Exhibit 4.2
LIMITED GUARANTY AGREEMENT
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This LIMITED GUARANTY AGREEMENT, entered into as of December __, 1996, by
and between the Federal Deposit Insurance Corporation, solely in its corporate
capacity, and State Street Bank and Trust Company, not in its individual
capacity but solely as trustee (the "Trustee") of FDIC REMIC Trust 1996-C1 (the
"Trust") created pursuant to a Declaration of Trust, dated November 13, 1996 and
amended and restated pursuant to the Pooling and Servicing Agreement, dated as
of December 1, 1996 (the "Pooling and Servicing Agreement") by and among the
Trustee, Banc One Management and Consulting Corporation (the "Servicer") and the
Federal Deposit Insurance Corporation, in its corporate capacity (in such
capacity, the "FDIC") and in its capacity as administrator of the Bank Insurance
Fund and as receiver of various depository institutions (in such capacities, the
"Mortgage Loan Seller");
W I T N E S S E T H:
WHEREAS, the Mortgage Loan Seller is the owner of adjustable and fixed
rate, amortizing and balloon payment, mortgage loans identified on Schedule 1
and Schedule 2 to the Pooling and Servicing Agreement (the "Mortgage Loans")
secured primarily by liens on fee simple estates in commercial, multifamily and
residential real properties;
WHEREAS, the Mortgage Loan Seller will convey the Mortgage Loans to the
Trust;
WHEREAS, as a condition to such conveyance, and in consideration of, among
other things, the delivery to the FDIC of the Stripped Interest Certificates,
the FDIC is required to deliver to the Trustee on behalf of the
Certificateholders this Agreement;
NOW, THEREFORE, in consideration of the premises and the covenants herein
contained, the parties agree as follows:
ARTICLE I.
Definitions
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1.01 Definitions. For purposes of this Agreement, the following terms
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shall have the meanings assigned respectively below. All capitalized terms used
but not defined herein are defined in the Pooling and Servicing Agreement.
"Appraisal Reduction" shall mean, in connection with an appraisal referred
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to in clause (iv) of the definition of Limited Guaranty Draw loan, the excess,
if any, of the Purchase Price for such loan (calculated as if such loan were
purchased by a person other than the FDIC) over the appraised value of the
related Mortgaged Property.
"Available Sub-Pool Coverage Amount" shall mean, with respect to Sub-Pool
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I, the Sub-Pool I Available Coverage Amount, and with respect to Sub-Pool II,
the Sub-Pool II Available Coverage Amount.
"Bank Insurance Fund" shall mean the Bank Insurance Fund established by
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Congress in 1989 as the successor to the Deposit Insurance Fund pursuant to the
Financial Institutions Reform, Recovery and Enhancement Act of 1989.
"Business Day" shall mean any day other than (i) a Saturday or a Sunday or
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(ii) a day on which federally insured depository institutions in the City of New
York, the District of Columbia or the city in which the Corporate Trust Office
is located are authorized or obligated by law, governmental decree or executive
order to be closed.
"Certificates" shall mean the FDIC REMIC Trust 1996-C1, Commercial Mortgage
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Pass-Through Certificates, Series 1996-C1 evidencing, in the aggregate, the
entire beneficial ownership interest in the Trust.
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"Certificateholders" shall mean the holders of the Certificates.
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"Claim Period" shall mean, with respect to any Distribution Date, the
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period ending on the related Demand Date and commencing on the day following the
immediately preceding Demand Date or, in the case of the first Distribution
Date, commencing on the Closing Date.
"Credit Draw Amount" shall mean, with respect to any Distribution Date, the
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portion of the Guarantied Amount for such Distribution Date attributable to
Realized Losses and Limited Guaranty Draw loans, together with any interest
payable thereon pursuant to Section 3.01 hereof.
"Demand for Payment" shall mean, with respect to a Credit Draw Amount and
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an Expense Draw Amount, the written demand for payment by the Trustee in the
form attached hereto as Exhibit A.
"Demand Date" shall mean, with respect to any Distribution Date, the fourth
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Business Day preceding such Distribution Date.
"Dollars" or "$" shall mean the lawful money of the United States of
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America.
"Excess Coverage Amount" shall mean, with respect to Sub-Pool I, the Sub-
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Pool I Excess Coverage Amount, and with respect to Sub-Pool II, the Sub-Pool II
Excess Coverage Amount.
"Expense Draw Amount" shall mean the portion of any Guarantied Amount
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attributable to Extraordinary Trust Fund Expenses, including without limitation
Inspection Expenses.
"Guarantied Amount" shall have the meaning set forth in Section 2.02.
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"Guaranty" shall mean the FDIC's guarantee of payment of Guarantied Amounts
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pursuant to this Agreement.
"Limited Guaranty Account" shall have the meaning specified in Section
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5.01.
"Limited Guaranty Draw Loan" shall mean any Mortgage Loan (i) that
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following the Cut-off Date has become subject to a temporary modification,
waiver or amendment of the terms thereof that results in the reduction of the
Scheduled Payments due thereon; (ii) that becomes a Discounted Mortgage Loan
following the Cut-off Date; (iii) that has become the subject of a Deficient
Valuation or as to which the principal balance thereof has otherwise been
reduced, including as a result of the extension of the Maturity Date of a
Discounted Mortgage Loan, or (iv) as to which, immediately following the date on
which P&I Advances in respect of an aggregate of 18 months of Scheduled Payments
remain unreimbursed, the appraised value of the related Mortgaged Property, as
determined in an appraisal pursuant to Section 3.20(c) of the Pooling and
Servicing Agreement, is less than the Purchase Price for such Mortgage Loan
(calculated as if such loan were purchased by a person other than the FDIC).
"Limited Guaranty Draw Loan Reduction" shall mean a Temporary Reduction, an
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Appraisal Reduction or a Permanent Reduction.
"Permanent Reduction" shall mean, in connection with a permanent reduction
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of the principal balance of a Mortgage Loan referred to in clause (ii) or (iii)
of the definition of Limited Guaranty Draw Loan, the amount of the reduction of
the principal balance of such loan.
"Prospectus" shall mean the prospectus dated December __, 1996, prepared in
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connection with the issuance of the Certificates.
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"Sub-Pool I Available Coverage Amount" shall mean at any time of
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determination $___________, as reduced by (x) the sum of (i) the aggregate of
all Guarantied Amounts previously paid hereunder in Sub-Pool I and (ii) the
aggregate of all amounts previously paid in respect of Sub-Pool I from Residual
Cash Flow pursuant to Section 1.05(b)(iii), Section 1.05(b)(v), Section
1.05(c)(iii) or Section 1.05(c)(v) of the Pooling and Servicing Agreement (i.e.,
all amounts covered by Residual Cash Flow that otherwise would be required to be
paid under this Limited Guaranty Agreement, other than Inspection Expenses) and
as increased by (y) all amounts paid by the Trustee to the FDIC pursuant to the
Pooling and Servicing Agreement in reimbursement of previously paid Guarantied
Amounts in respect of Sub-Pool I.
"Sub-Pool I Excess Coverage Amount" shall mean at any time of determination
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the excess, if any, of (i) the Sub-Pool II Available Coverage Amount over (ii)
the aggregate of the Class Balances of the Sub-Pool II Certificates.
"Sub-Pool II Available Coverage Amount" shall mean at any time of
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determination $___________, as reduced by (x) the sum of (i) the aggregate of
all Guarantied Amounts previously paid hereunder in respect of Sub-Pool II and
(ii) the aggregate of all amounts previously paid in respect of Sub-Pool II from
Residual Cash Flow pursuant to Section 1.05(b)(iii), Section 1.05(b)(v), Section
1.05(c)(iii) or Section 1.05(c)(v) of the Pooling and Servicing Agreement (i.e.,
all amounts covered by Residual Cash Flow that otherwise would be required to be
paid under this Limited Guaranty Agreement, other than Inspection Expenses) and
as increased by (y) all amounts paid by the Trustee to the FDIC pursuant to the
Pooling and Servicing Agreement in reimbursement of previously paid Guarantied
Amounts in respect of Sub-Pool II.
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"Sub-Pool II Excess Coverage Amount" shall mean at any time of
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determination the excess, if any, of (i) the Sub-Pool I Available Coverage
Amount over (ii) the aggregate of the Class Balances of the Sub-Pool I
Certificates.
"Temporary Reduction" shall mean, with respect to any Due Date, in
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connection with a temporary modification, waiver or amendment of the terms of
any Mortgage Loan referred to in clause (i) of the definition of Limited
Guaranty Draw Loan, the amount of the reduction in the portion of the Scheduled
Payment thereon due on such Due Date attributable to interest.
ARTICLE II.
The Guaranty
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2.01 Guaranty. Subject to the terms and conditions hereinafter set forth,
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the FDIC hereby guaranties to the Trustee on behalf of the holders of
Certificates evidencing an interest in a particular Sub-Pool payment as provided
in Section 3.02 of the Credit Draw Amount and the Expense Draw Amount for such
Sub-Pool, provided that the Guarantied amount in respect of a particular Sub-
Pool shall not exceed the Available Sub-Pool Coverage Amount plus the Excess
Coverage Amount for such Sub-Pool at the time of determination. The obligations
of the FDIC under this Section 2.01 are absolute and unconditional, (a)
irrespective of (i) the value, genuineness, validity, regularity or
enforceability of the Mortgage Loans or any other agreement or instrument
referred to herein or therein, or (ii) any substitution, release or exchange of
any other guaranty of or security for any of the Mortgage Loans and (b) to the
fullest extent permitted by applicable law, irrespective of any other
circumstance whatsoever that
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might otherwise constitute a legal or equitable discharge or defense of a surety
or guarantor, it being the intent of this Section 2.01 that the obligation of
the FDIC hereunder be absolute and unconditional under any and all
circumstances.
It is understood and agreed that the assets of the Bank Insurance Fund (the
"BIF") are the sole assets available for payment of the Guarantied Amounts
pursuant to this Agreement and that the obligations of the FDIC hereunder are
not general obligations of the United States backed by its full faith and
credit.
2.02 Coverage of Guaranty. This Guaranty shall extend to the amount of
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(i) Realized Losses, (ii) Limited Guaranty Draw Loan Reductions and (iii)
Extraordinary Trust Fund Expenses incurred in connection with each Sub-Pool
(collectively, the "Guarantied Amount" with respect to such Sub-Pool).
ARTIClE III.
Payment of the Guarantied Amount
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3.01 Demand on FDIC. The Trustee's demand on the FDIC for payment of the
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Credit Draw Amount and the Expense Draw Amount may be made at any time in
writing substantially in the form attached hereto as Exhibit A. The Trustee
will make a Demand for Payment during a particular Claim Period only after first
applying Residual Cash Flow available pursuant to Section 1.05 of the Pooling
and Servicing Agreement. The Trustee will make a demand for Payment as soon as
reasonably practicable following notice to the Trustee of the occurrence of a
Realized Loss, a Limited Guaranty Draw Loan Reduction or an Extraordinary Trust
Fund Expense. The portion of any Credit Draw Amount in respect of a Realized
Loss or
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Limited Guaranty Draw Loan Reduction incurred in a particular Due Period that is
not paid on the P&I Advance Date in the month in which such Due Period ends will
include accrued interest at a rate equal to the sum of (x) the Weighted Average
Effective Net Mortgage Rate for the applicable Sub-Pool and the Distribution
Date immediately following the P&I Advance Date on which such amount will be
paid plus (y)_.__%.
3.02 Payment by FDIC. The FDIC will, not later than the P&I Advance Date
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in respect of each Distribution Date, pay to the Trustee the amount set forth in
the Demand for Payment requested during the related Claim Period by the Trustee
pursuant to Section 3.01 hereof; provided, that in each case, the FDIC is
required to pay in respect of a particular Sub-Pool an amount not in excess of
the Available Sub-Pool Coverage Amount and the Excess Coverage Amount for such
Sub-Pool on the date of determination and further provided that (a) the FDIC
may, at any time, upon ten (10) days' notification to the Trustee, deduct from
any amount payable hereunder any amount previously improperly paid and (b) the
FDIC may, at any time, add to any amount payable hereunder in respect of a
Credit Draw Amount relating to a particular Mortgage Loan all or a portion of
the amount of outstanding Advances made with respect to such loan. All such
payments by the FDIC hereunder shall be made as described in Section 5.01.
3.03 Conditions of Guaranty. The FDIC hereby waives diligence,
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presentment, protest and any requirement that the Trustee or any
Certificateholder exhaust any right or take any action against or give notice to
any mortgagor under the Mortgage Loans or the FDIC, except for the written
demands for payment by the Trustee, on behalf of the Certificateholders, on the
FDIC as required by this Agreement. The FDIC will accept a Demand For Payment
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from the Servicer upon a determination by the FDIC that the Trustee has failed
to present properly such Demand For Payment in a timely fashion.
ARTICLE IV.
Representations and Warranties of FDIC
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The FDIC represents and warrants to the Trustee, on behalf of the
Certificateholders, as of the date hereof and as of December __, 1996, that:
4.01 Financial Condition. Since September 30, 1996, there has been no
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material adverse change in the financial condition of the Bank Insurance Fund.
4.02 No Breach. None of the execution and delivery of this Agreement, the
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consummation of the transactions herein contemplated or compliance with the
terms and provisions hereof will conflict with or result in a breach of, or
require any consent under, any applicable law or regulation, or any order, writ,
injunction or decree of any court or governmental authority or agency, or any
agreement or instrument to which the FDIC is a party or by which the FDIC is
bound or to which the FDIC is subject, or constitute a default under any such
agreement or instrument, or result in the creation or imposition of any lien
upon the FDIC's earnings or assets pursuant to the terms of any such agreement
or instrument.
4.03 Action. This Agreement has been duly and validly authorized,
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executed and delivered by the FDIC and constitutes its legal, valid and binding
obligation, enforceable in accordance with its terms.
4.04 Approvals. No authorizations, approvals or consents of, and no
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filings or registrations with, any governmental or regulatory authority or
agency (other than such as have
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been obtained) are necessary for the execution, delivery or performance by the
FDIC of this Agreement or for the validity or enforceability hereof.
4.05 Borrowing from Treasury. Pursuant to Section 14(a) of the Federal
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Deposit Insurance Act, the FDIC is authorized to borrow from the U.S. Treasury,
with the approval of the Secretary of the Treasury, up to an amount that when
aggregated with borrowings outstanding to the Savings Association Insurance Fund
equals $__ billion, in order to meet its obligations under this Guaranty and its
deposit insurance obligations to member institutions.
4.06 Information in Prospectus. The statements in the sections of the
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Prospectus entitled "The Federal Deposit Insurance Corporation" and "The Bank
Insurance Fund" are true, correct and complete in all material respects.
ARTICLE V.
Miscellaneous
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5.01 All Payments Made to Trustee. All amounts payable by the FDIC under
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this Agreement shall be made to the Trustee on behalf of the Certificateholders
in dollars and in immediately available funds by credit to the segregated trust
account established and held by the Trustee under the Pooling and Servicing
Agreement for the benefit of the Certificateholders (the "Limited Guaranty
Account"). The Limited Guaranty Account shall be designated "State Street Bank
and Trust Company, as Trustee in trust for the registered holders of the FDIC
REMIC Trust 1996-C1 Commercial Mortgage Pass-Through Certificates, Series 1996-
C1". If the Trustee does not elect to establish and maintain a separate Limited
Guaranty Account with
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respect to each Sub-Pool, the Trustee shall at all times during the term hereof
maintain a separate ledger sub-account of the Limited Guaranty Account for each
Sub-Pool, which ledger sub-account shall accurately reflect each deposit to and
withdrawal from the Limited Guaranty Account that is allocable to such Sub-Pool.
The Trustee shall deposit any amount paid under the Limited Guaranty in the
Limited Guaranty Account and distribute such amount as described in the Pooling
and Servicing Agreement. All payments made by the FDIC to the Trustee under
this Agreement shall be deemed paid as required hereunder notwithstanding any
failure by the Trustee to remit any such amounts to the Certificateholders on
the related Distribution Date.
5.02 Termination. The FDIC's obligations hereunder shall remain in full
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force and effect and shall terminate only upon the termination of the Trust
pursuant to the provisions of the Pooling and Servicing Agreement.
5.03 Governing Law. THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACT MADE
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UNDER THE LAWS OF THE STATE OF NEW YORK, AND FOR ALL PURPOSES SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH SUCH LAWS, BUT WITHOUT GIVING EFFECT TO THE
CONFLICT OF LAWS PRINCIPLES THEREOF.
5.04 Communications. All communications pursuant to or required by this
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Agreement shall be (a) in writing, (b) addressed to each party at its respective
address set forth in the Pooling and Servicing Agreement and mailed, telecopied
or delivered, and (c) deemed to have been given at such time as said
communications are transmitted by telecopier or, if mailed or personally
delivered, when received by the party to which said communications were
addressed.
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5.05 Amendments Etc. The terms of this Agreement may be waived, altered
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or amended only by an instrument in writing duly executed by each party hereto.
Any such amendment, alteration or waiver shall be binding upon the parties
hereto and the Certificateholders.
5.06 Captions. The captions and section headings appearing herein are
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included solely for convenience of reference and are not intended to affect the
interpretation of any provision of this Agreement.
5.07 Counterparts. This Agreement may be executed in any number of
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counterparts, all of which taken together shall constitute one and the same
instrument and each party hereto may execute this Agreement by signing any such
counterpart.
5.08 Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES,
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TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY
JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
5.09 Severability. If any provision hereof is invalid and unenforceable
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in any jurisdiction, then, to the fullest extent permitted by law, (i) the other
provisions hereof shall remain in full force and effect in such jurisdiction and
shall be liberally construed in favor of the Trustee on behalf of the
Certificateholders in order to carry out the intentions of the parties hereto as
nearly as may be possible and (ii) the invalidity or unenforceability of any
provision hereof in any jurisdiction shall not affect the validity or
enforceability of such provision in any other jurisdiction.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
FEDERAL DEPOSIT INSURANCE
CORPORATION, in its corporate capacity
By:
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Name:
Title:
STATE STREET BANK AND TRUST
COMPANY, as trustee
By:
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Name:
Title:
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EXHIBIT A (1 OF 2)
FORM OF LIMITED GUARANTY
SUMMARY
Date: ____________________
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Current Month Year-to-Date
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Sub Pool I
I. Realized Losses xx,xxx xx,xxx
II. Limited Guaranty Draw Loss Reductions:
Temporary Reduction xx,xxx xx,xxx
Discounted Mortgage Loan xx,xxx xx,xxx
Deficient Valuation xx,xxx xx,xxx
Appraisal Reduction xx,xxx xx,xxx
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Total Limited Guaranty Draw Loans xx,xxx xx,xxx
III. Extraordinary Trust Fund Expenses xx,xxx xx,xxx
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Sub Pool 1 Limited Guaranty Claim xx,xxx xx,xxx
Less: Residual Cash Applied to Limited Guaranty Claim xx,xxx xx,xxx
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SUB POOL 1 LIMITED GUARANTY DRAW xx,xxx xx,xxx
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Sub Pool II
I. Realized Losses xx,xxx xx,xxx
II. Limited Guaranty Draw Loans:
Temporary Reduction xx,xxx xx,xxx
Discounted Mortgage Loan xx,xxx xx,xxx
Deficient Valuation xx,xxx xx,xxx
Appraisal Reduction xx,xxx xx,xxx
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Total Limited Guaranty Draw Loans xx,xxx xx,xxx
III. Extraordinary Trust Fund Expenses xx,xxx xx,xxx
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Sub Pool II Limited Guaranty Claim xx,xxx xx,xxx
Less: Residual Cash Applied to Limited Guaranty Claim xx,xxx xx,xxx
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SUB POOL II LIMITED GUARANTY ClAIMS xx,xxx xx,xxx
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TOTAL LIMITED GUARANTY CLAIM xx,xxx xx,xxx
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State Street Bank and Trust Company as Trustee
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by = Authorized Officer (COMB Approval)
EXHIBIT A (2 of 2)
FORM OF AVAILABLE LIMITED GUARANTY
AVAILABLE GUARANTY AMOUNT
Date: ____________________
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Sub Pool I Sub Pool II
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Available Guaranty Amount:
Beginning Available Sub-Pool Coverage Amount
Add: Excess Coverage Amount Received
or
Less: Excessive Coverage Transferred
Subtotal
Less: Cumulative Guaranty Claims to Date
Subtotal
Add: Recoveries from Residual Payments
Recoveries from Loan Recoveries
Current Available Coverage Amount
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State Street Bank and Trust Company as Trustee
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by = Authorized Officer (COMB Approval)
