SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) November 28, 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.)
<PAGE>
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 November 28, 1997, the Registrant caused the issuance and sale
of $55,196,194 aggregate initial principal amount of Mortgage
Participation Securities, Series 1997-2 (the "Securities") pursuant to the
Series 1997-2 Pooling Agreement (the "Pooling Agreement"), dated as of
November 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 $55,196,194 (1)
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(1) The effective per annum interest rate borne by the Securities
during the calendar month ") will equal a fraction, expressed as
a percentage truncated at the fourth decimal place, the Period
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 6.1413%
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) two classes of Guaranteed REMIC Pass-Through Certificates
issued by FNMA representing beneficial ownership interests in separate
Underlying FNMA Trusts (the "Pooled FNMA Certificates") and (ii) six classes of
Multiclass Mortgage Securities or Multiclass Mortgage Participation Certificates
issued by FHLMC as part of 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 November 25, 1997, by
and between the Registrant, as Purchaser and Bear, as Seller.
<PAGE>
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 November 25, 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
4.1 Series 1997-2 Pooling Agreement, dated as of November 1, 1997,
by and between the Registrant, as Seller and Norwest Bank
Minnesota, National Association, as Trustee (including
exhibits).
<PAGE>
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.
November 28, 1997 FINANCIAL ASSET SECURITIZATION, INC.
By: /s/ R. Walter Jones, IV
------------------------
Name: R. Walter Jones, IV
Title: President
<PAGE>
INDEX TO EXHIBITS
Page
4.1 Series 1997-2 Pooling Agreement, dated as of
November 1, 1997, by and between the Registrant,
as Seller, and Norwest Bank Minnesota,National Association,
as Trustee............................................................
EXHIBIT 4.1
FINANCIAL ASSET SECURITIZATION, INC.,
Seller
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
Trustee
--------------------------------
POOLING AGREEMENT
Dated as of November 1, 1997
--------------------------------
$55,196,194
Financial Asset Securitization, Inc.
Mortgage Participation Securities
Series 1997-2
===============================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
ARTICLE I -- DEFINITIONS 1
Section 1.01. Defined Terms.......................................................................................1
ARTICLE II -- CONVEYANCE OF THE POOLED SECURITIES AND TREASURY SECURITIES; ORIGINAL ISSUANCE OF SECURITIES 13
Section 2.01. Conveyance of the Pooled Certificates..............................................................13
Section 2.02. Acceptance of Trust Fund by Trustee; Initial Issuance of Securities................................14
Section 2.03. Representations and Warranties of the Seller and the Trustee.......................................15
Section 2.04. Substitution of Pooled Certificates................................................................18
ARTICLE III -- ADMINISTRATION OF THE POOLED CERTIFICATES AND TREASURY SECURITIES; PAYMENTS AND REPORTS TO
SECURITYHOLDERS 19
Section 3.01. Administration of the Trust Fund and the Pooled Certificates.......................................19
Section 3.02. Collection of Monies...............................................................................20
Section 3.03. Establishment of Asset Proceeds and Trustee Fee Accounts; Deposits Therein........................20
Section 3.04. Permitted Withdrawals From the Asset Proceeds Account..............................................22
Section 3.05. Distributions......................................................................................22
Section 3.06. Statements to Securityholders......................................................................24
Section 3.07. Access to Certain Documentation and Information....................................................26
ARTICLE IV -- THE SECURITIES 26
Section 4.01. The Securities.....................................................................................26
Section 4.02. Registration of Transfer and Exchange of Securities................................................28
Section 4.03. Mutilated, Destroyed, Lost or Stolen Securities....................................................29
Section 4.04. Persons Deemed Owners..............................................................................29
Section 4.05. Exchange of Securities.............................................................................30
ARTICLE V -- THE TRUSTEE 30
Section 5.01. Duties of Trustee..................................................................................30
Section 5.02. Certain Matters Affecting the Trustee..............................................................32
Section 5.03. Trustee Not Liable for Securities or Pooled Certificates or Treasury Securities....................33
Section 5.04. Trustee May Own Securities.........................................................................33
Section 5.05. Trustee's Fees; Indemnification of the Trustee.....................................................33
Section 5.06. Eligibility Requirements for Trustee...............................................................34
Section 5.07. Resignation and Removal of the Trustee.............................................................34
Section 5.08. Successor Trustee..................................................................................35
Section 5.09. Merger or Consolidation of Trustee.................................................................36
Section 5.10. Appointment of Co-Trustee or Separate Trustee......................................................36
ARTICLE VI -- THE SELLER 37
Section 6.01. Liability of the Seller............................................................................37
Section 6.02. Merger, Consolidation or Conversion of the Seller..................................................37
Section 6.03. Limitation on Liability of the Seller and Others...................................................37
ARTICLE VII -- TERMINATION 38
Section 7.01. Termination........................................................................................38
ARTICLE VIII - TAX PROVISIONS 40
Section 8.01 Trust Administration...............................................................................40
Section 8.02 Prohibited Activities..............................................................................41
ARTICLE IX -- MISCELLANEOUS PROVISIONS 42
Section 9.01. Amendment..........................................................................................42
Section 9.02. Counterparts.......................................................................................43
Section 9.03. Limitation on Rights of Securityholders............................................................43
Section 9.04. Governing Law......................................................................................44
Section 9.05. Notices............................................................................................44
Section 9.06. Severability of Provisions.........................................................................44
Section 9.07. Successors and Assigns.............................................................................44
Section 9.08. Article and Section Headings.......................................................................45
Section 9.09. Notices to Rating Agencies.........................................................................45
Exhibit A - Form of Class A-1 Security
Exhibit B - Form of Option Exercise Notice
Schedule A - Pooled Certificates and Treasury Securities
</TABLE>
<PAGE>
POOLING AGREEMENT, dated as of November 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 1997-2 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 (i) minus all amounts received as principal on the
Pooled Certificates and applied to principal from amounts received on the then
outstanding Securities (ii) plus all amounts of accreted interest added thereto.
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: November 28, 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 1997-2 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 December 26, 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 (other than Pooled FHLMC 2003/Z
Certificates), the 15th day of each month, and with respect to Pooled FHLMC
2003/Z Certificates, the second business day as defined in the applicable
Underlying Agreement following 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.
FMV Opinion: An opinion of an investment banking firm of
national reputation (other than an Affiliate of the Seller), which may be
obtained in connection with the determination of the Repurchase Price for a
repurchase pursuant to Section 2.03(c).
FNMA: The Federal National Mortgage Association.
FNMA Pooled Certificate Distribution Date: With respect to
Pooled FNMA 97-G5/SH Certificates, the 17th day of each month and with respect
to Pooled FNMA 97-78/Z Certificates, the 18th 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.
Interest Treasuries: The meaning set forth in the definition
of Treasury Securities.
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.
<PAGE>
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.
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.
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.
Original Class A-1 Balance: $55,196,194, minus the initial
principal amount of all Securities exchanged pursuant to Section 4.05 determined
as of the respective dates of exchange.
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. ss. 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, minus the original principal
balance of the Pooled Certificates issued to a Securityholder in exchange for
Securities pursuant to Section 4.05.
Pooled FHLMC Certificates: Multiclass Mortgage Participation
Certificates or Multiclass Mortgage Securities, issued by FHLMC and identified
as the Pooled FHLMC Certificates in Schedule A hereto.
<PAGE>
Pooled FHLMC 1381/E Certificates: FHLMC Multiclass Mortgage
Participation Certificates, Series 1381, Class E.
Pooled FHLMC 1578/Z Certificates: FHLMC Multiclass Mortgage
Participation Certificates, Series 1578, Class Z.
Pooled FHLMC 1591/SC Certificates: FHLMC Multiclass Mortgage
Participation Certificates, Series 1591, Class SC.
Pooled FHLMC 1723/SB Certificates: FHLMC Multiclass Mortgage
Participation Certificates, Series 1723, Class SB.
Pooled FHLMC 1930/SF Certificates: FHLMC Multiclass Mortgage
Participation Certificates, Series 1930, Class SF.
Pooled FHLMC 2003/Z Certificates: FHLMC Multiclass Mortgage
Securities, Series 2003, Class Z.
Pooled Fixed Rate Certificates: Pooled FHLMC 1381/E
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 97-78/Z Certificates: FNMA Guaranteed REMIC
Pass-Through Certificates, FNMA REMIC Trust 1997-78, Class Z.
Pooled FNMA 97-G5/SH Certificates: FNMA Guaranteed REMIC
Pass-Through Certificates, FNMA REMIC Trust 1997-G5, Class SH.
Pooled Inverse Floating Rate Certificates: Pooled FHLMC
1591/SC Certificates, Pooled FHLMC 1723/SB Certificates, Pooled FHLMC 1930/SF
Certificates, and Pooled FNMA 97-G5/SH Certificates.
Pooled IO Certificates: Pooled FHLMC 1930/SF Certificates and
Pooled FNMA 97-G5/SH Certificates.
Pooled Securityholder: The Trustee or its Depository
Participant for the benefit of the Securityholders.
Principal Treasuries: The meaning set forth in the definition
of Treasury Securities.
PTC: Participants Trust Company, or any successors thereto.
<PAGE>
Purchase Agreement: The Purchase Agreement dated November 25,
1997 between Bear, Stearns & Co., Inc. and the Seller relating to the Pooled
Certificates and the Treasury Securities
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.
Repurchase Price: In connection with the repurchase of (i) any
Pooled Certificate that is not a Pooled IO Certificate pursuant to Section
2.03(c) or Section 7.01(a)(i), a price equal to the outstanding Pooled
Certificate principal balance thereof as of the date of repurchase plus accrued
interest thereon in accordance with the applicable Underlying Agreements, (ii)
any Pooled IO Certificate pursuant to Section 2.03(c), a price equal to the
highest bid obtained by the Trustee from three dealers then active in the market
for such Pooled IO Certificate (or such lesser number as may then be active);
provided, however, if the Trustee is able to obtain a bid from only one active
dealer, then the Trustee may obtain a FMV Opinion to determine whether such bid
is at least equal to the fair market value of such Pooled IO Certificate and the
Repurchase Price shall be the higher of the bid or the fair market value of such
Pooled IO Certificate as stated in any such FMV Opinion; provided further,
however, if the Trustee is unable to obtain a bid from any active dealer, then
the Trustee shall obtain a FMV Opinion and the Repurchase Price shall be equal
to the fair market value of such Pooled IO Certificate as stated in such FMV
Opinion, (iii) any Pooled IO Certificate pursuant to Section 7.01(a)(i), a price
equal to the portion of the interest distribution amount allocable to such
Pooled IO Certificate for such date of repurchase and (iv) any Treasury Security
pursuant to Section 2.03(c) or Section 7.01(a)(i), a price equal to the amount
payable on such Treasury Security at its maturity.
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.
<PAGE>
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, Inc.
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.
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.
<PAGE>
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 Z Certificates, with one or more accrual certificates
bearing a coupon no less than the coupon of the Z Certificate being substituted
for, (b) 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, or (c) in the case of the Pooled Fixed
Rate Certificates, with one fixed rate certificate bearing a coupon no less than
the coupon of the Pooled Fixed Rate Certificate, (ii) the sum of the outstanding
principal amounts or notional principal amounts, as applicable, of the
Substitute Pooled Certificates equals the sum of the outstanding principal
amounts or notional principal amounts, as applicable 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 1381/E 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 Substitute Treasury Security results in the same
aggregate payment amount of principal or interest, as the case may be, on the
same Distribution Date as the Deleted Treasury Security being substituted for;
(ii) 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 (iii) 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).
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, minus the original principal balance of the Treasury
Securities issued to a Securityholder in exchange for Securities pursuant to
Section 4.05. The portions of the Treasury Securities to be used to pay interest
on the Securities as indicated on Schedule A hereto are referred to as "Interest
Treasuries" and the portion thereof to be used to pay principal on the
Securities as indicated on Schedule A hereto are referred to as "Principal
Treasuries."
<PAGE>
Treasury Security Distribution Date: With respect to the
Treasury Securities delivered to the Trustee on the Closing Date, the respective
Due Date set forth on Schedule A hereto, 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.
Z Certificates: Pooled FHLMC 1578/Z Certificates, Pooled FHLMC
2003/Z Certificates and Pooled FNMA 97-78/Z Certificates.
<PAGE>
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, PTC or
DTC, as applicable, 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 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 and 8-301 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.
<PAGE>
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,
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.
<PAGE>
(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 made on the Treasury Securities.
(xi) As of the Closing Date, collectively, the Pooled
Certificates which have principal balances and the Principal
Treasuries have an aggregate principal balance or, in the case
of the Principal Treasuries, an amount payable at maturity,
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.
(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, PTC 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 a Pooled
Certificate was not duly created and is not validly existing
and (b) such 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).
<PAGE>
(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 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.
<PAGE>
(vii) The Pooled Certificates and the Treasury
Securities will be held in the Trustee's account at the
Federal Reserve Bank of Minneapolis, Minnesota, PTC or DTC, as
applicable, 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
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.
<PAGE>
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 that is not a Pooled IO Certificate or
a 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 records of the Federal Reserve Bank of
Minneapolis, PTC or DTC, as applicable, 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 and deliver all
instruments of transfer or assignment, without recourse, in form as provided to
it as are necessary to vest in the Seller or its designee 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 Treasury Securities, 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.
<PAGE>
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 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 1997-2, 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.
<PAGE>
(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 Account, entitled "Norwest Bank
Minnesota, National Association, as trustee for the registered holders of
Financial Asset Securitization, Inc. Mortgage Participation Securities, Series
1997-2, 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
(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 funds payable as principal
from the Reserve Fund, 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 the
remaining amount payable as principal from
the Reserve Fund; and
third, from the remaining Available Funds,
to the Securityholders as interest.
<PAGE>
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.
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.
<PAGE>
(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 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 and the portions thereof derived from the
Treasury Securities;
(iii) the Class A-1 Balance before and after
applying payments on such Distribution Date;
(iv) the Original Class A-1 Balance as of the Closing
Date and the Original Class A-1 Balance after giving effect to
all exchanges pursuant to Section 4.05 (from which
Securityholders may calculate their respective Percentage
Interests);
(v) the effective interest rate on the
Securities for such Distribution Date;
(vi) 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;
<PAGE>
(vii) the outstanding amount payable at maturity,
immediately prior to and after taking into account
distributions made on such Distribution Date, of each of the
Treasury Securities; and
(viii) 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.
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.
<PAGE>
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.
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 November 28, 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.
<PAGE>
(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, 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, PTC or DTC, as applicable, 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, PTC or DTC, as applicable, from the Trustee to such
Security Owner.
<PAGE>
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 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.
<PAGE>
(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.
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 December 1998, any
Holder or Security Owner holding not less than 10% of the Original Class A-1
Balance as of the Closing Date 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.
(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, PTC and/or 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.
<PAGE>
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;
(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.
<PAGE>
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;
(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.
<PAGE>
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.
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.
<PAGE>
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 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.
<PAGE>
(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.
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.
<PAGE>
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 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.
<PAGE>
(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.
ARTICLE VI
THE SELLER
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 or notional principal balance of all but one of the Pooled
Certificates 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 the Pooled
Certificates and Principal Treasuries at the time of any such repurchase is 10%
or less than their aggregate outstanding principal balance on the Closing Date
as reduced by the principal amount of any Pooled Certificates and Treasury
Securities exchanged pursuant to Section 4.05.
(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:
<PAGE>
(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.
(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:
<PAGE>
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.
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 or notional 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
based on their respective Percentage Interests to the Securityholders of the
remaining Pooled Certificate and any remaining Treasury Securities 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.
<PAGE>
(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.
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.
<PAGE>
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
(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
<PAGE>
(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.
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.
<PAGE>
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.
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 1997-2, with a
copy to the Trustee at 11000 Broken Land Parkway, Columbia, Maryland 21044,
Attention: FASI 1997-2 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.
<PAGE>
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,
(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/ R. Walter Jones, IV
-----------------------
Name: R. Walter Jones, IV
Title: 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:
CITY OF RICHMOND)
On the 24th day of November, 1997 before me, a notary public
in and for said State, personally appeared R. Walter Jones, IV known to me to be
the President of Financial Asset Securitization Inc., the corporation that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
/s/ Chanda D. Walker
--------------------
Notary Public
[Notarial Seal] Commission Expires: September 30, 2001
<PAGE>
STATE OF NEW YORK )
: ss:
COUNTY OF NEW YORK)
On the 25th day of November 1997 before me, a notary public in
and for said State, personally appeared Peter 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/ Richard J. Derr
-------------------
Notary Public
[Notarial Seal] Commission Expires:
RICHARD J. DERR
Notary Public, State of New York
No. 01DE4866255
Qualified in Suffolk County
Commission Expires July 28, 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 ARE 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 1997-2
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. 31738VCK9
<TABLE>
<CAPTION>
<S> <C>
Class : A-1
First Distribution Date : December 26, 1997 Initial Principal Amount
Assumed Final Distribution Date : January 25, 2028 of this Security
("Denomination") : $55,196,194
Approximate Original Class
Principal Amount : $55,196,194
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. Under certain circumstances, the principal
amount of the Securities could be paid in full where interest would remain payable,
in which case, the calculation of the effective per annum interest rate borne by
the Securities would not be meaningful.
</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 November 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 each
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
set forth above.
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 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: November 28, 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 1997-2
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 solely 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 A-1 Balance of the Securities. Any such
consent by the Holder of this Security 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 the Class 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 this Security is registered as the owner
hereof for all purposes, and neither the Security Registrar, the Trustee nor any
such agent shall be affected by notice to 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 the
prohibited transaction rules of ERISA and the related excise tax provisions of
the Code.
Beginning on the Distribution Date in December 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 1997-2
CUSIP No.: 31738VCK9
Ladies and Gentlemen:
Reference is made to the Pooling Agreement dated as of November 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:
Participant Number in Participants Trust Company
Proposed Exchange Date:
[Accompanying this letter is a certified check in the amount of the
Option Exercise Fee.]
<PAGE>
[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.]
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
- -------------------------------------------------------- ------------ -------------------
<S> <C>
Pooled FHLMC Certificates
Multiclass Mortgage Participation Certificates, 31.52% $9,538,686.94
Series 1381, Class E
Multiclass Mortgage Participation Certificates, 21.06% $5,846,021.77
Series 1578, Class Z
Multiclass Mortgage Participation Certificates, 34.40% $,012,030.47
Series 1591, Class SC
Multiclass Mortgage Participation Certificates, 79.47% $1,681,455.80
Series 1723, Class SB
Multiclass Mortgage Participation Certificates, 34.35% $4,814,507.00
Series 1930, Class SF
Multiclass Mortgage Securities, Series 2003, Class Z 53.83% $3,019,999.80
Pooled FNMA Certificates
Guaranteed REMIC Pass-Through Certificates, Fannie 87.51% $22,098,000.00
Mae REMIC Trust 1997-78, Class Z
Guaranteed REMIC Pass-Through Certificates, Fannie 3.10% $1,915,500.00
Mae REMIC Trust 1997-G5, Class SH
</TABLE>
TREASURY SECURITIES
<TABLE>
<CAPTION>
Amount to be paid
Designation PT/IT(1) at maturity Due Date CUSIP No.
<S> <C>
United States Treasury Security PT $1,250,000 February 15, 1998 912820AM9
United States Treasury Security PT $1,250,000 August 15, 1998 912820AP2
United States Treasury Security PT $1,250,000 February 15, 1999 912833BZ2
United States Treasury Security PT $1,250,000 August 15, 1999 912820AT4
United States Treasury Security IT $120,000 December 26, 1997 91279454Y6
United States Treasury Security IT $120,000 January 8, 1998 9127944Q4
United States Treasury Security IT $120,000 February 15, 1998 912820AM9
</TABLE>
