SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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) October 30, 1997
Financial Asset Securitization, Inc.
(Exact name of registrant as specified in charter)
Virginia 0-15483 53-1526174
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
901 East Byrd Street, Richmond, Virginia 23219
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (804) 344-7575
(Former name or former address, if changed since last report.)
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Item 1. Changes in Control of Registrant.
Not Applicable.
Item 2. Acquisition or Disposition of Assets.
Not Applicable.
Item 3. Bankruptcy or Receivership.
Not Applicable.
Item 4. Changes in Registrant's Certifying Accountant.
Not Applicable.
Item 5. Other Events.
On October 30, 1997, the Registrant caused the issuance and sale
of $55,809,878 aggregate initial principal amount of Mortgage
Participation Securities, Series 1997-1 (the "Securities") pursuant to the
Series 1997-1 Pooling Agreement (the "Pooling Agreement"), dated as of
October 1, 1997, by and between the Registrant, as Seller, and Norwest
Bank Minnesota, National Association, as Trustee. The Securities were
issued in one Class, with an Initial Principal Amount and a Pass-Through
Rate as described below:
Class Initial Pass-Through
Designation Principal Amount Rate
Class A-1 $55,809,878 (1)
(1) The effective per annum interest rate borne by the Securities
during the calendar month preceding the month in which the
Distribution Date occurs (each, an "Interest Accrual Period")
will equal a fraction, expressed as a percentage truncated at the
fourth decimal place, the numerator of which is equal to the
aggregate amount in respect of interest paid to the
Securityholders for the related Interest Accrual Period
multiplied by 12, and the denominator of which is the principal
amount of the Securities immediately prior to such Distribution
Date. The effective per annum interest rate borne by the
Securities during the first Interest Accrual Period is projected
to be approximately 6.8825%
The Securities evidence, in the aggregate, the entire beneficial
ownership interest in a trust (the "Trust"), which consists primarily of all or
a portion of (i) nine classes of Guaranteed REMIC Pass-Through Certificates
issued by FNMA representing beneficial ownership interests in nine separate
Underlying FNMA Trusts (the "Pooled FNMA Certificates") and (ii) nine classes of
Multiclass Mortgage Securities or Multiclass Mortgage Participation Certificates
issued by FHLMC as part of nine separate Underlying FHLMC Series (the "Pooled
FHLMC Certificates" and together with the Pooled FNMA Certificates, the "Pooled
Certificates") transferred to the Trust by the Registrant pursuant to the
Pooling Agreement. The Pooled Certificates were purchased by the Registrant in a
privately-negotiated transaction with Bear, Stearns & Co. Inc. ("Bear") pursuant
to a Purchase Agreement (the "Purchase Agreement"), dated October 1, 1997, by
and between the Registrant, as Purchaser and Bear, as Seller.
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The Class A-1 Securities have been sold by the Registrant to Bear
pursuant to (i) an Underwriting Agreement (the "Underwriting Agreement"), dated
October 28, 1997, by and between Bear and the Registrant and (ii) a Terms
Agreement (the "Terms Agreement"), dated October 28, 1997, by and between Bear
and the Registrant.
Capitalized terms used but not defined herein shall have the meanings
assigned to them in the Pooling Agreement.
Item 6. Resignations of Registrant's Directors. Not Applicable.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
Exhibits
1.1 Underwriting Agreement, dated October 28, 1997, by and between
the Registrant and Bear, Stearns & Co. Inc.
4.1 Series 1997-1 Pooling Agreement, dated as of October 1, 1997,
by and between the Registrant, as Seller and Norwest Bank
Minnesota, National Association, as Trustee (including
exhibits).
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Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
October 28, 1997 FINANCIAL ASSET SECURITIZATION, INC.
By: /s/ William E. Hardy
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Name: William E. Hardy
Title: Executive Vice President
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INDEX TO EXHIBITS
Page
1.1 Underwriting Agreement, dated October 28, 1997, by and between
Bear, Stearns & Co. Inc. and the Registrant..........................
4.1 Series 1997-1 Pooling Agreement, dated as of October 1, 1997, by and
between the Registrant, as Seller, and Norwest Bank Minnesota,
National Association, as Trustee......................................
EXHIBIT 1.1
FINANCIAL ASSET SECURITIZATION, INC.
MORTGAGE PARTICIPATION SECURITIES
UNDERWRITING AGREEMENT
October 28, 1997
Bear, Stearns & Co. Inc.
245 Park Avenue
New York, New York 10167
Dear Sirs:
1. Introduction. Financial Asset Securitization, Inc., a
Virginia corporation (the "Company"), from time to time proposes to issue and
sell Mortgage Participation Securities ("Securities") in various series (each a
"Series"), and, within each Series, in various classes, in one or more offerings
on terms determined at the time of sale. The Securities of each series will be
issued pursuant to a pooling agreement (each, a "Pooling Agreement") among the
Company, as seller, one or more master servicers which may include the Company
and a third-party trustee (the "Trustee"). Upon issuance, the Securities of each
series will evidence undivided interests in the Trust Fund (as defined in the
Pooling Agreement) established for such series containing mortgages or mortgage
related securities or, in the event the Trust Fund, or a portion thereof,
constitutes the upper tier of a two-tier real estate mortgage investment conduit
("REMIC"), the Trust Fund may contain interests issued by a lower tier trust
which will contain mortgages or mortgage related securities, all as described in
the Prospectus (as defined below). Terms not defined herein which are defined in
the Pooling Agreement shall have the meanings ascribed to them in the Pooling
Agreement.
Whenever the Company determines to make an offering of a
Series of Securities (an "Offering") through you or an underwriting syndicate
managed or co-managed by you, it will offer to enter into an agreement ("Terms
Agreement") providing for the sale of such Securities to, and the purchase and
offering thereof by, you and such other co-managers and underwriters, if any,
which have been selected by you and have authorized you to enter into such Terms
Agreement and other related documentation on their behalf (the "Underwriters,"
which term shall
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include you whether acting alone in the sale of Securities or
as a co-manager or as a member of an underwriting syndicate). The Terms
Agreement relating to each Offering shall specify the principal amount of
Securities to be issued and their terms not otherwise specified in the Pooling
Agreement, the price at which the Securities are to be purchased by each of the
Underwriters from the Company and the initial public offering price or the
method by which the price at which the Securities are to be sold will be
determined. The Terms Agreement, which shall be substantially in the form of
Exhibit A hereto, may take the form of an exchange of any standard form of
written telecommunication between you and the Company. Each Offering governed by
this Agreement, as supplemented by the applicable Terms Agreement, shall inure
to the benefit of and be binding upon the Company and each of the Underwriters
participating in the Offering of such Securities.
The Company hereby agrees with the Underwriters as follows:
2. Representations and Warranties of the Company.
The Company represents and warrants to you as of the date hereof, and to the
Underwriters named in the applicable Terms Agreement as of the date of such
Terms Agreement, as follows:
(a) A registration statement, including a prospectus, and such
amendments thereto as may have been required to the date hereof, relating to the
Securities and the offering thereof from time to time in accordance with Rule
415 under the Securities Act of 1933, as amended ("Act"), have been filed with
the Securities and Exchange Commission ("Commission") and such registration
statement as amended has become effective. Such registration statement as
amended and the prospectus relating to the sale of Securities constituting a
part thereof as from time to time amended or supplemented (including any
prospectus filed with the Commission pursuant to Rule 424 of the rules and
regulations of the Commission ("Rules and Regulations") under the Act, including
any documents incorporated by reference therein pursuant to Item 12 of Form S-3
under the Act which were filed under the Securities Exchange Act of 1934, as
amended (the "Exchange Act") on or before the Effective Date of the Registration
Statement or the date of the Prospectus Supplement, are respectively referred to
herein as the "Registration Statement" and the "Prospectus"; provided, however,
that a supplement to the Prospectus (a "Prospectus Supplement") prepared
pursuant to Section 5(a) hereof shall be deemed to have supplemented the
Prospectus only with respect to the Offering of the Series of Securities to
which it relates. The conditions of Rule 415 under the Act have been satisfied
with respect to the Company and the Registration Statement.
(b) On the effective date of the Registration Statement, the
Registration Statement and the Prospectus conformed in all material respects to
the requirements of the Act and the Rules and Regulations, and did not include
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading, and on the date of each Terms Agreement, the Registration Statement
and the Prospectus will conform in all material respects to the requirements of
the Act and the Rules and Regulations, and the Prospectus will not include any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the
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statements therein, in light of the circumstances under which they are made, not
misleading; provided, however, that the foregoing does not apply to (i)
statements or omissions in such documents based upon written information
furnished to the Company by or for the benefit of any Underwriter specifically
for use therein or (ii) any Current Report (as defined in Section 5(b) below) or
in any amendment thereof or supplement thereto, incorporated by reference in
such Registration Statement or such Prospectus (or any amendment thereof or
supplement thereto).
(c) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus except as otherwise
stated therein, there has been no material adverse change in the condition,
financial or otherwise, earnings, affairs, regulatory situation or business
prospects of the Company whether or not arising in the ordinary course of
business.
(d) This Agreement has been, and the Pooling Agreement, when
executed and delivered as contemplated hereby and thereby will have been, duly
executed and delivered by the Company and each constitutes, or will constitute
when so executed and delivered, a legal, valid and binding instrument
enforceable against the Company in accordance with its terms, subject, as to the
enforceability of remedies, to applicable bankruptcy, reorganization,
insolvency, moratorium and other laws affecting the rights of creditors
generally, and to general principles of equity and the discretion of the court
(regardless of whether enforceability of such remedies is considered in a
proceeding in equity or at law), and except that the provisions relating to
indemnification and contribution may be unenforceable as against public policy.
(e) At the applicable Closing Date, each applicable Terms
Agreement will have been duly authorized, executed and delivered by the Company
and will be a legal, valid and binding obligation of the Company enforceable in
accordance with its terms, subject to the effect of bankruptcy, insolvency,
moratorium, fraudulent conveyance and other laws affecting the rights of
creditors generally, and to general principles of equity and the discretion of
the court (regardless of whether enforceability of such remedies is considered
in a proceeding in equity or at law), and except that the provisions relating to
indemnification and contribution may be unenforceable as against public policy.
(f) The issuance of the Securities has been duly authorized by
the Company and, when such Securities are executed and authenticated in
accordance with the Pooling Agreement and delivered against payment pursuant to
this Agreement, such Securities will be validly issued and outstanding; and the
Securities will be entitled to the benefits provided by the Pooling Agreement.
The Securities are in all material respects in the form contemplated by the
Pooling Agreement.
(g) Neither the Company nor the Trust Fund is or, as a result
of the offer and sale of the Securities as contemplated in this Agreement will
become, an "investment company" as defined in the Investment Company Act of
1940, as amended (the "Investment Company Act"), or an "affiliated person" of
any such "investment company" that is registered or is required to be registered
under the Investment Company Act (or an "affiliated person" of any such
"affiliated person"), as such terms are defined in the Investment Company Act.
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(h) The representations and warranties made by the Company in
the Pooling Agreement and made in any Officer's Certificate of the Company
delivered pursuant to the Pooling Agreement will be true and correct at the time
made and on the Closing Date.
3. Purchase, Sale and Delivery of Securities. Subject to the
terms and conditions hereof, the delivery of the applicable mortgage loans or
mortgage related securities and in reliance upon the representations and
warranties set forth herein, the Company agrees to sell to the Underwriters and
the Underwriters agree to purchase the Securities. Delivery of and payment for
the Securities shall be made at your office or at such other location as you
shall make known at such time as shall be specified in the applicable Terms
Agreement, each such time being herein referred to as a "Closing Date." Delivery
of the Securities shall be made by the Company to the Underwriters against
payment of the purchase price specified in the applicable Terms Agreement in
Federal Funds by wire or check. Unless delivery is made through the facilities
of the Depository Trust Company, the Securities so to be delivered will be in
definitive, fully registered form, in such denominations and registered in such
names as you request, and will be made available for inspection and packaging at
your office at least twenty-four hours prior to the applicable Closing Date.
4. Offering by Underwriters. It is understood that the
Underwriters propose to offer the Securities for sale to the public as set forth
in the Prospectus.
5. Covenants of the Company. The Company covenants and agrees
with you and the several Underwriters participating in the Offering of any
Series of Securities that:
(a) In connection with the execution of each Terms Agreement,
the Company will prepare a Prospectus Supplement to be filed under the Act
setting forth the principal amount of Securities covered thereby and their terms
not otherwise specified in the Prospectus, the price at which the Securities are
to be purchased by the Underwriters from the Company, either the initial public
offering price or the method by which the price at which the Securities are to
be sold will be determined, the selling concession and reallowance, if any, any
delayed delivery arrangements, and such other information as you and the Company
deem appropriate in connection with the offering of the Securities, but the
Company will not file any amendments to the Registration Statement or any
amendments or supplements to the Prospectus, unless it shall first have
delivered copies of such amendments or supplements to you, and you shall not
have objected thereto promptly after receipt thereof. The Company will advise
you or your counsel promptly (i) when notice is received from the Commission
that any post-effective amendment to the Registration Statement has become or
will become effective, and (ii) of any order or communication suspending or
preventing, or threatening to suspend or prevent, the offer and sale of the
Securities, or of any proceedings or examinations that may lead to such an order
or communication, whether by or of the Commission or any authority administering
any state securities or Blue Sky law, as soon as the Company is advised thereof,
and will use its best efforts to prevent the issuance of any such order or
communication and to obtain as soon as possible its lifting, if issued.
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(b) The Company will cause any Computational Materials and any
Structural Term Sheets (each as defined in Section 8 below) with respect to each
Series of Securities that are delivered by the Underwriters to the Company
pursuant to Section 8 to be filed with the Commission on a Current Report on
Form 8-K (a "Current Report") pursuant to Rule 13a-11 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") on the business day
immediately following the day on which such Computational Materials and
Structural Term Sheets are delivered to counsel for the Company by any of the
Underwriters prior to 10:30 a.m. (and will use its best efforts to cause such
Computational Materials and Structural Term Sheets to be so filed prior to 2:00
p.m., New York time, on such business day), and will promptly advise you when
such Current Report has been so filed. The Company will cause one Collateral
Term Sheet (as defined in Section 9 below) with respect to an Offering of a
Series that is delivered by any of the Underwriters to the Company in accordance
with the provisions of Section 9 to be filed with the Commission on a Current
Report pursuant to Rule 13a-11 under the Exchange Act on the business day
immediately following the day on which such Collateral Term Sheet is delivered
to counsel for the Company by any of the Underwriters prior to 10:30 a.m. In
addition, if at any time prior to the availability of the related Prospectus
Supplement, any of the Underwriters has delivered to any prospective investor a
subsequent Collateral Term Sheet that reflects, in the reasonable judgment of
such Underwriter and the Company, a material change in the characteristics of
the mortgage loans or mortgage related securities for the related Series from
those on which a Collateral Term Sheet with respect to the related Series
previously filed with the Commission was based, the Company will cause any such
Collateral Term Sheet that is delivered by such Underwriter to the Company in
accordance with the provisions of Section 9 to be filed with the Commission on a
Current Report on the business day immediately following the day on which such
Collateral Term Sheet is delivered to counsel for the Company by such
Underwriter prior to 2:00 p.m. In each case, the Company will promptly advise
you when such Current Report has been so filed. Notwithstanding the four
preceding sentences, the Company shall have no obligation to file any materials
provided by any of the Underwriters pursuant to Sections 8 and 9 which (i) in
the reasonable determination of the Company are not required to be filed
pursuant to the Kidder Letters or the PSA Letter (each as defined in Section 8
below), or (ii) contain erroneous information or contain any untrue statement of
a material fact or, when read in conjunction with the Prospectus and Prospectus
Supplement, omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; it being understood,
however, that the Company shall have no obligation to review or pass upon the
accuracy or adequacy of, or to correct, any Computational Materials or ABS Term
Sheets (as defined in Section 9 below) provided by such Underwriter to the
Company pursuant to Section 8 or Section 9 hereof. The Company shall give notice
to you and such Underwriter of its determination not to file any materials
pursuant to clause (i) of the preceding sentence and agrees to file such
materials if such Underwriter or you reasonably object to such determination
within one business day after receipt of such notice.
(c) If at any time when a prospectus relating to the
Securities is required to be delivered under the Act any event occurs as a
result of which in the opinion of counsel for
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the Company or the Underwriters the Prospectus as then amended or supplemented
would include an untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, or if it is necessary at any time to
amend the Prospectus to comply with the Act, the Company promptly will prepare
and file with the Commission an amendment or supplement which will correct such
statement or omission or an amendment which will effect such compliance;
provided, however, that (i) the Company will not be required to file any such
amendment or supplement with respect to any Computational Materials, Structural
Term Sheets or Collateral Term Sheets incorporated by reference in the
Prospectus other than any amendments or supplements of such Computational
Materials or Structural Term Sheets that are furnished to the Company by the
Underwriter pursuant to Section 8(e) hereof or any amendments or supplements of
such Collateral Term Sheets that are furnished to the Company by the Underwriter
pursuant to Section 9(d) hereof which are required to be filed in accordance
therewith and (ii) any such amendment or update prepared at the request of the
Underwriters or as required by applicable securities laws more than nine months
after the Closing Date shall be at the expense of the Underwriters.
(d) With respect to each Series of Securities, the Company
will make generally available to the holders of the Securities and will deliver
to you, in each case as soon as practicable, an earnings statement covering the
twelve-month period beginning after the date of the Terms Agreement in respect
of such series of Securities, which will satisfy the provisions of Section 11(a)
of the Act with respect to the Securities.
(e) The Company will furnish to you copies of the Registration
Statement (two of which will be signed and will include all documents and
exhibits thereto or incorporated by reference therein), each related preliminary
prospectus, the Prospectus, and all amendments and supplements to such
documents, in each case as soon as available and in such quantities as you
request.
(f) The Company will use its best efforts arrange for the
qualification of the Securities for sale and the determination of their
eligibility for investment under the laws of such jurisdictions as you
reasonably designate and will continue such qualifications in effect so long as
reasonably required for the distribution; provided, however, that the Company
shall not be required to qualify to do business in any jurisdiction where it is
not qualified on the date of the related Terms Agreement or to take any action
which would subject it to general or unlimited service of process in any
jurisdiction in which it is not, on the date of the related Terms Agreement,
subject to such service of process; and provided further that the Underwriters
will pay all costs and expenses associated therewith.
(g) The Company will pay all expenses incidental to the
performance of its obligations under this Agreement and any Terms Agreement and
will reimburse the Underwriters for any expenses (including fees and
disbursements of counsel and accountants) incurred by them in connection with
qualification of the Securities and determination of their eligibility for
investment under the laws of such jurisdictions as you designate and the
printing of memoranda
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relating thereto, for any fees charged by the nationally recognized statistical
rating agencies for the rating of the Securities, for the filing fee of the
National Association of Securities Dealers, Inc. relating to the Securities, if
applicable, and for expenses incurred in distributing preliminary prospectuses
to the Underwriters.
(h) During the period when a prospectus is required by law to
be delivered in connection with the sale of the Securities pursuant to this
Agreement, the Company will file or cause to be filed, on a timely and complete
basis, all documents that are required to be filed by the Company with the
Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.
(i) So long as the Securities of a Series shall be
outstanding, the Company will deliver to you the annual statement of compliance
delivered to the Trustee pursuant to the Pooling Agreement and the annual
statement of a firm of independent public accountants furnished to the Trustee
pursuant to the Pooling Agreement as soon as such statements are furnished to
the Trustee.
6. Conditions to the Obligations of the Underwriters. The
obligations of the Underwriters named in any Terms Agreement to purchase and pay
for the Securities will be subject to the accuracy of the representations and
warranties on the part of the Company as of the date hereof, the date of the
applicable Terms Agreement and the applicable Closing Date, to the accuracy of
the statements made in any officers' certificates (each an "Officer's
Certificate") pursuant to the provisions hereof, to the performance by the
Company of its obligations hereunder and to the following additional conditions
precedent:
(a)(i) At the time the applicable Terms Agreement is executed,
Deloitte & Touche and/or any other firm of certified independent public
accountants acceptable to you shall have furnished to you a letter, addressed to
you, and in form and substance satisfactory to you in all respects, stating in
effect that using the assumptions and methodology used by the Company, all of
which shall be described in such letter or the Prospectus Supplement, they have
recalculated such numbers, percentages and weighted average lives set forth in
the Prospectus as you may reasonably request, compared the results of their
calculations to the corresponding items in the Prospectus, and found each such
number, percentage, and weighted average life set forth in the Prospectus to be
in agreement with the results of such calculations. To the extent historical
financial delinquency or related information is included with respect to one or
more master servicers, such letter or letters shall also relate to such
information.
(a)(ii) At the Closing Date, Deloitte & Touche and/or any
other firm of certified independent public accountants acceptable to you shall
have furnished to you a letter, addressed to you, and in form and substance
satisfactory to you in all respects, relating to the extent such information is
not covered in the letter or letters provided pursuant to clause (a)(i), to a
portion of the information set forth on the Schedule attached to the Pooling
Agreement and the characteristics of the mortgage loans or mortgage related
securities, as presented in the Prospectus Supplement or the Form 8-K relating
thereto, or if a letter relating to the same
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information is provided to the Trustee, indicating that you are entitled to rely
upon its letter to the Trustee.
(b) Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus, there shall not have
been any change, or any development involving a prospective change, in or
affecting the business or properties of the Company or any of its affiliates the
effect of which, in any case, is, in your judgment, so material and adverse as
to make it impracticable or inadvisable to proceed with the Offering or the
delivery of the Securities as contemplated by the Registration Statement and the
Prospectus. All actions required to be taken and all filings required to be made
by the Company under the Act and the Exchange Act prior to the sale of the
Securities shall have been duly taken or made; and prior to the applicable
Closing Date, no stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose shall have
been instituted, or to the knowledge of the Company or you, shall be
contemplated by the Commission or by any authority administering any state
securities or Blue Sky law.
(c) Unless otherwise specified in any applicable Terms
Agreement for a Series, the Securities shall be rated in one of the four highest
grades by one or more nationally recognized statistical rating agencies
specified in said Terms Agreement.
(d) You shall have received the opinion of counsel, dated the
applicable Closing Date, to the effect that:
1. The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the Commonwealth of
Virginia, with corporate power and authority to own its assets and conduct its
business as described in the Prospectus. The Company has no subsidiaries.
2. The Underwriting Agreement, the Terms Agreement, and the
Purchase Agreement have been duly authorized, executed and delivered by the
Company and assuming due and valid authorization and execution by the
Underwriter, each constitutes a legal, valid and binding obligation of the
Company.
3. The Pooling Agreement has been duly and validly authorized,
executed and delivered by the Company and assuming due and valid authorization
and execution by the other parties thereto, constitutes the valid and binding
agreement of the Company, enforceable in accordance with its terms.
4. Upon due execution and authentication by the Trustee of the
Securities in accordance with the Pooling Agreement, and delivery to, and
payment for the Securities by the Underwriter, as provided in the Underwriting
Agreement and the Terms Agreement, the Securities will be validly issued and
entitled to the benefits of the Pooling Agreement.
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5. The Registration Statement has become effective under the
Securities Act, and, to our knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued and no proceedings
for that purpose have been instituted or are pending or contemplated under the
Securities Act.
6. The statements in the Prospectus under the heading "Certain
Federal Income Tax Consequences" and in the Prospectus Supplement under the
heading "Certain Federal Income Tax Considerations," to the extent that they
constitute matters of law or legal conclusions have been prepared or reviewed by
us and provide a fair summary of such law or conclusions.
7. The Pooling Agreement is not required to be qualified under
the Trust Indenture Act of 1939, as amended, and neither the Company nor the
Trust is required to be registered under the Investment Company Act of 1940, as
amended.
Each opinion also shall relate to such other matters as may be
specified in the related Terms Agreement or as to which you reasonably may
request. In rendering any such opinion, counsel for the Company may rely on
certificates of responsible officers of the Company, the Trustee, and public
officials or, as to matters of law other than Virginia or Federal law, on
opinions of other counsel (copies of which opinions shall be delivered to you),
provided that, in cases of opinions of other counsel, counsel for the Company
shall include in its opinion a statement of its belief that both it and you are
justified in relying on such opinions.
(e) You shall have received from counsel for the Company a
letter, dated as of the Closing Date, stating that you may rely on the opinions
delivered by such firm under the Pooling Agreement and to the rating agency or
agencies rating the Securities as if such opinions were addressed directly to
you (copies of which opinions shall be delivered to you).
(f) You shall have received from counsel for the Underwriters,
if such counsel is different from counsel to the Company, such opinion or
opinions, dated as of the Closing Date, with respect to the validity of the
Securities, the Registration Statement, the Prospectus and other related matters
as the Underwriters may require, and the Company shall have furnished to such
counsel such documents as they may have requested from it for the purpose of
enabling them to pass upon such matters.
(g) You shall have received Officer's Certificates signed by
such of the principal executive, financial and accounting officers of the
Company as you may request, dated as of the Closing Date, in which such
officers, to the best of their knowledge after reasonable investigation, shall
state that the representations and warranties of the Company in this Agreement
are true and correct; that the Company has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied at or prior to
the Closing Date; that no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that purpose have
been instituted or are contemplated; that, subsequent to the respective dates as
of which information is given in the Prospectus, and except as set forth or
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contemplated in the Prospectus, there has not been any material adverse change
in the general affairs, business, key personnel, capitalization, financial
condition or results of operations of the Company; and that except as otherwise
stated in the Prospectus, there are no material actions, suits or proceedings
pending before any court or governmental agency, authority or body or, to their
knowledge, threatened, affecting the Company or the transactions contemplated by
this Agreement.
The Company will furnish you with such conformed copies of
such opinions, certificates, letters and documents as you reasonably request.
If any of the conditions specified in this Section 6 shall not
have been fulfilled in all material respects with respect to a particular
Offering when and as provided in this Agreement and the related Terms Agreement,
or if any of the opinions and certificates mentioned above or elsewhere in this
Agreement and the related Terms Agreement shall not be in all material respects
reasonably satisfactory in form and substance to you, this Agreement (with
respect to the related Offering) and the related Terms Agreement and all
obligations of the Underwriters hereunder (with respect to the related Offering)
and thereunder may be canceled at, or at any time prior to, the related Closing
Date by the Underwriter. Notice of such cancellation shall be given to the
Company in writing, or by telephone or telegraph confirmed in writing.
7. Indemnification.
(a) The Company agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act against
any and all losses, claims, damages, liabilities and expenses whatsoever
(including but not limited to attorneys' fees and any and all expenses
reasonably incurred in investigating, preparing or defending against any
litigation, commenced or threatened, or any claim whatsoever, and any and all
amounts paid in settlement of any claim or litigation), joint or several, to
which they or any of them may become subject under the Act, the Exchange Act, or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
relating to the applicable Series of Securities (the "Applicable Registration
Statement") as it became effective or in any amendment or supplement thereof, or
in the Applicable Registration Statement or the related Prospectus, or in any
amendment thereof, or arise out of or are based upon the omission or alleged
omission (in the case of any Computational Materials or ABS Term Sheets in
respect of which the Company agrees to indemnify the Underwriters, as set forth
below, when such are read in conjunction with the related Prospectus and
Prospectus Supplement) to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading; provided,
however, that (i) the Company will not be liable in any such case to the extent
that any such loss, claim, damage or liability arises out of or is based upon
any such untrue statement or alleged untrue statement or omission or alleged
omission made therein (A) in reliance upon and in conformity with written
information furnished to the Company as herein stated by or on behalf of the
Underwriters specifically for use in connection with the preparation thereof or
(B) in any Current
<PAGE>
Report or any amendment or supplement thereof, except to the extent that any
untrue statement or alleged untrue statement therein or omission therefrom
results (or is alleged to have resulted) directly from an error (a "Mortgage
Pool Error") in the information concerning the characteristics of the mortgage
loans or mortgage related securities furnished by the Company to the
Underwriters in writing or by electronic transmission that was used in the
preparation of either (x) any Computational Materials or ABS Term Sheets (or
amendments or supplements thereof) included in such Current Report (or amendment
or supplement thereof) or (y) any written or electronic materials furnished to
prospective investors on which the Computational Materials (or amendments or
supplements) were based, (ii) such indemnity with respect to any Corrected
Statement (as defined below) in such Prospectus (or Prospectus Supplement
thereto) shall not inure to the benefit of the Underwriters (or any person
controlling any Underwriter) from whom the person asserting any loss, claim,
damage or liability purchased the Securities of the related Series that are the
subject thereof if such person did not receive a copy of a Prospectus Supplement
to such Prospectus at or prior to the confirmation of the sale of such
Securities and the untrue statement or omission of a material fact contained in
such Prospectus (or Prospectus Supplement thereto) was corrected (a "Corrected
Statement") in such other supplement and such supplement was furnished by the
Company to the Underwriters prior to the delivery of such confirmation, and
(iii) such indemnity with respect to any Mortgage Pool Error shall not inure to
the benefit of the Underwriters (or any person controlling any Underwriter) from
whom the person asserting any loss, claim, damage or liability received any
Computational Materials (or any written or electronic materials on which the
Computational Materials are based) or ABS Term Sheets that were prepared on the
basis of such Mortgage Pool Error, if, prior to the time of confirmation of the
sale of the applicable Series of Securities to such person, the Company notified
the Underwriters in writing of the Mortgage Pool Error or provided in written or
electronic form information superseding or correcting such Mortgage Pool Error
(in any such case, a "Corrected Mortgage Pool Error"), and the Underwriters
failed to notify such person thereof or to deliver to such person corrected
Computational Materials (or underlying written or electronic materials) or ABS
Term Sheets. This indemnity agreement will be in addition to any liability which
the Company may otherwise have.
(b) The Underwriters severally, and not jointly, agree to
indemnify and hold harmless the Company, each of the directors of the Company,
each of the officers of the Company who shall have signed the Registration
Statement, and each other person, if any, who controls the Company within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, against
any losses, claims, damages, liabilities and expenses whatsoever (including but
not limited to attorneys' fees and any and all expenses reasonably incurred in
investigating, preparing or defending against any litigation, commenced or
threatened, or any claim whatsoever, and any and all amounts paid in settlement
of any claim or litigation), joint or several, to which they or any of them may
become subject under the Act, the Exchange Act or otherwise, insofar as such
losses, liabilities, claims, damages or expenses (or actions in respect thereof)
arise out of or are based upon (A) any untrue statement or alleged untrue
statement of a material fact contained in the Applicable Registration Statement,
as originally filed or any amendment thereof, or any related preliminary
prospectus or the Prospectus, or in any amendment thereof or supplement thereto,
or arise out of or are based upon the omission or
<PAGE>
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that any such loss, claim, damage, liability or
expense arises out of or is based upon any such untrue statement or alleged
untrue statement or omission or alleged omission made therein in reliance upon
and in conformity with written information furnished to the Company, by or on
behalf of such Underwriter expressly for use therein; or (B) any Computational
Materials or ABS Term Sheets (or amendments or supplements thereof) furnished to
the Company by such Underwriter pursuant to Section 8 and incorporated by
reference in such Registration Statement or the related Prospectus, Prospectus
Supplement or any amendment or supplement thereof (except that no such indemnity
shall be available for any losses, claims, damages or liabilities, or actions in
respect thereof resulting from any Mortgage Pool Error, other than a Corrected
Mortgage Pool Error). This indemnity will be in addition to any liability which
the Underwriters may otherwise have. The Company acknowledges that, unless
otherwise set forth in the applicable Terms Agreement, the statements set forth
in the last paragraph of the cover page and under the caption "Method of
Distribution" and the stabilization legend required by Item 502(d)(1) under
Regulation S-K of the Act included in the Prospectus Supplement relating to a
Series of Securities constitute the only information furnished in writing by or
on behalf of any Underwriter expressly for use in the Applicable Registration
Statement or the Prospectus or in any amendment thereof or supplement thereto,
as the case may be (other than any Computational Materials or ABS Term Sheets
(or amendments or supplements thereof) furnished to the Company by such
Underwriter), and each Underwriter confirms, on its behalf, that such statements
are correct.
(c) Promptly after receipt by an indemnified party
under subsection (a) or (b) above of notice of the commencement of any action,
such indemnified party will, if a claim in respect thereof is to be made against
the indemnifying party under such subsection, notify each party against whom
indemnification is to be sought in writing of the commencement thereof (but the
failure so to notify an indemnifying party shall not relieve it from any
liability which it may have under this Section 7 except to the extent that it
has been prejudiced in any material respect by such failure or from any
liability which it may have otherwise). In case any such action is brought
against any indemnified party, and it notifies an indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein, and to the extent that it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof, with counsel satisfactory to
such indemnified party. Notwithstanding the foregoing, the indemnified party or
parties shall have the right to employ its or their own counsel in any such
case, but the fees and expenses of such counsel shall be at the expense of such
indemnified party or parties unless (i) the employment of such counsel shall
have been authorized in writing by one of the indemnifying parties in connection
with the defense of such action, (ii) the indemnifying parties shall not have
employed counsel to have charge of the defense of such action within a
reasonable time after notice of commencement of the action, or (iii) such
indemnified party or parties shall have reasonably concluded that there may be
defenses available to it or them which are different from or additional to those
available to one or all of the indemnifying parties (in which case the
indemnifying parties shall not have the right to direct the defense of such
action on behalf of the
<PAGE>
indemnified party or parties), in any of which events such fees and expenses
shall be borne by the indemnifying parties. Anything in this subsection to the
contrary notwithstanding, an indemnifying party shall not be liable for any
settlement of any claim or action effected without its written consent;
provided, however, that such consent was not unreasonably withheld.
(d) In order to provide for contribution in circumstances in
which the indemnification provided for in Section 7 hereof is for any reason
held to be unavailable, on grounds of public policy or otherwise, from the
Company or the Underwriters or is insufficient to hold harmless a party
indemnified thereunder, the Company and the Underwriters shall contribute to the
aggregate losses, claims, damages, liabilities and expenses of the nature
contemplated by such indemnification provision (including any investigation,
legal and other expenses incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claims asserted, but after
deducting in the case of losses, claims, damages, liabilities and expenses
suffered by the Company any contribution received by the Company from persons,
other than the Underwriters, who may also be liable for contribution, including
persons who control the Company within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act, officers of the Company who signed the
Applicable Registration Statement and directors of the Company) to which the
Company and the Underwriters may be subject (i) in the case of any losses,
claims, damages and liabilities (or actions in respect thereof) which do not
arise out of or are not based upon any untrue statement or omission of a
material fact in any Computational Materials or ABS Term Sheets (or any
amendments or supplements thereof), in such proportions as is appropriate to
reflect the relative benefits received by the Company on one hand and the
Underwriters on the other from the Offering of the Securities as to which such
loss, liability, claim, damage or expense is claimed to arise or, if such
allocation is not permitted by applicable law or indemnification is not
available as a result of the indemnifying party not having received notice as
provided in Section 7(c) hereof, in such proportion as is appropriate to reflect
not only the relative benefits referred to above but also the relative fault of
the Company on one hand and the Underwriters on the other in connection with the
statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations
or (ii) in the case of any losses, claims, damages and liabilities (or actions
in respect thereof) which arise out of or are based upon any untrue statement or
omission of a material fact in any Computational Materials or ABS Term Sheets
(or any amendments or supplements thereof) or in any written or electronic
materials distributed to prospective investors on which the Computational
Materials are based, in such proportion as is appropriate to reflect the
relative fault of the Company on the one hand and the Underwriter that furnished
such Computational Materials or ABS Term Sheets on the other in connection with
the statements or omissions which resulted in such losses, claims, damages or
liabilities (or actions in respect thereof) as well as any other relevant
equitable considerations; provided, however, that in no case shall such
Underwriter be responsible under this subparagraph (ii) for any amount in excess
of the aggregate Purchase Price for the Offered Securities.
The relative benefits received by the Company on one
hand and the Underwriters on the other shall be deemed to be in the same
proportion as (x) the total proceeds from the Offering (net of underwriting
discounts and commissions but before deducting
<PAGE>
expenses) received by the Company and (y) the underwriting discounts and
commissions received by the Underwriters, respectively, in each case as set
forth in the Terms Agreement in respect of the Offering of the Securities as to
which such loss, liability, claim, damage or expense is claimed to arise. The
relative fault of the Company on one hand and the Underwriters on the other
shall be determined by reference to, among other things, (A) in the case of
clause (i) of the preceding paragraph, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company on one hand or the
Underwriters on the other, (B) in the case of clause (ii) of the preceding
paragraph, whether the untrue or alleged untrue statement of a material fact or
the omission or alleged omission to state a material fact relates to any untrue
statement or omission of a material fact in any Computational Materials or ABS
Term Sheets (or any amendments or supplements thereof) or in any written or
electronic materials distributed by the applicable Underwriter to prospective
investors on which the Computational Materials are based, and (C) in the case of
either clause (i) or clause (ii) of the preceding paragraph, the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company and the Underwriters agree that
it would not be just and equitable if contribution pursuant to this Section 7(d)
were determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to above.
Notwithstanding the provisions of this Section 7(d), (x) except as otherwise
provided in Section 7(d)(ii), in no case shall the Underwriters be liable or
responsible for any amount in excess of the underwriting discount set forth in
the Terms Agreement relating to the Securities as to which such losses, claims,
damages, liabilities or expenses are claimed to arise, and (y) no person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 7(d), each person, if
any, who controls any Underwriter within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act shall have the same rights to contribution as
such Underwriter, and each person, if any, who controls the Company within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, each
officer of the Company who shall have signed the Applicable Registration
Statement and each director of the Company shall have the same rights to
contribution as the Company, subject in each case to clauses (i) and (ii) of
this Section 7(d). Any party entitled to contribution will, promptly after
receipt of notice of commencement of any action, suit or proceeding against such
party in respect of which a claim for contribution may be made against another
party or parties under this Section 7(d), notify such party or parties from whom
contribution may be sought, but the omission to so notify such party or parties
shall not relieve the party or parties from whom contribution may be sought from
any obligation it or they may have under this Section 7(d) or otherwise. No
party shall be liable for contribution with respect to any action or claim
settled without its consent; provided, however, that such consent was not
unreasonably withheld.
8. Computational Materials and Structural Term Sheets. (a) Not
later than 2:00 p.m., New York time, on the business day before the date on
which the Current Report relating to the Securities of a Series is required to
be filed by the Company with the Commission pursuant to Section 5(b) hereof, you
and any other applicable Underwriter shall deliver to the Company,
<PAGE>
and unless otherwise agreed to by the Company, in a form reasonably convertible
to an EDGAR filing format, a copy of all materials provided by the Underwriters
to prospective investors in such Securities which constitute (i) "Computational
Materials, within the meaning of the no-action letter dated May 20, 1994 issued
by the Division of Corporation Finance of the Commission to Kidder, Peabody
Acceptance Corporation I, Kidder, Peabody & Co. Incorporated, and Kidder
Structured Asset Corporation and the no-action letter dated May 27, 1994 issued
by the Division of Corporation Finance of the Commission to the Public
Securities Association (together, the "Kidder Letters") and the filing of such
material is a condition of the relief granted in such letter (such materials
being the "Computational Materials"), and (ii) "Structural Term Sheets" within
the meaning of the no-action letter dated February 17, 1995 issued by the
Division of Corporation Finance of the Commission to the Public Securities
Association (the "PSA Letter") and the filing of such material is a condition of
the relief granted in such letter (such materials being the "Structural Term
Sheets"). Each delivery of Computational Materials and Structural Term Sheets to
the Company by you and any other applicable Underwriter pursuant to this
paragraph (a) shall be effected by delivering a copy of such materials to
counsel for the Company on behalf of the Company at the address specified by the
Company and one copy of such materials to the Company.
(b) You and each other Underwriter, by virtue of its having
executed and delivered the related Terms Agreement, which shall incorporate this
Section 8(b) by reference, represents and warrants to and agrees with the
Company, as of the date of the related Terms Agreement and as of the Closing
Date, that:
(i) the Computational Materials
furnished to the Company pursuant to Section 8(a)
constitute (either in original, aggregated or
consolidated form) all of the materials furnished to
prospective investors by such Underwriter prior to
the time of delivery thereof to the Company that are
required to be filed with the Commission with respect
to the Offering of the Securities in accordance with
the Kidder Letters, and such Computational Materials
comply with the requirements of the Kidder Letters;
(ii) the Structural Term Sheets
furnished to the Company pursuant to Section 8(a)
constitute all of the materials furnished to
prospective investors by such Underwriter prior to
the time of delivery thereof to the Company that are
required to be filed with the Commission as
"Structural Term Sheets" with respect to the related
Offering of the Securities in accordance with the PSA
Letter, and such Structural Term Sheets comply with
the requirements of the PSA Letter;
(iii) on the date any such
Computational Materials or Structural Term Sheets
with respect to the Offering of the Securities (or
any written or electronic materials furnished to
prospective investors on which the Computational
Materials are based) were last furnished to each
<PAGE>
prospective investor and on the date of delivery
thereof to the Company pursuant to Section 8(a) and
on the related Closing Date, such Computational
Materials (or such other materials) or Structural
Term Sheets did not and will not include any untrue
statement of a material fact or, when read in
conjunction with the related Prospectus and
Prospectus Supplement, omit to state a material fact
required to be stated therein or necessary to make
the statements therein not misleading; and
(iv) all Computational Materials (or
underlying materials distributed to prospective
investors on which the Computational Materials were
based) or Structural Term Sheets furnished to
prospective investors contained and will contain a
legend, prominently displayed on the first page
thereof, to the effect that the Company has not
prepared, reviewed or participated in the preparation
of such materials and is not responsible for the
accuracy thereof.
Notwithstanding the foregoing, you and each such Underwriter make no
representation or warranty as to whether any Computational Materials or
Structural Term Sheets (or any written or electronic materials on which the
Computational Materials are based) included or will include any untrue statement
resulting directly from any Mortgage Pool Error (except any Corrected Mortgage
Pool Error, with respect to materials prepared after the receipt by the
Underwriters from the Company of notice of such Corrected Mortgage Pool Error or
materials superseding or correcting such Corrected Mortgage Pool Error).
(c) Each Underwriter delivering Computational Materials shall
cause a firm of public accountants to furnish to the Company a letter, dated as
of the date on which such Underwriter delivers any Computational Materials
(which term shall be deemed to include, for purposes of this paragraph (c),
calculated statistical information delivered to prospective investors in the
form of a Structural Term Sheet) to the Company pursuant to Section 8(a), in
form and substance satisfactory to the Company, stating in effect that they have
verified the mathematical accuracy of any calculations performed by such
Underwriter and set forth in such Computational Materials.
(d) The Underwriters acknowledge and agree that the Company
has not authorized and will not authorize the distribution of any Computational
Materials (or any written or electronic materials on which the Computational
Materials are based) or Structural Term Sheets to any particular prospective
investor, and agrees that any Computational Materials or Structural Term Sheets
with respect to any Series of Securities furnished to prospective investors
shall include a disclaimer in the form described in paragraph (b) (iv) above.
The Underwriters agree that they will not represent to prospective investors
that any Computational Materials or Structural Term Sheets were prepared or
disseminated on behalf of the Company.
(e) If, at any time when a prospectus relating to the
Securities of a Series is required to be delivered under the Act, it shall be
necessary to amend or supplement the related
<PAGE>
Prospectus or Prospectus Supplement as a result of an untrue statement of a
material fact contained in any Computational Materials or Structural Term Sheets
provided by an Underwriter pursuant to this Section 8 or the omission to state
therein a material fact required, when considered in conjunction with the
related Prospectus and Prospectus Supplement, to be stated therein or necessary
to make the statements therein, when read in conjunction with the related
Prospectus and Prospectus Supplement, not misleading, or if it shall be
necessary to amend or supplement any Current Report relating to any
Computational Materials or Structural Term Sheets to comply with the Act or the
rules thereunder, such Underwriter promptly will prepare and furnish to the
Company for filing with the Commission an amendment or supplement which will
correct such statement or omission or an amendment which will effect such
compliance. Such Underwriter will deliver an Officer's Certificate to the
Company representing and warranting to the Company that, as of the date of
delivery of such amendment or supplement to the Company, such amendment or
supplement will not include any untrue statement of a material fact or, when
read in conjunction with the related Prospectus and Prospectus Supplement, omit
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that such Underwriter will
make no representation or warranty as to whether any such amendment or
supplement will include any untrue statement resulting directly from any
Mortgage Pool Error (except any Corrected Mortgage Pool Error, with respect to
any such amendment or supplement prepared after the receipt by such Underwriter
from the Company of notice of such Corrected Mortgage Pool Error or materials
superseding or correcting such Corrected Mortgage Pool Error). The Company shall
have no obligation to file such amendment or supplement if (i) the Company
determines that such amendment or supplement contains any untrue statement of a
material fact or, when read in conjunction with the related Prospectus and
Prospectus Supplement, omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading; it being
understood, however, that the Company shall have no obligation to review or pass
upon the accuracy or adequacy of, or to correct, any such amendment or
supplement provided by such Underwriter to the Company pursuant to this
paragraph (e) or (ii) the Company reasonably determines that such filing is not
required under the Act and such Underwriter does not object as provided below.
The Company shall give notice to such Underwriter of its determination not to
file an amendment or supplement pursuant to clause (ii) of the preceding
sentence and agrees to file such amendment or supplement if such Underwriter
reasonably objects to such determination within one business day after receipt
of such notice.
9. Collateral Term Sheets. (a) Prior to the delivery of any
"Collateral Term Sheet" within the meaning of the PSA Letter, the filing of
which material is a condition of the relief granted in such letter (such
material being the "Collateral Term Sheets"), to a prospective investor in the
Securities, the applicable Underwriter shall notify the Company and its counsel
by telephone of its intention to deliver such materials and the approximate date
on which the first such delivery of such materials is expected to occur. Not
later than 10:30 a.m., New York time, on the business day immediately following
the date on which any Collateral Term Sheet was first delivered to a prospective
investor in the Securities of an offered series, such applicable Underwriter
shall deliver to the Company, and unless otherwise agreed to by the Company, in
a form reasonably convertible to an EDGAR format, a complete copy of all
materials provided by
<PAGE>
such Underwriter to prospective investors in such Securities which constitute
"Collateral Term Sheets." Each delivery of a Collateral Term Sheet to the
Company pursuant to this paragraph (a) shall be effected by delivering a copy of
such materials to counsel for the Company on behalf of the Company at the
address specified by the Company and one copy of such materials to the Company.
(Collateral Term Sheets and Structural Term Sheets are, together, referred to
herein as "ABS Term Sheets.") At the time of each such delivery, such
Underwriter shall indicate in writing that the materials being delivered
constitute Collateral Term Sheets, and, if there has been any prior such
delivery with respect to the related Series, shall indicate whether such
materials differ in any material respect from any Collateral Term Sheets
previously delivered to the Company with respect to such Series pursuant to this
Section 9(a) as a result of the occurrence of a material change in the
characteristics of the related Mortgage Loans.
(b) You and each other Underwriter, by virtue of its having
executed and delivered the related Terms Agreement, which shall incorporate this
Section 9(b) by reference, represents and warrants to and agrees with the
Company as of the date of the related Terms Agreement and as of the Closing
Date, that:
(i) The Collateral Term Sheets furnished to the
Company pursuant to Section 9(a) constitute all of the
materials furnished to prospective investors by such
Underwriter prior to time of delivery thereof to the Company
that are required to be filed with the Commission as
"Collateral Term Sheets" with respect to the related Offering
of the Securities in accordance with the PSA Letter, and such
Collateral Term Sheets comply with the requirements of the PSA
Letter;
(ii) On the date any such Collateral Term Sheets with
respect to the Offering of the Securities were last furnished
to each prospective investor and on the date of delivery
thereof to the Company pursuant to Section 9(a) and on the
related Closing Date, such Collateral Term Sheets did not and
will not include any untrue statement of a material fact or,
when read in conjunction with the Prospectus and Prospectus
Supplement, omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading; and
(iii) such Underwriter has not represented to any
prospective investor that any Collateral Term Sheets with
respect to any Series were prepared or disseminated on behalf
of the Company, and, except as otherwise disclosed by such
Underwriter to the Company in writing prior to the date
hereof, all Collateral Term Sheets previously furnished to
prospective investors included a disclaimer to the effect set
forth in Section 8(b)(iv).
Notwithstanding the foregoing, you and each such Underwriter make no
representation or warranty as to whether any Collateral Term Sheet included or
will include any untrue statement or material omission resulting directly from
any Mortgage Pool Error (except any Corrected Mortgage Pool Error, with respect
to materials prepared after the receipt by such Underwriter
<PAGE>
from the Company of notice of such Corrected Mortgage Pool Error or materials
superseding or correcting such Corrected Mortgage Pool Error).
(c) Each Underwriter delivering Collateral Term Sheets
acknowledges and agrees that any Collateral Term Sheets with respect to any
Series of Securities furnished to prospective investors from and after the date
hereof shall include a disclaimer to the effect set forth in Section 8(d)
hereof, and to the effect that the information contained in such materials
supersedes the information contained in any prior Collateral Term Sheet with
respect to such Series of Securities being offered and will be superseded by the
description of the related Mortgage Loans in the related Prospectus Supplement.
The Underwriters agree that they will not represent to any prospective investors
that any Collateral Term Sheets were prepared or disseminated on behalf of the
Company.
(d) If, at any time when a prospectus relating to the
Securities of a Series is required to be delivered under the Act, it shall be
necessary to amend or supplement the related Prospectus as a result of an untrue
statement of a material fact contained in any Collateral Term Sheets provided by
an Underwriter pursuant to this Section 9 or the omission to state therein a
material fact required, when considered in conjunction with the related
Prospectus and Prospectus Supplement, to be stated therein or necessary to make
the statements therein, when read in conjunction with the related Prospectus and
Prospectus Supplement, not misleading, or if it shall be necessary to amend or
supplement any Current Report relating to any Collateral Term Sheets to comply
with the Act or the rules thereunder, such Underwriter promptly will prepare and
furnish to the Company for filing with the Commission an amendment or supplement
which will correct such statement or omission or an amendment which will effect
such compliance. Such Underwriter will deliver an Officer's Certificate to the
Company representing and warranting to the Company that, as of the date of
delivery of such amendment or supplement to the Company, such amendment or
supplement will not include any untrue statement of a material fact or, when
read in conjunction with the related Prospectus and Prospectus Supplement, omit
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, such Underwriter will make
no representation or warranty as to whether any such amendment or supplement
will include any untrue statement resulting directly from any Mortgage Pool
Error (except any Corrected Mortgage Pool Error, with respect to any such
amendment or supplement prepared after the receipt by such Underwriter from the
Company of notice of such Corrected Mortgage Pool Error or materials superseding
or correcting such Corrected Mortgage Pool Error). The Company shall have no
obligation to file such amendment or supplement if the Company determines that
(i) such amendment or supplement contains any untrue statement of a material
fact or, when read in conjunction with the related Prospectus and Prospectus
Supplement, omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; it being understood,
however, that the Company shall have no obligation to review or pass upon the
accuracy or adequacy of, or to correct, any such amendment or supplement
provided by such Underwriter to the Company pursuant to this paragraph (d) or
(ii) such filing is not required under the Act. The Company shall give notice to
such Underwriter of its determination not to file an amendment or supplement
pursuant to clause (ii) of the preceding sentence.
<PAGE>
10. Default of Underwriters. If any Underwriter or
Underwriters participating in an Offering of Securities default in their
obligations to purchase Securities hereunder and under the Terms Agreement and
the aggregate purchase price of Securities which such defaulting Underwriter or
Underwriters agreed but failed to purchase does not exceed 10% of the aggregate
purchase price of the Securities then being purchased, you may make arrangements
satisfactory to the Company for the purchase of such Securities by other
persons, including any of the Underwriters, but if no such arrangements are made
by the Closing Date the non-defaulting Underwriters shall be obligated
severally, in proportion to their respective total commitments as set forth in
the applicable Terms Agreement (for all classes of Securities), to purchase the
Securities which such defaulting Underwriter or Underwriters agreed but failed
to purchase. If any Underwriter or Underwriters so default and the aggregate
purchase price of Securities with respect to which such default or defaults
occur is more than 10% of the aggregate purchase price of Securities then being
purchased, and arrangements satisfactory to you and the Company for the purchase
of such Securities by other persons are not made within 36 hours after such
default, the Terms Agreement as to which such offering relates will terminate
without liability on the part of any non-defaulting Underwriter or the Company,
except as provided in Section 11. As used in this Agreement, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section. Nothing herein will relieve a defaulting Underwriter from liability for
its default.
11. Survival of Certain Representations and Obligations. The
respective indemnities, agreements, representations, warranties, and other
statements of the Company or its officers and of the several Underwriters set
forth in or made pursuant to this Agreement will remain in full force and
effect, regardless of any investigation, or statement as to the result thereof,
made by or on behalf of any Underwriter or the Company or any of its officers or
directors or any controlling person, and will survive delivery of and payment
for the Securities and any termination of this Agreement or any Terms Agreement,
including any termination pursuant to Section 10.
12. Termination. You shall have the right to terminate any
Terms Agreement at any time prior to the applicable Closing Date if any domestic
or international event or act or occurrence has materially disrupted, or in your
opinion will in the immediate future materially disrupt, securities markets; or
if trading on the New York or American Stock Exchanges shall have been
suspended, or minimum or maximum prices for trading shall have been fixed, or
maximum ranges for prices for securities shall have been required on the New
York or American Stock Exchanges by the New York or American Stock Exchanges or
by order of the Commission or any other governmental authority having
jurisdiction; or if the United States shall have become involved in a war or
major hostilities; or if a banking moratorium has been declared by a state or
Federal authority, or if a banking moratorium in foreign exchange trading by
major international banks or persons has been declared; or if any new
restriction materially and adversely affecting the distribution of the Series of
Securities as to which such Terms Agreement relates shall have become effective;
or if there shall have been such change in the market for securities in general
or in political, financial or economic conditions as in your judgment would be
so materially adverse as to make it inadvisable to proceed with the Offering,
sale and delivery
<PAGE>
of the Series of Securities as to which such Terms Agreement relates on the
terms contemplated in such Terms Agreement. Any notice of termination pursuant
to this Section 12 shall be by telephone, telex, or telegraph, confirmed in
writing by letter.
13. Notices. All communications hereunder will be in writing,
and, if sent to the Underwriters, will be mailed, delivered or telegraphed and
confirmed to you at 245 Park Avenue, New York, New York 10167, Attention:
General Counsel or if sent to the Company, will be mailed, delivered or
telegraphed and confirmed to it at 901 East Byrd Street, Richmond, Virginia
23219, Attention: William E. Hardy; provided, however, that any notice to an
Underwriter pursuant to Section 7 will be mailed, delivered or telegraphed to
such Underwriter at the address furnished by it.
14. Successors. This Agreement and the Terms Agreement will
inure to the benefit of and be binding upon the parties hereto and thereto, and
their respective successors and the officers and directors and controlling
persons referred to in Section 7, and no other person will have any right or
obligation hereunder or thereunder.
15. Representation of Underwriters. You will act for the
several Underwriters in connection with each Offering of Securities governed by
this Agreement, and any action under this Agreement and any Terms Agreement
taken by you will be binding upon all the Underwriters identified in such Terms
Agreement.
16. Construction. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York, without
giving effect to principles of conflict of laws.
<PAGE>
If the foregoing is in accordance with your understanding of
our agreement, kindly sign and return to us the enclosed duplicate hereof,
whereupon it will become a binding agreement among the Company and the several
Underwriters in accordance with its terms.
Very truly yours,
FINANCIAL ASSET SECURITIZATION, INC.
By: /s/William E. Hardy
-------------------
Name: William E. Hardy
Title: Executive Vice President
The foregoing Underwriting Agreement
hereby is confirmed and accepted
as of the date first above written.
BEAR, STEARNS & CO. INC.
By: /s/Jeffrey Mayer
----------------
Title: Senior Managing Director
<PAGE>
EXHIBIT A
FINANCIAL ASSET SECURITIZATION, INC.
Mortgage Participation Securities
FORM OF TERMS AGREEMENT
Dated: , 199
To: FINANCIAL ASSET SECURITIZATION, INC. [AND ]
Re: Underwriting Agreement dated October , l997
Series Designation: Series 19
Class Designation Schedule:
Terms of the Securities:
Original
Principal Interest Price to
Class Amount Rate Public(1)(2)
(1) Do not include if the Securities will be offered from time to time by the
Underwriter in negotiated transactions at varying prices to be determined at the
time of sale.
(2) Plus accrued interest, if any, at the applicable rate from .
Distribution Dates: The th day of each month or, if such th day is not a
business day, the next succeeding business day commencing .
<PAGE>
Certificate Rating:
Mortgage Assets: The initial amounts to be included in any Reserve Account and
other accounts are as set forth, and the Mortgage Loans to be included in the
Trust Fund are as described, in Annex A hereto.
Purchase Price: The aggregate purchase price payable by the Underwriter
for the Securities covered by this Agreement will be $ . [Purchase
price may also be separately stated by class.]
Credit Enhancement:
[Include pool policies, letters of credit, bonds, subordination and similar
arrangements.]
Closing Date: , 19 , a.m., N.Y. Time
The undersigned, agrees, subject to the terms and provisions of the
above-referenced Underwriting Agreement, which is incorporated herein in its
entirety and made a part hereof, to purchase the respective principal amounts of
the Classes of the above-referenced Series of Securities set forth [herein] [on
Schedule I attached hereto].
BEAR, STEARNS & CO. INC.
By: _________________________
Senior Managing Director
[ADDITIONAL UNDERWRITERS]
By: __________________________
--------------------------
Title:
Accepted:
FINANCIAL ASSET SECURITIZATION, INC.
By: _________________________
<PAGE>
Schedule I (for Multiple Underwriters)
Underwriters
<TABLE>
<CAPTION>
Name Class Class Class Class Class
<S> <C>
Bear, Stearns $ $ $ $ $
& Co. Inc.
[Other
Underwriters]
----- ----- ----- ----- -----
Total ====== ====== ====== ===== =====
</TABLE>
EXHIBIT 4.1
FINANCIAL ASSET SECURITIZATION, INC.,
Seller
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
Trustee
POOLING AGREEMENT
Dated as of October 1, 1997
$55,809,878
Financial Asset Securitization, Inc.
Mortgage Participation Securities
Series 1997-1
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I -- DEFINITIONS..........................................................................................2
Section 1.01. Defined Terms..............................................................................2
ARTICLE II -- CONVEYANCE OF THE POOLED SECURITIES AND TREASURY SECURITIES; ORIGINAL ISSUANCE OF SECURITIES.......14
Section 2.01. Conveyance of the Pooled Certificates.....................................................14
Section 2.02. Acceptance of Trust Fund by Trustee; Initial Issuance of Securities.......................15
Section 2.03. Representations and Warranties of the Seller and the Trustee..............................16
Section 2.04. Substitution of Pooled Certificates......................................................19
ARTICLE III -- ADMINISTRATION OF THE POOLED CERTIFICATES AND TREASURY SECURITIES; PAYMENTS AND REPORTS TO
SECURITYHOLDERS.........................................................................................21
Section 3.01. Administration of the Trust Fund and the Pooled Certificates..............................21
Section 3.02. Collection of Monies......................................................................21
Section 3.03. Establishment of Asset Proceeds and Trustee Fee Accounts; Deposits Therein..............22
Section 3.04. Permitted Withdrawals From the Asset Proceeds Account.....................................23
Section 3.05. Distributions.............................................................................24
Section 3.06. Statements to Securityholders.............................................................25
Section 3.07. Access to Certain Documentation and Information...........................................27
ARTICLE IV -- THE SECURITIES.....................................................................................27
Section 4.01. The Securities............................................................................27
Section 4.02. Registration of Transfer and Exchange of Securities.......................................29
Section 4.03. Mutilated, Destroyed, Lost or Stolen Securities...........................................30
Section 4.04. Persons Deemed Owners.....................................................................31
Section 4.05. Exchange of Securities...................................................................31
ARTICLE V -- THE TRUSTEE.........................................................................................32
Section 5.01. Duties of Trustee.........................................................................32
Section 5.02. Certain Matters Affecting the Trustee.....................................................33
Section 5.03. Trustee Not Liable for Securities or Pooled Certificates or Treasury Securities...........34
Section 5.04. Trustee May Own Securities................................................................34
Section 5.05. Trustee's Fees; Indemnification of the Trustee............................................35
Section 5.06. Eligibility Requirements for Trustee......................................................35
Section 5.07. Resignation and Removal of the Trustee....................................................36
Section 5.08. Successor Trustee.........................................................................37
Section 5.09. Merger or Consolidation of Trustee........................................................37
Section 5.10. Appointment of Co-Trustee or Separate Trustee.............................................38
ARTICLE VI -- THE DEPOSITOR......................................................................................39
Section 6.01. Liability of the Seller...................................................................39
Section 6.02. Merger, Consolidation or Conversion of the Seller.........................................39
Section 6.03. Limitation on Liability of the Seller and Others..........................................39
ARTICLE VII -- TERMINATION.......................................................................................40
Section 7.01. Termination...............................................................................40
ARTICLE VIII -- TAX PROVISIONS..................................................................................42
Section 8.01 Trust Administration.......................................................................42
Section 8.02 Prohibited Activities......................................................................43
ARTICLE IX -- MISCELLANEOUS PROVISIONS...........................................................................43
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Section 9.01. Amendment.................................................................................43
Section 9.02. Counterparts..............................................................................45
Section 9.03. Limitation on Rights of Securityholders...................................................45
Section 9.04. Governing Law.............................................................................45
Section 9.05. Notices...................................................................................46
Section 9.06. Severability of Provisions................................................................46
Section 9.07. Successors and Assigns....................................................................46
Section 9.08. Article and Section Headings..............................................................46
Section 9.09. Notices to Rating Agencies................................................................46
</TABLE>
Exhibit A - Form of Class A-1 Security
Exhibit B - Form of Option Exercise Notice
Schedule A - Pooled Certificates
<PAGE>
POOLING AGREEMENT, dated as of October 1, 1997, by and between
Financial Asset Securitization, Inc., as depositor (the "Seller"), and Norwest
Bank Minnesota, National Association, as trustee (the "Trustee").
PRELIMINARY STATEMENT
The Seller intends to cause the issuance of and to sell its
Mortgage Participation Securities, Series 1997-1 representing in the aggregate
the entire beneficial ownership of a trust fund (the "Trust Fund"), the primary
assets of which are the Pooled Certificates (defined herein) and the Treasury
Securities (defined herein).
All things necessary to make this Agreement a valid
declaration of trust by the Seller in accordance with its terms have been done.
In consideration of the premises and the mutual agreements
herein contained, the Seller and the Trustee agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Defined Terms
Whenever used in this Agreement, including the Preliminary
Statement, the following words and phrases, unless the context otherwise
requires, shall have the following meanings:
Affiliate: With respect to any specified Person, any other
Person that directly, or indirectly through one or more intermediaries, controls
or is controlled by, or is under common control with, such specified Person. For
the purposes of this definition, "control" when used with respect to any
specified Person means possession, direct or indirect, of the power to direct or
cause the direction of the management and policies of such Person, whether
through the ownership of voting securities, by contract or otherwise, and the
terms "controlling," "controlled by" and "under common control with" have
meanings correlative to the foregoing.
Agreement: This Pooling Agreement and all amendments hereof
and supplements hereto.
Asset Proceeds Account: The trust account or accounts, which
shall at all times be Eligible Accounts, created and maintained by the Trustee
for the benefit of the Securityholders pursuant to Section 3.03. Funds deposited
in the Asset Proceeds Account shall be held in trust for the Securityholders for
the uses and purposes set forth in Article III hereof.
<PAGE>
Available Funds: As of any date of determination, the
aggregate amount on deposit in the Asset Proceeds Account as of such date, net
of any portion thereof which represents amounts to be paid to any Person
pursuant to clauses (ii) and (iv) of Section 3.04.
Business Day: Any day other than a Saturday, a Sunday or a day
on which banking institutions in New York or in the city in which the Corporate
Trust Office of the Trustee is located are authorized or obligated by law or
executive order to close.
Class: Collectively, all of the Securities bearing the same
designation.
Class A-1 Balance: The aggregate principal amount of Class A-1
Securities outstanding as of any date of determination, which is equal to the
Original Class A-1 Balance minus all amounts received as principal on the Pooled
Certificates and Treasury Securities plus all amounts of accreted interest added
to the outstanding principal balance of the Z Certificates. If, on any
Distribution Date, the amount by which the Z Certificates have accreted exceeds
the aggregate distributions of principal on the other Pooled Certificates, the
Class A-1 Balance will be increased by the amount of such excess.
Class A-1 Security: Any one of the Class A-1 Securities, as
executed hereunder by the Trustee and authenticated and delivered hereunder by
the Security Registrar, substantially in the form of Exhibit A hereto.
Closing Date: October 30, 1997.
Code: The Internal Revenue Code of 1986, as amended.
Corporate Trust Office: The corporate trust office of the
Trustee at which at any particular time its corporate trust business with
respect to this Agreement shall be administered, which office at the date of the
execution of this Agreement is located at Sixth & Marquette Streets,
Minneapolis, Minnesota 55479, Attention: FASI 1997-1 telephone no. (410)
884-2000, facsimile no. (410) 884-2360.
Definitive Securities: The meaning specified in Section
4.01(b) hereof.
Deleted Pooled Certificate: A Pooled Certificate replaced by
a Substitute Pooled Certificate.
Deleted Treasury Security: A Treasury Security replaced by a
Substitute Treasury Security.
Depository: DTC, the nominee of which is Cede & Co., or any
successor thereto.
Depository Agreement: The meaning specified in Subsection
4.01(a) hereof.
<PAGE>
Depository Participant: A broker, dealer, bank or other
financial institution or other Person for whom from time to time the Depository
effects book-entry transfers and pledges of securities deposited with the
Depository.
Determination Time: Noon, Eastern Standard Time, on a
Distribution Date.
Distribution Date: With respect to any month, the
Distribution Date shall be the 25th day of such month or, if such day is not a
Business Day, then the next succeeding Business Day. The first Distribution
Date shall occur on November 25, 1997.
DTC: The Depository Trust Company.
Eligible Account: Any of (i) an account maintained with a
federal or state chartered depository institution or trust company, the
short-term unsecured debt obligations of which are rated at least P-1 by Moody's
and A-1+ by S&P (or comparable ratings if Moody's and S&P are not the Rating
Agencies) at any time funds are on deposit therein, (ii) a trust account or
accounts maintained with the trust department of a federally chartered
depository institution or trust company acting in its fiduciary capacity, or
(iii) a trust account or accounts maintained with the trust department of a
state chartered depository institution or trust company acting in its fiduciary
capacity and subject to regulations regarding fiduciary funds on deposit therein
substantially similar to 12 CFR ss. 9.10(b).
ERISA: The Employee Retirement Income Security Act of 1974,
as amended, and the rules and regulations promulgated thereunder.
Escrow Amount: With respect to any Distribution Date,
one-twelfth of the product of 0.0025% and the Class A-1 Balance immediately
prior to such Distribution Date.
Exchange Date: A date on which Securities are exchanged for a
pro rata portion of the Pooled Certificates and Treasury Securities pursuant to
Section 4.05.
FHLMC: The Federal Home Loan Mortgage Corporation.
FHLMC Pooled Certificate Distribution Date: With respect to
each of the Pooled FHLMC Certificates, the 15th day of each month or, if any
such day is not a business day as defined in the applicable Underlying
Agreement, the next succeeding business day as so defined.
Final Distribution Date: With respect to the Pooled
Certificates, the Treasury Securities or the Securities, as applicable, the
Pooled Certificate Distribution Date, Treasury Security Distribution Date or the
Distribution Date, as applicable, on which the final distribution thereon is to
be made in accordance with the related Underlying Agreement, the terms of the
Treasury Securities or this Agreement, as the case may be.
<PAGE>
Fitch: Fitch Investors Service, L.P., or its successor in
interest.
FNMA: The Federal National Mortgage Association.
FNMA Pooled Certificate Distribution Date: With respect to
each of the Pooled FNMA Certificates, the 25th day of each month or, if any such
day is not a business day as defined in the applicable Underlying Agreement, the
next succeeding business day as so defined.
Independent: When used with respect to any specified Person,
such a Person who (i) is in fact independent of the Seller and any Affiliate of
the Seller, (ii) does not have any direct financial interest in the Seller or in
any Affiliate of the Seller, and (iii) is not connected with the Seller or any
Affiliate of the Seller as an officer, employee, promoter, underwriter, trustee,
partner, director or person performing similar functions.
Interest Accrual Period: The one month period beginning on
the first day and ending on the last day of the month preceding the month of a
Distribution Date.
Investment Company Act: The Investment Company Act of 1940,
as amended from time to time, and the rules and regulations promulgated
thereunder.
LIBOR: London interbank offered quotations for one month
Eurodollar deposits.
Majority Securityholders: The Holders of Securities
evidencing in the aggregate greater than 50% of the aggregate Class A-1 Balance
of all the Securities.
Monthly Distribution Amount: With respect to any Distribution
Date, the aggregate of (i) the interest distribution amount for such
Distribution Date, and (ii) the principal distribution amount for such
Distribution Date.
Moody's: Moody's Investors Service, Inc. or its successor in
interest.
Notice of Final Distribution: With respect to the Pooled
Certificates, any notice provided pursuant to the related Underlying Agreement
to the effect that final distribution on a Pooled Certificate shall be made only
upon presentment and surrender thereof. With respect to the Securities, the
notice to be provided pursuant to Section 7.01(b) to the effect that final
distribution on the Securities shall be made only upon presentment and surrender
thereof.
Officers' Certificate: A certificate signed by the Chairman of
the Board, the President, a Senior Vice President, a Vice President or an
Assistant Vice President and by the Treasurer, the Secretary, an Assistant
Treasurer or an Assistant Secretary of the Seller or the Trustee, as required by
this Agreement.
<PAGE>
Opinion of Counsel: A written opinion of counsel, who may be
counsel for the Seller, which opinion is addressed to the Trustee and is
reasonably acceptable to the Trustee.
Original Class A-1 Balance: $55,809,878
Option Exercise Fee: The fee set forth in Section 4.05(c).
Option Exercise Notice: A notice, substantially in the form of
Exhibit B, delivered by a Holder or Security Owner holding not less than 10% of
the outstanding principal amount of the Securities.
Percentage Interest: With respect to any Security, the portion
of the Class represented by such Security, expressed as a percentage, the
numerator of which is the initial outstanding principal amount of such Security
as of the Closing Date, as specified on the face thereof, and the denominator of
which is the Original Class A-1 Balance.
Permitted Investments: Any one or more of the following
obligations or securities:
(i) direct obligations of, or obligations fully
guaranteed as to timely payment of principal and
interest by, the United States or any agency or
instrumentality thereof, provided such obligations
are backed by the full faith and credit of the United
States;
(ii) demand and time deposits in, certificates of
deposit of, or bankers' acceptances (which shall each
have an original maturity of not more than 90 days
and, in the case of bankers' acceptances, shall in no
event have an original maturity of more than 365 days
or a remaining maturity of more than 30 days)
denominated in United States dollars issued by, any
depository institution or trust company (including
the Trustee or any agent of the Trustee, acting in
its 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 banking
authorities, so long as at the time of such
investment or contractual commitment providing for
such investment the commercial paper or other
short-term debt obligations of such depository
institution or trust company (or, in the case of a
depository institution which is the principal
subsidiary of a holding company, the commercial paper
or other short-term debt obligations of such holding
company) have a credit rating of "A-1+" and P-1 from
S&P and Moody's, respectively;
<PAGE>
(iii) repurchase obligations with respect to any
security described in clause (i) above where such
security has a remaining maturity of one year or less
and where such repurchase obligation has been entered
into with a depository institution or trust company
(acting as principal) described in clause (ii) above;
(iv) 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 securities are rated "AAA" and "Aaa" by
S&P and Moody's, respectively, at the time of such
investment or contractual commitment providing for
such investment; provided, however, that securities
issued by any particular corporation will not be
Permitted Investments to the extent that investment
therein will cause the then outstanding principal
amount of securities issued by such corporation and
held as part of the Trust Fund to exceed 10% of the
sum of the aggregate outstanding principal balance of
all Pooled Certificates and the aggregate principal
amount of all Permitted Investments in the Asset
Proceeds Account;
(v) commercial paper (having original maturities of
not more than 365 days) of any corporation
incorporated under the laws of the United States or
any state thereof which on the date of acquisition
has been rated by each Rating Agency in its highest
short-term rating available, provided that such
commercial paper shall have a remaining maturity of
not more than 30 days;
(vi) certificates or receipts representing ownership
interests in future principal payments on obligations
of the United States of America or its agencies or
instrumentalities (which obligations are backed by
the full faith and credit of the United States of
America) held by a custodian on behalf of the holders
of such receipts; and
(vii) money market funds which are rated by Moody's
at the time at which the investment is made in its
highest long-term rating category, any such money
market funds which provide for demand withdrawals
being conclusively deemed to satisfy any maturity
requirements for Permitted Investments set forth in
the Certificates or this Agreement, including money
market funds of the Trustee and any such funds that
are managed by the Trustee or its affiliates or for
which the Trustee or any affiliate acts as advisor
(as long as such funds otherwise meet the criteria
described in this clause (vii));
<PAGE>
provided, however, that no instrument shall be a Permitted Investment if it
represents, either (1) the right to receive only interest payments with respect
to the underlying debt instrument or (2) the right to receive both principal and
interest payments derived from obligations underlying such instrument and the
principal payments with respect to such instrument provide a yield to maturity
greater than 120% of the yield to maturity at par of such underlying
obligations.
Person: Any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
Plan: Any employee benefit plan or retirement arrangement,
including individual retirement accounts and annuities, Keogh plans and
collective investment funds in which such plans, accounts, annuities or
arrangements are invested, that are described in or subject to the Plan Asset
Regulations, ERISA or corresponding provisions of the Code.
Plan Asset Regulations: The Department of Labor regulations
set forth in 29 C.F.R. <W039> 2510.3-101.
Pooled Certificate Class Percentage: Means, for each class of
Pooled Certificates, the percentage which the Pooled Certificate constitutes of
its entire class as set forth in Schedule A attached hereto under the caption "%
of Class."
Pooled Certificate Distribution Date: Each of the FHLMC
Pooled Certificate Distribution Date and the FNMA Pooled Certificate
Distribution Date.
Pooled Certificate Distribution Date Information: The
information provided or updated monthly by FNMA and FHLMC in respect of Pooled
Certificates in connection with each Pooled Certificate Distribution Date.
Pooled Certificates: The Pooled FHLMC Certificates and the
Pooled FNMA Certificates sold by the Seller to, and registered in the name of,
or held for the benefit of, the Trustee pursuant to Section 2.01 or 2.04 and as
more particularly described in Schedule A hereto.
Pooled FHLMC Certificates: Multiclass Mortgage Participation
Certificates, issued by FHLMC and identified as the Pooled FHLMC Certificates in
Schedule A hereto.
Pooled FHLMC G003/SA Certificates: FHLMC Multiclass Mortgage
Securities, Series G003, Class SA.
Pooled FHLMC G020/SB Certificates: FHLMC Multiclass Mortgage
Securities, Series G020, Class SB.
<PAGE>
Pooled FHLMC 1041/F Certificates: FHLMC Multiclass Mortgage
Participation Certificates, Series 1041, Class F.
Pooled FHLMC 1385/S Certificates: FHLMC Multiclass Mortgage
Participation Certificates, Series 1385, Class S.
Pooled FHLMC 1435/SB Certificates: FHLMC Multiclass Mortgage
Participation Certificates, Series 1435, Class SB.
Pooled FHLMC 1483/FD Certificates: FHLMC Multiclass Mortgage
Participation Certificates, Series 1483 Class FD.
Pooled FHLMC 1504/FA Certificates: FHLMC Multiclass Mortgage
Participation Certificates, Series 1504, Class FA.
Pooled FHLMC 1578/SC Certificates: FHLMC Multiclass Mortgage
Participation Certificates, Series 1578, Class SC.
Pooled FHLMC 1585/PM Certificates: FHLMC Multiclass Mortgage
Participation Certificates, Series 1585, Class PM.
Pooled Floating Rate Certificates: Pooled FHLMC 1483/FD
Certificates and Pooled FHLMC 1504/FA Certificates.
Pooled FNMA Certificates: Guaranteed REMIC Pass-Through
Certificates issued by FNMA and identified as the Pooled FNMA Certificates in
Schedule A hereto.
Pooled FNMA 93-41/SA Certificates: FNMA Guaranteed REMIC
Pass-Through Certificates, FNMA REMIC Trust 1993-41, Class SA.
Pooled FNMA 93-56/SB Certificates: FNMA Guaranteed REMIC
Pass-Through Certificates, FNMA REMIC Trust 1993-56, Class SB.
Pooled FNMA 93-60/SB Certificates: FNMA Guaranteed REMIC
Pass-Through Certificates, FNMA REMIC Trust 1993-60, Class SB.
Pooled FNMA 93-113/SF Certificates: FNMA Guaranteed REMIC
Pass-Through Certificates, FNMA REMIC Trust 1993-113, Class SF.
Pooled FNMA 93-120/SP Certificates: FNMA Guaranteed REMIC
Pass-Through Certificates, FNMA REMIC Trust 1993-120, Class SP.
<PAGE>
Pooled FNMA 93-179/SX Certificates: FNMA Guaranteed REMIC
Pass-Through Certificates, FNMA REMIC Trust 1993-179, Class SX.
Pooled FNMA 94-17/S Certificates: FNMA Guaranteed REMIC
Pass-Through Certificates, FNMA REMIC Trust 1994-17, Class S.
Pooled FNMA 97-44/Z Certificates: FNMA Guaranteed REMIC
Pass-Through Certificates, FNMA REMIC Trust 1997-44, Class Z.
Pooled FNMA 97-57/ZH Certificates: FNMA Guaranteed REMIC
Pass-Through Certificates, FNMA REMIC Trust 1997-57, Class ZH.
Pooled Inverse Floating Rate Certificates: Pooled FHLMC
G003/SA Certificates, Pooled FHLMC G020/SB Certificates, Pooled FHLMC 1041/F
Certificates, Pooled FHLMC 1385/S Certificates, Pooled FHLMC 1435/SB
Certificates, Pooled FHLMC 1578/SC Certificates, Pooled FHLMC 1585/PM
Certificates, Pooled FNMA 93-41/SA Certificates, Pooled FNMA 93-56/SB
Certificates, Pooled FNMA 93-60/SB Certificates, Pooled FNMA 93-113/SF
Certificates, Pooled FNMA 93-120/SP Certificates, Pooled FNMA 93-179/SX
Certificates, and Pooled FNMA 94-17/S Certificates.
Pooled Securityholder: The Trustee or its Depository
Participant for the benefit of the Securityholders.
Purchase Agreement: The Purchase Agreement dated October 28,
1997 between Bear, Stearns & Co., Inc. and the Seller relating to the Pooled
Certificates.
Rating Agency or Rating Agencies: Moody's and Fitch or their
successors. If such agencies or their successors are no longer in existence,
"Rating Agencies" shall be deemed to refer to such nationally recognized
statistical rating agencies, or other comparable Persons, designated by the
Seller, notice of which designation shall be given to the Trustee, and specific
ratings of Moody's and Fitch shall be deemed to refer to the equivalent ratings
of the parties so designated.
Record Date: With respect to any Distribution Date, the last
Business Day of the month preceding the month in which such Distribution Date
occurs; provided, however, that for this purpose the Distribution Date is deemed
to occur on the 25th of each month, without regard to whether such day is a
Business Day.
Remaining Pooled Certificate: Any class of the Pooled
Certificates, following the date on which the principal balance or notional
principal balance of all other classes of the Pooled Certificates and Treasury
Securities is reduced to zero.
<PAGE>
Repurchase Price: In connection with the repurchase of any
Pooled Certificate or Treasury Security pursuant to Section 2.03(c) or Section
7.01(a)(i), a price equal to the outstanding principal balance of the Pooled
Certificate or principal amount of the Treasury Security as of the date of
repurchase, plus accrued interest on the Pooled Certificate in accordance with
the applicable Underlying Agreements.
Responsible Officer: When used with respect to the Trustee,
any officer of the Trustee assigned to and working in its Corporate Trust Office
or similar group administering the Trust Fund hereunder and also, with respect
to a particular matter, any other officer of the Trustee to whom a particular
matter is referred by the Trustee because of such officer's knowledge of and
familiarity with the particular subject.
Reserve Fund: The portion of the Trust Fund constituting the
Treasury Securities.
S&P: Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies.
Securities Act: The Securities Act of 1933, as amended.
Security: Any Class A-1 Security as executed hereunder by the
Trustee and authenticated and delivered hereunder by the Security Registrar,
substantially in the form of Exhibit A hereto.
Security Owner: Any Person who is the beneficial owner of a
Security registered in the name of the Depository or its nominee.
Security Principal Balance: With respect to any Security, as
of any date of determination, the then outstanding principal amount of such
Security, which is equal to the product of (a) the Percentage Interest evidenced
by such Security and (b) the then Class A-1 Balance of the Security.
Security Registrar and Security Register: Shall each have the
meanings provided in Section 4.02.
Securityholder or Holder: As to the Securities, the person in
whose name a Security is registered in the Security Register, except that,
solely for the purpose of giving any consent, approval or waiver pursuant to
this Agreement, any Security registered in the name of the Seller or any
Affiliate thereof shall be deemed not to be outstanding and shall not be taken
into account for purposes of determining whether the Holders of Securities
evidencing the requisite aggregate Percentage Interest necessary to effect any
such consent, approval or waiver has been obtained, unless such Persons
collectively own all the Securities.
<PAGE>
Seller: Financial Asset Securitization, Inc., a Virginia
corporation, or its successor in interest.
Single Security: A Security with an original principal amount
of $1,000.
Substitute Pooled Certificate: One or more mortgage related
securities tendered to the Trustee pursuant to Section 2.04, issued by GNMA,
FNMA or FHLMC, which meet the following criteria: (i) such substitution shall be
(a) in the case of the Pooled Floating Rate Certificates, with at least one
floating rate certificate which is entitled to receive interest based on LIBOR
whose coupon will at least equal the coupon of the Pooled Certificate being
substituted for at all levels of LIBOR, (b) in the case of the Z Certificates,
with one or more accrual certificates bearing a coupon no less than the coupon
of the Pooled Certificate being substituted for, or (c) in the case of the
Pooled Inverse Floating Rate Certificates, one or more inverse floating rate
certificates based on LIBOR whose combined coupon will be at least equal to the
coupon of the Pooled Certificates being substituted for at all levels of LIBOR,
(ii) the sum of the outstanding principal amounts of the Substitute Pooled
Certificates equals the sum of the outstanding principal amounts of the Deleted
Pooled Certificates being substituted for, (iii) the Substitute Pooled
Certificates as the date of substitution ultimately are backed by mortgage loans
(a) with a weighted average pass-through rate no more than 50 basis points below
and no more than 50 basis points above the weighted average pass-through rate of
the mortgage loans ultimately backing the Deleted Pooled Certificate and (b)
which are conventional, fixed rate, one- to four-family, fully amortizing, level
payment, first mortgage loans with original maturities of up to 30 years, except
with respect to the Pooled FHLMC 1385/S Certificates and the Pooled FNMA 94-17/S
Certificates, for which the original maturity of the Mortgage Loans shall be up
to 15 years, (iv) the inclusion of which in the Trust Fund will not result in a
withdrawal or downgrading in the rating assigned to the Securities by the Rating
Agencies, written confirmation of which shall be provided by the Rating Agencies
to the Trustee and (v) will not cause the Trust Fund to lose its status as a
grantor trust for federal income tax purposes as indicated in an Opinion of
Counsel to be provided to the Trustee.
Substitute Treasury Security: One or more United States
Treasury securities tendered to the Trustee pursuant to Section 2.04 which meet
the following criteria: (i) the maturity of the Substitute Treasury Securities
shall be within 90 days of the maturity of the Treasury Securities being
substituted for, (ii) the sum of the outstanding principal amounts of the
Substitute Treasury Securities equals the sum of the outstanding principal
amounts of the Deleted Treasury Securities being substituted for, (iii) the
inclusion of which in the Trust Fund will not result in a withdrawal or
downgrading in the rating assigned to the Securities by the Rating Agencies,
written confirmation of which shall be provided by the Rating Agencies to the
Trustee and (iv) will not cause the Trust Fund to lose its status as a grantor
trust for federal income tax purposes as indicated in an Opinion of Counsel to
be provided to the Trustee.
Supplemental Distribution Date: Shall have the meaning set
forth in Section 3.05(a).
<PAGE>
Treasury Securities: The United States Treasury securities
sold by Seller to, and registered in the name of, or held for the benefit of,
the Trustee pursuant to Section 2.01 or 2.04 and as more particularly described
in Schedule A hereto.
Treasury Security Distribution Date: With respect to the
Treasury Securities, February 15, 1998, August 15, 1998, February 15, 1999 and
August 15, 1999, respectively, or the respective maturity dates of Substitute
Treasury Securities.
Trustee: Norwest Bank Minnesota, National Association., in
its capacity as trustee, or its successor in interest.
Trustee Fee: With respect to any Distribution Date, the
monthly fee equal to one-twelfth of the product of [0.0175%] and the Class
Balance immediately prior to such Distribution Date, but not less than [$210.00]
with respect to any Distribution Date.
Trustee Fee Escrow Account: The trust account or accounts,
which shall at all times be Eligible Accounts, created and maintained by the
Trustee pursuant to Section 3.03.
Trust Fund: The segregated pool of assets subject hereto,
constituting the corpus of the trust created hereby and to be administered
hereunder, consisting of:
(i) the Pooled Certificates;
(ii) the Treasury Securities constituting the Reserve
Fund;
(iii) all amounts payable on the Pooled Certificates following
the Closing Date pursuant to the Underlying Agreements;
(iv) the Asset Proceeds Account and such funds or assets as
are from time to time deposited in the Asset Proceeds Account other than
the amounts described in Section 3.04(iv) hereof;
(v) the Seller's rights under the Purchase Agreement; and
(vi) the income, payments and proceeds of each of the
foregoing.
Underlying Agreements: The agreements pursuant to which the
related Pooled Certificates were issued, as in effect on the Closing Date.
Underlying Series: Each series of securities which includes
one of the Pooled Certificates.
<PAGE>
Z Certificates: Pooled FNMA 97-44/Z Certificates and Pooled
FNMA 97-57/ZH Certificates.
ARTICLE II
CONVEYANCE OF THE POOLED SECURITIES AND TREASURY SECURITIES;
ORIGINAL ISSUANCE OF SECURITIES
Section 2.01. Conveyance of the Pooled Certificates.
(a) The Seller, concurrently with the execution and
delivery hereof, does hereby sell, transfer, assign, set-over and otherwise
convey to the Trustee, in trust, for the use and benefit of the Securityholders,
without recourse, all the right, title and interest of the Seller (i) in and to
the Pooled Certificates, (ii) in and to the Treasury Securities, (iii) in and to
the Purchase Agreement and (iv) in and to all other assets constituting the
Trust Fund. Such assignment includes, without limitation, all amounts payable on
the Pooled Certificates pursuant to the Underlying Agreements and on the
Treasury Securities following the Closing Date.
(b) In connection with such transfer and assignment, and
concurrently with its execution and delivery of this Agreement, the Seller shall
have caused the Pooled Certificates and the Treasury Securities to be registered
in the book-entry records of the Federal Reserve Bank of Minneapolis in the name
of the Trustee.
(c) The transfer of the Pooled Certificates and the
Treasury Securities and all other assets constituting the Trust Fund is absolute
and is intended by the parties hereto as a sale.
(d) It is intended that the conveyances by the Seller to
the Trustee of the Pooled Certificates and the Treasury Securities as provided
for in this Section 2.01 be construed as a sale by the Seller to the Trustee of
the Pooled Certificates and the Treasury Securities for the benefit of the
Securityholders. Further, it is not intended that any such conveyance be deemed
to be a pledge of the Pooled Certificates and the Treasury Securities by the
Seller to the Trustee to secure a debt or other obligation of the Seller.
However, in the event that the Pooled Certificates and the Treasury Securities
are held to be property of the Seller, or if for any reason this Agreement is
held or deemed to create a security interest in the Pooled Certificates and the
Treasury Securities, then it is intended that (a) this Agreement shall also be
deemed to be a security agreement within the meaning of Articles 8 and 9 of the
New York Uniform Commercial Code and the Uniform Commercial Code of any other
applicable jurisdiction; (b) the conveyance provided for in Section 2.01 shall
be deemed to be a grant by the Seller to the Trustee of a security interest in
all of the Seller's right (including the power to convey title thereto), title
and interest, whether now owned or hereafter acquired, in and to (1) the Pooled
Certificates and the Treasury Securities, (2) all amounts payable pursuant to
the Pooled Certificates and the Treasury Securities in accordance with the terms
thereof and (3) any and all general intangibles consisting of, arising from or
relating to any of the foregoing, and all
<PAGE>
proceeds of the conversion, voluntary or involuntary, of the foregoing into
cash, instruments, securities or other property, including without limitation
all amounts from time to time held in the Asset Proceeds Account, whether in the
form of cash, instruments, securities or other property, other than the amounts
described in Section 3.04(iv) hereof; (c) the possession by the Trustee or any
agent of the Trustee of such items of property as constitute instruments, money,
negotiable documents or chattel paper shall be deemed to be "possession by the
secured party," or possession by a purchaser or a person designated by such
secured party, for purposes of perfecting the security interest pursuant to the
New York Uniform Commercial Code and the Uniform Commercial Code of any other
applicable jurisdiction (including, without limitation, Section 9-305, 8-313 or
8-321 thereof); and (d) notifications to persons 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 Trustee
for the purpose of perfecting such security interest under applicable law.
The Seller and the Trustee, at the Seller's or the Majority
Securityholders' direction, shall, to the extent consistent with this Agreement,
take such reasonable actions as may be determined to be necessary to ensure
that, if this Agreement were deemed to create a security interest in the Pooled
Certificates and the Treasury Securities, and the other property described
above, 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.
Section 2.02. Acceptance of Trust Fund by Trustee; Initial
Issuance of Securities.
The Trustee acknowledges receipt of the Underlying Agreements
and the transfer and assignment to it of the Pooled Certificates and the
Treasury Securities as evidenced by the written confirmation of the registration
of such Pooled Certificates and Treasury Securities in the name of the Trustee,
in good faith and without notice of any adverse claim, and the assignment to it
of all other assets included in the Trust Fund and declares that it holds and
will hold its interest in the Pooled Certificates and the Treasury Securities
and all other assets included in the Trust Fund in trust for the exclusive use
and benefit of all present and future Securityholders in accordance with the
terms of this Agreement. Concurrently with such transfer and assignment and in
exchange therefor, pursuant to the written request of the Seller executed by an
officer of the Seller, the Trustee has executed and caused to be authenticated
and delivered to or upon the order of the Seller, the Securities in authorized
denominations evidencing the entire beneficial ownership of the Trust Fund.
Until the Trust Fund is terminated in accordance with Section
7.01, except as provided herein, the Trustee shall not assign, sell, dispose of
or transfer any interest in the Pooled Certificates and the Treasury Securities
or any other asset constituting the Trust Fund or permit the Pooled Certificates
and the Treasury Securities or any other asset constituting the Trust Fund to be
subjected to any lien, claim or encumbrance arising by, through or under the
Trustee or any person claiming by, through or under the Trustee.
<PAGE>
Section 2.03. Representations and Warranties of the Seller
and the Trustee.
(a) The Seller hereby represents and warrants to the
Trustee and for the benefit of the Securityholders, as of the Closing Date,
that:
(i) The Seller is a corporation duly organized,
validly existing and in good standing under the laws
of the State of Virginia, and the Seller is possessed
of all licenses necessary to carry on its business.
(ii) The execution and delivery of this Agreement by
the Seller, and the performance and compliance with
the terms of this Agreement by the Seller, will not
violate the Seller's certificate of incorporation or
bylaws or constitute a default (or an event which,
with notice or lapse of time, or both, would
constitute a default) under, or result in the breach
of, any material agreement or other instrument to
which it is a party or which is applicable to it or
any of its assets.
(iii) The Seller has the full right, power and
authority to enter into and consummate all
transactions contemplated by this Agreement,
including but not limited to selling the Pooled
Certificates and the Treasury Securities to the
Trustee, has duly authorized the execution, delivery
and performance of this Agreement, and has duly
executed and delivered this Agreement.
(iv) This Agreement, assuming due authorization,
execution and delivery by the Trustee, constitutes a
valid, legal and binding obligation of the Seller,
enforceable against the Seller in accordance with the
terms hereof, subject to (A) applicable bankruptcy,
insolvency, reorganization, moratorium and other laws
affecting the enforcement of creditors' rights
generally, and (B) general principles of equity,
regardless of whether such enforcement is considered
in a proceeding in equity or at law.
(v) The Seller 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,
<PAGE>
which violation is likely to affect materially and
adversely either the ability of the Seller to perform
its obligations under this Agreement or the financial
condition of the Seller.
(vi) No litigation is pending or, to the best of the
Seller's knowledge, threatened against the Seller
which, if determined adversely to the Seller, would
prohibit the Seller from entering into this Agreement
or is likely to materially and adversely affect
either the ability of the Seller to perform its
obligations under this Agreement or the financial
condition of the Seller.
(vii) The Seller was, immediately prior to the
transfer of the Pooled Certificates and the Treasury
Securities to the Trustee, the sole owner thereof
free and clear of any lien, pledge, charge or
encumbrance of any kind (except any lien created by
this Agreement).
(viii) The Seller acquired the Pooled Certificates
and the Treasury Securities in good faith without
notice of any adverse claim, lien, charge,
encumbrance or security interest (including without
limitation, federal tax liens or liens arising under
ERISA).
(ix) The Seller has not assigned any interest in the
Pooled Certificates and the Treasury Securities or
any distributions or payments thereon, except as
contemplated herein.
(x) The Trustee, in its capacity as the holder of the
Pooled Certificates, will be entitled to
distributions under the Underlying Agreements equal
to all distributions of interest and principal made
on the Pooled Certificates, and in its capacity as
the holder of the Treasury Securities, will be
entitled to all payments of principal made on the
Treasury Securities.
(xi) As of the Closing Date, collectively, the Pooled
Certificates and the Treasury Securities have an
aggregate principal balance greater than or equal to
the Original Class A-1 Balance.
(xii) The information relating to the Pooled
Certificates and the Treasury Securities set forth in
Schedule A is true and correct in all material
respects.
<PAGE>
(xiii) Each Pooled Certificate and Treasury Security
is an Uncertificated Security (as such term is
defined in Article 8 of the Uniform Commercial Code)
registered on the books of the Federal Reserve Banks
or the Depository in the name of the Trustee or its
financial intermediary on behalf of the Trustee.
(xiv) The Pooled Certificates are REMIC regular
interests.
(xv) The Seller has no actual knowledge after
reasonable inquiry that (a) each trust issuing each
Pooled Certificate was not duly created and is not
validly existing and (b) each Pooled Certificate (1)
was not validly issued by such trust and (2) is not
outstanding, (3) is not the legal, valid, binding and
enforceable obligation of such trust and (4) is not
entitled to the benefits of the pooling and servicing
agreement, indenture, trust agreement or other
document pursuant to which such Pooled Certificate
was issued (except as limited by bankruptcy,
insolvency or other similar laws affecting the
enforcement of creditors' rights generally or to the
extent that such enforceability may be subject to the
exercise of judicial discretion in accordance with
general equitable principles).
(b) The Trustee hereby represents and warrants to the
Seller and for the benefit of the Securityholders, as of the Closing Date, that:
(i) The Trustee is a national banking association,
duly organized and validly existing under the laws of
the United States of America.
(ii) The execution and delivery of this Agreement by
the Trustee, and the performance and compliance with
the terms of this Agreement by the Trustee, will not
violate the Trustee's charter or bylaws or constitute
a default (or an event which, with notice or lapse of
time, or both, would constitute a default) under, or
result in the breach of, any material agreement or
other instrument to which it is a party or which is
applicable to it or any of its assets which default
is likely to affect materially and adversely either
the ability of the Trustee to perform its obligations
hereunder or its financial condition.
(iii) The Trustee has the full power and authority to
enter into and consummate all transactions
contemplated by this Agreement, has
<PAGE>
duly authorized the execution, delivery and
performance of this Agreement, and has duly executed
and delivered this Agreement.
(iv) This Agreement, assuming due authorization,
execution and delivery by the Seller, constitutes a
valid, legal and binding obligation of the Trustee,
enforceable against the Trustee in accordance with
the terms hereof, subject to (A) applicable
bankruptcy, insolvency, reorganization, moratorium
and other laws affecting the enforcement of
creditors' rights generally, and (B) general
principles of equity, regardless of whether such
enforcement is considered in a proceeding in equity
or at law or in an administrative proceeding.
(v) The Trustee 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 or regulation of any federal, state or
local governmental or regulatory authority, which
violation is likely to affect materially and
adversely either the ability of the Trustee to
perform its obligations under this Agreement or the
financial condition of the Trustee.
(vi) No litigation is pending or, to the best of the
Trustee's knowledge, threatened against the Trustee
which would prohibit the Trustee from entering into
this Agreement or is likely to materially and
adversely affect either the ability of the Trustee to
perform its obligations under this Agreement or the
financial condition of the Trustee.
(vii) The Pooled Certificates and the Treasury
Securities will be held in the Trustee's account at
the Federal Reserve Bank of Minneapolis, Minnesota,
as evidenced by the written confirmation of the
registration of such Pooled Certificates and Treasury
Securities in the name of the Trustee; it has
acquired the Pooled Certificates and the Treasury
Securities on behalf of the Securityholders from the
Seller in good faith, for value, and, to the best of
the Trustee's knowledge, without notice or actual
knowledge of any adverse claim, lien, charge,
encumbrance or security interest (including, without
limitation, federal tax liens or liens arising under
ERISA); it has not and will not, in any capacity
other than as Trustee, assert any claim or interest
in the Pooled Certificates and the Treasury
Securities and will hold its interest in such Pooled
Certificates and the Treasury
<PAGE>
Securities and the proceeds thereof in trust pursuant
to the terms of this Agreement; and it has not
encumbered or transferred its right, title or
interest in the Pooled Certificates and the Treasury
Securities.
(c) It is understood and agreed that the representations
and warranties set forth in Section 2.03(a) shall survive the execution and
delivery of this Agreement. Upon discovery by either party hereto of a breach of
any of the foregoing representations and warranties which materially and
adversely affects the interests of the Securityholders or either party hereto,
the party discovering such breach will give prompt written notice thereof to the
other party hereto and to the Securityholders. Within thirty (30) days of the
earlier of either discovery by or notice to the Seller of any breach of a
representation or warranty of the Seller that materially and adversely affects
the interests of the Securityholders, the Seller shall use its best efforts
promptly to cure such breach in all material respects and, if such breach cannot
be cured, the Seller shall, at the election of the Majority Securityholders,
repurchase each Pooled Certificate and Treasury Security affected by the breach
at the Repurchase Price. If the Seller is to repurchase Pooled Certificates, the
Trustee shall promptly determine the Repurchase Price in accordance with the
definition thereof. Repurchase of any of the Pooled Certificates or Treasury
Securities pursuant to the foregoing provisions of this Section 2.03(c) shall be
accomplished by (i) deposit in the Asset Proceeds Account on the Business Day
prior to the next succeeding Distribution Date of the amount of the Repurchase
Prices of the Deleted Pooled Certificates and Deleted Treasury Securities and
(ii) amending Schedule A hereto to remove the related Deleted Pooled
Certificates and Deleted Treasury Securities.
Section 2.04. Substitution of Pooled Certificates and Treasury
Securities. Notwithstanding anything to the contrary in this Agreement, in lieu
of repurchasing a Pooled Certificate or Treasury Security pursuant to Section
2.03(c), the Seller may, no later than the date by which such repurchase by the
Seller would otherwise be required, cause to be registered in the book-entry
record of the Federal Reserve Bank of Minneapolis in the name of the Trustee a
Substitute Pooled Certificate or Substitute Treasury Security, as the case may
be, accompanied by an Officer's Certificate of the Seller identifying such
Substitute Pooled Certificate or Substitute Treasury Security, as the case may
be, and confirming that it conforms to the requirements set forth in the
definition of "Substitute Pooled Certificate" or "Substitute Treasury Security",
as the case may be; provided, however, that substitution pursuant to this
Section 2.04 in lieu of repurchase shall not be permitted after the termination
of the 90 day period beginning on the Closing Date. Upon receipt of such
Officer's Certificate and the written confirmation of such transfer, such
Substitute Pooled Certificate or Substitute Treasury Security, as the case may
be, shall thereafter be deemed to be a Pooled Certificate or Treasury Security
hereunder. In the event of such a substitution, payments received on the
Substitute Pooled Certificate or Substitute Treasury Security, as the case may
be, for the month in which the substitution occurs shall be the property of the
Seller and payments received on the Deleted Pooled Certificate or Deleted
Treasury Security, as the case may be, during such month shall be the property
of the Trust Fund. Upon receipt of the foregoing with respect to the Substitute
Pooled Certificate or Substitute Treasury Security, as the case may be, the
Trustee shall release to the Seller and shall execute
<PAGE>
and deliver all instruments of transfer or assignment, without recourse, in form
as provided to it as are necessary to vest in the Seller title to and rights
under the related Deleted Pooled Certificate or Deleted Treasury Security, as
the case may be, released pursuant to this Section 2.04. The Seller shall
deliver the documents related to the Substitute Pooled Certificate in accordance
with the provisions of Section 2.02. The representations and warranties set
forth in 2.03(a) concerning the Pooled Certificates or Substitute Treasury
Security, as the case may be, shall be deemed to have been made by the Seller
with respect to each Substitute Pooled Certificate or Substitute Treasury
Security, as the case may be, as of the date of acceptance of such Substitute
Pooled Certificate or Substitute Treasury Security, as the case may be, by the
Trustee. On the date of substitution, the Trustee shall (i) amend Schedule A
hereto, to reflect such substitution and shall provide a copy of the amended
Schedule A to the Seller and the Rating Agencies and (ii) provide written
acknowledgment to the Seller of the transfer and assignment to it of the related
Substitute Pooled Certificate or Substitute Treasury Security, as the case may
be, in good faith and without notice of any adverse claim, and the assignment to
it of all other related assets to be included in the Trust Fund.
ARTICLE III
ADMINISTRATION OF THE POOLED CERTIFICATES AND TREASURY SECURITIES;
PAYMENTS AND REPORTS TO SECURITYHOLDERS
Section 3.01. Administration of the Trust Fund and the
Pooled Certificates.
If at any time the Trustee, as a holder of a Pooled
Certificate, is requested in writing in such capacity, whether by a
Securityholder, a holder of a certificate of an Underlying Series or a party to
the related Underlying Agreement or any other Person, to take any action or to
give any consent, approval or waiver, including, without limitation, in
connection with an amendment of any Underlying Agreement, the Trustee shall
promptly notify all of the Securityholders and the Seller of such request and of
its planned course of action with respect thereto and shall, in its capacity as
a holder of Pooled Certificates, take such action in connection with the
exercise and/or enforcement of any rights and/or remedies available to it in
such capacity with respect to such request, as the Majority Securityholders
shall direct in writing. The Trustee shall promptly furnish to the Seller and,
upon the written request of a Securityholder, such Securityholder, all notices,
statements, reports or other information that it receives as holder of the
Pooled Certificates.
Section 3.02. Collection of Monies.
(a) In connection with its receipt of any distribution on
the Pooled Certificates on any Pooled Certificate Distribution Date (or such
later date on which the Trustee shall receive the related Pooled Certificate
Distribution Date Information), the Trustee shall review the related Pooled
Certificate Distribution Date Information and shall confirm that the aggregate
amount of
<PAGE>
such distribution received by the Trustee is consistent with such information
(it being understood that the Trustee shall be entitled to rely on the accuracy
and correctness of such information).
(b) If the Trustee receives a Notice of Final
Distribution in respect of any of the Pooled Certificates, the Trustee shall
present and surrender any related Pooled Certificates which are in certificated
form for final payment thereon in accordance with the terms and conditions of
the related Underlying Agreement and such notice. The Trustee shall promptly
deposit in the Asset Proceeds Account the final distribution received by the
Trustee upon presentation and surrender of such Pooled Certificates for
distribution in accordance with Section 3.05 hereof on the next succeeding
Distribution Date.
Section 3.03. Establishment of Asset Proceeds Account and
Trustee Fee Escrow Account; Deposits Therein.
(a) The Trustee, for the benefit of the Securityholders,
shall establish and maintain one or more interest bearing trust accounts
(collectively, the "Asset Proceeds Account"), each of which shall be an Eligible
Account, entitled "Norwest Bank Minnesota, National Association, as trustee for
the registered holders of Financial Asset Securitization, Inc. Mortgage
Participation Securities, Series 1997-1, Asset Proceeds Account", held in trust
by the Trustee for the benefit of the Securityholders. The Trustee shall cause
all distributions received on the Pooled Certificates and all payments received
on the Treasury Securities by the Trustee in its capacity as holder of the
Pooled Certificates and Treasury Securities, from whatever source, and all
amounts received by it representing payment of a Repurchase Price pursuant to
Section 2.03(c) and 7.01(a)(i), subsequent to the Closing Date to be deposited
directly into the Asset Proceeds Account. The Asset Proceeds Account is
initially located at the Trustee. The Trustee shall give notice to the Seller
and to Securityholders of any new location of the Asset Proceeds Account prior
to any change thereof.
(b) In the event that payments in respect of the Pooled
Certificates and Treasury Securities are received by the Trustee prior to the
related Distribution Date, the Trustee may invest such funds deposited in the
Asset Proceeds Account in one or more Permitted Investments held in the name of
the Trustee and shall receive as compensation, in addition to the Trustee Fee,
any interest or investment income earned on such Permitted Investments, which
may be withdrawn by the Trustee on each Distribution Date and shall not
constitute Available Funds. Notwithstanding the foregoing, no such Permitted
Investment may mature later than the day before such related Distribution Date
(unless such Permitted Investment is an obligation of the Trustee, in which case
such Permitted Investment may mature on the Distribution Date) and no such
investment shall be sold prior to its maturity date. The amount of any losses
incurred in respect of any such investments shall be deposited in the Asset
Proceeds Account by the Trustee out of its own funds immediately as realized.
(c) The Trustee shall establish and maintain one or more
interest bearing trust accounts (collectively, the "Trustee Fee Escrow
Account"), each of which shall be an Eligible
<PAGE>
Account, entitled "Norwest Bank Minnesota, National Association, as trustee for
the registered holders of Financial Asset Securitization, Inc. Mortgage
Participation Securities, Series 1997-1, Trustee Fee Escrow Account" held in
trust (but outside of the Trust Fund established hereby) by the Trustee. The
Trustee Fee Escrow Account is initially located at the Trustee. The Trustee
shall give notice to the Seller and the Securityholders of any new location of
the Trustee Fee Escrow Account prior to any change thereof. On each Distribution
Date the Trustee may transfer from the Asset Proceeds Account to the Trustee Fee
Escrow Account the Escrow Amount for such Distribution Date. The Trustee may
invest any amounts deposited in the Trustee Fee Escrow Account in one or more
Permitted Investments held in the name of the Trustee in trust. No such
Permitted Investment may mature later than the day before any Distribution Date
which in the Trustee's sole discretion is believed to be a Distribution Date
upon which the Trustee Fee may exceed interest received on the Pooled
Certificates (unless such Permitted Investment is an obligation of the Trustee,
in which event such Permitted Investment may mature on the Distribution Date).
No investment shall be sold prior to its maturity date unless the investment
must be sold to pay the Trustee Fee. The amount of any losses incurred in
respect of any investment shall be deposited in the Trustee Fee Escrow Account
by the Seller out of its own funds immediately as realized. All interest and
investment income on amounts in the Trustee Fee Escrow Account shall be retained
in the Trustee Fee Escrow Account. On any Distribution Date on which the Trustee
Fee for such Distribution Date exceeds the interest received from the Pooled
Certificates for such Distribution Date, the Trustee may withdraw the amount of
the excess from the Trustee Fee Escrow Account, and pay such excess to the
Trustee in its individual capacity. If the Trustee resigns or is removed and a
successor trustee is appointed, any amounts on deposit in the Trustee Fee Escrow
Account shall thereafter be held in the same manner by and for the benefit of
the successor trustee. Upon the termination of the Trust Fund, any amount
(including earnings) remaining in the Trustee Fee Escrow Account shall be paid
to the Trustee.
(d) The Seller shall cause all distributions received on
the Pooled Certificates or Treasury Securities by the Seller or any of its
Affiliates after the Closing Date to be deposited directly into the Asset
Proceeds Account.
Section 3.04. Permitted Withdrawals From the Asset
Proceeds Account.
The Trustee may from time to time withdraw funds from the
Asset Proceeds Account for the following purposes (without any particular order
of priority):
(i) to make distributions in the amounts and in the
manner provided for in Section 3.05;
(ii) to pay to the Person entitled thereto any amount
deposited in the Asset Proceeds Account in
error;
(iii) to clear and terminate the Asset Proceeds
Account upon the termination of this Agreement;
and
<PAGE>
(iv) to pay itself, as additional compensation, the
net reinvestment income permitted to be paid to
it as provided in Section 3.03(b) and any
amounts to which it is entitled to be paid
pursuant to Section 5.05.
On each Distribution Date, the Trustee shall withdraw all
funds from the Asset Proceeds Account and shall use such funds withdrawn from
the Asset Proceeds Account only for the purposes described in this Section 3.04
and in Section 3.05.
Section 3.05. Distributions.
(a) On each Distribution Date, the Trustee shall apply
amounts in the Asset Proceeds Account representing Available Funds in the
following manner and order of priority, in each case to the extent of the
remaining Available Funds:
first, from amounts with respect to interest
received on the Pooled Certificates, to the
Trustee, to pay the portion of the Trustee
Fee not being covered by a withdrawal from
the Trustee Fee Escrow Account and, after
payment of the Trustee Fee, to deposit the
Escrow Amount in the Trustee Fee Escrow
Account;
second, from amounts with respect to
principal received on the Pooled
Certificates and Treasury Securities, to the
Securityholders an amount with respect to
principal, if any, such that the principal
balance of the Securities after such
distribution is equal to the aggregate
balance of the Pooled Certificates and
Treasury Securities; and
third, from the remaining Available Funds,
to the Securityholders as interest.
If the Trustee has not received a distribution on, or the
Pooled Certificate Distribution Date Information with respect to, any of the
Pooled Certificates, or payment on any Treasury Security, by the Determination
Time, the distribution or payment allocable to such Pooled Certificates or
Treasury Securities will not be made on the applicable Distribution Date, but,
if such distribution and such Pooled Certificate Distribution Date Information,
or payment on any Treasury Security, (i) is received by the Trustee by noon,
Eastern Standard Time, on the third Business Day after the Determination Time,
the Trustee will distribute such amounts, in accordance with the priorities set
forth above on the third Business Day after the Determination Time (a
"Supplemental Distribution Date") or (ii) is received by the Trustee after noon,
Eastern Standard Time, on the third Business Day after the Determination Time,
such amounts will be distributed by the Trustee on the next succeeding
Distribution Date, and in neither case will additional interest be paid thereon.
<PAGE>
For accounting purposes, each Distribution Date and, if
applicable, the related Supplemental Distribution Date is deemed to occur in the
same month as the concurrent or immediately preceding Pooled Certificate
Distribution Date.
(b) All distributions made to Securityholders pursuant to
Section 3.05(a) on each Distribution Date shall be allocated pro rata among the
outstanding Securities based upon their respective Percentage Interests and,
except in the case of the final distribution to the Securityholders, shall be
made to the Holders of record on the related Record Date. Distributions to any
Securityholder on any Distribution Date shall be made by wire transfer of
immediately available funds to the account of such Securityholder at a bank or
other entity having appropriate facilities therefor, if such Securityholder
shall have so notified the Trustee in writing (which wiring instructions may be
in the form of a standing order applicable to all future Distribution Dates) no
less than five Business Days prior to the related Record Date (or, in the case
of the initial Distribution Date, no later than the related Record Date) and is
the registered owner of Securities with an aggregate initial Security Principal
Balance of not less than $1,000,000, or otherwise by check mailed by first class
mail to the address of such Securityholder appearing in the Security Register.
Final distribution to each Securityholder will be made in like manner, but only
upon presentment and surrender of such Security at the Corporate Trust Office or
such other location specified in the notice to Securityholders of such final
distribution.
(c) Notwithstanding any other provision of this
Agreement, the Trustee shall comply with all federal withholding requirements
respecting payments to Securityholders of interest or, subject to the receipt of
such information with respect to the Pooled Certificates and Treasury
Securities, the accrual of original issue discount that the Trustee reasonably
believes are applicable under the Code. The consent of Securityholders shall not
be required for such withholding. In the event the Trustee does withhold any
amount from payments to any Securityholder pursuant to federal withholding
requirements, the Trustee shall indicate the amount withheld to such
Securityholders.
(d) The Trustee may conclusively rely on the Pooled
Certificate Distribution Date Information in making the calculations called for
in this Section 3.05 and in Section 3.06. If the Pooled Certificate Distribution
Date Information is insufficient to make the calculations provided for in this
Section 3.05, the Trustee shall promptly request FHLMC, with respect to the
Pooled FHLMC Certificates, and FNMA, with respect to the Pooled FNMA
Certificates, to provide sufficient information in writing, and after receipt of
such information the Trustee shall make on the following Distribution Date any
necessary adjustments in the application of amounts in the Asset Proceeds
Account. If such information is not received from FHLMC or FNMA, the Trustee
shall not be responsible for making any such adjustment.
Section 3.06. Statements to Securityholders.
On each Distribution Date, the Trustee shall prepare, to the
extent it receives information regarding the distributions on the Pooled
Certificates and Treasury Securities on the
<PAGE>
Distribution Date; and shall forward by mail, a statement to each
Securityholder, the Seller and the Rating Agencies stating:
(i) the Available Funds for such Distribution
Date;
(ii) the interest distribution amount and the
principal distribution amount for such Distribution
Date and, with respect to each, the components
thereof as reported in the related Pooled Certificate
Distribution Date Information or other information
received by the Trustee from FHLMC or FNMA pursuant
to Section 3.05(d) with respect to the Pooled
Certificates;
(iii) the Class A-1 Balance before and after applying
payments on such Distribution Date;
(iv) the effective interest rate on the
Securities for such Distribution Date;
(v) the outstanding principal and/or notional amount,
as the case may be, immediately prior to and after
taking into account distributions made on such
Distribution Date, and the current interest rate on
each of the Pooled Certificates for such Distribution
Date;
(vi) the outstanding principal amount, immediately
prior to and after taking into account distributions
made on such Distribution Date, of each of the
Treasury Securities; and
(vii) the amount of the Trustee Fee for such
Distribution Date.
In the case of the information furnished pursuant to clauses
(ii) and (iii) above, the amounts shall also be expressed as a dollar amount per
$1000 of principal face amount. The Trustee's responsibility for reporting the
above information is limited to the availability, timeliness of receipt of, and
accuracy of the Pooled Certificate Distribution Date Information and any
additional written information received by the Trustee pursuant to Section
3.05(d) with respect to the Pooled Certificates. If the Trustee receives any
such additional information after preparing a statement required by this
Section, the Trustee shall report the related adjustments in a revised statement
prepared after receipt of such information.
<PAGE>
In addition, the Trustee promptly will furnish to the Seller,
and upon the written request of a Securityholder, to such Securityholder, copies
of any notices, statements, reports or other communications, received by the
Trustee in its capacity as the holder of Pooled Certificates and Treasury
Securities.
On or before March 31st of each calendar year, commencing in
1998, the Trustee shall prepare and deliver by first class mail to the Seller
and to each Person who at any time during the prior calendar year was a
Securityholder of record a statement containing the information required to be
contained in the regular monthly report to Securityholders, as set forth in
clauses (ii) and (iv) above aggregated for such prior calendar year or in the
case of a Securityholder, the applicable portion thereof during which such
Person was a Securityholder. Such obligation of the Trustee shall be deemed to
have been satisfied to the extent that substantially comparable information
shall be provided by the Trustee pursuant to any requirements of the Code and
regulations thereunder as from time to time are in force.
The Trustee shall be responsible for preparing, at its own
expense, signing and filing, on behalf of the Trust Fund, federal income tax and
information returns with the Internal Revenue Service ("IRS") and Minnesota
income tax returns and the returns of any other state taxing authority the
necessity of filing of which shall have been confirmed to the Trustee in writing
either by the delivery of an Opinion of Counsel to such effect or by the
delivery to the Trustee of a written notification to such effect by the taxing
authority of any such state. The Seller shall provide the Trustee within 10 days
of the Closing Date all information deemed necessary by the Trustee to fulfill
its obligations under this paragraph. The Trustee shall furnish to each
Securityholder at the time required by law such information reports or returns
as are required by applicable federal, state or local law with respect to the
Trust Fund to enable Securityholders to prepare their tax returns and will
furnish comparable information to the IRS and other taxing authorities as and
when required by law to do so.
The Trustee shall be responsible for preparing, at its own
expense, signing and filing, on behalf of the Trust Fund, all filings with the
Securities and Exchange Commission required to be made on behalf of the Trust
Fund.
Section 3.07. Access to Certain Documentation and
Information.
The Trustee shall provide to the Seller access to all reports,
documents and records maintained by the Trustee in respect of its duties
hereunder, such access being afforded without charge but only upon three
Business Days' written request and during normal business hours at offices
designated by the Trustee.
<PAGE>
ARTICLE IV
THE SECURITIES
Section 4.01. The Securities.
(a) The Depository, the Seller and the Trustee have
entered into a letter agreement dated as of October 30, 1997 (the "Depository
Agreement"). Except as provided in Subsection 4.01(b), the Securities shall at
all times remain registered in the name of the Depository or its nominee and at
all times: (i) registration of such Securities may not be transferred by the
Trustee except to a successor to the Depository; (ii) ownership and transfers of
registration of such Securities on the books of the Depository shall be governed
by applicable rules established by the Depository; (iii) the Depository may
collect its usual and customary fees, charges and expenses from its Depository
Participants; (iv) the Trustee shall deal with the Depository as representative
of the Security Owners for purposes of exercising the rights of Securityholders
under this Agreement, and requests and directions for and votes of such
representative shall not be deemed to be inconsistent if they are made with
respect to different Security Owners; and (v) the Trustee may rely and shall be
fully protected in relying upon information furnished by the Depository with
respect to its Depository Participants.
All transfers by Security Owners of Securities shall
be made in accordance with the procedures established by the Depository
Participant or brokerage firm representing such Security Owners. Each
Depository Participant shall only transfer Certificates of Security Owners it
represents or of brokerage firms for which it acts as agent in accordance with
the Depository's normal procedures.
(b) If (i)(A) the Seller advises the Trustee in writing
that the Depository is no longer willing or able to properly discharge its
responsibilities as Depository and (B) the Trustee or the Seller is unable to
locate a qualified successor within 30 days or (ii) the Seller at its option
advises the Trustee in writing that it elects to terminate the book-entry system
through the Depository, the Trustee shall request that the Depository notify all
Security Owners of the occurrence of any such event and of the availability of
definitive, fully registered Securities (the "Definitive Securities") to
Security Owners requesting the same. Upon surrender to the Trustee of the
Securities by the Depository, accompanied by registration instructions from the
Depository for registration, the Trustee shall issue the Definitive Securities.
Neither the Seller nor the 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.
(c) The Securities shall be substantially in the form set
forth in Exhibit A hereto. The Securities shall be executed by manual or
facsimile signature on behalf of the Trustee in its capacity as trustee
hereunder by an authorized officer. Securities bearing the manual or facsimile
signatures of individuals who were at any time the proper officers of the
Trustee shall be entitled to all benefits under this Agreement, subject to the
following sentence,
<PAGE>
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities. No Security shall be entitled
to any benefit under this Agreement, or be valid for any purpose, unless there
appears on such Security a certificate of authentication substantially in the
form provided for herein executed by the Security Registrar by manual signature,
and such certificate upon any Security shall be conclusive evidence, and the
only evidence, that such Security has been duly authenticated and delivered
hereunder. All Securities shall be dated the date of their authentication.
(d) The Securities will be registered as a single
Security held by a nominee of the Depository, and beneficial interests will be
held by investors through the book-entry facilities of the Depository in minimum
denominations of $25,000 and increments of $1 in excess thereof, except that one
Security may be issued in a different amount so that the sum of the
denominations of all outstanding Securities shall equal the Original Class A-1
Balance.
(e) If the Trust is terminated pursuant to Section
7.01(a)(iii), the book-entry system through the Depository shall be terminated
by the Seller and the Trustee and the Trustee shall request that the Depository
notify all Security Owners of the occurrence of such event and that, following
the Final Distribution Date, the Security Owners as of the Record Date for the
Final Distribution Date will be required to hold their pro rata portion of the
Remaining Pooled Certificate in the book-entry records of the Federal Reserve
Banks and that the Trustee will not release any further distributions in respect
of the Remaining Pooled Certificate to a Security Owner until such Security
Owner or the Depository has provided the Trustee with sufficient information to
transfer such Security Owner's pro rata portion of the Remaining Pooled
Certificate in the book-entry records of the Federal Reserve Banks from the
Trustee to such Security Owner.
Section 4.02. Registration of Transfer and Exchange of
Securities.
(a) At all times during the term of this Agreement, there
shall be maintained at the office of a registrar (the "Security Registrar") a
register (the "Security Register") in which, subject to such reasonable
regulations as the Security Registrar may prescribe, the Security Registrar
shall provide for the registration of Securities and of transfers and exchanges
of Securities as herein provided. The Trustee is initially appointed (and hereby
agrees to act in accordance with the terms hereof) as Security Registrar for the
purpose of registering Securities and transfers and exchanges of Securities as
herein provided. For so long as the Trustee acts as Security Registrar, its
Corporate Trust Office shall constitute the offices of the Certificate Registrar
maintained for such purposes. The Security Registrar may appoint, by a written
instrument delivered to the Seller, any other bank or trust company in New York
to act as an additional or co-Security Registrar under such conditions as the
Security Registrar may prescribe, provided that the predecessor Security
Registrar shall not be relieved of any of its duties or responsibilities
hereunder by reason of such appointment. If the Trustee resigns or is removed in
accordance with the terms hereof, the successor trustee shall immediately
succeed to
<PAGE>
its predecessor's duties as Security Registrar. The Seller and the Trustee shall
have the right to inspect the Security Register or to obtain a copy thereof at
all reasonable times, and to rely conclusively upon a certificate of the
Security Registrar as to the information set forth in the Security Register.
Every Securityholder agrees with the Security Registrar and
the Trustee that neither the Security Registrar, nor the Trustee shall be held
accountable by reason of the disclosure of any such information as to the names
and addresses of the Securityholders hereunder, regardless of the source from
which such information was derived.
(b) Subject to the preceding subsections, upon surrender
for registration of transfer of any Security at the offices of the Security
Registrar maintained for such purpose, the Trustee shall execute and the
Security Registrar shall authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Securities of a like aggregate
Percentage Interest.
(c) At the option of any Holder, its Securities may be
exchanged for other Securities of authorized denominations of a like aggregate
Percentage Interest, upon surrender of the Securities to be exchanged at the
offices of the Security Registrar maintained for such purpose. Whenever any
Securities are so surrendered for exchange, the Trustee shall execute and the
Security Registrar shall authenticate and deliver the Securities which the
Securityholder making the exchange is entitled to receive.
(d) Every Security presented or surrendered for transfer
or exchange shall (if so required by the Trustee) be duly endorsed by, or be
accompanied by a written instrument of transfer in the form satisfactory to the
Trustee duly executed by, the Holder thereof or his attorney duly authorized in
writing.
(e) No service charge shall be made for any transfer or
exchange of Securities, but the Trustee may require payment of a sum sufficient
to cover any tax or governmental charge that may be imposed in connection with
any transfer or exchange of Securities.
(f) All Securities surrendered for transfer and exchange
shall be destroyed by the Security Registrar without liability on its part.
(g) No transfer of a Security may be made to any Plan
unless an exemption granted by the Department of Labor applies to the
acquisition, holding or transfer of such Security. Each purchaser of a Security,
by virtue of its purchase of such Security, will be deemed to have represented
either that (i) it is not a Plan or (ii) such an exemption exists which exempts
the acquisition, holding or transfer of a Security by such purchaser from the
prohibited transaction rules of ERISA and the related excise tax provisions of
the Code.
<PAGE>
Section 4.03. Mutilated, Destroyed, Lost or Stolen
Securities.
If (i) any mutilated Security is surrendered to the Security
Registrar, or the Trustee and the Security Registrar receive evidence to their
satisfaction of the destruction, loss or theft of any Security, and (ii) (except
in the case of a mutilated Security) there is delivered to the Trustee and the
Security Registrar such agreement, security or indemnity as may be required by
them to save each of them harmless, then, in the absence of notice to the
Trustee or the Security Registrar that such Security has been acquired by a bona
fide purchaser, the Trustee shall execute and the Security Registrar shall
authenticate and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Security, a new Security of like tenor and Percentage
Interest but bearing a number not contemporaneously outstanding. Upon the
issuance of any new Security under this Section, the Trustee may require the
payment by the Securityholder of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto. Any duplicate
Security issued pursuant to this Section shall constitute complete and
indefeasible evidence of ownership in the Trust Fund, as if originally issued,
whether or not the lost, stolen or destroyed Security shall be found at any
time.
Section 4.04. Persons Deemed Owners.
Prior to due presentment of a Security for registration of
transfer, the Seller, the Trustee, the Security Registrar and any agent of the
Seller, the Trustee or the Security Registrar may treat the Person in whose name
any Certificate is registered as the owner of such Security for the purpose of
receiving distributions pursuant to Section 3.05 and for all other purposes
whatsoever, and neither the Seller, the Trustee, the Security Registrar nor any
agent of the Seller, the Trustee or the Security Registrar shall be affected by
notice to the contrary.
Section 4.05. Exchange of Securities.
(a) Beginning on the Distribution Date in November 1998,
any Holder or Security Owner holding not less than 10% of the outstanding
principal amount of the Securities shall have the option to exchange not less
than 10% of the outstanding principal amount of the Securities for a pro rata
portion of each of the Pooled Certificates and Treasury Securities.
(b) Holders or Security Owners may exercise the option
set forth in Section 4.05(a) by delivering an Option Exercise Notice to the
Trustee, accompanied by the Option Exercise Fee, at least five Business Days
prior to the proposed Exchange Date, which must be a Business Day. An Option
Exercise Notice may not be revoked after delivery to the Trustee. The Trustee
may refuse to accept, or give effect to, any Option Exercise Notice that is
incomplete or defective, in its sole judgment, or not accompanied by the Option
Exercise Fee.
(c) The Trustee shall be entitled to charge a fee (the
"Option Exercise Fee"), as compensation, equal to the greater of (i) $500 and
(ii) 0.02% of the outstanding principal amount of the Securities to be exchanged
for Pooled Certificates and Treasury Securities.
<PAGE>
(d) On the Exchange Date, the Trustee shall cause the
transfer of such Holder's or Security Owner's pro rata portion of each of the
Pooled Certificates and Treasury Securities in the book-entry records of the
Federal Reserve Banks and the Depository, as applicable, from the Trustee to
such Holder or Certificate Owner.
ARTICLE V
THE TRUSTEE
Section 5.01. Duties of Trustee.
(a) The Trustee, upon receipt of all resolutions,
certificates, statements, opinions, reports, documents, orders or other
instruments furnished to the Trustee which are specifically required to be
furnished pursuant to any provision of this Agreement, shall examine them to
determine whether they are in the form required by this Agreement and the
Underlying Agreements; provided, however, that the Trustee shall not be
responsible to determine, confirm or recalculate the accuracy or content of any
such resolution, certificate or other instrument furnished to it pursuant to
this Agreement. The Trustee shall notify the Securityholders and the Rating
Agencies of any such documents which do not materially conform to the
requirements of this Agreement in the event that the Trustee, after so
requesting of the party required to deliver the same, does not receive
satisfactorily corrected documents or a satisfactory explanation regarding any
such nonconformities.
The Trustee shall forward or cause to be forwarded to
the Person entitled to receive the same in a timely fashion the notices, reports
and statements required to be forwarded by the Trustee pursuant to Sections
3.01, 3.03, 3.06 and 7.01.
(b) No provision of this Agreement shall be construed to
relieve the Trustee from liability for its own negligent action, its own
negligent failure to act or its own willful misconduct; provided, however, that:
(i) The duties and obligations of the Trustee shall
be determined solely by the express provisions of this
Agreement, the Trustee shall not be liable except for the
performance of such duties and obligations as are specifically
set forth in this Agreement, no implied covenants or
obligations shall be read into this Agreement against the
Trustee and, in the absence of bad faith on the part of the
Trustee, the Trustee may conclusively rely, as to the truth of
the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished by the
Seller to the Trustee and which on their face, do not
contradict the requirements of this Agreement;
<PAGE>
(ii) The Trustee shall not be personally liable for
an error of judgment made in good faith by a Responsible
Officer or Responsible Officers of the Trustee, unless it
shall be proved that the Trustee was negligent in ascertaining
the pertinent facts;
(iii) The Trustee shall not be personally liable with
respect to any action taken, suffered or omitted to be taken
by it in good faith in accordance with the direction of the
Majority Securityholders in accordance with the terms of this
Agreement, as to the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee,
under this Agreement;
(iv) No provision in this Agreement shall require the
Trustee to expend or risk its own funds or otherwise incur any
personal financial liability in the performance of any of its
duties as Trustee hereunder, or in the exercise of any of its
rights or powers, if the Trustee shall have reasonable grounds
for believing that repayment of funds or adequate indemnity
against such risk or liability is not reasonably assured to
it; provided that this provision shall not be deemed to
abrogate the responsibilities undertaken by the Trustee
hereunder to perform routine administrative duties in
accordance with the terms hereof; and
(v) The Trustee shall not be deemed to have notice of
any fact or circumstance upon the occurrence of which it may
be required to take action hereunder unless a Responsible
Officer of the Trustee has actual knowledge of such event,
fact or circumstance or unless written notice of any such
event is received by the Trustee at its Corporate Trust
Office.
Section 5.02. Certain Matters Affecting the Trustee
Except as otherwise provided in Section 5.01:
(i) The Trustee may rely and shall be protected in
acting or refraining from acting upon any resolution, Officers'
Certificate, certificate of auditors or any other certificate,
statement, instrument, opinion, report, notice, request, consent,
order, appraisal, bond or other paper or document reasonably believed
by it to be genuine and to have been signed or presented by the proper
party or parties;
(ii) The Trustee may consult with counsel and any
Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken or suffered or omitted by it
hereunder in good faith and in accordance with such Opinion of Counsel;
<PAGE>
(iii) The Trustee shall be under no obligation to
exercise any of the trusts or powers vested in it by this Agreement or
to institute, conduct or defend any litigation hereunder or in relation
hereto at the request, order or direction of any of the
Securityholders, pursuant to the provisions of this Agreement, unless
such Securityholders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities which
may be incurred therein or thereby;
(iv) The Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order or other paper or document, but the Trustee,
in its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit, and, if the Trustee shall
determine to make such further inquiry or investigation, it shall be
entitled to the extent reasonable under the circumstances to examine
the books, records and premises of such Person, personally or by agent
or attorney;
(v) The Trustee shall not be personally liable for
any action taken, suffered or omitted by it in good faith and believed
by it to be authorized or within the discretion or rights or powers
conferred upon it by this Agreement; and
(vi) The Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by
or through agents or attorneys and shall not be liable for the default
or misconduct of any such agents or attorneys if selected with
reasonable care.
Section 5.03. Trustee Not Liable for Securities or Pooled
Certificates or Treasury Securities.
The recitals contained herein and in the Securities (other
than the statements attributed to, and the representations and warranties of,
the Trustee in Article II and the signature of the Trustee on each Security)
shall be taken as the statements of the Seller, and the Trustee assumes no
responsibility for their correctness. The Trustee makes no representations as to
the validity or sufficiency of this Agreement (other than as specifically set
forth in Section 2.03(b)) or of the Securities (other than that the Securities
shall be duly and validly executed by it as Trustee and authenticated by it as
Security Registrar) or of the Pooled Certificates or the Treasury Securities,
the Underlying Agreements or any related document. Except as otherwise provided
herein, the Trustee shall not be accountable for the use or application by the
Seller of any of the Securities or of the proceeds of such Securities, or for
the use or application of any funds paid to the Seller in respect of the
assignment and delivery of the Pooled Certificates or the Treasury Securities.
<PAGE>
Section 5.04. Trustee May Own Securities.
The Trustee in its individual or any other capacity may become
the owner or pledgee of Securities with the same rights it would have if it were
not Trustee.
Section 5.05. Trustee's Fees; Indemnification of the
Trustee.
(a) The Trustee shall withdraw the Trustee Fee, as
compensation, from the Asset Proceeds Account, and to the extent necessary, the
Trustee Fee Escrow Account, as provided in Sections 3.03(c) and 3.05 hereof.
(b) Subject to the provisions of this paragraph, the
Trustee and any director, officer, employee or agent of the Trustee shall be
entitled to be indemnified and held harmless by the Trust Fund against any loss,
liability or expense (including, without limitation, costs and expenses of
litigation, and of investigation, counsel fees and expenses, damages, judgments,
amounts paid in settlement and out-of-pocket expenses) arising out of, or
incurred in connection with, this Agreement, the Securities, the exercise and
performance of any of the powers and duties of the Trustee hereunder; provided
that neither the Trustee nor any of the other above specified Persons shall be
entitled to indemnification pursuant to this Section 5.05(b) for (i) allocable
overhead, (ii) expenses or disbursements incurred or made by or on behalf of the
Trustee in the normal course of the Trustee's performing routine administrative
duties in accordance with any of the provisions hereof, (iii) any expense or
liability specifically required to be borne out of the Trustee's own funds
pursuant to the terms hereof, or (iv) any loss, liability or expense incurred by
reason of willful misfeasance, bad faith or negligence in the performance of the
Trustee's obligations and duties.
The provisions of this Section 5.05(b) shall survive
any resignation or removal of the Trustee and appointment of a successor
trustee.
Section 5.06. Eligibility Requirements for Trustee .
The Trustee hereunder shall at all times be a trust company or
banking institution organized and doing business under the laws of the United
States of America or any State thereof, authorized under such laws to exercise
corporate trust powers, having a combined capital, surplus and undivided profits
of at least $50,000,000 (or shall be a member of a bank holding system, the
combined capital and surplus of which is at least $50,000,000) and subject to
supervision or examination by federal or state authority. If such trust company
or banking institution publishes reports of condition at least annually,
pursuant to law or to the requirements of the aforesaid supervising or examining
authority, then for the purposes of this Section the combined capital, surplus
and undivided profits of such trust company or banking institution shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. The Trustee shall at all times meet the
requirements for a trustee under Section 26(a)(1) of the Investment Company Act
and shall in no event be an Affiliate of the
<PAGE>
Seller or of any Person involved in the organization or operation of the Seller.
In case at any time the Trustee shall cease to be eligible in accordance with
the provisions of this Section, the Trustee shall resign immediately in the
manner and with the effect specified in Section 5.07.
Section 5.07. Resignation and Removal of the Trustee.
(a) The Trustee may upon 30 days' notice resign and be
discharged from the trusts hereby created by giving written notice thereof to
the Seller and the Securityholders. Upon receiving such notice of resignation,
the Seller shall promptly appoint a successor trustee by written instrument, in
duplicate, one copy of which instrument shall be delivered to the resigning
Trustee and one copy to the successor trustee. If no successor trustee shall
have been so appointed and have accepted appointment within 30 days after the
giving of such notice of resignation, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a successor trustee.
(b) If at any time the Trustee shall cease to be eligible
in accordance with the provisions of Section 5.06 and shall fail to resign after
written request therefor by the Seller or the Majority Securityholders, or if at
any time the Trustee shall become incapable of acting, or shall be adjudged
bankrupt or insolvent, or a receiver of the Trustee or of its property shall be
appointed, or any public officer shall take charge or control of the Trustee or
of its property or affairs for the purpose of rehabilitation, conservation or
liquidation, then the Seller may remove the Trustee and appoint a successor
trustee by written instrument, in duplicate, one copy of which instrument shall
be delivered to the Trustee so removed and one copy to the successor trustee.
(c) Majority Securityholders may at any time remove the
Trustee and appoint a successor trustee by written instrument or instruments, in
triplicate, signed by such Holders or their attorneys-in-fact duly authorized,
one complete set of which instruments shall be delivered to the Seller, one
complete set to the Trustee so removed and one complete set to the successor so
appointed. A copy of such instrument shall be delivered to the Securityholders
by the Seller. All reasonable out-of-pocket costs and expenses incurred in
connection with such removal and replacement of the Trustee, including without
limitation, reasonable attorneys fees and expenses, shall be borne by the party
requesting such action.
(d) Notwithstanding anything to the contrary contained
herein, (i) any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section shall become
effective only upon acceptance of appointment by the successor trustee as
provided in Section 5.08 and (ii) no entity may be appointed as a successor
trustee if such appointment would result in a withdrawal or downgrading of any
then current rating assigned to the Securities by a Rating Agency.
<PAGE>
Section 5.08. Successor Trustee.
(a) Any successor trustee appointed as provided in
Section 5.07 shall execute, acknowledge and deliver to the Seller, the
Securityholders and to its predecessor trustee an instrument accepting such
appointment hereunder, and thereupon the resignation or removal of the
predecessor trustee shall become effective and the appointment of such successor
trustee shall become effective and such successor trustee, without any further
act, deed or conveyance, shall become fully vested with all the rights, powers,
duties and obligations of its predecessor hereunder, with the like effect as if
originally named as trustee herein. The predecessor trustee shall deliver to the
successor trustee the Pooled Certificates and related documents and statements
held by it hereunder, and the Seller, the Trustee and the predecessor trustee
shall execute and deliver such instruments and do such other things as may be
required for more fully and certainly vesting and confirming in the successor
trustee all such rights, powers, duties and obligations.
(b) No successor trustee shall accept appointment as
provided in this Section unless at the time of such acceptance such successor
trustee shall be eligible under the provisions of Section 5.06.
(c) Upon acceptance of appointment by a successor trustee
as provided in this Section, the Seller shall mail notice of the succession of
such trustee hereunder to all Securityholders at their addresses as shown in the
Security Register. If the Seller fails to mail such notice within 10 days after
acceptance of appointment by the successor trustee, the successor trustee shall
cause such notice to be mailed at the expense of the Seller.
Section 5.09. Merger or Consolidation of Trustee.
Any trust company or banking institution into which the
Trustee may be merged or converted or with which it may be consolidated or any
trust company or banking institution resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any trust company or
banking institution succeeding to all or substantially all of the corporate
trust business of the Trustee, shall be the successor of the Trustee hereunder,
provided such trust company or banking institution shall be eligible under the
provisions of Section 5.06, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding. The Trustee shall mail notice of any such merger or
consolidation to the Seller and to the Securityholders at their address as shown
in the Security Register.
Section 5.10. Appointment of Co-Trustee or Separate
Trustee.
(a) Notwithstanding any other provisions hereof, at any
time, for the purpose of meeting any legal requirements of any jurisdiction in
which any part of the Trust Fund or property securing the same may at the time
be located, the Trustee shall have the power and shall
<PAGE>
execute and deliver all instruments to appoint one or more Persons approved by
the Trustee to act as co-trustee or co-trustees, jointly with the Trustee, or
separate trustee or separate trustees, of all or any part of the Trust Fund, and
to vest in such Person or Persons, in such capacity, such title to the Trust
Fund, or any part thereof, and, subject to the other provisions of this Section
5.10, such powers, duties, obligations, rights and trusts as the Trustee may
consider necessary or desirable. No co-trustee or separate trustee hereunder
shall be required to meet the terms of eligibility as a successor trustee under
Section 5.06 hereunder; provided, that if the co-trustee or separate trustee
does not meet such eligibility standards, the Trustee shall remain liable for
its actions hereunder, and no notice to Securityholders of the appointment of
co-trustee(s) or separate trustee(s) shall be required under Section 5.08
hereof.
(b) In the case of any appointment of a co-trustee or
separate trustee pursuant to this Section 5.10 all rights, powers, duties and
obligations conferred or imposed upon the Trustee shall be conferred or imposed
upon and exercised or performed jointly by the Trustee and such separate trustee
or co-trustee, except to the extent that under any law of any jurisdiction in
which any particular act or acts are to be performed, the Trustee shall be
incompetent or unqualified to perform such act or acts, in which event such
rights, powers, duties and obligations (including the holding of title to the
Trust Fund or any portion thereof in any such jurisdiction) shall be exercised
and performed by such separate trustee or co-trustee at the direction of the
Trustee.
(c) Any notice, request or other writing given to the
Trustee shall be deemed to have been given to each of the then separate trustees
and co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article V. Each separate trustee and co-trustee, upon its
acceptance of the trusts conferred, shall be vested with the estates or property
specified in its instrument of appointment, either jointly with the Trustee or
separately, as may be provided therein, subject to all the provisions of this
Agreement, specifically including every provision of this Agreement relating to
the conduct of, affecting the liability of, or affording protection to, the
Trustee. Every such instrument shall be filed with the Trustee.
(d) Any separate trustee or co-trustee may, at any time,
constitute the Trustee its agent or attorney-in-fact, with full power and
authority, to the extent not prohibited by law, to do any lawful act under or in
respect of this Agreement on its behalf and in its name. If any separate trustee
or co-trustee shall die, become incapable of acting, resign or be removed, all
of its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
<PAGE>
ARTICLE VI
THE DEPOSITOR
Section 6.01. Liability of the Seller.
The Seller shall be liable in accordance herewith only to the
extent of the respective obligations specifically imposed upon and undertaken by
the Seller herein.
Section 6.02. Merger, Consolidation or Conversion of the
Seller.
Subject to the following paragraph, the Seller will keep in
full effect its existence, rights and franchises as a corporation under the laws
of the jurisdiction of its incorporation, and will obtain and preserve its
qualification to do business as a foreign corporation in each jurisdiction in
which such qualification is or shall be necessary to protect the validity and
enforceability of this Agreement and the Securities and to perform its duties
under this Agreement.
The Seller may be merged or consolidated with or into any
Person, or transfer all or substantially all of its assets to any Person, in
which case any Person resulting from any merger or consolidation to which the
Seller shall be a party, or any Person succeeding to the business of the Seller,
shall be the successor of the Seller 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.
Section 6.03. Limitation on Liability of the Seller and
Others.
Neither the Seller nor any of the directors, officers,
employees or agents of the Seller shall be under any liability to the Trust Fund
or the Securityholders for any action taken or for refraining from the taking of
any action in good faith pursuant to this Agreement, or for errors in judgment;
provided, however, that this provision shall not protect the Seller or any such
other Person against any breach of a representation or warranty made herein, or
against any expense or liability specifically required to be borne thereby
pursuant to the terms hereof, or against any liability which would otherwise be
imposed by reason of willful misfeasance, bad faith or negligence in the
performance of obligations or duties hereunder, or by reason of reckless
disregard of such obligations and duties. The Seller and any director, officer,
employee or agent of the Seller may rely in good faith on any document of any
kind which, prima facie, is properly executed and submitted by any Person
respecting any matters arising hereunder. Provided that such action is not
related to its representations made in or its duties under this Agreement, the
Seller shall not be under any obligation to appear in, prosecute or defend any
action or proceeding unless such action in its opinion does not involve it in
any expense or liability.
<PAGE>
ARTICLE VII
TERMINATION
Section 7.01. Termination.
(a) The respective obligations and responsibilities of the
Seller and the Trustee created hereby with respect to the Securities (other than
the obligation to make certain payments and to send certain notices to
Securityholders as hereinafter set forth) shall terminate upon the earlier of
(i) the repurchase by or at the direction of the Seller of all Pooled
Certificates and Treasury Securities at the Repurchase Price therefor as of the
date of such repurchase; or (ii) the payment (or provision for payment) to the
Securityholders of all amounts held by or on behalf of the Trustee and required
to be paid to them hereunder on the Final Distribution Date following receipt of
the final distribution made on the Pooled Certificates and Treasury Securities;
or (iii) the Distribution Date following the first Distribution Date on which
the principal balance of all but one of the Pooled Certificates and Treasury
Securities has been reduced to zero; provided, however, that in no event shall
the trust created hereby continue beyond the expiration of twenty-one 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, living on the date
hereof. The right of the Seller or its designee to repurchase all Pooled
Certificates and Treasury Securities pursuant to Section 7.01(a)(i) shall be
exercisable only if the aggregate outstanding principal balance of such Pooled
Certificates and Treasury Securities of the time of any such repurchase is 10%
or less than their aggregate outstanding principal balance on the Closing Date.
(b) The Trustee shall give a Notice of Final Distribution
to the Securityholders, the Seller and the Rating Agencies as soon as
practicable of the Distribution Date on which the Trustee anticipates that the
final distribution will be made on the Securities, which notice shall:
(i) specify the Distribution Date on which the
final distribution is anticipated to be made
to Securityholders;
(ii) specify the amount of any such final
distribution, if known; and
(iii) state that the final distribution to
Securityholders will be made only upon
presentment and surrender of Securities at
the office of the Trustee therein specified.
If the Trust Fund is not terminated on the anticipated Distribution Date for any
reason, the Trustee shall promptly mail notice thereof to each Securityholder,
the Seller and to the Rating Agencies.
<PAGE>
(c) Upon presentment and surrender of the Securities by
the Securityholders on the Final Distribution Date, the Trustee shall distribute
to the Securityholders the amounts otherwise distributable on such Distribution
Date pursuant to Section 3.05(a). Any funds not distributed on the Final
Distribution Date because of the failure of any Securityholders to tender their
Securities shall be set aside and held in trust for the account of the
appropriate non-tendering Securityholders, whereupon the Trust Fund shall
terminate. If any Securities as to which Notice of Final Distribution has been
given pursuant to this Section 7.01 shall not have been surrendered for
cancellation within six months after the time specified in such notice, the
Trustee shall mail a second notice to the remaining Securityholders, at their
last addresses shown in the Security Register, to surrender their Securities for
cancellation in order to receive, from such funds held, the final distribution
with respect thereto. If within one year after the second notice any Security
shall not have been surrendered for cancellation, the Trustee shall directly or
through an agent, take reasonable steps to contact the remaining Securityholders
concerning surrender of their Securities. If within two years after the second
notice any Securities shall not have been surrendered for cancellation, the
Trustee shall segregate all amounts distributable to the Holders thereof and
shall thereafter hold such amounts for the benefit of such Holders. No interest
shall accrue or be payable to any Securityholder on any amount held as a result
of such Securityholder's failure to surrender its Security(s) for final payment
thereof in accordance with this Section 7.01. The costs and expenses of
maintaining such funds and of contacting Securityholders shall be paid out of
the assets which remain held.
(d) If the option by the Seller to repurchase or cause
the repurchase of all Pooled Certificates and Treasury Securities under Section
7.01(a)(i) above is exercised, the Seller and/or its designee shall deposit in
the Asset Proceeds Account, by 10:00 a.m., New York City time, on the applicable
Distribution Date, an amount equal to the Repurchase Price for the Pooled
Certificates and Treasury Securities then remaining in the Trust Fund. Upon the
presentation and surrender of the Securities, the Trustee, as paying agent,
shall distribute the Repurchase Price as follows to the extent of such amount:
first, to pay the Trustee Fee to the Trustee and any other
amounts then due and owing to the Trustee pursuant to Section
5.05(b);
second, the amount otherwise distributable to the
Securityholders on such Distribution Date but for such
repurchase;
third, to the Securityholders as distributions of interest,
the interest portion included in the Repurchase Price;
fourth, to the Securityholders as distributions of principal,
the principal portion included in the Repurchase Price, up to
the outstanding Class A-1 Balance; and
fifth, to the extent of the balance, if any, of such
Repurchase Price still remaining, to the Securityholders as
additional distributions of interest.
<PAGE>
Upon deposit of the required Repurchase Price and delivery to the Trustee of an
Officer's Certificate from the Seller certifying that such deposit of the
Repurchase Price in the Asset Proceeds Account has been made, following such
final Distribution Date, the Trustee shall promptly release to the Seller and/or
its designee, the Pooled Certificates and Treasury Securities, subject to the
Trustee's obligation to hold any amounts payable to Securityholders in trust
without interest pending final distributions pursuant to Section 7.01(c).
(e) If the principal balance of all but one of the Pooled
Certificates has been reduced to zero as provided in Section 7.01(a)(iii), the
Trustee shall arrange for the distribution in kind (pro rata based on
Certificate Principal Balances) to the Securityholders of the remaining Pooled
Certificate on the Distribution Date following the first Distribution Date on
which the principal balance of all but such remaining Pooled Certificate has
been reduced to zero.
ARTICLE VIII
TAX PROVISIONS
Section 8.01 Trust Administration. For federal income tax
purposes, the Trust Fund formed pursuant to this Agreement will be classified as
a grantor trust under Subpart E, Part 1 of Subchapter J of the Code and not as
an association taxable as a corporation.
(a) The Seller, the Trustee, and the Securityholders
shall take any action or cause the Trust Fund to take any action necessary to
create and maintain the status of the Trust Fund as a grantor trust for federal
income tax purposes and shall assist each other as necessary to create or
maintain such status.
(b) The Seller, the Trustee, and the Securityholders
shall not take any action or cause the Trust Fund to take any action that could
endanger the status of the Trust Fund as a grantor trust for federal income tax
purposes, unless the Trustee and the Seller have received an Opinion of Counsel
(at the expense of the party seeking to take such action) to the effect that the
contemplated action will not endanger such status.
(c) The Trustee or its designee may employ counsel,
accountants and professional assistance to aid in the performance of the
accounting necessary for federal and state tax reporting and compliance or the
performance of the above powers and duties. The expense incurred by the Trustee
or its designee in connection with the foregoing shall be reimbursed as part of
the administrative expenses of the Trust Fund described in Section 5.05 hereof.
<PAGE>
Section 8.02 Prohibited Activities.
(a) No REMIC election has been or will be made with
respect to the Trust Fund.
(b) Neither the Trustee nor the Seller shall consent to,
approve or enter into any modification of any term of any of the Pooled
Certificates or the Treasury Securities (including, but not limited to, the
interest rate, the principal balance, the amortization schedule, the remaining
term to maturity, or any other term affecting the amount or timing of payments
on the Pooled Certificates or the Treasury Securities) unless the Trustee has
received an Opinion of Counsel (as the expense of the party seeking to modify
any of the Pooled Certificates or the Treasury Securities) to the effect that
such modification would not be treated as giving rise to a new debt instrument
for federal income tax purposes.
(c) The Trustee shall not sell or dispose of the Pooled
Certificates or the Treasury Securities (except in a disposition pursuant to (i)
the default of any Pooled Certificate or Treasury Security, (ii) the bankruptcy
of the Trust Fund, (iii) the termination of the Trust Fund as set forth in
Section 7.01 hereof, or (iv) a disposition of a Pooled Certificate or Treasury
Security pursuant to Section 2.03(c) or 2.04 hereof), nor acquire any asset for
the Trust Fund unless it has received an Opinion of Counsel that such sale,
disposition or acquisition will not affect adversely the status of the Trust
Fund as a grantor trust under the Code.
ARTICLE IX
MISCELLANEOUS PROVISIONS
Section 9.01. Amendment.
(a) This Agreement may be amended from time to time by
the Seller and the Trustee, without the prior consent of any Securityholder:
(i) to cure any ambiguity;
(ii) to correct or supplement any provisions herein
which may be inconsistent with any other provisions herein;
(iii) to make any other provisions with respect to
matters or questions arising under this Agreement which shall
not be materially inconsistent with the existing provisions of
this Agreement; and
<PAGE>
(iv) to make such modifications as may be permitted
or required hereunder in connection with a repurchase or
substitution of a Pooled Certificate or Treasury Security
pursuant to Section 2.03(c) or 2.04 hereof.
provided that such amendment shall not, as evidenced by an Opinion of Counsel
(at the expense of the party seeking such amendment) delivered to the Trustee
(the expense of which shall be paid for by the Seller), adversely affect in any
material respect the interests of any Securityholder. Counsel shall be entitled
to rely on a letter from each Rating Agency that the modification will not cause
the then-existing rating of the Securities to be downgraded as conclusive
evidence that the modification does not adversely affect in any material respect
the interests of any Securityholder.
(b) This Agreement may also be amended from time to time
by the Seller and the Trustee with the prior written consent of the Majority
Securityholders for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Agreement or of modifying in
any manner the rights of the Securityholders; provided, however, that no such
amendment shall:
(i) reduce in any manner the amount of, or delay the
timing of, payments which are required to be distributed on
any Security without the consent of the Holder of such
Security;
(ii) modify the provisions of this Section 9.01
without the consent of the Holders of all Securities; or
(iii) be made unless and until the Trustee shall have
received an Opinion of Counsel (at the expense of the party
seeking such amendment but in no event at the expense of the
Trust Fund) to the effect that such amendment shall not
adversely affect the status of the Trust as a grantor trust
for federal income tax purposes.
(c) Promptly after the execution of any such amendment
the Trustee shall furnish written notification of the substance of such
amendment to each Securityholder. It shall not be necessary for the consent of
Securityholders under this Section 9.01 to approve the particular form of any
proposed amendment, but it shall be sufficient if such consent shall approve the
substance thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Securityholders shall be subject to
such reasonable regulations as the Trustee may prescribe.
<PAGE>
Section 9.02. Counterparts.
This Agreement may be executed simultaneously in any number of
counterparts, each of which counterparts shall be deemed to be an original, and
such counterparts shall constitute but one and the same instrument.
Section 9.03. Limitation on Rights of Securityholders.
(a) The death or incapacity of any Securityholder shall
not operate to terminate this Agreement or the Trust Fund, nor entitle such
Securityholder's legal representatives or heirs to claim an accounting or to
take any action or proceeding in any court for a partition or winding up of the
Trust Fund, nor otherwise affect the rights, obligations and liabilities of the
parties hereto or any of them.
(b) No Securityholder shall have any right to vote
(except as expressly provided for herein) or in any manner otherwise control the
operation and management of the Trust Fund, or the obligations of the parties
hereto, nor shall anything herein set forth, or contained in the terms of the
Securities, be construed so as to constitute the Securityholders from time to
time as partners or members of an association; nor shall any Securityholder be
under any liability to any third party by reason of any action taken by the
parties to this Agreement pursuant to any provision hereof.
(c) No Securityholder shall have any right by virtue of
any provision of this Agreement to institute any suit, action or proceeding in
equity or at law upon or under or with respect to this Agreement, unless such
Holder previously shall have given to the Trustee and the Seller a written
notice of default hereunder, and of the continuance thereof, as herein-before
provided, and unless the Majority Securityholders also shall have made written
request upon the Trustee to institute such action, suit or proceeding in its own
name as Trustee hereunder and shall have offered to the Trustee such reasonable
indemnity as it may require against the costs, expenses and liabilities to be
incurred therein or thereby, and the Trustee, for 30 days after its receipt of
such notice, request and offer of indemnity, shall have neglected or refused to
institute any such action, suit or proceeding. For the prosecution and
enforcement of the rights granted under this Section, each and every
Securityholder and the Trustee shall be entitled to such relief as can be given
either at law or in equity.
Section 9.04. Governing Law.
This Agreement and the Securities shall be construed in
accordance with the laws of the State of New York applicable to agreements made
and to be performed in said state (without reference to the conflicts of law
provisions of such state), and the obligations, rights and remedies of the
parties hereunder and the Securityholders shall be determined in accordance with
such laws.
<PAGE>
Section 9.05. Notices.
All communications provided for or permitted hereunder shall
be in writing and shall be deemed to have been duly given when delivered to: (a)
in the case of the Seller, Financial Asset Securitization, Inc., 901 East Byrd
Street, Richmond, Virginia 23219, Attention: President, or such other address as
may hereafter be furnished to the Trustee in writing by the Seller; (b) in the
case of the Trustee, Norwest Bank Minnesota, National Association, Sixth &
Marquette Streets, Minneapolis, Minnesota 55479, Attention: FASI 1997-1, with a
copy to the Trustee at 11000 Broken Land Parkway, Columbia, Maryland 21044,
Attention: FASI 1997-1 or such other address as may hereafter be furnished to
the Seller in writing by the Trustee; (c) in the case of Moody's, Moody's
Investors Service, Inc., 99 Church Street, New York, New York 10007, Attention:
Mortgage Pass-Through Monitoring Group; and (d) in the case of Fitch Investors
Service, L.P., One State Street Plaza, 34th Floor, New York, New York 10004.
Section 9.06. 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 Securities or the rights of the Holders thereof.
Section 9.07. Successors and Assigns.
The provisions of this Agreement shall be binding upon and
inure to the benefit of the respective successors and assigns of the parties
hereto, and all such provisions shall inure to the benefit of the
Securityholders.
Section 9.08. Article and Section Headings.
The article and section headings herein are for convenience of
reference only, and shall not limit or otherwise affect the meaning hereof.
Section 9.09. Notices to Rating Agencies.
The Trustee shall notify each Rating Agency at such time as it
is otherwise required pursuant to this Agreement to give notice of the
occurrence of any of the events described in clauses (a), (b), (d), or (f) below
or provide a copy to each Rating Agency at such time as otherwise required to be
delivered pursuant to this Agreement of each of the statements described in
clauses (c) and (e) below:
(a) a material change or amendment to this Agreement,
<PAGE>
(b) the termination or appointment of a successor
Trustee,
(c) the monthly distribution statement required to be
delivered to the Securityholders pursuant to Section
3.06,
(d) the non-conformance of any documents pursuant to
Section 5.01(a),
(e) the Notice of Final Distribution required to be
delivered pursuant to Section 7.01(b), and
(f) a change in the location of the Asset Proceeds
Account or the Trustee Fee Escrow Account.
The Seller shall notify each Rating Agency of any change in
its identity.
<PAGE>
IN WITNESS WHEREOF, the Seller and the Trustee have caused
their names to be signed hereto by their respective duly authorized officers,
all as of the day and year first above written.
FINANCIAL ASSET SECURITIZATION, INC., as Seller
By: /s/William E. Hardy
-------------------
Name: William E. Hardy
Title: Executive Vice President
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Trustee
By: /s/Peter J. Masterman
---------------------
Name: Peter J. Masterman
Title: Vice President
<PAGE>
STATE OF VIRGINIA)
ss:
COUNTY OF RICHMOND)
On the 30 day of October, 1997 before me, a notary public in
and for said State, personally appeared William Hardy known to me to be the EVP
of Financial Asset Securitization Inc., the corporation that executed the within
instrument, and also knoPwn to me to be the person who executed it on behalf of
said corporation, and acknowledged to me that such corporation executed the
within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
/s/ Wendy R. Manthorpe
----------------------
Notary Public Commissioned as
Wendy R. Mayhew
[Notarial Seal] Commission Expires: My commission
Expires February 28, 2000
<PAGE>
STATE OF NEW YORK )
: ss:
COUNTY OF NEW YORK)
On the 30 day of October, 1997 before me, a notary public in
and for said State, personally appeared Peter M. Masterman known to me to be a
Vice President of Norwest Bank Minnesota, National Association, the national
banking association that executed the within instrument, and also known to me to
be the person who executed it on behalf of said national banking association,
and acknowledged to me that such national banking association executed the
within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
/s/ Maureen C. Marry
--------------------
Notary Public
[Notarial Seal] Commission Expires:
Notary Public, State of New York
No. 41-4668664
Qualified in Queens County
Commission Expires July 31, 1998
<PAGE>
EXHIBIT A
FORM OF CLASS A-1 SECURITY
THIS SECURITY DOES NOT REPRESENT AN OBLIGATION OF, OR AN INTEREST IN,
FINANCIAL ASSET SECURITIZATION, INC. OR THE TRUSTEE REFERRED TO BELOW OR ANY OF
THEIR RESPECTIVE AFFILIATES AND IS NOT GUARANTEED OR INSURED BY ANY GOVERNMENTAL
AGENCY OR INSTRUMENTALITY.
THE CURRENT PRINCIPAL BALANCE OF THIS SECURITY WILL BE DECREASED BY THE
PRINCIPAL PAYMENTS HEREON. ACCORDINGLY, FOLLOWING THE INITIAL ISSUANCE OF THE
SECURITIES, THE CURRENT PRINCIPAL AMOUNT OF THIS SECURITY WILL BE DIFFERENT FROM
THE DENOMINATION SHOWN BELOW. ANYONE ACQUIRING THIS SECURITY MAY ASCERTAIN ITS
CURRENT PRINCIPAL BALANCE BY INQUIRY OF THE TRUSTEE NAMED HEREIN.
UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITIES ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS MADE TO CEDE &
CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
MORTGAGE PARTICIPATION
SECURITIES,
No. A-1-1 SERIES 1997-1
evidencing a beneficial interest in a Trust
consisting primarily of the Pooled Certificates and Treasury Securities
(as defined in the Agreement)
FINANCIAL ASSET SECURITIZATION, INC.
CUSIP No. 31738VCJ2
<TABLE>
<S> <C>
Class : A-1
First Distribution Date : November 25, 1997 Initial Principal Amount
Assumed Final Distribution Date : October 25, 2027 of this Security
("Denomination") : $55,809,878
Approximate Original Class
Principal Amount : $55,809,878
Pass-Through Rate : The effective per annum
interest rate borne by the
Securities during the Interest
Accrual Period with respect to
a Distribution Date will equal
a fraction, expressed as a
percentage truncated at the
fourth decimal place, the
numerator of which is equal to
the aggregate amount in respect
of interest paid to the
Securityholders for the related
Interest Accrual Period
multiplied by 12, and the
denominator of which is the
principal amount of the
Securities immediately prior to
such Distribution Date.
</TABLE>
THIS CERTIFIES THAT
is the registered owner of the Percentage Interest evidenced hereby in the
beneficial ownership interest of Securities of the same Class as this Security
in a Trust (the "Trust") consisting primarily of a portion of certain classes of
securities described in the Agreement (the "Pooled Certificates") sold by
Financial Asset Securitization, Inc. ("FASI"). The Trust was created pursuant to
the Pooling Agreement dated as of October 1, 1997 (the "Agreement"), between
FASI, as Seller, and Norwest Bank Minnesota, National Association, as trustee
(the "Trustee"), a summary of certain of the pertinent provisions of which is
set forth hereafter. To the extent not defined herein, capitalized terms used
herein shall have the meaning ascribed to them in the Agreement. This Security
is issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Security by virtue of its
acceptance hereof assents and by which such Holder is bound.
Interest on this Security will accrue during the one month period beginning
on the first day and ending on the last day of the month preceding the month of
the Distribution Date (as hereinafter defined) at a per annum rate equal to the
Pass Through Rate as set forth above. Distributions of principal and interest on
the Securities with respect to a month will be made on the 25th day of such
month (each, a "Distribution Date") or, if such day is not a Business Day (as
defined herein), then on the next succeeding Business Day. A "Business Day"
means a day other than a Saturday, a Sunday or a day on which banking
institutions in New York, New York or the city in which the corporate trust
office of the Trustee is located are authorized or obligated by law or executive
order to be closed. In addition, if the Trustee has not received a distribution
on, or the distribution information with respect to, any of the Pooled
Certificates by noon, Eastern Standard Time, on the Distribution Date (the
"Determination Time"), the distribution allocable to such Pooled Certificates
will not be made on the Distribution Date, but (i) if such distribution and such
distribution information are received by noon, Eastern Standard Time, on the
third Business Day after the Determination Time, it will be made on the third
Business Day after the Determination Time, or (ii) if received after noon,
Eastern Standard Time, on the third Business Day after the Determination Time,
it will be made on the next succeeding Distribution Date, and in neither case
will additional interest be paid thereon. Distributions will be made on each
Distribution Date to holders of record as of the close of business on the last
Business Day of the calendar month preceding the month in which such
Distribution Date occurs; provided that for this purpose the Distribution Date
is deemed to occur on the 25th of each month, without regard to whether such day
is a Business Day. The assumed Final Distribution Date is the Distribution date
in October 2027.
Distributions on this Security will be made by the Trustee by check mailed
to the address of the Person entitled thereto as such name and address shall
appear on the Security Register or, if such Person so requests by notifying the
Trustee in writing as specified in the Agreement and if such Person holds
Securities with an initial aggregate initial Security Balance of not less than
$1,000,000, by wire transfer in immediately available funds to the account
specified in writing by such Person to the Trustee. Notwithstanding the above,
the final distribution on this Security will be made after due notice by the
Trustee of the pendency of such distribution and only upon presentation and
surrender of this Security at the office or agency appointed by the Trustee for
that purpose and designated in such notice.
IN WITNESS WHEREOF, the Trustee has caused this Security to be duly
executed.
Dated: October 30, 1997
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
Not in its individual capacity but
solely as Trustee
By:
-------------------
Name:
Title:
This is one of the Class A-1 Securities referred to in the within-mentioned
Agreement.
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, as Certificate Registrar
By:
-----------------
Name:
Title:
<PAGE>
FINANCIAL ASSET SECURITIZATION, INC.
MORTGAGE PARTICIPATION SECURITIES, SERIES 1997-1
This Security is one of a duly authorized issue of Securities
designated as set forth on the face hereof (the "Securities"). The Securities,
in the aggregate, evidence the entire beneficial ownership interest in the Trust
formed pursuant to the Agreement.
The Securityholder, by its acceptance of this Security, agrees that it
will look soley to the Trust for payment hereunder and that the Trustee is not
liable to the Securityholders for any amount payable under this Security or
the Agreement or, except as expressly provided in the Agreement, subject to any
liability under the Agreement.
This Security does not purport to summarize the Agreement and reference
is made to the Agreement for the interests, rights and limitations of rights,
benefits, obligations and duties evidenced hereby, and the rights, duties and
immunities of the Trustee.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights of the Securityholders
under the Agreement from time to time by the Seller and the Trustee with
the consent of the Holders of Securities evidencing more than 50% of the
aggregate Class Balance of the Securities. Any such consent by the Holder of
this Securities shall be conclusive and binding on such Holder and upon all
future Holders of this Security and of any Security issued upon the transfer
hereof or in lieu hereof whether or not notation of such consent is made
upon this Security. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of
the Securities.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Security is registrable with the
Trustee upon surrender of this Security for registration of transfer at the
offices or agencies maintained by the Trustee in the City of Minneapolis, State
of Minnesota, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Trustee duly executed by the Holder
hereof or such Holder's attorney duly authorized in writing, and thereupon one
or more new Securities in authorized denominations representing a like
aggregate principal amount will be issued to the designated transferee.
The Securities are issuable only as registered Securities without
coupons in Classes and denominations specified in the Agreement. As provided in
the Agreement and subject to certain limitations therein set forth, this
Security is exchangeable for one or more new Securities of the same Class and
evidencing the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.
No service charge will be made to the Securityholders for any such
registration of transfer, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith. The Security Registrar and the Trustee and any agent of any of them
may treat the Person in whose name the Security is registered as the owner
hereof for all purposes, and neither the Security Registrant, the Trustee nor
such agent shall be affected by notice in the contrary.
Any purchaser of this Security, by virtue of its purchase of this
Security, will be deemed to have represented either that (i) it is not a Plan or
(ii) an exemption granted by the Department of Labor applies that exempts the
acquisition, holding or transfer of this Security by such purchaser from
prohibited transaction rules of ERISA and the related excise tax provisions of
the Code.
Beginning on the Distribution Date in November 1998, holders of a
minimum of 10% of the outstanding principal amount of the Securities will
be entitled to exchange such Securities for a pro rata portion of each of
the Pooled Certificates and Treasury Securities. Holders of Securities to
be exchanged will be charged an exchange fee by the Trustee equal to the
greater of (i) $500 and (ii) 0.02% of the outstanding principal amount of
such Securities. Holders will be required to provide the Trustee with
irrevocable written notice as provided in the Agreement, accompanied by the
exchange fee, of any proposed exchange of Securities at least five Business
Days prior to the proposed date of such exchange, which must be a Business Day.
The obligations created by the Agreement and the Trust created
thereby (other than the obligations to make certain payments and send certain
notices to Securityholders with respect to the termination of the Agreement)
shall terminate upon the earlier of (i) the repurchase by or at the direction
of the Seller of all Pooled Certificates and Treasury Securities, if any,
under the circumstances set forth in the Agreement; (ii) the payment (or
provision for payment) to the Securityholders of all amounts held by or on
behalf of the Trustee and required to be paid to them under the Agreement on
the Final Distribution Date following receipt of the final distribution to be
made on the Pooled Certificates and Treasury Securities; or (iii) the
Distribution Date following the first Distribution Date on which only one of
the Pooled Certificates remains entitled to payments of principal and/or
interest. In no event, however, will the Trust created by the Agreement
continue beyond the expiration of 21 years after the death of certain persons
identified in the Agreement
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
-------------------------------------------------
- ------------------------------------------------------------------------
(Please print or typewriter name and address including postal zip code assignee)
the within Security and hereby authorizes the transfer of registration of such
interest to the assignee on the Security Register of the Trust Fund.
I (We) further direct the Security Registrar to issue a new Security of a
like denomination and Class, to the above named assignee and deliver such
Security to the following address:
Dated:
-------------------------------------
Signature by or on behalf of assignor
-------------------------------------
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for
purposes of distribution:
--------------------------------------------
Distributions shall be made, by wire transfer or
otherwise, in immediately available funds to
--------------------------------
- ----------------------------------------------------------------------------
- ---------------------------------------------------------------------------
account number , or, if mailed by check to
--------------- ------------------
- ---------------------------------------------------------------------------
Applicable statements should be mailed to
----------------------------------
This information is provided by
--------------------------------------------
the assignee named above, or
---------------------------------------------
as its agent.
<PAGE>
EXHIBIT B
FORM OF OPTION EXERCISE NOTICE
Date:
Norwest Bank Minnesota, National Association
Sixth & Marquette Streets
Minneapolis, Minnesota 55479
Re: Financial Asset Securitization, Inc.
Mortgage Participation Securities
Series 1997-1 CUSIP No.:
Ladies and Gentlemen:
Reference is made to the Pooling Agreement dated as of October 1, 1997
between Financial Asset Securitization, Inc., Seller, and Norwest Bank
Minnesota, National Association, Trustee (the "Agreement"). Terms defined in the
Agreement shall have the same meaning when used herein, except as otherwise
provided.
The undersigned desires to exchange Securities for Pooled Certificates
and Treasury Securities as provided in Section 4.05 of the Agreement. Set forth
below is information pertinent to the exchange:
Principal Amount of Securities held by the undersigned: $
Principal Amount of Securities to be Exchanged: $
Participant Number in The Depository Trust
Company:
Federal Reserve Bank Delivery Instructions:
Proposed Exchange Date:
[Accompanying this letter is a certified check in the amount of the
Option Exercise Fee.]
[The Option Exercise Fee will be paid by wire transfer of immediately
available funds to the amount of the Trustee at not
later than the close of business on the date hereof.]
<PAGE>
A copy of this letter will be delivered to The Depository Trust Company
not later than the close of business on the date hereof.
The undersigned understands that this Option Exercise Notice is
irrevocable.
Very truly yours,
[Name]
By:
--------------------
Title:
------------------
Signature Guaranteed:
<PAGE>
SCHEDULE A
POOLED CERTIFICATES
<TABLE>
<CAPTION>
Current Principal
Full Name of Series % of Class Balance
- ---------------------------------- ---------------- ------------------
Pooled FHLMC Certificates
<S> <C>
Multiclass Mortgage Participation Certificates, 33.96% $702,795.17
Series G003, Class SA
Multiclass Mortgage Participation Certificates, 100.00% $384,309.90
Series G020, Class SB
Multiclass Mortgage Participation Certificates, 31.43% $221,374.78
Series 1041, Class F
Multiclass Mortgage Participation Certificates, 26.67% $145,332.90
Series 1385, Class S
Multiclass Mortgage Participation Certificates, 71.22% $3,184,158.32
Series 1435, Class SB
Multiclass Mortgage Participation Certificates, 54.60% $10,073,742.81
Series 1483, Class FD
Multiclass Mortgage Participation Certificates, 86.67% $4,212,204.78
Series 1504, Class FA
Multiclass Mortgage Participation Certificates, 5.58% $555,580.32
Series 1578, Class SC
Multiclass Mortgage Participation Certificates, 4.81% $597,977.28
Series 1585, Class PM
Pooled FNMA Certificates
Guaranteed REMIC Pass-Through Certificates, 3.33% $268,807.98
Fannie Mae REMIC Trust 1993-41, Class SA
Guaranteed REMIC Pass-Through Certificates, 48.29% $7,961,315.64
Fannie Mae REMIC Trust, 1993-56, Class SB
Guaranteed REMIC Pass-Through Certificates, 15.55% $640,181.76
Fannie Mae REMIC Trust, 1993-60, Class SB
Guaranteed REMIC Pass-Through Certificates, 24.53% $579,380.20
Fannie Mae REMIC Trust, 1993-113, Class SF
Guaranteed REMIC Pass-Through Certificates, 8.31% $155,416.30
Fannie Mae REMIC Trust, 1993-120, Class SP
Guaranteed REMIC Pass-Through Certificates, Fannie 2.68% $125,620.63
Mae REMIC Trust 1993-179, Class SX
Guaranteed REMIC Pass-Through Certificates, Fannie 0.86% $198,824.59
Mae REMIC Trust 1994-17, Class S
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Guaranteed REMIC Pass-Through Certificates, Fannie 52.60% $9,503,692.48
Mae REMIC Trust 1997-44, Class Z
Guaranteed REMIC Pass-Through Certificates, Fannie 53.10% $11,299,162.25
Mae REMIC Trust 1997-57, Class ZH
TREASURY SECURITIES
Designation Principal Amount Due Date
----------- ---------------- --------
United States Treasury Security $1,250,000 February 15, 1998
United States Treasury Security $1,250,000 August 15, 1998
United States Treasury Security $1,250,000 February 15, 1999
United States Treasury Security $1,250,000 August 15, 1999
</TABLE>
