTERED UNDER THE ACT AND
APPLICABLE STATE SECURITIES LAWS OR THAT IS EXEMPT FROM
THE REGISTRATION REQUIREMENTS OF THE ACT AND SUCH LAWS.
NO PERSON IS OBLIGATED TO REGISTER THIS CERTIFICATE
UNDER THE ACT OR ANY STATE SECURITIES LAWS."
(b) By its acceptance of a Certificate, each Prospective Holder agrees
and acknowledges that no legal or beneficial interest in all or any portion of
any Certificate may be transferred directly or indirectly to an entity that
holds certificates of beneficial interest as nominee to facilitate the clearance
and settlement of such securities through electronic book-entry changes in
Accounts of participating organizations (a "Book-Entry Nominee") and any such
purported transfer shall be void and have no effect.
(c) No transfer of this certificate or any beneficial interest therein
shall be made to any person unless the Owner Trustee has received a certificate
from the Transferee to the effect that such transferee (i) is not a person which
is an employee benefit plan, trust, or account subject to Title I of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA") or Section
4975 of the Code or a governmental plan, defined in Section 3(32) of ERISA
subject to any federal, state or local law which is, to a material extent,
similar to the foregoing provisions of ERISA or the Code (any such person being
a "plan") and (ii) is not an entity, including an insurance company separate
account or general account, whose underlying assets include plan assets by
reason of a plan's investment in the entity.
(d) The Owner Trustee shall not execute, and shall not countersign and
deliver, a Certificate in connection with any transfer thereof unless the
transferor shall have provided to the Owner Trustee a certificate, substantially
in the form attached as Exhibit C to this Agreement, signed by the transferee,
which certificate shall contain the consent of the transferee to any amendments
of this Agreement as may be required to effectuate further the foregoing
restrictions on transfer of the Certificates to Book-Entry Nominees, and an
agreement by the transferee that it will not transfer a Certificate without
providing to the Owner Trustee a certificate substantially in the form attached
as Exhibit C to this Agreement.
(e) The Certificates shall bear an additional legend referring to the
restrictions contained in paragraphs (b) through (d) above.
(f) Notwithstanding any of the foregoing, the Certificates shall not be
transferable without the prior written consent of the Note Insurer.
(g) Notwithstanding any of the foregoing, the Owner Trustee shall
assure that (i) the Certificates are transferable only in Percentage Interests
of 10% or more, (ii) no transfer of a Certificate shall be effected if, as a
result of such transfer, the Certificates would be deemed to be held by more
than 100 holders or beneficial owners within the meaning of Treasury Regulation
Section 1.7704-1(h)(1)(ii), (iii) the Certificates will not be listed or traded
on any established securities exchange market within the meaning of Treasury
Regulation Section 1.7704-1, and (iv) the Certificates are not held by any
Non-U.S. Persons.
ARTICLE IV
ACTIONS BY OWNER TRUSTEE
SECTION 4.1. PRIOR NOTICE TO HOLDERS WITH RESPECT TO CERTAIN
---------------------------------------------------------
MATTERS.
- -------
With respect to the following matters, the Owner Trustee shall not take
action, and the Certificateholders shall not direct the Owner Trustee to take
any action, unless at least 30 days before the taking of such action, the Owner
Trustee shall have notified the Certificateholders and the Note Insurer in
writing of the proposed action and neither the Certificateholders nor the Note
Insurer shall have notified the Owner Trustee in writing prior to the 30th day
after such notice is given that such Certificateholders and/or the Note Insurer
have withheld consent or the Certificateholders have provided alternative
direction (any direction by the Certificateholders shall require the prior
consent of the Note Insurer):
(a) the initiation of any claim or lawsuit by the Trust (except claims
or lawsuits brought in connection with the collection of the Home Loans) and the
compromise of any action, claim or lawsuit brought by or against the Trust
(except with respect to the aforementioned claims or lawsuits for collection of
the Home Loans); (b) the election by the Trust to file an amendment to the
Certificate of Trust (unless such amendment is required to be filed under the
Business Trust Statute);
(c) the amendment or other change to this Agreement or any Basic
Document in circumstances where the consent of any Holder or the Note Insurer is
required;
(d) the amendment or other change to this Agreement or any Basic
Document in circumstances where the consent of any Holder or the Note Insurer is
not required and such amendment materially adversely affects the interest of the
Certificateholders;
(e) the appointment pursuant to the Indenture of a successor Note
Registrar, Trust Paying Agent, or Indenture Trustee or pursuant to this
Agreement of a successor Certificate Registrar or Trust Paying Agent, or the
consent to the assignment by the Note Registrar, Paying Agent, or Indenture
Trustee or Certificate Registrar or Trust Paying Agent of its obligations under
the Indenture or this Agreement, as applicable.
(f) the consent to the calling or waiver of any default of any Basic
Document;
(g) the consent to the assignment by the Indenture Trustee or Servicer
of their respective obligations under any Basic Document;
(h) except as provided in Article IX hereof, dissolve, terminate or
liquidate the Trust in whole or in part;
(i) merge or consolidate the Trust with or into any other entity, or
convey or transfer all or substantially all of the Trust's assets to any other
entity;
(j) cause the Trust to incur, assume or guaranty any indebtedness other
than as set forth in this Agreement or the Basic Documents;
(k) do any act that conflicts with any other Basic Document;
(l) do any act which would make it impossible to carry on the ordinary
business of the Trust as described in Section 2.3 hereof;
(m) confess a judgment against the Trust;
(n) possess Trust assets, or assign the Trust's right to property, for
other than a Trust purpose;
(o) cause the Trust to lend any funds to any entity; or
(p) change the Trust's purpose and powers from those set forth in this
Trust Agreement.
In addition the Trust shall not commingle its assets with those of any
other entity. The Trust shall maintain its financial and accounting books and
records separate from those of any other entity. Except as expressly set forth
herein, the Trust shall pay its indebtedness, operating expenses, and
liabilities from its own funds, and the Trust shall not pay the indebtedness,
operating expenses, and liabilities of any other entity. The Trust shall
maintain appropriate minutes or other records of all appropriate actions and
shall maintain its office separate from the offices of the Depositor and City
National Bank of West Virginia.
The Owner Trustee shall not have the power, except upon the direction
of the Certificateholders with the consent of the Note Insurer, and to the
extent otherwise consistent with the Basic Documents, to (i) remove or replace
the Servicer or the Indenture Trustee, (ii) institute proceedings to have the
Trust declared or adjudicated bankrupt or insolvent, (iii) consent to the
institution of bankruptcy or insolvency proceedings against the Trust, (iv) file
a petition or consent to a petition seeking reorganization or relief on behalf
of the Trust under any applicable federal or state law relating to bankruptcy,
(v) consent to the appointment of a receiver, liquidator, assignee, trustee,
sequestrator, or any similar official of the Trust or a substantial portion of
the property of the Trust, (vi) make any assignment for the benefit of the
Trust's creditors, (vii) cause the Trust to admit in writing its inability to
pay its debts generally as they become due, and (viii) take any action, or cause
the Trust to take any action, in furtherance of any of the foregoing (any of the
above, a "Bankruptcy Action"). So long as the Indenture and the Insurance
Agreement remain in effect and no Note Insurer Default exists, no
Certificateholder shall have the power to take, and shall not take, any
Bankruptcy Action with respect to the Trust or direct the Owner Trustee to take
any Bankruptcy Action with respect to the Trust.
SECTION 4.2. ACTION BY HOLDERS WITH RESPECT TO BANKRUPTCY.
--------------------------------------------
The Owner Trustee shall not have the power to commence a voluntary
proceeding in bankruptcy relating to the Trust without the consent and approval
of the Note Insurer, the unanimous prior approval of all Certificateholders and
the Note Insurer and the delivery to the Owner Trustee by each such
Certificateholder of a certification that such Certificateholder reasonably
believes that the Trust is insolvent.
SECTION 4.3. RESTRICTIONS ON HOLDERS' POWER.
------------------------------
The Certificateholders shall not direct the Owner Trustee to take or
refrain from taking any action if such action or inaction would be contrary to
any obligation of the Trust or the Owner Trustee under this Agreement or any of
the Basic Documents or would be contrary to Section 2.3 nor shall the Owner
Trustee be obligated to follow any such direction, if given.
SECTION 4.4. MAJORITY CONTROL.
----------------
Except as expressly provided herein, any action that may be taken by
the Certificateholders under this Agreement may be taken by the Holders of
Certificates evidencing more than 50% of the Percentage Interest in the Trust
Interest and such action shall be binding upon all Certificateholders. Except as
expressly provided herein, any written notice of the Certificateholders
delivered pursuant to this Agreement shall be effective if signed by Holders of
Certificates evidencing more than 50% of the Percentage Interest in the Trust
Interest at the time of the delivery of such notice and such action shall be
binding upon all Certificateholders.
ARTICLE V
APPLICATION OF TRUST FUNDS; CERTAIN DUTIES
SECTION 5.1. ESTABLISHMENT OF CERTIFICATE DISTRIBUTION ACCOUNT.
-------------------------------------------------
The Owner Trustee shall cause the Trust Paying Agent, for the benefit
of the Certificateholders, to establish and maintain with Norwest Bank
Minnesota, National Association, for the benefit of the Owner Trustee one or
more Accounts that while the Trust Paying Agent holds such Account shall be
entitled "Certificate Distribution Account, Norwest Bank Minnesota, National
Association, as Trust Paying Agent, in trust for the Holders of Certificates
evidencing beneficial interests in City Capital Home Loan Trust 1998-4." Funds
shall be deposited in the Certificate Distribution Account as required by the
Indenture or, following satisfaction and release of the Indenture, by the
Servicing Agreement.
All of the right, title, and interest of the Owner Trustee in all funds
on deposit from time to time in the Certificate Distribution Account and in all
proceeds thereof shall be held for the benefit of the Certificateholders, the
Note Insurer, and such other persons entitled to distributions therefrom. Except
as otherwise expressly provided herein, the Certificate Distribution Account
shall be under the sole dominion and control of the Owner Trustee for the
benefit of the Certificateholders and the Note Insurer.
SECTION 5.2. APPLICATION OF TRUST FUNDS.
--------------------------
(a) On each Payment Date, the Trust Paying Agent shall distribute to
the Certificateholders, on the basis of their respective Percentage Interests,
all amounts then on deposit in the Certificate Distribution Account.
(b) On each Payment Date, the Trust Paying Agent shall send to
Certificateholders the statement provided to the Owner Trustee by the Indenture
Trustee pursuant to Section 2.08(d) of the Indenture with respect to such
Payment Date. If the Trust Paying Agent is an entity other than the Indenture
Trustee, the Owner Trustee shall provide a copy of such statement to the Trust
Paying Agent to enable it to perform its duties under this Section 5.2(b).
(c) In the event that any withholding tax is imposed under federal,
state, or local law on the Trust's payment (or allocations of income) to a
Certificateholder, such tax shall reduce the amount otherwise distributable to
such Certificateholder in accordance with this Section. The Owner Trustee, and
the Trust Paying Agent on its behalf, is hereby authorized and directed to
retain in the Certificate Distribution Account from amounts otherwise
distributable to the Certificateholders sufficient funds for the payment of any
tax that is legally owed by the Trust (but such authorization shall not prevent
the Owner Trustee from contesting any such tax in appropriate proceedings, and
withholding payment of such tax, if permitted by law, pending the outcome of
such proceedings). The Certificate Registrar will provide the Trust Paying Agent
with a statement indicating the amount of any such withholding tax. The amount
of any withholding tax imposed with respect to a Certificateholder shall be
treated as cash distributed to such Certificateholder at the time it is withheld
by the Trust and remitted to the appropriate taxing authority from the
Certificate Distribution Account at the direction of the Owner Trustee or the
Trust Paying Agent on its behalf. If there is a possibility that withholding tax
is payable with respect to a distribution (such as a distribution to a
Certificateholder who is a Non-U.S. Person), the Trust Paying Agent may in its
sole discretion withhold such amounts in accordance with this paragraph (c). In
the event that a Certificateholder wishes to apply for a refund of any such
withholding tax, the Owner Trustee and the Trust Paying Agent shall reasonably
cooperate with such Certificateholder in making such claim so long as such
Certificateholder agrees to reimburse the Owner Trustee for any out-of-pocket
expenses incurred.
(d) Notwithstanding anything to the contrary herein, at any time after
the Indenture is no longer in effect but while this Agreement remains in effect,
the Trust Paying Agent shall be entitled to receive, from the cash flow on the
Home Loans and prior to any payment to the Certificateholders on each Payment
Date, a reasonable fee on each Payment Date not to exceed the Indenture Trustee
Fee that would have been payable to the Indenture Trustee on such Payment Date
if the Indenture was still in effect.
SECTION 5.3. METHOD OF PAYMENT.
-----------------
Distributions required to be made to Certificateholders on any Payment
Date shall be made to each Certificateholder of record on the preceding Record
Date either by wire transfer, in immediately available funds, to the account of
such Holder at a bank or other entity having appropriate facilities therefor, if
such Certificateholder shall have provided to the Trust Paying Agent appropriate
written instructions at least five Business Days prior to such Payment Date, or,
if not, by check mailed to such Certificateholder at the address of such Holder
appearing in the Certificate Register.
SECTION 5.4. SEGREGATION OF MONEYS; NO INTEREST.
----------------------------------
Subject to Sections 5.1 and 5.2, moneys received by the Trust Paying
Agent hereunder and deposited into the Certificate Distribution Account will be
segregated and, if the Holders of more than 50% of the Certificates so direct,
shall be invested in Permitted Investments maturing no later than one Business
Day prior to the related Payment Date at the direction of such
Certificateholders. The Trust Paying Agent shall not be liable for payment of
any interest or losses in respect of such moneys. Investment gains shall be for
the account of and paid to the Certificateholders.
ARTICLE VI
AUTHORITY AND DUTIES OF OWNER TRUSTEE
SECTION 6.1. GENERAL AUTHORITY.
-----------------
The Owner Trustee is authorized and directed to execute and deliver or
cause to be executed and delivered the Notes, the Certificates, and the Basic
Documents to which the Trust is to be a party and each certificate or other
document attached as an exhibit to or contemplated by the Basic Documents to
which the Trust is to be a party and any amendment or other agreement or
instrument described in Article III, in each case, in such form as the Owner
Trustee shall approve, as evidenced conclusively by the Owner Trustee's
execution thereof. In addition, the Owner Trustee is authorized and directed, on
behalf of the Trust, to execute and deliver to the Authenticating Agent, the
Issuer Request and the Issuer Order referred to in Section 2.11 of the
Indenture, in such form as the Depositor shall approve, as evidenced
conclusively by the Owner Trustee's or the Depositor's execution thereof,
directly to the Authenticating Agent to authenticate and deliver Notes in the
aggregate principal amount of $168,173,000. In addition to the foregoing, the
Owner Trustee is authorized, but shall not be obligated, to take all actions
required of the Trust, pursuant to the Basic Documents.
SECTION 6.2. GENERAL DUTIES.
--------------
It shall be the duty of the Owner Trustee:
(a) To discharge (or cause to be discharged) all of its
responsibilities pursuant to the terms of this Agreement and the Basic Documents
to which the Trust is a party and to administer the Trust in the interest of the
Certificateholders, subject to the Basic Documents and in accordance with the
provisions of this Agreement; the Owner Trustee shall not be responsible for
taking any action with respect to the Indenture or any other of the Basic
Documents unless a Responsible Office of the Owner Trustee has actual knowledge
of the facts which require such action or has received written notice of the
need to take such action; the Owner Trustee shall not be responsible for any
matter regarding the Investment Company Act of 1940, as amended (or any
successor statute) or the rules or regulations thereunder; and
(b) To obtain and preserve the Issuer's qualification to do business in
each jurisdiction in which such qualification is or shall be necessary to
protect the validity and enforceability of the Indenture, the Notes, the Home
Loans, and each other instrument and agreement included in the Trust Estate.
SECTION 6.3. ACTION UPON INSTRUCTION.
-----------------------
(a) Subject to Article IV and in accordance with the terms of the Basic
Documents, the Certificateholders may by written instruction direct the Owner
Trustee in the management of the Trust but only to the extent consistent with
the limited purpose of the Trust. Such direction may be exercised at anytime by
written instruction of the Certificateholders pursuant to Article IV. Without
limiting the generality of the foregoing, the Owner Trustee shall act as
directed by the Certificateholders in connection with Note redemptions requested
by the Certificateholders, and shall take all actions and deliver all documents
that the Trust is required to take and deliver in accordance with Section 4.01
and Article X of the Indenture in order to effect any redemption requested by
the Certificateholders.
(b) The Owner Trustee shall not be required to take any action
hereunder or under any Basic Document if the Owner Trustee shall have reasonably
determined, or shall have been advised by counsel, that such action is likely to
result in liability on the part of the Owner Trustee or is contrary to the terms
hereof or of any Basic Document or is otherwise contrary to law.
(c) Whenever the Owner Trustee is unable to decide between alternative
courses of action permitted or required by the terms of this Agreement or under
any Basic Document, the Owner Trustee shall promptly give notice (in such form
as shall be appropriate under the circumstances) to the Certificateholders and
the Note Insurer requesting instruction from the Certificateholders as to the
course of action to be adopted, and to the extent the Owner Trustee acts in good
faith in accordance with any written instruction of the Certificateholders
received, the Owner Trustee shall not be liable on Account of such action to any
Person. If the Owner Trustee shall not have received appropriate instruction
within 10 days of such notice (or within such shorter period of time as
reasonably may be specified in such notice or may be necessary under the
circumstances) it may, but shall be under no duty to, take or refrain from
taking such action, not inconsistent with this Agreement or the Basic Documents,
as it shall deem to be in the best interests of the Certificateholders, and
shall have no liability to any Person for such action or inaction.
(d) In the event that the Owner Trustee is unsure as to the application
of any provision of this Agreement or any Basic Document or any such provision
is ambiguous as to its application, or is, or appears to be, in conflict with
any other applicable provision, or in the event that this Agreement permits any
determination by the Owner Trustee or is silent or is incomplete as to the
course of action that the Owner Trustee is required to take with respect to a
particular set of facts, the Owner Trustee may give notice (in such form as
shall be appropriate under the circumstances) to the Certificateholders
requesting instruction and, to the extent that the Owner Trustee acts or
refrains from acting in good faith in accordance with any such instruction
received, the Owner Trustee shall not be liable, on account of such action or
inaction, to any Person. If the Owner Trustee shall not have received
appropriate instruction within 10 days of such notice (or within such shorter
period of time as reasonably may be specified in such notice or may be necessary
under the circumstances) it may, but shall be under no duty to, take or refrain
from taking such action, not inconsistent with this Agreement or the Basic
Documents, as it shall deem to be in the best interests of the
Certificateholders, and shall have no liability to any Person for such action or
inaction.
SECTION 6.4. NO DUTIES EXCEPT AS SPECIFIED IN THIS AGREEMENT, THE BASIC
----------------------------------------------------------
DOCUMENTS OR ANY INSTRUCTIONS.
- -----------------------------
The Owner Trustee shall not have any duty or obligation to manage, make
any payment with respect to, register, record, sell, dispose of, or otherwise
deal with the Owner Trust Estate, or to otherwise take or refrain from taking
any action under, or in connection with, any document contemplated hereby to
which the Owner Trustee is a party, except as expressly provided by the terms of
this Agreement, any Basic Document, or in any document or written instruction
received by the Owner Trustee pursuant to Section 6.3; and no implied duties or
obligations shall be read into this Agreement or any Basic Document against the
Owner Trustee. The Owner Trustee shall have no responsibility for filing any
financing or continuation statement in any public office at any time or to
otherwise perfect or maintain the perfection of any security interest or lien
granted to it hereunder or to record this Agreement or any Basic Document. The
Owner Trustee nevertheless agrees that it will, at its own cost and expense,
promptly take all action as may be necessary to discharge any liens on any part
of the Owner Trust Estate that result from actions by, or claims against, the
Owner Trustee that are not related to the ownership or the administration of the
Owner Trust Estate.
SECTION 6.5. NO ACTION EXCEPT UNDER SPECIFIED DOCUMENTS OR
---------------------------------------------------------
INSTRUCTIONS.
- ------------
The Owner Trustee shall not manage, control, use, sell, dispose of, or
otherwise deal with any part of the Owner Trust Estate except (i) in accordance
with the powers granted to and the authority conferred upon the Owner Trustee
pursuant to this Agreement, (ii) in accordance with the Basic Documents, and
(iii) in accordance with any document or instruction delivered to the Owner
Trustee pursuant to Section 6.3.
SECTION 6.6. RESTRICTIONS.
------------
The Owner Trustee shall not take any action (a) that is inconsistent
with the purposes of the Trust set forth in Section 2.3 or (b) that, to the
actual knowledge of the Owner Trustee, would result in the Trust's becoming
taxable as a corporation for Federal income tax purposes. The Certificateholders
shall not direct the Owner Trustee to take action that would violate the
provisions of this Section.
ARTICLE VII
CONCERNING THE OWNER TRUSTEE
SECTION 7.1. ACCEPTANCE OF TRUSTS AND DUTIES.
-------------------------------
The Owner Trustee accepts the trusts hereby created and agrees to
perform its duties hereunder with respect to such trusts but only upon the terms
of this Agreement and the Basic Documents. There shall be no implied duties of
the Owner Trustee under this Agreement or under the Basic Documents. The Owner
Trustee also agrees to disburse all moneys actually received by it constituting
part of the Owner Trust Estate upon the terms of the Basic Documents and this
Agreement. The Owner Trustee shall not be answerable or accountable hereunder or
under any Basic Document under any circumstances, except (i) for its own willful
misconduct or negligence or (ii) in the case of the inaccuracy of any
representation or warranty contained in Section 7.3 expressly made by the Owner
Trustee. In particular, but not by way of limitation (and subject to the
exceptions set forth in the preceding sentence):
(a) the Owner Trustee shall not be liable for any error of judgment
made by a responsible officer of the Owner Trustee;
(b) the Owner Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in accordance with the instructions of the
Certificateholders;
(c) no provision of this Agreement or any Basic Document shall require
the Owner Trustee to expend or risk funds or otherwise incur any financial
liability in the performance of any of its rights or powers hereunder or under
any Basic Document if the Owner Trustee shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against such risk
or liability is not reasonably assured or provided to it;
(d) under no circumstances shall the Owner Trustee be liable for
indebtedness evidenced by or arising under any of the Basic Documents, including
the principal of and interest on the Notes;
(e) the Owner Trustee shall not be responsible for or in respect of the
validity or sufficiency of this Agreement or for the due execution hereof by the
Depositor or for the form, character, genuineness, sufficiency, value, or
validity of any of the Owner Trust Estate or for or in respect of the validity
or sufficiency of the Basic Documents, other than the certificate of
authentication on the Certificates, and the Owner Trustee shall in no event
assume or incur any liability, duty, or obligation to any Noteholder or to any
Certificateholder, other than as expressly provided for herein and in the Basic
Documents;
(f) the Owner Trustee shall not be liable for the default or misconduct
of the Seller, the Depositor, the Indenture Trustee, the Master Servicer or the
Servicer under any of the Basic Documents or otherwise and the Owner Trustee
shall have no obligation or liability to perform the obligations of the Trust
under this Agreement or the Basic Documents that are required to be performed by
the Indenture Trustee under the Indenture or the Servicer and the Master
Servicer under the Servicing Agreement; and
(g) the Owner Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Agreement, or to institute, conduct,
or defend any litigation under this Agreement or otherwise or in relation to
this Agreement or any Basic Document, at the request, order or direction of any
of the Certificateholders, unless such Certificateholders have offered to the
Owner Trustee security or indemnity satisfactory to it against the costs,
expenses, and liabilities that may be incurred by the Owner Trustee therein or
thereby. The right of the Owner Trustee to perform any discretionary act
enumerated in this Agreement or in any Basic Document shall not be construed as
a duty, and the Owner Trustee shall not be answerable for other than its gross
negligence or willful misconduct in the performance of any such act.
SECTION 7.2. FURNISHING OF DOCUMENTS.
-----------------------
The Owner Trustee shall furnish to the Certificateholders promptly upon
receipt of a written request therefor, duplicates or copies of all reports,
notices, requests, demands, certificates, financial statements, and any other
instruments furnished to the Owner Trustee under the Basic Documents. On behalf
of the Owner Trustee, the Depositor shall furnish to Noteholders promptly upon
written request therefor, copies of the Servicing Agreement and the Indenture.
SECTION 7.3. REPRESENTATIONS AND WARRANTIES.
------------------------------
(a) The Owner Trustee hereby represents and warrants to the Depositor
for the benefit of the Certificateholders, that:
(i) It is a banking corporation duly organized and validly
existing in good standing under the laws of the State of Delaware. It
has all requisite corporate power and authority to execute, deliver
and perform its obligations under this Agreement.
(ii) It has taken all corporate action necessary to authorize the
execution and delivery by it of this Agreement, and this Agreement
will be executed and delivered by one of its officers who is duly
authorized to execute and deliver this Agreement on its behalf.
(iii) Neither the execution nor the delivery by it of this
Agreement nor the consummation by it of the transactions contemplated
hereby nor compliance by it with any of the terms or provisions hereof
will contravene any Federal or Delaware law, governmental rule or
regulation governing the banking or trust powers of the Owner Trustee
or any judgment or order binding on it, or constitute any default
under its charter documents or by-laws.
(b) The Trust Paying Agent hereby represents and warrants to the
Depositor and the Note Insurer for the benefit of the Certificateholders, that:
(i) It is a banking association duly organized and validly
existing in good standing under the laws of the United States of
America. It has all requisite corporate power and authority to
execute, deliver, and perform its obligations under this Agreement.
(ii) It has taken all corporate action necessary to authorize the
execution and delivery by it of this Agreement, and this Agreement
will be executed and delivered by one of its officers who is duly
authorized to execute and deliver this Agreement on its behalf.
(iii) Neither the execution nor the delivery by it of this
Agreement nor the consummation by it of the transactions contemplated
hereby nor compliance by it with any of the terms or provisions hereof
will contravene any Federal law, governmental rule, or regulation
governing the banking or trust powers of the Trust Paying Agent or any
judgment or order binding on it, or constitute any default under its
charter documents or by-laws.
SECTION 7.4. RELIANCE; ADVICE OF COUNSEL.
---------------------------
(a) The Owner Trustee shall incur no liability to anyone in acting upon
any signature, instrument, notice, resolution, request, consent, order,
certificate, report, opinion, bond, or other document or paper believed by it to
be genuine and believed by it to be signed by the proper party or parties. The
Owner Trustee may accept a certified copy of a resolution of the board of
directors or other governing body of any corporate party as conclusive evidence
that such resolution has been duly adopted by such body and that the same is in
full force and effect. As to any fact or matter the method of the determination
of which is not specifically prescribed herein, the Owner Trustee may for all
purposes hereof rely on a certificate, signed by the president or any vice
president or by the treasurer or other authorized officers of the relevant
party, as to such fact or matter and such certificate shall constitute full
protection to the Owner Trustee for any action taken or omitted to be taken by
it in good faith in reliance thereon, including officers' certificates under the
Indenture.
(b) In the exercise or administration of the trusts hereunder and in
the performance of its duties and obligations under this Agreement or the Basic
Documents, the Owner Trustee (i) may act directly or through its agents or
attorneys pursuant to agreements entered into with any of them, and the Owner
Trustee shall not be liable for the conduct or misconduct of such agents or
attorneys if such agents or attorneys shall have been selected by the Owner
Trustee with reasonable care, and (ii) may consult with counsel, accountants,
and other skilled persons to be selected with reasonable care and employed by
it. The Owner Trustee shall not be liable for anything done, suffered, or
omitted in good faith by it in accordance with the written opinion or advice of
any such counsel, Accountants, or other such persons and not contrary to this
Agreement or any Basic Document.
SECTION 7.5. NOT ACTING IN INDIVIDUAL CAPACITY.
---------------------------------
Except as provided in this Article VII, in accepting the trusts hereby
created, Wilmington Trust Company acts solely as Owner Trustee hereunder and not
in its individual capacity, and all Persons having any claim against the Owner
Trustee by reason of the transactions contemplated by this Agreement or any
Basic Document shall look only to the Owner Trust Estate for payment or
satisfaction thereof.
SECTION 7.6. OWNER TRUSTEE NOT LIABLE FOR CERTIFICATES OR HOME LOANS.
-------------------------------------------------------
The recitals contained herein and in the Certificates (other than the
signature and countersignature of the Owner Trustee on the Certificates) shall
be taken as the statements of the Depositor, and the Owner Trustee assumes no
responsibility for the correctness thereof. The Owner Trustee makes no
representations as to the validity or sufficiency of this Agreement, of any
Basic Document, of the Certificates (other than the signature and
countersignature of the Owner Trustee on the Certificates and as specified in
Section 7.3), of the Notes, or of any Home Loans or related documents. The Owner
Trustee shall at no time have any responsibility or liability for or with
respect to the legality, validity, and enforceability of any Home Loan, or the
perfection and priority of any security interest created by any Home Loan or the
maintenance of any such perfection and priority, or for or with respect to the
sufficiency of the Owner Trust Estate or its ability to generate the payments to
be distributed to Certificateholders under this Agreement or the Noteholders
under the Indenture, including, without limitation, the existence, condition and
ownership of any Mortgaged Property, the existence and enforceability of any
insurance thereon, the existence and contents of any Home Loan on any computer
or other record thereof, the validity of the assignment of any Home Loan to the
Trust or of any intervening assignment, the completeness of any Home Loan, the
performance or enforcement of any Home Loan, the compliance by the Depositor or
the Servicer with any warranty or representation made under any Basic Document
or in any related document or the accuracy of any such warranty or
representation, or any action of the Indenture Trustee, the Master Servicer or
the Servicer or any subservicer taken in the name of the Owner Trustee.
SECTION 7.7. OWNER TRUSTEE MAY OWN CERTIFICATES AND NOTES.
--------------------------------------------
The Owner Trustee in its individual or any other capacity may become
the owner or pledgee of Certificates or Notes and may deal with the Depositor,
the Indenture Trustee, the Master Servicer and the Servicer in banking
transactions with the same rights as it would have if it were not Owner Trustee.
SECTION 7.8. LICENSES.
--------
The Owner Trustee shall cause the Trust to use its best efforts to
obtain and maintain the effectiveness of any licenses required in connection
with this Agreement and the Basic Documents and the transactions contemplated
hereby and thereby until such time as the Trust shall terminate in accordance
with the terms hereof.
ARTICLE VIII
COMPENSATION OF OWNER TRUSTEE
SECTION 8.1. OWNER TRUSTEE'S FEES AND EXPENSES.
---------------------------------
The Owner Trustee shall receive as compensation for its services
hereunder an annual fee as agreed upon before the date hereof between the
Indenture Trustee and the Owner Trustee. The Owner Trustee shall be entitled to
be reimbursed by City National Bank of West Virginia for the Owner Trustee's
other reasonable expenses hereunder, including the reasonable compensation,
expenses and disbursements of such agents, representatives, experts, and counsel
as the Owner Trustee may employ in connection with the exercise and performance
of its rights and its duties hereunder. Such fees and expenses are as set forth
in the fee agreement attached hereto as Exhibit D.
---------
SECTION 8.2. INDEMNIFICATION.
---------------
The Certificateholders shall be liable as obligor for, and shall
indemnify the Owner Trustee and the Trust Paying Agent and their respective
successors, assigns, agents, and servants (collectively, the "Indemnified
Parties") from and against, any and all liabilities, obligations, losses,
damages, taxes, claims, actions, and suits, and any and all reasonable costs,
expenses, and disbursements (including reasonable legal fees and expenses) of
any kind and nature whatsoever (collectively, "Expenses") which may at any time
be imposed on, incurred by, or asserted against any Indemnified Party in any way
relating to or arising out of this Agreement, the Basic Documents, the Owner
Trust Estate, the administration of the Owner Trust Estate, or the action or
inaction of the Owner Trustee or the Trust Paying Agent hereunder, except only
that the Certificateholders shall not be liable for or required to indemnify an
Indemnified Party from and against Expenses arising or resulting from any of the
matters described in the third sentence of Section 7.1. The indemnities
contained in this Section shall survive the resignation or termination of the
Owner Trustee or the Trust Paying Agent or the termination of this Agreement. In
any event of any claim, action or proceeding for which indemnity will be sought
pursuant to this Section, the Certificateholders will be entitled to participate
therein, with counsel selected by such Holders and reasonably satisfactory to
the Indemnified Parties, and after notice from Certificateholders to the
Indemnified Parties of its election to assume the defense thereof, the
Certificateholders shall not be liable to the Indemnified Party under this
Section 8.2 for any legal or other expenses subsequently incurred by such
Indemnified Party in connection with the defense of such action; provided,
however, that this sentence shall not be in effect if (1) the Certificateholders
shall not have employed counsel reasonably satisfactory to the Indemnified Party
to represent the Indemnified Party within a reasonable time after notice of
commencement of the action or (2) the Certificateholders shall have authorized
the employment of counsel for the Indemnified Party at the expense of the
Certificateholders. If the Certificateholders assume the defense of any such
proceeding, they shall be entitled to settle such proceeding without any
liability being assessed against any Indemnified Party or, if such settlement
provides for release of any such Indemnified Party without any liability being
assessed against any Indemnified Party in connection with all matters relating
to the proceeding which have been asserted against such Indemnified Party in
such proceeding by the other parties to such settlement, without the consent of
such Indemnified Party, but otherwise only with the consent of such Indemnified
Party. Certificateholders shall be liable for this indemnification obligation
pro rata, based upon their respective Percentage Interests.
SECTION 8.3. PAYMENTS TO THE OWNER TRUSTEE.
-----------------------------
Any amounts paid to the Owner Trustee or the Trust Paying Agent
pursuant to this Article VIII shall be deemed not to be a part of the Owner
Trust Estate immediately after such payment.
ARTICLE IX
TERMINATION OF TRUST AGREEMENT
SECTION 9.1. TERMINATION OF TRUST AGREEMENT.
------------------------------
(a) This Agreement (other than Article VIII) and the Trust shall
terminate and be of no further force or effect on the earlier of: (i) the final
payment or other liquidation of the Home Loans and the disposition of all REO
Properties and the remittance of all funds due hereunder with respect to such
Home Loans and REO Properties or the disposition of the Home Loans and REO
Properties at the direction of a majority of the Certificateholders, in either
case after the satisfaction and discharge of the Indenture pursuant to Section
4.01 of the Indenture; and (ii) the expiration of 21 years from the death of the
last survivor of the descendants of Joseph P. Kennedy (the late ambassador of
the United States to the Court of St. James's). The bankruptcy, liquidation,
dissolution, death, or incapacity of any Certificateholder or the Depositor
shall not (x) operate to terminate this Agreement or the Trust, (y) 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 all
or any part of the Trust or Owner Trust Estate, or (z) otherwise affect the
rights, obligations, and liabilities of the parties hereto.
(b) Except as provided in Section 9.1(a) above, none of the Depositor,
the Servicer, the Note Insurer or any Certificateholder shall be entitled to
revoke or terminate the Trust.
(c) Notice of any termination of the Trust, specifying the Payment Date
upon which the Certificateholders shall surrender their Certificates to the
Owner Trustee for payment of the final distributions and cancellation, shall be
given by the Owner Trustee to the Certificateholders, the Note Insurer, the
Rating Agencies and the Trust Paying Agent mailed within five Business Days of
receipt by the Owner Trustee of notice of such termination pursuant to Section
9.1(a) above, which notice given by the Owner Trustee shall state (i) the
Payment Date upon or with respect to which final payment of the Certificates
shall be made upon presentation and surrender of the Certificates at the office
of the Owner Trustee therein designated, (ii) the amount of any such final
payment, and (iii) that the Record Date otherwise applicable to such Payment
Date is not applicable, payments being made only upon presentation and surrender
of the Certificates at the office of the Owner Trustee therein specified. The
Owner Trustee shall give such notice to the Certificate Registrar (if other than
the Owner Trustee) and the Trust Paying Agent at the time such notice is given
to Certificateholders. The Owner Trustee shall give notice to the Trust Paying
Agent of each presentation and surrender of Certificates promptly, and the Trust
Paying Agent shall promptly cause to be distributed to the related
Certificateholders amounts distributable on such Payment Date pursuant to
Section 5.2(a).
(d) Upon the winding up of the Trust and its termination, the Owner
Trustee shall cause the Certificate of Trust to be canceled by filing a
certificate of cancellation with the Secretary of State in accordance with the
provisions of Section 3820 of the Business Trust Statute.
ARTICLE X
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
SECTION 10.1. ELIGIBILITY REQUIREMENTS FOR OWNER TRUSTEE.
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The Owner Trustee shall at all times be a corporation satisfying the
provisions of Section 3807(a) of the Business Trust Statute; authorized to
exercise corporate powers; having a combined capital and surplus of at least
$50,000,000 and subject to supervision or examination by Federal or state
authorities; and having (or having a parent that has) a rating of at least
"Baa3" by Moody's and "A-1" by Standard & Poor's and being acceptable to the
Note Insurer. If such corporation shall publish reports of condition at least
annually, pursuant to law or to the requirements of the aforesaid supervising or
examining authority, then for the purpose of this Section, the combined capital
and surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In
case at any time the Owner Trustee shall cease to be eligible in accordance with
the provisions of this Section, the Owner Trustee shall resign immediately in
the manner and with the effect specified in Section 10.2.
SECTION 10.2. RESIGNATION OR REMOVAL OF OWNER TRUSTEE.
---------------------------------------
The Owner Trustee may at any time resign and be discharged from the
trusts hereby created by giving written notice thereof to the Servicer, the
Indenture Trustee, and the Note Insurer. Upon receiving such notice of
resignation, the Servicer shall promptly appoint a successor Owner Trustee
(acceptable to the Note Insurer) by written instrument, in duplicate, one copy
of which instrument shall be delivered to the resigning Owner Trustee and one
copy to the successor Owner Trustee. If no successor Owner Trustee shall have
been so appointed and have accepted appointment within 30 days after the giving
of such notice of resignation, the resigning Owner Trustee or the Note Insurer
may petition any court of competent jurisdiction for the appointment of a
successor Owner Trustee.
If at any time the Owner Trustee shall cease to be eligible in
accordance with the provisions of Section 10.1 and shall fail to resign after
written request therefor by the Certificateholders or the Servicer, or if at any
time the Owner Trustee shall be legally unable to act, or shall be adjudged
bankrupt or insolvent, or a receiver of the Owner Trustee or of its property
shall be appointed, or any public officer shall take charge or control of the
Owner Trustee or of its property or affairs for the purpose of rehabilitation,
conservation, or liquidation, then the Note Insurer, or the Certificateholders
or the Servicer with the consent of the Note Insurer, may remove the Owner
Trustee. If the Certificateholders or the Servicer or the Note Insurer shall
remove the Owner Trustee under the authority of the immediately preceding
sentence, the Note Insurer, or the Servicer with the consent of the Note
Insurer, shall promptly appoint a successor Owner Trustee by written instrument
in duplicate, one copy of which instrument shall be delivered to the outgoing
Owner Trustee so removed and one copy to the successor Owner Trustee and payment
of all fees owed to the outgoing Owner Trustee.
Any resignation or removal of the Owner Trustee and appointment of a
successor Owner Trustee pursuant to any of the provisions of this Section shall
not become effective until acceptance of appointment by the successor Owner
Trustee pursuant to Section 10.3 receipt of written approval by the Note Insurer
and payment of all fees and expenses owed to the outgoing Owner Trustee. The
Servicer shall provide notice of such resignation or removal of the Owner
Trustee to each of the Rating Agencies, the Indenture Trustee, the Trust Paying
Agent and the Note Insurer.
SECTION 10.3. SUCCESSOR OWNER TRUSTEE.
-----------------------
Any successor Owner Trustee appointed pursuant to Section 10.2 shall
execute, acknowledge, and deliver to the Servicer, the Depositor, the Indenture
Trustee, the Note Insurer, and to its predecessor Owner Trustee an instrument
accepting such appointment under this Agreement, and thereupon the resignation
or removal of the predecessor Owner Trustee shall become effective and such
successor Owner Trustee (if acceptable to the Note Insurer), without any further
act, deed, or conveyance, shall become fully vested with all the rights, powers,
duties, and obligations of its predecessor under this Agreement, with like
effect as if originally named as Owner Trustee. The predecessor Owner Trustee
shall upon payment of its fees and expenses deliver to the successor Owner
Trustee all documents and statements and moneys held by it under this Agreement;
and the Depositor and the predecessor Owner Trustee shall execute and deliver
such instruments and do such other things as may reasonably be required for
fully and certainly vesting and confirming in the successor Owner Trustee all
such rights, powers, duties, and obligations.
No successor Owner Trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor Owner Trustee shall
be eligible pursuant to Section 10.1.
Upon acceptance of appointment by a successor Owner Trustee pursuant to
this Section, the Servicer shall mail notice of the successor of such Owner
Trustee to all Certificateholders, the Indenture Trustee, the Trust Paying
Agent, the Noteholders, the Note Insurer and the Rating Agencies. If the
Servicer fails to mail such notice within 10 days after acceptance of
appointment by the successor Owner Trustee, the successor Owner Trustee shall
cause such notice to be mailed at the expense of the Depositor.
SECTION 10.4. MERGER OR CONSOLIDATION OF OWNER TRUSTEE.
----------------------------------------
Any corporation into which the Owner Trustee may be merged or converted
or with which it may be consolidated or any corporation resulting from any
merger, conversion, or consolidation to which the Owner Trustee shall be a
party, or any corporation succeeding to all or substantially all of the
corporate trust business of the Owner Trustee, shall be the successor of the
Owner Trustee hereunder, provided such corporation shall be eligible pursuant to
Section 10.1, without the execution or filing of any instrument or any further
act on the part of any of the parties hereto, anything herein to the contrary
notwithstanding; provided further that the Owner Trustee shall mail notice of
such merger or consolidation to the Rating Agencies.
SECTION 10.5. APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.
---------------------------------------------
Notwithstanding any other provisions of this Agreement, at any time,
for the purpose of meeting any legal requirements of any jurisdiction in which
any part of the Owner Trust Estate or any Mortgaged Property may at the time be
located, and for the purpose of performing certain duties and obligations of the
Owner Trustee with respect to the Trust and the Certificates, the Owner Trustee
shall have the power and shall execute and deliver all instruments to appoint
one or more Persons approved by the Owner Trustee and acceptable to the Note
Insurer to act as co-trustee, jointly with the Owner Trustee, or separate
trustee or separate trustees, of all or any part of the Owner Trust Estate, and
to vest in such Person, in such capacity, such title to the Trust, or any part
thereof, and, subject to the other provisions of this Section, such powers,
duties, obligations, rights, and trusts as the Note Insurer and the Owner
Trustee may consider necessary or desirable. No co-trustee or separate trustee
under this Agreement shall be required to meet the terms of eligibility as a
successor trustee pursuant to Section 10.1 and no notice of the appointment of
any co-trustee or separate trustee shall be required pursuant to Section 10.3.
Each separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provision and conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon the Owner Trustee shall be conferred upon and exercised
or performed by the Owner Trustee and such separate trustee or
co-trustee jointly (it being understood that such separate trustee or
co-trustee is not authorized to act separately without the Owner
Trustee joining in such act), except to the extent that under any law
of any jurisdiction in which any particular act or acts are to be
performed, the Owner Trustee shall be incompetent or unqualified to
perform such act or acts, in which event such rights, powers, duties,
and obligations (including the holding of title to the Trust or any
portion thereof in any such jurisdiction) shall be exercised and
performed singly by such separate trustee or co-trustee, but solely at
the direction of the Owner Trustee;
(ii) no trustee under this Agreement shall be personally liable
by reason of any act or omission of any other trustee under this
Agreement; and
(iii) the Owner Trustee may at any time accept the resignation of
or remove any separate trustee or co-trustee.
Any notice, request, or other writing given to the Owner Trustee shall
be deemed to have been given to the separate trustees and co-trustees, as if
given to each of them. Every instrument appointing any separate trustee or
co-trustee, other than this Agreement, shall refer to this Agreement and to the
conditions of this Article. Each separate trustee and co-trustee, upon its
acceptance of appointment, shall be vested with the estates specified in its
instrument of appointment, either jointly with the Owner Trustee or separately,
as may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Owner Trustee.
Each such instrument shall be filed with the Owner Trustee.
Any separate trustee or co-trustee may at any time appoint the Owner
Trustee as its Agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate 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
Owner Trustee, to the extent permitted by law, without the appointment of a new
or successor trustee.
ARTICLE XI
CONTRIBUTION OF HOME LOANS
SECTION 11.1. AGREEMENT TO CONTRIBUTE AND CONVEY.
----------------------------------
The Issuer acknowledges that the net proceeds from the sale of the
Notes ($168,378,147.70) will be paid to the Depositor or its designee, and the
Issuer will issue the Certificates to the order of the Depositor or its
designee, in consideration of the transfer of the Home Loans and the related
rights, title, and interests thereunder and the rights of the Depositor pursuant
to the Home Loan Sale Agreement (collectively, the "Consideration"). As and for
the Consideration and subject to the terms and conditions set forth herein, the
Depositor agrees to contribute and convey, and the Trust agrees to accept and
acquire, all of the Depositor's right, title, and interest in and to the Home
Loans identified on the schedule (the "Home Loan Schedule") annexed hereto as
Exhibit E. The Home Loan Schedule will set forth as to each Home Loan the items
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specified in the definition of "Home Loan Schedule" in the Indenture.
The aggregate of the principal balances of the Home Loans being
contributed and conveyed pursuant to this Agreement as of the close of business
on the Cut-off Date, after application of all payments of principal received in
respect of such Home Loans before the Cut-off Date (the "Initial Pool Principal
Balance"), is set forth on the Cross Receipt executed concurrently herewith in
the form of Exhibit F attached hereto (the "Cross Receipt"). Simultaneously with
---------
and in consideration of the Depositor's contribution, transfer, sale and
conveyance of the Home Loans to the Trust, the Trust shall cause the Notes to be
issued and delivered to the Depositor or its designee and the Certificates to be
issued to the order of the Depositor or its designee. The transfer and
conveyance of the Home Loans shall take place on the Closing Date.
SECTION 11.2. CONVEYANCE OF HOME LOANS.
------------------------
(a) Effective as of the Closing Date, subject only to receipt of the
Consideration and the delivery of the Home Loan File (as defined in the Home
Loan Sale Agreement) for each Home Loan pursuant to subsection (c) below, the
Depositor does hereby sell, contribute, assign, transfer, and otherwise convey
to the Trust, without recourse, representation, or warranty (other than as
expressly set forth in Section 2.10 (a) hereof), and the Trust does hereby
accept, assume, and acquire, all of the Depositor's right, title, and interest
in and to the Home Loans identified on the Home Loan Schedule, and the Trust
hereby assumes and agrees to perform and be bound by each and all of the
covenants, agreements, duties, and obligations of the Depositor arising under or
relating to such Home Loans.
(b) The Trust and its assignees shall be entitled to receive all
payments of principal and interest received on or with respect to the Home Loans
on and after the Cut-off Date, and all other recoveries of principal and
interest collected on or after the Cut-off Date and each of the rights of the
Depositor pursuant to representations, warranties, and indemnities in favor of
the Depositor contained in the Home Loan Sale Agreement.
(c) In connection with its contribution and conveyance of the Home
Loans pursuant to subsection (a) above, the terms of the Home Loan Sale
Agreement govern the delivery of the Home Loan Files to the Custodian, on behalf
of the Indenture Trustee, the Noteholders, and the Note Insurer, and the
Depositor assigns all of its rights under the Home Loan Sale Agreement to the
Trust.
(d) In connection with its conveyance of the Home Loans pursuant to
subsection (a) above, the Depositor shall deliver to the Trust or its designee
in respect of such Home Loans, on or before the Closing Date, all amounts, if
any, received on each Home Loan on and after the Cut-off Date held by or on
behalf of the Depositor.
(e) The Depositor shall, at any time upon the request of the Trust,
without limiting the obligations of the Depositor under this Agreement, execute,
acknowledge, and deliver all such additional documents and instruments and all
such further assurances and will do or cause to be done all such further acts
and things as may be proper or reasonably necessary to carry out the intent of
this Agreement.
SECTION 11.3. ASSIGNMENT OF RELATED RIGHTS AND REMEDIES.
-----------------------------------------
(a) Effective as of the Closing Date, subject only to delivery of the
Home Loan File for each Home Loan pursuant to Section 11.2(c) hereof, the
Depositor does hereby assign, transfer, and otherwise convey to the Trust,
without recourse, representation, or warranty (other than as expressly set forth
in Section 2.10(a) hereof), and the Trust does hereby accept, assume, and
acquire, to be held jointly and severally with the Depositor, all of the
Depositor's rights and remedies under the Home Loan Sale Agreement and the Trust
hereby assumes and agrees to perform and be bound by each and all of the
covenants and agreements of the Depositor arising under the Home Loan Sale
Agreement relating to such rights and remedies and the exercise or enforcement
thereof.
(b) Simultaneously with the exercise of any rights and remedies or any
notices given to City National Bank of West Virginia by the Trust under the Home
Loan Sale Agreement, the Trust shall give the Depositor, the Transferor and the
Note Insurer notice thereof, including, without limitation, copies of all
notices given to City National Bank of West Virginia.
(c) This Section 11.3 provides the sole remedies available to the
Trust, its successors and assignees, respecting any breach (i) of
representations and warranties with respect to the Home Loans to which reference
is made in Section 2.10(b) or (ii) on the part of the Depositor under Section
2.10 hereof.
SECTION 11.4. CLOSING.
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The closing of the conveyance of the Home Loans (the "Closing") shall
be held at the offices of Hunton & Williams, Riverfront Plaza, East Tower, 951
East Byrd Street, Richmond, Virginia 23219 at 10:00 a.m., Eastern time, on the
Closing Date.
The Closing shall be subject to each of the following conditions:
(a) All terms and conditions of this Agreement required to be complied
with on or before the Closing Date shall have been complied with and the
Depositor shall have the ability to comply with all terms and conditions and
perform all duties and obligations required to be complied with or performed
after the Closing Date.
(b) The Trust shall have paid all costs and expenses payable by it to
the Depositor or otherwise pursuant to this Agreement.
Both parties shall use their best efforts to perform their respective
obligations hereunder in a manner that will enable the Trust to acquire the Home
Loans on the Closing Date. Notwithstanding the foregoing, satisfaction by the
Depositor or Trust of its respective obligations under the foregoing provisions
of this Section 11.4 shall not be conditions precedent to the obligation of the
Depositor or Trust, respectively, to close the transactions contemplated by this
Agreement.
SECTION 11.5. SERVICING.
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As of the Cut-off Date, the Home Loans will be serviced by City
National Bank of West Virginia (in such capacity, the "Servicer") pursuant to
the terms of the Servicing Agreement.
SECTION 11.6. GRANT OF A SECURITY INTEREST.
----------------------------
It is the express intent of the parties hereto that the conveyance of
the Home Loans by the Depositor to the Trust as provided in Section 11.2(a)
hereof be, and be construed as, a complete and absolute transfer by the
Depositor to the Trust of all of the Depositor's right, title, and interest in
and to the Home Loans and not as a pledge of the Home Loans by the Depositor to
the Trust to secure a debt or other obligation of the Depositor. However, if,
notwithstanding the aforementioned intent of the parties, the Home Loans are
held to be property of the Depositor, then (a) it is the express intent of the
parties that such conveyance be deemed a pledge of the Home Loans by the
Depositor to the Trust to secure a debt or other obligation of the Depositor,
and (b) (i) this Agreement shall also be deemed to be a security agreement
within the meaning of Article 9 of the New York Uniform Commercial Code; (ii)
the conveyance provided for in Section 11.2(a) hereof shall be deemed to be a
grant by the Depositor to the Trust of a security interest in all of the
Depositor's right, title and interest in and to the Home Loans, and all amounts
payable to the holder of the Home Loans in accordance with the terms thereof,
and all proceeds of the conversion, voluntary, or involuntary, of the foregoing
into cash, instruments, securities, or other property, including without
limitation all such amounts, other than investment earnings from time to time
held or invested pursuant to and in accordance with the provisions of the
Servicing Agreement or the Indenture, as applicable, whether in the form of
cash, instruments, securities, or other property; (iii) the subsequent pledge of
the Home Loans by the Trust to the Indenture Trustee as contemplated by the
preamble hereto shall be deemed to be an assignment of any security interest
created hereunder; (iv) in the event that the Trust is disregarded as a separate
entity from the Depositor in the event of insolvency of the Depositor, the
Depositor also shall be deemed to have granted to the Indenture Trustee a
security interest in all of the Depositor's right, title and interest in and to
the Owner Trust Estate; (v) the possession by the Depositor or the Trust or any
of their respective agents, including, without limitation, the Indenture Trustee
or its agent, of the notes or other instruments evidencing the indebtedness of
the obligors under the related Home Loans (the "Mortgage Notes") and such other
items of property relating to the Home Loans as constitute instruments, money,
negotiable documents, or chattel paper shall be deemed to be "possession by the
secured party" for purposes of perfecting the security interest pursuant to
Section 9-305 of the New York Uniform Commercial Code; and (vi) notifications to
persons (other than the Indenture Trustee) holding such property, and
acknowledgments, receipts, or confirmations from persons holding such property,
shall be deemed notifications to, or acknowledgments, receipts, or confirmations
from, financial intermediaries, bailees, or agents (as applicable) of the
secured party for the purpose of perfecting such security interest under
applicable law. The Depositor and the Trust 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 Home Loans, or the
Owner Trust Estate, as the case may be, 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 this Agreement and the
Indenture.
ARTICLE XII
MISCELLANEOUS
SECTION 12.1. SUPPLEMENTS AND AMENDMENTS.
--------------------------
This Agreement may be amended by the Depositor, the Trust Paying Agent,
and the Owner Trustee, with the prior consent of the Note Insurer, and with
prior written notice to the Rating Agencies, but without the consent of any of
the Noteholders or the Certificateholders or the Indenture Trustee, to cure any
ambiguity, to correct or supplement any provisions in this Agreement, or for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of this Agreement or of modifying in any manner the rights of
the Noteholders or the Certificateholders; provided however, such action shall
not adversely affect in any material respect the interests of any Noteholder or
Certificateholder or the rights of the Note Insurer. An amendment described
above shall be deemed not to adversely affect in any material respect the
interests of any Noteholder or Certificateholder if the party requesting the
amendment satisfies the Rating Agency Condition with respect to such amendment.
This Agreement may also be amended from time to time by the Depositor,
the Trust Paying Agent, and the Owner Trustee, with the prior written consent of
the Rating Agencies and with the prior written consent of the Indenture Trustee,
the Note Insurer, the Holders (as defined in the Indenture) of Notes evidencing
more than 50% of the Outstanding Amount of the Notes, the Holders of
Certificates evidencing more than 50% of the Percentage Interests of the Trust
Interest and if the party requesting such amendment satisfies the Rating Agency
Condition with respect to such amendment, for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement or of modifying in any manner the rights of the Noteholders or
the Certificateholders; provided however, no such amendment shall (a) increase
or reduce in any manner the amount of, or accelerate or delay the timing of,
collections of payments on the Home Loans or distributions that shall be
required to be made for the benefit of the Noteholders, the Certificateholders
or the Note Insurer, or (b) reduce the aforesaid percentage of the Outstanding
Amount of the Notes or the Percentage Interests required to consent to any such
amendment, in either case of clause (a) or (b) without the consent of the
holders of all the outstanding Notes and the Note Insurer, and in the case of
clause (b) without the consent of the Holders of all the outstanding
Certificates.
Promptly after the execution of any such amendment or consent, the
Owner Trustee shall furnish written notification of the substance of such
amendment or consent to each Certificateholder, the Indenture Trustee, the Note
Insurer and each of the Rating Agencies.
It shall not be necessary for the consent of Certificateholders, the
Noteholders, or the Indenture Trustee pursuant to this Section to approve the
particular form of any proposed amendment or consent, but it shall be sufficient
if such consent shall approve the substance thereof. The manner of obtaining
such consents (and any other consents of Certificateholders provided for in this
Agreement or in any other Basic Document) and of evidencing the authorization of
the execution thereof by Certificateholders shall be subject to such reasonable
requirements as the Owner Trustee may prescribe.
Promptly after the execution of any amendment to the Certificate of
Trust, the Owner Trustee shall cause the filing of such amendment with the
Secretary of State.
Prior to the execution of any amendment to this Agreement or the
Certificate of Trust, the Owner Trustee shall be entitled to receive and rely
upon an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Agreement. The Owner Trustee may, but shall not
be obligated to, enter into any such amendment which affects the Owner Trustee's
own rights, duties, or immunities under this Agreement or otherwise.
SECTION 12.2. NO LEGAL TITLE TO OWNER TRUST ESTATE IN HOLDERS.
-----------------------------------------------
The Certificateholders shall not have legal title to any part of the
Owner Trust Estate. The Certificateholders shall be entitled to receive
distributions with respect to their undivided ownership interest therein only in
accordance with Articles V and IX. No transfer, by operation of law or
otherwise, of any right, title, or interest of the Certificateholders to and in
their ownership interest in the Owner Trust Estate shall operate to terminate
this Agreement or the trusts hereunder or entitle any transferee to an
Accounting or to the transfer to it of legal title to any part of the Owner
Trust Estate.
SECTION 12.3. LIMITATIONS ON RIGHTS OF OTHERS.
-------------------------------
The provisions of this Agreement are solely for the benefit of the
Owner Trustee, the Depositor, the Certificateholders, the Trust Paying Agent,
and to the extent expressly provided herein, the Indenture Trustee, the Note
Insurer, and the Noteholders, and nothing in this Agreement, whether express or
implied, shall be construed to give to any other Person any legal or equitable
right, remedy or claim in the Owner Trust Estate or under or in respect of this
Agreement or any covenants, conditions, or provisions contained herein. Nothing
in this section, however, shall alter or modify in any way, the fiduciary
obligations of the Owner Trustee to the Certificateholders pursuant to this
Agreement, and nothing in this section shall create any fiduciary obligation of
the Owner Trustee to any Person, other than to the Certificateholders.
SECTION 12.4. NOTICES.
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(a) Unless otherwise expressly specified or permitted by the terms
hereof, all communications provided for or permitted hereunder shall be in
writing and shall be deemed to have been given if (1) personally delivered, (2)
upon receipt by the intended recipient or three Business Days after mailing if
mailed by certified mail, postage prepaid (except that notice to the Owner
Trustee shall be deemed given only upon actual receipt by the Owner Trustee),
(3) sent by express courier delivery service and received by the intended
recipient, or (4) except with respect to notices sent to the Owner Trustee,
transmitted by telex or facsimile transmission (or any other type of electronic
transmission agreed upon by the parties and confirmed by a writing delivered by
any of the means described in (1), (2) or (3), at the following addresses: (i)
if to the Owner Trustee, its Corporate Trust Office; (ii) if to the Depositor,
Financial Asset Securities Corp., 600 Steamboat Road, Greenwich, Connecticut
06830, Attention: City Capital Home Loan Trust 1998-4, Telecopy No.: (203)
629-4640; (iii) if to the Note Insurer, MBIA Insurance Corporation, 113 King
Street, Armonk, New York 10504, Attention: Insured Portfolio Management-SF (City
Capital Home Loan Trust 1998-4), Telecopy No.: (914) 765-3810; (iv) if to the
Trust Paying Agent, Norwest Bank Minnesota, National Association, Sixth Street
and Marquette Avenue, Minneapolis, Minnesota 55479-0069, Attention: City Capital
Home Loan Trust 1998-4, Telecopy No.: (612) 667-9825, with a copy to Norwest at
11000 Broken Land Parkway, Columbia, Maryland 21044, Attention: City Capital
Home Loan Trust 1998-4, Telecopy No.: (410) 884-2363; (v) if to City National
Bank of West Virginia, to 25 Gatewater Road, Charleston, West Virginia 25313,
Attention: Michael D. Dean, Telecopy No.: (304) 769-1184 or, as to each such
party, at such other address as shall be designated by such party in a written
notice to each other party.
(b) Any notice required or permitted to be given to a Certificateholder
shall be given by first-class mail, postage prepaid, at the address of such
Certificateholder as shown in the Certificate Register. Any notice so mailed
within the time prescribed in this Agreement shall be conclusively presumed to
have been duly given, whether or not the Certificateholder receives such notice.
SECTION 12.5. SEVERABILITY.
------------
Any provision of this Agreement that is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
SECTION 12.6. SEPARATE COUNTERPARTS.
---------------------
This Agreement may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original,
but all such counterparts shall together constitute but one and the same
instrument.
SECTION 12.7. SUCCESSORS AND ASSIGNS.
----------------------
All covenants and agreements contained herein shall be binding upon,
and inure to the benefit of, the Depositor, the Note Insurer, the Owner Trustee,
and its successors and each owner and its successors and permitted assigns, all
as herein provided. Any request, notice, direction, consent, waiver, or other
instrument or action by a Certificateholder shall bind the successors and
assigns of such Certificateholder.
SECTION 12.8. NO PETITION.
-----------
The Owner Trustee, by entering into this Agreement, each
Certificateholder, by accepting a Certificate, and the Indenture Trustee and
each Noteholder by accepting the benefits of this Agreement, hereby covenant and
agree that they will not at any time institute against the Depositor or the
Trust, or join in any institution against the Depositor or the Trust of, any
bankruptcy, reorganization, arrangement, insolvency, or liquidation proceedings,
or other proceedings under any United States Federal or state bankruptcy or law
in connection with any obligations relating to the Certificates, the Notes, this
Agreement, or any of the Basic Documents.
SECTION 12.9. NO RECOURSE.
-----------
Each Certificateholder by accepting a Certificate acknowledges that
such Certificateholder's Certificate represents a beneficial interest in the
Trust only and does not represent an interest in or an obligation of the
Servicer, the Depositor, the Owner Trustee, or any Affiliate thereof and no
recourse may be had against such parties or their assets, except as may be
expressly set forth or contemplated in this Agreement, the Certificates, or the
Basic Documents.
SECTION 12.10. HEADINGS.
--------
The headings of the various Articles and Sections herein are for
convenience of reference only and shall not define or limit any of the terms or
provisions hereof.
SECTION 12.11. GOVERNING LAW.
-------------
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
SECTION 12.12. GRANT OF CERTIFICATEHOLDER RIGHTS TO NOTE INSURER.
-------------------------------------------------
(a) In consideration for the issuance of the Certificates and for the
guarantee of the Notes by the Note Insurer pursuant to the Insurance Policy, the
holders of the Certificates hereby grant to the Note Insurer the right to act as
the holder of 100% of the outstanding Certificates for the purpose of exercising
the rights of the Certificateholders under this Agreement without the consent of
the Certificateholders, including the voting rights of such holders hereunder,
but excluding those rights requiring the consent of all such holders under
Section 12.1 and any rights of such holders to distributions under Section
5.2(a); provided that the preceding grant of rights to the Note Insurer by the
holders of the Trust Interest shall be subject to Section 12.14. Nothing in this
section, however, shall alter or modify in any way, the fiduciary obligations of
the Owner Trustee to the Certificateholders pursuant to this Agreement, and
nothing in this section shall create any fiduciary obligation of the Owner
Trustee to any Person, other than to the Certificateholders.
(b) The rights of the Note Insurer to direct certain actions and
consent to certain actions of the Certificateholders hereunder will terminate at
such time as the Balance of the Notes has been reduced to zero and the Note
Insurer has been reimbursed for any amounts owed under the Insurance Policy and
the Insurance Agreement and the Note Insurer has no further obligation under the
Insurance Policy.
SECTION 12.13. THIRD PARTY BENEFICIARY.
-----------------------
The Note Insurer is an intended third-party beneficiary of this
Agreement, and this Agreement shall be binding upon and inure to the benefit of
the Note Insurer; provided that, notwithstanding the foregoing, for so long as a
Note Insurer Default is continuing with respect to its obligations under the
Insurance Policy, the Noteholders shall succeed to the Note Insurer's rights
hereunder. Without limiting the generality of the foregoing, all covenants and
agreements in this Agreement that expressly confer rights upon the Note Insurer
shall be for the benefit of and run directly to the Note Insurer, and the Note
Insurer shall be entitled to rely on and enforce such covenants to the same
extent as if it were a party to this Agreement. Nothing in this section,
however, shall alter or modify in any way, the fiduciary obligations of the
Owner Trustee to the Certificateholders pursuant to this Agreement, and nothing
in this section shall create any fiduciary obligation of the Owner Trustee to
any Person, other than to the Certificateholders.
SECTION 12.14. SUSPENSION AND TERMINATION OF NOTE INSURER'S RIGHTS.
---------------------------------------------------
During the continuation of a Note Insurer Default, rights granted or
reserved to the Note Insurer hereunder shall vest instead in the holders of the
Notes; provided that the Note Insurer shall be entitled to any distributions in
reimbursement of any amounts due and owing the Note Insurer under the Insurance
Agreement, and the Note Insurer shall retain those rights under Section 12.1 to
consent to any amendment of this Agreement.
At such time as either (i) the Note Balance of the Notes has been
reduced to zero or (ii) the Insurance Policy has been terminated and in either
case of (i) or (ii) the Note Insurer has been reimbursed for all amounts owed
under the Insurance Policy and the Insurance Agreement (and the Note Insurer no
longer has any obligation under the Insurance Policy, except for breach thereof
by the Note Insurer), then the rights and benefits granted or reserved to the
Note Insurer hereunder (including the rights to direct certain actions and
receive certain notices) shall terminate and the Certificateholders shall be
entitled to the exercise of such rights and to receive such benefits of the Note
Insurer following such termination to the extent that such rights and benefits
are applicable to the Certificateholders.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Deposit Trust
Agreement to be duly executed by their respective officers hereunto duly
authorized, as of the day and year first above written.
FINANCIAL ASSET SECURITIES CORP.,
as Depositor
By: /s/ John Paul Graham
------------------------------
Name: John Paul Graham
------------------------------
Title: Vice President
------------------------------
WILMINGTON TRUST COMPANY,
as Owner Trustee
By: /s/ Emmett R. Harmon
------------------------------
Authorized Signatory
CITY NATIONAL BANK OF WEST VIRGINIA,
as Servicer
By: /s/ Robert A. Henson
------------------------------
Name: Robert A. Henson
------------------------------
Title: Chief Financial Officer
------------------------------
<PAGE>
The Trust Paying Agent hereby acknowledges its appointment as Trust
Paying Agent under this Agreement and agrees to act in such capacity as
described herein.
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Trust Paying Agent
By: /s/ Randall S. Reider
------------------------------
Name: Randall S. Reider
------------------------------
Title: Assistant Vice President
------------------------------
Exhibit 10.2
HOME LOAN SALE AGREEMENT
------------------------
THIS HOME LOAN SALE AGREEMENT (this "Agreement"), made as of November
1, 1998, by and among CITY NATIONAL BANK OF WEST VIRGINIA, a national banking
association ("City National" or the "Seller"), CITY CAPITAL MARKETS CORPORATION,
a Delaware corporation ("City Capital" or the "Transferor"), and FINANCIAL ASSET
SECURITIES CORP., a Delaware corporation (the "Depositor") and acknowledged by
the Indenture Trustee and the Custodian, each as identified herein, recites and
provides as follows:
RECITALS
1. Schedule I attached hereto (the "Home Loan Schedule") and made a part
----------
hereof lists the home loans to be sold pursuant to this Agreement (the "Home
Loans"). The Home Loans are currently owned by the Seller and the Seller desires
to sell such Home Loans to City Capital. City Capital is a wholly-owned
subsidiary of City National.
2. City Capital desires to purchase the Home Loans and intends immediately
after its purchase to transfer the Home Loans to the Depositor.
3. The Depositor desires to purchase the Home Loans from City Capital and
intends immediately after such purchase to transfer the Home Loans to City
Capital Home Loan Trust 1998-4 (the "Issuer"), which will be formed pursuant to
the terms of a Deposit Trust Agreement (the "Trust Agreement"), dated as of
November 1, 1998, by and among the Depositor, Wilmington Trust Company, as Owner
Trustee (the "Owner Trustee"), City National, as Servicer (the "Servicer"), and
Norwest Bank Minnesota, National Association, as Trust Paying Agent.
4. The Issuer will in turn pledge the Home Loans to Norwest Bank Minnesota,
National Association, as Indenture Trustee (the "Indenture Trustee"), under an
Indenture to be dated as of November 1, 1998 (the "Indenture"), by and among the
Issuer and Norwest Bank Minnesota, National Association, as Indenture Trustee,
Note Administrator and Custodian, pursuant to which the Issuer's Asset-Backed
Notes, Series 1998-4 (the "Notes"), will be issued.
5. The Notes shall be sold pursuant to an Underwriting Agreement dated
November 23, 1998 (the "Underwriting Agreement"), between the Depositor and
Greenwich Capital Markets, Inc. (the "Underwriter"), and will be offered as
described in the Prospectus Supplement (the "Prospectus Supplement") and the
Prospectus ("the Prospectus") relating to the offering of the Notes.
6. The certificates of beneficial ownership of the Issuer (the "Trust
Certificates") will be issued by the Issuer to the Depositor, as part of the
consideration for the transfer of the Home Loans to the Issuer. Immediately
thereafter, the Depositor will transfer the Trust Certificates to City Capital,
as part of the consideration for its transfer of the Home Loans to the
Depositor.
7. Capitalized terms used and not defined herein shall have the meanings
assigned to them in Exhibit B attached hereto or, if not defined therein, in the
---------
Indenture.
AGREEMENT
NOW THEREFORE, in consideration of the above premises, the mutual
promises herein made and other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
SECTION 1. SALE AND PURCHASE.
(a) Subject to the terms and conditions of this Agreement, the Seller
agrees to sell to City Capital, and City Capital agrees to purchase from the
Seller, and contemporaneously therewith, City Capital agrees to sell to the
Depositor, and the Depositor agrees to purchase from City Capital, on the date
of the issuance of the Notes (the "Closing Date"), which is expected to be on or
about November 30, 1998, Home Loans having an aggregate principal balance on
November 1, 1998 (the "Cut-off Date") of approximately $182,598,310 (the
"Cut-off Date Principal Balance").
(b) The Seller has prepared, or provided information to City Capital
enabling it to prepare, the schedule attached hereto as Schedule I identifying
----------
all of the Home Loans to be purchased on the Closing Date and describing such
Home Loans. The Seller shall, with the consent of City Capital and the
Depositor, amend or modify, or provide information to City Capital enabling it
to amend or modify, Schedule I on or prior to the Closing Date if necessary to
----------
reflect the inclusion of additional Home Loans and the withdrawal of certain of
the Home Loans currently listed on the attached Schedule I. Schedule I, as so
---------- ----------
amended or modified (the "Home Loan Schedule"), shall conform to the
requirements of City Capital and the Depositor as set forth in this Agreement
and shall be used as the definitive Home Loan Schedule attached as an exhibit to
the Indenture identifying all of the Home Loans actually transferred by the
Seller to City Capital and accepted by City Capital, and transferred by City
Capital and accepted by the Depositor, on the Closing Date.
(c) The sales of the Home Loans hereunder shall be effected pursuant to a
Bill of Sale substantially in the form attached hereto as Exhibit A (the "Bill
---------
of Sale").
SECTION 2. POOL PURCHASE PRICE.
(a) As full consideration for the Seller's sale of the Home Loans to City
Capital, City Capital will (1) pay to the Seller on the Closing Date, cash in
immediately available funds equal to the aggregate proceeds of the sale of the
Notes ($168,378,147.70, less associated transaction expenses, as described in
Section 10) and (2) accept the Trust Certificates, as the Seller's designee
(collectively, the "Pool Purchase Price"). As full consideration for City
Capital's sale of the Home Loans to the Depositor, the Depositor will (1) pay or
cause the Underwriter to pay to City Capital cash in the amount of
$168,378,147.70 and (2) transfer and deliver the Trust Certificates to City
Capital.
(b) The Depositor, or any assignee or transferee of the Depositor (which
will include the Issuer and the Indenture Trustee) shall be entitled to all
Monthly Payments received on and after the Cut-off Date and all Principal
Prepayments and other unscheduled collections of principal collected in respect
of the Home Loans on and after the Cut-off Date.
(c) Pursuant to the Trust Agreement, the Depositor will transfer and assign
all of its right, title, and interest in and to the Home Loans to the Issuer,
which will in turn pledge all of its right, title, and interest in and to the
Home Loans to the Indenture Trustee pursuant to the Indenture for the benefit of
the holders of the Notes and the Note Insurer.
SECTION 3. TRANSFER OF THE HOME LOANS.
(a) Transfer of Ownership. Upon the sales of the Home Loans provided for
herein (the "Sales"), the ownership of each Home Loan and the related Home Loan
Documents shall be vested in the Depositor, and the ownership of all other
records and documents with respect to any Home Loan prepared by or which come
into the possession of the Seller shall immediately vest in the Depositor upon
such preparation or possession. The Seller shall promptly deliver to Norwest
Bank Minnesota, National Association, as custodian (the "Custodian") on behalf
of the Indenture Trustee any documents that come into its possession with
respect to the Home Loans following the Sales of the Home Loans. Prior to such
delivery, the Seller shall hold any such documents itself for the benefit of the
Depositor, its successors and assigns.
All documents with respect to any Home Loan in the possession of City
National following the execution by City National of the Servicing Agreement
shall be held by City National, in its capacity as Servicer, as bailee and agent
for the Depositor, its successors and assigns (including particularly the Issuer
and the Indenture Trustee), and shall only be released in accordance with the
terms of the Servicing Agreement.
(b) Delivery of Home Loan Files. Not later than five Business Days prior to
the Closing Date, the Seller shall deliver to the Custodian each of the Home
Loan Documents (other than the assignments of Mortgage) required to be included
in the Home Loan File for substantially all of the Home Loans, and any remaining
Home Loan Files shall be delivered by or on behalf of the Seller to the
Custodian no later than two Business Days prior to the Closing Date. The
Mortgage Note for each Home Loan shall be endorsed without recourse to the
Indenture Trustee and the Mortgage for each Home Loan shall be assigned to the
Indenture Trustee. Each endorsement of a Mortgage Note to the Indenture Trustee
shall be in the following form:
WITHOUT RECOURSE,
PAY TO THE ORDER OF
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
AS TRUSTEE
The Seller shall deliver the assignments of Mortgage in recordable form to
the Custodian no later than nine (9) Business Days following the Closing Date.
The Custodian shall return the assignments of Mortgage to the Seller as soon as
possible thereafter for recordation in accordance with the provisions of Section
3(d). Each assignment of a Mortgage relating to a Home Loan shall be made to
"NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, AS TRUSTEE under an Indenture
w/City Capital Home Loan Trust 1998-4 dated as of November 1, 1998."
Prior to the transfer and sale of the Home Loans pursuant to this
Agreement, all Home Loan Documents delivered to the Custodian shall be held by
the Custodian for the benefit of the Seller, and the possession by the Custodian
of such Home Loan Documents will be at the will of the Seller and will be in a
custodial capacity only. Following the (i) Sales of the Home Loans in accordance
with the terms and upon satisfaction of the conditions of this Agreement and
(ii) transfer of the Home Loans to the Issuer, the Custodian will hold all Home
Loan Documents delivered to it hereunder for the benefit of the Issuer, as its
agent and bailee, until the Home Loans are pledged by the Issuer to the
Indenture Trustee.
(c) Examination of Home Loan Documents; Acceptance of Home Loans. Prior to
the Closing Date, the Seller shall either (1) deliver to City Capital and the
Depositor, or their respective designees in escrow, for examination, the Home
Loan Documents pertaining to each Home Loan, or (2) make such Home Loan
Documents available to City Capital and the Depositor, or their respective
designees for examination at the Seller's offices or at such other place as the
Seller shall specify. City Capital, the Depositor, the Issuer, the Indenture
Trustee, the Custodian or a designee of any such entity may review the Home Loan
Documents.
Prior to the Closing Date, the Custodian shall review certain of the
documents delivered pursuant to Section 3(b) hereof as provided in Section
6.15(a) of the Indenture. No later than 45 days following the Closing Date, the
Custodian shall conduct such further review of the Home Loan Documents as is
required by Section 6.15(b) of the Indenture (the "Interim Certification"). A
final review shall be conducted by the Custodian prior to the first anniversary
of the Closing Date as provided in Section 6.15(c) of the Indenture. If at any
time City Capital, the Depositor, the Seller, the Note Insurer, or the Indenture
Trustee, or the Custodian on its behalf, discovers or receives notice that any
Home Loan Document is missing or defective in any material respect with respect
to any Home Loan, or that there exists any material discrepancy between the Home
Loan Documents and the Home Loan Schedule, it shall promptly notify the Seller
in writing thereof. Upon its receipt of notice of such incompleteness, defect or
discrepancy, the Seller shall cure or repurchase the affected Home Loan to the
extent provided in Section 7(b) hereof. At the time of any such repurchase, the
Custodian on its behalf, shall release documents in its possession relating to
such Home Loan to the Seller. The fact that City Capital, the Depositor, the
Indenture Trustee, or a designee of either entity (including the Custodian on
behalf of the Indenture Trustee) has conducted or has failed to conduct any
partial or complete examination of the Home Loan Documents shall not affect the
rights of the Depositor, City Capital, the Indenture Trustee, or the Note
Insurer (or any assignee or successor of any of them) to demand repurchase or
other relief as provided herein.
(d) Recordation of Assignments of Mortgage. Subject to the Sales of the
Home Loans in accordance with the terms of this Agreement, the Depositor hereby
authorizes and instructs the Seller, and the Seller hereby agrees, to record (or
to cause one of its affiliates to record) all assignments of Mortgage with
respect to each Home Loan required to be contained in the Home Loan File
pursuant to the Indenture in the public recording office for the jurisdiction in
which the related Mortgaged Property is located. All recording fees relating to
the recordation of the assignments of Mortgage as described above shall be paid
by the Seller or an affiliate of the Seller. Such assignments of Mortgage with
respect to each Home Loan must be delivered to the recording office of the
appropriate jurisdiction within 90 days after the Closing Date, and the failure
of the related assignment to contain evidence of recording thereon within one
year after the Closing Date will constitute a defect for purposes of Section 7
below if such failure would have a material adverse effect on the Noteholders or
the Note Insurer; provided, however, that if such failure to record any
assignment of Mortgage relates solely to the inability of the Seller to deliver
an original Mortgage or intervening assignment of Mortgage because the original
of such document has not been returned by the applicable recording office and
the Seller has provided to the Note Insurer evidence of recordation reasonably
satisfactory to the Note Insurer, the Seller shall not be obligated to
repurchase the related Home Loan.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE SELLER.
(a) General Representations. The Seller hereby represents and warrants to
City Capital and the Depositor as of the date of this Agreement, or as of such
other date as is specifically provided, as follows:
(1) The Seller is a national bank, duly organized, validly existing,
and in good standing under the laws of the United States of America. The
Seller has the full power and authority to own its properties and conduct
its business as its business is presently conducted.
(2) The Seller has the full power, authority, and legal right to
transfer and convey the Home Loans to City Capital, and has the full power,
authority (corporate and other) and legal right to execute and deliver,
engage in the transactions contemplated by, and perform and observe the
terms and conditions of, this Agreement.
(3) This Agreement has been duly and validly authorized, executed, and
delivered by the Seller and (assuming the due authorization, execution, and
delivery hereof by City Capital and the Depositor) constitutes the valid,
legal, and binding agreement of the Seller, enforceable against the Seller
in accordance with its terms, subject to bankruptcy, insolvency,
reorganization, receivership, moratorium, or other similar laws affecting
creditors' rights generally and to general principles of equity, regardless
of whether such enforcement is sought in a proceeding in equity or at law.
(4) No consent, approval, authorization, or order of or registration
or filing with, or notice to, any governmental authority or court is
required for the execution, delivery, and performance of or compliance by
the Seller with this Agreement or the consummation by the Seller of any
other transaction contemplated hereby.
(5) Neither the execution and delivery of this Agreement by the
Seller, nor the consummation by the Seller of the transactions herein
contemplated, nor compliance with the provisions hereof by the Seller, will
(A) conflict with or result in a breach of, or constitute a default under,
any of the provisions of the Seller's organizational documents or by-laws,
or any law, governmental rule or regulation, or any judgment, decree, or
order binding on the Seller or any of its properties, or any of the
provisions of any indenture, mortgage, deed of trust, contract, or other
instrument to which the Seller is a party or by which the Seller is bound
or (B) result in the creation or imposition of any lien, charge, or
encumbrance which would have a material adverse effect upon any of the
Seller's properties pursuant to the terms of any such indenture, mortgage,
deed of trust, contract, or other instrument.
(6) There are no actions, suits, proceedings, or investigations
pending or, to the Seller's knowledge, threatened against the Seller that
should reasonably be expected to affect adversely the transfer of the Home
Loans to City Capital, the issuance of the Notes, or the execution,
delivery, performance, or enforceability of this Agreement or have a
material adverse effect on the financial condition of the Seller.
(7) The Seller is, and, immediately prior to the sale of the Home
Loans to City Capital, the Seller will be, the sole owner of, and will have
good, indefeasible and marketable title to, the Home Loans, subject to no
prior lien, mortgage, security interest, pledge, charge, or other
encumbrance, except any lien to be released prior to or concurrently with
the purchase of the Home Loans by City Capital. Following the sale of the
Home Loans, City Capital will own such Home Loans, free and clear of any
prior lien, mortgage, security interest, pledge, charge, or other
encumbrance, except the lien created by the Indenture.
(8) The Seller has not dealt with any broker, investment banker, agent
or other person that may be entitled to any commission or compensation in
connection with the Sales of the Home Loans.
(9) The Seller will treat the transfer of the Home Loans to City
Capital as a sale on its books and records in accordance with generally
accepted accounting principles.
(10) With respect to each Home Loan, the Seller is in possession of
each of the Mortgage Loan Documents required to be included in the related
Home Loan File (except to the extent such Home Loan File has been delivered
to the Custodian or Indenture Trustee as described in this Agreement).
(11) The description of the Home Loans set forth in the Prospectus
Supplement under the heading "The Pool" does not contain any untrue
statement of any material fact or omit any material fact required to be
stated therein or necessary in order to make the statements contained
therein, in light of the circumstances under which they are made, not
misleading.
(12) The consideration received by the Seller upon the sale of the
Home Loans under this Agreement constitutes fair consideration and
reasonably equivalent value for the Home Loans.
(13) The Seller is solvent and the sale of the Home Loans to City
Capital as contemplated hereby will not cause the Seller to become
insolvent. The sale of the Home Loans to City Capital is not undertaken
with the intent to hinder, delay or defraud any of the Seller's creditors.
(14) On the Closing Date, 55% or more (by aggregate principal balance)
of the Home Loans do not constitute "real estate mortgages" for the purpose
of Treasury Regulation ss.301.7701 under the Code. For this purpose a Home
Loan does not constitute a "real estate mortgage" if:
(i) The Home Loan is not secured by an interest in real property, or
---
(ii) The Home Loan is not an "obligation principally secured by an
---
interest in real property." For this purpose an "obligation is principally
secured by an interest in real property" if it satisfies either test set
------
out in paragraph (1) or paragraph (2) below.
(1) The 80-percent test. An obligation is principally secured by an
interest in real property if the fair market value of the
interest in real property securing the obligation
(A) was at least equal to 80 percent of the adjusted issue price
of the obligation at the time the obligation was originated
(or, if later, the time the obligation was significantly
modified); or
(B) is at least equal to 80 percent of the adjusted issue price
of the obligation on the Closing Date.
For purposes of this paragraph (1), the fair market value of
the real property interest must be first reduced by the
amount of any lien on the real property interest that is
senior to the obligation being tested, and must be further
reduced by a proportionate amount of any lien that is in
parity with the obligation being tested, in each case before
the percentages set forth in (1)(A) and (1)(B) are
determined. The adjusted issue price of an obligation is its
issue price plus the amount of accrued original issue
discount, if any, as of the date of determination.
(2) Alternative test. An obligation is principally secured by an
interest in real property if substantially all of the proceeds of
the obligation were used to acquire or to improve or protect an
interest in real property that, at the origination date, is the
only security for the obligation. For purposes of this test, loan
guarantees made by the United States or any state (or any
political subdivision, agency, or instrumentality of the United
States or of any state), or other third party credit enhancement
are not viewed as additional security for a loan. An obligation
is not considered to be secured by property other than real
property solely because the obligor is personally liable on the
obligation. For this purpose only, substantially all of the
proceeds of the obligations means 66-2/3% or more of the gross
proceeds.
(15) With respect to each Home Loan that is not a first mortgage loan,
either (A) no consent for the Home Loan is required by the holder of the
related prior lien or (B) such consent has been obtained and has been
delivered to the Indenture Trustee.
(16) No Home Loan was selected from the Seller's assets in a manner
which would cause it to be adversely selected as to credit risk from the
pool of home loans owned by the Seller.
(17) The transfer, assignment and conveyance of the Mortgage Notes and
the Mortgages by the Seller to City Capital are not subject to the bulk
transfer laws or any similar statutory provisions in effect in any
applicable jurisdiction.
(18) All of the Home Loans have a first monthly payment due no later
than _________________, 1998.
(b) Home Loan Representations. The Seller hereby makes the following
representations and warranties to City Capital and the Depositor with respect to
each Home Loan, as of the date of this Agreement.
(1) The information pertaining to each Home Loan set forth in the Home
Loan Schedule was true and correct in all material respects as of the
Cut-off Date.
(2) As of the Cut-off Date, none of the Home Loans were more than 30
days contractually past due. The Seller has not advanced funds or induced,
solicited, or knowingly received any advance of funds from a party other
than the Obligor, directly or indirectly, for the payment of any amount
required by the Home Loan.
(3) The terms of the related Mortgage Note and the related Mortgage
contain the entire agreement of the parties thereto and have not been
impaired, waived, altered, or modified in any respect, except by written
instruments reflected in the related Home Loan File and recorded, if
necessary, to maintain the lien priority of the related Mortgage. No other
instrument of waiver, alteration, expansion, or modification has been
executed with respect to such Mortgage Note or Mortgage, and no Obligor has
been released, in whole or in part, except in connection with an assumption
agreement which is included in the related Home Loan File.
(4) The related Mortgage Note and the related Mortgage are not subject
to any set-off rights, claims, counterclaims, or defenses, including the
defense of usury or of fraud in the inducement, nor will the operation of
any of the terms of such Mortgage Note or Mortgage, or the exercise of any
right thereunder, render such Mortgage Note or Mortgage unenforceable, in
whole or in part, or subject to any right of rescission, set-off,
counterclaim, or defense, including the defense of usury, and no such right
of rescission, set-off, counterclaim, or defense has been asserted with
respect thereto.
(5) Neither the related Mortgage Note nor the related Mortgage has
been satisfied, canceled, rescinded, or subordinated, in whole or part, and
the Seller has not waived the performance by the related Obligor of any
action, if the Obligor's failure to perform such action would cause the
Mortgage Note to be in default, except as otherwise permitted by Section
4(b)(3) above. The related Mortgaged Property has not been released from
the lien of the Mortgage, in whole or in part, nor has any instrument been
executed that would effect any such satisfaction, subordination, release,
cancellation, or rescission.
(6) The related Mortgage is a valid, subsisting and enforceable lien
on the related Mortgaged Property, including the land and all buildings on
the Mortgaged Property.
(7) The related 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 enforceability may be
limited by bankruptcy, insolvency, reorganization, or other similar laws
affecting creditors' rights in general and by general principles of equity.
(8) To the Seller's knowledge, all parties to the related Mortgage
Note and the related Mortgage had legal capacity to enter into the Home
Loan and to execute and deliver the Mortgage Note and Mortgage at the dates
thereof, and the Mortgage Note and Mortgage have been duly and properly
executed by such parties.
(9) The proceeds of the Home Loan have been fully disbursed and there
is no requirement for future advances thereunder, and any and all
applicable requirements set forth in the related Home Loan Documents have
been complied with.
(10) As of the Cut-off Date, there is no default, breach, violation,
or event of acceleration existing under the Home Loan, the related Mortgage
Note and the related Mortgage, and there is no event which, with the
passage of time or with notice and the expiration of any grace or cure
period, would constitute such a default, breach, violation, or event of
acceleration.
(11) The related Mortgage Note and the related Mortgage contain
customary and enforceable provisions such as to render the rights and
remedies of the holder thereof adequate for the realization against the
related Mortgaged Property of the benefits of the security provided
thereby, including, (A) in the case of any Mortgage designated as a deed of
trust, by trustee's sale, and (B) otherwise by judicial foreclosure.
(12) Each Home Loan bears interest at a fixed interest rate. The
related Mortgage Note shall mature within not more than 30 years from the
date of origination of the Home Loan. The related Mortgage Note is payable
in substantially equal Monthly Payments, with interest payable in arrears,
and requires a Monthly Payment which is sufficient to fully amortize the
original principal balance over the original term and to pay interest at
the related interest rate. Interest on the Home Loan is calculated on the
basis of a 360-day year consisting of twelve 30-day months, and the
Mortgage Note does not provide for any extension of the original term.
(13) The related Mortgage Note is not and has not been secured by any
collateral except the lien of the corresponding Mortgage.
(14) If the related Mortgage constitutes 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 the Mortgage, or a valid
substitution of trustee has been recorded, and no extraordinary fees or
expenses are or will become payable to the trustee under the deed of trust,
except in connection with default proceedings and a trustee's sale after
default by the Obligor.
(15) There exists a Home Loan File relating to each Home Loan and such
Home Loan File contains all of the Home Loan Documents required to be
included therein as of the date hereof (as governed by the definition of
"Home Loan Documents"). Each document included in the Home Loan File which
is required to be executed by the Obligor has been executed by the Obligor
in the appropriate places. With respect to each Home Loan, the assignment
of the related Mortgage to the Indenture Trustee is in recordable form and
is acceptable for recording under the laws of the jurisdiction in which the
Mortgaged Property is located. All blanks on any form required to be
completed have been so completed.
(16) Except in the case of not more than 2.0% of the Home Loans, all
of the Home Loans were originated either by the Seller, an affiliate of the
Seller, or by one of the Seller's correspondent lenders in accordance with
the Seller's underwriting guidelines for its Fixed Rate High LTV Loan
Program (February 1998, or more recent, edition) (the "Underwriting
Guidelines"). Except in the case of not more than 2.0% of the Home Loans,
all of the Home Loans have been underwritten or re-underwritten by the
Seller and reviewed for compliance with the Underwriting Guidelines.
(17) All Mortgaged Properties are insured by a generally acceptable
insurer against loss by fire hazards of extended coverage and such other
hazards as are customarily insured against in the area where the Mortgaged
Property is located pursuant to standard insurance policies for the area
where the Mortgaged Property is located and all such policies contain a
standard mortgagee clause naming the Seller, its successors and assigns, as
loss payee.
(18) All costs, fees and expenses incurred in originating and closing
the Home Loan and in recording the related Mortgage have been paid and the
Obligor is not entitled to any refund of any amounts paid or due to the
payee pursuant to the related Mortgage Note or the related Mortgage.
(19) There is no obligation on the part of the Seller or any other
party other than the Obligor to make payments with respect to the Home
Loan. No Home Loan contains a "buydown" or other similar provision, a
graduated payment feature, or a shared appreciation or other contingent
features.
(20) At the time of origination of the Home Loan, each related prior
lien, if any, was not 30 or more days delinquent.
(21) The related Mortgage contains an enforceable provision requiring
the consent of the mortgagee to assumption of the Home Loan upon sale of
the related Mortgaged Property.
(22) There is no homestead or other exemption available to the Obligor
which would materially interfere with the right to sell the related
Mortgaged Property at a trustee's sale or the right to foreclose the
Mortgage. No relief has been requested or allowed to the Obligor under the
Soldiers' and Sailors' Civil Relief Act of 1940, as amended.
(23) The related Home Loan File for each Home Loan contains a title
document with respect to such Home Loan reflecting that title to the
related Mortgaged Property is vested at least 50% in the Obligor under such
Home Loan.
(24) To the best of the Seller's knowledge, the related Mortgaged
Property (including each residential dwelling improvement thereon) is free
from damage which materially and adversely affects the value thereof and
there are no proceedings pending for total or partial condemnation for the
related Mortgaged Property.
(25) The Home Loan was originated in compliance with all applicable
laws and regulations and, to the Seller's knowledge, no fraud or
misrepresentation was committed by any person or entity in connection
therewith.
(26) The Home Loan has been serviced and collected in accordance with
all applicable laws and regulations and, to the Seller's knowledge, no
fraud or misrepresentation was committed by any person or entity in
connection with such servicing and collection activities.
(27) Any Home Loan originated in the State of Texas, was originated
pursuant to either Chapter 3 or Chapter 6 of the Texas Consumer Credit
Code.
(28) As of the Cut-Off Date, no Obligor is a debtor under proceedings
under the federal Bankruptcy Code, and no such Obligor has defaulted in
payments on a Home Loan after the filing of such bankruptcy case, whether
under a plan of reorganization or otherwise.
(29) The Seller has not advanced funds to make loan payments with
respect to a Home Loan, or induced, solicited, or knowingly received any
advance of loan payments, with respect to a Home Loan from any party other
than the Obligor.
(30) The Home Loan either complies with the Home Ownership and Equity
Protection Act of 1994 or is not subject to such act.
(31) As of the Cut-Off Date, to the Seller's knowledge the Mortgaged
Property is free from any and all toxic or hazardous substances, and the
Seller has no knowledge of any violation of any environmental law (either
local, state, or federal), rule, or regulation in respect of any Mortgaged
Property which violation has or could have a material adverse effect on the
market value of such Mortgaged Property.
(32) The Home Loan is not secured by a Mortgage on a non-owner
occupied Mortgaged Property.
(33) All obligations of the Seller under all debt consolidation loans,
property improvement loans, combination loans and loans for other consumer
purposes have been completed in accordance with the terms of such loans and
no additional goods or services will be, or are required to be provided by
the Seller after the Closing Date.
(34) In the event that any Home Loan was originated by an entity (such
entity, the "Originator") other than the Seller and to the extent the
Seller has failed to fulfill or is not capable of fulfilling its
obligations to cure or repurchase such Home Loan as required hereunder,
then the Note Insurer or the Indenture Trustee, on behalf of the Holders of
the Notes, may enforce any remedies for breach of representations and
warranties made by the Originator with respect to such Home Loan.
(35) To the best of the Seller's knowledge, all required inspections,
licenses and certificates with respect to home improvements and the use and
occupancy of all occupied portions of the Mortgaged Property securing a
Home Loan, if applicable, have been made, obtained or issued as applicable.
To the best of the Seller's knowledge, all improvements which were
considered in determining the appraised value of the Mortgaged Property
securing a Home Loan, if applicable, lay wholly within the boundaries and
building restriction lines of the related property and no improvements on
adjoining properties encroach upon such property and no improvement located
on or being a part of such property is in violation of any applicable
zoning laws or regulation.
(36) None of the Home Loans have been originated through a home
improvement contractor.
(37) None of the Home Loans are installment contracts for goods or
services and none of the Home Loans made for property improvement purposes
were for goods and services which constitute either "consumer credit
contracts" or "purchase money loans" as such terms are defined in 16 C.F.R.
Section 433.1
(38) None of the Mortgage Notes constitute or comprise "chattel paper"
as such term is defined in Section 9.105(b) of the Uniform Commercial Code.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF OTHER PARTIES.
(a) City Capital hereby represents and warrants to the Seller and the
Depositor as of the date of this Agreement, or as of such other date as is
specifically provided, as follows:
(i) City Capital is a corporation duly organized, validly existing,
and in good standing under the laws of the State of Delaware.
(ii) City Capital has the full power, authority (corporate and other),
and legal right to execute and deliver, engage in the transactions
contemplated by, and perform and observe the terms and conditions of, this
Agreement.
(iii) This Agreement has been duly and validly authorized, executed,
and delivered by City Capital, and (assuming the due authorization,
execution, and delivery hereof by the Seller and the Depositor) constitutes
the valid, legal and binding agreement of City Capital, enforceable against
City Capital in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, receivership, moratorium, or other similar laws
affecting creditors' rights generally and to general principles of equity,
regardless of whether such enforcement is sought in a proceeding in equity
or at law.
(iv) No consent, approval, authorization, or order of or registration
or filing with, or notice to, any governmental authority or court is
required for the execution, delivery, and performance of, or compliance by
City Capital with, this Agreement, or the consummation by City Capital of
any other transaction contemplated hereby.
(v) Neither the execution and delivery of this Agreement by City
Capital, nor the consummation by City Capital of the transactions hereby
contemplated, nor compliance with the provisions hereof by City Capital,
will (A) conflict with or result in a breach of, or constitute a default
under, any of the provisions of City Capital's certificate of incorporation
or by-laws, or any law, governmental rule or regulation, or any judgment,
decree, or order binding on City Capital or any of its properties, or any
of the provisions of any contract or other instrument to which City Capital
is a party or by which it is bound or (B) result in the creation or
imposition of any lien, charge, or encumbrance which would have a material
adverse effect upon the Notes.
(vi) There are no actions, suits, proceedings, or investigations
pending or, to City Capital's knowledge, threatened against City Capital
that should reasonably be expected to affect adversely the execution,
delivery, performance, or enforceability of this Agreement or have a
material adverse effect on the financial condition of City Capital.
(vii) Assuming the accuracy of the representations in Section 4(a)(7),
City Capital is, and, immediately prior to the sale of the Home Loans to
the Depositor, City Capital will be, the sole owner of, and will have good,
indefeasible and marketable title to, the Home Loans, subject to no prior
lien, mortgage, security interest, pledge, charge, or other encumbrance,
except any lien to be released prior to or concurrently with the purchase
of the Home Loans by the Depositor. Following the sale of the Home Loans,
the Depositor, or the Issuer, as the Depositor's transferee, will own such
Home Loans, free and clear of any prior lien, mortgage, security interest,
pledge, charge or other encumbrance, except the lien created by the
Indenture.
(viii) City Capital has not dealt with any broker, investment banker,
agent or other person that may be entitled to any commission or
compensation in connection with the sale of the Home Loans to the
Depositor.
(ix) City Capital will treat the transfer of the Home Loans to the
Depositor as a sale on its books and records in accordance with generally
accepted accounting principles.
(x) The consideration received by City Capital upon the sale of the
Home Loans under this Agreement constitutes fair consideration and
reasonably equivalent value for the Home Loans.
(xi) City Capital is solvent and the sale of the Home Loans to the
Depositor as contemplated hereby will not cause City Capital to become
insolvent. The sale of the Home Loans to the Depositor is not undertaken
with the intent to hinder, delay or defraud any of City Capital's
creditors.
(b) The Depositor hereby represents and warrants to the Seller and City
Capital as of the date of this Agreement, or as of such other date as is
specifically provided, as follows:
(i) The Depositor is a corporation duly organized, validly existing,
and in good standing under the laws of the State of Delaware.
(ii) The Depositor has the full power, authority (corporate and
other), and legal right to execute and deliver, engage in the transactions
contemplated by, and perform and observe the terms and condition of, this
Agreement.
(iii) This Agreement has been duly and validly authorized, executed,
and delivered by the Depositor, and (assuming the due authorization,
execution, and delivery hereof by the Seller and City Capital) constitutes
the valid, legal and binding agreement of the Depositor, enforceable
against the Depositor in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, receivership, moratorium, or other similar laws
affecting creditors' rights generally and to general principles of equity,
regardless of whether such enforcement is sought in a proceeding in equity
or at law.
(iv) No consent, approval, authorization, or order of or registration
or filing with, or notice to, any governmental authority or court is
required for the execution, delivery, and performance of, or compliance by
the Depositor with, this Agreement, or the consummation by the Depositor of
any other transaction contemplated hereby.
(v) Neither the execution and delivery of this Agreement by the
Depositor, nor the consummation by the Depositor of the transactions hereby
contemplated, nor compliance with the provisions hereof by the Depositor,
will (A) conflict with or result in a breach of, or constitute a default
under, any of the provisions of the Depositor's certification of
incorporation or by-laws, or any law, governmental rule or regulation, or
any judgment, decree, or order binding on the Depositor or any of its
properties, or any of the provisions of any contract or other instrument to
which the Depositor is a party or by which it is bound or (B) result in the
creation or imposition of any lien, charge, or encumbrance which would have
a material adverse effect upon the Notes.
(vi) There are no actions, suits, proceedings, or investigations
pending or, to the Depositor's knowledge, threatened against the Depositor
that should reasonably be expected to affect adversely the execution,
delivery, performance, or enforceability of this Agreement or have a
material adverse effect on the financial condition of the Depositor.
SECTION 6. COVENANTS OF THE SELLER. The Seller hereby covenants to City
Capital and the Depositor as follows:
(a) On or before the Closing Date, the Seller shall execute and deliver a
Secretary's or Assistant Secretary's Certificate evidencing the Seller's
authority to enter into the transactions contemplated by this Agreement.
(b) On or before the Closing Date, the Seller shall take all steps
reasonably required of it to effect the transfer of the Home Loans to the Issuer
and the pledge of the Home Loans to the Indenture Trustee, free and clear of any
lien, charge, or encumbrance except the lien evidenced by the Indenture.
(c) The Seller shall use its best efforts to make available to counsel for
City Capital and the Depositor in executed form each of the Closing Documents
(as defined in Section 9(b) below) on or before the Closing Date, it being
understood that such documents are to be released and delivered only on the
closing of the transaction contemplated hereby and the sale of the Notes.
(d) In the event the Seller fails to take all actions necessary to effect
the conveyance of the Home Loans to City Capital on or before the Closing Date
as contemplated hereby, the Seller hereby constitutes and appoints City Capital
and its officers and representatives as the Seller's true and lawful
attorneys-in-fact to do all acts and transactions and to execute and deliver all
agreements, documents, instruments and papers by and on behalf of the Seller as
may be necessary to consummate the transfer of the Home Loans to City Capital.
The foregoing grant of authority shall be deemed to be irrevocable and a power
coupled with an interest.
(e) The Seller shall furnish to the Issuer, the Indenture Trustee and the
Note Trustee, annually on or before the date specified in Section 3.06 of the
Indenture, the opinion of counsel required to be delivered pursuant to such
Section 3.06.
SECTION 7. REPURCHASE OBLIGATIONS.
(a) Each of the representations and warranties made by the Seller herein
shall survive the Sales of the Home Loans and shall continue in full force and
effect, notwithstanding any restrictive or qualified endorsement on the Mortgage
Notes and notwithstanding subsequent termination of this Agreement, the Trust
Agreement or the Indenture. The Seller's representations and warranties shall
not be impaired by any review or examination of Home Loan Documents or other
documents evidencing or relating to the Home Loans or any failure on the part of
City Capital or the Depositor to review or examine such documents and shall
inure to the benefit of the Issuer and the Indenture Trustee (as the assignees
of the Depositor) for the benefit of the Noteholders and the Note Insurer.
(b) Upon discovery or receipt of notice by the Seller, City Capital, the
Depositor, the Custodian, the Note Insurer, or the Indenture Trustee of any
missing or materially defective document in any Home Loan File, a breach of any
of the representations and warranties of the Seller set forth in Section 4
hereof, or a default in the performance of any of the covenants or other
obligations of the Seller under this Agreement, that in any of the foregoing
cases materially and adversely affects the value of any Home Loan or the
interest therein of City Capital, the Depositor, the Issuer, the Indenture
Trustee, the Noteholders, or the Note Insurer, the party discovering or
receiving notice of the missing or materially defective document, breach, or
default shall give prompt written notice to the other parties hereto. Upon its
discovery or its receipt of notice of any such missing or materially defective
documentation or any such breach of a representation and warranty or covenant
(notwithstanding that such representation and warranty was made to the Seller's
knowledge or best knowledge), the Seller shall, within 60 days after such
discovery or receipt of such notice, either (i) cure such defect or breach in
all material respects or (ii) repurchase the affected Home Loan at the Purchase
Price therefor. The Seller shall amend the Home Loan Schedule to reflect the
withdrawal of any Home Loan from the terms of this Agreement, the Trust
Agreement, and the Indenture. Any repurchase of a Home Loan pursuant to this
Section 7(b) shall be accomplished by the delivery to the Indenture Trustee, on
(or determined as of) the last day of the calendar month in which such
repurchase is made, of the Purchase Price for such Home Loan (such delivery may
be made on or before the Deposit Date in the month following such calendar
month). Notwithstanding the foregoing, in the event that any Home Loan File
fails to include an assignment of Mortgage in favor of the Indenture Trustee, as
certified by the Custodian in the Interim Certification, then the Seller shall
immediately repurchase the related Home Loan at the Purchase Price therefor
(unless such repurchase obligation is waived in writing by the Note Insurer).
(c) It is understood and agreed that the obligations of the Seller set
forth in this Section 7 to cure or repurchase a Home Loan and to indemnify City
Capital and the Depositor as provided in Section 8 of this Agreement constitute
the sole remedies of City Capital, the Depositor, the Issuer, and the Indenture
Trustee against the Seller with respect to a missing or materially defective
document in any Home Loan File, a breach of representations and warranties of
the Seller set forth in Section 4 hereof, or a default in the performance by the
Seller of any of its covenants or other obligations under this Agreement.
(d) Any party providing a notice under this Section 7 shall provide a copy
of such notice to the Master Servicer and the Seller shall furnish a copy of
each revised Home Loan Schedule to the Master Servicer and the Indenture Trustee
at their addresses for notices set forth in Section 8.03 of the Servicing
Agreement.
SECTION 8. INDEMNIFICATION.
(a) In the event the Seller breaches its representations, warranties,
covenants, or obligations set forth herein, the Seller shall indemnify and hold
harmless each of City Capital and the Depositor (and its assignees in accordance
with Section 17 hereof) (the "Indemnified Parties") from and against any losses,
damages, penalties, fines, forfeitures, 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, such breach. Promptly
after receipt by an Indemnified Party of notice of the commencement of any such
action, such Indemnified Party will notify the Seller in writing of the
commencement thereof if a claim in respect of such action is to be made against
the Seller under this Section 8, but the omission so to notify the Seller will
not relieve the Seller from any liability hereunder unless such omission
materially prejudices the rights or positions of the Seller. If any such action
is brought against an Indemnified Party, and it notifies the Seller of the
commencement thereof, the Seller will be entitled to participate therein, and to
assume the defense thereof, with counsel selected by the Seller and reasonably
satisfactory to such Indemnified Party, and after notice from the Seller to the
Indemnified Party of its election so to assume the defense thereof, the Seller
will not be liable to the Indemnified Party under this Section 8 for any legal
or other expenses subsequently incurred by such Indemnified Party in connection
with the defense of such action; provided, however, that this right to assume
the defense of such action shall not be in effect if (1) the Seller shall not
have employed counsel reasonably satisfactory to the Indemnified Party to
represent the Indemnified Party within a reasonable time after notice of
commencement of the action or (2) the Seller shall have authorized the
employment of counsel for the Indemnified Party at the expense of the Seller. If
the Seller assumes the defense of any such proceeding, it shall be entitled to
settle such proceeding with the consent of any Indemnified Party that is also
subject to such proceeding or, if such settlement provides for release of any
such Indemnified Party in connection with all matters relating to the proceeding
which have been asserted against such Indemnified Party in such proceeding by
the other parties to such settlement, without the consent of such Indemnified
Party.
(b) The Seller shall, from its own funds, pay or reimburse the Indenture
Trustee upon its request, for all reasonable expenses and disbursements incurred
or made by the Indenture Trustee in accordance with any of the provisions of the
Servicing Agreement, the Indenture, the Custodial Agreement, and (in its
capacity as Trust Paying Agent) the Deposit Trust Agreement (including any
Opinions of Counsel requested by the Indenture Trustee) except any such expense
or disbursement as may arise from its negligence or bad faith or that is
otherwise reimbursed to the Indenture Trustee, provided, however, that the
Indenture Trustee shall not refuse to perform any of its duties under the
Indenture, the Servicing Agreement, or the Deposit Trust Agreement solely as a
result of the failure of the Seller to pay or reimburse such expenses or
disbursements.
(c) The Seller agrees to indemnify the Indenture Trustee, the Note
Administrator, the Trust Paying Agent, the Master Servicer, the Custodian and
their respective agents, directors, employees, and officers (each a "Transaction
Indemnified Party") from, and hold it harmless against, any and all losses and
liabilities, damages, claims, or expenses (including reasonable attorneys' fees,
expenses, and disbursements), incurred or in connection with any legal action
against the Trust Estate, the Issuer, or any Transaction Indemnified Party,
other than any loss, liability, or expense incurred by reason of the negligence,
bad faith, or intentional misconduct of the party seeking indemnification.
Notwithstanding the generality of the foregoing, if any action, suit, or other
proceeding is brought against a Transaction Indemnified Party for which the
Transaction Indemnified Party seeks indemnification under this Section 8(c), the
Transaction Indemnified Party shall promptly notify the Seller of the
commencement thereof, whereupon the Seller will be entitled to participate
therein, and to assume the defense thereof, with counsel selected by the Seller
and reasonably satisfactory to such Transaction Indemnified Party, provided,
that, if in the Transaction Indemnified Party's reasonable judgment the
Transaction Indemnified Party has any claims or defenses that conflict with or
differ from the interests of the Seller, the Transaction Indemnified Party shall
be entitled to select counsel of its choosing and pursue such claims and
defenses separately and all related costs, expenses, and liabilities associated
with such separate claims or defenses will continue to be covered by the
Seller's indemnification obligation under this Section 8(c). The Seller shall
not be entitled to settle any proceeding without the consent of any Transaction
Indemnified Party with any right of indemnification under this Section 8(c) with
respect to such proceeding except upon such terms as will provide each such
Transaction Indemnified Party reasonable assurance of full indemnity under this
Section 8(c).
SECTION 9. CONDITIONS TO OBLIGATIONS TO PURCHASE. The obligation of each of
City Capital and the Depositor hereunder to purchase the Home Loans is subject
to the following conditions:
(a) The accuracy in all material respects of all of the representations and
warranties of the Seller under this Agreement and the non-occurrence of any
event which, with notice or the passage of time, would constitute a default
under this Agreement;
(b) Each of City Capital and the Depositor shall have received, or their
respective attorneys shall have received, in escrow (to be released from escrow
at the time of closing), the following documents (collectively, the "Closing
Documents") in such forms as are acceptable to City Capital and the Depositor,
duly executed by all signatories other than the recipient as required pursuant
to the respective terms thereof:
(i) A Bill of Sale substantially in the form of Exhibit A hereto;
(ii) An opinion of counsel for the Seller as to various corporate
matters and such other opinions of counsel as are necessary in order to
obtain the ratings set forth in Section 9(f) below, each of which also
shall be acceptable to Moody's Investors Service, Inc. ("Moody's") and
Standard & Poor's Ratings Services, a Division of The McGraw-Hill
Companies, Inc. ("S&P" and together with Moody's, the "Rating Agencies")
(it being understood that such opinions shall expressly provide that the
Indenture Trustee shall be entitled to rely on such opinions of counsel);
and
(iii) From Ernst & Young LLP, certified public accountants, comfort
letters as required by the Underwriting Agreement;
(c) The Seller shall have delivered to the Indenture Trustee or the
Custodian on its behalf, in escrow, all documents required to be delivered
hereunder and shall have released its interest therein to City Capital or its
designee and City Capital shall have released its interest in such documents to
the Depositor;
(d) Compliance by the Seller with all other terms and conditions of this
Agreement;
(e) The sale of the Notes pursuant to the terms of the Underwriting
Agreement; and
(f) The receipt of written confirmation from Moody's and S&P that they have
assigned ratings of "Aaa" and "AAA" to the Class A Notes, respectively.
SECTION 10. FEES AND DEPOSITS. City Capital shall be responsible for
payment of (1) all fees and expenses of accountants, printers, the Note Insurer,
the Owner Trustee, the Custodian, the Master Servicer, and the Indenture Trustee
in connection with the issuance of the Notes, including the fees of their
respective attorneys, including such fees and expenses associated with loan file
due diligence review, (2) the fees incurred by the Seller in connection with the
sale of the Home Loans to City Capital for attorneys and accountants, and (3)
the fees and expenses payable to the Rating Agencies for their initial ratings
of the Notes, including the fees of their respective attorneys. In addition,
City Capital shall pay the fees and expenses of its attorneys and accountants in
connection with the issuance of the Notes.
SECTION 11. MANDATORY DELIVERY; GRANT OF SECURITY INTEREST. The Sales and
delivery on the Closing Date of the Home Loans described in the Home Loan
Schedule are mandatory, it being specifically understood and agreed that each
Home Loan is unique and identifiable on the Closing Date and that an award of
money damages would be insufficient to compensate City Capital and the Depositor
for the losses and damages that would be incurred by them in the event of the
Seller's failure to deliver the Home Loans on or before the Closing Date. The
Seller hereby grants to City Capital, and City Capital hereby assigns such
grants to the Depositor, a first lien on and a continuing first priority
security interest in each Home Loan and each document and instrument evidencing
each Home Loan to secure the performance by the Seller of its obligation to
deliver such Home Loans hereunder. All rights and remedies of City Capital and
the Depositor under this Agreement are distinct from, and cumulative with, any
other rights or remedies under this Agreement or afforded by law or equity, and
all such rights and remedies may be exercised concurrently, independently, or
successively.
SECTION 12. NOTICES. All demands, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given when personally
delivered, or five days after being mailed by registered mail, postage prepaid,
or upon transmission if transmitted by telecopier, telex, or telegraph and
confirmed by a similar mailed writing, provided the transmitting machine has
printed an electronic confirmation of delivery, to the following:
a. If to City Capital:
City Capital Markets Corporation
25 Gatewater Road
Charleston, West Virginia 25313
Attention: Michael D. Dean
Telecopy: (304) 769-1184
with a copy, given in the manner
prescribed above, to:
Kevin J. Buckley, Esq.
Hunton & Williams
Riverfront Plaza, East Tower
951 East Byrd Street
Richmond, Virginia 23219-4074
Telecopy: (804) 788-8218
b. If to the Seller:
City National Bank of West Virginia
c/o City Holding Company
25 Gatewater Road
Charleston, West Virginia 25313
Telecopy: (304) 769-1184
Attention: Michael D. Dean
with a copy, given in the manner
prescribed above, to:
Kevin J. Buckley, Esq.
Hunton & Williams
Riverfront Plaza, East Tower
951 East Byrd Street
Richmond, Virginia 23219-4074
Telecopy: (804) 788-8218
c. If to the Depositor:
Financial Asset Securities Corp.
600 Steamboat Road
Greenwich, Connecticut 06830
Telecopy:
Attention:
d. If to the Note Insurer:
MBIA Insurance Corporation
113 King Street
Armonk. New York 10504
Attention: Asset-Backed IPM
(City Capital Home Loan Trust 1998-4)
Telecopy: (914) 725-3810
Any party may alter the address to which communications or copies are to be
sent by giving notice of such change of address in conformity with the
provisions of this Section 12 for the giving of notice.
SECTION 13. SEVERABILITY OF PROVISIONS. Any part, provision,
representation, warranty, or covenant contained in this Agreement that is
prohibited or unenforceable or that is held to be void or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction as to any Home Loan shall not invalidate or render unenforceable
such provision in any other jurisdiction. To the extent permitted by applicable
law, the parties hereto waive any provision of law that prohibits or renders
void or unenforceable any provision hereof.
SECTION 14. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, NOTWITHSTANDING
ANY NEW YORK OR OTHER CONFLICT OF LAWS PROVISION TO THE CONTRARY.
SECTION 15. FURTHER ASSURANCES. Each party agrees to execute and deliver
such instruments and take such actions as each other party, the Issuer, or the
Indenture Trustee may, from time to time, reasonably request in order to
effectuate the purpose and to carry out the terms of this Agreement including,
without limitation, the execution and filing of any UCC financing statements to
evidence the interests of City Capital, the Depositor, and any of its
transferees in the Home Loans and other assets pledged to the Indenture Trustee.
SECTION 16. SURVIVAL. The Seller agrees that the representations,
warranties and agreements made by it herein and in any certificate or other
instrument delivered pursuant hereto shall be deemed to have been relied upon by
City Capital and the Depositor, notwithstanding any investigation heretofore or
hereafter made by or on behalf of City Capital or the Depositor, and that the
representations, warranties and agreements made by the Seller herein or in any
such certificate or other instrument shall survive the delivery of and payment
for the Home Loans.
SECTION 17. ASSIGNMENT; THIRD PARTY BENEFICIARIES. The Seller hereby
acknowledges that the Depositor will assign all its rights hereunder to the
Issuer, which will in turn pledge all of the rights hereunder to the Indenture
Trustee. The Seller agrees that, upon the execution of the Indenture, the
Indenture Trustee will have all such rights and remedies provided to the
Depositor hereunder and this Agreement will inure to the benefit of the
Indenture Trustee for the benefit of the Noteholders and the Note Insurer.
The Indenture Trustee shall constitute not only an assignee of the
Depositor's rights in accordance with this Section 17 but also an intended
third-party beneficiary of this Agreement to the extent necessary to enforce
such rights and to obtain the benefit of such remedies and the benefit of
Sections 8(b) and (c) and Section 10, and this Agreement shall be binding upon
the Indenture Trustee. The Note Insurer is an intended third-party beneficiary
of this Agreement, and this Agreement shall be binding upon and inure to the
benefit of the Note Insurer; provided, that, notwithstanding the foregoing, for
so long as a Note Insurer Default is continuing with respect to its obligations
under the Note Insurance Policy, the Noteholders shall succeed to the Note
Insurer's rights hereunder. Without limiting the generality of the foregoing,
all covenants and agreements in this Agreement that expressly confer rights upon
the Note Insurer shall be for the benefit of and run directly to the Note
Insurer, and the Note Insurer shall be entitled to rely on and enforce such
covenants to the same extent as if it were a party to this Agreement. The Master
Servicer, the Note Administrator and the Trust Paying Agent are intended
third-party beneficiaries of Section 8(c) of this Agreement, and Section 8(c) of
this Agreement shall be binding upon such parties. The Custodian is an intended
third-party beneficiary of Sections 3(e) and 8(c) of this Agreement, and
Sections 3(e) and 8(c) shall be binding upon the Custodian.
SECTION 18. MISCELLANEOUS.
(a) This Agreement may be executed in two or more counterparts, each of
which when so executed and delivered shall be an original, but all of which
together shall constitute one and the same instrument. This Agreement shall
inure to the benefit of, and be binding upon, the parties hereto and their
respective successors and assigns.
(b) Any person into which the Seller may be merged or consolidated or any
person resulting from a merger or consolidation involving the Seller or any
person succeeding to the business of the Seller shall be considered the
successor of the Seller hereunder, without the further act or consent of either
party hereto. Except as provided above, this Agreement cannot be assigned,
pledged or hypothecated by any party without the written consent of each other
party to this Agreement.
(c) This Agreement supersedes all prior agreements and understandings
between the parties hereto relating to the subject matter hereof. Neither this
Agreement nor any term hereof may be changed, waived, discharged, or terminated
orally, but only by an instrument in writing signed by the party against whom
enforcement of the change, waiver, discharge, or termination is sought. The
headings in this Agreement are for purposes of reference only and shall not
limit or otherwise affect the meaning of the provisions of this Agreement.
(d) City Capital and the Depositor shall cause the Custodian to as promptly
as possible deliver the Home Loans and all related Home Loan Documents to the
Seller or the Seller's designee and any security interest created by Section 11
hereof shall be deemed to have been released if, on the Closing Date, each of
the conditions set forth in Section 9 hereof shall not have been satisfied or
waived.
(e) It is the express intent of the parties hereto that each of the Sales
of the Home Loans as contemplated by this Agreement be construed as a sale of
the Home Loans and not as a financing. It is, further, not the intention of the
parties that such conveyance be deemed a pledge of the Home Loans by the Seller
to City Capital, or by City Capital to the Depositor or any assignee of the
Depositor, including, but not limited to, the Indenture Trustee, to secure a
debt or other obligation of any party hereto. However, in the event that,
notwithstanding the intent of the parties hereto, the Home Loans are held to be
property of the Seller, then (i) this Agreement shall also be deemed to be a
security agreement among the Seller, as debtor, City Capital, as secured party,
and the Depositor, as assignee of the secured party, within the meaning of
Article 9 of the New York Uniform Commercial Code; and (ii) the sale to City
Capital provided for herein shall be deemed to be a grant by the Seller to City
Capital of a first priority security interest in all of the Seller's right,
title and interest in and to the Home Loans and all amounts payable to the
holder of the Home Loans in accordance with the terms thereof and all proceeds
thereof, and City Capital shall be deemed to have assigned all of such interests
to the Depositor. In the event that, notwithstanding the intent of the parties
hereto, the Home Loans are held to be property of City Capital, then (i) this
Agreement shall be deemed to be a security agreement between City Capital, as
debtor, and the Depositor, as secured party, within the meaning of Article 9 of
the New York Uniform Commercial Code; and (ii) the sale to the Depositor
provided for herein shall be deemed to be a grant by City Capital to the
Depositor of a first priority security interest in all of City Capital's right,
title and interest in and to the Home Loans and all amounts payable to the
holder of the Home Loans in accordance with the terms thereof and all proceeds
thereof. Notwithstanding the foregoing, City Capital shall not treat the Sale of
the Home Loans to the Depositor hereunder as a sale of the Home Loans for
federal income tax purposes. The Seller, City Capital and the Depositor 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 Home Loans by the Seller or City Capital or both such parties,
such security interest or interests would be deemed to be a perfected security
interest or interests of first priority under applicable law and would be
maintained as such throughout the terms of this Agreement and the Indenture.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Home Loan Sale Agreement
to be executed and delivered by their respective officers thereunto duly
authorized as of the date first above written.
CITY NATIONAL BANK OF WEST VIRGINIA
By: /s/ Robert A. Henson
-------------------------------
Name: Robert A. Henson
------------------------------
Title: Chief Financial Officer
-----------------------------
CITY CAPITAL MARKETS CORPORATION
By: /s/ Michael D. Dean
-------------------------------
Name: Michael D. Dean
------------------------------
Title: /s/ Vice President
-----------------------------
FINANCIAL ASSET SECURITIES CORP.
By: /s/ John Paul Graham
-------------------------------
Name: John Paul Graham
------------------------------
Title: Vice President
-----------------------------
FOR THE LIMITED PURPOSE OF ACKNOWLEDGING THEIR RESPECTIVE OBLIGATIONS UNDER
SECTIONS 3 AND 7 HEREOF:
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, AS INDENTURE TRUSTEE AND
CUSTODIAN
By: /s/ Randall S. Reider
-------------------------------
Name: Randall S. Reider
-------------------------------
Title: Assistant Vice President
-------------------------------
<PAGE>
SCHEDULE I
THE HOME LOANS
<PAGE>
EXHIBIT A TO THE HOME LOAN SALE AGREEMENT
BILL OF SALE
BILL OF SALE, made as of the 30th day of November, 1998, by City National
Bank of West Virginia, a national bank (the "Seller"), and City Capital Markets
Corporation, a Delaware corporation ("City Capital"), to Financial Asset
Securities Corp., a Delaware corporation (the "Depositor").
WHEREAS, the Seller, City Capital and the Depositor are parties to that
certain Home Loan Sale Agreement, dated as of November 1, 1998, with respect to
the sale by the Seller to City Capital, and the simultaneous sale by City
Capital to the Depositor, of the Home Loans (the "Sales Agreement");
WHEREAS, simultaneously with the sale of the Home Loans by City Capital to
the Depositor, the Depositor intends to transfer the Home Loans and certain
related assets to City Capital Home Loan Trust 1998-4 (the "Issuer"), and the
Issuer intends in turn to simultaneously pledge the Home Loans and certain
related assets to Norwest Bank Minnesota, National Association, as trustee (the
"Indenture Trustee") pursuant to an Indenture (the "Indenture"), dated as of
November 1, 1998, among the Issuer, and Norwest Bank Minnesota, National
Association, as Indenture Trustee, Note Administrator and Custodian.
NOW THEREFORE, for and in consideration of the consideration set forth in
the Sales Agreement, and for other good and valuable consideration, the receipt
and adequacy of which are hereby acknowledged, the Seller does hereby bargain,
sell, convey, assign and transfer to City Capital, and simultaneously herewith,
City Capital does hereby bargain, sell, convey, assign, and transfer to the
Depositor, without recourse, free and clear of any liens, claims, or other
encumbrances, all of the respective rights, title, and interests of the Seller
and City Capital, respectively, in and to each of the Home Loans identified on
Schedule I to the Indenture, together with the Home Loan Documents and other
documents maintained as part of the related Home Loan Files, all Mortgaged
Properties which secure a Home Loan but are acquired by repossession,
foreclosure, or deed in lieu of foreclosure after the Cut-off Date, and all
payments of principal and interest received on the Home Loans on and after the
Cut-off Date, and all other unscheduled collections collected in respect of the
Home Loans on and after the Cut-off Date, and all proceeds of the conversion,
voluntary or involuntary, of the foregoing.
The Seller hereby acknowledges receipt from City Capital of the Pool
Purchase Price referred to in Section 2 of the Sales Agreement.
Nothing in this Bill of Sale shall be construed to be a modification of, or
limitation on, any provision of the Sales Agreement, including the
representations, warranties, and agreements set forth therein.
Unless otherwise defined herein, capitalized terms used in this Bill of
Sale shall have the meanings assigned to them in the Sales Agreement, or if not
assigned in the Sales Agreement, the Indenture.
IN WITNESS WHEREOF, the Seller and City Capital each has caused this Bill
of Sale to be executed and delivered by its respective officer thereunto duly
authorized as of the date first above written.
CITY NATIONAL BANK OF WEST VIRGINIA
By:_______________________________
Name:_____________________________
Title:____________________________
CITY CAPITAL MARKETS CORPORATION
By:_______________________________
Name:_____________________________
Title:____________________________
<PAGE>
EXHIBIT B
DEFINED TERMS
"HOME LOAN FILE": As to each Home Loan, a file containing all of the
related Home Loan Documents.
"HOME LOAN": Any of the Home Loans identified on the Home Loan Schedule.
"HOME LOAN DOCUMENTS": With respect to each Home Loan, the following
documents:
(a) The original Mortgage Note bearing all intervening endorsements,
endorsed as provided in Section 3 of the Agreement, and signed in the name of
the last endorsee (the "Last Endorsee") by an authorized Person (in the event
that the Home Loan was acquired by the Last Endorsee in a merger, the signature
must be in the following form: "[Last Endorsee], successor by merger to [name of
predecessor]"; in the event that the Home Loan was acquired or originated by the
Last Endorsee while doing business under another name, the signature must be in
the following form" "[Last Endorsee], [formerly known as] or [doing business as]
[previous name]").
(b) The original of the guarantee executed in connection with the Mortgage
Note (if any).
(c) The original Mortgage with evidence of recording thereon, or a copy
thereof together with an officer's certificate of the Seller or of the title
company, escrow company, or attorney that closed the related Home Loan (the
"Settlement Agent") certifying that such represents a true and correct copy of
the original and that such original has been submitted for recordation in the
appropriate governmental recording office of the jurisdiction where the
Mortgaged Property is located.
(d) The originals of all assumption, modification, consolidation, or
extension agreements (if any) with evidence of recording thereon, or copies
thereof together with an officer's certificate of the Seller or the Settlement
Agent certifying that such represent true and correct copies of the originals
and that such originals have each been submitted for recordation in the
appropriate governmental recording office of the jurisdiction where the
Mortgaged Property is located.
(e) The original Assignment of Mortgage for each Home Loan, as provided in
Section 3 of the Agreement, in form and substance acceptable for recording and
signed in the name of the Last Endorsee (in the event that the Home Loan was
acquired by the Last Endorsee in a merger, the signature must be in the
following form: "[Last Endorsee], successor by merger to [name of predecessor]";
in the event that the Home Loan was acquired or originated while doing business
under another name, the signature must be in the following form: "[Last
Endorsee], [formerly known as] or [doing business as] [previous name]").
(f) The originals of all intervening assignments of mortgage (if any) with
evidence of recording thereon, or copies thereof together with an officer's
certificate of the Seller or the Settlement Agent certifying that such represent
true and correct copies of the originals and that such originals have been
submitted for recordation in the appropriate governmental recording office of
the jurisdiction where the Mortgaged Property is located.
"MORTGAGE": With respect to a Home Loan, the mortgage, deed of trust, deed
to secure debt, or other instrument securing the related Mortgage Note which
creates a valid and enforceable lien on or ownership interest in the related
Mortgaged Property.
"MORTGAGE NOTE": With respect to a Home Loan, the note or other evidence of
the indebtedness secured by the related Mortgage.
"MORTGAGED PROPERTY": With respect to a Home Loan, the real property,
together with the improvements thereon, subject to the lien of the related
Mortgage.
"OBLIGOR": With respect to any Home Loan, the obligor(s) on the related
Mortgage Note and mortgagor(s) on the related Mortgage.
"PRINCIPAL PREPAYMENT": Any mortgagor payment or other recovery in respect
of principal on a Home Loan (including Net Liquidation Proceeds (as defined in
the Indenture)) which, in the case of a mortgagor payment, is received in
advance of its scheduled due date and is not accompanied by an amount as to
interest representing scheduled interest for any month subsequent to the month
of such payment, or that was accompanied by instructions from the related
mortgagor directing the Servicer to apply such payment to the Principal Balance
of such Home Loan currently.
"SERVICER": The Seller, or any successor thereto, in its capacity as
servicer under the Servicing Agreement.
"SERVICING AGREEMENT": The Servicing Agreement, dated as of November 1,
1998, among City Capital Home Loan Trust 1998-4, as Issuer, City National, as
Servicer, and Norwest Bank Minnesota, National Association, as Master Servicer
and Indenture Trustee.
Exhibit 10.3
===========================================
SERVICING AGREEMENT
Dated as of November 1, 1998
among
CITY CAPITAL HOME LOAN TRUST 1998-4,
as Issuer,
CITY NATIONAL BANK OF WEST VIRGINIA,
as Servicer,
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Indenture Trustee and as Master Servicer
===========================================
Home Loans
Pledged under an Indenture dated as of November 1, 1998
<PAGE>
<TABLE>
TABLE OF CONTENTS
<CAPTION>
<S> <C> <C>
ARTICLE I DEFINITIONS.............................................................................................1
Section 1.01. Definitions...............................................................................1
Section 1.02. Interest Calculations....................................................................15
Section 1.03. Determination of Material Adverse Effect.................................................15
ARTICLE II ADMINISTRATION AND SERVICING OF HOME LOANS............................................................15
Section 2.01. Servicing Generally......................................................................15
Section 2.02. Collection of Certain Home Loan Payments; Collection Account.............................16
Section 2.03. Hazard Insurance Policies................................................................19
Section 2.04. Assumption and Modification Agreements...................................................20
Section 2.05. Servicer's Protection of Trust Estate; Realization upon Defaulted Home Loans.............21
Section 2.06. Custodian and Indenture Trustee to Cooperate; Release of Home Loan Files.................23
Section 2.07. Servicing Compensation; Payment of Certain Expenses by the Servicer......................24
Section 2.08. Annual Statement as to Compliance........................................................25
Section 2.09. Annual Independent Public Accountants' Servicing Report..................................25
Section 2.10. Access to Certain Documentation and Information Regarding the Home Loans.................25
Section 2.11. Maintenance of Fidelity Bond and Errors and Omissions Policy.............................26
Section 2.12. Notices to the Issuer, the Rating Agencies, the Master Servicer,
the Indenture Trustee and the Note Insurer...............................................26
Section 2.13. Reports of Foreclosures and Abandonment of Mortgaged Properties..........................26
Section 2.14. Sub-Servicers and Sub-Servicing Agreements...............................................27
Section 2.15. Servicing for Benefit of the Note Insurer................................................27
Section 2.16. RESERVED.................................................................................28
Section 2.17. Filing of Financing Statements and Continuation Statements...............................28
ARTICLE III SERVICER REMITTANCE REPORT; MASTER SERVICER..........................................................28
Section 3.01. Servicer Remittance Report...............................................................28
Section 3.02. Master Servicer Duties...................................................................28
Section 3.03. RESERVED.................................................................................29
Section 3.04. Master Servicer Compensation.............................................................29
Section 3.05. Master Servicer Default.................................................................29
Section 3.06. Merger or Consolidation of Master Servicer...............................................30
Section 3.07. Resignation of Master Servicer...........................................................30
Section 3.08. Assignment or Delegation of Duties by the Master Servicer................................30
Section 3.09. Limitation on Liability of the Master Servicer and Others................................31
ARTICLE IV SERVICING ADVANCES....................................................................................31
Section 4.01. Servicing Advances.......................................................................31
ARTICLE V THE SERVICER...........................................................................................32
Section 5.01. Representations and Warranties of the Servicer...........................................32
Section 5.02. Liability of the Servicer................................................................33
Section 5.03. Merger or Consolidation of, or Assumption of the Obligations of, the Servicer............34
Section 5.04. Limitation on Liability of the Servicer and Others.......................................34
Section 5.05. Servicer Not to Resign...................................................................35
ARTICLE VI DEFAULT...............................................................................................35
Section 6.01. Events of Default........................................................................35
Section 6.02. Master Servicer to Act; Appointment of Successor.........................................37
Section 6.03. Notifications to Noteholders.............................................................38
Section 6.04. Assumption or Termination of Sub-Servicing Agreements by
the Master Servicer, Indenture Trustee or any Successor Servicer.........................38
Section 6.05. Indemnification..........................................................................39
ARTICLE VII TERMINATION..........................................................................................39
Section 7.01. Termination..............................................................................39
ARTICLE VIII MISCELLANEOUS PROVISIONS............................................................................40
Section 8.01. Amendment................................................................................40
Section 8.02. Governing Law............................................................................41
Section 8.03. Notices..................................................................................41
Section 8.04. Severability of Provisions...............................................................41
Section 8.05. Assignment...............................................................................42
Section 8.06. Third Party Beneficiary; Rating..........................................................42
Section 8.07. Counterparts.............................................................................42
Section 8.08. Intention of the Parties.................................................................42
Section 8.09. Waivers and Modifications................................................................42
Section 8.10. Further Agreements.......................................................................43
Section 8.11. Attorney-in-Fact.........................................................................43
</TABLE>
SCHEDULES AND EXHIBITS
Schedule I Home Loan Schedule
Exhibit A Form of Annual Statement as to Compliance
Exhibit B Form of Request for Release
Exhibit C Form of Liquidation Report
Exhibit D Data Fields for Monthly Reporting
Exhibit E Form of Initial Notice of Advance Recovery
for Liquidated Home Loan
<PAGE>
THIS SERVICING AGREEMENT (this "Agreement"), dated as of November 1, 1998,
among CITY CAPITAL HOME LOAN TRUST 1998-4, as Issuer of its Asset-Backed Notes,
Series 1998-4 (the "Issuer"), CITY NATIONAL BANK OF WEST VIRGINIA, as Servicer
(in such capacity, together with permitted successors hereunder, the
"Servicer"), and NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, not in its
individual capacity but as trustee (the "Indenture Trustee") pursuant to that
certain Indenture (the "Indenture"), dated as of November 1, 1998, among the
Issuer and Norwest Bank Minnesota, National Association, as Indenture Trustee,
Note Administrator and Custodian, and as Master Servicer hereunder (the "Master
Servicer"), recites and provides as follows:
RECITALS
WHEREAS, the Servicer is engaged in the business of servicing home loans;
WHEREAS, the Issuer desires to pledge to the Indenture Trustee certain home
loans, identified on Schedule I hereto (the "Home Loans") in connection with the
issuance of the Issuer's Asset-Backed Notes, Series 1998-4 (the "Notes");
WHEREAS, the Issuer desires to contract with the Servicer for the servicing
responsibilities associated with the Home Loans and the Servicer desires to
assume the servicing responsibilities associated with such Home Loans;
WHEREAS, the Issuer desires to contract with the Master Servicer, and the
Master Servicer desires to assume the obligation, to supervise and oversee the
performance of the Servicer hereunder, in accordance with the terms hereof; and
WHEREAS, the Issuer, the Servicer, the Master Servicer, and the Indenture
Trustee desire to execute this Agreement to define each party's rights, duties
and obligations relating to the servicing of the Home Loans.
NOW, THEREFORE, in consideration of the above premises and of the mutual
agreements hereinafter set forth, and for other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the Issuer, the
Servicer, the Master Servicer, and the Indenture Trustee hereby agree as
follows:
ARTICLE I
DEFINITIONS
Section 1.01.00 Definitions.
Whenever used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the meanings specified in this
Section 1.01. Terms capitalized and not otherwise defined herein shall have the
meanings assigned to such terms in the Indenture, even after the Indenture shall
have been terminated.
"AFFILIATE": With respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified Person.
For the purposes of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise, and the terms "controlling" and
"controlled" have meanings corresponding to the foregoing.
"AGGREGATE PRINCIPAL BALANCE": As defined in the Indenture.
"AGREEMENT": This Servicing Agreement, dated as of November 1, 1998, among
the Issuer, the Servicer, the Master Servicer, and the Indenture Trustee, and
all amendments hereof and supplements hereto.
"APPRAISAL": A written appraisal of a Mortgaged Property made by an
appraiser holding all state certifications or licenses provided by the state in
which the Mortgaged Property is located, which appraisal must be written, in
form and substance, to FDIC, Fannie Mae and Freddie Mac standards, and must meet
the appraisal standards of the Uniform Standards of Professional Appraisal
Practice.
"APPRAISED VALUE": With respect to any Mortgaged Property, the lesser of
(a) the value thereof as determined by an Appraisal and (b) the purchase price
paid for the related Mortgaged Property by the Obligor with the proceeds of the
related Home Loan; provided, however, that in the case of a Refinanced Home
Loan, the Appraised Value of the Mortgaged Property shall be equal to the value
thereof as determined by an Appraisal.
"ANCILLARY SERVICING COMPENSATION": Prepayment fees, assumption fees, fees
for insufficient funds, and other amounts in the nature of additional fees paid
by the Obligor.
"BUSINESS DAY": Any day other than (a) a Saturday or a Sunday or (b) a day
on which banking institutions in the State of West Virginia, the State of New
York, the State of Delaware, the State of Maryland, the State of Minnesota, the
State of California, or the state in which the principal office of the Note
Insurer is located are required or authorized by law, executive order or
governmental decree to be closed.
"CERTIFICATE DISTRIBUTION ACCOUNT": As defined in the Deposit Trust
Agreement.
"CLOSING DATE": On or about November 30, 1998.
"CODE": The Internal Revenue Code of 1986, as amended, and as may be
further amended from time to time, any successor statutes thereto, and
applicable U.S. Department of Treasury regulations issued pursuant thereto in
temporary or final form and proposed regulations thereunder to the extent that,
by reason of their proposed effective date, such proposed regulations would
apply.
"COLLECTION ACCOUNT": The segregated account or accounts, which shall at
all times be an Eligible Account, established and maintained pursuant to Section
2.02(b) and entitled "[Servicer], in trust for the benefit of Holders of City
Capital Home Loan Trust 1998-4 Asset-Backed Notes, Series 1998-4 and MBIA as
Note Insurer, Collection Account". References herein to the Collection Account
shall include any Sub-Servicing Account as the context requires. If a Servicer
Termination Event described in Section 6.01(f) hereof occurs, the Servicer shall
close the existing Collection Account and cause it to be re-established in the
name of the Indenture Trustee, and transfer all funds from the old Collection
Account to the new Collection Account.
"COLLECTION PERIOD": As to any Deposit Date, the period beginning on the
first day of the calendar month immediately preceding the month in which such
Deposit Date occurs and ending on the last day of such calendar month.
"COMBINED LOAN-TO-VALUE RATIO": With respect to any Home Loan, the
fraction, expressed as a percentage, the numerator of which is the Principal
Balance of such Home Loan at origination plus, in the case of a Home Loan
secured by a junior lien, the aggregate outstanding principal balance of the
related senior lien loans on the date of origination of such Home Loan, and the
denominator of which is the Appraised Value of the related Mortgaged Property at
the time of origination of such Home Loan.
"CUMULATIVE LOSS PERCENTAGE": As of any Payment Date, the percentage
equivalent of the fraction obtained by dividing (1) the principal amount of
Cumulative Realized Losses on the Home Loans from the applicable Cut-off Dates
through the end of the related Collection Period by (2) the Initial Pool
Principal Balance.
"CUMULATIVE LOSS RATE TRIGGER": The "Cumulative Loss Rate Trigger" occurs
on a Deposit Date if the Cumulative Loss Percentage equals or exceeds 10.00%.
"DELINQUENCY LOSS FACTOR": As of any Payment Date, the sum of (A) the
Principal Balance of all Home Loans that are 30-59 days delinquent multiplied by
25%, (B) the Principal Balance of all Home Loans that are 60-89 days delinquent
multiplied by 50%, (C) the Principal Balance of all Home Loans that are 90 or
more days delinquent multiplied by 100%, and (D) the Principal Balance of all
Home Loans modified in excess of the 3% limitation in Section 2.04 hereof.
"DELINQUENCY PERCENTAGE": For any Payment Date, the percentage equivalent
of the fraction obtained by dividing (1) the Aggregate Principal Balances of all
Home Loans that were more than 60 days contractually delinquent, REO Property,
in foreclosure, or for which the related Obligor was in a bankruptcy proceeding
or paying a reduced Monthly Payment as a result of a bankruptcy workout, as of
the end of the related Collection Period or that were modified in excess of the
3% limitation in Section 2.04 hereof, by (2) the Aggregate Principal Balance of
all of the Home Loans as of the related Determination Date.
"DELINQUENCY RATE TRIGGER": The Rolling Delinquency Percentage exceeds 8.0%
as of any Payment Date.
"DEPOSIT DATE": As to any Payment Date, the 18th day of the month in which
such Payment Date occurs or, if such 18th day is not a Business Day, the next
succeeding Business Day.
"DEPOSIT TRUST AGREEMENT": The Deposit Trust Agreement, dated as of
November 1, 1998, between the Depositor, Wilmington Trust Company, as Owner
Trustee, the Servicer, and Norwest Bank Minnesota, National Association, as
Trust Paying Agent, pursuant to which the Issuer was formed.
"DEPOSITOR": Financial Asset Securities Corp., as transferor of the Home
Loans to the Issuer pursuant to the terms of that certain Deposit Trust
Agreement.
"DETERMINATION DATE": As to any Deposit Date, the close of business on the
last day of the calendar month preceding the calendar month in which such
Deposit Date occurs.
"ELIGIBLE ACCOUNT": Either (A) a segregated account or accounts maintained
with an institution the deposits of which are insured by the Bank Insurance Fund
or the Savings Association Insurance Fund of the FDIC, the unsecured and
uncollateralized debt obligations of which shall be rated "AA" or better by
Standard & Poor's and "Aa2" or better by Moody's or in the highest short-term
rating category by Standard & Poor's and Moody's (A1 and P1, respectively), and
that is either (1) a federal savings and loan association duly organized,
validly existing and in good standing under the federal banking laws, (2) an
institution duly organized, validly existing and in good standing under the
applicable banking laws of any state, (3) a national banking association duly
organized, validly existing and in good standing under the federal banking laws,
(4) a principal subsidiary of a bank holding company or (5) approved in writing
by the Note Insurer or (B) a 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, the unsecured and uncollateralized debt obligations of which shall be
rated "Baa3" or better by Moody's.
"EVENT OF DEFAULT": As defined in Section 6.01.
"FANNIE MAE": Fannie Mae and its successors in interest.
"FDIC": The Federal Deposit Insurance Corporation and its successors in
interest.
"FEMA": The Federal Emergency Management Agency and its successors in
interest.
"FREDDIE MAC": Freddie Mac and its successors in interest.
"HOME LOAN": Each of the Home Loans pledged to the Indenture Trustee
pursuant to the Indenture that from time to time comprise part of the Trust
Estate, all of which originally so held being identified in the Home Loan
Schedule attached hereto as Schedule I.
"HOME LOAN DOCUMENTS": As defined in the Home Loan Sale Agreement.
"HOME LOAN FILE": As defined in the Home Loan Sale Agreement.
"HOME LOAN SALE AGREEMENT": The Home Loan Sale Agreement, dated as of
November 1, 1998, among the Seller, the Transferor and the Depositor, pursuant
to which the Depositor acquired the Home Loans.
"HOME LOAN SCHEDULE": As of any date, the schedule of Home Loans then
subject to this Agreement. The initial schedule of Home Loans as of the Cut-off
Dates therefor is attached hereto as Schedule I. The Home Loan Schedule shall be
amended from time to time by the Seller to reflect the addition of Home Loans
to, and the removal of Home Loans from, the Trust Estate pursuant to the
Indenture. The Home Loan Schedule shall include the information required by the
Indenture. The Home Loan Schedule and any amendment thereto shall be delivered
to the Indenture Trustee in both physical and computer-readable form.
"INDENTURE": The Indenture, dated as of November 1, 1998, among the Issuer
and Norwest Bank Minnesota, National Association, as Indenture Trustee, Note
Administrator and Custodian, pursuant to which the Home Loans and certain other
assets included in the Trust Estate are pledged as collateral for the Notes, and
any supplements or amendments thereto.
"INDENTURE TRUSTEE": Norwest Bank Minnesota, National Association, a
national banking association, and its successors in interest or any successor
trustee appointed as provided pursuant to the Indenture.
"INDENTURE TRUSTEE FEE": The monthly fee of the Indenture Trustee, which
shall be determined as set forth in the Indenture.
"INITIAL POOL PRINCIPAL BALANCE": The aggregate of the Principal Balances
of the Home Loans determined as of their respective Cut-off Dates (after
application of all payments of principal received in respect of any such Home
Loan before such Cut-off Dates), which aggregate amount is $182,598,309.53.
"INSURANCE PROCEEDS": With respect to any Deposit Date, proceeds paid by
any insurer (other than the Note Insurer) and received by the Servicer during
the related Collection Period pursuant to any insurance policy covering a Home
Loan or the related Mortgaged Property, including any deductible payable by the
Servicer with respect to a blanket insurance policy pursuant to Section 2.03 and
the proceeds from any fidelity bond or errors and omission policy pursuant to
Section 2.11, net of any component thereof covering any expenses incurred by or
on behalf of the Servicer and specifically reimbursable under this Agreement.
"INSURED PAYMENT": As defined in the Indenture.
"ISSUER": City Capital Home Loan Trust 1998-4, as issuer of the Notes
pursuant to the Indenture.
"LIQUIDATED HOME LOAN": As to any Deposit Date, any Home Loan shall be a
Liquidated Home Loan on the earlier of (1) the date as to which the Servicer has
determined, in accordance with the servicing procedures specified herein, that
all Liquidation Proceeds that it expects to recover from or on account of such
Home Loan have been recovered and (2) the date as to which any portion of the
Monthly Payment is 180 or more days past due.
"LIQUIDATION EXPENSES": Expenses that are incurred by the Servicer in
connection with the liquidation of any Home Loan and not recovered under any
insurance policy or from any Obligor. Such expenses with respect to any
Liquidated Home Loan shall include, without limitation, the outstanding amount
of any liens superior in priority, if any, to the lien of the foreclosed Home
Loan, legal fees and expenses, real estate brokerage commissions, any
unreimbursed amount expended by the Servicer pursuant to Section 2.05 respecting
the related Home Loan, and any other related and previously unreimbursed
Servicing Advances.
"LIQUIDATION PROCEEDS": Cash (other than Insurance Proceeds) received in
connection with the liquidation of any Mortgaged Property, whether through
trustee's sale, foreclosure sale, condemnation, taking by eminent domain or
otherwise received in respect of any Home Loan foreclosed upon as described in
Section 2.05 (including, without limitation, proceeds from the rental of the
related Mortgaged Property).
"LIQUIDATION REPORT": A liquidation report in the form of Exhibit C
attached hereto.
"MASTER SERVICING FEE": With respect to any Payment Date, 1/12 of the
product of 0.10% per annum and the Aggregate Principal Balance of the Home Loans
as of the first day of the related Collection Period (or, in the case of the
first Collection Period, the Initial Pool Principal Balance).
"MBIA PAYMENT DEFAULT": As defined in the Indenture.
"MONTHLY PAYMENT": With respect to any Mortgage Note, the amount of each
monthly payment payable by the Obligor under such Mortgage Note in accordance
with its terms, including one month's accrued interest on the related Principal
Balance at the then applicable Mortgage Interest Rate, but net of any portion of
such monthly payment that represents late payment charges, prepayment or
extension fees or collections allocable to payments to be made by Obligors for
payment of insurance premiums or similar items.
"MOODY'S": Moody's Investors Service, Inc. and its successors in interest.
"MORTGAGE": The mortgage, deed of trust or other instrument creating a
first lien on an estate in fee simple in real property securing a Home Loan.
"MORTGAGE INTEREST RATE": As defined in the Indenture.
"MORTGAGE NOTE": The note or other instrument evidencing the indebtedness
of an Obligor under the related Home Loan.
"MORTGAGED PROPERTY": The underlying property securing a Home Loan.
"NET LIQUIDATION PROCEEDS": As to any Home Loan, Liquidation Proceeds net
of Liquidation Expenses, but in no event shall the portion of Net Liquidation
Proceeds in respect of such Home Loan allocable to principal exceed the
outstanding Principal Balance of the related Home Loan.
"NET WORTH": For any fiscal quarter, the sum of the Servicer's assets
reflected on a balance sheet for such fiscal quarter prepared in accordance with
GAAP consistently applied minus the sum of the Servicer's liabilities required
to be shown as such on a balance sheet for such fiscal quarter prepared in
accordance with GAAP consistently applied.
"NOTE ACCOUNT": The segregated account established and maintained by the
Indenture Trustee pursuant to Section 8.02 of the Indenture.
"NOTE BALANCE": Note Balance, as defined in the Indenture.
"NOTEHOLDER" or "HOLDER": The Person in whose name a Note is registered in
the Note Register, except that, solely for the purpose of taking any action
under Article VI or giving any consent pursuant to this Agreement, any Note
registered in the name of the Issuer or the Servicer or any Person actually
known to a Responsible Officer of the Indenture Trustee to be an Affiliate of
the Issuer or the Servicer shall be deemed not to be outstanding and the Voting
Interest evidenced thereby shall not be taken into account in determining
whether Holders of the requisite Voting Interests necessary to take any such
action or effect any such consent have acted or consented unless the Issuer, the
Servicer or any such Person is an owner of record of all of the Notes.
"NOTE INSURANCE POLICY": The Financial Guaranty Insurance Policy (No.
28860) dated November 30, 1998, including any endorsements thereto, issued by
the Note Insurer for the benefit of the Noteholders, pursuant to which the Note
Insurer guarantees payment of Insured Payments.
"NOTE INSURER": MBIA Insurance Corporation, a stock insurance company
organized and created under the laws of the State of New York, and any
successors thereto.
"NOTE INSURER DEFAULT": The existence and continuance of any of the
following:
(a) an MBIA Payment Default;
(b) entry by a court having jurisdiction in the premises of (1) a
final and nonappealable decree or order for relief in respect of the Note
Insurer in an involuntary case or proceeding under any applicable United
States federal or state bankruptcy, insolvency, rehabilitation,
reorganization or other similar law or (2) a final and nonappealable decree
or order adjudging the Note Insurer bankrupt or insolvent, or approving as
properly filed a petition seeking reorganization, rehabilitation,
arrangement, adjustment or composition of or in respect of the Note Insurer
under any applicable United States federal or state law, or appointing a
custodian, receiver, liquidation, rehabilitator, assignee, trustee,
sequestrator or other similar official of the Note Insurer or of any
substantial part of its property, or ordering the winding-up or liquidation
of its affairs, and the continuance of any such decree or order for relief
or any such other decree or order unstayed and in effect for a period of 60
consecutive days; or
(c) the commencement by the Note Insurer of a voluntary case or
proceeding under any applicable United States federal or state bankruptcy,
insolvency, reorganization or other similar law or of any other case or
proceeding to be adjudicated bankrupt or insolvent, or the consent of the
Note Insurer to the entry of a decree or order for relief in respect of the
Note Insurer in an involuntary case or proceeding under any applicable
United States federal or state bankruptcy, insolvency case or proceeding
against the Note Insurer, or the filing by the Note Insurer of a petition
or answer or consent seeking reorganization or relief under any applicable
United States federal or state law, or the consent by the Note Insurer to
the filing of such petition or to the appointment of or the taking
possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator or similar official of the Note Insurer or of any substantial
part of its property, or the failure by the Note Insurer to pay debts
generally as they become due, or the admission by the Note Insurer in
writing of its inability to pay its debts generally as they become due, or
the taking of corporate action by the Note Insurer in furtherance of any
such action.
Notwithstanding anything to the contrary contained herein, upon the
existence and continuance of a Note Insurer Default, the consent by the Note
Insurer shall not be required for any action or inaction hereunder and the Note
Insurer shall not have any rights with respect thereto except that the Note
Insurer shall be entitled to an Opinion of Counsel to the effect that such
amendment does not materially and adversely impair the Note Insurer's interests
if an amendment is requested while a Note Insurer Default is continuing.
"NOTE INSURER PARTIES": The Note Insurer or its respective agents,
representatives, directors, officers or employees.
"NOTE REGISTER": The register maintained pursuant to Section 2.06 of the
Indenture.
"NOTES": The Issuer's Asset-Backed Notes, Series 1998-4, issued pursuant to
the Indenture.
"OBLIGOR": The borrower under a Mortgage Note.
"OFFICER'S CERTIFICATE": A certificate signed by the Chairman of the Board,
the Vice Chairman of the Board, the President, Chief Operating Officer or a Vice
President of the Seller, the Depositor, the Servicer or, in the case of the
Issuer, an authorized signatory of the Owner Trustee, as the case may be, and
delivered to the Indenture Trustee, Note Insurer or each Rating Agency, as the
case may be.
"ORIGINAL PRINCIPAL AMOUNT": With respect to any Home Loan, the original
principal amount due under the related Mortgage Note as of its date of
origination.
"PAYMENT AHEAD": Any payment remitted by a Obligor with respect to a
Mortgage Note during a Collection Period in excess of the Monthly Payment due
during such Collection Period with respect to such Mortgage Note, which excess
sums the related Obligor has instructed the Servicer to apply to Monthly
Payments due in one or more subsequent Collection Periods. A Monthly Payment
that was a Payment Ahead shall, for purposes of computing certain amounts under
this Agreement, be deemed to have been received by the Servicer on the date in
the related Collection Period on which such Monthly Payment would have been due
if such Monthly Payment had not been paid as part of a Payment Ahead.
"PAYMENT DATE": The date of payment on the Notes pursuant to the Indenture,
which date is the 25th day of each month or, if such day is not a Business Day,
the Business Day immediately following such 25th day, beginning in December
1998.
"PERCENTAGE INTEREST": As defined in the Indenture.
"PERMITTED INVESTMENTS": One or more of the following obligations,
instruments and securities:
(a) direct obligations of, and obligations fully guaranteed by, the
United States of America, Freddie Mac, Fannie Mae, the Federal Home Loan
Banks or any agency or instrumentality of the United States of America
rated "Aa3" or higher by Moody's, the obligations of which are backed by
the full faith and credit of the United States of America;
(b) (i) demand and time deposits in, certificates of deposit of,
banker's acceptances issued by or federal funds sold by any depository
institution or trust company (including the Indenture Trustee or its agent
acting in their respective commercial capacities) incorporated under the
laws of the United States of America or any state thereof and subject to
supervision and examination by federal and/or state authorities, so long
as, at the time of such investment or contractual commitment providing for
such investment, such depository institution or trust company or its
ultimate parent has a short-term unsecured debt rating in one of the two
highest available rating categories of S&P and Moody's and provided that
each such investment has an original maturity of no more than 365 days, and
(ii) any other demand or time deposit or deposit which is fully insured by
the FDIC;
(c) repurchase obligations with a term not to exceed 30 days with
respect to any security described in clause (a) above and entered into with
a depository institution or trust company (acting as a principal) rated "A"
or higher by S&P and rated "A2" or higher by Moody's; provided, however,
that collateral transferred pursuant to such repurchase obligation must be
of the type described in clause (a) above and must (i) be valued daily at
current market price plus accrued interest, (ii) pursuant to such
valuation, be equal, at all times, to 105% of the cash transferred by the
Indenture Trustee in exchange for such collateral and (iii) be delivered to
the Indenture Trustee or, if the Indenture Trustee is supplying the
collateral, an agent for the Indenture Trustee, in such a manner as to
accomplish perfection of a security interest in the collateral by
possession of certified securities;
(d) securities bearing interest or sold at a discount issued by any
corporation incorporated under the laws of the United States of America or
any state thereof which has a long-term unsecured debt rating in the
highest available rating category of each of the Rating Agencies at the
time of such investment;
(e) commercial paper having an original maturity of less than 365 days
and issued by an institution having a short-term unsecured debt rating in
the highest available rating category of each of the Rating Agencies at the
time of such investment;
(f) a guaranteed investment contract approved by each of the Rating
Agencies and the Note Insurer and issued by an insurance company or other
corporation having a long-term unsecured debt rating in the highest
available rating category of each of the Rating Agencies at the time of
such investment;
(g) money market funds having ratings in the highest available rating
categories of Moody's and one of the two highest available rating
categories by S&P at the time of such investment (any such money market
funds which provide for demand withdrawals being conclusively deemed to
satisfy any maturity requirements for Permitted Investments set forth
herein), including money market funds of the Indenture Trustee and any such
funds that are managed by the Indenture Trustee or its affiliates or for
which the Indenture Trustee or any affiliate acts as advisor as long as
such money market funds satisfy the criteria of this subparagraph (g); and
(h) any investment otherwise acceptable to the Note Insurer and each
Rating Agency.
"PERSON": Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, limited liability company,
unincorporated organization or government or any agency or political subdivision
thereof.
"PRINCIPAL BALANCE": As to any Home Loan and any Determination Date, the
actual outstanding principal amount thereof as of the close of business on the
Determination Date in the preceding month (or, in the case of the first
Determination Date, as of the applicable Cut-off Date) less (1) all scheduled
payments of principal received in respect of such Home Loan and due during the
related Collection Period, (2) all other amounts collected, received, or
otherwise recovered in respect of principal on the Home Loans (including
Principal Prepayments, but not including Payments Ahead that are not allocable
to principal for the related Collection Period) during or in respect of the
related Collection Period, (3) Net Liquidation Proceeds and Trust Insurance
Proceeds allocable to principal recovered or collected in respect of such Home
Loan during the related Collection Period, (4) the portion of the Purchase Price
allocable to principal to be remitted to the Indenture Trustee on or prior to
the next succeeding Deposit Date in connection with a release and removal of
such Home Loan pursuant to the Indenture, to the extent such amount is actually
remitted on or prior to such Deposit Date; provided, however, that a Home Loan
that has become a Liquidated Home Loan since the preceding Determination Date
(or, in the case of the first Determination Date, since the applicable Cut-off
Date) will be deemed to have a Principal Balance of zero on the current
Determination Date, and (5) any other reduction in the principal balance of the
related Mortgage Note, including a reduction as a result of any bankruptcy or
other court order; provided that the principal balance of the Home Loan shall be
zero on the Stated Maturity Date.
"PRINCIPAL PREPAYMENT": As to any Home Loan and Collection Period, any
payment by a Obligor or other recovery in respect of principal on a Home Loan
(including the portion of Net Liquidation Proceeds in respect of such Home Loan
allocable to principal) that, in the case of a payment by an Obligor, is
received in advance of its scheduled due date and is not a Payment Ahead.
"PURCHASE PRICE": As defined in the Indenture.
"RATING AGENCIES": Standard & Poor's and Moody's (each, a "Rating Agency").
If either such agency or a successor is no longer in existence, "Rating Agency"
shall be such nationally recognized statistical credit rating agency, or other
comparable Person, designated by the Servicer, notice of which designation shall
be given to the Indenture Trustee.
"REALIZED LOSS": With respect to any Liquidated Home Loan, the amount, if
any, by which the Principal Balance of such Home Loan (determined as of the
Determination Date immediately prior to such Home Loan becoming a Liquidated
Home Loan) exceeds the portion of Net Liquidation Proceeds, if any, in respect
of such Home Loan allocable to principal, which amount shall in no event exceed
the Principal Balance of such Home Loan (determined as of the Determination Date
immediately prior to such Home Loan becoming a Liquidated Home Loan); provided
however, that Realized Losses shall be reduced by 80% of any amounts recovered
by the Servicer subsequent to the date on which a Home Loan became a Liquidated
Home Loan.
"REFINANCED HOME LOAN": A Home Loan the proceeds of which were not used to
purchase the related Mortgaged Property.
"REMITTABLE FUNDS": With respect to any Deposit Date, the amount equal to
the aggregate of the following amounts:
(a) all payments in respect of or allocable to interest received with
respect to the Home Loans during the related Collection Period and all
other interest payments on or in respect of the Home Loans received by or
on behalf of the Servicer during the related Collection Period (including
Payments Ahead that are allocable to interest for the related Collection
Period), and any net income from related REO Properties collected during
the related Collection Period;
(b) all scheduled payments of principal received (or deemed to have
been received, in the case of Payments Ahead) with respect to the Home
Loans during the related Collection Period, and all other principal
payments (including Principal Prepayments, but excluding amounts described
elsewhere in this definition) received or deemed to have been received
during the related Collection Period (including Payments Ahead that are
allocable as principal for the related Collection Period) in respect of the
Home Loans; and
(c) all Trust Insurance Proceeds, Net Liquidation Proceeds received
during the related Collection Period, and any subsequent collections on any
Liquidated Home Loan to the extent of any Realized Loss incurred with
respect to such Home Loan, after payment to the Servicer of any additional
compensation permitted in respect of such Home Loan under Section 2.07;
but net of the following amounts:
(1) the Servicing Fee and any other compensation payable to the
Servicer pursuant to Section 2.07 for the related Collection Period to
the extent not previously paid to or retained by the Servicer;
(2) the aggregate amount of Servicing Advances, not to exceed
$250 per Home Loan, made by the Servicer with respect to any Home Loan
and not previously reimbursed to the Servicer;
(3) the aggregate amount of Servicing Advances to the extent of
amounts recovered on the Home Loans with respect to which the Servicer
made such Servicing Advances (other than those included in the related
Liquidation Expenses or netted out by the Servicer from related
Insurance Proceeds or reimbursed pursuant to clause (2) above) or
reimbursed to the Servicer pursuant to Section 8.02(c) of the
Indenture;
(4) any amount deposited into the Collection Account that may not
be withdrawn therefrom pursuant to a final and nonappealable order of
a United States bankruptcy court of competent jurisdiction imposing a
stay pursuant to Section 362 of the United States Bankruptcy Code and
that would otherwise have been included in Remittable Funds on such
Deposit Date; and
(5) excess Net Liquidation Proceeds as described in the second
paragraph of Section 2.05.
"REO PROPERTY": Any Mortgaged Property acquired by the Indenture Trustee,
on behalf of the Trust, by foreclosure, deed in lieu of foreclosure, or similar
action.
"RESPONSIBLE OFFICER": When used with respect to the Indenture Trustee, the
Chairman or Vice Chairman of the Board of Directors or Trustees, the Chairman or
Vice Chairman of the Executive or Standing Committee of the Board of Directors
or Trustees, the President, the Chairman of the Committee on Trust Matters, any
Vice President, the Secretary, any Assistant Secretary, the Treasurer, any
Assistant Treasurer, the Cashier, any Assistant Cashier, any Trust Officer or
Assistant Trust Officer, the Controller and any Assistant Controller or any
other officer of the Indenture Trustee customarily performing functions similar
to those performed by any of the above designated officers and 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": As of any Payment Date, the average of
the Delinquency Percentages as of the last day of each of the three (or one,
two, and three in the case of the first three Payment Dates, as applicable) most
recently ended Collection Periods.
"ROLLING LOSS PERCENTAGE": As of any Payment Date, the percentage
equivalent of a fraction, the numerator of which is the aggregate amount of
Realized Losses incurred during the preceding 12 Collection Periods, and the
denominator of which is the aggregate Principal Balances of the Home Loans as of
the first day of the 12th preceding Collection Period.
"ROLLING LOSS RATE TRIGGER": The Rolling Loss Percentage exceeds 2.50% as
of any Payment Date on or after the Payment Date occurring in December 1998.
"SELLER": City National Bank of West Virginia, as seller of the Home Loans.
"SERVICER": City National Bank of West Virginia, or any successor servicer
appointed as provided pursuant to this Agreement.
"SERVICER REMITTANCE REPORT": The monthly report prepared by the Servicer
and delivered to the parties specified in Section 3.01.
"SERVICER TERMINATION EVENT": As defined in Section 6.01.
"SERVICING ADVANCES": All reasonable and customary "out-of-pocket" costs
and expenses incurred in the performance by the Servicer of its servicing
obligations, including, but not limited to, the cost of (1) the preservation,
restoration, and protection of the Mortgaged Properties, including without
limitation advances in respect of real estate taxes and assessments and
insurance premiums on fire, hazard and, if applicable, flood insurance policies,
to the extent not paid by the related Obligors, (2) any enforcement or judicial
proceedings with respect to the Home Loans or Mortgaged Properties, including
collections and foreclosures, (3) the management and liquidation of any REO
Property and (4) compliance with the Servicer's obligations under Section 2.03
(other than its obligation to deposit in the Collection Account amounts
representing the deductible in respect of any blanket hazard insurance policy).
"SERVICING FEE": With respect to any Payment Date, 1/12 of the product of
the Servicing Fee Rate and the Aggregate Principal Balance of the Home Loans as
of the first day of the related Collection Period (or, in the case of the first
Collection Period, the Initial Pool Principal Balance).
"SERVICING FEE RATE": 1.00% per annum.
"SERVICING OFFICER": Any officer of the Servicer involved in, or
responsible for, the administration and servicing of the Home Loans whose name
and specimen signature appear on a list of servicing officers annexed to an
Officer's Certificate furnished to the Indenture Trustee by the Servicer, as
such list may from time to time be amended.
"STANDARD & POOR'S" OR "S&P": Standard & Poor's Ratings Services, a
division of The McGraw-Hill Companies, Inc., and its successors in interest.
"SUB-SERVICER": Any Person, including an Affiliate of the Servicer, with
whom the Servicer has entered into a Sub-Servicing Agreement and who satisfies
the requirements set forth in Section 2.14 hereof in respect of the
qualification of a Sub-Servicer.
"SUB-SERVICING ACCOUNT": Any segregated account, which shall at all times
be an Eligible Account, established and maintained as though it were a
Collection Account pursuant to Section 2.02(b) and entitled "[Sub-Servicer], in
trust for the benefit of Holders of City Capital Home Loan Trust 1998-4
Asset-Backed Notes, Series 1998-4, and MBIA as Note Insurer Collection Account".
References herein to the Collection Account shall include any Sub-Servicing
Account as the context requires.
"SUB-SERVICING AGREEMENT": A written contract between the Servicer and any
Sub-Servicer relating to the servicing and/or administration of certain Home
Loans.
"TOTAL EXPECTED LOSSES": As of any Payment Date, the sum of (1) cumulative
Realized Losses on the Home Loans from the applicable Cut-off Dates through the
end of the related Collection Period and (2) the Delinquency Loss Factor.
"TOTAL EXPECTED LOSSES TRIGGER": As of any Payment Date, (1) from the
Closing Date through and including the fifth anniversary of the Closing Date,
the Total Expected Losses equal or exceed 13.00% of the Initial Pool Principal
Balance of the Home Loans and (2) from the date immediately following the fifth
anniversary of the Closing Date and thereafter, the Total Expected Losses equal
or exceed 16.00% of the Initial Pool Principal Balance of the Home Loans.
"TRANSFEROR": City Capital Markets Corporation, as transferor of the Home
Loans to the Depositor pursuant to the terms of that certain Home Loan Sale
Agreement.
"TRUST CERTIFICATES": The certificates of beneficial ownership of the
Issuer.
"TRUST ESTATE": As defined in the Indenture.
"TRUST INSURANCE PROCEEDS": Insurance Proceeds that (1) are applied by the
Servicer to reduce the Principal Balance of the related Home Loan and (2) not
applied to the restoration or repair of the related Mortgaged Property or
released to the related Obligor in accordance with the Servicer's normal
servicing procedures, applicable law or the terms of the related Home Loan.
"TRUST PAYING AGENT": As defined in the Deposit Trust Agreement.
"VICE PRESIDENT": Any vice president, whether or not designated by a number
or a word or words added before or after the title "vice president".
"VOTING INTEREST": With respect to any provisions hereof providing for the
action, consent or approval of the Holders of all Notes evidencing specified
Voting Interests in the Trust Estate, the Noteholders will collectively be
entitled to 100% of the aggregate Voting Interests represented by all Notes.
Voting Interests allocated to the Notes shall be allocated in proportion to the
Note Balance. With respect to any provision hereof providing for action, consent
or approval of the Notes, each Holder of the Notes will have a Voting Interest
in the Notes equal to such Holder's Percentage Interest in the Notes.
Section 1.02.00 Interest Calculations.
---------------------
All calculations of interest at the Mortgage Interest Rate that are made in
respect of the Principal Balance of a Home Loan, shall be made on a monthly
basis using a 360-day year of twelve 30 day months.
Section 1.03.00 Determination of Material Adverse Effect.
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Whenever a determination is to be made under this agreement as to whether a
given action, course of conduct, event or set of facts or circumstances could or
would have a material adverse effect on the Trust Estate, the Note Insurer or
any Noteholder (or any similar or analogous determination), such determination
shall be made without giving effect to the insurance provided by the Note
Insurance Policy.
ARTICLE II
ADMINISTRATION AND SERVICING OF HOME LOANS
Section 2.01.00 Servicing Generally.
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(a) General Duties; Licensing. Acting directly or through one or more
---------------------------
Sub-Servicers as provided in Section 2.14, the Servicer, as servicer, shall
administer the Home Loans with reasonable care, using that degree of skill and
attention that the Servicer exercises with respect to all comparable home loans
that it services for itself or others and in conformance with standard industry
practice for servicing of home loans similar to the Home Loans. The Servicer
shall follow its customary standards, policies and procedures in performing its
duties as Servicer, to the extent not in conflict with the provisions of this
Agreement. Notwithstanding the appointment of any Sub-Servicer, the Servicer
shall remain liable for the performance of all of the servicing obligations and
responsibilities under this Agreement. The Servicer shall maintain all licenses
and qualifications necessary under the laws of any jurisdiction where Mortgaged
Properties are located for it to perform the servicing obligations hereunder
legally. The Servicer shall cause any Sub-Servicer to maintain for it all
licenses and qualifications necessary to perform its servicing obligations in
the states where the Mortgaged Properties to which the applicable Sub-Servicing
Agreement relates are located. The Servicer shall cooperate with the Issuer, the
Indenture Trustee, and the Note Administrator and furnish to the Issuer, the
Indenture Trustee, and the Note Administrator such information in its possession
as may be necessary or otherwise reasonably requested to enable the Issuer, the
Indenture Trustee, and the Note Administrator, to perform their respective tax
reporting duties under the Indenture. The Issuer and the Indenture Trustee shall
furnish the Servicer with any powers of attorney and other documents requested
by the Servicer and the Master Servicer necessary or appropriate to enable the
Servicer to carry out its servicing and administrative duties hereunder, within
5 days of receipt of such request. The forms of such documents shall be appended
to such requests.
(b) Interest Rate and Monthly Payments. The Servicer shall enforce each
------------------------------------
Home Loan. The Servicer's records shall, at all times, reflect the Mortgage
Interest Rate and Monthly Payment.
(c) Servicer Authority. Without limiting the generality of the foregoing,
-------------------
the Servicer (1) shall continue, and is hereby authorized and empowered by the
Issuer and the Indenture Trustee, to execute and deliver, on behalf of itself,
the Issuer, the Noteholders, the Note Insurer and the Indenture Trustee or any
of them, any and all instruments of satisfaction or cancellation, or of partial
or full release or discharge and all other comparable instruments, with respect
to the Home Loans and with respect to the related Mortgaged Properties and (2)
subject to Section 2.05, to institute foreclosure proceedings or obtain deeds in
lieu of foreclosure so as to convert ownership of Mortgaged Properties into the
name of the Indenture Trustee pursuant to Section 2.05 of this Agreement. The
Servicer may sue to enforce or collect on any of the Home Loans or any insurance
policy covering a Home Loan, in its own name if possible, or on behalf of the
Issuer or the Indenture Trustee. If the Servicer commences a legal proceeding to
enforce a Home Loan or any such insurance policy, the Issuer and the Indenture
Trustee shall thereupon be deemed to have automatically assigned the Home Loan
or the rights under such insurance policy to the Servicer for purposes of
collection only. If, however, in any suit or legal proceeding for enforcement,
it is held that the Servicer may not enforce or collect on a Home Loan or any
insurance policy covering a Home Loan on the ground that it is not a real party
in interest or a holder entitled to enforce such Home Loan or such insurance
policy, as the case may be, then the Issuer and the Indenture Trustee shall,
upon the written request of a Servicing Officer, execute and return to the
Servicer such powers of attorney and other documents as are necessary or
appropriate to enable the Servicer to enforce such Home Loan or insurance
policy, as the case may be, and which are prepared by the Servicer and submitted
to the Issuer or the Indenture Trustee for execution.
The Servicer, on behalf of the Issuer, the Noteholders and the Note
Insurer, shall prepare, execute, deliver and take all actions reasonably
necessary to protect the Trust Estate pursuant to Section 3.05 of the Indenture
and shall, on behalf of the Issuer, execute and deliver and take any additional
actions as shall be deemed necessary to effect the administrative obligations of
the Issuer under the Indenture.
(d) Independent Contractor Relationship. The relationship of the Servicer
------------------------------------
to the Issuer and the Indenture Trustee under this Agreement is intended by the
parties to be that of an independent contractor and not that of a joint
venturer, partner or agent.
Section 2.02.00 Collection of Certain Home Loan Payments; Collection
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Account.
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(a) Collection Procedures. The Servicer shall, to the extent such
----------------------
procedures shall be consistent with this Agreement, follow such collection
procedures as it follows from time to time with respect to Home Loans in its
servicing portfolio that are comparable to the Home Loans. The Servicer shall
not amend or modify these procedures, policies and practices with respect to the
Home Loans (other than as required by applicable laws and regulations) without
the prior consent of the Note Insurer and the Master Servicer, and a copy of any
such amendment or modification shall be furnished to the Indenture Trustee.
Consistent with the foregoing, the Servicer may in its discretion (1) waive any
assumption fees, late payment charges, charges for checks returned for
insufficient funds, prepayment fees, if any, or other fees that may be collected
in the ordinary course of servicing the Home Loans, (2) if an Obligor is in
default or appears about to be in default because of an Obligor's financial
condition, arrange with the Obligor a schedule for the payment of delinquent
payments due on the related Home Loan or (3) modify payments of monthly
principal and interest on any Home Loan becoming subject to the terms of the
Soldiers' and Sailors' Civil Relief Act of 1940, as amended (the "Relief Act"),
in accordance with the Servicer's general policies for comparable Home Loans
subject to the Relief Act; provided, however, that the Servicer shall not,
without the prior written consent of the Note Insurer, permit any waiver,
modification or variance of a Home Loan unless permitted under Section 2.04. The
Servicer will not consent to the placement of a deed of trust or mortgage, as
applicable, on any Mortgaged Property that has a priority equal to or higher
than the lien securing the related Home Loan unless such Home Loan is prepaid in
full. No partial release of a Home Loan shall be made if it would cause the
current Combined Loan-to-Value Ratio of the Home Loan (taking into account the
partial release) to be higher than the original Combined Loan-to-Value Ratio of
the Home Loan.
(b) Collection Account. The Servicer shall establish and maintain, or cause
------------------
to be established and maintained, one or more Eligible Accounts that in the
aggregate are the Collection Account. At the Servicer's option, amounts held in
the Collection Account shall be invested by the depository institution or trust
company then maintaining the account at the written direction of the Servicer in
Permitted Investments that mature not later than the Deposit Date next
succeeding the date of investment. The Servicer shall not retain any cash or
investment in the Collection Account for a period in excess of 12 months and
cash therein shall be considered transferred on a first-in, first-out basis to
the Indenture Trustee for inclusion in the Note Account, as described in Section
2.02(d). All net income and gain realized from any such investment shall be for
the benefit of the Servicer as additional servicing compensation and shall be
subject to its withdrawal or order from time to time. Any losses realized in
connection with any such investment shall be for the account of the Servicer and
the Servicer shall deposit or cause to be deposited the amount of such loss (to
the extent not offset by income from other investments) in the Collection
Account immediately upon the realization of such loss and shall have no right to
reimbursement therefor. Any benefit resulting from deposits, maintenance or
investment of funds in the Collection Account shall be for the Servicer's
benefit.
(c) Deposits to Collection Account. Subject to the last paragraph of this
-------------------------------
Section 2.02(c), the Servicer shall deposit in the Collection Account each of
the following payments on and collections in respect of the Home Loans as soon
as practicable, but in no event later than the close of business on the second
Business Day after its receipt thereof:
(i) all payments in respect of or allocable to interest on the Home
Loans (including any net income from REO Properties), net of the Servicing
Fees attributable to such payments;
(ii) all collections of principal on or with respect to the Home
Loans;
(iii) all Payments Ahead;
(iv) all Net Liquidation Proceeds;
(v) all Trust Insurance Proceeds (including, for this purpose, any
amounts required to be credited by the Servicer pursuant to the last
sentence of Section 2.03); and
(vi) any subsequent collections on any Liquidated Home Loan to the
extent of any Realized Loss incurred with respect to such Home Loan, after
payment to the Servicer of any additional compensation permitted in respect
of such Home Loan under Section 2.07;
in any case net of its Servicing Fees, Ancillary Servicing Compensation,
reimbursable outstanding Servicing Advances, and fees payable to the Servicer in
respect of any subsequent collections on Liquidated Home Loans to the extent the
Servicer's automated system deducts such amounts from collected funds prior to
deposit of such collected funds into the Collection Account.
The Servicer shall replace all amounts previously withdrawn from the
Collection Account and applied by the Servicer towards the payment of a
Servicing Advance pursuant to Section 4.01 by depositing into the Collection
Account on or prior to the Deposit Date immediately following such withdrawal an
amount equal to the total of all such amounts so applied since the immediately
preceding Deposit Date.
The foregoing requirements respecting deposits to the Collection Account
are exclusive, it being understood that, without limiting the generality of the
foregoing, the Servicer need not deposit in the Collection Account amounts
representing fees, late payment charges, charges for checks returned for
insufficient funds, prepayment fees, if any, or extension or other
administrative charges paid by Obligors or amounts received by the Servicer for
the account of Obligors for application towards the payment of taxes, insurance
premiums, assessments and similar items. The amounts deposited in the Collection
Account are subject to withdrawal by the Servicer, from time to time, (1) to
make transfers to the Indenture Trustee for deposit into the Note Account
pursuant to Section 2.02(d), (2) to pay itself the Servicing Fee, to the extent
not already paid to or retained by the Servicer, pursuant to Section 2.07,
Ancillary Servicing Compensation, and investment income on Permitted
Investments, (3) to make Servicing Advances or to reimburse itself for Servicing
Advances, as applicable, in either case in accordance with Section 4.01, (4) to
withdraw amounts that have been deposited into the Collection Account in error
or (5) to clear and terminate the Collection Account in accordance with the
Indenture. In addition, if the Servicer deposits in the Collection Account any
amount not required to be so deposited or any amount in respect of payments by
Obligors made by checks subsequently returned for insufficient funds or other
reason for non-payment, it may at any time withdraw such amount from the
Collection Account, any provision herein to the contrary notwithstanding.
Upon such terms as the Note Insurer, Standard & Poor's and Moody's may
approve, the Servicer may make the deposits to the Collection Account referred
to in Section 2.02(c) on a later day than the second Business Day after receipt
of the amounts required to be so deposited, which terms and later day shall be
specified by the Note Insurer, Standard & Poor's and Moody's and confirmed to
the Indenture Trustee and the Servicer in writing; provided, however, that in
any event such amounts shall be deposited into the Collection Account no later
than the next succeeding Deposit Date.
(d) Remittances to Indenture Trustee. At or before 12:00 noon Charleston,
---------------------------------
West Virginia time on each Deposit Date, the Servicer shall withdraw from the
Collection Account all amounts on deposit therein that constitute any portion of
Remittable Funds for the related Deposit Date and remit such amounts to the
Indenture Trustee for deposit into the Note Account. In addition, any amounts
required pursuant to the Indenture to be deposited into the Note Account in
connection with a purchase of any Home Loans by the Servicer pursuant to the
Indenture and any other amounts required by this Agreement to be deposited by
the Servicer with the Indenture Trustee shall be remitted to the Indenture
Trustee for deposit into the Note Account on the applicable Deposit Date. On
each Deposit Date after the Indenture has been satisfied and released for so
long as the Deposit Trust Agreement remains in effect, the Servicer shall remit
all Remittable Funds to the Trust Paying Agent, for deposit into the Certificate
Distribution Account in accordance with the Deposit Trust Agreement.
In the event that the Servicer does not remit all Remittable Funds for the
related Payment Date on the Deposit Date, the Servicer also shall pay to the
Indenture Trustee on demand, for its own account and not for the account of the
Noteholders, an amount equal to the income that the Indenture Trustee would have
received on the investment of such funds in Permitted Investments, as reasonably
calculated by the Indenture Trustee, from the Deposit Date until the date that
such Remittable Funds have been remitted to the Indenture Trustee.
Section 2.03.00 Hazard Insurance Policies.
-------------------------
The Servicer shall cause to be maintained for each Home Loan as to which
the related Mortgaged Property has been acquired on behalf of the Indenture
Trustee upon foreclosure, by deed in lieu of foreclosure or comparable
conversion, hazard insurance (including flood insurance coverage, if obtainable,
to the extent such property is located in a federally designated flood area in
such amount as is required under applicable FEMA guidelines) with extended
coverage in an amount that is not less than the lesser of (1) the maximum
insurable value from time to time of the improvements securing such Home Loan
from time to time, (2) the combined principal balance owing on such Home Loan
and any loan senior to such Home Loan and (3) the minimum amount required to
compensate for damage or loss on a replacement cost basis; provided, further,
that such hazard insurance shall be in an amount not less than such amount as is
necessary to avoid the application of any coinsurance clause contained in the
related hazard insurance policy. Each such hazard insurance policy shall contain
a standard mortgagee loss payable clause naming the originator, its successors
and assigns, as mortgagee. The Servicer shall be under no obligation to require
that any Obligor maintain earthquake or other additional insurance and shall be
under no obligation itself to maintain any such additional insurance on property
acquired in respect of a Home Loan, other than pursuant to such applicable laws
and regulations as shall at any time be in force and as shall require such
additional insurance. Amounts collected by the Servicer under any such policies
shall be deposited into the Collection Account in accordance with Section 2.02
to the extent that they constitute Net Liquidation Proceeds or Trust Insurance
Proceeds. If the Servicer shall obtain and maintain a blanket policy, issued by
an insurer acceptable to each Rating Agency and the Note Insurer, insuring
against such hazard losses, it shall conclusively be deemed to have satisfied
its obligations as set forth in the first sentence of this Section, it being
understood and agreed that such policy may contain a deductible clause that is
in form and substance consistent with standard industry practice, in which case
the Servicer shall, in the event that there shall not have been maintained on
the related Mortgaged Property a policy complying with the first sentence of
this Section 2.03, and there shall have been a loss that would have been covered
by such policy, deposit in the Collection Account in accordance with Section
2.02 the amount not otherwise payable under the blanket policy because of such
deductible clause from its own funds, and such amount shall not be reimbursable
to the Servicer.
Section 2.04.00 Assumption and Modification Agreements.
--------------------------------------
In any case in which property subject to a Mortgage is voluntarily conveyed
by the Obligor, the Servicer may enter into an assumption agreement with the
Person to whom such Mortgaged Property has been or is about to be conveyed,
pursuant to which such Person becomes liable under the related Mortgage Note
and, to the extent permitted by applicable law or the related mortgage
documents, the Obligor remains liable thereon. The Servicer shall not enter into
any assumption agreement which modifies the Mortgage Interest Rate or payment
terms of the Mortgage Note without the consent of the Note Insurer. If the
Person to whom such Mortgaged Property has been or is about to be conveyed
satisfies the Servicer's then-current underwriting standards as to borrower
creditworthiness for home loans similar to the Home Loans and is in the same
Seller credit rating category as that which was assigned to the borrower under
the Home Loan being replaced, the Servicer may enter into a substitution of
liability agreement with such person, under which the previous Obligor is
released from liability thereon and the transferee is substituted as an Obligor
and becomes liable under the Mortgage Note. The Servicer shall not permit an
assumption agreement or a substitution of liability agreement with respect to a
Home Loan unless permitted by applicable law and unless the Servicer determines
that such action would not materially increase the risk of default or
delinquency on such Home Loan or materially impair the security for such Home
Loan. The Servicer will not enter into any assumption agreement or substitution
of liability agreement unless such agreement complies with the Servicer's
standard servicing procedures and the Servicer would enter into such agreement
with respect to a home loan in its own portfolio. The Servicer shall notify the
Indenture Trustee and the Master Servicer that any assumption agreement or
substitution of liability agreement has been completed and the Servicer shall
forward to the Custodian the original of such assumption agreement or
substitution of liability agreement. Such assumption agreement or substitution
of liability agreement shall, for all purposes, be considered a part of the
related Home Loan File to the same extent as all other documents and instruments
constituting a part thereof. In connection with any such agreement, the Mortgage
Interest Rate shall not be reduced (but may be increased), the Principal Balance
of such Home Loan shall not be changed and the term of such Home Loan will not
be extended beyond the existing term of such Home Loan. Any fee collected by the
Servicer for entering into any such agreement shall be retained by the Servicer
as Ancillary Servicing Compensation.
Notwithstanding any other provision hereof 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 reasons of any assumption of a
Home Loan, or transfer of any Mortgaged Property without the assumption thereof,
by operation of law or any assumption or transfer that the Servicer reasonably
believes it may be restricted by law from preventing, for any reason whatsoever.
Subject to the limitations in the following paragraph, the Servicer shall
not agree to any modification, waiver, or amendment of any provision of any Home
Loan unless, in the Servicer's good faith judgment, (i) such modification,
waiver or amendment would minimize the loss that might otherwise be experienced
with respect to such Home Loan, and (ii) such Home Loan has experienced a
payment default or a payment default is reasonably foreseeable by the Servicer.
Notwithstanding the foregoing, no modification, waiver, or amendment of a Home
Loan shall be permitted which, without the prior written consent of the Note
Insurer, would (1) change the Mortgage Interest Rate, (2) forgive the payment of
any principal or interest, (3) impair the priority of the lien represented by
the related Mortgage, (4) extend the final maturity date of the Home Loan beyond
September 25, 2029 in any case except to the extent required under the Relief
Act, or (5) provide for any modified Monthly Payment in an amount less than the
current accrued interest on the Principal Balance of such Home Loan.
Pursuant to the restrictions set forth in the preceding paragraph, the
Servicer shall have the right to modify, waive or amend any provisions of the
Home Loans, in an aggregate amount (as measured by the Principal Balances of
such Home Loans) not to exceed 3.0% of the Initial Pool Principal Balance of the
Home Loans without the consent of the Note Insurer. Any modification, waiver or
amendment of Home Loans in excess of the foregoing 3.0% limitation shall be
subject to prior written consent of the Note Insurer and the Principal Balance
of any Home Loan so modified, waived or amended shall be included in the
calculation of the Delinquency Percentage and the Delinquency Loss Factor.
In conjunction with the foregoing, the Servicer shall notify the Indenture
Trustee of any modification, waiver or amendment of any provision of any Home
Loan and the date thereof, and shall deliver to the Custodian for deposit in the
related Home Loan File, an original counterpart of the agreement relating to
such modification, waiver or amendment, promptly following the execution
thereof. Such notice shall state that the conditions contained in this Section
2.04 have been satisfied.
Section 2.05.00 Servicer's Protection of Trust Estate; Realization upon
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Defaulted Home Loans
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(a) Servicer's Protection of Trust Estate. Subject to the servicing
standard and the terms of this Agreement and of the respective Home Loans, the
Servicer shall have full power and authority, 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 (including exercising any remedy under any Home
Loan, retaining counsel in connection with the performance of any of its
obligations hereunder, and instigating litigation to enforce any obligation of
any Obligor, without the consent or approval of the Indenture Trustee, unless
any such consent or approval is expressly required hereunder or under applicable
law), subject only to the specific requirements and prohibitions of applicable
law, this Agreement (particularly Section 2.04 hereof), and the respective Home
Loans and, with respect to any delinquent or defaulted Home Loan, subject to the
Servicer's good faith determination that such action is necessary or desirable
to realize maximum value for such Home Loan. In performing its obligations
hereunder the Servicer shall at all times act in good faith in a commercially
reasonable manner in accordance with all requirements of law applicable to the
Home Loans. In connection with the servicing of the Home Loans, the Servicer
shall prepare and execute any and all documents or instruments necessary to
maintain the lien created by any Home Loan on the related Mortgaged Property.
The Servicer may agree to modifications, waivers, amendments, subordinations,
consents to or with respect to any documents related to the Home Loan only as
permitted by Section 2.04. The Servicer shall notify the Indenture Trustee, the
Master Servicer and the Note Insurer of any such action and the date thereof,
and shall promptly provide the Indenture Trustee, the Master Servicer, and the
Note Insurer a status report with respect to such actions. The Servicer shall
deliver to the Custodian for deposit in the related Home Loan File an original
counterpart of the agreement relating to such action and a copy of such
agreement for the Custodian's records promptly following the execution thereof.
The Indenture Trustee shall execute, at the direction of the Servicer, any
powers of attorney and other documents necessary or appropriate to enable the
Servicer to carry out its servicing and administrative duties hereunder and
necessary to maintain the lien created by any Mortgage on the related Mortgaged
Property or any portion thereof.
(b) Realization Upon Default. The Servicer, on behalf of and as the agent
of the Indenture Trustee, shall foreclose upon or otherwise comparably convert
the ownership of Mortgaged Properties securing such of the Home Loans as come
into and continue in default and as to which no satisfactory arrangements can be
made for collection of delinquent payments pursuant to Section 2.02(a) into the
name of the Indenture Trustee; provided, however, that if the Servicer has
actual knowledge or reasonably believes that any Mortgaged Property is affected
by hazardous or toxic wastes or substances, then the Servicer will cause to be
undertaken an environmental inspection of the Mortgaged Property that complies
with Fannie Mae's selling and servicing guide applicable to single family homes
and its servicing procedures. If the environmental inspection reveals any
potentially hazardous substances, the Servicer will notify the Indenture Trustee
and the Note Insurer, and the Servicer will not foreclose or accept a deed in
lieu of foreclosure on the Mortgaged Property without the consent of the Note
Insurer. In connection with such foreclosure or other conversion, the Servicer
shall follow such practices and procedures as it shall deem necessary or
advisable and as shall be normal and usual in its general loan servicing
activities. The foregoing is subject to the proviso that the Servicer shall not
be required to expend its own funds in connection with any foreclosure or
restoration of any Mortgaged Property unless, in the reasonable judgment of the
Servicer, such foreclosure, correction or restoration will increase Net
Liquidation Proceeds (taking into account the reimbursement of such expenses to
the Servicer and any unreimbursed Servicing Advances made or expected to be made
with respect to such Home Loan).
To the extent the Net Liquidation Proceeds derived from any such
foreclosure or conversion exceed the Principal Balance of the related Home Loan
and accrued interest thereon at the applicable Mortgage Interest Rate through
the Determination Date during the Collection Period in which such foreclosure or
conversion occurs, such excess shall be paid directly to the Servicer as
additional Servicing Compensation and shall be free from the lien of the
Indenture.
In the event that title to any Mortgaged Property is acquired as REO
Property by the Indenture Trustee in foreclosure or by deed in lieu of
foreclosure, the deed or certificate of sale shall be issued to the Indenture
Trustee, or to its nominee, on behalf of the Noteholders and the Note Insurer,
and the Servicer shall manage, conserve, protect and operate each such REO
Property for the Noteholders solely for the purpose of its prompt disposition
and sale. The Servicer shall use its best efforts to dispose of each such REO
Property as expeditiously as possible consistent with the goal of maximizing Net
Liquidation Proceeds (taking into account any unreimbursed Servicing Advances
made or expected to be made with respect to such REO Property). None of the
Issuer, the Indenture Trustee or the Servicer, acting on behalf of the Trust
Estate, shall provide financing from the Trust Estate to any purchaser of any
such REO Property.
The Servicer must determine, as to each defaulted Home Loan, when such Home
Loan has become a Liquidated Home Loan.
Section 2.06.00 Custodian and Indenture Trustee to Cooperate; Release of
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Home Loan Files.
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(a) Upon the payment in full of the principal balance of any Home Loan, the
Servicer shall notify the Custodian and Indenture Trustee by a certification in
the form of Exhibit B hereto (a "Request for Release") (which certification
shall include a statement to the effect that all amounts received in connection
with such payment which are required to be deposited to the Collection Account
pursuant to Section 2.02 have been so deposited) of a Servicing Officer. Such
notification shall be made from time to time as necessary and consistent with
the servicing standards, but not later than the time that the Servicer delivers
its Servicer Remittance Report to the Issuer, the Master Servicer, the Note
Insurer, and the Indenture Trustee pursuant to Section 3.01. The Custodian
shall, within five Business Days after its receipt of such Request for Release,
release the related Home Loan File or the specified documents to the Servicer.
Upon any such payment in full, the Servicer is authorized to procure a deed of
full reconveyance covering the related Mortgaged Property encumbered by such
Mortgage, which deed, except as otherwise provided in applicable law, shall be
recorded in the office of the County Recorder in which the Mortgage is recorded,
or, as the case may be, to procure an instrument of satisfaction or, if the
related Obligor so requests, an assignment without recourse, in each case
prepared by the Servicer at its expense and executed by the Indenture Trustee,
which deed of reconveyance, instrument of satisfaction or assignment shall be
delivered by the Servicer to the Person entitled thereto, it being understood
and agreed that no expenses incurred in connection with such deed of
reconveyance, assignment or instrument of satisfaction shall be reimbursed from
amounts at the time on deposit in the Collection Account.
(b) From time to time and as appropriate for the servicing or foreclosure
of any Home Loan or to effect a partial release of any Mortgaged Property from
the lien of the related Mortgage, the Servicer shall deliver to the Custodian,
as agent for the Indenture Trustee a Request for Release requesting the related
Home Loan File. The Custodian shall, within five Business Days after its receipt
of such Request for Release, release the related Home Loan File to the Servicer.
Any such Request for Release shall obligate the Servicer to return each and
every document previously requested from the Home Loan File to the Custodian by
the twenty-first day following the release thereof, unless (1) the Home Loan has
been liquidated and the Net Liquidation Proceeds relating to the Home Loan have
been deposited in the Collection Account or the Note Account or (2) the Home
Loan File or such document has been delivered to an attorney, or to a public
trustee or other public official as required by law, for the purposes of
initiating or pursuing legal action or other proceedings for the foreclosure of
the Mortgaged Property either judicially or non-judicially, and the Servicer has
delivered to the Indenture Trustee a certificate of the Servicer certifying as
to the name and address of the Person to which such Home Loan File or such
document was delivered and the purpose or purposes of such delivery. Upon
receipt of an officer's certificate of the Servicer stating that such Home Loan
was liquidated and that all amounts received or to be received in connection
with such liquidation which are required to be deposited into the Collection
Account or the Note Account have been so deposited, or that such Home Loan has
become an REO Property (each, a "Servicing Officer's Certificate"), the Request
for Release shall be released by the Custodian to the Servicer.
(c) Upon receipt of a Servicing Officer's Certificate, the Indenture
Trustee shall execute any documents prepared by the Servicer and delivered to it
as necessary or appropriate to enable the Servicer to perform its obligations
hereunder, including, without limitation, documents to enable the Servicer to
convey title to a Mortgaged Property to the Obligor or its designee upon payment
of the Home Loan in full or to convey title to an REO Property to the purchaser
thereof, or to convey title to a Mortgaged Property into the name of the
Indenture Trustee pursuant to Section 2.05.
Section 2.07.00 Servicing Compensation; Payment of Certain Expenses by the
-----------------------------------------------------------
Servicer.
- --------
On each Deposit Date, the Servicer shall be entitled to receive, by
withdrawal by the Servicer from the Collection Account, out of collections of
interest on the Home Loans for the related Collection Period, as servicing
compensation for such Collection Period, the Servicing Fee, to the extent not
retained by the Servicer from amounts remitted to the Collection Account
pursuant to Section 2.02(c)(i). The Servicer shall also be entitled to retain
any Ancillary Servicing Compensation when received. In addition, if (a) the
Servicer obtains any collections on a Liquidated Home Loan subsequent to the
date on which it became a Liquidated Home Loan and to the extent of any Realized
Loss on such Home Loan, (b) the Required Overcollateralization Amount at such
date is calculated in accordance with clause (d) of the definition of "Required
Overcollateralization Amount" and (c) the Note Insurer consents to such
additional compensation, then the Servicer shall be entitled to receive, as
additional servicing compensation, 20% of such recovery amount in the priority
specified in the Indenture.
The Servicer shall be required to pay all expenses incurred by it in
connection with its activities hereunder (including payment of the fees and
expenses relating to the Annual Independent Public Accountant's Servicing Report
described in Section 2.09, and all other fees and expenses not otherwise
expressly stated hereunder for the account of the Noteholders) and shall be
entitled to reimbursement therefor only as provided in Section 8.02(c) of the
Indenture.
Section 2.08.00 Annual Statement as to Compliance.
---------------------------------
The Servicer will deliver to the Issuer, the Indenture Trustee, the Note
Insurer, the Master Servicer and each Rating Agency, on or before March 31 of
each year, beginning with March 31, 1999, an Officer's Certificate of the
Servicer substantially in the form set forth in Exhibit A hereto stating that
(1) a review of the activities of the Servicer during the preceding calendar
year (or since the Closing Date in the case of the first such statement) and of
its performance under this Agreement has been made under such officer's
supervision and (2) to the best of such officer's knowledge, based on such
review, the Servicer has fulfilled all its material obligations under this
Agreement throughout such year (or since the Closing Date in the case of the
first such statement), or, if there has been a default in the fulfillment of any
such obligation, specifying each such default known to such officer and the
nature and status thereof.
The Servicer shall deliver to the Issuer, the Master Servicer, and the
Indenture Trustee, with a copy to the Note Insurer and each Rating Agency,
promptly after having obtained knowledge thereof, but in no event later than ten
Business Days thereafter, written notice by means of an Officer's Certificate of
any event that with the giving of notice or the lapse of time, or both, would
become a Servicer Termination Event. Without duplication of the foregoing, the
Servicer will deliver to the Master Servicer and the Indenture Trustee a copy of
any information it provides to the Note Insurer under Section 2.02(f) of the
Insurance Agreement.
Section 2.09.00 Annual Independent Public Accountants' Servicing Report.
-------------------------------------------------------
On or before March 31 of each year, beginning with March 31, 1999, the
Servicer at its expense shall cause a firm of nationally recognized independent
public accountants (who may also render other services to the Servicer) to
furnish a report to the Issuer, the Indenture Trustee, the Note Insurer, the
Master Servicer and each Rating Agency, to the effect that such firm has
examined certain documents and records relating to the servicing activities of
the Servicer for the period covered by such report, and that such examination,
which has been conducted substantially in compliance with the Uniform Single
Attestation Program for Mortgage Bankers (to the extent that the procedures in
such audit guide are applicable to the servicing obligations set forth in this
Agreement), has disclosed no exceptions or errors in records relating to the
servicing activities of the Servicer that, in the opinion of such firm, are
material, except for such exceptions as shall be set forth in such report.
Section 2.10.00 Access to Certain Documentation and Information Regarding
-----------------------------------------------------------
the Home Loans.
- --------------
(a) The Servicer shall provide to supervisory agencies or entities for
regulated Noteholders and to Noteholders that are federally insured savings
associations and the FDIC and its supervisory agents and examiners access to the
documentation regarding the Home Loans required by applicable regulations of the
Office of Thrift Supervision, and to the Issuer, the Master Servicer, the
Indenture Trustee and the Note Insurer (provided, however, that if a Note
Insurer Default has occurred and is continuing, then each Noteholder shall have
such right of access) and their respective agents all documentation relating to
the Home Loans that is in the possession of the Servicer, such access being
afforded without charge but only upon reasonable request and during normal
business hours at the offices of the Servicer. Nothing in this Section 2.10(a)
shall derogate from the obligation of the Servicer to observe any applicable law
prohibiting disclosure of information regarding the Obligors, and the failure of
the Servicer to provide access as provided in this Section as a result of such
obligation shall not constitute a breach of this Section.
(b) The Servicer shall supply information to the Indenture Trustee or the
Note Administrator, as the case may be, upon reasonable advance notice, in such
form as the Indenture Trustee or the Note Administrator shall reasonably
request, as is required in the Indenture Trustee's or the Note Administrator's
reasonable judgment to enable the Indenture Trustee or the Note Administrator,
as the case may be, to make required payments and to furnish the certificates,
statements, and reports to Noteholders and the Note Insurer as required of the
Indenture Trustee or the Note Administrator pursuant to the Indenture, it being
understood that the Servicer is responsible for supplying information concerning
the Home Loans and not for any other information, including, without limitation,
calculation of payments due on the Notes. The Servicer shall also supply
information upon reasonable advance notice, in such form as the Note Insurer or
the Master Servicer shall reasonably request, as is reasonably requested by the
Note Insurer to enable the Note Insurer to monitor the performance of the Home
Loans or the Master Servicer to monitor the Servicer's performance of its
obligations hereunder.
Section 2.11.00 Maintenance of Fidelity Bond and Errors and Omissions
---------------------------------------------------------
Policy.
- ------
The Servicer shall during the term of its service as Servicer maintain in
force a (1) policy or policies of insurance covering errors and omissions in the
performance of its obligations as Servicer hereunder and (2) fidelity bond in
respect of its officers, employees and agents, in each case in such form and
amount as is customary for entities acting in similar capacities and in an
amount that conforms to Fannie Mae levels.
Section 2.12.00 Notices to the Issuer, the Rating Agencies, the Master
Servicer, the Indenture Trustee and the Note Insurer.
In addition to the other notices required to be given to the Issuer, the
Rating Agencies, the Master Servicer, the Indenture Trustee, and the Note
Insurer by the provisions of this Agreement, the Servicer shall give prompt
notice to the Issuer, each Rating Agency, the Master Servicer, the Indenture
Trustee, and the Note Insurer of (1) any amendment to this Agreement and (2) the
occurrence of a Servicer Termination Event. Furthermore, the Home Loan Schedule
and any amendment thereto shall be delivered to the Indenture Trustee in both
physical and computer-readable form.
Section 2.13.00 Reports of Foreclosures and Abandonment of Mortgaged
---------------------------------------------------------
Properties.
- ----------
On or before February 28 of each year beginning in 1999, the Servicer shall
file the reports of foreclosures and abandonments of any Mortgaged Property
required by Code Section 6050J with the Internal Revenue Service and provide a
copy of such filing to the Indenture Trustee. The reports from the Servicer
shall be in form and substance sufficient to meet the reporting requirements
imposed by such Section 6050J.
Section 2.14.00 Sub-Servicers and Sub-Servicing Agreements.
------------------------------------------
(a) The Servicer may enter into Sub-Servicing Agreements for any servicing
and administration of Home Loans with any institution that is acceptable to the
Note Insurer, the Master Servicer, and the Indenture Trustee and that is in
compliance with the laws of each state necessary to enable it to perform its
obligations under such Sub-Servicing Agreement. The Servicer shall give notice
to the Master Servicer, the Indenture Trustee, and the Note Insurer of the
appointment of any Sub-Servicer. The Servicer shall not enter into any
Sub-Servicing Agreement that does not provide for the servicing of the Home
Loans specified therein on a basis consistent with the terms of this Agreement
or that otherwise violates the provisions of this Agreement. The Servicer may
enter into, and make amendments to, any Sub-Servicing Agreement or enter into
different forms of Sub-Servicing Agreements; provided, however, that any such
amendments or forms shall be consistent with and not violate the provisions of
this Agreement.
(b) For purposes of this Agreement the Servicer shall be deemed to have
received payments on Home Loans when any Sub-Servicer has received such
payments. With respect to the Servicer's obligations under Section 2.01 to make
deposits into the Collection Account, the Servicer shall be deemed to have made
such deposits when any Sub-Servicer has made such deposits into a Sub-Servicing
Account if permitted by the related Sub-Servicing Agreement.
(c) Any Sub-Servicing Agreement and any other transactions or services
relating to the Home Loans involving a Sub-Servicer shall be deemed to be
between the Sub-Servicer and the Servicer alone and the Note Insurer, the Master
Servicer, and the Indenture Trustee shall not be deemed parties thereto and
shall have no claims, rights, obligations, duties or liabilities with respect to
any Sub-Servicer, except that the Indenture Trustee shall have such claims or
rights that arise as a result of any funds held by a Sub-Servicer in trust for
or on behalf of the Trust Estate, the Noteholders and the Note Insurer.
Notwithstanding the execution of any Sub-Servicing Agreement, the Servicer shall
not be relieved of any liability hereunder and shall remain obligated and liable
for the servicing and administration of the Home Loans.
Section 2.15.00 Servicing for Benefit of the Note Insurer.
-----------------------------------------
Provided there does not exist a Note Insurer Default, the Servicer hereby
acknowledges and agrees that it shall service and administer the Home Loans and
any REO Properties, and shall maintain the Collection Account for the benefit of
the Noteholders and for the benefit of the Note Insurer, and all references in
this Agreement to the benefit of or actions on behalf of the Noteholders shall
be deemed to include the Note Insurer.
All notices, statements, reports, certificates or opinions required by this
Agreement to be sent to any other party hereto or to the Noteholders shall also
be sent to the Note Insurer.
Section 2.16.00 RESERVED.
--------
Section 2.17.00 Filing of Financing Statements and Continuation Statements.
----------------------------------------------------------
Promptly following the Closing Date and on or before the fifth anniversary
of the filing of any financing statements by the Seller, the Transferor, the
Issuer or the Depositor, respectively, with respect to the assets conveyed to
the Trust Estate, the Servicer shall cause to be prepared and have executed by
the necessary parties and file in the proper jurisdictions all financing and
continuation statements necessary to maintain the liens, security interests, and
priorities of such liens and security interests. The Servicer agrees to file all
such financing statements, and the Indenture Trustee agrees to cooperate with
the Servicer in preparing, executing and filing such statements.
ARTICLE III
SERVICER REMITTANCE REPORT; MASTER SERVICER
Section 3.01.00 Servicer Remittance Report.
--------------------------
Not later than the sixth Business Day of each month, the Servicer shall
deliver to the Issuer, the Indenture Trustee, the Note Insurer, the Master
Servicer and the Note Administrator a computer-readable magnetic tape (the
"Tape" for such month) and a series of hard copy reports generally including the
same information included on the Tape (the "Report," and, together with the
Tape, the "Servicer Remittance Report" for such month) detailing the payments
and collections received in respect of the Home Loans during the immediately
preceding Collection Period. The Servicer Remittance Report shall contain the
data fields described in Exhibit D hereto, including loan-by-loan information
that specifies account number, borrower name, outstanding principal balance and
activity for the preceding Collection Period, and any other information
sufficient to enable the Note Administrator to report the items specified in
clause (x) of clause (i) and clauses (vi) through (xvi) of the definition of
"Payment Date Statement" in the Indenture, as well as (a) the information set
forth on Exhibit C hereto as to Home Loans that became Liquidated Home Loans
during the related Collection Period, and may be delivered in a separate report
in the form of Exhibit C hereto or as part of the Servicer Remittance Report and
(b) any other information regarding the Home Loans as may be required to enable
the Master Servicer to perform its obligations under this Article III or as may
from time to time be agreed to by the Servicer, the Indenture Trustee, the
Master Servicer, the Note Administrator and the Note Insurer. The Servicer shall
only be required to report information concerning the Home Loans, and shall not
be required to calculate any required payments on the Notes or to the Note
Insurer.
Section 3.02.00 Master Servicer Duties.
----------------------
The Master Servicer shall supervise, monitor, and oversee the obligations
of the Servicer in accordance with the terms of this Agreement on behalf of the
Indenture Trustee and for the benefit of the Noteholders, in accordance with
this Agreement and applicable laws and regulations. The Master Servicer shall
(i) oversee and consult with the Servicer as appropriate from time to time to
fulfill the Master Servicer's obligations hereunder, (ii) receive, review and
evaluate all reports, information and other data and documents provided to the
Master Servicer by the Servicer and (iii) otherwise exercise its best efforts to
cause the Servicer to perform and observe the covenants, obligations and
conditions required to be performed under this Agreement.
Section 3.03.00 RESERVED.
--------
Section 3.04.00 Master Servicer Compensation.
----------------------------
As compensation for the performance of its obligations as Master Servicer
under this Agreement, the Master Servicer shall be entitled to receive on each
Payment Date the Master Servicing Fee for such Payment Date, payable as provided
in Section 8.02(c) of the Indenture; provided, however, that, upon the discharge
and release of the Indenture and until termination of this Agreement as provided
herein, the Servicer shall remit the Master Servicing Fee directly to the Master
Servicer on the 25th day of each month (or, if such date is not a Business Day,
the immediately following Business Day). As compensation for the Note
Administrator's services under the Indenture, the Master Servicer shall pay the
reasonable fees of the Note Administrator, as agreed to between the Master
Servicer and the Note Administrator.
Section 3.05.00 Master Servicer Default.
-----------------------
In the event that the Master Servicer fails to observe or perform in any
material respect any of its obligations under this Agreement, which failure
continues unremedied for a period of 30 days after the date on which written
notice of such failure requiring the same to be remedied shall have been given
to the Master Servicer (each, a "Master Servicer Default") by (i) the Indenture
Trustee, at the direction of the Note Insurer (unless the Indenture Trustee and
the Master Servicer are at that time one and the same Person), (ii) by the Note
Insurer, or (iii) by the Indenture Trustee in the event a Note Insurer Default
has occurred and is continuing, unless the Indenture Trustee and the Master
Servicer are one and the same Person, in which case the notice may be given by
the percentage of Noteholders entitled to act in the case of an Event of Default
under the Indenture. If such Master Servicer Default shall not have been
remedied by the Master Servicer, either the Note Insurer or the Indenture
Trustee (unless the Indenture Trustee and the Master Servicer are at that time
one and the same Person), at the direction of the Note Insurer, or the Indenture
Trustee in the event a Note Insurer Default exists and is continuing (or, if at
such time the Indenture Trustee and the Master Servicer are one and the same
Person, by the percentage of Noteholders entitled to act in the case of an Event
of Default under the Indenture), by notice given in writing to the Master
Servicer with a copy to the Note Insurer or the Indenture Trustee, as
applicable, may terminate all of the rights, responsibilities and obligations of
the Master Servicer under this Agreement (except its rights to indemnification
by the Servicer under this Agreement and any other rights accruing to the Master
Servicer prior to the date of termination). On or after the receipt by the
Master Servicer of such written notice, unless a successor Master Servicer
acceptable to the Note Insurer (so long as no Note Insurer Default then exists)
shall have been appointed, the Indenture Trustee (unless it and the Master
Servicer are one and the same Person) shall assume the rights and obligations of
the Master Servicer hereunder.
Upon the occurrence of a Master Servicer Default, a successor Master
Servicer acceptable to the Note Insurer (unless a Note Insurer Default then
exists) shall be appointed (i) by the Indenture Trustee (so long as it is not
also the Master Servicer), (ii) if the Indenture Trustee and the Master Servicer
are one and the same Person, by the Note Insurer (so long as no Note Insurer
Default then exists), or (iii) if the Indenture Trustee and the Master Servicer
are one and the same Person and a Note Insurer Default then exists, by the
percentage of Noteholders entitled to act under the Indenture upon the
occurrence of an Event of Default thereunder.
Section 3.06.00 Merger or Consolidation of Master Servicer.
------------------------------------------
Any Person into which the Master Servicer may be merged or consolidated, or
any Person resulting from any merger, conversion, other change in form or
consolidation to which the Master Servicer shall be a party, or any Person
succeeding to the business of the Master Servicer, shall be the successor to the
Master Servicer 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 resulting
Person to the Master Servicer shall be a Person that shall have a net worth of
not less than $15,000,000 and is acceptable to the Note Insurer (so long as no
Note Insurer Default exists) and the Indenture Trustee.
Section 3.07.00 Resignation of Master Servicer.
------------------------------
Except as otherwise provided in Sections 3.05 and 3.08 hereof, the Master
Servicer shall not resign from the obligations and duties hereby imposed on it
unless it determines that its duties hereunder are no longer permissible under
applicable law or are in material conflict by reason of applicable law with any
other activities carried on by it and cannot be cured, or it obtains the prior
written consent of the Note Insurer (so long as no Note Insurer Default exists)
and the Indenture Trustee. Any such determination permitting the resignation of
the Master Servicer shall be evidenced by an Opinion of Counsel that shall be
Independent to such effect delivered to the Indenture Trustee and the Note
Insurer. No such resignation shall become effective until the Indenture Trustee
(unless it and the Master Servicer are one and the same Person) shall have
assumed, or a successor Master Servicer acceptable to the Note Insurer shall
have been appointed by the Indenture Trustee and until such successor shall have
assumed, the Master Servicer's responsibilities and obligations under this
Agreement. Notice of such resignation shall be given promptly by the Master
Servicer to the Indenture Trustee, Servicer and Note Insurer.
Section 3.08.00 Assignment or Delegation of Duties by the Master Servicer.
---------------------------------------------------------
Except as expressly provided herein, the Master Servicer shall not assign
or transfer any of its rights, benefits or privileges hereunder to any other
Person, or delegate to or subcontract with, or authorize or appoint any other
Person to perform any of the duties, covenants or obligations to be performed by
the Master Servicer hereunder; provided, however, that the Master Servicer shall
have the right without the prior written consent of the Indenture Trustee, the
Note Insurer (so long as no Note Insurer Default exists) or the Servicer to
delegate or assign to or subcontract with or authorize or appoint an Affiliate
of the Master Servicer to perform and carry out any duties, covenants or
obligations to be performed and carried out by the Master Servicer hereunder. In
no case, however, shall any such delegation, subcontracting or assignment to an
Affiliate of the Master Servicer relieve the Master Servicer of any liability
hereunder. Notice of such permitted assignment shall be given promptly by the
Master Servicer to the Indenture Trustee, Servicer and Note Insurer. If,
pursuant to any provision hereof, the duties of the Master Servicer are
transferred to a successor Master Servicer, the entire amount of the Master
Servicing Fee and other compensation payable to the Master Servicer pursuant
hereto or under the Indenture, shall thereafter be payable to such successor
master servicer.
Section 3.09.00 Limitation on Liability of the Master Servicer and Others.
---------------------------------------------------------
Neither the Master Servicer nor any of the directors, officers, employees
or agents of the Master Servicer shall be under any liability to the Indenture
Trustee, the Note Insurer, the Noteholders or the Certificateholders for any
action taken or for refraining from the taking of any action in good faith
pursuant to this Agreement, or for errors in judgment; provided, however, that
this provision shall not protect the Master Servicer or any such person against
any liability that would otherwise be imposed by reason of willful misfeasance,
bad faith or negligence in its performance of its duties or by reason of
reckless disregard for its obligations and duties under this Agreement. The
Master Servicer and any director, officer, employee or agent of the Master
Servicer may rely in good faith on any document of any kind prima facie properly
executed and submitted by any Person respecting any matters arising hereunder.
The Master Servicer shall be under no obligation to appear in, prosecute or
defend any legal action that is not incidental to its duties to master service
the Home Loans in accordance with this Agreement and that in its opinion may
involve it in any expenses or liability.
Neither the Master Servicer nor the Indenture Trustee shall be liable for
any acts or omissions of the Servicer. In particular, neither the Master
Servicer nor the Indenture Trustee shall be liable for any servicing errors or
interruption in servicing resulting from any failure of the Servicer to maintain
computer and other information systems that are year-2000 compliant.
ARTICLE IV
SERVICING ADVANCES
Section 4.01.00 Servicing Advances.
------------------
(a) Servicing Advances. The Servicer may from time to time during the term
------------------
of this Agreement make such Servicing Advances as the Servicer shall deem
appropriate or advisable under the circumstances and are required pursuant to
the terms of this Agreement. Servicing Advances may be paid by the Servicer out
of amounts on deposit in the Collection Account from time to time; provided,
however, that the Servicer shall be required to replace any such amounts by
deposit into the Collection Account on or before the first Deposit Date
occurring after the payment of a Servicing Advance with such amounts, and the
amount of such deposit shall thereafter be considered a Servicing Advance for
purposes of reimbursement under this Agreement. Servicing Advances shall be
reimbursable upon notice to the Master Servicer substantially in the form of
Exhibit E hereto as follows: (i) the first $250 of Servicing Advances made by
the Servicer for each Home Loan shall be reimbursable from amounts on deposit in
the Collection Account, (ii) Servicing Advances made by the Servicer in excess
of $250 per Home Loan shall be reimbursable from collections or recoveries
relating to the Home Loan including Liquidation Proceeds and Insurance Proceeds,
and such other amounts as may be collected by the Servicer from the Obligor, and
(iii) any Servicing Advance made by the Servicer and not recovered pursuant to
clauses (i) or (ii) shall be reimbursable from the Note Account in accordance
with the terms of the Indenture.
(b) The Master Servicer may promptly pay any Servicing Advance if and to
the extent that the Servicer fails to do so, provided, however, in no event
shall the Master Servicer be required to make any Servicing Advance, and
provided, further, that the aggregate amount of Servicing Advances made by the
Master Servicer in respect of any Payment Date shall not exceed the Master
Servicer's compensation for such Payment Date.
ARTICLE V
THE SERVICER
Section 5.01.00 Representations and Warranties of the Servicer.
----------------------------------------------
(a) The Servicer hereby represents and warrants to the Issuer, the
Indenture Trustee, the Master Servicer, the Note Insurer and the Noteholders
that, as of the Closing Date:
(i) The Servicer is a national banking association duly organized,
validly existing and in good standing under the laws of the United States
of America. The Servicer is in compliance with the laws of each state in
which it is acting as Servicer with respect to a Home Loan to the extent
necessary to perform all servicing obligations with respect to the related
Mortgaged Property hereunder. The Servicer has the power and authority to
execute and deliver this Agreement and to perform its obligations in
accordance herewith. The execution, delivery and performance of this
Agreement (including all instruments of transfer to be delivered pursuant
to this Agreement) by the Servicer and the consummation of the transactions
contemplated hereby have been duly and validly authorized by all necessary
action. This Agreement evidences the valid and binding obligation of the
Servicer enforceable against the Servicer in accordance with its terms,
subject to the effect of bankruptcy, insolvency, reorganization, moratorium
and other similar laws relating to or affecting creditors' rights
generally, the application of equitable principles in any proceeding,
whether at law or in equity, or any notice, order or directive or similar
action by a federal banking agency which would be enforceable pursuant to
Section 8 of the Federal Deposit Insurance Act to the extent that such
notice, order, directive or action prohibits or enjoins performance by the
Servicer. The consummation of the transactions contemplated hereby will not
result in the breach of any terms or provisions of the articles of
association or charter of the Servicer or result in the breach of any term
or provision of, or conflict with or constitute a default under or result
in the acceleration of any obligation under, any material agreement,
indenture or loan or credit agreement or other material instrument to which
the Servicer or its property is subject, or result in the violation of any
law, rule, regulation, order, judgment or decree to which the Servicer or
its property is subject.
(ii) All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required
to be taken, given or obtained, as the case may be, by or from any federal,
state or other governmental authority or agency, that are necessary in
connection with the execution and delivery by the Servicer of this
Agreement, have been duly taken, given or obtained, as the case may be, are
in full force and effect, are not subject to any pending proceedings
(administrative, judicial or otherwise) with respect to which the time
within which any appeal therefrom may be taken or review thereof may be
obtained has expired or no review thereof may be obtained or appeal
therefrom taken, and are adequate to authorize the consummation of the
transactions contemplated by this Agreement on the part of the Servicer and
the performance by the Servicer of its obligations under this Agreement.
(iii) There is no action, suit, proceeding or investigation pending
or, to the best of the Servicer's knowledge, threatened against the
Servicer that, either in any one instance or in the aggregate, should
reasonably be expected to result in any material adverse change in the
business, operations, financial condition, properties or assets of the
Servicer or in any material impairment of the right or ability of the
Servicer to carry on its business substantially as now conducted, or in any
material liability on the part of the Servicer or that would draw into
question the validity of this Agreement or the Home Loans or of any action
taken or to be taken in connection with the obligations of the Servicer
contemplated herein, or that should be reasonably expected to impair the
ability of the Servicer to perform under the terms of this Agreement.
(iv) The Servicer is not in default with respect to any order or
decree of any court or any order, regulation or demand of any federal,
state, municipal or governmental agency, which default should reasonably be
expected to have consequences that would materially and adversely affect
the condition (financial or other) or operations of the Servicer or its
properties or to have consequences that should reasonably be expected to
adversely affect its performance hereunder;
(v) The collection practices used by the Servicer are in all material
respects legal and customary in the non-conforming home loan servicing
business.
(b) Upon discovery by any party hereto of a breach of any of the foregoing
representations and warranties that materially and adversely affects the
interests of the Noteholders, the party discovering such breach shall give
prompt written notice to the other parties hereto and the Note Insurer. Within
30 days of its discovery or its receipt of notice of breach, the Servicer shall
cure such breach in all material respects.
Section 5.02.00 Liability of the Servicer.
-------------------------
The Servicer shall be liable in accordance herewith only to the extent of
the obligations specifically imposed upon and undertaken by the Servicer herein.
Section 5.03.00 Merger or Consolidation of, or Assumption of the
-----------------------------------------------------------
Obligations of, the Servicer.
- ----------------------------
Any corporation or other entity (1) into which the Servicer may be merged
or consolidated, (2) that may result from any merger, conversion or
consolidation to which the Servicer shall be a party, or (3) that may succeed to
all or substantially all of the business of the Servicer, which corporation or
other entity shall be the successor to the Servicer under this Agreement without
the execution or filing of any document or any further act by any of the parties
to this Agreement; provided that if the Servicer is not the surviving entity, or
if the assumption by the surviving entity is not effective by operation of law,
then the surviving entity shall execute and deliver to the Issuer, the Master
Servicer, and the Indenture Trustee an agreement of assumption to perform every
obligation of the Servicer hereunder and provided further that if the surviving
entity is not the Servicer, the surviving entity must (A) have a net worth of
not less than $10,000,000, (B) be acceptable to the Note Insurer, the Indenture
Trustee and the Master Servicer (provided however, that if the Note Insurer, the
Master Servicer, and Indenture Trustee cannot reasonably agree in good faith on
a successor servicer, then the Note Insurer shall have the right to approve the
surviving entity), and (C) each Rating Agency must have issued written
confirmation that the succession of such successor will not result in a
downgrading of the implied rating then assigned by such Rating Agency to the
Notes (without taking into account the Note Insurance Policy).
Section 5.04.00 Limitation on Liability of the Servicer and Others.
--------------------------------------------------
Neither the Servicer nor any of its directors, officers, employees or
agents shall be under any liability to the Issuer, the Indenture Trustee, the
Trust Estate, the Note Insurer, the Master Servicer, or the Noteholders for any
action taken or for refraining from the taking of any action by the Servicer
pursuant to this Agreement, or for errors in judgment; provided, however, that
this provision shall not protect the Servicer or any such person against any
liability that would otherwise be imposed by reason of willful misfeasance, bad
faith or negligence in the performance of the duties of the Servicer or by
reason of reckless disregard of the obligations and duties of the Servicer
hereunder. The Servicer and any director, officer, employee or agent of the
Servicer may rely in good faith on any document of any kind prima facie properly
executed and submitted by any Person respecting any matters arising hereunder.
The Servicer shall not be under any obligation to appear in, prosecute or defend
any legal action that is not incidental to its duties to service the Home Loans
in accordance with this Agreement, and that in its opinion may involve it in any
expense or liability.
Section 5.05.00 Servicer Not to Resign.
----------------------
Subject to the provisions of Section 5.03 regarding the merger or
consolidation of the Servicer into or with another entity, the Servicer shall
not resign from the obligations and duties hereby imposed on it except upon
determination that the performance of its duties or obligations hereunder is no
longer permissible under applicable law or regulation or is in material conflict
by reason of applicable law or regulation with any other activities carried on
by it at the date of this Agreement. Any such determination permitting the
resignation of the Servicer pursuant to this Section shall be evidenced by an
Opinion of Counsel to such effect delivered to the Issuer, the Indenture
Trustee, the Master Servicer, and the Note Insurer and obtained by the Servicer
at its own expense. No resignation pursuant to this Section 5.05 shall become
effective until the Master Servicer shall have appointed a successor servicer
which shall have assumed the responsibilities and obligations of the Servicer in
accordance with Section 6.02 or the Master Servicer shall have assumed such
duties in accordance with Section 6.02, or (b) shall relieve the Servicer of
responsibility for any obligations pursuant to this Agreement that specifically
survive the resignation or termination of the Servicer. Each of the Rating
Agencies shall be given written notice of a resignation of the Servicer pursuant
to this Section.
Notwithstanding the foregoing, the Servicer may resign effective upon its
appointment of a successor the appointment of whom has been approved by the
Master Servicer, the Note Insurer and the Indenture Trustee in writing, but only
if each Rating Agency shall have confirmed in writing that the appointment of
such successor will not result in the downgrading of the then-current implied
ratings assigned by them to the Notes (without taking into account the Note
Insurance Policy).
ARTICLE VI
DEFAULT
Section 6.01.00 Events of Default.
-----------------
If any one of the following events (each a "Servicer Termination Event")
shall occur and be continuing:
(a) Any failure by the Servicer to deposit into the Collection Account or
transfer to the Indenture Trustee for deposit in the Note Account any amount
required to be deposited therein under this Agreement on the related Deposit
Date;
(b) Failure on the part of the Servicer duly to observe or perform in any
material respect any other covenants or agreements of the Servicer set forth in
this Agreement or so long as the Servicer and Seller under the Home Loan Sale
Agreement are the same, the failure of the Seller, which failure (1) materially
and adversely affects the Noteholders or the Note Insurer and (2) continues
unremedied for a period of 30 days after the earlier of (i) the date on which
the Servicer acquires knowledge of such failure or (ii) the date on which
written notice of such failure (which notice shall refer specifically to this
Section), requiring the same to be remedied, shall have been given to the
Servicer by the Master Servicer or the Indenture Trustee;
(c) The entry against the Servicer of a decree or order by a court or
agency or supervisory authority having jurisdiction in the premises for the
appointment of a trustee, conservator, receiver or liquidator in any insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings, or for the winding up or liquidation of its affairs, and the
continuance of any such decree or order unstayed and in effect for a period of
60 consecutive days;
(d) The consent by the Servicer to the appointment of a trustee,
conservator or receiver or liquidator in any bankruptcy, insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings of or relating to the Servicer or of or relating to substantially
all of its property; or the admission by the Servicer in writing of its
inability to pay its debts generally as they become due, the Servicer's filing
of a petition to take advantage of any applicable bankruptcy, insolvency or
reorganization statute, the Servicer's making of an assignment for the benefit
of its creditors, or the Servicer's voluntary suspension of payment of its
obligations;
(e) The occurrence of a Delinquency Rate Trigger, a Cumulative Loss Rate
Trigger a Rolling Loss Rate Trigger, or a Total Expected Losses Trigger; or
(f) Breach by City National Bank of West Virginia, as Seller, in any
material respect of any of its representations and warranties made herein or in
the Home Loan Sale Agreement (not including Section 4(b) thereof), or in any
certificate delivered pursuant hereto or thereto, and the failure of the Seller
to cure such breach in all material respects within 30 days after the notice of
such breach shall have been given to the Seller by the Issuer, the Indenture
Trustee or the Note Insurer; then, and in each and every such case, so long as
such Servicer Termination Event shall not have been remedied by the Servicer,
the Master Servicer may (with the prior written consent of the Note Insurer,
which consent shall not be unreasonably withheld), or at the written direction
of the Note Insurer (so long as no Note Insurer Default has occurred and is
continuing, or if a Note Insurer Default has occurred and is continuing, the
Indenture Trustee) shall, by notice then given in writing to the Servicer with a
copy to the Note Insurer and to the Indenture Trustee, terminate all of the
rights, responsibilities and obligations of the Servicer as servicer under this
Agreement. On or after the receipt by the Servicer of such written notice, all
authority and power of the Servicer under this Agreement, whether with respect
to the Home Loans or otherwise, shall pass to and be vested in the Master
Servicer (or, if the Master Servicer is then serving as the Servicer, the
Indenture Trustee) (unless a successor Servicer has been appointed by the Master
Servicer pursuant to Section 6.02) pursuant to and under this Section and,
without limitation, the Master Servicer, the Indenture Trustee or successor
Servicer is hereby authorized and empowered to execute and deliver, on behalf of
the Servicer, as attorney-in-fact or otherwise, any and all documents and other
instruments, and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement of the Mortgage Notes and related
documents, or otherwise. Notwithstanding anything herein to the contrary, the
Master Servicer shall not be deemed to have notice of a Servicer Termination
Event unless and until a responsible officer of the Master Servicer (x) has
actual knowledge of the occurrence of such Servicer Termination Event or (y) has
received a notice of the occurrence of such Servicer Termination Event from the
Servicer pursuant to Section 2.12 hereof or from the Indenture Trustee or the
Note Insurer, and the Master Servicer shall not be in default of its obligations
under Section 3.05 hereof with respect to any failure to give a default notice
to the Servicer in the absence of either actual knowledge on the part of a
responsible officer of the Master Servicer or the receipt of such notice from
the Servicer, the Indenture Trustee or the Master Servicer. The Servicer agrees
to cooperate with the Master Servicer and the Indenture Trustee in effecting the
termination of its responsibilities and rights as Servicer hereunder, including,
without limitation, the transfer to the Master Servicer, the Indenture Trustee
or successor Servicer for the administration by it of all cash amounts that
shall at the time be held by the Servicer that have been deposited by the
Servicer in the Collection Account or transferred to the Indenture Trustee for
deposit into the Note Account or thereafter received by the Servicer with
respect to the Home Loans.
All reasonable costs and expenses (including attorneys' fees) incurred in
connection with transferring the Home Loan Files held by the Servicer to a
successor Servicer, amending this Agreement to reflect the appointment of a
successor as Servicer pursuant to this Section 6.01 or otherwise in connection
with the assumption by a successor Servicer of the duties of the predecessor
Servicer hereunder shall be paid by the predecessor Servicer upon presentation
of reasonable documentation of such costs and expenses. The Indenture Trustee
shall promptly notify each Noteholder of any Servicer Termination Event by
telecopy.
Section 6.02.00 Master Servicer to Act; Appointment of Successor.
------------------------------------------------
On and after the time the Servicer receives a notice of termination
pursuant to Section 6.01, the Master Servicer shall appoint a successor Servicer
meeting the criteria described below and, if it does not appoint a successor, or
until the successor's appointment takes effect, the Master Servicer shall be the
successor in all respects to the Servicer in its capacity as Servicer under this
Agreement (hereinafter in this Section, the "Servicer") and the transactions set
forth or provided for herein and shall be subject to all the responsibilities,
duties and liabilities relating thereto placed on the Servicer by the terms and
provisions hereof. As compensation therefor, the Master Servicer shall be
entitled to such compensation as the Servicer would have been entitled to
hereunder if no such notice of termination had been given. In the event the
Master Servicer fails to appoint a successor Servicer, and the Master Servicer
is legally unable to act as successor Servicer itself, it may petition a court
of competent jurisdiction to appoint, any established housing and home finance
institution or any institution that regularly services home loans that is then
servicing a home loan portfolio and having all licenses, permits and approvals
required by applicable law, and having a net worth of not less than $10,000,000,
as the successor to the Servicer hereunder in the assumption of all or any part
of the responsibilities, duties or liabilities of the Servicer hereunder;
provided that any such successor Servicer (other than the Master Servicer or the
Indenture Trustee) shall be acceptable to the Note Insurer (if no Note Insurer
Default has occurred and is continuing), which acceptance shall not be
unreasonably withheld; and provided further that the appointment of any such
successor Servicer will not result in the qualification, reduction or withdrawal
of the implied rating assigned to the Notes by any Rating Agency, without taking
into account the existence of the Note Insurance Policy. Pending appointment of
a successor to the Servicer hereunder, unless the Master Servicer is prohibited
by law from so acting, the Master Servicer shall act in such capacity as
hereinabove provided. In connection with such appointment and assumption, the
Master Servicer may make such arrangements for the compensation of such
successor out of payments on Home Loans as it and such successor shall agree;
provided, however, that no such compensation shall be in excess of that
permitted the Servicer hereunder. The Master Servicer and such successor shall
take such action, consistent with this Agreement, as shall be necessary to
effect any such succession. The appointment of a successor Servicer shall not
affect any liability of the predecessor Servicer that may have arisen under this
Agreement prior to its termination as Servicer, nor shall any successor Servicer
be liable for any acts or omissions of the predecessor Servicer or for any
breach by such Servicer or the Issuer of any of its representations or
warranties contained herein or in any related document or agreement. Each of the
Rating Agencies shall be given written notice of the appointment of a successor
Servicer pursuant to this Section.
Notwithstanding the foregoing paragraph, if the Master Servicer has assumed
the obligations of the defaulting Servicer hereunder, then the Indenture Trustee
shall be entitled to exercise the rights of the Master Servicer under this
Section 6.02.
Section 6.03.00 Notifications to Noteholders.
----------------------------
Upon any termination or appointment of a successor to the Servicer pursuant
to this Article VI, the Indenture Trustee shall give prompt written notice
thereof to Noteholders at their respective addresses appearing in the Note
Register, the Issuer, the Note Insurer and to each Rating Agency.
Within 10 days of obtaining actual knowledge of the occurrence of any
Servicer Termination Event or Master Servicer Default that remains uncured, the
Indenture Trustee shall transmit by mail to all Noteholders notice of such
Servicer Termination Event or Master Servicer Default.
Section 6.04.00 Assumption or Termination of Sub-Servicing Agreements by
-----------------------------------------------------------
the Master Servicer, Indenture Trustee or any Successor Servicer.
- ----------------------------------------------------------------
Upon the termination of the Servicer as servicer under this Agreement, the
Master Servicer or any other successor to the Servicer hereunder may, subject to
the terms of any Sub-Servicing Agreement, in its sole and absolute discretion
elect to assume or terminate any Sub-Servicing Agreement then in force and
effect between the Servicer and the Sub-Servicer. Notwithstanding the foregoing,
any termination fee due to a Sub-Servicer because of its termination by the
Master Servicer or the successor servicer hereunder shall be the responsibility
of the terminated Servicer and not the Master Servicer or the successor
servicer. Upon the assumption of any Sub-Servicing Agreement, the terminated
Servicer agrees to deliver to the assuming party any and all documents and
records relating to the applicable Sub-Servicing Agreement and an accounting of
amounts collected and held by it and otherwise use its best reasonable efforts
to effectuate the orderly transfer of the Sub-Servicing Agreement.
Section 6.05.00 Indemnification.
---------------
(a) The Servicer agrees to, and does hereby indemnify and hold harmless the
Trust, the Owner Trustee, the Indenture Trustee, the Note Administrator, the
Master Servicer, and their respective directors, officers, employees, and
agents, and their successors and assigns against, and shall reimburse each of
the foregoing indemnified parties, as applicable, for any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, claims,
costs, expenses, and disbursements of any kind or nature whatsoever, including
reasonable fees and expenses of counsel of litigation which may be imposed on,
incurred by or asserted against any of such indemnified parties, in any way
related to, or arising out of, this Agreement or any of the transactions
contemplated herein, to the extent that any of the same results from or arises
out of (1) any material breach of any representation or warranty made by the
Servicer in this Agreement, (2) any material breach by the Servicer of any
covenant or obligation of the Servicer under this Agreement or any schedule,
written statement, document, or certificate furnished by Servicer pursuant to
this Agreement, or (3) the negligence, willful misfeasance, or bad faith of the
Servicer in the performance of its duties under this Agreement. The indemnities
contained in this Section 6.05 shall survive the termination of this Agreement.
The indemnity obligations set forth in this Section 6.05 shall be in addition to
(but not exclusive of) any other remedies set forth in this Agreement, but in no
event shall this indemnity or any other remedy to which a party may be entitled
provide recovery for amounts already recovered under any other provision of this
Agreement or any other agreement or from any other source. The Servicer shall
not be under any obligation to appear in, prosecute, or defend any legal action
which is not incidental to its duties to service the Home Loans and which in its
opinion may involve it in any expense or liability.
(b) The Servicer may rely on the written instructions and directions of the
Master Servicer pursuant to the terms of this Agreement and shall not be liable
to the Trust, the Owner Trustee, the Indenture Trustee, or the Master Servicer
for any action taken or for refraining from the taking of any action in good
faith pursuant to such instructions and directions; provided, however, that this
provision shall not protect the Servicer against any material breach of any
representation or warranty made herein or material failure to perform its
obligations in compliance with any standard of care set forth in this Agreement,
or any liability that would otherwise be imposed by reason of any material
breach of the terms and conditions of this Agreement.
(c) The Master Servicer agrees to, and does hereby indemnify and hold the
Servicer harmless against, and shall reimburse the Servicer for any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
claims, costs, expenses, and disbursements of any kind or nature whatsoever
which may be imposed on, incurred by or asserted against the Servicer with
respect to any action taken or not taken in good faith pursuant to the
instructions and directions of the Master Servicer as provided herein.
ARTICLE VII
TERMINATION
Section 7.01.00 Termination.
-----------
Except as otherwise specifically set forth herein, the obligations and
responsibilities of the Servicer shall terminate upon the earliest to occur of
(1) the final payment or other liquidation of the Home Loans and the disposition
of all REO Properties and the remittance of all funds due hereunder with respect
to such Home Loans and REO Properties and (2) the satisfaction and discharge of
the indebtedness evidenced by the Notes and the payment of all amounts due the
Note Insurer under the Insurance Agreement and the termination of the Deposit
Trust Agreement.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.01.00 Amendment.
---------
This Agreement may be amended from time to time by the Servicer, the
Issuer, the Master Servicer and the Indenture Trustee, without the consent of
any of the Noteholders but, so long as no Note Insurer Default has occurred and
is continuing, with the prior written consent of the Note Insurer (which consent
shall not be unreasonably withheld), (1) to cure any error or any ambiguity, (2)
to correct or supplement any provisions herein which may be inconsistent with
any other provisions herein, (3) to comply with the requirements of the Code, or
(4) to amend 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 that in all such cases the Indenture Trustee shall have
received written confirmation from each Rating Agency that any such
modifications to this Agreement will not result in a qualification, reduction or
withdrawal of the implied rating assigned to the Notes by such Rating Agency
(without taking into account the Note Insurance Policy).
This Agreement may also be amended from time to time by the Servicer, the
Issuer, the Master Servicer and the Indenture Trustee, with the consent of the
Note Insurer (which consent shall not be unreasonably withheld) and the Holders
of Notes evidencing Voting Interests of the Notes affected thereby aggregating
greater than 50%, 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 Notes; provided, however, that no
such amendment shall (1) reduce in any manner the amount of, or delay the timing
of, collections of payments on Home Loans or payments which are required to be
deposited into the Note Account without the consent of all Noteholders or (2)
reduce the aforesaid percentage of the Notes the Holders of which are required
to consent to any such amendment, without the consent of the Holders of all
Notes then outstanding.
Promptly after the execution of any such amendment or consent pursuant to
the second preceding paragraph, the Indenture Trustee shall furnish an executed
copy of such amendment to each Noteholder and to each Rating Agency.
The manner of obtaining such consents and of evidencing the authorization
of the execution thereof by Noteholders shall be subject to such reasonable
requirements as the Indenture Trustee may prescribe.
Prior to the execution of any amendment to this Agreement, the Indenture
Trustee, the Master Servicer, and the Note Insurer shall be entitled to receive
and rely upon an Opinion of Counsel furnished by and at the expense of the party
requesting such amendment stating that the execution of such amendment is
authorized or permitted by this Agreement. The Indenture Trustee may, but shall
not be obligated to, enter into any such amendment that affects the Indenture
Trustee's own rights, duties or immunities under this Agreement.
Section 8.02.00 Governing Law.
-------------
This Agreement shall be construed in accordance with the laws of the State
of New York (without regard to conflict of laws principles and the application
of the laws of any other jurisdiction), and the obligations, rights and remedies
of the parties hereunder shall be determined in accordance with such laws.
Section 8.03.00 Notices.
-------
All demands, notices and communications hereunder shall be in writing and
shall be deemed to have been duly given when delivered to (a) in the case of the
Issuer, to Wilmington Trust Company at 1100 N. Market Street, Wilmington,
Delaware 19890, Attention: Emmett Harmon, with copies to the Indenture Trustee,
and to Michael D. Dean, at City National Bank of West Virginia, 25 Gatewater
Road, Charleston, West Virginia 25313, Telecopy (304) 769-1184; (b) in the case
of the Servicer, at City National Bank of West Virginia, 25 Gatewater Road,
Charleston, West Virginia 25313, Telecopy (304) 776-8820, Attention: A. Lawrence
Crimmins, Jr., (c) in the case of the Master Servicer or Note Administrator, at
Norwest Bank Minnesota, National Association, as Master Servicer or Note
Administrator, 11000 Broken Land Parkway, Columbia, Maryland 21044, Telecopy
(410) 884-2363, Attention: City Capital Home Loan Trust 1998-4; (d) in the case
of the Note Insurer, MBIA Insurance Corporation, 113 King Street, Armonk, New
York, 10504, Telecopy (914) 765-3810, Attention: Insured Portfolio Management -
Structured Finance (IPM-SF) (City Capital Home Loan Trust 1998-4 Asset-Backed
Notes, Series 1998-4); (e) in the case of S&P, to Standard & Poor's, 26
Broadway, 15th Floor, New York, New York 10004, Attention: Mortgage Surveillance
Group; (f) in the case of Moody's, to Moody's Investors Service Inc., 99 Church
Street, New York, New York 10007; and (g) in the case of the Indenture Trustee,
at Norwest Bank Minnesota, National Association, Sixth Street and Marquette
Avenue, Minneapolis, Minnesota 55479, Telecopy (612) 667-9825, Attention: City
Capital Home Loan Trust 1998-4; or, as to each party, at such other address as
shall be designated by such party in a written notice to each other party. Any
notice required or permitted to be mailed to a Noteholder shall be given by
first class mail, postage prepaid, at its address shown in the Note Register.
Any notice so mailed within the time prescribed in this Agreement shall be
conclusively presumed to have been duly given, whether or not the Noteholder
receives such notice. Any notice or other document required to be delivered or
mailed by the Indenture Trustee to any Rating Agency shall be given on a best
efforts basis and only as a matter of courtesy and accommodation and the
Indenture Trustee shall have no liability for failure to deliver such notice or
document to any such Rating Agency.
Section 8.04.00 Severability of Provisions.
--------------------------
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be for any reason whatsoever held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement or of the Notes or the rights of the Holders thereof.
Section 8.05.00 Assignment.
----------
Notwithstanding anything to the contrary contained herein, except as
provided in Sections 5.03 and 5.05, this Agreement may not be assigned by the
Issuer or the Servicer without the prior written consent of the Note Insurer and
the Holders of Notes evidencing not less than 662/3% of the Voting Interests of
all Notes.
Section 8.06.00 Third Party Beneficiary; Rating.
-------------------------------
(a) The Note Insurer is an intended third-party beneficiary of this
Agreement. This Agreement shall be binding upon and inure to the benefit of the
Note Insurer; provided that, notwithstanding the foregoing, for so long as a
Note Insurer Default is continuing, the Noteholders shall succeed to the Note
Insurer's rights hereunder. Without limiting the generality of the foregoing,
all covenants and agreements in this Agreement that expressly confer rights upon
the Note Insurer shall be for the benefit of and run directly to the Note
Insurer, and the Note Insurer (including any rights of consent) shall be
entitled to rely on and enforce such covenants to the same extent as if it were
a party to this Agreement.
(b) In the event the rating of the Note Insurer by any of the Rating
Agencies is reduced to a rating that is below "investment grade" (as that term
is then commonly used), the Servicer shall, at its own expense, seek to obtain
ratings of the Notes (apart from the rating related to the Note Insurance
Policy) from such Rating Agency.
(c) The Note Administrator is an intended third-party beneficiary of this
Agreement for the purpose of enforcing its right to compensation pursuant to
Section 3.04 of this Agreement.
Section 8.07.00 Counterparts.
------------
This Agreement may be executed simultaneously in any number of
counterparts. Each counterpart shall be deemed to be an original, and all such
counterparts shall constitute one and the same instrument.
Section 8.08.00 Intention of the Parties.
------------------------
It is the intention of the parties that the Issuer is conveying, and the
Servicer is receiving, only a contract for servicing and administering the Home
Loans. Accordingly, the parties hereby acknowledge that the Indenture Trustee
remains the sole and absolute record holder of the Home Loans and all rights
related thereto.
Section 8.09.00 Waivers and Modifications.
-------------------------
No term or provision of this Agreement may be waived or modified unless
such waiver or modification is in writing and signed by the party against whom
such waiver or modification is sought to be enforced.
Section 8.10.00 Further Agreements.
------------------
The Servicer and the Issuer each agree to execute and deliver to the other
such reasonable and appropriate additional documents, instruments or agreements
as may be necessary or appropriate to effectuate the purposes of this Agreement.
Section 8.11.00 Attorney-in-Fact.
----------------
The Issuer hereby designates the Servicer its agent and attorney-in-fact to
execute any financing statement, continuation statement or other instrument
required pursuant to this Agreement or the Indenture.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers, all as of the day and year first
above written.
CITY CAPITAL HOME LOAN TRUST 1998-4,
AS ISSUER
By: Wilmington Trust Company, not in its
individual capacity, but solely
as Owner Trustee
By: /s/ Emmett R. Harmon
-------------------------------------
Authorized Signatory
CITY NATIONAL BANK OF WEST VIRGINIA,
AS SERVICER
By: /s/ Robert A. Henson
-------------------------------------
Name: Robert A. Henson
Title: Chief Financial Officer
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION
AS MASTER SERVICER
By: /s/ Randall S. Reider
-------------------------------------
Name: Randall S. Reider
Title: Assistant Vice President
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION
AS INDENTURE TRUSTEE AND NOT IN
ITS INDIVIDUAL CAPACITY
By: /s/ Randall S. Reider
-------------------------------------
Name: Randall S. Reider
Title: Assistant Vice President
<PAGE>
ACKNOWLEDGED:
The Custodian hereby acknowledges its obligations as Custodian under this
Agreement.
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, AS CUSTODIAN
By: /s/ Randall S. Reider
-------------------------------------
Name: Randall S. Reider
Title: Assistant Vice President
Exhibit 10.4
FINANCIAL GUARANTY INSURANCE POLICY
OBLIGATIONS: City Capital Home Loan Trust 1998-4 POLICY NUMBER: 28860
Asset-Backed Notes, Series 1998-4
$168,173,000 Class A 7.04% Notes
MBIA Insurance Corporation (the "Note Insurer"), in consideration of
the payment of the premium and subject to the terms of this Financial Guaranty
Insurance Policy (this "Policy"), hereby unconditionally and irrevocably
guarantees to any Noteholder that an amount equal to each full and complete
Insured Payment will be received by Norwest Bank Minnesota, National
Association, or its successor, as indenture trustee for the Noteholders (the
"Indenture Trustee"), on behalf of the Noteholders from the Note Insurer, for
distribution by the Indenture Trustee to each Noteholder of each Noteholder's
proportionate share of the Insured Payment. The Note Insurer's obligations
hereunder with respect to a particular Insured Payment shall be discharged to
the extent funds equal to the applicable Insured Payment are received by the
Indenture Trustee, whether or not such funds are properly applied by the
Indenture Trustee. Insured Payments shall be made only at the time set forth in
this Policy and no accelerated Insured Payments shall be made regardless of any
acceleration of the Obligations, unless such acceleration is at the sole option
of the Note Insurer.
Notwithstanding the foregoing paragraph, this Policy does not cover
shortfalls, if any, attributable to the liability of the Trust or the Indenture
Trustee for withholding taxes, if any (including interest and penalties in
respect of any such liability).
The Note Insurer will pay any Insured Payment that is a Preference
Amount on the Business Day following receipt on a Business Day by the Fiscal
Agent (as described below) of (i) a certified copy of the order requiring the
return of a preference payment, (ii) an opinion of counsel satisfactory to the
Note Insurer that such order is final and not subject to appeal, (iii) an
assignment in such form as is reasonably required by the Note Insurer,
irrevocably assigning to the Note Insurer all rights and claims of the
Noteholder relating to or arising under the Obligations against the debtor which
made such preference payment or otherwise with respect to such preference
payment and (iv) appropriate instruments to effect the appointment of the Note
Insurer as agent for such Noteholder in any legal proceeding related to such
preference payment, such instruments being in a form satisfactory to the Note
Insurer, provided that if such documents are received after 12:00 noon New York
City time on such Business Day, they will be deemed to be received on the
following Business Day. Such payments shall be disbursed to the receiver or
trustee in bankruptcy named in the final order of the court exercising
jurisdiction on behalf of the Noteholder and not to any Noteholder directly
unless such Noteholder has returned principal or interest paid on the
Obligations to such receiver or trustee in bankruptcy, in which case such
payment shall be disbursed to such Noteholder.
The Note Insurer will pay any other amount payable hereunder no later
than 12:00 noon New York City time on the later of the Payment Date on which the
related Deficiency Amount is due or the third Business Day following receipt in
New York, New York, on a Business Day by State Street Bank and Trust Company,
N.A., as Fiscal Agent for the Note Insurer or any successor fiscal agent
appointed by the Note Insurer (the "Fiscal Agent") of a Notice (as described
below); provided that if such Notice is received after 12:00 noon New York City
time on such Business Day, it will be deemed to be received on the following
Business Day. If any such Notice received by the Fiscal Agent is not in proper
form or is otherwise insufficient for the purpose of making claim hereunder, it
shall be deemed not to have been received by the Fiscal Agent for purposes of
this paragraph, and the Note Insurer or the Fiscal Agent, as the case may be,
shall promptly so advise the Indenture Trustee and the Indenture Trustee may
submit an amended Notice.
Insured Payments due hereunder, unless otherwise stated herein, will be
disbursed by the Fiscal Agent to the Indenture Trustee on behalf of the
Noteholders by wire transfer of immediately available funds in the amount of the
Insured Payment less, in respect of Insured Payments related to Preference
Amounts, any amount held by the Indenture Trustee for the payment of such
Insured Payment and legally available therefor.
The Fiscal Agent is the agent of the Note Insurer only and the Fiscal
Agent shall in no event be liable to Noteholders for any acts of the Fiscal
Agent or any failure of the note Insurer to deposit or cause to be deposited,
sufficient funds to make payments due under this Policy.
The Fiscal Agent is the agent of the Note Insurer only and the Fiscal
Agent shall in no event be liable to Noteholders for any acts of the Fiscal
Agent or any failure of the Note Insurer to deposit or cause to be deposited,
sufficient funds to make payments due under this Policy.
Subject to the terms of the Agreement, the Note Insurer shall be
subrogated to the rights of each Noteholder to receive payments under the
Obligations to the extent of any payment by the Note Insurer under this Policy.
As used herein, the following terms shall have the following meanings:
"Agreement" means the Indenture dated as of November 1, 1998 between
the Trust and Norwest Bank Minnesota, National Association, as the Indenture
Trustee, Note Administrator and Custodian, without regard to any amendment or
supplement thereto, unless the Note Insurer shall have consented in writing
thereto.
"Business Day" means any day other than a Saturday, a Sunday or a day
on which banking institutions in New York City, or in the city in which the
Corporate Trust Office of the Indenture Trustee is located are authorized or
obligated by law or executive order to close.
"Deficiency Amount" means, with respect to any Payment Date, the sum of
(i) the Note Interest for such Payment Date minus Available Funds and (ii) the
then existing Overcollateralization Deficit, if any, after the application of
Available Funds to reduce the Note Balance on such Payment Date.
"Insured Payment" means (i) as of any Payment Date, the Deficiency
Amount and (ii) any Preference Amount due and then owing hereunder.
"Noteholder" means each Noteholder (as defined in the Agreement) (other
than the Seller or the Servicer) who, on the applicable Payment Date, is
entitled under the terms of the applicable Obligations to payment thereunder.
"Notice" means the telephonic or telegraphic notice, promptly confirmed
in writing by fax substantially in the form of Exhibit A attached hereto, the
original of which is subsequently delivered by registered or certified mail,
from the Indenture Trustee specifying the Insured Payment which shall be due and
owing on the applicable Payment Date.
"Preference Amount" means any amount previously distributed to a
Noteholder on the Obligations that is recoverable and sought to be recovered as
a voidable preference by a trustee in bankruptcy pursuant to the United States
Bankruptcy Code (11 U.S.C.), as amended from time to time, in accordance with a
final nonappealable order of a court having competent jurisdiction.
Capitalized terms used herein and not otherwise defined herein shall
have the respective meanings set forth in the Agreement as of the date of
execution of this Policy, without giving effect to any subsequent amendment to
or modification of the Agreement unless such amendment or modification has been
approved in writing by the Note Insurer.
Any notice hereunder or service of process on the Fiscal Agent may be
made at the address listed below for the Fiscal Agent or such other address as
the Note Insurer shall specify in writing to the Indenture Trustee.
The notice address of the Fiscal Agent is 15th Floor, 61 Broadway, New
York, New York, 10006, Attention: Municipal Registrar and Paying Agency, or such
other address as the Fiscal Agent shall specify to the Indenture Trustee in
writing.
This Policy is being issued under and pursuant to, and shall be
construed under, the laws of the State of New York, without giving effect to the
conflict of laws principles thereof.
The insurance provided by this Policy is not covered by the
Property/Casualty Insurance Security Fund specified in Article 76 of the New
York Insurance Law.
This Policy is not cancelable for any reason. The premium on this
Policy is not refundable for any reason including payment, or provision being
made for payment, prior to maturity of the Obligations.
<PAGE>
IN WITNESS WHEREOF, the Note Insurer has caused this Policy to be
executed and attested this 30th day of November, 1998.
MBIA Insurance Corporation
/s/ Richard Weill
---------------------------
President
/s/
---------------------------
Assistant Secretary
<PAGE>
EXHIBIT A
TO NOTE GUARANTY INSURANCE POLICY
NUMBER: 28860
NOTICE UNDER NOTE GUARANTY
INSURANCE POLICY NUMBER: 28860
State Street Bank and Trust Company, N.A., as Fiscal Agent
for MBIA Insurance Corporation
61 Broadway, 15th Floor
New York, NY 10006
Attention: Municipal Registrar and
Paying Agency
MBIA Insurance Corporation
113 King Street
Armonk, NY 10504
The undersigned, a duly authorized officer of Norwest Bank Minnesota,
National Association, as indenture trustee (the "Indenture Trustee"), hereby
certifies to State Street Bank and Trust Company, N.A. (the "Fiscal Agent") and
MBIA Insurance Corporation (the "Note Insurer"), with reference to Financial
Guaranty Insurance Policy Number: 28860 (the "Policy") issued by the Note
Insurer in respect of City Capital Home Loan Trust 1998-4 Asset-Backed Notes,
Series 1998-4, $168,173,000 Class A 7.04% Notes.
(i) the Indenture Trustee is the indenture trustee under the Indenture
dated as of November 1, 1998, between City Capital Home Loan Trust 1998-4,
and Norwest Bank Minnesota, National Association, as the Indenture Trustee
as the Note Administrator and as Custodian;
(ii) the Note Interest due under clause (i) of the definition of Deficiency
Amount for the Payment Date occurring on (the "Applicable Payment Date") is
$________ (the "Note Interest");
(iii) the amount of the Available Funds for the Applicable Payment Date is
$_________ (the "Available Funds");
(iv) the excess, if any, of the Note Interest in clause (ii) over the
Available Funds in clause (iii) is $__________;
(v) the excess, if any, of the Available Funds in clause (iii) over the
Note Interest in clause (ii) is $__________;
(vi) the amount of the then existing Overcollateralization Deficit before
the application of Available Funds on the Applicable Payment Date under
clause (ii) of the definition of Deficiency Amount is $_________; (the
"Overcollateralization Deficit);
(vii) the excess, if any, of the Overcollateralization Deficit as reported
in clause (vi) over the amount in clause (v) is $_________;
(viii) the sum of the amount in clause (iv) and the amount in clause (vii)
is $__________ (the "Deficiency Amount");
(ix) the amount of previously distributed payments on the Obligations that
is recoverable and sought to be recovered as a voidable preference by a
trustee in bankruptcy pursuant to the Bankruptcy Code in accordance with a
final nonappealable order of a court having competent jurisdiction is
$________ (the "Preference Amount");
(x) the total Insured Payment due is $_________, which amount equals the
sum of the Deficiency Amount and the Preference Amount;
(xi) the Indenture Trustee is making a claim under and pursuant to the
terms of the Policy for the dollar amount of the insured Payment set forth
in (viii) above to be applied to the payment of the Deficiency Amount for
the Applicable Payment Date in accordance with the Agreement and for the
dollar amount of the Insured Payment set forth in (ix) above to be applied
to the payment of any Preference Amount; and
(xii) the Indenture Trustee directs that payment of the Insured Payment be
made to the following account by bank wire transfer of federal or other
immediately available funds in accordance with the terms of the Policy:
[INDENTURE TRUSTEE'S ACCOUNT NUMBER].
Any capitalized term used in this Notice and not otherwise defined
herein shall have the meaning assigned thereto in the Policy.
Any Person Who Knowingly And With Intent To Defraud Any Insurance
Company Or Other Person Files An Application For Insurance Or Statement Of Claim
Containing Any Materially False Information, Or Conceals For The Purpose Of
Misleading, Information Concerning Any Fact Material Thereto, Commits A
Fraudulent Insurance Act, Which Is A Crime, And Shall Also Be Subject To A Civil
Penalty Not To Exceed Five Thousand Dollars And The Stated Value Of The Claim
For Each Such Violation.
IN WITNESS WHEREOF, the Indenture Trustee has executed and delivered
this Notice under the Policy as of the day of , .
[NAME OF INDENTURE TRUSTEE], as
Indenture Trustee
By__________________________________
Title
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