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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event
Reported) May 19, 1999
FINANCIAL ASSET SECURITIES CORP., (as depositor under the Trust
Agreement, dated as of May 1, 1999, relating to the City Capital Home
Loan Trust 1999-1, Asset Backed Notes, Series 1999-1).
FINANCIAL ASSET SECURITIES CORP.
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(Exact name of registrant as specified in its charter)
Delaware 333-67329 06-1442101
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(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 Executive (Zip Code)
Offices)
Registrant's telephone number, including area code (203) 622-2700
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<PAGE>
Item 5. Other Events.
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On May 19, 1999, City Capital Home Loan Trust 1999-1 (the "Trust"), a
Delaware statutory business trust, for which Financial Asset Securities Corp.
(the "Company") acting as depositor, issued $238,236,000 Class A Asset-Backed
Notes, Series 1999-1 (the "Notes").
In connection with the offering of the Notes, the Company entered
into a Deposit Trust Agreement dated as of May 1, 1999 (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 May 1, 1999 (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
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Information and Exhibits.
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(a) Not applicable.
(b) Not applicable.
(c) Exhibit:
4.1 Indenture dated as of May 1, 1999.
10.1 Deposit Trust Agreement dated as of May 1, 1999.
10.2 Home Loan Sale Agreement made as of May 1, 1999.
10.3 Servicing Agreement dated as of May 1, 1999.
10.4 Financial Guaranty Insurance Policy dated May 19, 1999.
<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
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Name: John Paul Graham
Title: Vice President
Dated: May 19, 1999
<PAGE>
Exhibit Index
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Exhibit Page
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4.1 Indenture dated as of May 1, 1999.
10.1 Deposit Trust Agreement dated as of May 1, 1999.
10.2 Home Loan Sale Agreement made as of May 1, 1999.
10.3 Servicing Agreement dated as of May 1, 1999.
10.4 Financial Guaranty Insurance Policy dated May 19, 1999.
EXHIBIT 4.1
INDENTURE
between
CITY CAPITAL HOME LOAN TRUST 1999-1,
as Issuer,
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Indenture Trustee,
Note Administrator and Custodian
Dated as of April 30, 1999
Relating to
CITY CAPITAL HOME LOAN TRUST 1999-1
ASSET-BACKED NOTES, SERIES 1999-1
<PAGE>
TABLE OF CONTENTS
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Page
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ARTICLE I DEFINITIONS........................................................2
Section 1.01. General Definitions..................................2
ARTICLE II THE NOTES........................................................22
Section 2.01. Form Generally......................................22
Section 2.02. Form of Certificate of Authentication...............23
Section 2.03. General Provisions With Respect to Principal and
Interest Payments...................................23
Section 2.04. Denominations.......................................24
Section 2.05. Execution, Authentication, Delivery and Dating......24
Section 2.06. Registration; Registration of Transfer and
Exchange............................................25
Section 2.07. Mutilated, Destroyed, Lost or Stolen Notes..........26
Section 2.08. Payments of Principal and Interest..................26
Section 2.09. Persons Deemed Owners...............................28
Section 2.10. Cancellation........................................28
Section 2.11. Authentication and Delivery of Notes................29
Section 2.12. Book-Entry Notes....................................30
Section 2.13. Termination of Book Entry System....................31
ARTICLE III COVENANTS.......................................................32
Section 3.01. Payment of Notes....................................32
Section 3.02. Maintenance of Office or Agency.....................32
Section 3.03. Money for Note Payments to Be Held In Trust.........32
Section 3.04. Existence of Issuer.................................34
Section 3.05. Protection of Trust Estate..........................34
Section 3.06. Opinions as to Trust Estate.........................35
Section 3.07. Performance of Obligations; Servicing Agreement.....35
Section 3.08. Investment Company Act..............................36
Section 3.09. Negative Covenants..................................36
Section 3.10. Annual Statement as to Compliance...................37
Section 3.11. Restricted Payments.................................37
Section 3.12. Treatment of Notes as Debt for Tax Purposes.........38
Section 3.13. Notice of Events of Default.........................38
Section 3.14. Further Instruments and Acts........................38
Section 3.15. Covenants of the Indenture Trustee..................38
ARTICLE IV SATISFACTION AND DISCHARGE.......................................39
Section 4.01. Satisfaction and Discharge of Indenture.............39
Section 4.02. Application of Trust Money..........................41
ARTICLE V DEFAULTS AND REMEDIES.............................................41
Section 5.01. Event of Default....................................41
Section 5.02. Acceleration of Maturity; Rescission and
Annulment...........................................42
Section 5.03. Collection of Indebtedness and Suits for
Enforcement by Indenture Trustee....................43
Section 5.04. Remedies............................................43
Section 5.05. Indenture Trustee May File Proofs of Claim..........44
Section 5.06. Indenture Trustee May Enforce Claims Without
Possession of Notes.................................45
Section 5.07. Application of Money Collected......................45
Section 5.08. Limitation on Suits.................................46
Section 5.09. Unconditional Rights of Noteholders to
Receive Principal and Interest......................47
Section 5.10. Restoration of Rights and Remedies..................47
Section 5.11. Rights and Remedies Cumulative......................47
Section 5.12. Delay or Omission Not Waiver........................47
Section 5.13. Control by Noteholders..............................48
Section 5.14. Waiver of Past Defaults.............................48
Section 5.15. Undertaking for Costs...............................48
Section 5.16. Waiver of Stay or Extension Laws....................49
Section 5.17. Sale of Trust Estate................................49
Section 5.18. Action on Notes.....................................51
Section 5.19. Application of Section 316(a) of the Trust
Indenture Act.......................................51
ARTICLE VI THE INDENTURE TRUSTEE............................................51
Section 6.01. Duties of Indenture Trustee.........................51
Section 6.02. Notice of Default...................................52
Section 6.03. Rights of Indenture Trustee.........................53
Section 6.04. Not Responsible for Recitals or Issuance of Notes...53
Section 6.05. May Hold Notes......................................53
Section 6.06. Money Held in Trust.................................54
Section 6.07. Eligibility; Disqualification.......................54
Section 6.08. Indenture Trustee's Capital and Surplus.............54
Section 6.09. Resignation and Removal; Appointment of Successor...54
Section 6.10. Acceptance of Appointment by Successor..............55
Section 6.11. Merger, Conversion, Consolidation or Succession
to Business of Indenture Trustee....................56
Section 6.12. Preferential Collection of Claims Against Issuer....56
Section 6.13. Co-Indenture Trustees and Separate Indenture
Trustees............................................56
Section 6.14. Authenticating Agents...............................58
Section 6.15. Review of Home Loan Files...........................59
Section 6.16. Indenture Trustee Fees and Expenses.................61
ARTICLE VII NOTEHOLDERS' LISTS AND REPORTS..................................61
Section 7.01. Issuer to Furnish Indenture Trustee Names and
Addresses of Noteholders............................61
Section 7.02. Preservation of Information; Communications to
Noteholders.........................................61
Section 7.03. Reports by Indenture Trustee........................62
Section 7.04. Reports by Issuer...................................62
ARTICLE VIII ACCOUNTS, PAYMENTS OF INTEREST AND PRINCIPAL, AND RELEASES.....62
Section 8.01. Collection of Moneys................................62
Section 8.02. Note Account........................................63
Section 8.03. Claims against the MBIA Insurance Policy............65
Section 8.04. General Provisions Regarding the Note Account
and Home Loans......................................66
Section 8.05. Releases of Defective Home Loans....................67
Section 8.06. Reports by Indenture Trustee to Noteholders;
Access to Certain Information.......................68
Section 8.07. Trust Estate Home Loan Files........................68
Section 8.08. Amendment to Servicing Agreement....................68
Section 8.09. Delivery of the Home Loan Files Pursuant to
Servicing Agreement.................................69
Section 8.10. Servicer as Agent...................................69
Section 8.11. Termination of Master Servicer......................69
Section 8.12. Opinion of Counsel..................................69
Section 8.13. Appointment of Custodians...........................70
Section 8.14. Rights of the Note Insurer to Exercise Rights
of Noteholders......................................70
Section 8.15. Trust Estate and Accounts Held for Benefit of
the Note Insurer....................................71
ARTICLE IX SUPPLEMENTAL INDENTURES..........................................71
Section 9.01. Supplemental Indentures Without Consent of
Noteholders.........................................71
Section 9.02. Supplemental Indentures With Consent of
Noteholders.........................................72
Section 9.03. Execution of Supplemental Indentures................73
Section 9.04. Effect of Supplemental Indentures...................73
Section 9.05. Conformity with Trust Indenture Act.................74
Section 9.06. Reference in Notes to Supplemental Indentures.......74
Section 9.07. Amendments to Governing Documents...................74
ARTICLE X REDEMPTION OF NOTES...............................................75
Section 10.01. Redemption..........................................75
Section 10.02. Form of Redemption Notice...........................75
Section 10.03. Notes Payable on Optional Redemption................76
ARTICLE XI NOTE ADMINISTRATION..............................................76
Section 11.01. Powers and Duties of the Note Administrator.........76
Section 11.02. Compensation; Payment of Certain Expenses...........77
Section 11.03. Instructions........................................77
Section 11.04. Benefit of the Agreement............................77
Section 11.05. Limitation of Responsibility of the Note
Administrator.......................................77
Section 11.06. Termination of Note Administrator...................78
ARTICLE XII MISCELLANEOUS...................................................79
Section 12.01. Compliance Certificates and Opinions................79
Section 12.02. Form of Documents Delivered to Indenture
Trustee.............................................80
Section 12.03. Acts of Noteholders.................................81
Section 12.04. Notices, etc. to Indenture Trustee, the Note
Insurer and Issuer..................................81
Section 12.05. Notices and Reports to Noteholders; Waiver of
Notices.............................................82
Section 12.06. Rules by Indenture Trustee..........................83
Section 12.07. The Trust Indenture Act.............................83
Section 12.08. Effect of Headings and Table of Contents;
References..........................................83
Section 12.09. Successors and Assigns..............................83
Section 12.10. Separability........................................83
Section 12.11. Benefits of Indenture...............................83
Section 12.12. Legal Holidays......................................83
Section 12.13. Governing Law.......................................84
Section 12.14. Counterparts........................................84
Section 12.15. Debt Instruments....................................84
Section 12.16. Issuer Obligation...................................84
Section 12.17. No Petition.........................................85
Section 12.18. Inspection..........................................85
Section 12.19. Usury...............................................85
Section 12.20. Third Party Beneficiary.............................86
Section 12.21. Limitation of Liability.............................86
<PAGE>
SCHEDULES AND EXHIBITS
Schedule I Home Loan Schedule
Exhibit A Form of Class A Note
Exhibit B Home Loan Sale Agreement
Exhibit C Custodial Agreement
Exhibit D [Reserved]
Exhibit E-1 Form of Custodian's Initial Certification
Exhibit E-2 Form of Custodian's Interim Certification
Exhibit E-3 Form of Custodian's Final Certification
Exhibit F MBIA Insurance Policy
Exhibit G [Reserved]
Exhibit H Servicing Agreement
<PAGE>
CROSS-REFERENCE TABLE
Cross-reference sheet showing the location in the Indenture of the
provisions inserted pursuant to Sections 310 through 318(a) inclusive of the
Trust Indenture Act of 1939.*
Trust Indenture Act of 1939 Indenture Section
Section 310
(a) (1).......................................... 6.07
(a) (2).......................................... 6.07, 6.08
(a) (3).......................................... 6.13
(a) (4).......................................... Not Applicable
(a) (5).......................................... 6.07
(b).............................................. 6.07, 6.09
(c).............................................. Not Applicable
Section 311
(a).............................................. 6.12
(b).............................................. 6.12
(c).............................................. Not Applicable
Section 312
(a).............................................. 7.01(a), 7.02(a)
(b).............................................. 7.02(b)
(c).............................................. 7.02(c)
Section 313
(a).............................................. 7.03(a)
(b).............................................. 7.03(a)
(c).............................................. 12.05
(d).............................................. 7.03(b)
Section 314
(a)(1)........................................... 7.04
(a)(2)........................................... 7.04
(a)(3)........................................... 7.04
(a)(4)........................................... 7.04
(b)(1)........................................... 2.11(c), 12.01
(b)(2)........................................... 3.06
(c)(1)........................................... 2.11(d), 4.01,
8.02(d), 12.01
(c)(2)........................................... 2.11(c), 4.01,
8.02(d), 12.01
(c)(3)........................................... 8.02(d)
(d)(1)........................................... 12.01(a)
(d)(2)........................................... 12.01(a)
(d)(3)........................................... 12.01(a)
(e).............................................. 12.01(b)
Section 315
(a).............................................. 6.01(b), 6.01(c)(1)
(b).............................................. 6.02, 12.05
(c).............................................. 6.01(a)
(d)(1)........................................... 6.01(b), 6.01(c)
(d)(2)........................................... 6.01(c)(2)
(d)(3)........................................... 6.01(c)(3)
(e).............................................. 5.15
Section 316
(a).............................................. 5.19
(b).............................................. 5.09
(c).............................................. 5.19
Section 317
(a)(1)........................................... 5.03
(a)(2)........................................... 5.05
(b).............................................. 3.03
Section 318
(a).............................................. 12.07
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* This Cross-Reference Table is not part of the Indenture.
<PAGE>
THIS INDENTURE, dated as of April 30, 1999 (as amended or supplemented
from time to time as permitted hereby, this "Indenture"), is among CITY CAPITAL
HOME LOAN TRUST 1999-1, a Delaware business trust (together with its permitted
successors and assigns, the "Issuer"), and NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, a national banking association, as trustee (together with its
permitted successors in the trusts hereunder, the "Indenture Trustee"), as note
administrator (together with its permitted successors and assigns in such
capacity, the "Note Administrator") and as custodian (together with its
permitted successors and assigns in such capacity, the "Custodian").
Preliminary Statement
The Issuer has duly authorized the execution and delivery of this
Indenture to provide for its Asset-Backed Notes, Series 1999-1 Class A (the
"Class A Notes" or the "Notes"), issuable as provided in this Indenture. All
covenants and agreements made by the Issuer herein are for the benefit and
security of the Holders of the Notes and the Note Insurer. The Issuer is
entering into this Indenture, and the Indenture Trustee is accepting the trusts
created hereby, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged. All things necessary to make this
Indenture a valid agreement of the Issuer in accordance with its terms have
been done.
Granting Clause
The Issuer hereby Grants to the Indenture Trustee, for the exclusive
benefit of the Holders of the Notes and the Note Insurer, all of the Issuer's
right, title and interest in and to (a) the Home Loans listed in Schedule I to
this Indenture (including property that secures a Home Loan that becomes an REO
Property), including the related Home Loan Files delivered or to be delivered
to the Indenture Trustee or the Custodian pursuant to the Home Loan Sale
Agreement, all payments of principal or interest received, collected or
otherwise recovered in respect of principal or interest after the Cut-off Date,
(b) the Servicing Agreement, (c) the Home Loan Sale Agreement, (d) the
Custodial Agreement, (e) the Trust Agreement, (f) the Insurance Policies, (g)
all cash, instruments or other property held or required to be deposited in the
Collection Account and the Note Account, including all investments made with
funds in such accounts (but not including any income on funds deposited in, or
investments made with funds deposited in, the Collection Account, which income
shall belong to and be for the account of the Servicer, and not including any
income on funds deposited in, or investments made with funds deposited in the
Note Account, which income shall belong to and be for the account of the
Indenture Trustee), and (h) all proceeds of the conversion, voluntary or
involuntary, of any of the foregoing into cash or other liquid assets,
including, without limitation, all insurance proceeds and condemnation awards.
Such Grants are made, however, in trust, to secure the Notes equally and
ratably without prejudice, priority or distinction between any Note and any
other Note by reason of difference in time of issuance or otherwise, and for
the benefit of the Note Insurer to secure (x) the payment of all amounts due on
the Notes in accordance with their terms, (y) the payment of all other sums
payable under this Indenture and (z) compliance with the provisions of this
Indenture, all as provided in this Indenture. All terms used in the foregoing
granting clauses that are defined in Section 1.01 are used with the meanings
given in said Section.
The Indenture Trustee acknowledges such Grant, accepts the trusts
hereunder in accordance with the provisions of this Indenture and agrees to
perform the duties herein required to the end that the interests of the Holders
of the Notes may be adequately and effectively protected. The Indenture Trustee
agrees that it will hold the MBIA Insurance Policy in trust and that it will
hold any proceeds of any claim upon the MBIA Insurance Policy, solely for the
use and benefit of the Noteholders in accordance with the terms hereof and the
MBIA Insurance Policy.
ARTICLE I
DEFINITIONS
Section 1.01. General Definitions.
Except as otherwise specified or as the context may otherwise require, the
following terms have the respective meanings set forth below for all purposes
of this Indenture, and the definitions of such terms are applicable to the
singular as well as to the plural forms of such terms and to the masculine as
well as to the feminine genders of such terms. Whenever reference is made
herein to an Event of Default or a Default known to the Indenture Trustee or of
which the Indenture Trustee has notice or knowledge, such reference shall be
construed to refer only to an Event of Default or Default of which the
Indenture Trustee is deemed to have notice or knowledge pursuant to Section
6.01(d). All other terms used herein that are defined in the Trust Indenture
Act (as hereinafter defined), either directly or by reference therein, have the
meanings assigned to them therein.
"ACCOUNTANT": A Person engaged in the practice of accounting who must be
Independent.
"ACT": With respect to any Noteholder or the Note Insurer, as defined in
Section 12.03.
"ADMINISTRATIVE FEE AMOUNT": For any Payment Date, the sum of the
Servicing Fee, the Master Servicing Fee, the Indenture Trustee Fee, the
Custodial Fee and the Note Insurer Premium, each relating to such Payment Date.
"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, relation to individuals or otherwise, and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"AGENT": Any Note Registrar, Paying Agent, Authenticating Agent or
Custodian.
"AGGREGATE PRINCIPAL BALANCE": With respect to any Payment Date, the
aggregate of the Principal Balances of the Home Loans as of the related
Determination Date (or other specified date).
"ANNUALIZED LOSS PERCENTAGE": On any date of determination, the Realized
Losses for the previous Collection Period (net of any recoveries received
during such Collection Period) as a percentage of the Aggregate Principal
Balance of the Home Loans, multiplied by 12.
"ASSIGNMENT EVENT": As defined in the Home Loan Sale Agreement.
"ASSIGNMENT OF MORTGAGE": As defined in the Home Loan Sale Agreement.
"AUTHENTICATING AGENT": The Person, if any, appointed as Authenticating
Agent by the Issuer pursuant to Section 6.13, until any successor
Authenticating Agent for the Notes is named, and thereafter "Authenticating
Agent" shall mean such successor. The initial Authenticating Agent shall be the
Indenture Trustee. Any Authenticating Agent other than the Indenture Trustee
shall sign an instrument under which it agrees to be bound by all of the terms
of this Indenture applicable to the Authenticating Agent.
"AUTHORIZED OFFICER": With respect to the Indenture Trustee, any
Responsible Officer and with respect to any other Person, the Chairman, Chief
Operating Officer, President or any Vice President of such Person.
"AVAILABLE FUNDS": With respect to the Notes and any Payment Date, the sum
of the amounts described in clauses (a) through (g) below, less (i) the
Administrative Fee Amount in respect of such Payment Date, (ii) Servicing
Advances previously made that are reimbursable to the Servicer (other than
those included in liquidation expenses for any Liquidated Home Loan and
reimbursed from the related Liquidation Proceeds) with respect to the related
Collection Period to the extent permitted by the Servicing Agreement and (iii)
the aggregate amounts (A) deposited into the Collection Account or Note 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 Bankruptcy Code and that would otherwise have
been included in Available Funds on such Payment Date and (B) received by the
Indenture Trustee that are recoverable and sought to be recovered from the
Issuer as a voidable preference by a trustee in bankruptcy pursuant to the
Bankruptcy Code in accordance with a final nonappealable order of a court of
competent jurisdiction:
(a) all scheduled payments of interest received with respect to the Home
Loans and due 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), plus any net
income from related REO Properties for such Collection Period;
(b) all scheduled payments of principal received with respect to the Home
Loans and due 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 be 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;
(c) the aggregate of any Trust Insurance Proceeds collected by the
Servicer during the related Collection Period;
(d) the aggregate of any Net Liquidation Proceeds collected by the
Servicer during the related Collection Period;
(e) the aggregate of the Purchase Prices received in respect of any Home
Loans that are required or permitted to be repurchased, released or removed by
the Seller during or in respect of the related Collection Period, to the extent
such amounts are received by the Indenture Trustee on or before the related
Deposit Date;
(f) the aggregate of amounts deposited in the Note Account during such
Collection Period in connection with redemption of the Notes pursuant to
Article X; and
(g) subsequent collections on Liquidated Home Loans to the extent of any
Realized Loss incurred with respect to such Home Loan, after payment to the
Servicer of any additional servicing compensation permitted under the Servicing
Agreement.
"BANKRUPTCY CODE": The Bankruptcy Reform Act of 1978 (Title 11 of the
United States Code), as amended.
"BASIC DOCUMENTS": This Agreement, the Trust Agreement, the Servicing
Agreement, the Home Loan Sale Agreement, the Custodial Agreement, the Insurance
Agreement and the Indemnification Agreement.
"BENEFICIAL OWNER": With respect to a Book-Entry Note, the Person who is
the beneficial owner of such Note as reflected on the books of the Clearing
Agency for the Notes or on the books of a Person maintaining an account with
such Clearing Agency (directly or as an indirect participant, in accordance
with the rules of such Clearing Agency).
"BEST EFFORTS": Efforts determined to be in good faith and reasonably
diligent by the Person performing such efforts, specifically the Issuer or the
Servicer, as the case may be, in its reasonable discretion. Such efforts do not
require the Issuer or the Servicer, as the case may be, to enter into any
litigation, arbitration or other legal or quasi-legal proceeding, nor do they
require the Issuer or the Servicer, as the case may be, to advance or expend
fees or sums of money in addition to those specifically set forth in this
Indenture and the Servicing Agreement.
"BOOK-ENTRY NOTES": Any Notes registered in the name of the Clearing
Agency or its nominee, ownership of which is reflected on the books of the
Clearing Agency or on the books of a person maintaining an account with such
Clearing Agency (directly or as an indirect participant in accordance with the
rules of such Clearing Agency).
"BOOK-ENTRY TERMINATION": The time at which the book-entry registration of
the Book-Entry Notes shall terminate, as specified in Section 2.13.
"BUSINESS DAY": 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 West Virginia, the State of New York, the State of Minnesota, the
State of Maryland or the State of Delaware are authorized or obligated by law,
regulation or executive order to be closed.
"CERTIFICATE": As defined in the Trust Agreement.
"CERTIFICATE DISTRIBUTION ACCOUNT": As defined in the Trust Agreement.
"CERTIFICATEHOLDERS": As defined in the Trust Agreement.
"CLASS A NOTES": Any of the Notes designated as Class A Notes and
evidenced by a duly executed and authenticated certificate substantially in the
form of Exhibit A hereto.
"CLEAN-UP CALL DATE": The first Payment Date on which the Note Balance is
equal to or less than 5% of the Original Note Balance.
"CLEARING AGENCY": An organization registered as a "clearing agency"
pursuant to Section 17A of the Securities and Exchange Act of 1934, as amended,
and the regulations of the Commission thereunder.
"CLEARING AGENCY PARTICIPANTS": The entities for whom the Clearing Agency
will maintain book-entry records of ownership and transfer of Book-Entry Notes,
which may include securities brokers and dealers, banks and trust companies and
clearing corporations and certain other organizations.
"CLOSING DATE": May 19, 1999, the date of initial issuance of the Notes.
"CODE": The Internal Revenue Code of 1986, as amended, and as may be
further amended from time to time, as 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 trust account established by the
Servicer and maintained pursuant to Section 2.02(b) of the Servicing Agreement.
"COLLECTION PERIOD": As to any Payment Date, the period beginning on the
first day of the calendar month immediately preceding the month in which such
Payment Date occurs and ending on the last day of such calendar month.
"COMBINED LOAN-TO-VALUE RATIO": As defined in the Servicing Agreement.
"COMMISSION": The Securities and Exchange Commission, as from time to time
constituted, created under the Securities Exchange Act of 1934.
"CORPORATE TRUST OFFICE": The principal office of the Indenture Trustee at
which at any particular time its corporate trust business with respect to this
Indenture shall be principally administered, which office at the date of the
execution of this Indenture is located at Corporate Trust, Norwest Center,
Sixth Street and Marquette Avenue, Minneapolis, Minnesota 55479-0069,
Attention: City Capital Home Loan Trust 1999-1, Series 1999-1.
"CUMULATIVE REALIZED LOSSES": The aggregate sum of the Realized Losses
from the Cut-off Date to any date of determination.
"CUSTODIAL AGREEMENT": The Custodial Agreement, dated as of April 30,
1999, between the Indenture Trustee and the Custodian, as such agreement may be
amended or supplemented from time to time as permitted hereby and thereby. A
copy of the Custodial Agreement as in effect on the date hereto is attached as
Exhibit C.
"CUSTODIAL FEE": With respect to any Payment Date, one-twelfth of 0.01% of
the Aggregate Principal Balance as of the applicable Determination Date.
"CUSTODIAN": Norwest Bank Minnesota, National Association, a national
banking association, and any additional or successor custodian appointed by the
Indenture Trustee pursuant to Section 8.13.
"CUT-OFF DATE": April 30, 1999, the date after which all payments received
in respect of the Home Loans shall belong to the Issuer, subject to the Grant
of the same hereunder to the Indenture Trustee.
"DEFAULT": Any occurrence that is, or with notice or the lapse of time or
both would become, an Event of Default.
"DEFECTIVE HOME LOAN": Any Home Loan that is required to be repurchased by
the Seller pursuant to the Home Loan Sale Agreement.
"DEFICIENCY AMOUNT": 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 Balances on such Payment Date.
"DEFINITIVE NOTES": Notes other than Book-Entry Notes.
"DELINQUENCY AMOUNT": As of any Payment Date, the product of the
Delinquency Percentage for such Payment Date and the Aggregate Principal
Balance of the Home Loans as of the Determination Date relating to such Payment
Date.
"DELINQUENCY LOSS FACTOR": As of any Payment Date, the sum of (i) the
Principal Balance of all Home Loans that are 30-59 days delinquent multiplied
by 25%, (ii) the Principal Balance of all Home Loans that are 60-89 days
delinquent multiplied by 50%, (iii) the Principal Balance of all Home Loans
that are 90 or more days delinquent multiplied by 100%, and (iv) the Principal
Balance of all Home Loans that are modified in excess of the 3% limitation in
Section 2.04 of the Servicing Agreement.
"DELINQUENCY PERCENTAGE": For any Payment Date, the rolling three month
average of the fraction, expressed as a percentage, (i) the numerator of which
is the aggregate of the Principal Balances as of the related Determination Date
of all Home Loans that were 60 or more days contractually delinquent, in
foreclosure, REO Property or for which the related Obligor was in a bankruptcy
proceeding or paying a reduced Monthly Payment as a result of a bankruptcy
workout or were modified in excess of the 3% limitation in Section 2.04 of the
Servicing Agreement and (ii) the denominator of which is the Aggregate
Principal Balance of all Home Loans as of the related Determination Date.
"DEPOSIT DATE": The date each month on which funds on deposit in the
Collection Account are remitted by the Servicer to the Indenture Trustee for
deposit into the Note Account, which date shall be with respect to any Payment
Date, the 18th day of the month in which such Payment Date occurs, or the next
succeeding Business Day, if such 18th day is not a Business Day.
"DEPOSITOR": Financial Asset Securities Corp., a Delaware corporation.
"DETERMINATION DATE": As to any Payment Date, the last day of the
Collection Period relating to such Payment Date.
"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 (A1) and Moody's (P1), and that is either
(i) a federal savings and loan association duly organized, validly existing and
in good standing under the federal banking laws, (ii) an institution duly
organized, validly existing and in good standing under the applicable banking
laws of any state, (iii) a national banking association duly organized, validly
existing and in good standing under the federal banking laws, (iv) a principal
subsidiary of a bank holding company, or (v) 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 5.01.
"EXCESS CASH": With respect to any Payment Date, the amount, if any, by
which Available Funds for such Payment Date exceed the sum of (i) any amounts
payable to the Note Insurer for Insured Payments paid on prior Payment Dates
and not yet reimbursed and for any unpaid Note Insurer Premiums for prior
Payment Dates (in each case with interest thereon at the "Late Payment Rate"
(as defined in the Insurance Agreement)), (ii) the Note Interest for the
related Payment Date, and (iii) the Monthly Principal for the related Payment
Date.
"EXCESS CASH PAYMENT": As defined in clause fourth of Section 8.02(c).
"FDIC": The Federal Deposit Insurance Corporation and its successors in
interest.
"FINAL CERTIFICATION": A certification as to the completeness of each Home
Loan File provided by the Custodian on or before the first anniversary of the
Closing Date pursuant to Section 6.15(c).
"FULL PREPAYMENT": With respect to any Home Loan, when any one of the
following occurs: (i) payment is made by the Obligor to the Servicer of 100% of
the outstanding principal balance of such Home Loan, together with all accrued
and unpaid interest thereon at the Mortgage Interest Rate on such Home Loan,
(ii) payment is made to the Indenture Trustee of the Purchase Price of such
Home Loan in connection with the purchase of such Home Loan by the holders of a
majority of the percentage interests of the Certificates, the Seller or the
Note Insurer or (iii) payment is made to the Servicer of all Insurance Proceeds
and Liquidation Proceeds, and other payments, if any, that have been determined
by the Servicer in accordance with the provisions of the Servicing Agreement to
be finally recoverable, in the Servicer's reasonable judgment, in respect of
such Home Loan.
"GRANT": To assign, transfer, mortgage, pledge, create and grant a
security interest in, deposit, set-over and confirm. A Grant of a Home Loan and
related Home Loan Files, a Permitted Investment, the Servicing Agreement, the
Home Loan Sale Agreement, the Trust Agreement, an Insurance Policy or any other
instrument shall include all rights, powers and options (but none of the
obligations) of the Granting party thereunder, including without limitation the
immediate and continuing right to claim for, collect, receive and give receipts
for principal and interest payments thereunder, insurance proceeds, Purchase
Prices and all other moneys payable thereunder and all proceeds thereof, to
give and receive notices and other communications, to make waivers or other
agreements, to exercise all rights and options, to bring Proceedings in the
name of the Granting party or otherwise, and generally to do and receive
anything that the Granting party is or may be entitled to do or receive
thereunder or with respect thereto.
"HOME LOAN": Each of the loans Granted to the Indenture Trustee under this
Indenture as security for the Notes and that from time to time comprise part of
the Trust Estate, including any property that secures a Mortgage that becomes
REO Property. The Home Loans are listed on the Home Loan Schedule annexed
hereto as Schedule I.
"HOME LOAN FILE": As defined in the Home Loan Sale Agreement.
"HOME LOAN SALE AGREEMENT": The Home Loan Sale Agreement, dated as of
April 30, 1999, between the Seller, the Transferor and the Depositor pursuant
to which the Home Loans will be acquired from the Seller by the Transferor and
from the Transferor by the Depositor, a copy of which agreement is attached
hereto as Exhibit B.
"HOME LOAN SCHEDULE": As of any date, the schedule of Home Loans included
in the Trust Estate. Schedule I hereto identifies the Home Loans being Granted
to the Indenture Trustee on the Closing Date. The Home Loan Schedule shall be
amended by the Seller as appropriate from time to time to reflect the deletion
of Home Loans in accordance with the terms of the Basic Documents. The Home
Loan Schedule shall identify each Home Loan by the Servicer's loan number and
address (including the state) of the related Mortgaged Property and shall set
forth as to each Home Loan the original Combined Loan-to-Value Ratio, the lien
priority of the related Mortgage, the Principal Balance as of the Cut-off Date,
the Mortgage Interest Rate, the Monthly Payment amount and the stated maturity
date of the related Mortgage Note. The Issuer shall cause the initial Home Loan
Schedule to be delivered by the Seller to the Indenture Trustee in both
physical and computer-readable form.
"HIGHEST LAWFUL RATE": As defined in Section 12.18.
"INDENTURE": This instrument as originally executed and, if from time to
time supplemented or amended by one or more indentures supplemental hereto
entered into pursuant to the applicable provisions hereof, as so supplemented
or amended. All references in this instrument to designated "Articles",
"Sections", "Subsections" and other subdivisions are to the designated
Articles, Sections, Subsections and other subdivisions of this instrument as
originally executed. The words "herein", "hereof", "hereunder" and other words
of similar import refer to this Indenture as a whole and not to any particular
Article, Section, Subsection or other subdivision.
"INDENTURE TRUSTEE": Norwest Bank Minnesota, National Association, a
national banking association, and any Person resulting from or surviving any
consolidation or merger to which it may be a party until a successor Person
shall have become the Indenture Trustee pursuant to the applicable provisions
of this Indenture, and thereafter "Indenture Trustee" shall mean such successor
Person.
"INDENTURE TRUSTEE FEE": With respect to any Payment Date, one-twelfth of
0.01% of the Note Balance as of the applicable Determination Date.
"INDEPENDENT": When used with respect to any specified Person means such a
Person who (i) is in fact independent of the Issuer and any other obligor upon
the Notes, (ii) does not have any direct financial interest or any material
indirect financial interest in the Issuer or in any such other obligor or in an
Affiliate of the Issuer or such other obligor, and (iii) is not connected with
the Issuer or any such other obligor as an officer, employee, promoter,
underwriter, trustee, partner, director or person performing similar functions.
Whenever it is herein provided that any Independent Person's opinion or
certificate shall be furnished to the Indenture Trustee, such Person shall be
appointed by an Issuer Order and such opinion or certificate shall state that
the signer has read this definition and that the signer is Independent within
the meaning hereof.
"INDIVIDUAL NOTE": A Note of an original principal amount of $1,000
(provided, however, one Note may be less than that amount); a Note of an
original principal amount in excess of $1,000 shall be deemed to be a number of
Individual Notes equal to the quotient obtained by dividing such original
principal amount by $1,000.
"INITIAL CERTIFICATION": The certification to be provided by the
Custodian on the Closing Date pursuant to Section 6.15(a).
"INDEMNIFICATION AGREEMENT": As defined in the Insurance Agreement.
"INSURANCE AGREEMENT": The Insurance Agreement, dated as of April 30,
1999, among the Note Insurer, the Issuer, the Servicer, the Seller, the
Depositor, Greenwich Capital Financial Products, Inc., the Indenture Trustee
and the Master Servicer.
"INSURANCE POLICIES": All insurance policies insuring any Home Loan or
Mortgaged Property, to the extent the Issuer or the Indenture Trustee has any
interest therein.
"INSURANCE PROCEEDS": As defined in the Servicing Agreement.
"INSURED PAYMENTS": As to any Payment Date, the amount required to be paid
by the Note Insurer under the MBIA Insurance Policy pursuant to a Notice of
Claim presented by the Indenture Trustee (in the manner described in Section
8.03). The Insured Payment is (i) for any Payment Date, the Deficiency Amount
and (ii) any Preference Amount due and then owing under the MBIA Insurance
Policy.
"INTEREST PERIOD": With respect to any Payment Date, the period beginning
on the first day of the calendar month preceding such Payment Date and ending
on the last day of such calendar month. All calculations of interest on the
Notes will be computed on the basis of a year of 360 days consisting of twelve
30-day months.
"INTERIM CERTIFICATION": A certification as to the completeness of each
Home Loan File provided by the Custodian no later than 45 days following the
Closing Date pursuant to Section 6.15(b).
"ISSUER": City Capital Home Loan Trust 1999-1, a Delaware business trust.
"ISSUER ORDER" AND "ISSUER REQUEST": A written order or request of the
Issuer signed on behalf of the Issuer by an Authorized Officer of the Owner
Trustee and delivered to the Indenture Trustee or the Authenticating Agent, as
applicable.
"LIQUIDATED HOME LOAN": As defined in the Servicing Agreement.
"LIQUIDATION PROCEEDS": As defined in the Servicing Agreement.
"MASTER SERVICER": Norwest Bank Minnesota, National Association, as
Master Servicer under the Servicing Agreement, and any successor Master
Servicer appointed pursuant to the Servicing Agreement.
"MASTER SERVICING FEE": As defined in the Servicing Agreement.
"MATURITY": With respect to any Note, the date on which the entire unpaid
principal amount of such Note becomes due and payable as therein or herein
provided, whether at the Stated Maturity Date or by declaration of
acceleration, call for redemption or otherwise.
"MBIA INSURANCE POLICY": The financial guaranty insurance policy (No.
29265), dated May 19, 1999, issued by the Note Insurer to the Indenture Trustee
for the benefit of the Noteholders, pursuant to which the Note Insurer
guarantees payment of Insured Payments. A specimen of the MBIA Insurance Policy
is attached hereto as Exhibit F.
"MBIA PAYMENT DEFAULT": Failure and continued failure by the Note Insurer
to make an Insured Payment required under the MBIA Insurance Policy in
accordance with its terms.
"MONTHLY PAYMENT": With respect to any Mortgage Note, the amount of each
monthly payment payable under such Mortgage Note by the Obligor 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.
"MONTHLY PRINCIPAL": For any Payment Date, an amount equal to (a) the
aggregate of (i) all scheduled payments of principal received with respect to
the Home Loans and due during the related Collection Period and 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, and (ii) the aggregate
of the amounts allocable to principal deposited in the Note Account on the
related Deposit Date by the holders of a majority of the percentage interests
of the Certificates, the Seller, or the Note Insurer in connection with a
repurchase, purchase, release or removal of any Home Loans pursuant to this
Indenture or any other Basic Document, reduced by (b) the amount of any
Overcollateralization Surplus with respect to such Payment Date.
"MOODY'S": Moody's Investors Service, Inc. and its successors in
interest.
"MORTGAGE": The mortgage, deed of trust or other instrument creating a
lien on an estate in fee simple in real property securing a Home Loan.
"MORTGAGE INTEREST RATE": With respect to each Home Loan, the fixed rate
per annum set forth in the related Mortgage Note at which interest accrues on
such Home Loan, after giving effect to any modification of a Home Loan for any
period in connection with a bankruptcy or similar proceeding involving the
related Obligor or a modification, waiver or amendment of such Home Loan
granted or agreed to by the Servicer in accordance with the Servicing
Agreement.
"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 Mortgage Note.
"NET LIQUIDATION PROCEEDS": As defined in the Servicing Agreement.
"NOTES": Has the same meaning as "Class A Notes."
"NOTE ACCOUNT": The segregated account, which shall be an Eligible
Account, established and maintained pursuant to Section 8.02 and entitled
"Norwest Bank Minnesota, National Association, as Indenture Trustee for City
Capital Home Loan Trust 1999-1 Asset-Backed Notes Series 1999-1, Note Account"
on behalf of the Noteholders and the Note Insurer.
"NOTE ADMINISTRATOR": Norwest Bank Minnesota, National Association, as
Note Administrator hereunder, and any successor Note Administrator appointed
hereunder.
"NOTE BALANCE": As of any date of determination, the original principal
amount of the Notes, reduced by all prior payments (including Insured
Payments), if any, made with respect to the principal of the Notes.
"NOTE INSURER": MBIA Insurance Corporation and any successor thereto.
"NOTE INSURER COMMITMENT LETTER": The Commitment Letter dated May 18,
1999, from the Note Insurer to the Seller regarding the issuance of a
financial guaranty insurance policy.
"NOTE INSURER DEFAULT": The existence and continuance of any of the
following:
(a) an MBIA Payment Default;
(b) the entry by a court having jurisdiction in the premises of (i) 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 of (ii) 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, liquidator,
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 to 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 PREMIUM": On the Closing Date, the premium due to the Note
Insurer in paragraph 1(a)(i) of the Note Insurer Commitment Letter and
thereafter the premium due to the Note Insurer on each Payment Date, which
amount shall be equal to the Note Insurer Premium Rate and the Note Balance
immediately prior to such Payment Date.
"NOTE INSURER PREMIUM RATE": On the Closing Date, the Premium Percentage
specified in paragraph 1(a)(i) of the Note Insurer Commitment Letter and
beginning on June [25], 1999 and on each Payment Date thereafter, the Premium
Percentage specified in paragraph 1(b) thereof.
"NOTE INTEREST": As to any Payment Date, the amount of interest payable to
Holders of the Notes on such Payment Date, which amount shall be equal to
interest for the applicable Interest Period at the Note Interest Rate on the
Note Balance as of the preceding Payment Date (after giving effect to the
payment, if any, in reduction of principal made on the Notes on such preceding
Payment Date).
"NOTE INTEREST RATE": 6.85% per annum; provided that, if the Notes are not
redeemed on the Clean-Up Call Date, then with respect to each Payment Date
thereafter, the Note Interest Rate shall be 7.35% per annum.
"NOTE REGISTER": As defined in Section 2.06.
"NOTE REGISTRAR": As defined in Section 2.06.
"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 Section 5.02 or giving of any consent pursuant to this Indenture, any
Note registered in the name of the Issuer, the Seller, the Servicer or the
Depositor or any Persons actually known by a Responsible Officer of the
Indenture Trustee to be an Affiliate of the Issuer, the Seller, the Servicer or
the Depositor shall be deemed not to be Outstanding and the percentage of the
Note Balance evidenced thereby shall not be taken into account in determining
whether Holders of the requisite percentage of the Note Balance necessary to
take any such action or effect any such consent have acted or consented unless
the Issuer, the Seller, the Servicer, the Depositor or any such Person is an
owner of record of all of the Notes.
"NOTICE OF CLAIM": The notice required to be furnished by the Indenture
Trustee to the Note Insurer in the event an Insured Payment is required to be
paid under the MBIA Insurance Policy with respect to any Payment Date, in the
form set forth as Exhibit A to the MBIA Insurance Policy.
"OBLIGOR": The obligor under a Mortgage Note.
"OFFICERS' 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.
"OPINION OF COUNSEL": A written opinion of counsel including in-house
counsel reasonably acceptable to the Indenture Trustee and, in the case of
opinions delivered to the Note Insurer, reasonably acceptable to it. Any
expense related to obtaining an Opinion of Counsel for an action requested by a
party shall be borne by the party required to obtain such opinion or seeking to
effect the action that requires the delivery of such Opinion of Counsel, except
in such instances where such opinion is at the request of the Indenture
Trustee, in which case such expense shall be an expense of the Seller.
"ORIGINAL NOTE BALANCE": The principal balance of the Notes at the issue
date thereof equal to $238,236,000.00.
"OUTSTANDING": As of the date of determination, all Notes theretofore
authenticated and delivered under this Indenture except:
(a) Definitive Notes theretofore canceled by the Note Registrar or
delivered to the Note Registrar for cancellation;
(b) Notes or portions thereof for whose payment or redemption money in the
necessary amount has been theretofore deposited with the Indenture Trustee or
any Paying Agent (other than the Issuer) in trust for the Holders of such
Notes; provided, however, that if such Notes are to be redeemed, notice of such
redemption has been duly given pursuant to this Indenture or provision
therefor, satisfactory to the Indenture Trustee, has been made;
(c) Notes in exchange for or in lieu of which other Notes have been
authenticated and delivered pursuant to this Indenture unless proof
satisfactory to the Indenture Trustee is presented that any such Notes are held
by a bona fide purchaser (as defined by the Uniform Commercial Code of the
applicable jurisdiction); and
(d) Notes alleged to have been destroyed, lost or stolen that have been
paid as provided for in Section 2.07; and;
(e) Notes for which the related Stated Maturity Date has occurred;
provided, however, that in determining whether the Holders of the requisite
percentage of the Note Balance of the Outstanding Notes have given any request,
demand, authorization, direction, notice, consent or waiver hereunder, Notes
owned by the Issuer, any other obligor upon the Notes or any Affiliate of the
Issuer, the Seller, the Servicer or the Depositor or such other obligor shall
be disregarded and deemed not to be Outstanding, except that, in determining
whether the Indenture Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only
Notes that the Indenture Trustee knows to be so owned shall be so disregarded.
Notes so owned that have been pledged in good faith may be regarded as
Outstanding if the pledgee establishes to the satisfaction of the Indenture
Trustee the pledgee's right so to act with respect to such Notes and that the
pledgee is not the Issuer, any other obligor upon the Notes or any Affiliate of
the Issuer, the Seller, the Servicer or the Depositor or such other obligor;
provided, further, however, that Notes that have been paid with the proceeds of
the MBIA Insurance Policy shall be deemed to be Outstanding for the purposes of
this Indenture, such payment to be evidenced by written notice from the Note
Insurer to the Indenture Trustee, and the Note Insurer shall be deemed to the
Holder thereof to the extent of any payments thereon made by the Note Insurer.
"OVERCOLLATERALIZATION AMOUNT": As to any Payment Date, the amount, if
any, by which (x) the Aggregate Principal Balance of the Home Loans for such
Payment Date exceeds (y) the Note Balance for such Payment Date, after taking
into account the Monthly Principal (disregarding any permitted reduction
thereof in Monthly Principal due to an Overcollateralization Surplus made on
such Payment Date) to be applied in reduction of the Note Balance on such
Payment Date. If the Aggregate Principal Balance of the Home Loans is less than
the Note Balance for such Payment Date, determined as provided above, the
Overcollateralization Amount for such Payment Date shall be zero.
"OVERCOLLATERALIZATION DEFICIT": As to any Payment Date, the amount, if
any, by which the Note Balance on such Payment Date (after taking into account
any payments to be paid on such Payment Date in reduction of the Note Balance)
exceeds the Aggregate Principal Balance of the Home Loans for such Payment
Date. If the Aggregate Principal Balance of the Home Loans as determined
pursuant to the preceding sentence is greater than the Note Balance for such
Payment Date determined as provided above, the Overcollateralization Deficit
for such Payment Date shall be zero.
"OVERCOLLATERALIZATION SURPLUS": As to any Payment Date, the amount, if
any, by which (x) the Overcollateralization Amount on such Payment Date exceeds
(y) the Required Overcollateralization Amount on such Payment Date.
"OWNER TRUSTEE": Wilmington Trust Company, a Delaware banking corporation,
not in its individual capacity, but solely as owner trustee under the Trust
Agreement, and any successor owner trustee thereunder.
"PAYING AGENT": The Indenture Trustee or any other depository institution
or trust company that is authorized by the Issuer pursuant to Section 3.03 to
pay the principal of, or interest on, any Notes on behalf of the Issuer, which
agent, if not the Indenture Trustee, shall have signed an instrument agreeing
to be bound by the terms of this Indenture applicable to the Paying Agent.
"PAYMENT AHEAD": As defined in the Servicing Agreement.
"PAYMENT DATE": The 25th day of each month or, if any such day is not a
Business Day, the Business Day immediately following such 25th day, beginning
in June 1999.
"PAYMENT DATE STATEMENT": The statement prepared pursuant to Section
2.08(e) with respect to collections on or in respect of the Home Loans and
other assets of the Trust Estate and payments on or in respect of the Notes,
based upon the information contained in the Servicer Remittance Report prepared
pursuant to the Servicing Agreement and setting forth the following information
with respect to each Payment Date (to the extent the Servicer has made such
information (other than the information described in clause (a) (ii), (b), (c),
(d) and (e) below) available to the Note Administrator):
(a) the amount of such payment to Noteholders allocable to (i) Monthly
Principal (separately setting forth Principal Prepayments) and (ii) any Excess
Cash Payment;
(b) the amount of such payment to Noteholders allocable to Note Interest;
(c) the Note Balance after giving effect to the payment of Monthly
Principal and any Excess Cash Payment applied to reduce the Note Balance on
such Payment Date;
(d) the amount of any Insured Payments for such Payment Date;
(e) the Overcollateralization Amount, the then applicable Required
Overcollateralization Amount, the Overcollateralization Surplus, if any, and
the Overcollateralization Deficit, if any, with respect to such Payment Date;
(f) the Aggregate Principal Balance of the Home Loans as of the end of the
related Collection Period;
(g) the amount of Servicing Advances made with respect to such Payment
Date and the amount of unreimbursed Servicing Advances, if any;
(h) the number and aggregate of the Principal Balances of Home Loans
(including the Principal Balances of all Home Loans in foreclosure)
contractually delinquent (i) one month, (ii) two months and (iii) three or more
months, as of the end of the related Collection Period;
(i) the number and aggregate of the Principal Balances of the Home Loans
in foreclosure or subject to other similar proceedings, and the number and
aggregate of the Principal Balance of Home Loans, the Obligor of which is known
by the Servicer to be in bankruptcy as of the end of the related Collection
Period and the book value of any real estate acquired through foreclosure,
grant of a deed in lieu of foreclosure or other similar proceedings during the
related Collection Period;
(j) the aggregate of the Principal Balances of the Home Loans repurchased
by the Seller or purchased by the Servicer, separately setting forth the
aggregate of the Principal Balances of Home Loans delinquent for three
consecutive monthly installments purchased by the Servicer at its option
pursuant to the Servicing Agreement;
(k) the aggregate amount of the Servicing Fee paid to or retained by the
Servicer, the aggregate amount of the Master Servicing Fee paid to the Master
Servicer, and the Administrative Fee Amount, in each case for the related
Collection Period;
(l) the aggregate Principal Balance of the three largest outstanding Home
Loans subject to this Indenture as of the related Determination Date;
(m) the aggregate amount of Realized Losses incurred during the related
Collection Period and the Cumulative Realized Losses since the Cut-off Date;
(n) the Rolling Delinquency Percentage, the Rolling Loss Percentage, the
Cumulative Loss Percentage, the Delinquency Loss Factor and Total Expected
Losses (each as defined in the Servicing Agreement) relating to such Payment
Date;
(o) the Rolling Three-Month Average Annualized Losses, the Delinquency
Percentage and the Total Expected Losses (as defined herein) relating to such
Payment Date; and
(p) the percentage of Home Loans (as measured by the Aggregate Principal
Balance of such Home Loans) of the Initial Pool Balance that have been modified
by the Servicer during the related Collection Period and the percentage of Home
Loans (as measured by the Aggregate Principal Balance of such Home Loans) of
the Initial Pool Balance that have been modified by the Servicer since the
Cut-off Date.
In the case of information furnished pursuant to subclauses (a) and (b) above,
the amounts shall be expressed as a dollar amount per Individual Note.
"PERCENTAGE INTEREST": With respect to a Note, the undivided percentage
interest (carried to eight places rounded down) obtained by dividing the
original principal balance of such Note by the Original Note Balance and
multiplying the result by 100.
"PERMITTED INVESTMENTS": One or more of the following obligations,
instruments and securities:
(a) direct general obligations of, or obligations fully guaranteed by, the
United States of America, the Federal Home Loan Mortgage Corporation, Federal
National Mortgage Corporation, 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
uninsured debt rating in one of the two highest available rating categories of
Standard & Poor's and the highest available rating category of 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 Standard & Poor's 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 certificated
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
category of Moody's and one of the two highest available rating categories of
Standard & Poor's 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 Seller or the Indenture Trustee and any such funds
that are managed by the Seller or the Indenture Trustee or their respective
Affiliates or for which the Seller or the Indenture Trustee or any Affiliate of
either acts as advisor, as long as such money market funds satisfy the criteria
of this subparagraph (g); and
(h) any investment approved in writing by the Note Insurer and written
evidence that any such investment will not result in a downgrading or
withdrawal of the rating by each Rating Agency on the Notes.
The Indenture Trustee may purchase from or sell to the Seller or itself or an
Affiliate of either, as principal or agent, the Permitted Investments listed
above. All Permitted Investments in a trust account under the Indenture shall
be made in the name of the Indenture Trustee for the benefit of the Noteholders
and the Note Insurer.
"PERSON": Any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust (including
any beneficiary thereof), unincorporated organization or government or any
agency or political subdivision thereof.
"PREDECESSOR NOTES": With respect to any particular Note, every previous
Note evidencing all or a portion of the same debt as that evidenced by such
particular Note ; and, for the purpose of this definition, any Note
authenticated and delivered under Section 2.07 in lieu of a lost, destroyed or
stolen Note shall be deemed to evidence the same debt as the lost, destroyed or
stolen Note .
"PREFERENCE AMOUNT": As defined in the MBIA Insurance Policy.
"PRINCIPAL BALANCE": As defined in the Servicing Agreement.
"PRINCIPAL PREPAYMENT": As defined in the Servicing Agreement.
"PROCEEDING": Any suit in equity, action at law or other judicial or
administrative proceeding.
"PURCHASE PRICE": With respect to any Defective Home Loan, an amount equal
to (i) the sum of (A) the Principal Balance of such Defective Home Loan as of
the beginning of the Collection Period next preceding the Deposit Date on which
such repurchase or purchase is required to occur, (B) interest computed at the
applicable Mortgage Interest Rate on such Principal Balance from the date to
which interest was last paid by the Obligor to the last day of the Collection
Period immediately preceding the Deposit Date on which such repurchase occurs
and (C) any previously unreimbursed Servicing Advances made on or in respect of
such Defective Home Loan, less (ii) any payments of principal and interest in
respect of such Defective Home Loan made by or on behalf of the related Obligor
during such Collection Period.
"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": As defined in the Servicing Agreement.
"RECORD DATE": With respect to any Payment Date, the date on which the
Persons entitled to receive any payment of principal of or interest on any
Notes (or notice of a payment in full of principal) due and payable on such
Payment Date are determined; such date shall be the last Business Day of the
month preceding the month of such Payment Date. With respect to a vote of
Noteholders required or allowed hereunder, the Record Date shall be the later
of (i) 30 days prior to the first solicitation of consents or (ii) the date of
the most recent list of Noteholders furnished to the Indenture Trustee pursuant
to Section 7.01(a) prior to such solicitation.
"REDEMPTION DATE": The Payment Date, if any, on which the Notes are
redeemed pursuant to Article X hereof which date may occur on or after the
Clean-Up Call Date or the Payment Date designated by the Issuer after receipt
by the Indenture Trustee of the Opinion of Counsel referred to in Section
10.01(c).
"REDEMPTION PRICE": With respect to any Note to be redeemed in whole or in
part, an amount equal to 100% of the Note Balance of the Note to be so
redeemed, together with accrued and unpaid interest on such amount at the Note
Interest Rate, through the end of the Interest Period immediately preceding the
Redemption Date.
"REMITTABLE FUNDS": As defined in the Servicing Agreement.
"REO PROPERTY": As defined in the Servicing Agreement.
"REQUIRED OVERCOLLATERALIZATION AMOUNT" means:
(a) for any Payment Date occurring during the period commencing on the
Closing Date and ending on the later of the 36th Payment Date following the
Closing Date and the date upon which an amount equal to one-half of the
Aggregate Principal Balance of the Home Loans as of the Cut-off Date has been
received by the Noteholders in reduction of the Note Balance, 14.00% of the
Aggregate Principal Balance of the Home Loans as of the Cut-off Date;
(b) for any Payment Date occurring after the end of the period described
in clause (a) above, the greater of (i) 28.00% of the Aggregate Principal
Balance of the Home Loans as of the Determination Date relating to such Payment
Date, and (ii) 1.00% of the Aggregate Principal Balance of the Home Loans as of
the Cut-off Date;
(c) Notwithstanding the provisions of clause (a) and clause (b) above, in
the event of a claim under the MBIA Insurance Policy, the Required
Overcollaterization Amount shall be determined pursuant to clause (a) above;
(d) Notwithstanding the provisions of clause (a), clause (b) and clause
(c) above, in the event on any date of determination, (i) the Delinquency
Percentage is equal to or greater than 4.00%, (ii) the Rolling Three Month
Average Annualized Losses exceed 4.00% or (iii) the Total Expected Losses meet
or exceed 2.00% from the Closing Date to and including the first anniversary of
the Closing Date; 5.00% from the day after the first anniversary of the Closing
Date to and including the second anniversary of the Closing Date; 7.50% from
the day after the second anniversary of the Closing Date to and including the
third anniversary of the Closing Date; 10.00% from the day after the third
anniversary of the Closing Date to and including the fourth anniversary of the
Closing Date; and 12.00% from the day after the fourth anniversary of the
Closing Date and thereafter, then the Required Overcollaterization Amount shall
be equal to 17.00% of the Aggregate Principal Balance of the Home Loans as of
the Cut-off Date;
provided, however, that after the occurrence of any of the events specified in
(d)(i), (d)(ii) and (d)(iii) above, if for six consecutive Collection Periods,
(x) the Delinquency Percentage remains below 4.00%, (y) the Rolling Three Month
Average Annualized Losses remain below 4.00% and (z) Total Expected Losses
remain below the specified level for the related time period as specified in
clause (d)(iii) above, then the Required Overcollaterization Amount may be
determined pursuant to clause (a) above.
"RESPONSIBLE OFFICER": With respect to the Indenture Trustee, the chairman
or vice-chairman of the board of directors, the chairman or vice-chairman of
the executive committee of the board of directors, the president, any vice
president, any assistant vice president, the secretary, any assistant
secretary, the treasurer, any assistant treasurer, the cashier, any trust
officer or assistant trust officer, the controller, 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 also,
with respect to a particular corporate trust matter, any other officer to whom
such matter is referred because of his knowledge of and familiarity with the
particular subject.
"ROLLING THREE MONTH AVERAGE ANNUALIZED LOSSES": The average of the
Annualized Loss Percentages for three most recent Collection Periods.
"SALE": The meaning specified in Section 5.17.
"SECURITIES ACT": The Securities Act of 1933, as amended.
"SELLER": City National Bank of West Virginia, a national banking
association, as Seller under the Home Loan Sale Agreement.
"SERVICER": With respect to any Home Loan, City National Bank of West
Virginia, a national banking association, as Servicer under the Servicing
Agreement, and its permitted successors and assigns thereunder, including any
successor servicer appointed pursuant to Section 6.02 of the Servicing
Agreement.
"SERVICER REMITTANCE REPORT": As defined in the Servicing Agreement.
"SERVICING ADVANCE": As defined in the Servicing Agreement.
"SERVICING AGREEMENT": The Servicing Agreement, dated as of April 30,
1999, among the Issuer, the Servicer, the Master Servicer and the Indenture
Trustee, providing, among other things, for the servicing of the Home Loans,
as such agreement may be amended or supplemented from time to time as
permitted hereby and thereby. A copy of the Servicing Agreement as in effect as
of the date hereof is attached hereto as Exhibit H.
"SERVICING FEE": As defined in the Servicing Agreement.
"SERVICING FEE RATE": 1.00% per annum.
"STANDARD & POOR'S": Standard & Poor's Ratings Services, a division of
The McGraw-Hill Companies, Inc., and its successors in interest.
"STATED MATURITY DATE": With respect to the Class A Notes, April 25,
2030.
"TOTAL EXPECTED LOSSES": An amount equal to the Cumulative Realized
Losses plus the Delinquency Loss Factor.
"TRANSFEROR": City Capital Markets Corporation, a Delaware corporation.
"TRUST AGREEMENT": The Deposit Trust Agreement, dated as of April 30,
1999, between the Depositor, the Servicer, the Trust Paying Agent and the
Owner Trustee.
"TRUST ESTATE": All money, instruments and other property subject or
intended to be subject to the lien of this Indenture for the benefit of the
Noteholders and the Note Insurer as of any particular time (including, without
limitation, all property and interests Granted to the Indenture Trustee,
including all proceeds thereof).
"TRUST INDENTURE ACT" OR "TIA": The Trust Indenture Act of 1939 as it may
be amended from time to time.
"TRUST INSURANCE PROCEEDS": As defined in the Servicing Agreement.
"TRUST PAYING AGENT": The entity appointed to act as paying agent
pursuant to the Trust Agreement with respect to amounts on deposit from time
to time in the Certificate Distribution Account and distributions thereof to
Certificateholders. The initial Trust Paying Agent is the Indenture Trustee.
"UNDERWRITER": Greenwich Capital Markets, Inc.
"U.S. BANKRUPTCY CODE" shall mean the United States Bankruptcy Code, 11
U.S.C. Sections 101, et seq., as amended or supplemented from time to time.
"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".
ARTICLE II
THE NOTES
Section 2.01. Form Generally.
The Class A Notes shall be in substantially the form set forth on Exhibit
A attached hereto. Each Note may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any securities exchange on which the Notes
may be listed, or as may, consistently herewith, be determined by the
Authorized Officers of the Owner Trustee executing such Notes on behalf of the
Issuer, as evidenced by their execution thereof. Any portion of the text of any
Note may be set forth on the reverse thereof with an appropriate reference on
the face of the Note .
The Definitive Notes may be produced in any manner determined by the
Authorized Officers of the Owner Trustee executing such Notes, as evidenced by
their execution thereof.
Section 2.02. Form of Certificate of Authentication.
The form of the Authenticating Agent's certificate of authentication is as
follows:
This is one of the Notes referred to in the within-mentioned
Indenture.
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION as
Authenticating Agent
By:
-------------------------------------
Authorized Signatory
Section 2.03. General Provisions With Respect to Principal and Interest
Payments.
The Notes shall be designated generally as the "Asset-Backed Notes, Series
1999-1".
The aggregate principal amount of Notes that may be authenticated and
delivered under this Indenture is limited to $238,236,000.00, except for the
Notes authenticated and delivered upon registration of transfer of, or in
exchange for, or in lieu of, other Notes pursuant to Sections 2.06, 2.07, or
9.06 of this Indenture. The Notes shall consist of a single class having an
Original Note Balance, Note Interest Rate and Stated Maturity Date as follows:
Original Note Stated
Designation Note Balance Interest Rate Maturity Date
- ----------- ------------ ------------- -------------
Class A $238,236,000.00 (1) April 25, 2030
- ---------------------------
(1) 6.85% per annum, provided that, if the Notes are not redeemed on the
Clean-Up Call Date, then with respect to each Payment Date thereafter,
the Note Interest Rate shall be 7.35% per annum.
The Notes shall be issued in the form specified in Section 2.01.
Subject to the provisions of Section 3.01, Section 5.07, Section 5.09 and
Section 8.02(d), the principal of each Note shall be payable in installments
ending no later than its Stated Maturity Date unless the unpaid principal of
such Notes become due and payable at an earlier date by declaration of
acceleration or call for redemption or otherwise.
The principal and interest payable on each Note are payable in coin or
currency of the United States of America as at the time of payment in legal
tender for payment of public and private debts. All payments made with respect
to any Note shall be applied first to the interest then due and payable on such
Note and then to the principal thereof. All computations of interest accrued on
the Class A Notes shall be made on the basis of a year of 360 days consisting
of twelve 30-day months. Interest on the Notes shall accrue at the Note
Interest Rate during each Interest Period on the Note Balance of each
Outstanding Note as of the preceding Payment Date (after giving effect to the
payment, if any, in reduction of principal made on the Notes on such preceding
Payment Date). Interest accrued during an Interest Period shall be payable on
the next following Payment Date.
All payments of principal of and interest on any Note shall be made in the
manner specified in Section 2.08. Notwithstanding any of the foregoing
provisions with respect to payments of principal of and interest on the Notes,
if the Notes have become or been declared due and payable following an Event of
Default and such acceleration of maturity and its consequences have not been
rescinded and annulled, then payments of principal of and interest on the Notes
shall be made in accordance with Section 5.07.
Section 2.04. Denominations.
The Notes shall be issuable only as registered Notes in the minimum
denomination of $50,000 and integral multiples of $1.00 in excess thereof, with
the exception that one Note may be issued in a lesser amount.
Section 2.05. Execution, Authentication, Delivery and Dating.
The Notes shall be executed on behalf of the Issuer by an Authorized
Officer of the Owner Trustee. The signature of such Authorized Officer of the
Owner Trustee on the Notes may be manual or by facsimile.
Notes bearing the manual or facsimile signature of an individual who was
at any time an Authorized Officer of the Owner Trustee shall bind the Issuer,
notwithstanding that such individual has ceased to be an Authorized Officer of
the Owner Trustee prior to the authentication and delivery of such Notes or was
not an Authorized Officer of the Owner Trustee at the date of such Notes.
At any time and from time to time after the execution and delivery of this
Indenture, the Issuer may deliver Notes executed on behalf of the Issuer to the
Authenticating Agent for authentication; and the Authenticating Agent shall
authenticate and deliver such Notes as in this Indenture provided and not
otherwise.
Each Note authenticated on the Closing Date shall be dated the Closing
Date. All other Notes that are authenticated after the Closing Date for any
other purpose hereunder shall be dated the date of their authentication.
No Note shall be entitled to any benefit under this Indenture or be valid
or obligatory for any purpose, unless there appears on such Note a certificate
of authentication substantially in the form provided for herein executed by the
Authenticating Agent by the manual signature of one of its authorized officers
or employees, and such certificate upon any Note shall be conclusive evidence,
and the only evidence, that such Note has been duly authenticated and delivered
hereunder.
Section 2.06. Registration; Registration of Transfer and Exchange.
The Issuer shall cause to be kept a register (the "Note Register") in
which, subject to such reasonable regulations as it may prescribe, the Issuer
shall provide for the registration of Notes and the registration of transfers
of Notes. The Indenture Trustee is hereby initially appointed "Note Registrar"
for the purpose of registering Notes and transfers of Notes as herein provided.
The Indenture Trustee shall remain the Note Registrar throughout the term
hereof. Upon any resignation of the Indenture Trustee, the Issuer shall
promptly appoint a successor, with the approval of the Note Insurer, or, in the
absence of such appointment, shall assume the duties of Note Registrar.
The Indenture Trustee shall maintain an office or offices or agency or
agencies where Notes may be surrendered for registration of transfer or
exchange and where notices and demands to or upon the Indenture Trustee in
respect of the Notes may be served. The Indenture Trustee initially designates
Norwest Center, Sixth Street and Marquette Avenue, Minneapolis, Minnesota
55479-0069 as its office for such purposes. The Indenture Trustee or its agent
shall give prompt written notice to the Depositor, the Note Insurer and the
Noteholders of any change in the location of the Note Register or any such
office or agency.
Upon surrender for registration of transfer of any Note at the office or
agency of the Issuer to be maintained as provided in Section 3.02, the Owner
Trustee on behalf of the Issuer, shall execute, and the Authenticating Agent
shall authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Notes of any authorized denominations and of a
like aggregate principal amount.
At the option of the Holder, Notes may be exchanged for other Notes of any
authorized denominations, and of a like aggregate initial principal amount,
upon surrender of the Notes to be exchanged at such office or agency. Whenever
any Notes are so surrendered for exchange, the Owner Trustee shall execute, and
the Authenticating Agent shall authenticate and deliver, the Notes that the
Noteholder making the exchange is entitled to receive.
All Notes issued upon any registration of transfer or exchange of Notes
shall be the valid obligations of the Issuer, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of transfer or
exchange shall be duly endorsed, or be accompanied by a written instrument of
transfer in form satisfactory to the Note Registrar duly executed by the Holder
thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Notes, but the Issuer and the Note Registrar may require payment of
a sum sufficient to cover any tax or other governmental charge as may be
imposed in connection with any registration of transfer or exchange of Notes.
Section 2.07. Mutilated, Destroyed, Lost or Stolen Notes.
If (1) any mutilated Note is surrendered to the Note Registrar or the Note
Registrar receives evidence to its satisfaction of the destruction, loss or
theft of any Note, and (2) there is delivered to the Note Registrar such
written indemnity as may be required by the Note Registrar to save each of the
Issuer, the Note Insurer and the Note Registrar harmless (provided that no
security shall be required for any indemnity from any institutional investor
whose long-term debt is rated investment grade by any of the Rating Agencies),
then, in the absence of notice to the Issuer or the Note Registrar that such
Note has 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 shall execute and upon its request the Note Registrar
shall authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Note, a new Note or Notes of the same
tenor and aggregate initial principal amount bearing a number not
contemporaneously outstanding. If, after the delivery of such new Note, a bona
fide purchaser of the original Note in lieu of which such new Note was issued
presents for payment such original Note, the Issuer and the Note Registrar
shall be entitled to recover such new Note from the person to whom it was
delivered or any person taking therefrom, except a bona fide purchaser, and
shall be entitled to recover upon the written indemnity provided therefor to
the extent of any loss, damage, cost or expenses incurred by the Issuer or the
Note Registrar in connection therewith. If any such mutilated, destroyed, lost
or stolen Note shall have become or shall be about to become due and payable,
or shall have become subject to redemption in full, instead of issuing a new
Note, the Issuer may pay such Note without surrender thereof, except that any
mutilated Note shall be surrendered.
Upon the issuance of any new Note under this Section, the Issuer or the
Note Registrar may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto and any other
reasonable expenses (including the fees and expenses of the Indenture Trustee
or the Note Registrar) connected therewith.
Every new Note issued pursuant to this Section in lieu of any destroyed,
lost or stolen Note shall constitute an original additional contractual
obligation of the Issuer, whether or not the destroyed, lost or stolen Note
shall be at any time enforceable by anyone, and shall be entitled to all the
benefits of this Indenture equally and proportionately with any and all other
Notes duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Notes.
Section 2.08. Payments of Principal and Interest.
(a) Payments on Notes issued as Book-Entry Notes will be made by or on
behalf of the Indenture Trustee to the Clearing Agency or its nominee. Any
installment of interest or principal payable on any Definitive Notes that is
punctually paid or duly provided for by the Issuer on the applicable Payment
Date shall be paid to the Person in whose name such Note (or one or more
Predecessor Notes) is registered at the close of business on the Record Date
for such Payment Date by either (i) check mailed to such Person's address as it
appears in the Note Register on such Record Date, or (ii) by wire transfer of
immediately available funds to the account of a Noteholder, if such Noteholder
(A) is the registered holder of Definitive Notes having an initial principal
amount of at least $1,000,000 and (B) has provided the Indenture Trustee with
wiring instructions in writing by five Business Days prior to the related
Record Date or has provided the Indenture Trustee with such instructions for
any previous Payment Date, except for the final installment of principal
payable with respect to such Note (or the Redemption Price for any Note called
for redemption, if such redemption will result in payment of the then entire
unpaid principal amount of such Note ), which shall be payable as provided in
subsection (b) below of this Section 2.08. Any installment of interest or
principal not punctually paid or duly provided for shall be payable as soon as
funds are available to the Indenture Trustee for payment thereof, or if Section
5.07 applies, pursuant to Section 5.07.
(b) All reductions in the principal amount of a Note (or one or more
Predecessor Notes) effected by payments of installments of principal made on
any Payment Date shall be binding upon all Holders of such Note and of any Note
issued upon the registration of transfer thereof or in exchange therefor or in
lieu thereof, whether or not such payment is noted on such Note. The final
installment of principal of each Note (including the Redemption Price of any
Note called for optional redemption, if such optional redemption will result in
payment of the entire unpaid principal amount of such Note) shall be payable
only upon presentation and surrender thereof on or after the Payment Date
therefor at the Indenture Trustee's presenting office located within the United
States of America pursuant to Section 3.02.
(c) Whenever the Indenture Trustee expects that the entire remaining
unpaid principal amount of any Note will become due and payable on the next
Payment Date other than pursuant to a redemption pursuant to Article X, it
shall, no later than two days prior to such Payment Date, telecopy or hand
deliver to each Person in whose name a Note to be so retired is registered at
the close of business on such otherwise applicable Record Date a notice to the
effect that: the Indenture Trustee expects that funds sufficient to pay such
final installment will be available in the Note Account on such Payment Date;
and if such funds are available, (i) such final installment will be payable on
such Payment Date, but only upon presentation and surrender of such Note at the
office or agency of the Note Registrar maintained for such purpose pursuant to
Section 3.02 (the address of which shall be set forth in such notice) and (ii)
no interest shall accrue on such Note after such Payment Date. A copy of such
form of notice shall be sent to the Note Insurer by the Indenture Trustee.
Notices in connection with redemptions of Notes shall be mailed to Noteholders
in accordance with Section 10.02.
(d) Subject to the foregoing provisions of this Section, each Note
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Note shall carry the rights to unpaid principal and
interest that were carried by such other Note. Any checks mailed pursuant to
subsection (a) of this Section 2.08 and returned undelivered shall be held in
accordance with Section 3.03.
(e) Each Payment Date Statement, prepared by the Note Administrator based
on the Servicer Remittance Report delivered to the Note Administrator and the
Indenture Trustee pursuant to the Servicing Agreement, shall be delivered by
the Note Administrator to the Indenture Trustee no later than the related
Deposit Date. The Indenture Trustee shall deliver each such Payment Date
Statement to the Note Insurer, the Rating Agencies, the Owner Trustee,
Greenwich Capital Markets, Inc. and each Noteholder. In addition, on each
Payment Date the Note Administrator shall forward to Bloomberg L.P. and the
Depositor the electromagnetic tape or disk containing certain Home Loan
information required to be delivered to the Note Administrator by the Servicer
pursuant to Section 3.01 of the Servicing Agreement; provided, however, that
the Note Administrator shall not forward any such tape or disk that separately
sets forth the Note Insurer Premium or the Note Insurer Premium Rate. Neither
the Note Administrator, the Indenture Trustee nor the Paying Agent shall have
any responsibility to recalculate, verify, reconcile or recompute information
contained in any such tape or disk or any such Servicer Remittance Report, and
in preparing each Payment Date Statement, the Note Administrator shall be
entitled to rely conclusively on the accuracy of the information or data
contained in the applicable Servicer Remittance Report.
(f) Within 90 days after the end of each calendar year, the Note
Administrator will be required to furnish to each person who at any time during
the calendar year was a Noteholder (which the Note Administrator shall promptly
prepare upon the request of the Indenture Trustee), a statement containing the
information set forth in subclauses (a) and (b) in the definition of "Payment
Date Statement," aggregated for such calendar year or the applicable portion
thereof during which such person was a Noteholder. Such obligation will be
deemed to have been satisfied to the extent that substantially comparable
information is provided pursuant to any requirements of the Code as are from
time to time in force. The Note Registrar shall furnish to the Note
Administrator, promptly following its request, with such information concerning
such Noteholder as the Note Administrator may reasonably require to perform its
obligations hereunder.
Section 2.09. Persons Deemed Owners.
Prior to due presentment for registration of transfer of any Note , the
Issuer, the Indenture Trustee, any Paying Agent and any other agent of the
Issuer, the Note Insurer or the Indenture Trustee may treat the Person in whose
name any Note is registered as the owner of such Note (a) on the applicable
Record Date for the purpose of receiving payments of the principal of and
interest on such Note and (b) on any other date for all other purposes
whatsoever, and neither the Issuer, the Indenture Trustee, any Paying Agent nor
any other agent of the Issuer, the Note Insurer or the Indenture Trustee shall
be affected by notice to the contrary.
Section 2.10. Cancellation.
All Notes surrendered for payment, registration of transfer, exchange or
redemption shall, if surrendered to any Person other than the Note Registrar,
be delivered to the Note Registrar and shall be promptly canceled by it. The
Issuer may at any time deliver to the Note Registrar for cancellation any Note
previously authenticated and delivered hereunder which the Issuer may have
acquired in any manner whatsoever, and all Notes so delivered shall be promptly
canceled by the Note Registrar. No Notes shall be authenticated in lieu of or
in exchange for any Notes canceled as provided in this Section, except as
expressly permitted by this Indenture. All canceled Notes held by the Note
Registrar shall be held by the Note Registrar in accordance with its standard
retention policy, unless the Issuer shall direct by an Issuer Order that they
be destroyed or returned to it.
Section 2.11. Authentication and Delivery of Notes.
On the Closing Date, the Notes shall be executed by an Authorized Officer
of the Owner Trustee and delivered to the Authenticating Agent for
authentication, and thereupon the same shall be authenticated and delivered by
the Authenticating Agent, upon Issuer Request and upon receipt by the
Authenticating Agent of all of the following:
(a) An Issuer Order authorizing the execution, authentication and delivery
of the Notes and specifying the Stated Maturity Date, the principal amount and
the Note Interest Rate of such Notes to be authenticated and delivered.
(b) An Issuer Order authorizing the execution and delivery of this
Indenture.
(c) One or more Opinions of Counsel addressed to the Authenticating Agent
and the Note Insurer or upon which the Authenticating Agent and the Note
Insurer is expressly permitted to rely, complying with the requirements of
Section 12.01, reasonably satisfactory in form and substance to the
Authenticating Agent and the Note Insurer.
In rendering the opinions set forth above, such counsel may rely upon
officer's certificates of the Issuer, the Owner Trustee, the Servicer and the
Indenture Trustee, without independent confirmation or verification with
respect to factual matters relevant to such opinions. In rendering the opinions
set forth above, such counsel need express no opinion as to (A) the existence
of, or the priority of the security interest created by the Indenture against,
any liens or other interests that arise by operation of law and that do not
require any filing or similar action in order to take priority over a perfected
security interest or (B) the priority of the security interest created by this
Indenture with respect to any claim or lien in favor of the United States or
any agency or instrumentality thereof (including federal tax liens and liens
arising under Title IV of the Employee Retirement Income Security Act of 1974).
The acceptability to the Note Insurer of the Opinion of Counsel delivered
to the Indenture Trustee and the Note Insurer at the Closing Date shall be
conclusively evidenced by the delivery on the Closing Date of the MBIA
Insurance Policy.
(d) An Officers' Certificate of the Issuer complying with the requirements
of Section 12.01 and stating that:
(i) the Issuer is not in Default under this Indenture and the
issuance of the Notes will not result in any breach of any of the terms,
conditions or provisions of, or constitute a default under, the Issuer's
Certificate of Trust or any indenture, mortgage, deed of trust or other
agreement or instrument to which the Issuer is a party or by which it is
bound, or any order of any court or administrative agency entered in any
proceeding to which the Issuer is a party or by which it may be bound or
to which it may be subject, and that all conditions precedent provided in
this Indenture relating to the authentication and delivery of the Notes
have been complied with; the Issuer is the owner of each Home Loan, free
and clear of any lien, security interest or charge, has not assigned any
interest or participation in any such Home Loan (or, if any such interest
or participation has been assigned, it has been released) and has the
right to Grant each such Home Loan to the Indenture Trustee;
(ii) the information set forth in the Home Loan Schedule attached as
Schedule I to this Indenture is correct;
(iii) the Issuer has Granted to the Indenture Trustee all of its
right, title and interest in each Home Loan; and
(iv) attached thereto is a true and correct copy of letters signed by
each Rating Agency confirming that the Notes have been rated in the
highest rating category of such Rating Agency.
(e) An executed counterpart of the Servicing Agreement.
(f) An executed counterpart of the Home Loan Sale Agreement.
(g) An executed counterpart of the Trust Agreement.
(h) An executed copy of the Custodial Agreement.
Section 2.12. Book-Entry Notes.
On the Closing Date, the Notes will be issued in the form of typewritten
global Notes representing the Book-Entry Notes, to be delivered to the
Indenture Trustee as custodian for The Depository Trust Company (the initial
Clearing Agency) by, or on behalf of, the Issuer. The Book-Entry Notes shall be
registered initially on the Note Register in the name of Cede & Co., the
nominee of the initial Clearing Agency; no Beneficial Owner thereof will
receive or be entitled to receive a Definitive Note representing such
Beneficial Owner's beneficial interest in such Note, except as provided in
Section 2.13 with respect to Book-Entry Termination; and registration of the
Notes may not be transferred by the Note Registrar except upon Book-Entry
Termination. Until the occurrence of Book-Entry Termination, the Note Registrar
shall deal with the Clearing Agency as the sole Holder of the Notes for
purposes of exercising the rights of Noteholders hereunder. The Indenture
Trustee, the Note Registrar, the Issuer and all other Persons shall recognize
the Clearing Agency as the Holder. All rights and privileges of any Beneficial
Owner shall be realized or exercised solely through the facilities of the
Clearing Corporation and the applicable rules and regulations of the Clearing
Corporation and any other financial intermediary through which a Beneficial
Owner claims its interest in any Note. Each payment of principal of and
interest on a Book-Entry Note shall be paid to the Clearing Agency. Each
Clearing Agency Participant shall be responsible for disbursing such payments
to the Beneficial Owners of the Book-Entry Notes that it represents and to each
indirect participating brokerage firm (a "brokerage firm" or "indirect
participating firm") for which it acts as agent. Each brokerage firm shall be
responsible for disbursing funds to the Beneficial Owners of the Book-Entry
Notes that it represents. All such credits and disbursements are to be made by
the Clearing Agency and the Clearing Agency Participants in accordance with
their respective procedures. None of the Indenture Trustee, the Note Registrar,
the Issuer, or any Paying Agent or the Note Insurer shall have any
responsibility therefor. Requests and directions from, and votes of, such
representatives shall not be deemed to be inconsistent if they are made with
respect to different Beneficial Owners.
Section 2.13. Termination of Book Entry System.
(a) The book-entry system through the Clearing Agency with respect to the
Book-Entry Notes may be terminated upon the happening of any of the following:
(i) The Clearing Agency or the Seller advises the Indenture Trustee
that the Clearing Agency is no longer willing or able to discharge
properly its responsibilities as nominee and depositary with respect to
the Notes and the Indenture Trustee or the Seller is unable to locate a
qualified successor clearing agency satisfactory to the Issuer;
(ii) The Seller, in its sole discretion, elects to terminate the
book-entry system by notice to the Clearing Agency and the Indenture
Trustee; or
(iii) After the occurrence of an Event of Default (at which time the
Indenture Trustee shall use all reasonable efforts to promptly notify each
Beneficial Owner through the Clearing Agency of such Event of Default),
the Beneficial Owners of no less than 51% of the Note Balance of the
Book-Entry Notes advise the Indenture Trustee in writing, through the
related Clearing Agency Participants and the Clearing Agency, that the
continuation of a book-entry system through the Clearing Agency to the
exclusion of any Definitive Notes being issued to any person other than
the Clearing Agency or its nominee is no longer in the best interests of
the Beneficial Owners.
(b) Upon the occurrence of any event described in subsection (a) above,
the Indenture Trustee shall use all reasonable efforts to notify all Beneficial
Owners, through the Clearing Agency, of the occurrence of such event and of the
availability of Definitive Notes to Beneficial Owners requesting the same, in a
Note Balance representing the interest of each, making such adjustments and
allowances as it may find necessary or appropriate as to accrued interest and
previous calls for redemption. Definitive Notes shall be issued only upon
surrender to the Indenture Trustee of the global Note by the Clearing Agency,
accompanied by registration instructions for the Definitive Notes. Neither the
Issuer nor the Indenture Trustee shall be liable for any delay in delivery of
such instructions and may conclusively rely on, and shall be protected in
relying on, such instructions. Upon issuance of the Definitive Notes, all
references herein to obligations imposed upon or to be performed by the
Clearing Agency shall cease to be applicable and the provisions relating to
Definitive Notes shall be applicable.
ARTICLE III
COVENANTS
Section 3.01. Payment of Notes.
The Issuer will pay or cause to be duly and punctually paid the principal
of, and interest on, the Notes in accordance with the terms of the Notes and
this Indenture. The Notes shall be non-recourse obligations of the Issuer and
shall be limited in right of payment to amounts available from the Trust Estate
as provided in this Indenture and the Issuer shall not otherwise be liable for
payments on the Notes. No person shall be personally liable for any amounts
payable under any Notes. If any other provision of this Indenture conflicts or
is deemed to conflict with the provisions of this Section 3.01, the provisions
of this Section 3.01 shall control.
Section 3.02. Maintenance of Office or Agency.
The Issuer will cause the Note Registrar to maintain its corporate trust
office at a location where Notes may be surrendered for registration of
transfer or exchange, and where notices and demands to or upon the Issuer in
respect of the Notes and this Indenture may be served.
The Issuer may also from time to time at its own expense designate one or
more other offices or agencies within the United States of America where the
Notes may be presented or surrendered for any or all such purposes and may from
time to time rescind such designations; provided, however, any designation of
an office or agency for payment of Notes shall be subject to Section 3.03. The
Issuer will give prompt written notice to the Indenture Trustee and the Note
Insurer of any such designation or rescission and of any change in the location
of any such other office or agency.
Section 3.03. Money for Note Payments to Be Held In Trust.
All payments of amounts due and payable with respect to any Notes that are
to be made from amounts withdrawn from the Note Account pursuant to Section
8.02(c) or Section 5.07 shall be made on behalf of the Issuer by the Paying
Agent, and no amounts so withdrawn from the Note Account for payments of Notes
shall be paid over to the Issuer under any circumstances except as provided in
this Section 3.03 or in Section 5.07 or Section 8.02. With respect to
Definitive Notes, if the Issuer shall have a Paying Agent that is not also the
Note Registrar, such Note Registrar shall furnish, no later than the fifth
calendar day after each Record Date, a list, in such form as such Paying Agent
may reasonably require, of the names and addresses of the Holders of Notes and
of the number of Individual Notes held by each such Holder.
Whenever the Issuer shall have a Paying Agent other than the Indenture
Trustee, it will, on or before the Business Day next preceding each Payment
Date direct the Indenture Trustee to deposit with such Paying Agent an
aggregate sum sufficient to pay the amounts then becoming due (to the extent
funds are then available for such purpose in the Note Account), such sum to be
held in trust for the benefit of the Persons entitled thereto. Any moneys
deposited with a Paying Agent in excess of an amount sufficient to pay the
amounts then becoming due on the Notes with respect to which such deposit was
made shall, upon Issuer Order, be paid over by such Paying Agent to the
Indenture Trustee for application in accordance with Article VIII.
Subject to the prior consent of the Note Insurer, any Paying Agent other
than the Indenture Trustee shall be appointed by Issuer Order and at the
expense of the Issuer. The Issuer shall not appoint any Paying Agent (other
than the Indenture Trustee) that is not, at the time of such appointment, a
depository institution or trust company whose obligations would be Permitted
Investments pursuant to clause (c) of the definition of the term Permitted
Investments. The Issuer will cause each Paying Agent other than the Indenture
Trustee to execute and deliver to the Indenture Trustee an instrument in which
such Paying Agent shall agree with the Indenture Trustee (and if the Indenture
Trustee acts as Paying Agent, it hereby so agrees), subject to the provisions
of this Section, that such Paying Agent will:
(a) allocate all sums received for payment to the Holders of Notes on each
Payment Date among such Holders in the proportion specified in the applicable
Payment Date Statement, in each case to the extent permitted by applicable law;
(b) hold all sums held by it for the payment of amounts due with respect
to the Notes in trust for the benefit of the Persons entitled thereto until
such sums shall be paid to such Persons or otherwise disposed of as herein
provided and pay such sums to such Persons as herein provided;
(c) if such Paying Agent is not the Indenture Trustee, immediately resign
as a Paying Agent and forthwith pay to the Indenture Trustee all sums held by
it in trust for the payment of the Notes if at any time the Paying Agent ceases
to meet the standards set forth above required to be met by a Paying Agent at
the time of its appointment;
(d) if such Paying Agent is not the Indenture Trustee, give the Indenture
Trustee notice of any Default by the Issuer (or any other obligor upon the
Notes) in the making of any payment required to be made with respect to any
Notes for which it is acting as Paying Agent;
(e) if such Paying Agent is not the Indenture Trustee, at any time during
the continuance of any such Default, upon the written request of the Indenture
Trustee, forthwith pay to the Indenture Trustee all sums so held in trust by
such Paying Agent; and
(f) comply with all requirements of the Code, and all regulations
thereunder, with respect to withholding from any payments made by it on any
Notes of any applicable withholding taxes imposed thereon and with respect to
any applicable reporting requirements in connection therewith; provided,
however, that with respect to withholding and reporting requirements applicable
to original issue discount (if any) on any of the Notes, the Issuer has
provided the calculations pertaining thereto to the Indenture Trustee and the
Paying Agent.
The Issuer may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or any other purpose, by Issuer Order direct
any Paying Agent, if other than the Indenture Trustee, to pay to the Indenture
Trustee all sums held in trust by such Paying Agent, such sums to be held by
the Indenture Trustee upon the same trusts as those upon which such sums were
held by such Paying Agent; and upon such payment by any Paying Agent to the
Indenture Trustee, such Paying Agent shall be released from all further
liability with respect to such money.
Any money held by the Indenture Trustee or any Paying Agent in trust for
the payment of any amount due with respect to any Note and remaining unclaimed
for two and one-half years after such amount has become due and payable to the
Holder of such Note (or if earlier, three months before the date on which such
amount would escheat to a governmental entity under applicable law) shall be
discharged from such trust and paid to the Issuer; and the Holder of such Note
shall thereafter, as an unsecured general creditor, look only to the Issuer for
payment thereof (but only to the extent of the amounts so paid to the Issuer),
and all liability of the Indenture Trustee or such Paying Agent with respect to
such trust money shall thereupon cease.
The Indenture Trustee may adopt and employ, at the expense of the Issuer,
any reasonable means of notification of such repayment (including, but not
limited to, mailing notice of such repayment to Holders whose Notes have been
called but have not been surrendered for redemption or whose right to or
interest in moneys due and payable but not claimed is determinable from the
records of the Indenture Trustee or any Agent, at the last address of record
for each such Holder).
Section 3.04. Existence of Issuer.
The Issuer will keep in full effect its existence, rights and franchises
as a business trust under the laws of the State of Delaware or under the laws
of any other state or the United States of America, and will obtain and
preserve its qualification to do business in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Indenture, the Notes, the Servicing Agreement, the
Custodial Agreement, the Insurance Agreement and the Trust Agreement.
Section 3.05. Protection of Trust Estate.
(a) The Issuer will from time to time execute and deliver all such
supplements and amendments hereto and all such financing statements,
continuation statements, instruments of further assurance and other
instruments, and will take such other action as may be necessary or advisable
to:
(i) Grant more effectively all or any portion of the Trust Estate;
(ii) maintain or preserve the lien of this Indenture or carry out
more effectively the purposes hereof;
(iii) perfect, publish notice of or protect the validity of any Grant
made or to be made by this Indenture;
(iv) enforcing the provisions of any of the Home Loans, the Servicing
Agreement, the Home Loan Sale Agreement, the Custodial Agreement, the
Insurance Agreement or the Trust Agreement; or
(v) preserve and defend title to the Trust Estate and the rights of
the Indenture Trustee, and of the Noteholders and the Note Insurer, in the
Home Loans and the other property held as part of the Trust Estate against
the claims of all Persons and parties.
(b) The Indenture Trustee shall not remove any portion of the Trust Estate
that consists of money or is evidenced by an instrument, certificate or other
writing from the jurisdiction in which it was held at the date of the most
recent Opinion of Counsel delivered pursuant to this Section 3.05 (or cause or
permit ownership or the pledge of any portion of the Trust Estate that consists
of book-entry securities to be recorded on the books of a Person located in a
different jurisdiction from the jurisdiction in which it was held, or to which
it is intended to be removed, as described in the Opinion of Counsel delivered
at the Closing Date pursuant to Section 2.11(c), if no Opinion of Counsel has
yet been delivered pursuant to this Section 3.05) or cause or permit ownership
or the pledge of any portion of the Trust Estate that consists of book-entry
securities to be recorded on the books of a Person located in a different
jurisdiction from the jurisdiction in which such ownership or pledge was
recorded at such time unless the Indenture Trustee shall have first received an
Opinion of Counsel addressed to the Indenture Trustee and the Note Insurer to
the effect that the lien and security interest created by this Indenture with
respect to such property will continue to be maintained after giving effect to
such action or actions.
Section 3.06. Opinions as to Trust Estate.
On or before April 30th in each calendar year, beginning with the first
calendar year commencing after the Closing Date, the Issuer shall furnish to
the Indenture Trustee and the Note Insurer an Opinion of Counsel reasonably
satisfactory in form and substance to the Indenture Trustee and the Note
Insurer either stating that, in the opinion of such counsel, such action has
been taken as is necessary to maintain the lien and security interest created
by this Indenture and reciting the details of such action or stating that in
the opinion of such counsel no such action is necessary to maintain such lien
and security interest. Such Opinion of Counsel shall also describe all such
action, if any, that will, in the opinion of such counsel, be required to be
taken to maintain the lien and security interest of this Indenture with respect
to the Trust Estate until May 1st in the following calendar year.
Section 3.07. Performance of Obligations; Servicing Agreement.
(a) The Issuer shall punctually perform and observe all of its obligations
under this Indenture and the Servicing Agreement.
(b) The Issuer shall not take any action and will use its Best Efforts not
to permit any action to be taken by others that would release any Person from
any of such Person's covenants or obligations under any of the Home Loan Files
or under any instrument included in the Trust Estate, or that would result in
the amendment, hypothecation, subordination, termination or discharge of, or
impair the validity or effectiveness of, any of the documents or instruments
contained in the Home Loan Files, except as expressly permitted in this
Indenture, the Servicing Agreement or such document included in the Home Loan
File or other instrument or unless such action will not adversely affect the
interests of the Holders of the Notes.
(c) If the Issuer shall have knowledge of the occurrence of a default
under the Servicing Agreement, the Issuer shall promptly notify the Indenture
Trustee, the Note Insurer and the Rating Agencies thereof, and shall specify in
such notice the action, if any, the Issuer is taking with respect to such
default.
(d) Upon any termination of the Servicer's rights and powers pursuant to
the Servicing Agreement, the Indenture Trustee shall promptly notify the Rating
Agencies and each Noteholder. As soon as any successor Servicer is appointed,
the Indenture Trustee shall notify the Rating Agencies and each Noteholder,
specifying in such notice the name and address of such successor Servicer.
Section 3.08. Investment Company Act.
The Issuer shall at all times conduct its operations so as not to be
subject to, or shall comply with, the requirements of the Investment Company
Act of 1940, as amended (or any successor statute), and the rules and
regulations thereunder.
Section 3.09. Negative Covenants.
The Issuer shall not:
(a) sell, transfer, exchange or otherwise dispose of any portion of the
Trust Estate except as expressly permitted by this Indenture or the Servicing
Agreement;
(b) claim any credit on, or make any deduction from, the principal of, or
interest on, any of the Notes by reason of the payment of any taxes levied or
assessed upon any portion of the Trust Estate;
(c) engage in any business or activity other than as permitted by the
Trust Agreement or other than in connection with, or relating to, the issuance
of the Notes pursuant to this Indenture or amend the Trust Agreement, as in
effect on the Closing Date, other than in accordance with Section 9.06;
(d) incur, issue, assume or otherwise become liable for any indebtedness
other than the Notes;
(e) incur, assume, guaranty or agree to indemnify any Person with respect
to any indebtedness of any Person, except for such indebtedness as may be
incurred by the Issuer in connection with the issuance of the Notes pursuant to
this Indenture;
(f) dissolve or liquidate in whole or in part (until the Notes are paid in
full); or
(g) (A) permit the validity or effectiveness of this Indenture or any
Grant to be impaired, or permit the lien of this Indenture to be impaired,
amended, hypothecated, subordinated, terminated or discharged, or permit any
Person to be released from any covenants or obligations under this Indenture,
except as may be expressly permitted hereby, (B) permit any lien, charge,
security interest, mortgage or other encumbrance (other than the lien of this
Indenture or any encumbrance permitted hereunder) to be created on or extend to
or otherwise arise upon or burden the Trust Estate or any part thereof or any
interest therein or the proceeds thereof, or (C) permit the lien of this
Indenture not to constitute a valid perfected first priority security interest
in the Trust Estate; or take any other action that should reasonably be
expected to, or fail to take any action if such failure should reasonably be
expected to, cause the Issuer to be taxable as an association pursuant to
Section 7701 of the Code or a taxable mortgage pool pursuant to Section 7701(i)
of the Code.
Section 3.10. Annual Statement as to Compliance.
On or before July 31, 2000, and each July 31st thereafter, the Issuer
shall deliver to the Indenture Trustee and the Note Insurer a written
statement, signed by an Authorized Officer of the Owner Trustee, stating that:
(a) a review of the fulfillment by the Issuer during such year of its
obligations under this Indenture has been made under such Authorized Officer's
supervision; and
(b) to the best of such Authorized Officer's knowledge, based on such
review, the Issuer has complied with all conditions and covenants under this
Indenture throughout such year, or, if there has been a Default in the
fulfillment of any such covenant or condition, specifying each such Default
known to such Authorized Officer and the nature and status thereof.
Promptly following its receipt of such statement, the Indenture Trustee
shall forward a copy thereof to each Noteholder.
Section 3.11. Restricted Payments.
The Issuer shall not, directly or indirectly, (i) pay any dividend or make
any distribution (by reduction of capital or otherwise), whether in cash,
property, securities or a combination thereof, to the Owner Trustee or any
owner of a beneficial interest in the Issuer or otherwise with respect to any
ownership or equity interest or security in or of the Issuer or to the
Servicer, (ii) redeem, purchase, retire or otherwise acquire for value any such
ownership or equity interest or security or (iii) set aside or otherwise
segregate any amounts for any such purpose; provided, however, that the Issuer
may make, or cause to be made, distributions to the Servicer, the Indenture
Trustee, the Master Servicer, the Owner Trustee, the Note Insurer and the
Certificateholders as contemplated by, and to the extent funds are available
for such purpose under, the Servicing Agreement or the Trust Agreement and the
Issuer will not, directly or indirectly, make or cause to be made payments to
or distributions from the Note Account except in accordance with this
Indenture.
Section 3.12. Treatment of Notes as Debt for Tax Purposes.
The Issuer shall treat the Notes as indebtedness for all federal and state
tax purposes.
Section 3.13. Notice of Events of Default.
The Issuer shall give the Indenture Trustee, the Note Insurer and the
Rating Agencies prompt written notice of each Event of Default hereunder, each
default on the part of the Servicer of its obligations under the Servicing
Agreement and each default on the part of the Seller of its obligations under
the Home Loan Sale Agreement.
Section 3.14. Further Instruments and Acts.
Upon request of the Indenture Trustee or the Note Insurer, the Issuer will
execute and deliver such further instruments and do such further acts as may be
reasonably necessary or proper to carry out more effectively the purpose of
this Indenture.
Section 3.15. Covenants of the Indenture Trustee.
(a) The Indenture Trustee shall perform, on behalf of the Trust acting
through the Owner Trustee, the duties of the Issuer hereunder specified below,
and shall consult with the Owner Trustee regarding such duties:
(i) the determination of the form of the Notes under Section 2.01;
(ii) directing the Owner Trustee to execute the Notes for the Issuer
and to return them to the Indenture Trustee for authentication and
delivery under Section 2.05;
(iii) direction of the Owner Trustee to execute and deliver Notes for
registration of transfer and exchange under Section 2.06;
(iv) direction of the Owner Trustee as to actions to be taken with
respect to Notes alleged to have been lost, stolen, destroyed or mutilated
under Section 2.07;
(v) maintenance of Note Registrar's Office and designation of any
offices where Notes may be presented or surrendered under Section 3.02;
(vi) if an additional Paying Agent is to be appointed, the
solicitation and review of bids, examination of the qualifications of
bidders, and submission to the Owner Trustee of a list of candidates from
which such appointment may be made by the Owner Trustee; preparation and
submission to each such Paying Agent for execution of an agreement to the
effect that such Paying Agent holds funds in trust; the direction of a
Paying Agent to remit all funds it is holding to the Indenture Trustee;
the direction of the Indenture Trustee to deposit moneys with such Paying
Agent; and notifications to Holders of Notes of availability of their last
payments, all under Section 3.03;
(vii) direction of Owner Trustee in connection with anything required
of the Issuer relating to the appointment of any co-Trustee under Section
6.13;
(viii) if an Authenticating Agent is to be appointed, the
solicitation and review of bids, examination of the qualifications of
bidders, and submission to the Owner Trustee of a list of qualified
candidates from which such appointment may be made by the Owner Trustee
under Section 6.14;
(ix) furnishing to the Indenture Trustee the names and addresses of
Noteholders to the extent required by Section 7.01;
(x) direction of the Owner Trustee's execution of documents, if any,
as provided by the Servicer as necessary to reconvey title to repurchased
Home Loans to the Seller under Section 8.05; and
(xi) notifying the Owner Trustee when the Note Administrator is of
the opinion that a supplemental indenture may be necessary or appropriate
and determining, based on advice of counsel, whether notations of
amendments should be made on Note Certificates, under Sections 9.01, 9.02,
and 9.07.
(b) The Indenture Trustee hereby agrees that it will not take any action
that is not related to the administration of the Trust Estate to (i) impair the
validity or effectiveness of the Indenture or the Grant of the Trust Estate
thereunder or release any Person from any covenant or obligation under this
Indenture, except as expressly permitted thereby, (ii) creating any lien,
charge, security interest, or similar encumbrance (other than the lien of this
Indenture or other permitted encumbrance or as otherwise permitted under the
provisions of this Indenture) on the Trust Estate, or (iii) cause the lien of
the Indenture not to constitute a valid perfected first priority security
interest in the Trust Estate, except as otherwise expressly permitted
hereunder. The Indenture Trustee shall not take any action that, to the actual
knowledge of the Indenture Trustee, would result in the Issuer becoming taxable
as a corporation for federal income tax purposes.
(c) The Indenture Trustee shall pay, from its own funds, the annual fee of
the Owner Trustee as described in Section 8.1 of the Trust Agreement.
ARTICLE IV
SATISFACTION AND DISCHARGE
Section 4.01. Satisfaction and Discharge of Indenture.
Whenever the following conditions shall have been satisfied:
(a) either
(i) all Notes theretofore authenticated and delivered (other than (i)
Notes that have been destroyed, lost or stolen and that have been replaced
or paid as provided in Section 2.07, and (ii) Notes for whose payment
money has theretofore been deposited in trust and thereafter repaid to the
Issuer, as provided in Section 3.03) have been delivered to the Note
Registrar for cancellation; or
(ii) all Notes not theretofore delivered to the Note Registrar for
cancellation
(A) have become due and payable, or
(B) will become due and payable at the Stated Maturity Date
within one year, or
(C) are to be called for redemption within one year under
irrevocable arrangements satisfactory to the Indenture Trustee for
the giving of notice of redemption by the Indenture Trustee in the
name, and at the expense, of the Issuer or the Servicer, and the
Issuer or the Servicer, in the case of clauses (B)(i), (B)(ii) or
(B)(iii) above, has irrevocably deposited or caused to be deposited
with the Indenture Trustee, in trust for such purpose, an amount
sufficient to pay and discharge the entire indebtedness on such Notes
not theretofore delivered to the Indenture Trustee for cancellation,
for principal and interest to the Stated Maturity Date or to the
applicable Redemption Date, as the case may be, and in the case of
Notes that were not paid at the Stated Maturity Date of their entire
unpaid principal amount, for all overdue principal and all interest
payable on such Notes to the next succeeding Payment Date therefor;
(b) the Issuer has paid or caused to be paid all other sums payable
hereunder by the Issuer (including, without limitation, any amounts due the
Note Insurer hereunder); and
(c) the Issuer has delivered to the Indenture Trustee and the Note Insurer
an Officers' Certificate and an Opinion of Counsel satisfactory in form and
substance to the Indenture Trustee and the Note Insurer each stating that all
conditions precedent herein providing for the satisfaction and discharge of
this Indenture have been complied with;
then, upon Issuer Request, this Indenture and the lien, rights and interests
created hereby and thereby shall cease to be of further effect, and the
Indenture Trustee and each co-trustee and separate trustee, if any, then acting
as such hereunder shall, at the expense of the Issuer (or of the Servicer in
the case of a redemption by the Servicer), execute and deliver all such
instruments furnished to the Indenture Trustee as may be necessary to
acknowledge the satisfaction and discharge of this Indenture and shall pay, or
assign or transfer and deliver, to the Issuer or upon Issuer Order all cash,
securities and other property held by it as part of the Trust Estate remaining
after satisfaction of the conditions set forth in clauses (1) and (2) above.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Indenture Trustee and the Paying Agent to the Issuer and the
Holders of Notes under Section 3.03, the obligations of the Indenture Trustee
to the Holders of Notes under Section 4.02 and the provisions of Section 2.07
with respect to lost, stolen, destroyed or mutilated Notes, registration of
transfers of Notes and rights to receive payments of principal of and interest
on the Notes shall survive.
Section 4.02. Application of Trust Money.
All money deposited with the Indenture Trustee pursuant to Sections 3.03
and 4.01 shall be held in trust and applied by it, in accordance with the
provisions of the Notes and this Indenture, to the payment, either directly or
through any Paying Agent, as the Indenture Trustee may determine, to the
Persons entitled thereto, of the principal and interest for whose payment such
money has been deposited with the Indenture Trustee.
ARTICLE V
DEFAULTS AND REMEDIES
Section 5.01. Event of Default.
"Event of Default", wherever used herein, means, with respect to Notes
issued hereunder, any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order of
any court or any order, rule or regulation of any administrative or
governmental body):
(1) if the Issuer, after payment of any Insured Payment in respect of such
Payment Date, shall default in the payment on any Payment Date of any
Deficiency Amount or fail to pay the Notes in full on or before its Stated
Maturity Date (and in the case of any such default, such default or
failure shall continue for a period of 5 days unremedied);
(2) if the Issuer shall breach or default in the due observance of any one or
more of the covenants set forth in clauses (a) through (g) of Section
3.09;
(3) if the Issuer shall breach, or default in the due observance or
performance of, any other of its covenants in this Indenture, and such
Default shall continue for a period of 30 days after the earlier of (i)
the date on which the Issuer obtains knowledge thereof or (ii) the date on
which there shall have been given to the Issuer by the Indenture Trustee
at the direction of the Note Insurer, or to the Issuer and the Indenture
Trustee by the Holders of Notes representing at least 25% of the Note
Balance of the Outstanding Notes, with the prior written consent of the
Note Insurer, a written notice specifying such Default and requiring it to
be remedied and stating that such notice is a "Notice of Default"
hereunder;
(4) if any representation or warranty of the Issuer made in this Indenture or
any certificate or other writing delivered by the Issuer pursuant hereto
or in connection herewith shall prove to be incorrect in any material
respect as of the time when the same shall have been made and, within 30
days after the earlier of (i) the date on which the Issuer obtains
knowledge thereof or (ii) the date on which there shall have been given
written notice thereof to the Issuer and the Note Insurer by the Indenture
Trustee at the direction of the Note Insurer, or to the Issuer and the
Indenture Trustee by the Holders of Notes representing at least 25% of the
Note Balance of the Outstanding Notes, with the prior written consent of
the Note Insurer, the circumstance or condition in respect of which such
representation or warranty was incorrect shall not have been eliminated or
otherwise cured; provided, however, that in the event that there exists a
remedy with respect to any such breach that consists of a purchase
obligation or repurchase obligation under the Basic Documents, then such
purchase obligation or repurchase obligation shall be the sole remedy with
respect to such breach and shall not constitute an Event of Default
hereunder;
(5) the entry of a decree or order for relief by a court having jurisdiction
in respect of the Issuer in an involuntary case under the federal
bankruptcy laws, as now or hereafter in effect, or any other present or
future federal or state bankruptcy, insolvency or similar law, or
appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Issuer or of any substantial
part of its property, or ordering the winding up or liquidation of the
affairs of the Issuer and the continuance of any such decree or order
unstayed and in effect for a period of 60 consecutive days; or
(6) the commencement by the Issuer of a voluntary case under the federal
bankruptcy laws, as now or hereafter in effect, or any other present or
future federal or state bankruptcy, insolvency or similar law, or the
consent by the Issuer to the appointment of or taking possession by a
receiver, liquidator, assignee, trustee, custodian, sequestrator or other
similar official of the Issuer or of any substantial part of its property
or the making by the Issuer of an assignment for the benefit of creditors
or the failure by the Issuer generally to pay its debts as such debts
become due or the taking of corporate action by the Issuer in furtherance
of any of the foregoing.
The payment by the Note Insurer of any Insured Payment in an amount
sufficient to cover the related Deficiency Amount pursuant to the MBIA
Insurance Policy in respect of any Payment Date shall not constitute an Event
of Default with respect to the Notes.
Section 5.02. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default occurs and is continuing, then and in every such
case, but with the consent of the Note Insurer in the absence of a Note Insurer
Default, the Indenture Trustee may, and on request of the Holders of Notes
representing not less than 50% of the Note Balance of the Outstanding Notes,
shall, declare all the Notes to be immediately due and payable by a notice in
writing to the Issuer (and to the Indenture Trustee if given by Noteholders),
and upon any such declaration such Notes, in an amount equal to the Note
Balance of such Notes, together with accrued and unpaid interest thereon to the
date of such acceleration, shall become immediately due and payable, all
subject to the prior written consent of the Note Insurer in the absence of a
Note Insurer Default.
At any time after such a declaration of acceleration of maturity of the
Notes has been made and before a judgment or decree for payment of the money
due has been obtained by the Indenture Trustee as hereinafter in this Article
provided the Note Insurer or the Holders of Notes representing more than 50% of
the Note Balance of the Outstanding Notes, with the prior written consent of
the Note Insurer, by written notice to the Issuer and the Indenture Trustee,
may rescind and annul such declaration and its consequences if:
(a) the Issuer has paid or deposited with the Indenture Trustee a sum
sufficient to pay:
(i) all payments of principal of, and interest on, all Notes and all
other amounts that would then be due hereunder or upon such Notes if the
Event of Default giving rise to such acceleration had not occurred; and
(ii) all sums paid or advanced by the Indenture Trustee hereunder and
the reasonable compensation, expenses, disbursements and advances of the
Indenture Trustee, its agents and counsel; and
(b) all Events of Default, other than the nonpayment of the principal of
Notes that have become due solely by such acceleration, have been cured or
waived as provided in Section 5.14. No such rescission shall affect any
subsequent Default or impair any right consequent thereon.
Section 5.03. Collection of Indebtedness and Suits for Enforcement by
Indenture Trustee.
Subject to the provisions of Section 3.01 and the following sentence, if
an Event of Default occurs and is continuing, the Indenture Trustee may, with
the prior written consent of the Note Insurer, proceed to protect and enforce
its rights and the rights of the Noteholders and the Note Insurer by any
Proceedings the Indenture Trustee deems appropriate to protect and enforce any
such rights, whether for the specific enforcement of any covenant or agreement
in this Indenture or in aid of the exercise of any power granted herein, or
enforce any other proper remedy. Any proceedings brought by the Indenture
Trustee on behalf of the Noteholders and the Note Insurer or any Noteholder or
the Note Insurer against the Issuer shall be limited to the preservation,
enforcement and foreclosure of the liens, assignments, rights and security
interests under the Indenture and no attachment, execution or other unit or
process shall be sought, issued or levied upon any assets, properties or funds
of the Issuer, other than the Trust Estate relative to the Notes in respect of
which such Event of Default has occurred. If there is a foreclosure of any such
liens, assignments, rights and security interests under this Indenture, by
private power of sale or otherwise, no judgment for any deficiency upon the
indebtedness represented by the Notes may be sought or obtained by the
Indenture Trustee or any Noteholder against the Issuer. The Indenture Trustee
shall be entitled to recover the costs and expenses expended by it pursuant to
this Article V including reasonable compensation, expenses, disbursements and
advances of the Indenture Trustee, its agents and counsel.
Section 5.04. Remedies.
If an Event of Default shall have occurred and be continuing and the Notes
have been declared due and payable and such declaration and its consequences
have not been rescinded and annulled, the Indenture Trustee, at the direction
of the Note Insurer (subject to Section 5.17, to the extent applicable) may,
for the benefit of the Noteholders and the Note Insurer, do one or more of the
following:
(a) institute Proceedings for the collection of all amounts then payable
on the Notes, or under this Indenture, whether by declaration or otherwise,
enforce any judgment obtained, and collect from the Issuer moneys adjudged due,
subject in all cases to the provisions of Sections 3.01 and 5.03;
(b) in accordance with Section 5.17, sell the Trust Estate or any portion
thereof or rights or interest therein, at one or more public or private Sales
called and conducted in any manner permitted by law;
(c) institute Proceedings from time to time for the complete or partial
foreclosure of this Indenture with respect to the Trust Estate;
(d) exercise any remedies of a secured party under the Uniform Commercial
Code and take any other appropriate action to protect and enforce the rights
and remedies of the Indenture Trustee or the Holders of the Notes and the Note
Insurer hereunder; and
(e) refrain from selling the Trust Estate and apply all Remittable Funds
pursuant to Section 5.07.
Section 5.05. Indenture Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, composition or other judicial
Proceeding relative to the Issuer or any other obligor upon any of the Notes or
the property of the Issuer or of such other obligor or their creditors, the
Indenture Trustee (irrespective of whether the Notes shall then be due and
payable as therein expressed or by declaration or otherwise and irrespective of
whether the Indenture Trustee shall have made any demand on the Issuer for the
payment of any overdue principal or interest) shall, with the prior written
consent of the Note Insurer, be entitled and empowered, by intervention in such
Proceeding or otherwise to:
(a) file and prove a claim for the whole amount of principal and interest
owing and unpaid in respect of the Notes and file such other papers or
documents as may be necessary or advisable in order to have the claims of the
Indenture Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Indenture Trustee, its agents and
counsel) and of the Noteholders and the Note Insurer allowed in such
Proceeding, and (ii) collect and receive any moneys or other property payable
or deliverable on any such claims and to distribute the same; and any receiver,
assignee, trustee, liquidator, or sequestrator (or other similar official) in
any such Proceeding is hereby authorized by each Noteholder and the Note
Insurer to make such payments to the Indenture Trustee and, in the event that
the Indenture Trustee shall consent to the making of such payments directly to
the Noteholders and the Note Insurer, to pay to the Indenture Trustee any
amount due to it for the reasonable compensation, expenses, disbursements and
advances of the Indenture Trustee, its agents and counsel.
Nothing herein contained shall be deemed to authorize the Indenture
Trustee to authorize or consent to or accept or adopt on behalf of any
Noteholder or the Note Insurer any plan of reorganization, arrangement,
adjustment or composition affecting any of the Notes or the rights of any
Holder thereof, or the Note Insurer, or to authorize the Indenture Trustee to
vote in respect of the claim of any Noteholder or the Note Insurer in any such
Proceeding. Any plan of reorganization, arrangement, adjustment or composition
relative to the Issuer or any other obligor upon any of the Notes or the
property of the Issuer or of such obligor or their creditors and affecting the
Notes or the rights of the Note Insurer under this Indenture or the Insurance
Agreement must be acceptable to the Note Insurer and, as long as no Note
Insurer Default exists and is continuing, the Note Insurer shall be entitled to
exercise the voting rights of the Holders of the Notes regarding such plan,
reorganization, arrangement, adjustment or composition.
Section 5.06. Indenture Trustee May Enforce Claims Without Possession of
Notes.
All rights of action and claims under this Indenture or any of the Notes
may be prosecuted and enforced by the Indenture Trustee without the possession
of any of the Notes or the production thereof in any Proceeding relating
thereto, and any such Proceeding instituted by the Indenture Trustee, at the
direction of the Note Insurer, shall be brought in its own name as trustee of
an express trust, and any recovery of judgment shall be for the ratable
benefit of the Holders of the Notes and the Note Insurer in respect of which
such judgment has been recovered after payment of amounts required to be paid
pursuant to clause first of Section 5.07.
Section 5.07. Application of Money Collected.
If the Notes have been declared due and payable following an Event of
Default and such declaration and its consequences have not been rescinded and
annulled, any money collected by the Indenture Trustee with respect to such
Notes pursuant to this Article or otherwise and any other monies that may then
be held or thereafter received by the Indenture Trustee as security for such
Notes shall be applied in the following order, at the date or dates fixed by
the Indenture Trustee and, in case of the payment of the entire amount due on
account of principal of, and interest on, such Notes, upon presentation and
surrender thereof:
first, to the Indenture Trustee, any unpaid Indenture Trustee's Fees then
due and any other amounts payable and due to the Indenture Trustee under
this Indenture, including any costs or expenses incurred by it in
connection with the enforcement of the remedies provided for in this
Article V, but only to the extent such costs and expenses have not
previously been reimbursed to the Indenture Trustee for such costs and
expenses pursuant to Section 6.15 hereof;
second, to the Servicer, any amounts required to pay the Servicer for any
unpaid Servicing Fees then due and, upon the final liquidation of the
related Home Loan (as determined by the Servicer pursuant to the
provisions of the Servicing Agreement) or the final liquidation of the
Trust Estate, to reimburse the Servicer for Servicing Advances up to $250
per Home Loan previously made by, and not previously reimbursed or
retained by, the Servicer, and to the Master Servicer, any unpaid Master
Servicing Fees then due;
third, to the payment of Note Interest then due and unpaid upon the
Outstanding Notes through the day preceding the date on which such payment
is made, ratably, without preference or priority of any kind;
fourth, to the payment of the Note Balance of the Outstanding Notes, up
to the amount of their respective Note Balances, ratably, without
preference or priority of any kind;
fifth, to the payment to the Note Insurer, as subrogee to the rights of
the Noteholders, (A) the aggregate amount necessary to reimburse the Note
Insurer for any unreimbursed Insured Payments paid by the Note Insurer on
prior Payment Dates, together with interest thereon at the "Late Payment
Rate" specified in the Insurance Agreement from the date such Insured
Payments were paid by the Note Insurer to such Payment Date, (B) the
amount of any unpaid Note Insurer Premium then due, together with interest
thereon at the "Late Payment Rate" specified in the Insurance Agreement
from the date such amounts were due and (C) any other amounts due and
owing to the Note Insurer under the Insurance Agreement;
sixth, to the Servicer, an amount equal to any unreimbursed Servicing
Advances; and
seventh, to the payment of the remainder, if any, to the Issuer or its
designee;
provided, however, that the priorities set forth in clause fifth and clause
sixth above shall be reversed in the event a Note Insurer Default shall exist
and be continuing.
Section 5.08. Limitation on Suits.
No Holder of a Note shall have any right to institute any Proceedings,
judicial or otherwise, with respect to this Indenture, or for the appointment
of a receiver or trustee, or for any other remedy hereunder, unless:
(a) such Holder has previously given written notice to the Indenture
Trustee and the Note Insurer of a continuing Event of Default;
(b) the Holders of Notes representing not less than 25% of the Note
Balance of the Outstanding Notes shall have made written request to the
Indenture Trustee to institute Proceedings in respect of such Event of Default
in its own name as Indenture Trustee hereunder;
(c) such Holder or Holders have offered to the Indenture Trustee indemnity
in full against the costs, expenses and liabilities to be incurred in
compliance with such request;
(d) the Indenture Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such Proceeding;
(e) no direction inconsistent with such written request has been given to
the Indenture Trustee during such 60-day period by the Holders of Notes
representing more than 50% of the Note Balance of the Outstanding Notes; and
(f) the consent of the Note Insurer shall have been obtained; it being
understood and intended that no one or more Holders of Notes shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders
of Notes or to obtain or to seek to obtain priority or preference over any
other Holders or to enforce any right under this Indenture, except in the
manner herein provided and for the equal and ratable benefit of all the Holders
of Notes.
In the event the Indenture Trustee shall receive conflicting or
inconsistent requests and indemnity from two or more groups of Holders of
Notes, each representing less than 50% of the Note Balance of the Outstanding
Notes, the Indenture Trustee in its sole discretion may determine what action,
if any, shall be taken notwithstanding any other provision herein to the
contrary.
Section 5.09. Unconditional Rights of Noteholders to Receive Principal
and Interest.
Subject to the provisions in this Indenture (including Sections 3.01 and
5.03) limiting the right to recover amounts due on a Note to recovery from
amounts in the Trust Estate, the Holder of any Note shall have the right, to
the extent permitted by applicable law, which right is absolute and
unconditional, to receive payment of each installment of interest on such Note
on the respective Payment Date for such installments of interest, to receive
payment of each installment of principal of such Note when due (or, in the case
of any Note called for redemption, on the date fixed for such redemption) and
to institute suit for the enforcement of any such payment, and such right shall
not be impaired without the consent of such Holder.
Section 5.10. Restoration of Rights and Remedies.
If the Indenture Trustee, the Note Insurer or any Noteholder has
instituted any Proceeding to enforce any right or remedy under this Indenture
and such Proceeding has been discontinued or abandoned for any reason, or has
been determined adversely to the Indenture Trustee, the Note Insurer or to such
Noteholder, then and in every such case the Issuer, the Indenture Trustee, the
Note Insurer and the Noteholders shall, subject to any determination in such
Proceeding, be restored severally and respectively to their former positions
hereunder, and thereafter all rights and remedies of the Indenture Trustee, the
Note Insurer and the Noteholders shall continue as though no such Proceeding
had been instituted.
Section 5.11. Rights and Remedies Cumulative.
No right or remedy herein conferred upon or reserved to the Indenture
Trustee, the Note Insurer or to the Noteholders is intended to be exclusive of
any other right or remedy, and every right and remedy shall, to the extent
permitted by law, be cumulative and in addition to every other right and remedy
given hereunder or now or hereafter existing at law or in equity or otherwise.
The assertion or employment of any right or remedy hereunder, or otherwise,
shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
Section 5.12. Delay or Omission Not Waiver.
No delay or omission of the Indenture Trustee, the Note Insurer or of any
Holder of any Note to exercise any right or remedy accruing upon any Event of
Default shall impair any such right or remedy or constitute a waiver of any
such Event of Default or an acquiescence therein. Every right and remedy given
by this Article or by law to the Indenture Trustee, the Note Insurer or to the
Noteholders may be exercised from time to time, and as often as may be deemed
expedient, by the Indenture Trustee, the Note Insurer or by the Noteholders
with the prior consent of the Note Insurer, as the case may be.
Section 5.13. Control by Noteholders.
The Holders of Notes representing more than 50% of the Note Balance of the
Outstanding Notes on the applicable Record Date shall, with the consent of the
Note Insurer, have the right to direct the time, method and place of conducting
any Proceeding for any remedy available to the Indenture Trustee or exercising
any trust or power conferred on the Indenture Trustee; provided that:
(a) such direction shall not be in conflict with any rule of law or with
this Indenture;
(b) any direction to the Indenture Trustee to undertake a Sale of the
Trust Estate shall be by the Holders of Notes representing the percentage of
the Note Balance of the Outstanding Notes specified in Section 5.17(b) (i),
unless Section 5.17(b) (ii) is applicable; and
(c) the Indenture Trustee may take any other action deemed proper by the
Indenture Trustee that is not inconsistent with such direction; provided,
however, that, subject to Section 6.01, the Indenture Trustee need not take any
action that it determines might involve it in liability or be unjustly
prejudicial to the Noteholders not consenting.
Section 5.14. Waiver of Past Defaults.
The Holders of Notes representing more than 50% of the Note Balance of the
Outstanding Notes on the applicable Record Date may on behalf of the Holders of
all the Notes, and with the consent of the Note Insurer, waive any past Default
hereunder and its consequences, except a Default:
(a) in the payment of principal or any installment of interest on any
Note; or
(b) in respect of a covenant or provision hereof that under Section 9.02
cannot be modified or amended without the consent of the Holder of each
Outstanding Note affected.
Upon any such waiver, such Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
Default or impair any right consequent thereon.
Section 5.15. Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any Note by his
acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy
under this Indenture, or in any suit against the Indenture Trustee for any
action taken, suffered or omitted by it as Indenture Trustee, the filing by any
party litigant in such suit of an undertaking to pay the costs of such suit,
and that such court may in its discretion assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in such suit, having due
regard to the merits and good faith of the claims or defenses made by such
party litigant; but the provisions of this Section shall not apply to any suit
instituted by the Indenture Trustee, to any suit instituted by the Note
Insurer, any Noteholder, or group of Noteholders with the prior consent of the
Note Insurer, holding in the aggregate Notes representing more than 10% of the
Note Balance of the Outstanding Notes, or to any suit instituted by any
Noteholder for the enforcement of the payment of any Deficiency Amount on any
Note on or after the related Payment Date or for the enforcement of the payment
of principal of any Note on or after the Stated Maturity Date (or, in the case
of any Note called for redemption, on or after the applicable Redemption Date).
Section 5.16. Waiver of Stay or Extension Laws.
The Issuer covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay or extension of law wherever
enacted, now or at any time hereafter in force, that may affect the covenants
in, or the performance of, this Indenture; and the Issuer (to the extent that
it may lawfully do so) hereby expressly waives all benefit or advantage of any
such law, and covenants that it will not hinder, delay or impede the execution
of any power herein granted to the Indenture Trustee, but will suffer and
permit the execution of every such power as though no such law had been
enacted.
Section 5.17. Sale of Trust Estate.
(a) The power to effect any sale (a "Sale") of any portion of the Trust
Estate pursuant to Section 5.04 shall not be exhausted by any one or more Sales
as to any portion of the Trust Estate remaining unsold, but shall continue
unimpaired until the entire Trust Estate shall have been sold or all amounts
payable on the Notes and under this Indenture with respect thereto shall have
been paid. The Indenture Trustee may from time to time postpone any public Sale
by public announcement made at the time and place of such Sale.
(b) To the extent permitted by law, the Indenture Trustee shall not in any
private Sale sell or otherwise dispose of the Trust Estate, or any portion
thereof, unless:
(i) the Holders of Notes representing not less than 50% of the Note
Balance of the Notes then Outstanding consent to or direct the Indenture
Trustee to make such Sale; or
(ii) the proceeds of such Sale would be not less than the entire
amount that would be payable to the Holders of the Notes, in full payment
thereof in accordance with Section 5.07, on the Payment Date next
succeeding the date of such Sale.
The purchase by the Indenture Trustee of all or any portion of the Trust
Estate at a private Sale shall not be deemed a Sale or disposition thereof for
purposes of this Section 5.17(b). In the absence of a Note Insurer Default, no
sale hereunder shall be effective without the consent of the Note Insurer.
(c) Unless the Holders of all Outstanding Notes have otherwise consented
or directed the Indenture Trustee, at any public Sale of all or any portion of
the Trust Estate at which a minimum bid equal to or greater than the amount
described in paragraph (ii) of subsection (b) of this Section 5.17 has not been
established by the Indenture Trustee and no Person bids an amount equal to or
greater than such amount, the Indenture Trustee, acting in its capacity as
Indenture Trustee on behalf of the Noteholders and the Note Insurer, shall
prevent such sale and bid an amount (which shall include the Indenture
Trustee's right, in its capacity as Indenture Trustee, to credit bid) at least
$1.00 more than the highest other bid in order to preserve the Trust Estate on
behalf of the Noteholders and the Note Insurer.
(d) In connection with a Sale of all or any portion of the Trust Estate:
(i) any Holder or Holders of Notes may bid for and purchase the
property offered for Sale, and upon compliance with the terms of sale may
hold, retain and possess and dispose of such property, without further
accountability, and may, in paying the purchase money therefor, deliver
any Outstanding Notes or claims for interest thereon in lieu of cash up to
the amount that shall, upon distribution of the net proceeds of such Sale,
be payable thereon, and such Notes, in case the amounts so payable thereon
shall be less than the amount due thereon, shall be returned to the
Holders thereof after being appropriately stamped to show such partial
payment;
(ii) the Indenture Trustee may bid for and acquire the property
offered for Sale in connection with any public Sale thereof, and, in lieu
of paying cash therefor, may make settlement for the purchase price by
crediting the gross Sale price against the sum of (A) the amount that
would be payable to the Holders of the Notes as a result of such Sale in
accordance with Section 5.07 on the Payment Date next succeeding the date
of such Sale and (B) the expenses of the Sale and of any Proceedings in
connection therewith which are reimbursable to it, without being required
to produce the Notes in order to complete any such Sale or in order for
the net Sale price to be credited against such Notes, and any property so
acquired by the Indenture Trustee shall be held and dealt with by it in
accordance with the provisions of this Indenture;
(iii) the Indenture Trustee shall execute and deliver an appropriate
instrument of conveyance transferring its interest in any portion of the
Trust Estate in connection with a Sale thereof;
(iv) the Indenture Trustee is hereby irrevocably appointed the agent
and attorney-in-fact of the Issuer to transfer and convey its interest in
any portion of the Trust Estate in connection with a Sale thereof, and to
take all action necessary to effect such Sale; and
(v) no purchaser or transferee at such a Sale shall be bound to
ascertain the Indenture Trustee's authority, inquire into the satisfaction
of any conditions precedent or see to the application of any moneys.
Section 5.18. Action on Notes.
The Indenture Trustee's right to seek and recover judgment under this
Indenture shall not be affected by the seeking, obtaining or application of any
other relief under or with respect to this Indenture. Neither the lien of this
Indenture nor any rights or remedies of the Indenture Trustee, the Note Insurer
or the Holders of Notes shall be impaired by the recovery of any judgment by
the Indenture Trustee against the Issuer or by the levy of any execution under
such judgment upon any portion of the Trust Estate.
Section 5.19. Application of Section 316(a) of the Trust Indenture Act.
Pursuant to Section 316(a) of the TIA, all provisions automatically
provided for in Section 316(a) are hereby expressly excluded.
ARTICLE VI
THE INDENTURE TRUSTEE
Section 6.01. Duties of Indenture Trustee.
(a) If an Event of Default has occurred and is continuing, the Indenture
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise, as a
prudent person would exercise or use under the circumstances in the conduct of
his or her own affairs.
(b) Except during the continuance of an Event of Default:
(i) The Indenture Trustee need perform only those duties that are
specifically set forth in this Indenture and no others and no implied
covenants or obligations shall be read into this Indenture against the
Indenture Trustee; and
(ii) In the absence of bad faith on its part, the Indenture Trustee
may request and conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Indenture Trustee and conforming to the
requirements of this Indenture. The Indenture Trustee shall, however,
examine such certificates and opinions to determine whether they conform
on their face to the requirements of this Indenture.
(c) The Indenture Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(i) This paragraph does not limit the effect of subsection (b) of
this Section 6.01;
(ii) The Indenture Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless it is proved
that the Indenture Trustee was negligent in ascertaining the pertinent
facts; and
(iii) The Indenture Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 5.13 or 5.17 or exercising
any trust or power conferred upon the Indenture Trustee under this
Indenture.
(d) For all purposes under this Indenture, the Indenture Trustee shall not
be deemed to have notice or knowledge of any Event of Default described in
Section 5.01(2), 5.01(5) or 5.01(6) or any Default described in Section 5.01(3)
or 5.01(4) or of any event described in Section 3.05 unless a Responsible
Officer assigned to and working in the Indenture Trustee's corporate trust
department has actual knowledge thereof or unless written notice of any event
that is in fact such an Event of Default or Default is received by the
Indenture Trustee at the Corporate Trust Office, and such notice references the
Notes generally, the Issuer, the Trust Estate or this Indenture.
(e) No provision of this Indenture shall require the Indenture Trustee to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it under the Servicing Agreement or otherwise.
(f) Every provision of this Indenture that in any way relates to the
Indenture Trustee is subject to the provisions of this Section.
(g) Notwithstanding any extinguishment of all right, title and interest of
the Issuer in and to the Trust Estate following an Event of Default and a
consequent declaration of acceleration of the Maturity of the Notes, whether
such extinguishment occurs through a Sale of the Trust Estate to another
Person, the acquisition of the Trust Estate by the Indenture Trustee or
otherwise, the rights, powers and duties of the Indenture Trustee with respect
to the Trust Estate (or the proceeds thereof) and the Noteholders and the Note
Insurer and the rights of Noteholders and the Note Insurer shall continue to be
governed by the terms of this Indenture.
(h) The Indenture Trustee or any Custodian appointed pursuant to Section
8.13 shall at all times retain possession of the Home Loan Files in the State
of Minnesota, except for those Home Loan Files or portions thereof released to
the Servicer pursuant to this Indenture or the Servicing Agreement.
Section 6.02. Notice of Default.
Immediately after the occurrence of any Default known to the Indenture
Trustee, the Indenture Trustee shall transmit by mail to the Note Insurer
notice of each such Default and, within 10 days after the occurrence of any
Default known to the Indenture Trustee, the Indenture Trustee shall transmit by
mail and by telecopy to all Holders of Notes notice of each such Default,
unless such Default shall have been cured or waived; provided, however, that in
no event shall the Indenture Trustee provide notice, or fail to provide notice
of a Default known to the Indenture Trustee in a manner contrary to the
requirements of the Trust Indenture Act. For the purposes of this Section 6.02,
the Indenture Trustee shall not be deemed to have knowledge of any Default
unless a Responsible Officer assigned to and working in the Indenture Trustee's
Corporate Trust Office has actual knowledge thereof or unless written notice of
any Default is received by the Indenture Trustee, which written notice may be
given by Note Insurer, and such notice references the Notes, the Trust Estate
or this Agreement. Concurrently with the mailing of any such notice to the
Holders of the Notes, the Indenture Trustee shall transmit by mail a copy of
such notice to the Rating Agencies.
Section 6.03. Rights of Indenture Trustee.
(a) Except as otherwise provided in Section 6.01, the Indenture Trustee
may rely on any document believed by it to be genuine and to have been signed
or presented by the proper Person. The Indenture Trustee need not investigate
any fact or matter stated in any such document.
(b) Before the Indenture Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel reasonably
satisfactory in form and substance to the Indenture Trustee. The Indenture
Trustee shall not be liable for any action it takes or omits to take in good
faith in reliance on any such Officer's Certificate or Opinion of Counsel.
(c) With the consent of the Note Insurer, which consent shall not be
unreasonably withheld, the Indenture Trustee may act through agents and shall
not be responsible for the misconduct or negligence of any agent appointed with
due care.
(d) The Indenture Trustee shall not be liable for any action it takes or
omits to take in good faith that it believes to be authorized or within its
rights or powers.
Section 6.04. Not Responsible for Recitals or Issuance of Notes.
The recitals contained herein and in the Notes, except the certificates of
authentication on the Notes, shall be taken as the statements of the Issuer,
and the Indenture Trustee and the Authenticating Agent assume no responsibility
for their correctness. The Indenture Trustee makes no representations with
respect to the Trust Estate or as to the validity or sufficiency of this
Indenture or of the Notes. The Indenture Trustee shall not be accountable for
the use or application by the Issuer of the Notes or the proceeds thereof or
any money paid to the Issuer or upon Issuer Order pursuant to the provisions
hereof.
Section 6.05. May Hold Notes.
The Indenture Trustee, any Agent, or any other agent of the Issuer, in
its individual or any other capacity, may become the owner or pledgee of Notes
and, subject to Section 6.07, may otherwise deal with the Issuer or any
Affiliate of the Issuer with the same rights it would have if it were not
Indenture Trustee, Agent or such other agent.
Section 6.06. Money Held in Trust.
Money held by the Indenture Trustee in trust hereunder need not be
segregated from other funds except to the extent required by this Indenture or
by law. The Indenture Trustee shall be under no liability for interest on any
money received by it hereunder except as otherwise agreed with the Issuer and
except to the extent of income or other gain on investments that are
obligations of the Indenture Trustee, in its commercial capacity, and income or
other gain actually received by the Indenture Trustee on investments, which are
obligations of others.
Section 6.07. Eligibility; Disqualification.
Irrespective of whether this Indenture is qualified under the TIA,
this indenture shall always have an Indenture Trustee who satisfies the
requirements of TIA Sections 310(a)(1) and 310(a)(5). The Indenture Trustee
shall always have a combined capital and surplus as stated in Section 6.08. The
Indenture Trustee shall be subject to TIA Section 310(h).
Section 6.08. Indenture Trustee's Capital and Surplus.
The Indenture Trustee shall at all times have a combined capital and
surplus of at least $100,000,000 or shall be a member of a bank holding company
system, the aggregate combined capital and surplus of which is at least
$100,000,000 and shall at all times be rated "BBB" or better by Standard &
Poor's and "Baa2" by Moody's; provided, however, that the Indenture Trustee's
separate capital and surplus shall at all times be at least the amount required
by TIA Section 310(a)(2). If the Indenture Trustee publishes annual reports of
condition of the type described in TIA Section 310(a)(1), its combined capital
and surplus for purposes of this Section 6.08 shall be as set forth in the
latest such report. If at any time the Indenture Trustee shall cease to be
eligible in accordance with the provisions of this Section 6.08, it shall
resign immediately in the manner and with the effect hereinafter specified in
this Article.
Section 6.09. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Indenture Trustee and no
appointment of a successor Indenture Trustee pursuant to this Article shall
become effective until the acceptance of appointment by the successor Indenture
Trustee under Section 6.10.
(b) The Indenture Trustee may resign at any time by giving written
notice thereof to the Issuer, the Servicer, the Note Insurer and each Rating
Agency. If an instrument of acceptance by a successor Indenture Trustee shall
not have been delivered to the Indenture Trustee within 30 days after the
giving of such notice of resignation, the resigning Indenture Trustee may
petition any court of competent jurisdiction for the appointment of a successor
Indenture Trustee.
(c) The Indenture Trustee may be removed at any time with the consent
of the Note Insurer, by Act of the Holders representing more than 50% of the
Note Balance of the Outstanding Notes, by notice delivered to the Indenture
Trustee and to the Issuer.
(d) If at any time: (1) the Indenture Trustee shall have a conflicting
interest prohibited by Section 6.07 and shall fail to resign or eliminate such
conflicting interest in accordance with Section 6.07 after written request
therefor by the Issuer, the Note Insurer or by any Noteholder; or (2) the
Indenture Trustee shall cease to be eligible under Section 6.08 or shall become
incapable of acting or shall be adjudged a bankrupt or insolvent, or a receiver
of the Indenture Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Indenture Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation; then, in any such case, (i) the Issuer by an Issuer Order, with
the consent of the Note Insurer, may remove the Indenture Trustee, and the
Issuer shall join with the Indenture Trustee in the execution, delivery and
performance of all instruments and agreements necessary or proper to appoint a
successor Indenture Trustee acceptable to the Note Insurer and to vest in such
successor Indenture Trustee any property, title, right or power deemed
necessary or desirable, subject to the other provisions of this Indenture;
provided, however, if the Issuer and the Note Insurer do not join in such
appointment within fifteen (15) days after the receipt by it of a request to do
so, or in case an Event of Default has occurred and is continuing, the
Indenture Trustee may petition a court of competent jurisdiction to make such
appointment, or (ii) subject to Section 5.15, and, in the case of a conflicting
interest as described in clause (1) above, unless the Indenture Trustee's duty
to resign has been stayed as provided in TIA Section 310(b), the Note Insurer
or any Noteholder who has been a bona fide Holder of a Note for at least six
months may, on behalf of himself and all others similarly situated, with the
consent of the Note Insurer, petition any court of competent jurisdiction for
the removal of the Indenture Trustee and the appointment of a successor
Indenture Trustee.
(e) If the Indenture Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of the Indenture
Trustee for any cause, the Issuer, by an Issuer Order shall promptly appoint a
successor Indenture Trustee acceptable to the Note Insurer. If within one year
after such resignation, removal or incapability or the occurrence of such
vacancy a successor Indenture Trustee shall be appointed by the Note Insurer
or, with the consent of the Note Insurer, by Act of the Holders of Notes
representing more than 50% of the Note Balance of the Outstanding Notes
delivered to the Issuer and the retiring Indenture Trustee, the successor
Indenture Trustee so appointed shall, forthwith upon its acceptance of such
appointment, become the successor Indenture Trustee and supersede the successor
Indenture Trustee appointed by the Issuer. If no successor Indenture Trustee
shall have been so appointed by the Issuer, the Note Insurer or Noteholders and
shall have accepted appointment in the manner hereinafter provided, any
Noteholder who has been a bona fide Holder of a Note for at least six months
may, on behalf of himself and all others similarly situated, with the consent
of the Note Insurer, petition any court of competent jurisdiction for the
appointment of a successor Indenture Trustee.
(f) The Issuer shall give notice of each resignation and each removal
of the Indenture Trustee and each appointment of a successor Indenture Trustee
to the Holders of Notes and the Note Insurer. Each notice shall include the
name of the successor Indenture Trustee and the address of its Corporate Trust
Office.
Section 6.10. Acceptance of Appointment by Successor.
Every successor Indenture Trustee appointed hereunder shall execute,
acknowledge and deliver to the Issuer, the Note Insurer and the retiring
Indenture Trustee an instrument accepting such appointment, and thereupon the
resignation or removal of the retiring Indenture Trustee shall become effective
and such successor Indenture Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, trusts and duties
of the retiring Indenture Trustee. Notwithstanding the foregoing, on request of
the Issuer or the successor Indenture Trustee, such retiring Indenture Trustee
shall, upon payment of its charges, execute and deliver an instrument
transferring to such successor Indenture Trustee all the rights, powers and
trusts of the retiring Indenture Trustee, and shall duly assign, transfer and
deliver to such successor Indenture Trustee all property and money held by such
retiring Indenture Trustee hereunder. Upon request of any such successor
Indenture Trustee, the Issuer shall execute and deliver any and all instruments
for more fully and certainly vesting in and confirming to such successor
Indenture Trustee all such rights, powers and trusts.
No successor Indenture Trustee shall accept its appointment unless at the
time of such acceptance such successor Indenture Trustee shall be qualified and
eligible under this Article.
Section 6.11. Merger, Conversion, Consolidation or Succession to Business
of Indenture Trustee.
Any corporation into which the Indenture 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 Indenture Trustee
shall be a party, or any corporation succeeding to all or substantially all of
the corporate trust business of the Indenture Trustee, shall be the successor
of the Indenture Trustee hereunder, provided such corporation shall be
otherwise qualified and eligible under this Article, without the execution or
filing of any paper or any further act on the part of any of the parties
hereto. In case any Notes have been authenticated, but not delivered, by the
Indenture Trustee then in office, any successor by merger, conversion or
consolidation to such authenticating Indenture Trustee may adopt such
authentication and deliver the Notes so authenticated with the same effect as
if such successor Indenture Trustee had authenticated such Notes.
Section 6.12. Preferential Collection of Claims Against Issuer.
The Indenture Trustee (and any co-trustee or separate trustee) shall be
subject to TIA Section 311(a), excluding any creditor relationship listed in
TIA Section 311(b), and an Indenture Trustee (and any co-trustee or separate
trustee) who has resigned or been removed shall be subject to TIA Section
311(a) to the extent indicated.
Section 6.13. Co-Indenture Trustees and Separate Indenture Trustees.
At any time or times, for the purpose of meeting the legal requirements of
any jurisdiction in which any of the Trust Estate may at the time be located,
the Indenture Trustee shall have power to appoint, and, upon the written
request of the Indenture Trustee, of the Note Insurer or of the Holders of
Notes representing more than 50% of the Note Balance of the Outstanding Notes
with respect to which a co-trustee or separate trustee is being appointed with
the consent of the Note Insurer, the Issuer shall for such purpose join with
the Indenture Trustee in the execution, delivery and performance of all
instruments and agreements necessary or proper to appoint, one or more Persons
approved by the Indenture Trustee either to act as co-trustee, jointly with the
Indenture Trustee, of all or any part of the Trust Estate, or to act as
separate trustee of any such property, in either case with such powers as may
be provided in the instrument of appointment, and to vest in such Person or
Persons in the capacity aforesaid, any property, title, right or power deemed
necessary or desirable, subject to the other provisions of this Section. If the
Issuer does not join in such appointment within 15 days after the receipt by it
of a request to do so, or in case an Event of Default has occurred and is
continuing, the Indenture Trustee alone shall have power to make such
appointment. All fees and expenses of any co-trustee or separate trustee shall
be payable by the Issuer.
Should any written instrument from the Issuer be required by any
co-trustee or separate trustee so appointed for more fully confirming to such
co-trustee or separate trustee such property, title, right or power, any and
all such instruments shall, on request, be executed, acknowledged and delivered
by the Issuer.
Every co-trustee or separate trustee shall, to the extent permitted by
law, but to such extent only, be appointed subject to the following terms:
(a) The Notes shall be authenticated and delivered and all rights, powers,
duties and obligations hereunder in respect of the custody of securities, cash
and other personal property held by, or required to be deposited or pledged
with, the Indenture Trustee hereunder, shall be exercised, solely by the
Indenture Trustee.
(b) The rights, powers, duties and obligations hereby conferred or imposed
upon the Indenture Trustee in respect of any property covered by such
appointment shall be conferred or imposed upon and exercised or performed by
the Indenture Trustee or by the Indenture Trustee and such co-trustee or
separate trustee jointly, as shall be provided in the instrument appointing
such co-trustee or separate trustee, except to the extent that under any law of
any jurisdiction in which any particular act is to be performed, the Indenture
Trustee shall be incompetent or unqualified to perform such act, in which event
such rights, powers, duties and obligations shall be exercised and performed by
such co-trustee or separate trustee.
(c) The Indenture Trustee at any time, by an instrument in writing
executed by it, with the concurrence of the Issuer evidenced by an Issuer
Order, may accept the resignation of or remove any co-trustee or separate
trustee appointed under this Section, and, in case an Event of Default has
occurred and is continuing, the Indenture Trustee shall have power to accept
the resignation of, or remove, any such co-trustee or separate trustee without
the concurrence of the Issuer upon the written request of the Indenture
Trustee, the Issuer shall join with the Indenture Trustee in the execution,
delivery and performance of all instruments and agreements necessary or proper
to effectuate such resignation or removal. A successor to any co-trustee or
separate trustee so resigned or removed may be appointed in the manner provided
in this Section.
(d) No co-trustee or separate trustee hereunder shall be personally liable
by reason of any act or omission of the Indenture Trustee, or any other such
trustee hereunder.
(e) Any Act of Noteholders delivered to the Indenture Trustee shall be
deemed to have been delivered to each such co-trustee and separate trustee.
Section 6.14. Authenticating Agents.
The Issuer shall appoint an Authenticating Agent with power to act on
its behalf and subject to its direction in the authentication and delivery of
the Notes designated for such authentication by the Issuer and containing
provisions therein for such authentication (or with respect to which the Issuer
has made other arrangements, satisfactory to the Indenture Trustee and such
Authenticating Agent, for notation on the Notes of the authority of an
Authenticating Agent appointed after the initial authentication and delivery of
such Notes) in connection with transfers and exchanges under Section 2.06, as
fully to all intents and purposes as though the Authenticating Agent had been
expressly authorized by that Section to authenticate and deliver Notes. For all
purposes of this Indenture (other than in connection with the authentication
and delivery of Notes pursuant to Sections 2.05 and 2.11 in connection with
their initial issuance), the authentication and delivery of Notes by the
Authenticating Agent pursuant to this Section shall be deemed to be the
authentication and delivery of Notes "by the Indenture Trustee." Such
Authenticating Agent shall at all times be a Person that both meets the
requirements of Section 6.08 for the Indenture Trustee hereunder and has an
office for presentation of Notes in the United States of America. The Indenture
Trustee shall initially be the Authenticating Agent and shall be the Note
Registrar as provided in Section 2.06. The office from which the Indenture
Trustee shall perform its duties as Note Registrar and Authenticating Agent
shall be the Corporate Trust Office. Any Authenticating Agent appointed
pursuant to the terms of this Section 6.13 or pursuant to the terms of any
supplemental indenture shall deliver to the Indenture Trustee as a condition
precedent to the effectiveness of such appointment an instrument accepting the
trusts, duties and responsibilities of Authenticating Agent and of Note
Registrar or co-Note Registrar and indemnifying the Indenture Trustee for and
holding the Indenture Trustee harmless against, any loss, liability or expense
(including reasonable attorneys' fees) incurred without negligence or bad faith
on its part, arising out of or in connection with the acceptance,
administration of the trust or exercise of authority by such Authenticating
Agent, Note Registrar or co-Note Registrar.
Any corporation into which any Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, consolidation or conversion to which any Authenticating Agent
shall be a party, or any corporation succeeding to the corporate trust business
of any Authenticating Agent, shall be the successor of the Authenticating Agent
hereunder, if such successor corporation is otherwise eligible under this
Section, without the execution or filing of any further act on the part of the
parties hereto or the Authenticating Agent or such successor corporation.
Any Authenticating Agent may at any time resign by giving written notice
of resignation to the Issuer. The Issuer may at any time terminate the agency
of any Authenticating Agent by giving written notice of termination to such
Authenticating Agent and the Issuer. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time any
Authenticating Agent shall cease to be eligible under this Section, the Issuer
shall promptly appoint a successor Authenticating Agent, shall give written
notice of such appointment to the Indenture Trustee, and shall mail notice of
such appointment to all Holders of Notes.
The Indenture Trustee agrees, subject to Section 6.01(e), to pay to any
Authenticating Agent from time to time reasonable compensation for its services
and the Indenture Trustee shall be entitled to be reimbursed for such payments
pursuant to Section 8 of the Home Loan Sale Agreement. The provisions of
Sections 2.09, 6.04 and 6.05 shall be applicable to any Authenticating Agent.
Section 6.15. Review of Home Loan Files.
(a) Initial Certification. The Custodian shall, for the benefit of the
Noteholders and the Note Insurer, review each Home Loan File prior to the
Closing Date, and shall deliver to the Seller, the Note Insurer, the Indenture
Trustee, each Noteholder and the Servicer on the Closing Date an Initial
Certification in the form attached hereto as Exhibit E-1 to the effect that,
except as specifically noted on a schedule of exceptions thereto, it has
received for each Home Loan, the related original Mortgage Note, endorsed to
the Indenture Trustee (or, as provided in the Home Loan Sale Agreement, a lost
note affidavit for such Mortgage Note, in the form of Exhibit C to the Home
Loan Sale Agreement, together with a certified true and correct copy of such
Mortgage Note), and the related original Mortgage (or certified copy thereof if
so permitted under the Home Loan Sale Agreement).
(b) Interim Certification. The Custodian shall, for the benefit of the
Noteholders and the Note Insurer, review each Home Loan File following the
Closing Date to ascertain that all documents required to be included in the
Home Loan File are included, and shall deliver to the Seller, the Note Insurer,
the Indenture Trustee, the Depositor and the Servicer no later than 45 days
following the Closing Date an Interim Certification in the form attached hereto
as Exhibit E-2 to the effect that, except as specifically noted on a schedule
of exceptions thereto, with respect to each Home Loan (A) all documents
required to be contained in the Home Loan File are in its possession, (B) such
documents have been reviewed by it and appear regular on their face and relate
to such Home Loan, and (C) based on its examination and only as to the
foregoing documents, the following data elements: (a) the Seller's loan number,
(b) the Mortgagor's name, (c) the address (including the state and zip code),
(d) the original Principal Balance, (e) the Monthly Payment Amount, (f) the
Mortgage Interest Rate, and (g) the maturity date of the related Mortgage Note,
as set forth on the Home Loan Schedule accurately reflects information set
forth in the Home Loan File.
It is understood that before making the Interim Certification, the
Custodian shall examine the related Home Loan Documents to confirm that:
(i) each Mortgage Note and Mortgage bears an original signature or
signatures purporting to be that of the Person or Persons named as the
maker and Obligor/trustor or, if photocopies are permitted, that such
copies bear a reproduction of such signature or signatures;
(ii) neither the Mortgage nor any related assignment of mortgage
(including the Assignment of Mortgage), on the face or the reverse side(s)
thereof, contains evidence of any unsatisfied claims, liens, security
interests, encumbrances or restrictions on transfer;
(iii) the principal amount of the indebtedness secured by the related
Mortgage is identical to the original principal amount of the related
Mortgage Note;
(iv) the related Assignment of Mortgage is in the form required
pursuant to clause (e) of the definition of "Home Loan Documents" in
Exhibit B to the Home Loan Sale Agreement, and bears an original signature
of the Seller and any other necessary party (or signatures purporting to
be that of the Seller and any such other party) or, if photocopies are
permitted, that such copies bear a reproduction of such signature or
signatures;
(v) if intervening assignments of mortgage are included in the Home
Loan File, each such intervening assignment bears an original signature of
the related mortgagee and/or the assignee (and any other necessary party)
(or signatures purporting to be that of each such party) or, if
photocopies are permitted, that such copies bear a reproduction of such
signature or signatures.
(c) Final Certification. On or before one year following the Closing Date,
the Custodian shall for the benefit of the Noteholders deliver to the Seller,
the Note Insurer, the Indenture Trustee, each Noteholder and the Servicer a
Final Certification in the form attached hereto as Exhibit E-3 evidencing the
completeness of the Home Loan File for each Home Loan, except as specifically
noted on a schedule of exceptions thereto.
(d) Certification Generally. In giving each of the Initial Certification,
the Interim Certification and the Final Certification, the Custodian shall be
under no duty or obligation (1) to inspect, review or examine any such
documents, instruments, securities or other papers to determine that they or
the signatures thereto are genuine, enforceable, or appropriate for the
represented purpose or that they have actually been recorded or that they are
other than what they purport to be on their face or (2) to determine whether
any Home Loan File should include a flood insurance policy, any rider, addenda,
surety or guaranty agreement, power of attorney, buy down agreement, assumption
agreement, modification agreement, written assurance or substitution agreement.
(e) RECORDATION REPORT. No later than the fifth (5th) Business Day of each
third month, commencing in August 1999, the Custodian shall deliver to the
Servicer, the Indenture Trustee and the Note Insurer a recordation report dated
as of the first day of such month, identifying those Home Loans for which it
has not yet received (1) an original recorded Mortgage or a copy thereof
certified to be true and correct by the public recording office in possession
of such Mortgage and (2) any required intervening assignments of mortgage or a
copy thereof certified to be a true and correct copy by the public recording
office in possession of such assignment. Any recordation report furnished after
the date which is 90 days following the occurrence of an Assignment Event also
shall identify those Home Loans for which the Custodian has not yet received an
original recorded Assignment of Mortgage or a copy thereof certified to be a
true and correct copy by the public recording office in possession of such
original Assignment of Mortgage.
Section 6.16. Indenture Trustee Fees and Expenses.
The Indenture Trustee shall be entitled to receive the Indenture Trustee
Fee on each Payment Date as provided herein. The Indenture Trustee also shall
be entitled, pursuant to the provisions of Section 8 of the Home Loan Sale
Agreement, to (i) payment of or reimbursement for expenses, disbursements and
advances incurred or made by the Indenture Trustee in accordance with any of
the provisions of this Indenture (including but not limited to the reasonable
compensation and the expenses and disbursements of its counsel and of all
persons not regularly in its employ) as provided in the Home Loan Sale
Agreement, and (ii) indemnification against litigation losses, liability and
expenses, including reasonable attorney's fees, incurred, arising out of or in
connection with this Indenture and the Notes as provided in the Home Loan Sale
Agreement and any Opinions of Counsel requested by the Indenture Trustee.
ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
Section 7.01. Issuer to Furnish Indenture Trustee Names and Addresses of
Noteholders.
(a) The Issuer shall furnish or cause to be furnished to the Indenture
Trustee (i) semi-annually, not less than 45 days nor more than 60 days after
the Payment Date occurring closest to six months after the Closing Date and
each Payment Date occurring at six-month intervals thereafter, all information
in the possession or control of the Issuer, in such form as the Indenture
Trustee may reasonably require, as to names and addresses of the Holders of
Notes, and (ii) at such other times, as the Indenture Trustee may request in
writing, within 30 days after receipt by the Issuer of any such request, a list
of similar form and content as of a date not more than 10 days prior to the
time such list is furnished; provided, however, that so long as the Indenture
Trustee is the Note Registrar, no such list shall be required to be furnished.
(b) In addition to furnishing to the Indenture Trustee the Noteholder
lists, if any, required under subsection (a), the Issuer shall also furnish all
Noteholder lists, if any, required under Section 3.03 at the times required by
Section 3.03.
Section 7.02. Preservation of Information; Communications to Noteholders.
(a) The Indenture Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of the Holders of Notes
contained in the most recent list, if any, furnished to the Indenture Trustee
as provided in Section 7.01 and the names and addresses of the Holders of Notes
received by the Indenture Trustee in its capacity as Note Registrar. The
Indenture Trustee may destroy any list furnished to it as provided in Section
7.01 upon receipt of a new list so furnished.
(b) Noteholders may communicate with other Noteholders and the Note
Insurer with respect to their rights under this Indenture or under the Notes.
(c) The Issuer, the Indenture Trustee and the Note Registrar shall have
the protection of TIA Section 312(c).
Section 7.03. Reports by Indenture Trustee.
(a) Within 60 days after December 31 of each year (the "Reporting Date"),
commencing with the year after the issuance of the Notes, (i) the Indenture
Trustee shall, if required by TIA Section 313(a), mail to all Holders and to
the Note Insurer a brief report dated as of such Reporting Date that complies
with TIA Section 313(a); (ii) the Indenture Trustee shall, to the extent not
set forth in the Payment Date Statement pursuant to Section 2.08(d), also mail
to the Noteholders with respect to which the Indenture Trustee has made
advances, and to the Note Insurer, any reports with respect to such advances
that are required by TIA Section 313(b)(2); and (iii) the Indenture Trustee
shall also mail to the Noteholders and the Note Insurer any reports required by
TIA Section 313(b)(1). For purposes of the information required to be included
in any such reports pursuant to TIA Sections 313(a)(2), 313(b)(1) (if
applicable), or 313(b)(2), the principal amount of indenture securities
outstanding on the date as of which such information is provided shall be the
balance of the then Outstanding Notes covered by the report.
(b) A copy of each report required under this Section 7.03 shall, at the
time of such transmission to the Noteholders and the Note Insurer be filed by
the Indenture Trustee with the Commission and with each securities exchange
upon which the Notes are listed. The Issuer will notify the Indenture Trustee
when the Notes are listed on any securities exchange.
Section 7.04. Reports by Issuer.
The Issuer (a) shall deliver to the Indenture Trustee and to the Note
Insurer within 15 days after the Issuer is required to file the same with the
Commission copies of the annual reports and of the information, documents and
other reports (or copies of such portions of any of the foregoing as the
Commission may by rules and regulations prescribe) that the Issuer is required
to file with the Commission pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, and (b) shall also comply with the other
provisions of TIA Section 314(a).
ARTICLE VIII
ACCOUNTS, PAYMENTS OF INTEREST AND PRINCIPAL, AND RELEASES
Section 8.01. Collection of Moneys.
Except as otherwise expressly provided herein, the Indenture Trustee may
demand payment or delivery of, and shall receive and collect, directly and
without intervention or assistance of any fiscal agent or other intermediary,
all money and other property payable to or receivable by the Indenture Trustee
pursuant to this Indenture. The Indenture Trustee shall hold all such money and
property received by it as part of the Trust Estate and shall apply it as
provided in this Indenture.
If the Indenture Trustee shall not have received the Remittable Funds by
close of business on any related Payment Date, the Indenture Trustee shall,
unless the Issuer or the Servicer shall have made provisions satisfactory to
the Indenture Trustee for delivery to the Indenture Trustee of an amount equal
to such Remittable Funds, deliver a notice to the Master Servicer, with a copy
to the Note Insurer, the Issuer and the Servicer, of their failure to remit
such Remittable Funds and that such failure, if not remedied by the close of
business on the fifth day following the related Payment Date, shall constitute
an Event of Default under this Indenture. Notwithstanding any other provision
hereof, the Indenture Trustee shall deliver to the Issuer or the Servicer, or
their respective designee or assignee, any Remittable Funds received with
respect to a Home Loan after the related Payment Date to the extent that the
Issuer or the Servicer, respectively, previously made payment or provision for
payment with respect to such Remittable Funds in accordance with this Section
8.01, and any such Remittable Funds shall not be deemed part of the Trust
Estate.
Except as otherwise expressly provided in this Indenture and the Servicing
Agreement, if, following delivery by the Indenture Trustee of the notice
described above, the Issuer or the Servicer shall fail to remit the Remittable
Funds on any Payment Date, the Indenture Trustee shall take such actions, if
any, as are required of the Indenture Trustee under Article VI of the Servicing
Agreement.
In addition, if a Master Servicer Default occurs under the Servicing
Agreement, the Indenture Trustee may, and upon the request of the Note Insurer
or, with the consent of the Note Insurer (unless a Note Insurer Default then
exists), the Holders of Notes representing more than 50% of the Note Balance of
the Outstanding Notes shall, take such action as may be appropriate to enforce
performance by the Master Servicer of its obligations under the Servicing
Agreement, including the institution and prosecution of appropriate
Proceedings. If at the time a Master Servicer Default occurs there also exists
a Note Insurer Default, such Noteholders may take such action directly in the
event that the Indenture Trustee and the Master Servicer are one and the same
Person. Any such action shall be without prejudice to any right to claim a
Default or Event of Default under this Indenture and to proceed thereafter as
provided in Article V.
Section 8.02. Note Account.
(a) The Issuer hereby directs the Indenture Trustee to establish one or
more accounts that shall collectively be the "Note Account" on or before the
Closing Date. The Indenture Trustee shall promptly deposit in the Note Account
(i) all Remittable Funds received by it from the Servicer pursuant to the
Servicing Agreement, (ii) any other funds from any deposits to be made by the
Servicer pursuant to the Servicing Agreement, (iii) any amount required to be
deposited in the Note Account pursuant to Section 8.01, (iv) all amounts
received pursuant to Section 8.03, and (v) all other amounts received for
deposit in the Note Account, including the payment of any Purchase Price
received by the Indenture Trustee. All amounts that are deposited from time to
time in the Note Account are subject to withdrawal by the Indenture Trustee for
the purposes set forth in subsections (c) and (d) of this Section 8.02. All
funds withdrawn from the Note Account pursuant to subsection (c) of this
Section 8.02 for the purpose of making payments to the Holders of Notes shall
be applied in accordance with Section 3.03.
(b) So long as no Default or Event of Default shall have occurred and be
continuing, amounts held in the Note Account shall be invested at the direction
of the Transferor in Permitted Investments, which Permitted Investments shall
mature no later than the Business Day preceding the immediately following
Payment Date or, if such Permitted Investments are an obligation of the
Indenture Trustee or are money market funds for which the Indenture Trustee or
any Affiliate is the manager or the advisor, such Permitted Investments shall
mature no later than the immediately following Payment Date. All income or
other gains, if any, from investment of moneys deposited in the Note Account
shall be for the benefit of the Transferor and on each Payment Date, any such
amounts may be released from the Note Account and paid to the Transferor. Any
loss resulting from such investment of moneys deposited in the Note Account
shall be reimbursed immediately as incurred to the Note Account by the
Transferor. Subject to Section 6.01 and unless the Indenture Trustee is the
obligor on any Permitted Investment, the Indenture Trustee shall not in any way
be held liable by reason of any insufficiency in the Note Account.
(c) On each Payment Date, the Indenture Trustee shall withdraw amounts on
deposit in the Note Account and pay on a pari passu basis the Note Insurer
Premium, the Indenture Trustee Fee, the Custodial Fee and the Master Servicing
Fee. After payment of such amounts, unless the Notes have been declared due and
payable pursuant to Section 5.02 and moneys collected by the Indenture Trustee
are being applied in accordance with Section 5.07, Available Funds on deposit
in the Note Account on any Payment Date or Redemption Date shall be withdrawn
from the Note Account, in the amounts required, for application on such Payment
Date as follows:
first, to the payment to the Note Insurer, as subrogee to the rights of
the Noteholders, the aggregate amount necessary to reimburse the Note
Insurer for any unreimbursed Insured Payments paid by the Note Insurer on
prior Payment Dates, together with interest thereon at the "Late Payment
Rate" specified in the Insurance Agreement from the date such Insured
Payments were paid by the Note Insurer to such Payment Date and the amount
of any unpaid Note Insurer Premium for any prior Payment Date together
with interest thereon at the "Late Payment Rate" specified in the
Insurance Agreement from the date such amounts were due; provided,
however, that the Note Insurer shall be paid such amounts only after the
Noteholders have received the Deficiency Amount with respect to such
Payment Date;
second, to the Noteholders the Note Interest for such Payment Date;
third, to the Noteholders, the amount of Monthly Principal for such
Payment Date in reduction of the Note Balance until the Note Balance
reduced to zero;
fourth, to the Noteholders in reduction of the Note Balance, the amount,
if any, equal to the lesser of (A) the Excess Cash with respect to such
Payment Date, and (B) the lesser of (1) the amount necessary for the
Overcollateralization Amount to equal the Required Overcollateralization
Amount on such Payment Date (after giving effect to application of Monthly
Principal for such Payment Date) and (2) the amount necessary to reduce
the Note Balance to zero (the "Excess Cash Payment");
fifth, to the Note Insurer, any amounts due and owing under the Insurance
Agreement that are not described in clause "first" above;
sixth, to the Servicer any unreimbursed Servicing Advances not recoverable
by the Servicer on a priority basis pursuant to the Servicing Agreement
(as reported in writing by the Servicer to the Indenture Trustee) and 20%
of any collections in respect of any Liquidated Home Loan received
subsequent to the date that such Home Loan became a Liquidated Home Loan,
to the extent of any Realized Loss on such Home Loan.
(d) On or after each Payment Date, so long as the Indenture Trustee shall
have prepared a Payment Date Statement in respect of such Payment Date and (1)
shall have made, or, in accordance with Section 3.03, set aside from amounts in
the Note Account an amount sufficient to make, the payments required to be made
as set forth in Section 8.02(c) as indicated in such Payment Date Statement,
and (2) shall have set aside any amounts that have been deposited in the Note
Account prior to such time that represent amounts that are to be used to make
payments on the Notes on the next succeeding Payment Date, the cash balance, if
any, then remaining in the Note Account shall be withdrawn from the Note
Account by the Indenture Trustee and, so long as no Default or Event of Default
shall have occurred and be continuing, shall be released from the lien of this
Indenture and paid by the Indenture Trustee to the Certificateholders.
(e) Any payments made by the Indenture Trustee to the Issuer pursuant to
this Section 8.02 shall be remitted to the Certificate Distribution Account
established and maintained pursuant to the Trust Agreement.
Section 8.03. Claims against the MBIA Insurance Policy.
(a) (i) The Indenture Trustee shall (A) receive as attorney-in-fact of
each Noteholder any Insured Payment from the Note Insurer or on behalf of
the Note Insurer and (B) disburse such Insured Payment to such Noteholders
in accordance with Section 8.02(c) hereof for the benefit of the related
Noteholders. Any Insured Payment received by the Indenture Trustee shall
be held by the Indenture Trustee uninvested. Insured Payments disbursed by
the Indenture Trustee from proceeds of the MBIA Insurance Policy shall not
be considered payment by the Issuer with respect to the Notes, nor shall
such payments discharge the obligation of the Issuer with respect to such
Notes, and the Note Insurer shall become the owner of such unpaid amounts
due from the Issuer in respect of such Insured Payments as the deemed
assignee and subrogee of such Noteholders and shall be entitled to receive
the reimbursement in respect thereof. The Indenture Trustee hereby agrees
on behalf of each Noteholder for the benefit of the Note Insurer that it
recognizes that to the extent the Note Insurer makes Insured Payments for
the benefit of the Noteholders, the Note Insurer will be entitled to
receive the related reimbursement in accordance with the priority of
distributions referenced in Section 8.02(c) hereof.
(ii) The Indenture Trustee shall promptly notify the Note Insurer of
any proceeding or the institution of any action, of which a Responsible
Officer of the Indenture Trustee has actual knowledge, constituting a
Preference Amount in respect of any payment made on the Notes. Each
Noteholder that pays any amount pursuant to a Preference Amount
theretofore received by such Noteholder on account of a Note will be
entitled to receive reimbursement for such amounts from the Note Insurer
in accordance with the terms of the MBIA Insurance Policy. Each
Noteholder, by its purchase of Notes, and the Indenture Trustee hereby
agree that, the Note Insurer (so long as no MBIA Payment Default exists)
may at any time during the continuation of any proceeding relating to a
Preference Amount direct all matters relating to such Preference Amount,
including, without limitation, (i) the direction of any appeal of any
order relating to such Preference Amount and (ii) the posting of any
surety, supersedeas or performance Note pending any such appeal. In
addition and without limitation of the foregoing, the Note Insurer shall
be subrogated to the rights of the Indenture Trustee and each Noteholder
in the conduct of any such Preference Amount, including, without
limitation, all rights of any party to any adversary proceeding action
with respect to any court order issued in connection with any such
Preference Amount.
(iii) Each Noteholder, by its purchase of Notes, and the Indenture
Trustee hereby agree that, unless an MBIA Payment Default exists and is
continuing, the Note Insurer shall have the right to direct all matters
relating to the Notes in any Proceeding in a bankruptcy of the Issuer,
including without limitation any Proceeding relating to a Preference
Amount and the posting of any surety or Note pending any such appeal.
(iv) With respect to a Preference Amount, the Indenture Trustee shall
be responsible for procuring and delivering the items set forth in the
MBIA Insurance Policy to the Note Insurer.
(b) Unless a Note Insurer Default exists and is continuing, the Indenture
Trustee shall cooperate in all respects with any reasonable request by the Note
Insurer for action to preserve or enforce the Note Insurer's rights or
interests hereunder without limiting the rights or affecting the interests of
the Noteholders as otherwise set forth herein.
(c) The Indenture Trustee shall surrender the MBIA Insurance Policy to the
Note Insurer for cancellation upon the expiration of the term of the MBIA
Insurance Policy as provided in the MBIA Insurance Policy.
(d) With respect to any Payment Date on which an Insured Payment is
required to be made, the Indenture Trustee shall deliver to the Note Insurer a
Notice of Claim (in the manner specified in the MBIA Insurance Policy) by no
later than noon on the third Business Day prior to such Payment Date in the
manner set forth in the MBIA Insurance Policy.
Section 8.04. General Provisions Regarding the Note Account and Home
Loans.
(a) The Note Account shall relate solely to the Notes and to the Home
Loans, Permitted Investments and other property securing the Notes. Funds and
other property in the Note Account shall not be commingled with any other
moneys or property of the Issuer or any Affiliate thereof. Notwithstanding the
foregoing, the Indenture Trustee may hold any funds or other property received
or held by it as part of the Note Account in collective accounts maintained by
it in the normal course of its business and containing funds or property held
by it for other Persons (which may include the Issuer or an Affiliate),
provided that such accounts are under the sole control of the Indenture Trustee
and the Indenture Trustee maintains adequate records indicating the ownership
of all such funds or property and the portions thereof held for credit to the
Note Account.
(b) If any amounts are needed for payment from the Note Account and
sufficient uninvested funds are not available therein to make such payment, the
Indenture Trustee shall cause to be sold or otherwise converted to cash a
sufficient amount of the investments in the Note Account.
(c) The Indenture Trustee shall, at all times while any Notes are
Outstanding, maintain in its possession, or in the possession of an agent whose
actions with respect to such items are under the sole control of the Indenture
Trustee, all certificates or other instruments, if any, evidencing any
investment of funds in the Note Account. The Indenture Trustee shall relinquish
possession of such items, or direct its agent to do so, only for purposes of
collecting the final payment receivable on such investment or certificate or,
in connection with the sale of any investment held in the Note Account, against
delivery of the amount receivable in connection with any sale.
(d) The Indenture Trustee shall not invest any part of the Trust Estate in
Permitted Investments that constitute uncertificated securities (as defined in
Section 8-102 of the Uniform Commercial Code, as enacted in the relevant
jurisdiction) or in any other book-entry securities unless it has received an
Opinion of Counsel reasonably satisfactory in form and substance to the
Indenture Trustee setting forth, with respect to each type of security for
which authority to invest is being sought, the procedures that must be followed
to maintain the lien and security interest created by this Indenture with
respect to the Trust Estate.
Section 8.05. Releases of Defective Home Loans.
Upon notice or discovery that any of the representations or warranties of
the Seller set forth in Section 4 of the Home Loan Sale Agreement was
materially incorrect or otherwise misleading with respect to any Home Loan as
of the time made, the Indenture Trustee shall direct the Seller to either (i)
within 60 days after the Seller receives actual knowledge of such
incorrectness, eliminate or otherwise cure the circumstance or condition in
respect of which such representation or warranty was incorrect as of the time
made, or (ii) withdraw such Defective Home Loan from the lien of this Indenture
following the expiration of such 60-day period by depositing to the Note
Account an amount equal to the Purchase Price for such Home Loan.
Notwithstanding the foregoing, the Seller shall be required pursuant to Section
7(b) of the Home Loan Sale Agreement to promptly purchase and withdraw from the
lien of this Indenture, without the opportunity for cure, any Home Loan as to
which the Final Certification notes as an exception the absence of a duly
executed Assignment of Mortgage unless such repurchase is waived by the Note
Insurer. Upon any purchase of a Defective Home Loan by the Seller in accordance
with Section 7 of the Home Loan Sale Agreement, the Indenture Trustee shall
deliver or cause the Custodian to deliver the Home Loan File relating to such
Defective Home Loan to the Seller, and the Issuer and the Indenture Trustee
shall execute such instruments of transfer furnished to them by the Servicer as
are necessary to convey title to such Defective Home Loan to the Seller from
the lien of this Indenture.
Section 8.06. Reports by Indenture Trustee to Noteholders; Access to
Certain Information.
On each Payment Date, the Indenture Trustee shall deliver the Payment Date
Statement to Noteholders of record as of the related Record Date (including the
Clearing Agency, if any).
The Indenture Trustee shall make available at its Corporate Trust Office,
during normal business hours, for review by any Noteholder or any person
identified to the Indenture Trustee as a prospective Noteholder, originals or
copies of the following items: (a) the Indenture and any amendments thereto,
(b) all Payment Date Statements delivered to the Issuer since the Closing Date,
(c) any Officers' Certificates delivered to the Indenture Trustee since the
Closing Date as described in the Indenture and (d) any Accountants' reports
delivered to the Indenture Trustee since the Closing Date as required under the
Servicing Agreement. Copies of any and all of the foregoing items will be
available from the Indenture Trustee upon request; however, the Indenture
Trustee will be permitted to require payment of a sum sufficient to cover the
reasonable costs and expenses of providing such copies and shall not be
required to provide such copies without reasonable assurances that such sum
will be paid.
Section 8.07. Trust Estate Home Loan Files.
(a) The Custodian shall release Home Loan Files or portions thereof to the
Servicer on the terms specified in the Servicing Agreement and in Section 8.09
hereof.
(b) The Custodian shall, at such time as there are no Notes Outstanding,
release all of the Trust Estate to the Issuer (other than any cash held for the
payment of the Notes pursuant to Section 3.03 or 4.02).
Section 8.08. Amendment to Servicing Agreement.
The Indenture Trustee may, without the consent of any Holder, enter into
or consent to any amendment or supplement to the Servicing Agreement for the
purpose of increasing the obligations or duties of any party other than the
Indenture Trustee or the Holders of the Notes. The Indenture Trustee may, in
its discretion, decline to enter into or consent to any such supplement or
amendment: (i) unless the Indenture Trustee receives an Opinion of Counsel that
the position of the Holders would not be materially adversely affected and
written confirmation from the Rating Agencies that the then-current implied
ratings on the Notes (without taking into account the MBIA Insurance Policy)
would not be adversely affected by such supplement or amendment or (ii) if its
own rights, duties or immunities would be adversely affected. The Indenture
Trustee will send a copy of each such amendment to each Noteholder by telecopy
promptly after the adoption thereof.
Section 8.09. Delivery of the Home Loan Files Pursuant to Servicing
Agreement.
As is appropriate for the servicing or foreclosure of any Home Loan, the
Custodian shall deliver to the Servicer of such Mortgage the Home Loan Files
for such Home Loan upon receipt by the Custodian on or prior to the date such
release is to be made of:
(a) such Officers' Certificates, if any, as are required by the Servicing
Agreement; and
(b) a "Request for Release" in the form prescribed by the Servicing
Agreement, executed by the Servicer, providing that the Servicer will hold or
retain the Home Loan Files in trust for the benefit of the Indenture Trustee,
the Note Insurer and the Holders of Notes.
Notwithstanding the foregoing, the Custodian shall not release any Home
Loan File to the Servicer if, following such release, the Home Loan Files for
more than 10% of the Home Loans then included in the Trust Estate would be
released to the Servicer and not returned.
Section 8.10. Servicer as Agent.
In order to facilitate the servicing of the Home Loans by the Servicer of
such Home Loans, the Servicer of the Home Loans has been appointed by the
Issuer to retain, in accordance with the provisions of the Servicing Agreement
and this Indenture, all Remittable Funds on such Home Loans prior to their
deposit into the Note Account on or prior to the related Deposit Date.
Section 8.11. Termination of Master Servicer.
Upon the occurrence and during the continuance of a Master Servicer
Default (as defined in the Servicing Agreement) specified in Section 3.05 of
the Servicing Agreement, the Indenture Trustee may, with the consent of the
Note Insurer, and shall, upon the direction of the Note Insurer (or as
otherwise provided in the Servicing Agreement), terminate the Master Servicer
as provided in Section 3.05 of the Servicing Agreement. If the Indenture
Trustee terminates the Master Servicer, the Indenture Trustee shall pursuant to
Section 3.05 of the Servicing Agreement assume the duties of the Master
Servicer or appoint a successor Master Servicer acceptable to the Issuer, the
Note Insurer and the Rating Agencies and meeting the requirements set forth in
the Servicing Agreement. Notwithstanding the foregoing, if upon the occurrence
of a Master Servicer Default the Indenture Trustee and the Master Servicer are
one and the same Person, then the Note Insurer shall appoint a successor Master
Servicer that satisfies the foregoing requirements unless at such time a Note
Insurer Default exists, in which event such successor Master Servicer shall be
appointed by the percentage of Noteholders authorized to act upon the
occurrence of an Event of Default hereunder.
Section 8.12. Opinion of Counsel.
The Indenture Trustee shall be entitled to receive at least five Business
Days' notice of any action to be taken pursuant to Section 8.08, accompanied by
copies of any instruments involved, and the Indenture Trustee shall be entitled
to receive an Opinion of Counsel, in form and substance reasonably satisfactory
to the Indenture Trustee, stating the legal effect of any such action,
outlining the steps required to complete the same, and concluding that all
conditions precedent to the taking of such action have been complied with.
Counsel rendering any such opinion may rely, without independent investigation,
on the accuracy and validity of any certificate or other instrument delivered
to the Indenture Trustee in connection with any such action.
Section 8.13. Appointment of Custodians.
The Indenture Trustee shall, with the consent of the Issuer and the Note
Insurer, appoint one or more Custodians to hold all or a portion of the Home
Loan Files as bailee of the Indenture Trustee on behalf of the Holders of the
Notes and the Note Insurer. Each Custodian shall (i) be a financial institution
supervised and regulated by the Comptroller of the Currency, the Board of
Governors of the Federal Reserve System, the Office of Thrift Supervision, or
the FDIC; (ii) have combined capital and surplus of at least $10,000,000; (iii)
be equipped with secure, fireproof storage facilities, and have adequate
controls on access to assure the safety and security of the Home Loan Files;
(iv) utilize in its custodial function employees who are knowledgeable in the
handling of mortgage documents and the functions of a mortgage document
custodian; (v) shall not be an Affiliate of the Issuer, the Depositor, the
Seller or the Servicer; and (vi) satisfy any other reasonable requirements that
the Indenture Trustee may from time to time deem necessary to protect the
interests of Noteholders and the Note Insurer in the Home Loan Files. Each
Custodian shall be subject to the same obligations and standard of care as
would be imposed on the Indenture Trustee hereunder assuming the Indenture
Trustee retained the Home Loan Files directly. Norwest Bank Minnesota, National
Association has been appointed as the initial Custodian under the Custodial
Agreement.
Section 8.14. Rights of the Note Insurer to Exercise Rights of
Noteholders.
By accepting its Notes, each Noteholder agrees that unless a Note Insurer
Default exists, the Note Insurer shall have the right to exercise all rights of
the Noteholders under this Agreement without any further consent of the
Noteholders (except those rights requiring consent of all such holders under
Section 9.02 hereof) including, without limitation:
(i) the right to require the Master Servicer to enforce the
Servicer's obligations under the Servicing Agreement;
(ii) the right to require the Seller to repurchase Defective Home
Loans pursuant to Section 8.05;
(iii) the right to direct the actions of the Indenture Trustee during
the continuance of an Event of Default; and
(iv) the right to vote on proposed amendments to this Indenture.
In addition, each Noteholder agrees that, unless a Note Insurer Default exists,
the rights specifically set forth above may be exercised by the Noteholders
only with the prior written consent of the Note Insurer.
Except as otherwise provided in Section 8.03 and notwithstanding any
provision in this Indenture to the contrary, so long as a Note Insurer Default
has occurred and is continuing, the Note Insurer shall have no rights to
exercise any voting rights of the Noteholders hereunder, nor shall the
Indenture Trustee be required to obtain the consent of, or act at the direction
of, the Note Insurer.
Section 8.15. Trust Estate and Accounts Held for Benefit of the Note
Insurer.
The Indenture Trustee shall hold the Trust Estate and the Home Loan Files
for the benefit of the Noteholders and the Note Insurer and all references in
this Agreement and in the Notes to the benefit of Holders of the Notes shall be
deemed to include the Note Insurer (provided there does not exist a Note
Insurer Default).
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.
ARTICLE IX
SUPPLEMENTAL INDENTURES
Section 9.01. Supplemental Indentures Without Consent of Noteholders.
With the consent of the Note Insurer and without the consent of the
Holders of any Notes, the Issuer and the Indenture Trustee, at any time and
from time to time, may enter into one or more indentures supplemental hereto,
in form satisfactory to the Indenture Trustee, for any of the following
purposes:
(a) to correct or amplify the description of any property at any time
subject to the lien of this Indenture, or better to assure, convey and confirm
unto the Indenture Trustee any property subject or required to be subjected to
the lien of this Indenture, or to subject to the lien of this Indenture
additional property;
(b) to add to the conditions, limitations and restrictions on the
authorized amount, terms and purposes of the issuance, authentication and
delivery of any Notes, as herein set forth, additional conditions, limitations
and restrictions thereafter to be observed;
(c) to evidence the succession of another Person to the Issuer to the
extent permitted herein, and the assumption by any such successor of the
covenants of the Issuer herein and in the Notes contained;
(d) to add to the covenants of the Issuer, for the benefit of the Holders
of all Notes and the Note Insurer or to surrender any right or power herein
conferred upon the Issuer;
(e) to cure any ambiguity, to correct or supplement any provision herein
that may be defective or inconsistent with any other provision herein, or to
amend any other provisions with respect to matters or questions arising under
this Indenture, which shall not be inconsistent with the provisions of this
Indenture, provided that such action shall not adversely affect in any material
respect the interests of the Holders of the Notes; and provided, further, that
the amendment shall not be deemed to adversely affect in any material respect
the interests of the Holders of the Notes and the Note Insurer if the Person
requesting the amendment obtains an Opinion of Counsel to such effect; or
(f) to modify, eliminate or add to the provisions of this Indenture to
such extent as shall be necessary to effect the qualification of this Indenture
under the TIA or under any similar federal statute hereafter enacted, and to
add to this Indenture such other provisions as may be expressly required by the
TIA.
Section 9.02. Supplemental Indentures With Consent of Noteholders.
With the consent of the Note Insurer and with the consent of Holders of
Notes representing not less than a majority of the Note Balance of all
Outstanding Notes by Act of said Holders delivered to the Issuer and the
Indenture Trustee, the Issuer and the Indenture Trustee may enter into an
indenture or indentures supplemental hereto for the purpose of adding any
provisions to, or changing in any manner or eliminating any of the provisions
of, this Indenture or of modifying in any manner the rights of the Holders of
the Notes under this Indenture; provided, however, that no such supplemental
indenture shall, without the consent of the Holder of each Outstanding Note
affected thereby:
(a) change the date of any Payment Date or the Stated Maturity Date of the
Notes or reduce the principal amount thereof, the Note Interest Rate thereon or
the Redemption Price with respect thereto, change the earliest date on which
any Note may be redeemed at the option of the Issuer, change any place of
payment where, or the coin or currency in which, any Note or any interest
thereon is payable, or impair the right to institute suit for the enforcement
of the payment of any installment of interest due on any Note on or after the
Stated Maturity Date thereof or for the enforcement of the payment of the
entire remaining unpaid principal amount of any Note on or after the Stated
Maturity Date (or, in the case of redemption, on or after the applicable
Redemption Date);
(b) reduce the percentage of the Note Balance of the Outstanding Notes,
the consent of the Holders of which is required for any such supplemental
indenture, or the consent of the Holders of which is required for any waiver of
compliance with provisions of this Indenture or Defaults hereunder and their
consequences provided for in this Indenture;
(c) modify any of the provisions of this Section, Section 5.13 or Section
5.17(b), except to increase any percentage specified therein or to provide that
certain other provisions of this Indenture cannot be modified or waived without
the consent of the Holder of each Outstanding Note affected thereby;
(d) modify or alter the provisions of the proviso to the definition of the
term "Outstanding";
(e) permit the creation of any lien other than the lien of this Indenture
with respect to any part of the Trust Estate (except as otherwise permitted or
contemplated herein) or terminate the lien of this Indenture on any property at
any time subject hereto or deprive the Holder of any Note of the security
afforded by the lien of this Indenture;
(f) modify any of the provisions of this Indenture in such manner as to
affect the calculation of the Deficiency Amount for any Payment Date (including
the calculation of any of the individual components of such Deficiency Amount)
or to affect rights of the Holders of the Notes to the benefits of any
provisions for the mandatory redemption of Notes contained herein; or
(g) incur any indebtedness, other than the Notes, that would cause the
Issuer or the Trust Estate to be treated as a "taxable mortgage pool" within
the meaning of Code Section 7701(i).
The Indenture Trustee may in its discretion determine whether or not any
Notes would be affected by any supplemental indenture and any such
determination shall be conclusive upon the Holders of all Notes, whether
theretofore or thereafter authenticated and delivered hereunder. The Indenture
Trustee shall not be liable for any such determination made in good faith.
It shall not be necessary for any Act of Noteholders under this Section to
approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such Act shall approve the substance thereof.
Promptly after the execution by the Issuer and the Indenture Trustee of
any supplemental indenture pursuant to this Section, the Indenture Trustee
shall mail such supplemental indenture and a notice setting forth in general
terms the substance of such supplemental indenture to the Holders of the Notes
to which such supplemental indenture relates. Any failure of the Indenture
Trustee to mail such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such supplemental indenture.
Section 9.03. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby
of the trusts created by this Indenture, the Indenture Trustee shall be
entitled to receive, and (subject to Section 6.01) shall be fully protected in
relying upon, an Opinion of Counsel stating that the execution of such
supplemental indenture is authorized or permitted by this Indenture. The
Indenture Trustee may, but shall not be obligated to, enter into any such
supplemental indenture that affects the Indenture Trustee's own rights, duties
or immunities under this Indenture or otherwise. The Issuer shall cause
executed copies of any supplemental indentures to be delivered to the Rating
Agencies.
Section 9.04. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article, this
Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every
Holder of Notes to which such supplemental indenture relates that have
theretofore been or thereafter are authenticated and delivered hereunder shall
be bound thereby.
Section 9.05. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the TIA as then in effect so long as this
Indenture shall then be qualified under the TIA.
Section 9.06. Reference in Notes to Supplemental Indentures.
Notes authenticated and delivered after the execution of any supplemental
indenture pursuant to this Article may, and if required by the Indenture
Trustee shall, bear a notation in form approved by the Indenture Trustee as to
any matter provided for in such supplemental indenture. If the Issuer shall so
determine, new Notes so modified as to conform, in the opinion of Indenture
Trustee and the Issuer, to any such supplemental indenture may be prepared and
executed by the Issuer and authenticated and delivered by the Indenture Trustee
in exchange for Outstanding Notes.
Section 9.07. Amendments to Governing Documents.
The Indenture Trustee shall, upon Issuer Request, consent to any proposed
amendment to the Issuer's governing documents, or an amendment to or waiver of
any provision of any other document relating to the Issuer's governing
documents, such consent to be given without the necessity of obtaining the
consent of the Holders of any Notes upon receipt by the Indenture Trustee of:
(i) an Officers' Certificate, to which such proposed amendment or
waiver shall be attached, stating that such attached copy is a true copy
of the proposed amendment or waiver and that all conditions precedent to
such consent specified in this Section 9.07 have been satisfied; and
(ii) written confirmation from the Rating Agencies that the
implementation of the proposed amendment or waiver will not adversely
affect their implied ratings of the Notes (without taking into account the
MBIA Insurance Policy).
Notwithstanding the foregoing, the Indenture Trustee may decline to
consent to a proposed waiver or amendment that adversely affects its own
rights, duties or immunities under this Indenture or otherwise.
Nothing in this Section 9.07 shall be construed to require that any Person
obtain the consent of the Indenture Trustee to any amendment or waiver or any
provision of any document where the making of such amendment or the giving of
such waiver without obtaining the consent of the Indenture Trustee is not
prohibited by this Indenture or by the terms of the document that is the
subject of the proposed amendment or waiver.
ARTICLE X
REDEMPTION OF NOTES
Section 10.01. Redemption.
(a) All the Notes may be redeemed in whole, but not in part, on the
Redemption Date at the Redemption Price at the option of the holders of a
majority of the percentage interests of the Certificates, or at the option of
the Note Insurer, if such Certificateholders shall not have exercised their
option to redeem the Notes on such Redemption Date, provided, however, that
funds in an amount equal to the Redemption Price, plus any amounts owed to the
Note Insurer under the Insurance Agreement, any unreimbursed Servicing Advances
and any unreimbursed amounts due and owing to the Indenture Trustee hereunder,
must have been deposited with the Indenture Trustee prior to the Indenture
Trustee's giving notice of such redemption pursuant to Section 10.02 or the
Issuer shall have complied with the requirements for satisfaction and discharge
of the Notes specified in Section 4.01. Notice of the election to redeem the
Notes shall be furnished to the Indenture Trustee and each Noteholder not later
than thirty (30) days prior to the Payment Date selected for such redemption,
whereupon all such Notes shall be due and payable on such Payment Date upon the
furnishing of a notice pursuant to Section 10.02 to each Holder of such Notes
and the Note Insurer.
(b) Upon receipt of the notice from the party exercising its election to
redeem the Notes pursuant to Section 10.01(a), the Indenture Trustee shall
prepare and deliver to the Issuer, no later than the related Redemption Date, a
Payment Date Statement stating therein that it has determined that the
conditions to redemption at the option of the Issuer have been satisfied and
setting forth the amount, if any, to be withdrawn from the Note Account and
paid to the Servicer as reimbursement for Servicing Advances and such other
information as may be required to accomplish such redemption.
(c) The Notes may be redeemed in whole, but not in part, on a Payment Date
specified by the Issuer at any time upon a determination by the Issuer, based
on an Opinion of Counsel addressed to the Issuer, the Indenture Trustee, the
Note Insurer and the Noteholders, that a substantial risk exists that the Notes
will not be treated for federal income tax purposes as evidences of
indebtedness.
Section 10.02. Form of Redemption Notice.
Notice of redemption shall be given by the Indenture Trustee in the name
of and at the expense of the Issuer by first class mail, postage prepaid,
mailed not less than ten days prior to the Redemption Date to each Holder of
Notes to be redeemed (with a copy sent to each Noteholder by telecopy), such
Holders being determined as of the Record Date for such Payment Date, and to
the Note Insurer. All notices of redemption shall state:
(a) the Redemption Date;
(b) the Redemption Price at which such Notes will be redeemed; and
(c) the fact of payment in full on such Notes, the place where such Notes
are to be surrendered for payment of the Redemption Price (which shall be the
office or agency of the Issuer to be maintained as provided in Section 3.02),
and that no interest shall accrue on such Note for any period after the date
fixed for redemption.
Failure to give notice of redemption, or any defect therein, to any Holder of
any Note selected for redemption shall not impair or affect the validity of the
redemption of any other Note.
Section 10.03. Notes Payable on Optional Redemption.
Notice of redemption having been given as provided in Section 10.02, the
Notes to be redeemed shall, on the applicable Redemption Date, become due and
payable at the Redemption Price and (unless the Issuer shall default in the
payment of the Redemption Price) no interest shall accrue on such Redemption
Price for any period after such Redemption Date; provided, however, that if
such Redemption Price is not paid on the Redemption Date, the Note Balance
shall, until paid, bear interest from the Redemption Date at the Note Interest
Rate.
ARTICLE XI
NOTE ADMINISTRATION
Section 11.01. Powers and Duties of the Note Administrator.
(a) In addition to the other obligations of the Note Administrator set
forth in this Indenture, the Note Administrator shall perform, on behalf of the
Trust acting through the Owner Trustee, the duties of the Issuer specified
below, and shall consult with the Owner Trustee regarding such duties.
(i) The monitoring of and compliance with the Trust's obligations
under Section 3.12 (but only to the extent of the Note Administrator's
obligations under clause (ii) below);
(ii) The preparation and delivery of the income tax returns, tax
elections, financial statements, and such annual or other reports of the
Trust pursuant to Section 2.11(k) of the Trust Agreement; provided,
however, that the Note Administrator shall not be required to compute the
Trust's gross income except to the extent it can do so without
unreasonable effort or expense based upon income statements furnished to
it; and provided, further, that the Note Administrator shall not be
required to prepare and file partnership tax returns on behalf of the
Issuer unless it receives an opinion of counsel (which shall not be at the
Note Administrator's expense, but shall be at the expense of the Seller or
other party furnishing such opinion) as to the necessity of such filings;
and
(iii) The Depositor shall prepare or cause to be prepared the initial
current reports on Form 8-K to be filed prior to the first Payment Date
and thereafter the Note Administrator will prepare or cause to be prepared
Form 10-Ks and Form 10-Qs (if necessary), or monthly current reports on
Form 8-K, on behalf of the Trust, as may be required by applicable law,
for filing with the Securities and Exchange Commission (the "SEC"). The
Owner Trustee will sign each such report on behalf of the Trust. The Note
Administrator will forward a copy of such report to the Indenture Trustee
and the Depositor promptly after such report has been filed with the SEC.
The Note Administrator agrees to use its best efforts to seek to terminate
such filing obligation after the period during which such filings are
required under the Securities Exchange Act of 1934. Promptly after filing
a Form 15 or other applicable form with the SEC in connection with such
termination, the Note Administrator shall deliver to the Indenture Trustee
and the Depositor a copy of such form together with copies of
confirmations of receipt by the SEC of each report filed therewith on
behalf of the Trust.
(b) The Note Administrator shall carry out in timely fashion all duties
which the Note Administrator is required to perform hereunder on behalf of the
Issuer. The Note Administrator shall have absolute discretion in the
performance of such duties and shall have no obligation to notify the Owner
Trustee of its actions except as set forth herein.
Section 11.02. Compensation; Payment of Certain Expenses.
The Note Administrator will provide the services called for hereunder for
the compensation provided in the Servicing Agreement for so long as the
Indenture remains in effect.
Section 11.03. Instructions.
If in performing its duties under this Article XI, the Note Administrator
is required to determine any matter or perform any function above which is
non-ministerial in nature, then the Note Administrator shall properly deliver
notice to the Indenture Trustee or to the Owner Trustee and the
Certificateholders, as applicable, requesting written instructions as to the
course of action to be taken. If the Note Administrator does not receive such
instructions within ten days after it has delivered such notice, it may, but
shall be under no duty to, take or refrain from taking such action not
inconsistent with this Indenture or the Trust Agreement as it shall deem
advisable in the best interest of the holders of the Notes and the Trust.
Section 11.04. Benefit of the Agreement.
It is expressly agreed that, in performing its duties pursuant to this
Article XI, the Note Administrator will act for the benefit of holders of the
Notes and the Note Insurer as well as for the benefit of the Trust, and that
such obligations on the part of the Note Administrator shall be enforceable at
the instance of the Indenture Trustee and the Trust.
Section 11.05. Limitation of Responsibility of the Note Administrator.
(a) The Note Administrator will have no responsibility under this
Indenture other than to render the services provided for hereunder in good
faith. The Note Administrator, its affiliates, its directors, officers,
shareholders, and employees will not be liable to the Trust, the Owner Trustee,
the Indenture Trustee, the Certificateholders, the Noteholders, or others,
except by reason of acts constituting bad faith, willful misfeasance, gross
negligence, or reckless disregard of the duties of the Note Administrator
hereunder. The Issuer will reimburse, indemnify, and hold harmless the Note
Administrator and its affiliates, shareholders, directors, officers, and
employees with respect to all expenses, losses, damages, liabilities, demands,
charges, and claims of any nature in respect of any acts or omissions performed
or omitted by the Note Administrator in good faith and in accordance with the
standard set forth above.
(b) The Issuer undertakes to pay or cause to be paid any amount due the
Note Administrator or its affiliates, shareholders, directors, officers and
employees, under this Article XI and such amounts shall be paid as provided for
under this Indenture or out of the assets of the Trust that are free of the
lien of this Indenture (and in no event by Wilmington Trust Company in its
individual capacity).
Section 11.06. Termination of Note Administrator.
(a) The Note Administrator, at its election, may resign as Note
Administrator hereunder and be discharged of its duties hereunder upon at least
30 days' prior notice to the Owner Trustee, the Note Insurer, and the Indenture
Trustee; provided, however, that at any time while the Notes are outstanding no
such resignation and discharge shall become effective until a Person selected
by the Note Administrator in its discretion and acceptable to the Owners, the
Note Insurer, and the Rating Agencies shall have assumed and agreed to perform
the duties of the Note Administrator hereunder as evidenced by a written
instrument to such effect delivered to the Owner Trustee. Upon delivery of such
written instrument to the Owner Trustee, the Trust shall promptly deliver to
the successor Note Administrator a written instrument acknowledging and
accepting the assignment of the resigning Note Administrator's rights hereunder
to the successor Note Administrator. Each such successor Note Administrator
shall be deemed to be the Note Administrator for all purposes of this
Indenture.
(b) If any of the following events shall occur and be continuing:
(i) The Note Administrator shall violate any provision of this
Indenture and such default is not cured within ten days after notice
thereof is given to the Note Administrator by the Owner Trustee, the Note
Insurer, or the Indenture Trustee; or
(ii) A court having jurisdiction over the premises shall enter a
decree or order for relief in respect of the Note Administrator in an
involuntary case under any applicable bankruptcy, insolvency, or other
similar law now or hereafter in effect, or appoint a receiver,
liquidation, assignee, custodian, trustee, sequestrator (or other similar
official) of the Note Administrator or for any substantial part of its
property, or order the winding-up or liquidation of its affairs; or
(iii) The Note Administrator shall commence a voluntary case under
any applicable bankruptcy, insolvency, or other similar law now or
hereafter in effect, or shall consent to the entry of an order for relief
in an involuntary case under any such law, or shall consent to the
appointment of or taking possession by a receiver, liquidator, assignee,
trustee, custodian, sequestrator (or other similar official) of the Note
Administrator or for any substantial part of its property, or shall make
any general assignment for the benefit of creditors, or shall fail
generally to pay its debts as they become due;
then in any such event the Note Administrator may be terminated by the Owner
Trustee upon notice to the Note Administrator; provided, however, that the Note
Administrator shall nevertheless be entitled to any amounts due to it pursuant
to Section 11.05 accruing prior to the date of such termination.
(c) Following receipt of instructions from the Note Insurer or the Holders
of the Notes, with the prior consent of the Note Insurer, and upon 30 days'
written notice to the Note Administrator, the Owner Trustee may remove the Note
Administrator; provided, however, that the Note Administrator shall
nevertheless be entitled to any amounts due to it pursuant to Section 11.05
accruing prior to the date of such termination.
ARTICLE XII
MISCELLANEOUS
Section 12.01. Compliance Certificates and Opinions.
(a) Upon any application or request by the Issuer to the Indenture Trustee
to take any action under any provision of this Indenture, the Issuer shall
furnish to the Indenture Trustee an Officers' Certificate stating that all
conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with and an Opinion of Counsel, if requested
by the Indenture Trustee, stating that in the opinion of such counsel all such
conditions precedent, if any, have been complied with, except that in the case
of any such application or request as to which the furnishing of such documents
is specifically required by any provision of this Indenture relating to such
particular application or request, no additional certificate or opinion need be
furnished.
(b) Every certificate, opinion or letter with respect to compliance with a
condition or covenant provided for in this Indenture, including one furnished
pursuant to specific requirements of this Indenture relating to a particular
application or request (other than certificates provided pursuant to TIA
Section 314(a)(4)) shall include and shall be deemed to include (regardless of
whether specifically stated therein) the following:
(i) statement that each individual signing such certificate, opinion
or letter has read such covenant or condition and the definitions herein
relating thereto;
(ii) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate, opinion or letter are based;
(iii) a statement that, in the opinion of each such individual, he
has made such examination or investigation as is necessary to enable him
to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 12.02. Form of Documents Delivered to Indenture Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of the Issuer may be based, insofar as it
relates to legal matters, upon a certificate or opinion of, or representations
by, counsel, unless such officer knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect to
the matters upon which his certificate or opinion is based are erroneous. Any
Opinion of Counsel may be based on the written opinion of other counsel, in
which event such Opinion of Counsel shall be accompanied by a copy of such
other counsel's opinion and shall include a statement to the effect that such
counsel believes that such counsel and the Indenture Trustee may reasonably
rely upon the opinion of such other counsel.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Wherever in this Indenture, in connection with any application or
certificate or report to the Indenture Trustee, it is provided that the Issuer
shall deliver any document as a condition of the granting of such application,
or as evidence of the Issuer's compliance with any term hereof, it is intended
that the truth and accuracy, at the time of the granting of such application or
at the effective date of such certificate or report (as the case may be), of
the facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Issuer to have such application granted or to the
sufficiency of such certificate or report. The foregoing shall not, however, be
construed to affect the Indenture Trustee's right to rely upon the truth and
accuracy of any statement or opinion contained in any such document as provided
in Section 6.01(b)(2). Whenever in this Indenture it is provided that the
absence of the occurrence and continuation of a Default or Event of Default is
a condition precedent to the taking of any action by the Indenture Trustee at
the request or direction of the Issuer, then, notwithstanding that the
satisfaction of such condition is a condition precedent to the Issuer's right
to make such request or direction, the Indenture Trustee shall be protected in
acting in accordance with such request or direction if it does not have
knowledge of the occurrence and continuation of such Default or Event of
Default as provided in Section 6.01(d).
Section 12.03. Acts of Noteholders.
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Indenture to be given or taken by Noteholders
or the Note Insurer may be embodied in and evidenced by one or more instruments
of substantially similar tenor signed by such Noteholders in person or by an
agent duly appointed in writing or the Note Insurer; and, except as herein
otherwise expressly provided, such action shall become effective when such
instrument or instruments are delivered to the Indenture Trustee, and, where it
is hereby expressly required, to the Issuer. Such instrument or instruments
(and the action embodied therein and evidenced thereby) are herein sometimes
referred to as the "Act" of the Noteholders signing such instrument or
instruments. Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this Indenture
and (subject to Section 6.01) conclusive in favor of the Indenture Trustee and
the Issuer, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of any notary public or other officer
authorized by law to take acknowledgments of deeds, certifying that the
individual signing such instrument or writing acknowledged to him the execution
thereof. Whenever such execution is by an officer of a corporation or a member
of a partnership on behalf of such corporation or partnership, such certificate
or affidavit shall also constitute sufficient proof of his authority.
(c) The ownership of Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice, consent, waiver
or other action by the Note Insurer in accordance with the provisions hereof or
the Holders of any Notes shall bind the Holders of every Note issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof, in
respect of anything done, omitted or suffered to be done by the Indenture
Trustee or the Issuer in reliance thereon, whether or not notation of such
action is made upon such Notes.
Section 12.04. Notices, etc. to Indenture Trustee, the Note Insurer and
Issuer.
Any request, demand, authorization, direction, notice, consent, waiver or
Act of Noteholders or other documents provided or permitted by this Indenture
shall be in writing and shall be deemed to have been given if personally
delivered at, telecopied to (provided confirmation of such telecopy has been
received), or mailed by certified mail, return receipt requested, to:
(a) the Indenture Trustee at its Corporate Trust Office with a copy to the
Note Administrator; or
(b) the Issuer, at City Capital Home Loan Trust 1999-1, in care of
Wilmington Trust Company, Rodney Square North, 1100 North Market Street,
Wilmington, Delaware 19890-0001, Attention: Corporate Trust Administration;
(c) the Note Insurer, at MBIA Insurance Corporation, 113 King Street,
Armonk, New York 10504, Attention: Insured Portfolio Management-SF (IPM-SF)
(City Capital Home Loan Trust 1999-1);
(d) the Seller or the Servicer, at City National Bank of West Virginia, 25
Gatewater Road, Charleston, West Virginia 25313 Attention: Michael D. Dean;
(e) the Note Administrator or the Master Servicer, at Norwest Bank
Minnesota, National Association, at 11000 Broken Land Parkway, Columbia,
Maryland 21044, Attention: City Capital Home Loan Trust 1999-1; or
(f) the Custodian, at Norwest Bank Minnesota, National Association,
Norwest Center, Sixth and Marquette Avenue, Minneapolis, Minnesota 55479-0083,
Attention: City Capital Home Loan Trust 1999-1;
or in each case, at such other address as may be designated by written notice to
the other parties;
Notices required to be given to the Rating Agencies by the Issuer or the
Indenture Trustee shall be in writing, personally delivered or mailed
first-class postage pre-paid, to (i) in the case of Moody's, at the following
address: Moody's Investors Service, Inc., Residential Mortgage Monitoring
Department, 99 Church Street, New York, New York 10007 and (ii) in the case of
Standard & Poor's, at the following address: Standard & Poor's Ratings Group,
26 Broadway (15th Floor), New York, New York, 10004, Attention: Asset Backed
Surveillance Department; or as to each of the foregoing, at such other address
as shall be designed by written notice to the other parties.
Section 12.05. Notices and Reports to Noteholders; Waiver of Notices.
Where this Indenture provides for notice to Noteholders of any event or
the mailing of any report to Noteholders, such notice or report shall be
sufficiently given (unless otherwise herein expressly provided) if mailed,
first-class postage prepaid, to each Noteholder affected by such event or to
whom such report is required to be mailed, at the address of such Noteholder as
it appears on the Note Register, not later than the latest date, and not
earlier than the earliest date, prescribed for the giving of such notice or the
mailing of such report, with a copy thereof sent by telecopy. In any case where
a notice or report to Noteholders is mailed and telecopied in the manner
provided above, neither the failure to mail and telecopy such notice or report,
nor any defect in any notice or report so mailed and telecopied, to any
particular Noteholder shall affect the sufficiency of such notice or report
with respect to other Noteholders, and any notice or report that is mailed and
telecopied in the manner herein provided shall be conclusively presumed to have
been duly given or provided.
Where this Indenture provides for notice in any manner, such notice may be
waived in writing by any Person entitled to receive such notice, either before
or after the event, and such waiver shall be the equivalent of such notice.
Waivers of notice by Noteholders shall be filed with the Indenture Trustee, but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.
In case, by reason of the suspension of regular mail service as a result
of a strike, work stoppage or similar activity, it shall be impractical to mail
notice of any event to Noteholders when such notice is required to be given
pursuant to any provision of this Indenture, then any manner of giving such
notice as shall be satisfactory to the Indenture Trustee shall be deemed to be
a sufficient giving of such notice.
Section 12.06. Rules by Indenture Trustee.
The Indenture Trustee may make reasonable rules for any meeting of
Noteholders.
Section 12.07. The Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with any other
provision hereof that is required to be included in this Indenture by any of
the provisions of the TIA, such required provision shall control.
Section 12.08. Effect of Headings and Table of Contents; References.
The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof. References
herein to "Articles" and "Sections" without reference to a document are to
designated Articles and Sections of this Indenture.
Section 12.09. Successors and Assigns.
All covenants and agreements in this Indenture by the Issuer shall bind
its successors and assigns, whether so expressed or not.
Section 12.10. Separability.
In case any provision in this Indenture or in the Notes shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
Section 12.11. Benefits of Indenture.
Subject to Section 12.20 of this Indenture, nothing in this Indenture or
in the Notes, expressed or implied, shall give to any Person, other than the
parties hereto and their successors hereunder, any separate trustee or
co-trustee appointed under Section 6.13, the Note Insurer and the Noteholders,
any benefit or any legal or equitable right, remedy or claim under this
Indenture.
Section 12.12. Legal Holidays.
In any case where the date of any Payment Date, Redemption Date or any
other date on which principal of or interest on any Note is proposed to be paid
shall not be a Business Day, then (notwithstanding any other provision of the
Notes or this Indenture) payment need not be made on such date, but may be made
on the next succeeding Business Day with the same force and effect as if made
on the nominal date of any such Payment Date, Redemption Date or other date for
the payment of principal of or interest on any Note and no interest shall
accrue for the period from and after any such nominal date, provided such
payment is made in full on such next succeeding Business Day.
Section 12.13. Governing Law.
IN VIEW OF THE FACT THAT NOTEHOLDERS MAY RESIDE IN MANY STATES AND OUTSIDE
THE UNITED STATES AND THE DESIRE TO ESTABLISH WITH CERTAINTY THAT THIS
INDENTURE WILL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH
THE LAW OF A STATE HAVING A WELL-DEVELOPED BODY OF COMMERCIAL AND FINANCIAL LAW
RELEVANT TO TRANSACTIONS OF THE TYPE CONTEMPLATED HEREIN, THIS INDENTURE AND
EACH NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED THEREIN.
Section 12.14. Counterparts.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
Section 12.15. Debt Instruments.
By its acceptance of any Note, each Noteholder will be deemed to have
agreed to treat its Note as a debt instrument for purposes of federal and state
income tax, franchise tax and any other tax measured in whole or in part by
income.
Section 12.16. Issuer Obligation.
No recourse may be taken, directly or indirectly, with respect to the
obligations of the Issuer, the Owner Trustee or the Indenture Trustee on the
Notes or under this Indenture or any certificate or other writing delivered in
connection herewith or therewith, against (i) the Indenture Trustee or the
Owner Trustee in its individual capacity, (ii) any owner of a beneficial
interest in the Issuer or (iii) any partner, owner, beneficiary, agent,
officer, director, employee or agent of the Indenture Trustee or the Owner
Trustee in its individual capacity, any holder of a beneficial interest in the
Issuer, the Owner Trustee or the Indenture Trustee or of any successor or
assign of the Indenture Trustee or the Owner Trustee in its individual
capacity, except as any such Person may have expressly agreed (it being
understood that the Indenture Trustee and the Owner Trustee have no such
obligations in their individual capacity) and except that any such partner,
owner or beneficiary shall be fully liable, to the extent provided by
applicable law, for any unpaid consideration for stock, unpaid capital
contribution or failure to pay any installment or call owing to such entity.
For all purposes of this Indenture, in the performance of any duties or
obligations of the Issuer hereunder, the Owner Trustee shall be subject to, and
entitled to the benefits of, the terms and provisions of the Trust Agreement.
Section 12.17. No Petition.
The Indenture Trustee, by entering into this Indenture, and each
Noteholder and Beneficial Owner, by accepting a Note , hereby covenant and
agree that they will not at any time institute against the Depositor or the
Issuer, or join in any institution against the Depositor or the Issuer of, any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings,
or other proceedings under any United States federal or state bankruptcy or
similar law in connection with any obligations relating to the Notes, this
Indenture or any of the Basic Documents. In addition, the Indenture Trustee
will on behalf of the holders of the Notes, (a) file a written objection to any
motion or other proceeding seeking the substantive consolidation of the Seller
with City Holding Company, the Depositor or the Issuer, (b) file an appropriate
memorandum of points and authorities or other brief in support of such
objection, or (c) endeavor to establish at the hearing on such objection that
the substantive consolidation of such entity would be materially prejudicial to
the Noteholders. This Section 12.17 will survive for one year and one day
following the termination of this Indenture.
Section 12.18. Inspection.
The Issuer agrees that, on reasonable prior notice, it will permit any
representative of the Indenture Trustee, the Note Insurer and any Noteholder
(provided that such Noteholder, together with its affiliates, owns 40% or more
of the then outstanding Note Balance), during the Issuer's normal business
hours, to examine all of books of account, records, reports and other papers of
the Issuer, to make copies and extracts therefrom, to cause such books to be
audited by Independent Accountants selected by the Indenture Trustee or the
Note Insurer, as the case may be, and to discuss its affairs, finances and
accounts with its officers, employees and Independent Accountants (and by this
provision the Issuer hereby authorizes its Accountants to discuss with such
representatives such affairs, finances and accounts), all at such reasonable
times and as often as may be reasonably requested. Any expense incident to the
exercise by the Indenture Trustee of any right under this Section 12.18 shall
be borne by the Seller.
Section 12.19. Usury.
The amount of interest payable or paid on any Note under the terms of this
Indenture shall be limited to an amount that shall not exceed the maximum
nonusurious rate of interest allowed by the applicable laws of the United
States or the State of New York (whichever shall permit the higher rate), that
could lawfully be contracted for, charged or received (the "Highest Lawful
Rate"). In the event any payment of interest on any Note exceeds the Highest
Lawful Rate, the Issuer stipulates that such excess amount will be deemed to
have been paid as a result of an error on the part of both the Indenture
Trustee, acting on behalf of the Holder of such Note, and the Issuer, and the
Holder receiving such excess payment shall promptly, upon discovery of such
error or upon notice thereof from the Issuer or the Indenture Trustee, refund
the amount of such excess or, at the option of the Indenture Trustee, apply the
excess to the payment of principal of such Note, if any, remaining unpaid. In
addition, all sums paid or agreed to be paid to the Indenture Trustee for the
benefit of Holders of Notes for the use, forbearance or detention of money
shall, to the extent permitted by applicable law, be amortized, prorated,
allocated and spread throughout the full term of such Notes.
Section 12.20. Third Party Beneficiary.
The Note Insurer is intended as a third party beneficiary of this
Indenture and this Indenture 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
MBIA 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 Indenture 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 Indenture. The
Depositor is an intended third-party beneficiary of this Indenture for purposes
of Section 8.02(b) hereof and Section 8.02(b) shall be binding upon and inure
to the benefit of the Depositor; and the Depositor shall be entitled to rely on
and enforce the covenants contained therein for its benefit to the same extent
as if it were a party to this Indenture.
Section 12.21. Limitation of Liability.
It is expressly understood and agreed by the parties hereto that (a) this
Agreement is executed and delivered by Wilmington Trust Company, not
individually or personally but solely as trustee of City Capital Home Loan
Trust 1999-1 under the Trust Agreement in the exercise of the powers and
authority conferred and vested in it, (b) each of the representations,
undertakings and agreements herein made on the part of the Trust is made and
intended not as personal representations, undertakings and agreements by
Wilmington Trust Company but is made and intended for the purpose for binding
only the Trust, (c) nothing herein contained shall be construed as creating any
liability on Wilmington Trust Company, individually or personally, to perform
any covenant either expressed or implied contained herein, all such liability,
if any, being expressly waived by the parties hereto and by an Person claiming
by, through or under the parties hereto (d) under no circumstances shall
Wilmington Trust Company be personally liable for the payment of any
indebtedness or expenses of the Trust or be liable for the breach or failure of
any obligation, representation, warranty or covenant made or undertaken by the
Trust under this Agreement.
<PAGE>
IN WITNESS WHEREOF, the Issuer, the Indenture Trustee, the Note
Administrator and the Custodian have caused this Indenture to be duly executed
by their respective officers thereunto duly authorized, all as of the day and
year first above written.
CITY CAPITAL HOME LOAN TRUST 1999-1
By: Wilmington Trust Company, not in
its individual capacity, but
solely as Owner Trustee
By:
Name:
Title:
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Indenture Trustee, Note
Administrator and Custodian
By:
Name:
Title:
<PAGE>
SCHEDULE I
HOME LOAN SCHEDULE
<PAGE>
EXHIBIT A
FORM OF CLASS A NOTE
<PAGE>
CITY CAPITAL HOME LOAN TRUST 1999-1
ASSET-BACKED NOTES, SERIES 1999-1, CLASS A
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE INDENTURE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY NOTE ISSUED
IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT MADE TO CEDE & CO. OR
TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC),
ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
THE PRINCIPAL OF THIS NOTE IS SUBJECT TO PREPAYMENT FROM TIME TO TIME WITHOUT
SURRENDER OF OR NOTATION ON THIS NOTE. ACCORDINGLY, THE OUTSTANDING PRINCIPAL
AMOUNT OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE
HEREOF. ANYONE ACQUIRING THIS NOTE MAY ASCERTAIN ITS CURRENT NOTE PRINCIPAL
BALANCE BY INQUIRY OF THE INDENTURE TRUSTEE.
<PAGE>
No. _______________ $____________
CITY CAPITAL HOME LOAN TRUST 1999-1
ASSET-BACKED NOTES, SERIES 1999-1,
6.85%(1 ) CLASS A
DUE APRIL 25, 2030
CUSIP NO. 177766AL6
City Capital Home Loan Trust 1999-1, a business trust organized and existing
under the laws of the State of Delaware (herein referred to as the "Issuer"),
for value received, hereby promises to pay to
or registered assigns, ____ the principal sum of ____ __________________
____________________________________ DOLLARS ($_____________) payable pursuant
to the Indenture (the "Indenture") dated as of April 30, 1999, among the Issuer
and Norwest Bank Minnesota, National Association, a national banking
association, as Indenture Trustee (the "Indenture Trustee") and as Note
Administrator and Custodian. Capitalized terms used but not defined herein are
defined in Article I of the Indenture.
THIS NOTE IS A NON-RECOURSE OBLIGATION OF THE ISSUER, AND IS LIMITED IN RIGHT
OF PAYMENT TO AMOUNTS AVAILABLE FROM THE TRUST ESTATE AND THE MBIA INSURANCE
POLICY REFERRED TO BELOW, AS PROVIDED IN THE INDENTURE. THE ISSUER IS NOT
OTHERWISE PERSONALLY LIABLE FOR PAYMENTS ON THIS NOTE. EACH HOLDER AND
BENEFICIAL OWNER HEREOF, BY ITS ACCEPTANCE OF THIS NOTE, AGREES THAT SUCH
HOLDER OR BENEFICIAL OWNER SHALL HAVE NO RECOURSE TO THE ISSUER, THE OWNER
TRUSTEE, THE INDENTURE TRUSTEE, THE DEPOSITOR, THE SELLER, THE SERVICER, THE
MASTER SERVICER OR ANY OF THEIR RESPECTIVE AFFILIATES, OR TO THE ASSETS OF ANY
OF THE FOREGOING ENTITIES, EXCEPT THE ASSETS OF THE ISSUER PLEDGED TO SECURE
THE NOTES PURSUANT TO THE INDENTURE.
________________
(1) The Class A Notes will bear interest at 6.8% per annum; provided that, if
the Class A Notes are not redeemed on the Clean-Up Call Date, then with
respect to each payment Date thereafter, th eNote Interest rate shall be
7.35% per annum.
Pursuant to the terms of the Indenture, payments will be made on the 25th day
of each month or, if such day is not a Business Day, on the Business Day
immediately following such 25th day (each a "Payment Date"), commencing on the
first Payment Date specified above, to the Person in whose name this Note is
registered at the close of business on the applicable Record Date, in an amount
equal to the product of (a) the Percentage Interest evidenced by this Note and
(b) the sum of the amounts to be paid on the Notes with respect to such Payment
Date, all as more specifically set forth in the Indenture.
So long as this Note is registered in the name of a Clearing Agency or its
nominee, the Indenture Trustee will make payments of principal of and interest
on this Note by wire transfers of immediately available funds to the Clearing
Agency or its nominee. Notwithstanding the above, the final distribution on
this Note will be made after due notice by the Indenture Trustee of the
pendency of such distribution and only upon presentation and surrender of this
Note at its Corporate Trust Office or such other offices or agencies appointed
by the Indenture Trustee for that purpose and such other locations provided in
the Indenture.
On each Payment Date, the Noteholders will be entitled to receive interest
payments in an aggregate amount equal to the Note Interest for such Payment
Date, together with principal payments in an aggregate amount equal to the
Monthly Principal, plus, until the related Overcollateralization Amount is
equal to the Required Overcollateralization Amount, Excess Cash, if any, for
such Payment Date. The "Note Balance" of a Note as of any date of determination
is equal to the initial principal balance thereof as of the Closing Date,
reduced by the aggregate of all amounts previously paid with respect to such
Note on account of principal.
This Note is one of a duly authorized issue of Notes of the Issuer, designated
as its Asset-Backed Notes, Series 1999-1 (herein called the "Notes"), issued
under the Indenture, to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights and
obligations thereunder of the Issuer, the Indenture Trustee and the Holders of
the Notes. To the extent that any provision of this Note contradicts or is
inconsistent with the provisions of the Indenture, the provisions of the
Indenture shall control and supersede such contradictory or inconsistent
provision herein. The Notes are subject to all terms of the Indenture. Each
Noteholder or Beneficial Owner, by acceptance of a Note, or in the case of a
Beneficial Owner, a beneficial interest in a Note, covenants and agrees to be
bound by all the terms and provisions of the Indenture.
As described above, the entire unpaid principal amount of this Note shall be
due and payable on the earlier of the Stated Maturity Date and the Redemption
Date, if any, pursuant to Article X of the Indenture. Notwithstanding the
foregoing, the entire unpaid principal amount of the Notes shall be due and
payable on the date on which an Event of Default shall have occurred and be
continuing if the Indenture Trustee, at the direction or upon the prior written
consent of MBIA Insurance Corporation (the "Note Insurer") in the absence of a
Note Insurer Default, or the Holders of the Notes representing not less than
50% of the Note Balance of the Outstanding Notes (with the prior written
consent of the Note Insurer in the absence of a Note Insurer Default), shall
have declared the Notes to be immediately due and payable in the manner
provided in Section 5.02 of the Indenture. All principal payments on the Notes
shall be made pro rata to the Noteholders entitled thereto.
MBIA Insurance Corporation (the "Note Insurer"), in consideration of the
payment of the premium and subject to the terms of the financial guaranty
insurance policy (the "MBIA Insurance Policy") issued thereby, has
unconditionally and irrevocably guaranteed the payment of the Insured Payments.
Pursuant to the Indenture, unless a Note Insurer Default exists (i) the Note
Insurer shall be deemed to be the holder of the Notes for certain purposes
specified in the Indenture and will be entitled to exercise all rights of the
Noteholders thereunder, including the rights of Noteholders relating to the
occurrence of, and the remedies with respect to, an Event of Default, without
the consent of such Noteholders, and (ii) the Indenture Trustee may take
actions which would otherwise be at its option or within its discretion,
including actions relating to the occurrence of, and the remedies with respect
to, an Event of Default, only at the direction of the Note Insurer. In
addition, on each Payment Date, after the Noteholders have been paid all
amounts to which they are entitled, the Note Insurer will be entitled to be
reimbursed for any unreimbursed Insured Payments, unreimbursed Premium Amounts
(each with interest thereon at the "Late Payment Rate" specified in the
Insurance Agreement) and any other amounts owed under the MBIA Insurance
Policy.
As provided in the Indenture, the Notes may be redeemed in whole, but not in
part, at the option of the holder(s) of a majority of the ownership interest of
the Issuer or, if not so redeemed, at the option of the Note Insurer, on any
Payment Date on and after the date on which the Note Balance is equal to or
less than 5% of the Original Note Balance.
Subject to the terms of the Indenture, the Notes will be registered as one or
more certificates held by a Clearing Agency or its nominee and beneficial
interests will be held by Beneficial Owners through the book-entry facilities
of such Clearing Agency or its nominee in minimum denominations of $50,000 and
increments of $1 in excess thereof.
As provided in the Indenture and subject to any limitations on transfer of this
Note by a Clearing Agency or its nominee and certain limitations set forth in
the Indenture, the transfer of this Note is registrable on the Note Register
upon surrender of this Note for registration of transfer at the office or
agency designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Indenture Trustee duly executed by, the Holder hereof or such Holder's attorney
duly authorized in writing, and thereupon one or more new Notes of authorized
denominations and in the same aggregate principal amount will be issued to the
designated transferee or transferees.
Each Noteholder or Beneficial Owner, by acceptance of this Note or, in the case
of a Beneficial Owner, a beneficial interest in a Note, covenants and agrees
that no recourse may be taken, directly or indirectly, with respect to the
obligations of the Issuer, the Owner Trustee or the Indenture Trustee on the
Notes or under the Indenture or any certificate or other writing delivered in
connection therewith, against (i) the Indenture Trustee or the Owner Trustee in
its individual capacity, (ii) any owner of a beneficial interest in the Issuer
or (iii) any partner, owner, beneficiary, agent, officer, director or employee
of the Indenture Trustee or the Owner Trustee in its individual capacity, any
holder of a beneficial interest in the Issuer, the Owner Trustee or the
Indenture Trustee or of any successor or assign of the Indenture Trustee or the
Owner Trustee in its individual capacity, except as any such Person may have
expressly agreed and except that any such partner, owner or beneficiary shall
be fully liable, to the extent provided by applicable law, for any unpaid
consideration for stock, unpaid capital contribution or failure to pay any
installment or call owing to such entity.
Each Noteholder or Beneficial Owner, by acceptance of this Note or, in the case
of a Beneficial Owner, a beneficial interest in this Note, covenants and agrees
by accepting the benefits of the Indenture that such Noteholder or Beneficial
Owner will not at any time institute against the Seller, the Depositor or the
Issuer, or join in any institution against the Seller, the Depositor or the
Issuer of, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings under any United States federal or state bankruptcy or
similar law in connection with any obligations relating to the Notes, the
Indenture, the Home Loan Sale Agreement, the Trust Agreement, the Servicing
Agreement, the Insurance Agreement and the Indemnification Agreement (the
"Basic Documents").
The Issuer has entered into the Indenture and this Note is issued with the
intention that, for federal, state and local income, single business and
franchise tax purposes, the Notes will qualify as indebtedness of the Issuer
secured by the Trust Estate. Each Noteholder, by acceptance of this Note (and
each Beneficial Owner by acceptance of a beneficial interest in this Note),
agrees to treat the Notes for federal, state and local income, single business
and franchise tax purposes as indebtedness of the Issuer.
Prior to the due presentment for registration of transfer of this Note, the
Issuer, the Indenture Trustee, the Note Insurer and any agent of the Issuer or
the Indenture Trustee may treat the Person in whose name this Note (as of the
day of determination or as of such other date as may be specified in the
Indenture) is registered as the owner hereof for all purposes, whether or not
this Note be overdue, and none of the Issuer, the Indenture Trustee, the Note
Insurer or any such agent shall be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Note Insurer and the Holders of
Notes representing a majority of the Note Balance of all Outstanding Notes. The
Indenture also contains provisions permitting the (i) Note Insurer or (ii) if a
Note Insurer Default exists, the Holders of Notes representing specified
percentages of the Note Balance of Outstanding Notes, on behalf of the Holders
of all the Notes, to waive compliance by the Issuer with certain provisions of
the Indenture and certain past defaults under the Indenture and their
consequences. Any such consent or waiver by the Note Insurer or by the Holder
of this Note (or any one or more Predecessor Notes) shall be conclusive and
binding upon such Holder and upon all future Holders of this Note and of any
Note issued upon the registration of transfer hereof or in exchange hereof or
in lieu hereof whether or not notation of such consent or waiver is made upon
this Note. The Indenture also permits the amendment thereof, in certain limited
circumstances, or the waiver of certain terms and conditions set forth in the
Indenture, without the consent of Holders of the Notes issued thereunder.
The term "Issuer" as used in this Note includes any successor to the Issuer
under the Indenture.
THIS NOTE AND THE INDENTURE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND
THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER AND THEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Unless the certificate of authentication hereon has been executed by the
Authenticating Agent whose name appears below by manual signature, this Note
shall not be entitled to any benefit under the Indenture referred to on the
reverse hereof, or be valid or obligatory for any purpose.
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this Instrument to be
signed, manually or in facsimile, by its Authorized Officer, as of the date set
forth below.
DATE: May __, 1999 CITY CAPITAL HOME LOAN TRUST 1999-1
By: WILMINGTON TRUST COMPANY, not
in its individual capacity but
solely as Owner Trustee under
the Trust Agreement
By: ______________________________
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Class A Notes designated above and referred to in
the within-mentioned Indenture.
Date: May __, 1999 NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, Authenticating Agent
By: ______________________________
Authorized Signatory
<PAGE>
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee:
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto:
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints , attorney, to transfer said Note on the
books kept for registration thereof,with full power of substitution in the
premises.
Dated: */
Signature Guaranteed:
*/
*/ NOTICE: The signature to this assignment must correspond with the name of
the registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatever. Such
signature must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar, which requirements include membership or
participation in STAMP or such other "signature guarantee program" as may be
determined by the Note Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.
<PAGE>
[ATTACH STATEMENT OF INSURANCE]
<PAGE>
EXHIBIT B
HOME LOAN SALE AGREEMENT
<PAGE>
EXHIBIT C
CUSTODIAL AGREEMENT
<PAGE>
EXHIBIT D
[RESERVED]
<PAGE>
EXHIBIT E-1
FORM OF CUSTODIAN'S INITIAL CERTIFICATION
May __, 1999
[Seller]
[Note Insurer]
[Servicer]
Re: Indenture, dated as of April 30, 1999 (the "Indenture"), among City
Capital Home Loan Trust 1999-1 (the "Issuer") and Norwest Bank Minnesota,
National Association, as Indenture Trustee, Note Administrator and Custodian.
Gentlemen:
In accordance with Section 6.15(a) of the Indenture, the undersigned, as
Custodian, hereby certifies that, as to each Home Loan listed in the Home Loan
Schedule to the Indenture (other than any Home Loan paid in full or listed on
the attachment hereto), it has reviewed the Home Loan File and has determined
that, except as noted on the Schedule of Exceptions attached hereto, it has
received, for each Home Loan listed on the Home Loan Schedule, the related
original Mortgage Note, endorsed to the Indenture Trustee (or, as provided in
the Home Loan Sale Agreement, a lost note affidavit for such Mortgage Note, in
the form of Exhibit C to the Home Loan Sale Agreement, together with a
certified true and correct copy of such Mortgage Note), and the related
original Mortgage (or certified copy thereof if so permitted under the Home
Loan Sale Agreement).
Except as described herein, the Custodian has not made an independent
examination of any documents contained in any Home Loan File. The Custodian
makes no representations as to: (i) the validity, legality, sufficiency,
enforceability or genuineness of any documents contained in any Home Loan File
for any of the Home Loans listed on the Home Loan Schedule to the Indenture,
(ii) the collectibility, insurability, effectiveness or suitability of any such
Home Loan or (iii) whether any Home Loan File should include any flood
insurance policy, any rider, addenda, surety or guaranty agreement, power of
attorney, buy down agreement, assumption agreement, modification agreement,
written assurance or substitution agreement.
Capitalized words and phrases used herein shall have the respective meanings
assigned to them in the above-captioned Indenture.
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Custodian
By:
Its:
<PAGE>
EXHIBIT E-2
FORM OF CUSTODIAN'S INTERIM CERTIFICATION
[Date]
[Seller]
[Indenture Trustee]
[Note Insurer]
[Servicer]
Re: Indenture, dated as of April 30, 1999 (the "Indenture"), between
City Capital Home Loan Trust 1999-1 (the "Issuer"), and Norwest Bank Minnesota,
National Association, as Indenture Trustee (the "Indenture Trustee"), Note
Administrator and Custodian.
Gentlemen:
In accordance with Section 6.15(b) of the Indenture, the undersigned, as
Custodian, hereby certifies that, as to each Home Loan listed in the Home Loan
Schedule to the Indenture (other than any Home Loan paid in full or listed on
the attached hereto), it has reviewed the Home Loan File and has determined
that, except as noted on the Schedule of Exceptions attached hereto: (i) all
documents required to be included in the Home Loan File (as set forth in the
definition of "Home Loan Documents" in the Home Loan Sale Agreement referred
to in the Indenture) are in its possession; (ii) such documents have been
reviewed by it and appear regular on their face and related to such Home Loan;
and (iii) based on examination by it, and only as to such documents, the
following data elements: (a) the Seller's loan number, (b) the Mortgagor's
name, (c) the address (including the state and zip code), (d) the original
Principal Balance, (e) the Monthly Payment Amount and (f) the Mortgage
Interest Rate, as set forth on the Home Loan Schedule to the Indenture
accurately reflects the information set forth in the Home Loan File. The
undersigned further certifies that the Custodian's review of each Home Loan
included each of the procedures listed in Section 6.15(b) of the Indenture.
Except as described herein, the Custodian has not made an independent
examination of any documents contained in any Home Loan File. The Custodian
makes no representations as to: (i) the validity, legality, sufficiency,
enforceability or genuineness of any documents contained in any Home Loan File
for any of the Home Loans listed on the Home Loan Schedule to the Indenture,
(ii) the collectibility, insurability, effectiveness or suitability of any such
Home Loan or (iii) whether any Home Loan File should include any flood
insurance policy, any rider, addenda, surety or guaranty agreement, power of
attorney, buy down agreement, assumption agreement, modification agreement,
written assurance or substitution agreement.
Capitalized words and phrases used herein shall have the respective meanings
assigned to them in the above-captioned Indenture.
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Custodian
By:____________________________________
Its:____________________________________
<PAGE>
EXHIBIT E-3
FORM OF CUSTODIAN'S FINAL CERTIFICATION
[Date]
[Seller]
[Indenture Trustee]
[Note Insurer]
[Servicer]
Re: Indenture, dated as of April 30, 1999 (the "Indenture"), between City
Capital Home Loan Trust 1999-1 (the "Issuer"), and Norwest Bank Minnesota,
National Association, as Indenture Trustee (the "Indenture Trustee"),
Note Administrator and Custodian.
Gentlemen:
In accordance with Section 6.15(c) of the Indenture, the undersigned, as
Custodian, hereby certifies that, except as noted on the Schedule of Exceptions
attached hereto, for each Home Loan listed in the Home Loan Schedule to the
Indenture (other than any Home Loan paid in full or listed on the attachment
hereto), it has received a complete Home Loan File which includes each of the
documents required to be included in the Home Loan File as set forth in the
definition of "Home Loan Documents" in the Home Loan Sale Agreement referred to
in the Indenture.
The Custodian has not made an independent examination of any documents
contained in any Home Loan File beyond the review specifically required in
Section 6.15 of the Indenture. The Custodian makes no representations as to:
(i) the validity, legality, sufficiency, enforceability or genuineness of any
documents contained in any Home Loan File for any of the Home Loans listed on
the Home Loan Schedule to the Indenture, (ii) the collectibility, insurability,
effectiveness or suitability of any such Home Loan or (iii) whether any Home
Loan File should include any flood insurance policy, any rider, addenda, surety
or guaranty agreement, power of attorney, buy down agreement, assumption
agreement, modification agreement, written assurance or substitution agreement.
Capitalized words and phrases used herein shall have the respective meanings
assigned to them in the above-captioned Indenture.
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Custodian
By:____________________________________
Its:____________________________________
<PAGE>
EXHIBIT F
MBIA INSURANCE POLICY
<PAGE>
EXHIBIT G
[Reserved]
<PAGE>
EXHIBIT H
SERVICING AGREEMENT
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 1999-1
Asset-Backed Notes
Series 1999-1
Dated as of April 30, 1999
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
ARTICLE I DEFINITIONS.............................................................................................1
Section 1.1. Capitalized Terms...........................................................................1
Section 1.2. Other Definitional Provisions...............................................................5
ARTICLE II ORGANIZATION...........................................................................................6
Section 2.1. Name........................................................................................6
Section 2.2. Office......................................................................................6
Section 2.3. Purposes and Powers.........................................................................6
Section 2.4. Appointment of Owner Trustee................................................................7
Section 2.5. Initial Capital Contribution of Owner Trust Estate..........................................7
Section 2.6. Declaration of Trust........................................................................7
Section 2.7. Liability of the Holders....................................................................7
Section 2.8. Title to Trust Property.....................................................................8
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................................14
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..........................................................16
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.............................................................21
Section 5.1. Establishment of Certificate Distribution Account..........................................21
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.............................................................................23
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.................................25
Section 6.6. Restrictions...............................................................................25
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..........................................................28
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...................................................................................29
ARTICLE VIII COMPENSATION OF OWNER TRUSTEE.......................................................................29
Section 8.1. Owner Trustee's Fees and Expenses..........................................................29
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..................................................33
Section 10.5. Appointment of Co-Trustee or Separate Trustee.............................................33
ARTICLE XI CONTRIBUTION OF HOME LOANS............................................................................35
Section 11.1. Agreement to Contribute and Convey........................................................35
Section 11.2. Conveyance of Home Loans..................................................................35
Section 11.3. Assignment of Related Rights and Remedies.................................................36
Section 11.4. Closing...................................................................................37
Section 11.5. Servicing.................................................................................37
Section 11.6. Grant of a Security Interest..............................................................37
ARTICLE XII MISCELLANEOUS........................................................................................38
Section 12.1. Supplements and Amendments................................................................38
Section 12.2. No Legal Title to Owner Trust Estate in Holders...........................................39
Section 12.3. Limitations on Rights of Others...........................................................40
Section 12.4. Notices...................................................................................40
Section 12.5. Severability..............................................................................41
Section 12.6. Separate Counterparts.....................................................................41
Section 12.7. Successors and Assigns....................................................................41
Section 12.8. No Petition...............................................................................41
Section 12.9. No Recourse...............................................................................41
Section 12.10. Headings.................................................................................41
Section 12.11. GOVERNING LAW............................................................................42
Section 12.12. Grant of Certificateholder Rights to Note Insurer........................................42
Section 12.13. Third Party Beneficiary..................................................................42
Section 12.14. Suspension and Termination of Note Insurer's Rights......................................43
</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 April 30, 1999, 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 May 19, 1999.
"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
April 30, 1999, 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 April 30, 1999, 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 April 30, 1999, 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 April
30, 1999, 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 1999-1, 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 1999-1.
"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 June 25, 1999.
"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
April 30, 1999, 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
1999-1," in which name the Owner Trustee may conduct the business of the
Trust, make and execute contracts and other instruments on behalf of the Trust
and sue and be sued.
Section 2.2. Office.
The office of the Trust shall be in care of the Owner Trustee at the
Corporate Trust Office or at such other address in Delaware as the Owner
Trustee may designate by written notice to the 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 the other Holders in
accordance with their respective Percentage Interests (to the extent permitted
by this limitation). 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 1999-1." 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 $238,236,000.00. 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
($237,954,381.22) 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 and on 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 after
the Cut-off Date, and all other recoveries of principal and interest collected
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 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.
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 23219-4074 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.
(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 1999-1,
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 1999-1), Telecopy No.:
(914) 765-3810; (iv) if to the Trust Paying Agent, Norwest Bank Minnesota,
National Association, 11000 Broken Land Parkway, Columbia, Maryland 21044,
Attention: City Capital Home Loan Trust 1999-1, Telecopy No.: (410) 884-2363
with a copy to Norwest Bank Minnesota, National Association, Sixth Street and
Marquette Avenue, Minneapolis, Minnesota 55479-0069, Attention: City Capital
Home Loan Trust 1999-1, Telecopy No.: (612) 667-9825; (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:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
WILMINGTON TRUST COMPANY,
as Owner Trustee
By:
--------------------------------------
Authorized Signatory
CITY NATIONAL BANK OF WEST
VIRGINIA, as Servicer
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
<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:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
<PAGE>
EXHIBIT A
TO THE DEPOSIT TRUST AGREEMENT
FORM OF CERTIFICATE
[Attached]
<PAGE>
THE EQUITY INTEREST IN THE TRUST REPRESENTED BY 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 EQUITY INTEREST MAY BE DIRECTLY OR
INDIRECTLY OFFERED OR SOLD OR OTHERWISE DISPOSED OF (INCLUDING PLEDGED) BY THE
HOLDER HEREOF ONLY TO (I) A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE
144A UNDER THE ACT, IN A TRANSACTION THAT IS REGISTERED UNDER THE ACT AND
APPLICABLE STATE SECURITIES LAWS OR THAT IS EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF THE ACT PURSUANT TO RULE 144A OR (II) A PERSON INVOLVED IN THE
ORGANIZATION OR OPERATION OF THE TRUST OR AN AFFILIATE OF SUCH A PERSON WITHIN
THE MEANING OF RULE 3A-7 OF THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED
(INCLUDING, BUT NOT LIMITED TO, FINANCIAL ASSET SECURITIES CORP.) IN A
TRANSACTION THAT IS REGISTERED UNDER THE ACT AND APPLICABLE STATE SECURITIES
LAWS OR THAT IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND SUCH
LAWS. NO PERSON IS OBLIGATED TO REGISTER THIS EQUITY INTEREST UNDER THE ACT OR
ANY STATE SECURITIES LAWS.
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.
THIS CERTIFICATE MAY NOT BE TRANSFERRED, SOLD, OR OTHERWISE DISPOSED OF
UNLESS, PRIOR TO SUCH DISPOSITION, THE PROPOSED TRANSFEREE DELIVERS TO THE
OWNER TRUSTEE AND THE CERTIFICATE REGISTRAR A CERTIFICATE STATING THAT SUCH
TRANSFEREE (A) AGREES TO BE BOUND BY AND TO ABIDE BY THE TRANSFER RESTRICTIONS
APPLICABLE TO THIS CERTIFICATE; (B) IS NOT AN ENTITY THAT WILL HOLD THIS
CERTIFICATE AS NOMINEE TO FACILITATE THE CLEARANCE AND SETTLEMENT OF SUCH
SECURITY THROUGH ELECTRONIC BOOK-ENTRY CHANGES IN ACCOUNTS OF PARTICIPATING
ORGANIZATIONS; AND (C) UNDERSTANDS THAT IT MUST TAKE INTO ACCOUNT ITS
PERCENTAGE INTEREST OF THE TAXABLE INCOME RELATING TO THIS CERTIFICATE.
<PAGE>
CITY CAPITAL HOME LOAN TRUST 1999-1
CERTIFICATE
No. 0001
THIS CERTIFIES THAT ______________________ (the "Owner") is the
registered owner of a 100% Percentage Interest of the Trust Interest in City
Capital Home Loan Trust 1999-1 (the "Trust") existing under the laws of the
State of Delaware and created pursuant to that certain Deposit Trust
Agreement, dated as of April 30, 1999 (the "Trust Agreement"), among Financial
Asset Securities Corp., as Depositor, Wilmington Trust Company, in its
individual capacity and in its fiduciary capacity as Owner Trustee under the
Trust Agreement (the "Owner Trustee"), Norwest Bank Minnesota, National
Association, as Trust Paying Agent, and City National Bank of West Virginia,
as Servicer. Capitalized terms used but not otherwise defined herein have the
meanings assigned to such terms in the Trust Agreement. The Owner Trustee, on
behalf of the Issuer and not in its individual capacity, has executed this
Certificate by one of its duly authorized signatories as set forth below. This
Certificate is one of the Certificates referred to in the Trust Agreement and
is issued under and is subject to the terms, provisions, and conditions of the
Trust Agreement to which the holder of this Certificate by virtue of the
acceptance hereof agrees and by which the holder hereof is bound. Reference is
hereby made to the Trust Agreement for the rights of the holder of this
Certificate, as well as for the terms and conditions of the Trust created by
the Trust Agreement.
The holder, by its acceptance hereof, agrees not to transfer this
Certificate except in accordance with terms and provisions of the Agreement.
THIS CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND
THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.
<PAGE>
IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Trust and not in
its individual capacity, has caused this Certificate to be duly executed.
CITY CAPITAL HOME LOAN TRUST 1999-1
By: Wilmington Trust Company, not in its
individual capacity but solely as
Owner Trustee under the Trust Agreement
By:
-----------------------------------------
Authorized Signatory
DATED: May __, 1999
CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within-mentioned
Agreement.
---------------------------------
as Authenticating Agent
By:
------------------------------
Authorized Signatory
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
- -------------------------------------------------------------------------------
(Please print or type name and address, including postal zip code, of assignee)
- -------------------------------------------------------------------------------
the within Instrument, and all rights thereunder, hereby irrevocably
constituting and appointing ________________________________________ Attorney
to transfer said Instrument on the books of the Certificate Registrar, with
full power of substitution in the premises.
Dated:
- ----------------------------
____________________________________*/
Signature Guaranteed:
_____________________________________*/
- ----------------------
*/ NOTICE:________The signature to this assignment must correspond with the
name as it appears upon the face of the within Instrument in every particular,
without alteration, enlargement or any change whatever. Such signature must be
guaranteed by a member firm of the New York Stock Exchange or a commercial
bank or trust company.
<PAGE>
EXHIBIT B
TO THE DEPOSIT TRUST AGREEMENT
FORM OF CERTIFICATE OF TRUST OF
CITY CAPITAL HOME LOAN TRUST 1999-1
THIS CERTIFICATE OF TRUST OF CITY CAPITAL HOME LOAN TRUST 1999-1 (the
"Trust"), dated as of May __, 1999, is being duly executed and filed by
Wilmington Trust Company, a Delaware banking corporation, as trustee, to form
a business trust under the Delaware Business Trust Act (12 Del. Code, Section
3801 et seq.).
1._______Name. The name of the business trust formed hereby is CITY
CAPITAL HOME LOAN TRUST 1999-1.
2._______Delaware Trustee. The name and business address of the trustee
of the Trust in the State of Delaware is Wilmington Trust Company of Rodney
Square North, 1100 North Market Street, Wilmington, Delaware 19890. Attention:
___________.
IN WITNESS WHEREOF, the undersigned, being the sole trustee of the Trust,
has executed this Certificate of Trust as of the date first above written.
Wilmington Trust Company, not
in its individual capacity
but solely as Owner Trustee
under a Deposit Trust Agreement, dated
as of April 30, 1999
By: _____________________________________
Name: ___________________________________
Title: __________________________________
<PAGE>
EXHIBIT C
TO THE DEPOSIT TRUST AGREEMENT
FORM OF TRANSFEREE CERTIFICATE
- -----------, ----
Financial Asset Securities Corp.
600 Steamboat Road
Greenwich, Connecticut 06830
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
Re: City Capital Home Loan Trust 1999-1 (the "Issuer")
Asset-Backed Notes, Series 1999-1
Ladies and Gentlemen:
___________________________________________________ (the "Holder") has
purchased or acquired, or intends to purchase or acquire from ______________,
the current Holder (the "Current Holder"), a Certificate representing a ___%
Percentage Interest (the "__% Certificate") in the Trust Interest for the
referenced Issuer, which represents an interest in the Issuer created pursuant
to that certain Deposit Trust Agreement, dated as of April 30, 1999 (the
"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. Capitalized terms used and not otherwise defined herein have the
meanings assigned to such terms in the Trust Agreement.
CERTIFICATION
The undersigned, as an authorized officer or agent of the Holder, hereby
certifies, represents, warrants, and agrees on behalf of the Holder as
follows:
1. The Holder is duly organized, validly existing and in good standing
under the laws of the jurisdiction in which it was formed and is authorized to
invest in the __% Certificate. The person executing this letter on behalf of
the Holder is duly authorized to do so on behalf of the Holder.
2. The Holder hereby acknowledges that no transfer of the __% Certificate
may be made unless such transfer is exempt from the registration requirements
of the Securities Act of 1933, as amended (the "Securities Act"), and
applicable state securities laws, or is made in accordance with the Securities
Act and such laws.
3. The Holder understands that the __% Certificate has 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 transferor reasonably
believes is (A) a qualified institutional buyer (as defined in Rule 144A under
the Securities Act) or (B) a Person involved in the organization or operation
of the Trust or an affiliate of such Person, in a transaction meeting the
requirements of Rule 144A under the Securities Act and in accordance with any
applicable securities laws of any state of the United States. The Holder
understands that the __% Certificate bears a legend to the foregoing effect.
4. The Holder is acquiring the __% Certificate for its own account or for
accounts for which it exercises sole investment discretion, and not with a
view to or for sale or other transfer in connection with any distribution of
the __% Certificate in any manner that would violate Section 5 of the
Securities Act or any applicable state securities laws, subject nevertheless
to any requirement of law that the disposition of the Holder's property shall
at all times be and remain within its control.
5. The Holder is (A) a "qualified institutional buyer" (a "QIB") as
defined in Rule 144A under the Securities Act, and is aware that the
transferor 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
Transferor). The Holder is able to bear the economic risks of such an
investment. The Holder is a QIB because [STATE FACTUAL BASIS FOR QIB STATUS]
6. If the Holder sells or otherwise transfers the registered ownership of
such __% Certificate, the Holder will comply with the restrictions and
requirements with respect to the transfer of the ownership of the __%
Certificate under the Trust Agreement, and the Holder will obtain from any
subsequent purchaser or transferee substantially the same certifications,
representations, warranties and covenants as required under the Trust
Agreement in connection with such subsequent sale or transfer thereof.
7. The Holder is not an entity that will hold a __% Certificate as
nominee (a "Book Entry Nominee") to facilitate the clearance and settlement of
such security through electronic book-entry changes in Accounts or
participating organizations.
8. The Holder (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 and is not directly or indirectly purchasing such __%
Certificate on behalf of, as investment manager of, as named fiduciary of, as
trustee of, or with assets of a Plan.
9. The Holder hereby agrees to indemnify each of the Issuer, the
Indenture Trustee and the Owner Trustee against any liability that may result
if the Holder's transfer of a __% Certificate (or any portion thereof) is not
exempt from the registration requirements of the Securities Act and any
applicable state securities laws or is not made in accordance with such
federal and state laws. Such indemnification of the Issuer, the Owner Trustee
shall survive the termination of the related Trust Agreement.
IN WITNESS WHEREOF, the Holder has caused this instrument to be executed
on its behalf, pursuant to the authority of its Board of Directors, by its
duly authorized signatory this ___ day of _________, 199_.
[NAME OF HOLDER]
-----------------------------------------
By: _____________________________________
Name: ___________________________________
Title: __________________________________
<PAGE>
EXHIBIT D
FEES AND EXPENSES OF OWNER TRUSTEE
ATTACHED
<PAGE>
EXHIBIT E
TO THE DEPOSIT TRUST AGREEMENT
HOME LOAN SCHEDULE
[See Schedule I to Indenture Tab 10]
<PAGE>
EXHIBIT F
TO THE DEPOSIT TRUST AGREEMENT
FORM OF CROSS RECEIPT
[Attached]
<PAGE>
CITY CAPITAL HOME LOAN TRUST 1999-1
ASSET-BACKED NOTES, SERIES 1999-1
Cross Receipt Between City Capital Markets Corporation and
City Capital Home Loan Trust 1999-1 Acknowledging Receipt of Mortgage Notes
Reference is made to that certain Deposit Trust Agreement, dated as of
April 30, 1999 (the "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. Capitalized terms used but not otherwise
defined herein shall have the meanings ascribed to such terms in the Trust
Agreement.
The Trust hereby acknowledges receipt from the Depositor of the Mortgage
Notes relating to the Home Loans identified on the Home Loan Schedule annexed
as Exhibit E to the Trust Agreement (the "Home Loans"). The Home Loans have an
Initial Pool Balance of $261,509,912.02.
CITY CAPITAL HOME LOAN TRUST 1999-1
By: Wilmington Trust Company, not in
its individual capacity but solely as
Owner Trustee of the Trust
By:
---------------------------------------
Authorized Signatory
The Depositor hereby acknowledges that it has instructed the Underwriter
to deliver to the Transferor $237, 954,381.22, in immediately available funds,
representing the aggregate net proceeds from the sale of the Notes delivered
to the Underwriter pursuant to the Underwriting Agreement, as part of the
Consideration for the contribution of the Home Loans by the Depositor to the
Trust as specified in the Trust Agreement. The Depositor instructs the Owner
Trustee to deliver a Certificate representing a 100% beneficial interest in
the Trust to City Capital Markets Corporation, as designee of the Depositor.
FINANCIAL ASSET SECURITIES CORP.
By:
---------------------------------------
Name:
Title:
Dated: May __, 1999
Exhibit 10.2
HOME LOAN SALE AGREEMENT
-------------------------
THIS HOME LOAN SALE AGREEMENT (this "Agreement"), made as of April 30,
1999, 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 1999-1 (the "Issuer"), which will be formed pursuant
to the terms of a Deposit Trust Agreement (the "Trust Agreement"), dated as of
April 30, 1999, 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 April 30, 1999 (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 1999-1 (the "Notes"), will be
issued.
5. The Notes shall be sold pursuant to an Underwriting Agreement dated
May 11, 1999 (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 May 19, 1999, Home Loans having an aggregate principal balance on
April 30, 1999 (the "Cut-off Date") of $261,509,912.02 (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. Schedule I shall
be amended from time to time by the Seller to reflect the substitution of Home
Loans, and the removal or repurchase of Home Loans pursuant to Section 7 of
this Agreement. Schedule I and any amendment thereto shall be delivered to the
Indenture Trustee and to the Issuer in both physical and computer-readable
form.
(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 ($237,954,381.22, 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
$237,954,381.22 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 after the Cut-off Date and all Principal Prepayments
and other unscheduled collections of principal collected in respect of the
Home Loans 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
the Home Loan Documents (other than the Assignments of Mortgage) for 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. 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 blank, but in
otherwise recordable form, to the Custodian no later than nine (9) Business
Days following the Closing Date. Following the occurrence of an Assignment
Event, the Seller will cause each Assignment of Mortgage relating to a Home
Loan to be completed in favor of "NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, AS TRUSTEE under an Indenture w/City Capital Home Loan Trust
1999-1 dated as of April 30, 1999" and the Assignments of Mortgage shall be
recorded as provided in Section 3(d) herein.
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. The Assignments of Mortgage
will be held by the Custodian in blank and are not required to be completed in
favor of the Indenture Trustee or recorded prior to the occurrence of an
Assignment Event; provided, however, that the Seller shall, at its expense,
notwithstanding whether an Assignment Event has occurred, cause an Assignment
of Mortgage to be completed and recorded for each Home Loan that is in
foreclosure or as otherwise may be required to permit the Servicer to properly
service the Home Loan under the Servicing Agreement. The Seller shall as
promptly as practicable but in no event later than 90 days following the
occurrence of an Assignment Event, at its own expense, cause each Assignment
of Mortgage in favor of the Indenture Trustee to be delivered for recordation
to the public recording office for the jurisdiction in which the related
Mortgaged Property is located. With respect to any Assignment of Mortgage as
to which the related recording information is unavailable within the time
period set forth above, such Assignment of Mortgage shall be submitted for
recording within 30 days after receipt of such information. The failure of the
related Assignment of Mortgage to contain evidence of recording thereof within
one year after the occurrence of an Assignment Event 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 cause the recordation of any Assignment of Mortgage is a result of
the (i) original Mortgage or intervening assignment of mortgage not having
been returned by the applicable recording office or (ii) the original
Assignment of Mortgage not having been returned by the applicable recording
office, and the Seller has provided to the Note Insurer evidence of
recordation of such document reasonably satisfactory to the Note Insurer, then
the Seller shall not be obligated to repurchase the related Home Loan.
The Indenture Trustee is hereby appointed as the attorney-in-fact of the
Seller with the power to prepare, execute and record Assignments of Mortgages
in the event that the Seller fails to do so on a timely basis as provided in
this paragraph (which recording shall be at the expense of the Seller).
The Indenture Trustee shall be provided a copy of each Assignment of
Mortgage submitted for recording and such copy shall be retained by it. In the
event that any such Assignment of Mortgage is lost or returned unrecorded
because of a defect therein, the Seller, at its own expense, shall promptly
prepare a substitute Assignment of Mortgage or cure such defect, as the case
may be, and thereafter the Seller shall be required to submit each such
Assignment of Mortgage for recording. Any failure of the Seller to comply with
this Section shall result in the obligation of the Seller to purchase the
related Mortgage Loan pursuant to the provisions of Section 7.
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 Home Loan 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 Section.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 May 28, 1999.
(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, as of
the date of delivery of the applicable Assignment of Mortgage, such
Assignment of Mortgage, delivered to the Indenture Trustee, is in blank
and is otherwise acceptable for recording under the laws of the
jurisdiction in which the Mortgaged Property is located. As of the
Closing Date, all blanks on any form (except for the Assignments of
Mortgage) required to be completed have been completed.
(16) Except in the case of not more than 1.0% 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 (November 1997, or more recent, edition) (the "Underwriting
Guidelines"). Except in the case of not more than 1.0% 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) Based solely on representations of the Obligors obtained at the
origination of the related Home Loans, approximately 99.40% (by
outstanding principal balance as of the Cut-off Date) will be secured by
owner occupied Mortgaged Properties which are the primary residences of
the related Obligors; approximately 0.53%% (by outstanding principal
balance as of the Cut-off Date) are planned unit developments and
approximately 0.07% (by outstanding principal balance as of the Cut-off
Date) are one-to-four family multi-family properties.
(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 Seller fails
to deliver to the Custodian an Assignment of Mortgage in blank, as certified
by the Custodian in the Interim Certification, or if the related Assignment of
Mortgage is not recorded following the occurrence of an Assignment Event as
provided in Section 3(d), then the Seller shall immediately repurchase the
related Home Loan at the Purchase Price therefor (unless such failure to
record does not have a material adverse effect on the Noteholders or the Note
Insurer or 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 1999-1)
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:
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Name:
-----------------------------------------
Title:
----------------------------------------
CITY CAPITAL MARKETS CORPORATION
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
FINANCIAL ASSET SECURITIES CORP.
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
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:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
<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 19th day of May, 1999, 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 April 30, 1999, 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 1999-1 (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 April 30, 1999, 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
after the Cut-off Date, and all other unscheduled collections collected in
respect of the Home Loans 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
"Assignment Event": The earliest to occur of any of the following: (i)
the Seller ceases to be "well-capitalized," within the meaning of the capital
adequacy regulations of the Comptroller of the Currency, or any successor
federal bank regulator having jurisdiction over the Seller; (ii) City National
Bank of West Virginia resigns or assigns its rights as Servicer under the
Servicing Agreement and a successor servicer has assumed its obligations
thereunder, unless such assignment is to an Affiliate of City National Bank of
West Virginia; (iii) City Capital Markets Corporation transfers or sells all
of its Percentage Interest in the Issuer unless such sale or transfer is made
to an Affiliate of City Capital Markets Corporation or City National Bank of
West Virginia; and (iv) receipt by the Seller of written notice from the Note
Insurer that it has determined, in its sole discretion, that recordation of
the Assignments of Mortgage is necessary to perfect the Issuer's security
interest in the Home Loans.
"Assignment of Mortgage": With respect to any Mortgage, an assignment,
notice of transfer or equivalent instrument, in recordable form, sufficient
under the laws of the jurisdiction in which the related Mortgaged Property is
located to reflect the sale of the Mortgage to the Trustee (whether in the
name of the Trustee or in blank), which assignment, notice of transfer or
equivalent instrument may be in blank or in the form of one or more blanket
assignments covering the Mortgage Loans secured by Mortgaged Properties
located in the same jurisdiction.
"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]"); or if such original Mortgage Note
cannot be located, a lost note affidavit, in the form of Exhibit C attached
hereto, together with a copy of the Mortgage Note certified as being a true
and correct copy thereof by the Seller.
(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 blank but otherwise in recordable form 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 April 30,
1999, among City Capital Home Loan Trust 1999-1, as Issuer, City National, as
Servicer, and Norwest Bank Minnesota, National Association, as Master Servicer
and Indenture Trustee.
<PAGE>
EXHIBIT C
FORM OF LOST NOTE AFFIDAVIT
---------------------------
I, ____________________________, being duly sworn, do hereby state under
oath that:
1. I, as ____________________ of City National Bank of West Virginia
(the "Company"), am authorized to make this Affidavit on behalf of
the Company.
2. The Company is the owner of the following described mortgage note
(the "Note"):
Loan No.:
Borrower(s):
Original Principal Amount:
3. The Company is the lawful owner of the Note, and the Company has not
canceled, altered, assigned, or hypothecated the Note.
4. The original Note, a true and correct copy of which is attached
hereto, was not located after a thorough and diligent search.
5. This affidavit is intended to be relied on by City Home Loan Owner
Trust 1999-1 (the "Issuer") and Norwest Bank Minnesota, National
Association, as indenture trustee (the "Indenture Trustee") under
the Indenture, dated as of April 30, 1999, among the Issuer and
Norwest Bank Minnesota, National Association, as Indenture Trustee
and as custodian and note administration, and respective successors
and assigns of the Issuer and the Indenture Trustee.
6. The Company hereby assigns its right, title and interest in the Note
to the Issuer and agrees immediately and without further
consideration to surrender the original Note to the Indenture
Trustee, on behalf of the Issuer, or their respective successor and
assigns if such original Note ever comes into the Company's
possession, custody or power.
7. The Company further agrees to indemnify and hold harmless the Issuer
and the Indenture Trustee and their respective successors and
assigns from any and all loss, liability, costs, damages, reasonable
attorneys' fees and expenses in connection with or arising out of
the representations made in this affidavit.
8. The Company agrees and acknowledges that this Affidavit may be
presented as evidence of the Note, whether in any proceeding or
action with respect thereto or otherwise, and hereby authorizes such
use of this Affidavit.
9. The representations, warranties and agreements herein shall bind the
undersigned and its successors and assigns, and shall inure to the
benefit of the Issuer and the Indenture Trustee and their respective
successors and assigns.
<PAGE>
EXECUTED THIS _____ day of ___________, 1999 on behalf of City
National Bank of West Virginia.
CITY NATIONAL BANK OF WEST VIRGINIA
(SEAL)
-----------------------------------
By:
Its:
STATE OF WEST VIRGINIA )
) ss:
COUNTY OF KANAWHA )
On the _____ day of ______________, 1999, before me,
__________________________, a notary public in and for said State, personally
appeared __________________________, personally known to me (or proved to me
on the basis of satisfactory evidence) to be the person whose name is
subscribed to the within instrument and acknowledged to me that he/she
executed the same in his/her authorized capacity, and that by his/her
signature on the instrument, the person, or the entity upon behalf of which
the person acted, executed the instrument.
WITNESS my hand and official seal.
---------------------------
Notary Public
My Commission Expires: __________________________________
SEAL
Exhibit 10.3
===========================================
SERVICING AGREEMENT
Dated as of April 30, 1999
among
CITY CAPITAL HOME LOAN TRUST 1999-1,
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 April 30, 1999
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <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.............................17
Section 2.03. Hazard Insurance Policies................................................................20
Section 2.04. Assumption and Modification Agreements...................................................20
Section 2.05. Servicer's Protection of Trust Estate; Realization upon Defaulted Home Loans.............22
Section 2.06. Custodian and Indenture Trustee to Cooperate; Release of Home Loan Files.................24
Section 2.07. Servicing Compensation; Payment of Certain Expenses by the Servicer......................25
Section 2.08. Annual Statement as to Compliance and Annual Call Report.................................26
Section 2.09. Annual Independent Public Accountants'Servicing Report...................................26
Section 2.10. Access to Certain Documentation and Information Regarding the Home Loans.................26
Section 2.11. Maintenance of Fidelity Bond and Errors and Omissions Policy.............................27
Section 2.12. Notices to the Issuer, the Rating Agencies, the Master Servicer, the Indenture Trustee
and the Note Insurer...........................................................................27
Section 2.13. Reports of Foreclosures and Abandonment of Mortgaged Properties..........................28
Section 2.14. Sub-Servicers and Sub-Servicing Agreements...............................................28
Section 2.15. Servicing for Benefit of the Note Insurer................................................28
Section 2.16. RESERVED.................................................................................29
Section 2.17. Filing of Financing Statements and Continuation Statements...............................29
ARTICLE III SERVICER REMITTANCE REPORT; MASTER SERVICER..........................................................29
Section 3.01. Servicer Remittance Report...............................................................29
Section 3.02. Master Servicer Duties...................................................................30
Section 3.03. RESERVED.................................................................................30
Section 3.04. Master Servicer Compensation.............................................................30
Section 3.05. Master Servicer Default..................................................................30
Section 3.06. Merger or Consolidation of Master Servicer...............................................31
Section 3.07. Resignation of Master Servicer...........................................................31
Section 3.08. Assignment or Delegation of Duties by the Master Servicer................................32
Section 3.09. Limitation on Liability of the Master Servicer and Others................................32
ARTICLE IV SERVICING ADVANCES....................................................................................33
Section 4.01. Servicing Advances.......................................................................33
ARTICLE V THE SERVICER...........................................................................................33
Section 5.01. Representations and Warranties of the Servicer...........................................33
Section 5.02. Liability of the Servicer................................................................35
Section 5.03. Merger or Consolidation of, or Assumption of the Obligations of, the Servicer............35
Section 5.04. Limitation on Liability of the Servicer and Others.......................................36
Section 5.05. Servicer Not to Resign...................................................................36
ARTICLE VI DEFAULT...............................................................................................37
Section 6.01. Events of Default........................................................................37
Section 6.02. Master Servicer to Act; Appointment of Successor.........................................39
Section 6.03. Notifications to Noteholders.............................................................40
Section 6.04. Assumption or Termination of Sub-Servicing Agreements by the Master Servicer, Indenture
Trustee or any Successor Servicer..............................................................40
Section 6.05. Indemnification..........................................................................40
ARTICLE VII TERMINATION..........................................................................................41
Section 7.01. Termination..............................................................................41
ARTICLE VIII MISCELLANEOUS PROVISIONS............................................................................42
Section 8.01. Amendment................................................................................42
Section 8.02. Governing Law............................................................................43
Section 8.03. Notices..................................................................................43
Section 8.04. Severability of Provisions...............................................................44
Section 8.05. Assignment...............................................................................44
Section 8.06. Third Party Beneficiary; Rating..........................................................44
Section 8.07. Counterparts.............................................................................44
Section 8.08. Intention of the Parties.................................................................44
Section 8.09. Waivers and Modifications................................................................45
Section 8.10. Further Agreements.......................................................................45
Section 8.11. Attorney-in-Fact.........................................................................45
SCHEDULES AND EXHIBITS
Schedule I Home Loan Schedule
Exhibit A Form of Annual Statement as to Compliance
Exhibit B Form of Power of Attorney
Exhibit C Form of Request for Release
Exhibit D Form of Liquidation Report
Exhibit E Data Fields for Monthly Reporting
Exhibit F Form of Initial Notice of Advance Recovery
for Liquidated Home Loan
</TABLE>
<PAGE>
THIS SERVICING AGREEMENT (this "Agreement"), dated as of April 30,
1999, among CITY CAPITAL HOME LOAN TRUST 1999-1, as Issuer of its Asset-Backed
Notes, Series 1999-1 (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 April 30, 1999, 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 1999-1 (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. 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 April 30, 1999,
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 May 19, 1999.
"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 1999-1 Asset-Backed Notes, Series 1999-1 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 Cut-off Date 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
April 30, 1999, 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
April 30, 1999, 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
Date 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 April 30, 1999, 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 the Cut-off Date (after application
of all payments of principal received in respect of any such Home Loan on and
before the Cut-off Date), which aggregate amount is $261,509,912.02.
"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 1999-1, 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 D
attached hereto.
"MASTER SERVICING FEE": With respect to any Payment Date, 1/12 of the
product of 0.095% 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.
29265) dated May 19, 1999, 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 1999-1, 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 June 1999.
"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 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
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 ss.
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 June 1999.
"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 1999-1
Asset-Backed Notes, Series 1999-1, 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 Cut-off Date 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. 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. Determination of Material Adverse Effect.
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. Servicing Generally.
(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. Collection of Certain Home Loan Payments; Collection
Account.
(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.
Section 2.03. 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. 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 March 25, 2030 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 addition, the Servicer may agree to the subordination of a Home
Loan (and request that the Indenture Trustee enter into a subordination
agreement with respect thereto) in connection with the refinancing of the
existing senior lien on the related Mortgaged Property or the substitution of a
new Mortgaged Property for the original Mortgaged Property, provided that (a)
in connection with a refinancing, such subordination would permit the related
Obligor to refinance the related senior lien to take advantage of a lower
interest rate or would permit the Obligor to extend the term of the related
senior lien and (b) with respect to any substitution of Mortgaged Property, the
resulting security for the Home Loan, in the good faith business judgment of
the Servicer, would not be impaired.
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 or the subordination of a 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,
amendment or subordination agreement, promptly following the execution thereof.
Such notice shall state that the conditions contained in this Section 2.04 have
been satisfied.
Section 2.05. Servicer's Protection of Trust Estate; Realization upon
Defaulted Home Loans
(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
in the form of Exhibit B and other documents necessary or appropriate to enable
the Servicer to carry out its servicing and administrative duties hereunder or
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. Custodian and Indenture Trustee to Cooperate; Release of
Home Loan Files.
(a) Upon the payment in full of the principal balance of any Home
Loan, the Servicer shall notify the Custodian and Indenture Trustee by
delivering two copies (one of which will be returned to the Master Servicer
with the Home Loan File) of a certification signed by a Servicing Officer in
the form of Exhibit C, or in a mutually agreeable electronic format which will,
in lieu of a signature on its face, originate from a Servicing Officer (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 two copies (one of which will
be returned to the Servicer with the Home Loan File) of a Request for Release
signed by a Servicing Officer on behalf of the related Master Servicer in
substantially the form attached as Exhibit C hereto, or in a mutually agreeable
electronic format which will, in lieu of a signature on its face, originate
from a Servicing Officer. 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. 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. Annual Statement as to Compliance and Annual Call
Report.
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, 2000, 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 will furnish (or cause to be furnished) to the Master
Servicer, on or before March 31 of each year, beginning with March 31, 2000, a
copy of the Consolidated Report of Condition and Income for the preceding
December 31 as filed with the Office of the Comptroller of the Currency.
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. Annual Independent Public Accountants' Servicing Report.
On or before March 31 of each year, beginning with March 31, 2000, 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. 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. 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. 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. Reports of Foreclosures and Abandonment of Mortgaged
Properties.
On or before February 28 of each year beginning in 2000, the Servicer
shall file the reports of foreclosures and abandonments of any Mortgaged
Property required by Code Section 6050J with the Internal Revenue Service. 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. 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. 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. RESERVED.
Section 2.17. 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. 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 E 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 (i) of clause (a) and clauses (f) through (p) of
the definition of "Payment Date Statement" in the Indenture, as well as (a) the
information set forth on Exhibit D 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 D 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. 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. RESERVED.
Section 3.04. 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. 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. 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. 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. 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. 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. 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; provided, however, that the Servicer will not be
obligated to make any Servicing Advance that it determines would not be
recoverable from subsequent collections or recoveries, including Liquidation
Proceeds and Insurance Proceeds, on the rleated Home Loan or otherwise.
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 F 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. 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. 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. 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. 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. 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. 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;
(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; or
(g) the Servicer ceases to be "adequately-capitalized," within the
meaning of the capital adequacy regulations of the Comptroller of the Currency,
or any successor federal bank regulator having jurisdiction over the Servicer.
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. 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. The Master Servicer shall
effectuate the transfer of the servicing responsibilities hereunder to itself
or a successor Servicer acceptable to the Note Insurer no later than 90 days
following the Master Servicer's receipt of a notice of termination of the
Servicer pursuant to this Section 6.02. Notwithstanding the foregoing, however,
the Master Servicer shall not be held liable by reason of any failure to make,
or any delay in making, any distribution hereunder or any portion thereof
caused by the failure of the Servicer to deliver, or any delay in delivering,
cash, documents or records to it. 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. 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. 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. 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. 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. 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. 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. 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 1999-1; (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 1999-1 Asset-Backed Notes, Series 1999-1); (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 1999-1;
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. 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. 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. 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. 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. 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. 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. 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. 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 1999-1,
AS ISSUER
By: Wilmington Trust Company, not in its
individual capacity, but solely
as Owner Trustee
By:______________________________________
Authorized Signatory
CITY NATIONAL BANK OF WEST VIRGINIA,
AS SERVICER
By:_______________________________________
Name:
Title:
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
AS MASTER SERVICER
By:________________________________________
Name:
Title:
NORWEST BANK MINNESOTA, NATIONAL ASSOCATION
AS INDENTURE TRUSTEE AND NOT IN ITS
INDIVIDUAL CAPACITY
By:_________________________________________
Name:
Title:
Servicing Agreement
<PAGE>
ACKNOWLEDGED:
The Custodian hereby acknowledges its obligations as Custodian under
this Agreement.
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, AS CUSTODIAN
By:_____________________________________
Name:
Title:
Servicing Agreement
<PAGE>
SCHEDULE I
HOME LOAN SCHEDULE
See Schedule I attached to Indenture at Tab __
<PAGE>
EXHIBIT A
FORM OF ANNUAL STATEMENT AS TO COMPLIANCE
The undersigned, ________________________, of City National Bank of
West Virginia (the "Servicer"), in its capacity as Servicer under that certain
Servicing Agreement dated as of April 30, 1999 (the "Servicing Agreement")
among City Capital Home Loan Trust 1999-1, as Issuer, City National Bank of
West Virginia, as Servicer, and Norwest Bank Minnesota, National Association,
as Indenture Trustee and as Master Servicer, does hereby certify pursuant to
Section 2.08 of the Servicing Agreement that as of the ___ day of ____________,
____:
(a) review of the activities of the Servicer for the year ended
December 31, ____ and of its performance under the Servicing
Agreement has been made under my supervision, and
(b) to the best of my knowledge, based on such review, the
Servicer has fulfilled all of its material obligations under
the Servicing Agreement throughout such year.
IN WITNESS WHEREOF, I have hereunto signed my name as of this ____ day
of ___________, ____.
Name:
Title:
<PAGE>
EXHIBIT B
FORM OF POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS: That Norwest Bank Minnesota, National
Association (Norwest Bank Minnesota), whose address is 11000 Broken Land
Parkway Columbia, Maryland, organized under the laws of the United States of
America (Norwest Bank Minnesota), hereby appoints City Mortgage Services,
("City") an unincorporated division of City National Bank of West Virginia, a
national banking association, whose address is 25 Gatewater Road P.O. Box 7520
Cross Lanes, WV 25356, a West Virginia corporation, as its attorney-in-fact to
execute all documents necessary to subordinate, reconvey, transfer, assign,
endorse, or release any lien created pursuant to a mortgage or deed of trust
securing a mortgage note presently owned by Norwest Bank Minnesota, in its
capacity as Indenture Trustee. City is authorized to so execute and file such
documents in connection with the full payment of all outstanding principal and
other amounts due pursuant to such mortgage note and the subordination of said
Deed of Trust or Mortgage pursuant to the servicing agreement, dated April 30,
1999, among City Capital Home Loan Trust 1999-1, City National Bank of West
Virginia and Norwest Bank Minnesota. The authority of the attorney-in-fact to
exercise any power herein granted shall commence on the date set forth below
and shall remain in full force and effect until such time as it is revoked by a
written notice sent by Norwest Bank Minnesota to City.
IN WITNESS WHEREOF, Norwest Bank Minnesota, National Association, As
Trustee has caused this Limited Power of Attorney to be duly executed by an
authorized officer.
- ----------------------------------------- ----------------------------------
Witness Witness
Date: NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION AS TRUSTEE
(Corporate Seal)
-------------------------------------
By:
STATE OF Maryland
COUNTY OF Howard
On _____________, 1999, before me, ___________, a Notary Public in and
for the County of Baltimore, State of Maryland, personally appeared __________
of Norwest Bank Minnestoa, National Association, as Trustee personally known to
me (or proved to me on the basis of satisfactory evidence) to be the person(s)
whose name(s) is/are subscribed to the within instrument and acknowledged to me
that he executed the same in his/her/ their authorized capacity, and that by
his/her/ their signature on the instrument the person(s), on the entity upon
behalf of which the person(s) acted, executed the instrument.
(Notary Seal)
- ------------------------------------------
Notary Seal Expires:
<PAGE>
EXHIBIT C
REQUEST FOR RELEASE OF DOCUMENTS AND RECEIPT
TO: Norwest Bank Minnesota, National Association
11000 Broken Land Parkway
Columbia, Maryland 21044
Norwest Bank Minnesota, National Association
Sixth Street and Marquette Avenue
Minneapolis, Minnesota 55479
RE: Servicing Agreement, dated as of April 30, 1999, among City Capital
Home Loan Trust 1999-1 (the "Issuer"), City National Bank of West
Virginia, as Servicer, and Norwest Bank Minnesota, National
Association, as Indenture Trustee and as Master Servicer (the
"Servicing Agreement")
In connection with the administration of the Home Loans held by you as
the Custodian, we request the release and acknowledge receipt, of the Home Loan
File for the Home Loan described below, for the reason indicated.
Obligor's Name and Address & Zip Code:
Home Loan Number:
Reason for Requesting Documents (check one)
___ 1. Home Loan Paid in Full. (The Servicer hereby certifies that all
amounts received in connection therewith have been deposited
into the Collection Account as provided in the Servicing
Agreement.)
___ 2. Home Loan in Foreclosure.
___ 3. Home Loan Liquidated by _________________. (The Servicer hereby
certifies that all proceeds of foreclosure, insurance,
condemnation or other liquidation have been finally received.)
___ 4. Other (explain). _______________________________
If item 1 or 3 above is checked, and if the Home Loan File was
previously released to us, please release to us our previous request and
receipt on file with you relating to the specified Home Loan.
If item 2 or 4 above is checked, upon our return of the Home Loan File
to you as the Custodian, please acknowledge your receipt by signing in the
space indicated below, and returning this form.
Capitalized terms used herein but not defined herein have the meanings
ascribed to them in the Servicing Agreement.
CITY NATIONAL BANK OF WEST VIRGINIA,
AS SERVICER
By: ____________________________________
Name: _____________________________
Title: _____________________________
Date: ______________________________
Acknowledgment of Documents returned to the Custodian:
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION AS CUSTODIAN
By: ___________________________________
Name:______________________________
Title: ____________________________
Date: _____________________________
<PAGE>
EXHIBIT D
FORM OF LIQUIDATION REPORT
DATE:
SERVICER NAME:
SERVICER ADDRESS:
SERVICER LOAN NUMBER:
Borrower Name:
Borrower Address:
Norwest Account Number:
Series #:
Type of Liquidation: _____ REO Disposition
_____ Charge Off
_____ Short Pay off
Date Last Paid: Next Payment Due:
Date of REO Date of REO Disposition
Original Principal Balance: $__________
Property Sale Price/Estimated Market
Value of Disposition: $__________
PROCEEDS
- --------
Proceeds from Sale of Acquired Property: $_______________
Principal Prepayment: $_______________
Insurance Proceeds: $_______________
Initial Advance Recovery: $_______________
Other (itemize): $_______________
Total Proceeds: $__________
EXPENSES
- --------
Actual Unpaid Principal Balance $_______________
Attorney's Fees: $_______________
Taxes: $_______________
Property Maintenance: $_______________
Insurance Premiums: $_______________
Other (itemize): $_______________
Total Expenses: $__________
LOSS/GAIN: $__________
<PAGE>
EXHIBIT E
DATA FIELDS FOR MONTHLY REPORTING
Field Name Position Length Cobil "picture"
- ------------------------------------------------------------------------------
Loan Number 001-010 10 X(10)
P&I Payment Amount 011-021 11 S9(9)V9(02)
Note Rate 022-027 6 S9(2)V9(04)
Service Fee Rate 028-033 6 S9(2)V9(04)
Ending UPB 034-044 11 S9(9)V9(02)
Next Due Date 045-052 8 CCYYMMDD
Curtailment Date #1 053-060 8 CCYYMMDD
Curtailment Amount #1 061-071 11 S9(9)V9(02)
Curtailment Date #2 072-079 8 CCYYMMDD
Curtailment Amount #2 080-090 11 S9(9)V9(02)
Curtailment Date #3 091-098 8 CCYYMMDD
Curtailment Amount #3 099-109 11 S9(9)V9(02)
FHA Premium Collected
on Invoiced** 110-120 11 S9(9)V9(02)
Paid in Full or Liquidation
Premium 121-131 11 S9(9)V9(02)
Principal Adjustment
Amount 132-142 11 S9(9)V9(02)
Action Code 143-144 2 X(02)
Gross Scheduled Interest
Amount 145-155 11 S9(9)V9(02)
Claims Paid Amount** 156-166 11 S9(9)V9(02)
Charge Off (Loan Loss)
Amount 167-177 11 S9(9)V9(02)
Date of PIF 178-185 8 CCYYMMDD
Reason for Default 186-187 2 X(02)
** if applicable
SERVICING CONTRACT NAME: _______________________ PHONE #: ________________
<PAGE>
EXHIBIT F
INITIAL NOTICE OF ADVANCE RECOVERY FOR
LIQUIDATED HOME LOAN
DATE:
SERVICER NAME:
SERVICER ADDRESS:
SERVICER LOAN NUMBER:
Borrower Name:
Borrower Address:
Norwest Account Number:
Series #:
Outstanding Principal Balance: $_______________
Next Payment Due:
Action Code/Status of Loan:
ADVANCES/EXPENSES INCURRED THROUGH __/__/__
Attorney Fees: $_______________
Property Maintenance: $_______________
Hazard Loss Expenses: $_______________
Taxes: $_______________
Insurance Premiums: $_______________
Other (Itemize): $_______________
Total Advance to Date: $_______________
Reimbursement Amount Requested: $_______________
Remaining Advance Balance to Date: $_______________
SERVICING CONTRACT NAME: _______________________ PHONE #: ________________
Exhibit 10.4
FINANCIAL GUARANTY INSURANCE POLICY
OBLIGATIONS: City Capital Home Loan Trust 1999-1 POLICY NUMBER: 29265
Asset-Backed Notes, Series 1999-1
$238,236,000 Class A 6.85% 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 (as described below) that an amount equal to each
full and complete Insured Payment (as described below) will be received from the
Note Insurer by Norwest Bank Minnesota, National Association, or its successor,
as 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.
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 April 30, 1999 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) a Saturday or a Sunday, (b)
a day on which the Note Insurer is closed or (c) 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 facsimile 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 19th day of May, 1999.
MBIA Insurance Corporation
/s/ Gary C. Stinton
----------------------------
President
Attest: /s/ An McDonald
-----------------------------
Assistant Secretary
<PAGE>
EXHIBIT A
TO NOTE GUARANTY INSURANCE POLICY
NUMBER: 29265
NOTICE UNDER NOTE GUARANTY
INSURANCE POLICY NUMBER: 29265
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: 29265 (the "Policy") issued by the Note
Insurer in respect of City Capital Home Loan Trust 1999-1 Asset-Backed Notes,
Series 1999-1, $238,236,000 Class A 6.85% Notes.
(i) the Indenture Trustee is the indenture trustee under the
Indenture dated as of April 30, 1999, between City Capital Home
Loan Trust 1999-1, 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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