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EXHIBIT 10.11
EXECUTION COPY
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TRUST AGREEMENT
among
FINANCIAL ASSET SECURITIES CORP.,
as Depositor,
MEGO MORTGAGE CORPORATION,
as the Company,
WILMINGTON TRUST COMPANY,
as Owner Trustee
and
FIRST BANK NATIONAL ASSOCIATION,
as Co-Owner Trustee
Dated as of June 14, 1997
MEGO MORTGAGE HOME LOAN OWNER TRUST 1997-3
Home Loan Asset Backed Notes and Certificates, Series 1997-3
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TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS
Section 1.1 Capitalized Terms.............................................I-1
Section 1.2 Other Definitional Provisions.................................I-5
ARTICLE II
ORGANIZATION
Section 2.1 Name.........................................................II-1
Section 2.2 Office.......................................................II-1
Section 2.3 Purposes and Powers..........................................II-1
Section 2.4 Appointment of Owner Trustee.................................II-2
Section 2.5 Initial Capital Contribution of Owner Trust Estate...........II-2
Section 2.6 Declaration of Trust.........................................II-2
Section 2.7 Title to Trust Property......................................II-2
Section 2.8 Situs of Trust...............................................II-3
Section 2.9 Representations and Warranties of the Depositor and
the Company; Covenant of the Company.........................II-3
Section 2.10 Federal Income Tax Allocations...............................II-5
ARTICLE III
TRUST SECURITIES AND TRANSFER OF INTERESTS
Section 3.1 Initial Ownership...........................................III-1
Section 3.2 The Trust Securities........................................III-1
Section 3.3 Execution, Authentication and Delivery of
Trust Securities............................................III-1
Section 3.4 Registration of Transfer and Exchange of
Trust Securities............................................III-1
Section 3.5 Mutilated, Destroyed, Lost or Stolen Trust
Securities..................................................III-2
Section 3.6 Persons Deemed Owners.......................................III-3
Section 3.7 Access to List of Owners' Names and Addresses...............III-3
Section 3.8 Maintenance of Office or Agency.............................III-3
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Section 3.9 Appointment of Paying Agent.................................III-3
Section 3.10 Book-Entry Certificates.....................................III-4
Section 3.11 Notices to Clearing Agency .................................III-5
Section 3.12 Definitive Certificates ....................................III-5
Section 3.13 Restrictions on Transfer of Certificates....................III-6
ARTICLE IV
ACTIONS BY OWNER TRUSTEE
Section 4.1 Prior Notice to Owners with Respect to Certain Matters.......IV-1
Section 4.2 Action by Owners with Respect to Certain Matters.............IV-3
Section 4.3 Action by Owners with Respect to Bankruptcy..................IV-3
Section 4.4 Restrictions on Owners' Power................................IV-3
Section 4.5 Majority Control.............................................IV-3
ARTICLE V
APPLICATION OF TRUST FUNDS; CERTAIN DUTIES
Section 5.1 Establishment of Trust Account................................V-1
Section 5.2 Application Of Trust Funds....................................V-1
Section 5.3 Method of Payment.............................................V-2
Section 5.4 Segregation of Moneys; No Interest............................V-2
Section 5.5 Accounting and Reports to the Certificateholders,
Owners, the Internal Revenue Service and Others...............V-2
Section 5.6 Signature on Returns..........................................V-3
ARTICLE VI
AUTHORITY AND DUTIES OF OWNER TRUSTEE
Section 6.1 General Authority............................................VI-1
Section 6.2 General Duties...............................................VI-1
Section 6.3 Action upon Instruction......................................VI-1
Section 6.4 No Duties Except as Specified in this Agreement, the
Transaction Documents or in Instructions.....................VI-2
Section 6.5 No Action Except Under Specified Documents or
Instructions.................................................VI-3
Section 6.6 Restrictions.................................................VI-3
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ARTICLE VII
CONCERNING THE OWNER TRUSTEE
Section 7.1 Acceptance of Trusts and Duties.............................VII-1
Section 7.2 Furnishing of Documents.....................................VII-2
Section 7.3 Representations and Warranties..............................VII-2
Section 7.4 Reliance; Advice of Counsel.................................VII-3
Section 7.5 Not Acting in Individual Capacity..........................VII-4
Section 7.6 Owner Trustee Not Liable for Trust Securities
or Home Loans...............................................VII-4
Section 7.7 Owner Trustee May Own Residual Instruments and
Notes.......................................................VII-4
Section 7.8 Licenses....................................................VII-5
Section 7.9 Rights of Co-Owner Trustee..................................VII-5
ARTICLE VIII
COMPENSATION OF OWNER TRUSTEE
Section 8.1 Owner Trustee's Fees and Expenses..........................VIII-1
Section 8.2 Indemnification............................................VIII-1
Section 8.3 Payments to the Owner Trustee..............................VIII-1
ARTICLE IX
TERMINATION OF TRUST AGREEMENT
Section 9.1 Termination of Trust Agreement...............................IX-1
ARTICLE X
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
Section 10.1 Eligibility Requirements for Owner Trustee....................X-1
Section 10.2 Resignation or Removal of Owner Trustee or Co-Owner
Trustee.......................................................X-1
Section 10.3 Successor Owner Trustee or Co-Owner Trustee...................X-2
Section 10.4 Merger or Consolidation of Owner Trustee......................X-2
Section 10.5 Appointment of Co-Owner Trustee or Separate Owner
Trustee.......................................................X-3
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ARTICLE XI
MISCELLANEOUS
Section 11.1 Supplements and Amendments..................................XI-1
Section 11.2 No Legal Title to Owner Trust Estate in Owners..............XI-2
Section 11.3 Limitations on Rights of Others.............................XI-2
Section 11.4 Notices.....................................................XI-2
Section 11.5 Severability................................................XI-3
Section 11.6 Separate Counterparts.......................................XI-3
Section 11.7 Successors and Assigns......................................XI-3
Section 11.8 No Petition.................................................XI-3
Section 11.9 Covenants of Company........................................XI-3
Section 11.10 No Recourse.................................................XI-3
Section 11.11 Headings....................................................XI-4
Section 11.12 GOVERNING LAW...............................................XI-4
Section 11.13 Inconsistencies with Sale and Servicing Agreement...........XI-4
EXHIBIT A Form of Certificate
EXHIBIT B Form of Residual Instrument
EXHIBIT C Certificate of Trust
EXHIBIT D Form of Certificate Depository Agreement
EXHIBIT E Form of Transfer Certificate
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TRUST AGREEMENT, dated as of June 14, 1997, among FINANCIAL ASSET
SECURITIES CORP., a Delaware corporation, as Depositor (the "Depositor"), MEGO
MORTGAGE CORPORATION, a Delaware corporation (the "Company"), WILMINGTON TRUST
COMPANY, a Delaware banking corporation, as Owner Trustee (the "Owner Trustee")
and FIRST BANK NATIONAL ASSOCIATION, as Co-Owner Trustee (the "Co-Owner
Trustee").
ARTICLE I
DEFINITIONS
Section 1.1 Capitalized Terms. For all purposes of this Agreement, the
following terms shall have the meanings set forth below:
"Agreement" shall mean this Trust Agreement, as the same may be amended
and supplemented from time to time.
"Administration Agreement" shall mean the Administration Agreement,
dated as of June 14, 1997 among the Issuer, the Company, and First Bank National
Association, as Administrator.
"Administrator" shall mean First Bank National Association, or any
successor in interest thereto, in its capacity as Administrator under the
Administration Agreement.
"Benefit Plan" shall have the meaning assigned to such term in Section
3.10.
"Book-Entry Certificate" shall mean a beneficial interest in the
Certificates, ownership and transfers of which shall be made through book
entries by a Clearing Agency as described in Section 3.10.
"Business Trust Statute" shall mean Chapter 38 of Title 12 of the
Delaware Code, 12 Del. Code Section 3801 et seq., as the same may be amended
from time to time.
"Certificate" shall mean any Trust Security issued hereby substantially
in the form of Exhibit A hereto attached.
"Certificate Depository Agreement" shall mean the agreement among the
Trust and DTC, dated as of the Closing Date, substantially in the form attached
hereto as Exhibit D, relating to the Certificates, as the same may be amended
and supplemented from time to time.
"Certificate Distribution Account" shall have the meaning assigned to
such term in the Sale and Servicing Agreement.
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"Certificate of Trust" shall mean the Certificate of Trust in the form
of Exhibit C to be filed for the Trust pursuant to Section 3810(a) of the
Business Trust Statute.
"Certificate Register" and "Certificate Registrar" shall mean the
register mentioned in, and the registrar appointed pursuant to, Section 3.4.
"Certificateholder" shall mean a Person in whose name a Certificate is
registered.
"Clearing Agency" shall mean an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act.
"Clearing Agency Participant" shall mean a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
Treasury Regulations promulgated thereunder.
"Co-Owner Trustee" shall mean First Bank National Association.
"Company" shall mean Mego Mortgage Corporation, a Delaware corporation.
"Corporate Trust Office" shall mean, with respect to the Owner Trustee,
the principal corporate trust office of the Owner Trustee located at Xxxxxx
Square North, 0000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx, XX 00000-0000, Attention:
Corporate Trust Administration; or at such other address in the State of
Delaware as the Owner Trustee may designate by notice to the Owners and the
Company, or the principal corporate trust office of any successor Owner Trustee
(the address (which shall be in the State of Delaware) of which the successor
owner trustee will notify the Owners and the Company).
"Definitive Certificates" shall mean a certificated form of security
that represents a Trust Security pursuant to Section 3.12.
"DTC" shall mean the Depository Trust Company, as the initial Clearing
Agency.
"ERISA" shall have the meaning assigned thereto in Section 3.10.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Expenses" shall have the meaning assigned to such term in Section 8.2.
"Indenture" shall mean the Indenture, dated as of June 14, 1997, by and
between the Issuer and the Indenture Trustee.
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"Indenture Trustee" means First Bank National Association, as Indenture
Trustee under the Indenture.
"Initial Certificate Principal Balance" shall mean $5,753,639.
"Issuer" shall mean Mego Mortgage Home Loan Owner Trust 1997-3, the
Delaware business trust created pursuant to this Agreement.
"Non-permitted Foreign Holder" shall have the meaning set forth in
Exhibit E hereto.
"Non-U.S. Person" shall mean an individual, corporation, partnership or
other person other than a citizen or resident of the United States, a
corporation, partnership or other entity created or organized in or under the
laws of the United States or any political subdivision thereof, an estate that
is subject to U.S. federal income tax regardless of the source of its income, or
a trust if a court within the United States is able to exercise primary
supervision over the administration of the trust and one or more United States
trustees have authority to control all substantial decisions of the trust.
"Owner" shall mean each beneficial owner of a Trust Security.
"Owner Trust Estate" shall mean the contribution of $1 referred to in
Section 2.5 and the Trust Estate (as defined in the Indenture).
"Owner Trustee" shall mean Wilmington Trust Company, a Delaware banking
corporation, not in its individual capacity but solely as owner trustee under
this Agreement, and any successor owner trustee hereunder.
"Paying Agent" shall mean the Co-Owner Trustee or any successor in
interest thereto or any other paying agent or co-paying agent appointed pursuant
to Section 3.9 and authorized by the Issuer to make payments to and
distributions from the Certificate Distribution Account, including payment of
principal of or interest on the Certificates on behalf of the Issuer.
"Percentage Interest" shall mean with respect to any Certificate, the
portion of the Certificates as a whole evidenced by such single Certificate,
expressed as a percentage rounded to five decimal places, equivalent to a
fraction, the numerator of which is the denomination represented by such single
Certificate and the denominator of which is the Original Class Principal Balance
of the Certificates. With respect to any Residual Instrument, the percentage
portion of all of the Residual Interest evidenced thereby as stated on the face
of such Residual Instrument.
"Prospective Owner" shall have the meaning set forth in Section 3.10(a).
"Rating Agency Condition" shall mean, with respect to any action to
which a Rating Agency Condition applies, that each Rating Agency shall have been
given 10 days (or such
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shorter period as is acceptable to each Rating Agency) prior notice thereof and
that each of the Rating Agencies shall have notified the Depositor, the Company,
the Owner Trustee, and the Co-Owner Trustee in writing that such action will not
result in a reduction or withdrawal of the then current rating of the Notes and
Certificates.
"Record Date" shall mean as to each Distribution Date (other than the
initial Distribution Date) the last Business Day of the month immediately
preceding the month in which such Distribution Date occurs; and with respect to
the initial Distribution Date shall mean July 3, 1997.
"Residual Instrument" shall have the meaning assigned to such term in
the Sale and Servicing Agreement; a form of Residual Instrument is attached
hereto as Exhibit B.
"Residual Interest" shall mean the right to receive distributions of and
with respect to the initial Distribution Date shall mean July 3, 1997. Excess
Spread, if any, and certain other funds, if any, on each Distribution Date,
pursuant to Sections 5.01(c) and 5.03 of the Sale and Servicing Agreement.
"Residual Instrument Holder" shall mean a Person in whose name a
Residual Instrument is registered.
"Sale and Servicing Agreement" shall mean the Sale and Servicing
Agreement dated as of the date hereof, among the Trust as Issuer, the Depositor,
the Indenture Trustee as Indenture Trustee, and Co-Owner Trustee, as Master
Servicer, and the Company, as Seller and Servicer.
"Secretary of State" shall mean the Secretary of State of the State of
Delaware.
"Securityholder" shall mean a holder of any Trust Security.
"Transaction Documents" shall have the meaning set forth in the Sale and
Servicing Agreement.
"Treasury Regulations" shall mean regulations, including proposed or
temporary regulations, promulgated under the Code. References herein to specific
provisions of proposed or temporary regulations shall include analogous
provisions of final Treasury Regulations or other successor Treasury
Regulations.
"Trust" shall mean the trust established by this Agreement.
"Trust Security" shall mean any Certificate or Residual Instrument
issued pursuant to the Trust Agreement.
"Underwriter" shall mean Greenwich Capital Markets, Inc.
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Section 1.2 Other Definitional Provisions.
(a) Capitalized terms used herein and not otherwise defined
herein have the meanings assigned to them in the Sale and Servicing Agreement
or, if not defined therein, in the Indenture.
(b) All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein.
(c) As used in this Agreement and in any certificate or other
document made or delivered pursuant hereto or thereto, accounting terms not
defined in this Agreement or in any such certificate or other document, and
accounting terms partly defined in this Agreement or in any such certificate or
other document to the extent not defined, shall have the respective meanings
given to them under generally accepted accounting principles. To the extent that
the definitions of accounting terms in this Agreement or in any such certificate
or other document are inconsistent with the meanings of such terms under
generally accepted accounting principles, the definitions contained in this
Agreement or in any such certificate or other document shall control.
(d) The words "hereof", "herein", "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement; Section and Exhibit
references contained in this Agreement are references to Sections and Exhibits
in or to this Agreement unless otherwise specified; and the term "including"
shall mean "including without limitation".
(e) The definitions contained in this Agreement are applicable
to the singular as well as the plural forms of such terms and to the masculine
as well as to the feminine and neuter genders of such terms.
(f) Any agreement, instrument or statute defined or referred to
herein or in any instrument or certificate delivered in connection herewith
means such agreement, instrument or statute as from time to time amended,
modified or supplemented and includes (in the case of agreements or instruments)
references to all attachments thereto and instruments incorporated therein;
references to a Person are also to its permitted successors and assigns.
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ARTICLE II
ORGANIZATION
Section 2.1 Name. The Trust created hereby shall be known as "Mego
Mortgage Home Loan Owner Trust 1997-3", in which name the Owner Trustee may
conduct the business of the Trust, make and execute contracts and other
instruments on behalf of the Trust and xxx and be sued.
Section 2.2 Office. The office of the Trust shall be in care of the
Owner Trustee at the Corporate Trust Office or at such other address in Delaware
as the Owner Trustee may designate by written notice to the Owners and the
Company.
Section 2.3 Purposes and Powers. (a) The purpose of the Trust is to
engage in the following activities:
(i) to issue the Notes pursuant to the Indenture and the
Trust Securities pursuant to this Agreement and to sell such Notes and
Trust Securities;
(ii) with the proceeds of the sale of the Notes and the
Trust Securities, to fund start-up and transactional expenses of the
Trust and to pay the balance to the Depositor and the Company, as their
interests may appear pursuant to the Sale and Servicing Agreement;
(iii) to assign, grant, transfer, pledge, mortgage and
convey the Trust Estate pursuant to the Indenture and to hold, manage
and distribute to the Owners pursuant to the terms of the Sale and
Servicing Agreement any portion of the Trust Estate released from the
lien of, and remitted to the Trust pursuant to, the Indenture;
(iv) to enter into and perform its obligations under the
Transaction Documents to which it is to be a party;
(v) to engage in those activities, including entering into
agreements, that are necessary, suitable or convenient to accomplish the
foregoing or are incidental thereto or connected therewith; and
(vi) subject to compliance with the Transaction Documents,
to engage in such other activities as may be required in connection with
conservation of the Owner Trust Estate and the making of distributions
to the Owners and the Noteholders.
The Trust is hereby authorized to engage in the foregoing activities. The Trust
shall not engage in any activity other than in connection with the foregoing or
other than as required or authorized by the terms of this Agreement or the
Transaction Documents.
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Section 2.4 Appointment of Owner Trustee. The Depositor hereby appoints
the Owner Trustee as trustee of the Trust effective as of the date hereof, to
have all the rights, powers and duties set forth herein.
Section 2.5 Initial Capital Contribution of Owner Trust Estate. The
Depositor hereby sells, assigns, transfers, conveys and sets over to the Owner
Trustee, as of the date hereof, the sum of $1. The Owner Trustee hereby
acknowledges receipt in trust from the Depositor, as of the date hereof, of the
foregoing contribution, which shall constitute the initial Owner Trust Estate
and shall be deposited in the Certificate Distribution Account. The Company
shall pay organizational expenses of the Trust as they may arise or shall, upon
the request of the Owner Trustee, promptly reimburse the Owner Trustee for any
such expenses paid by the Owner Trustee.
Section 2.6 Declaration of Trust. The Owner Trustee hereby declares that
it will hold the Owner Trust Estate in trust upon and subject to the conditions
set forth herein for the use and benefit of the Owners, subject to the
obligations of the Trust under the Transaction Documents. It is the intention of
the parties hereto that the Trust constitute a business trust under the Business
Trust Statute and that this Agreement constitute the governing instrument of
such business trust. It is the intention of the parties hereto that, solely for
income and franchise tax purposes, the Trust shall be treated as a partnership,
with the assets of the partnership being the Home Loans and other assets held by
the Trust, the partners of the partnership being the holders of the Trust
Securities and the Notes being non-recourse debt of the partnership. The parties
agree that, unless otherwise required by appropriate tax authorities, the Trust
will file or cause to be filed annual or other necessary returns, reports and
other forms consistent with the characterization of the Trust as a partnership
for such tax purposes. Effective as of the date hereof, the Owner Trustee shall
have all rights, powers and duties set forth herein and in the Business Trust
Statute with respect to accomplishing the purposes of the Trust.
Section 2.7 Title to Trust Property.
(a) Subject to the Indenture, legal title to all the Owner Trust
Estate shall be vested at all times in the Trust as a separate legal entity
except where applicable law in any jurisdiction requires title to any part of
the Owner Trust Estate to be vested in a trustee or trustees, in which case
title shall be deemed to be vested in the Owner Trustee, the Co-Owner Trustee
and/or a separate trustee, as the case may be.
(b) The Owners shall not have legal title to any part of the
Owner Trust Estate. No transfer by operation of law or otherwise of any interest
of the Owners shall operate to terminate this Agreement or the trusts hereunder
or entitle any transferee to an accounting or to the transfer to it of any part
of the Owner Trust Estate.
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Section 2.8 Situs of Trust. The Trust will be located and administered
in the state of Delaware. All bank accounts maintained by the Owner Trustee on
behalf of the Trust shall be located in the State of Delaware or the State of
New York, except with respect to the Co-Owner Trustee. The Trust shall not have
any employees; provided, however, that nothing herein shall restrict or prohibit
the Owner Trustee from having employees within or without the State of Delaware.
Payments will be received by the Trust only in Delaware or New York, and
payments will be made by the Trust only from Delaware or New York, except with
respect to the Co-Owner Trustee. The only office of the Trust will be at the
Corporate Trust Office in Delaware.
Section 2.9 Representations and Warranties of the Depositor and the
Company; Covenant of the Company.
(a) The Depositor hereby represents and warrants to the Owner
Trustee and the Co-Owner Trustee that:
(i) The Depositor is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Delaware
and has all licenses necessary to carry on its business as now being
conducted. The Depositor has the power and authority to execute and
deliver this Agreement and to perform in accordance herewith; the
execution, delivery and performance of this Agreement (including all
instruments of transfer to be delivered pursuant to this Agreement) by
the Depositor and the consummation of the transactions contemplated
hereby have been duly and validly authorized by all necessary action of
the Depositor; this Agreement evidences the valid, binding and
enforceable obligation of the Depositor; and all requisite action has
been taken by the Depositor to make this Agreement valid, binding and
enforceable upon the Depositor in accordance with its terms, subject to
the effect of bankruptcy, insolvency, reorganization, moratorium and
other, similar laws relating to or affecting creditors' rights generally
or the application of equitable principles in any proceeding, whether at
law or in equity.
(ii) The consummation of the transactions contemplated by
this Agreement will not result in (i) the breach of any terms or
provisions of the Articles of Incorporation or Bylaws of the Depositor,
(ii) the breach of any term or provision of, or conflict with or
constitute a default under or result in the acceleration of any
obligation under, any material agreement, indenture or loan or credit
agreement or other material instrument to which the Depositor, or its
property is subject, or (iii) the violation of any law, rule,
regulation, order, judgment or decree to which the Depositor or its
respective property is subject.
(iii) The Depositor is not in default with respect to any
order or decree of any court or any order, regulation or demand of any
federal, state, municipal or other governmental agency, which default
might have consequences that would materially and adversely affect the
condition (financial or otherwise) or operations of
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the Depositor or its properties or might have consequences that would
materially and adversely affect its performance hereunder.
(b) The Company hereby represents and warrants to the Owner
Trustee and the Co-Owner Trustee that:
(i) The Company is duly organized and validly existing as
a corporation in good standing under the laws of the State of Delaware,
with power and authority to own its properties and to conduct its
business as such properties are currently owned and such business is
presently conducted.
(ii) The Company is duly qualified to do business as a
foreign corporation in good standing, and has obtained all necessary
licenses and approvals in all jurisdictions in which the ownership or
lease of property or the conduct of its business shall require such
qualifications.
(iii) The Company has the power and authority to execute
and deliver this Agreement and to carry out its terms; and the
execution, delivery and performance of this Agreement has been duly
authorized by the Company by all necessary corporate action.
(iv) The consummation of the transactions contemplated by
this Agreement and the fulfillment of the terms hereof do not conflict
with, result in any breach of any of the terms and provisions of, or
constitute (with or without notice or lapse of time) a default under,
the articles of incorporation or by-laws of the Company, or any
indenture, agreement or other instrument to which the Company is a party
or by which it is bound; nor result in the creation or imposition of any
lien upon any of its properties pursuant to the terms of any such
indenture, agreement or other instrument (other than pursuant to the
Transaction Documents); nor violate any law or, to the best of the
Company's knowledge, any order, rule or regulation applicable to the
Company of any court or of any Federal or state regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over the Company or its properties.
(v) There are no proceedings or investigations pending or,
to the Company's best knowledge, threatened, before any court,
regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Company or its properties:
(i) asserting the invalidity of this Agreement, (ii) seeking to prevent
the consummation of any of the transactions contemplated by this
Agreement or (iii) seeking any determination or ruling that might
materially and adversely affect the performance by the Company of its
obligations under, or the validity or enforceability of, this Agreement.
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(c) The Company covenants with the Owner Trustee and the
Co-Owner Trustee that during the continuance of this Agreement it will comply in
all respects with the provisions of its Certificate of Incorporation in effect
from time to time.
Section 2.10 Federal Income Tax Allocations. Net income of the Trust for
any month, as determined for Federal income tax purposes (and each item of
income, gain, loss and deduction entering into the computation thereof), shall
be allocated to the holders of the Residual Instruments, on a pro rata basis.
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ARTICLE III
TRUST SECURITIES AND TRANSFER OF INTERESTS
Section 3.1 Initial Ownership. Upon the formation of the Trust by the
contribution by the Depositor pursuant to Section 2.5 and until the issuance of
the Trust Securities, the Depositor shall be the sole Owner of the Trust.
Section 3.2 The Trust Securities. The Certificates shall be issued in
minimum denominations of $100,000 and in integral multiples of $1,000 in excess
thereof. The Residual Instruments shall not be issued with a principal or
notional amount. The Trust Securities shall be executed on behalf of the Trust
by manual or facsimile signature of a Trust Officer of the Owner Trustee or the
Co-Owner Trustee. Trust Securities bearing the manual or facsimile signatures of
individuals who were, at the time when such signatures shall have been affixed,
authorized to sign on behalf of the Trust, shall be valid and binding
obligations of the Trust, notwithstanding that such individuals or any of them
shall have ceased to be so authorized prior to the authentication and delivery
of such Trust Securities or did not hold such offices at the date of
authentication and delivery of such Trust Securities.
A transferee of a Trust Security shall become an Owner, and shall be
entitled to the rights and subject to the obligations of an Owner hereunder and
under the Sale and Servicing Agreement, upon such transferee's acceptance of a
Trust Security duly registered in such transferee's name pursuant to Section
3.4.
Section 3.3 Execution, Authentication and Delivery of Trust Securities.
Concurrently with the sale of the Home Loans to the Trust pursuant to the Sale
and Servicing Agreement, the Owner Trustee or the Co-Owner Trustee shall cause
the Certificates, in an aggregate principal amount equal to the initial Class
Principal Balance of the Certificates, and the Residual Instruments representing
100% of the Percentage Interests of the Residual Interest to be executed on
behalf of the Trust, authenticated and delivered to or upon the written order of
the Depositor, signed by its chairman of the board, its president or any vice
president, without further corporate action by the Depositor, in authorized
denominations. No Trust Security shall entitle its holder to any benefit under
this Agreement, or shall be valid for any purpose, unless there shall appear on
such Trust Security a certificate of authentication substantially in the form
set forth in Exhibit A and B, executed by the Owner Trustee or the
Administrator, as the Owner Trustee's authenticating agent, by manual or
facsimile signature; such authentication shall constitute conclusive evidence
that such Trust Security shall have been duly authenticated and delivered
hereunder. All Trust Securities shall be dated the date of their authentication.
Section 3.4 Registration of Transfer and Exchange of Trust Securities.
The Certificate Registrar shall keep or cause to be kept, at the office or
agency maintained pursuant to Section 3.8, a Certificate Register in which,
subject to such reasonable regulations as it may prescribe, the Owner Trustee
shall provide for the registration of Trust Securities
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and of transfers and exchanges of Trust Securities as herein provided. The
Administrator shall be the initial Certificate Registrar.
Upon surrender for registration of transfer of any Trust Security at the
office or agency maintained pursuant to Section 3.8, the Owner Trustee or
Co-Owner Trustee shall execute, authenticate and deliver (or shall cause the
Administrator as its authenticating agent to authenticate and deliver), in the
name of the designated transferee or transferees, one or more new Trust
Securities in authorized denominations of a like aggregate amount dated the date
of authentication by the Owner Trustee or any authenticating agent. At the
option of an Owner, Trust Securities may be exchanged for other Trust Securities
of authorized denominations of a like aggregate amount upon surrender of the
Trust Securities to be exchanged at the office or agency maintained pursuant to
Section 3.8.
Every Trust Security presented or surrendered for registration of
transfer or exchange shall be accompanied by a written instrument of transfer in
form satisfactory to the Owner Trustee and the Certificate Registrar duly
executed by the Owner or his attorney duly authorized in writing. In addition,
each Trust Security presented or surrendered for registration of transfer and
exchange must be accompanied by a letter from the Prospective Owner certifying
as to the representations set forth in Sections 3.13(a) and (b), as applicable.
Each Trust Security surrendered for registration of transfer or exchange shall
be canceled and disposed of by the Owner Trustee in accordance with its
customary practice.
No service charge shall be made for any registration of transfer or
exchange of Trust Securities, but the Owner Trustee or the Certificate Registrar
may require payment of a sum sufficient to cover any tax or governmental charge
that may be imposed in connection with any transfer or exchange of Trust
Securities.
The preceding provisions of this Section notwithstanding, the Owner
Trustee shall not make and the Certificate Registrar shall not register transfer
or exchanges of Trust Securities for a period of 15 days preceding the due date
for any payment with respect to any of the Trust Securities.
Section 3.5 Mutilated, Destroyed, Lost or Stolen Trust Securities. If
(a) any mutilated Trust Security shall be surrendered to the Certificate
Registrar, or if the Certificate Registrar shall receive evidence to its
satisfaction of the destruction, loss or theft of any Trust Security and (b)
there shall be delivered to the Certificate Registrar and the Owner Trustee such
security or indemnity as may be required by them to save each of them harmless,
then in the absence of notice that such Trust Security shall have been acquired
by a bona fide purchaser, the Owner Trustee on behalf of the Trust shall execute
and the Owner Trustee, or the Administrator as the Owner Trustee's
authenticating agent, shall authenticate and deliver, in exchange for or in lieu
of any such mutilated, destroyed, lost or stolen Trust Security, a new Trust
Security of like tenor and denomination. In connection with the issuance of any
new Trust Security under this Section, the Owner Trustee or the Certificate
Registrar may require the payment of a sum sufficient to cover any tax or other
governmental charge that
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may be imposed in connection therewith. Any duplicate Trust Security issued
pursuant to this Section shall constitute conclusive evidence of ownership or
the related Percentage Interest in the Nos. and Interest, as if originally
issued, whether or not the lost, stolen or destroyed Trust Security shall be
found at any time.
Section 3.6 Persons Deemed Owners. Prior to due presentation of a Trust
Security for registration of transfer, the Owner Trustee or the Certificate
Registrar may treat the Person in whose name any Trust Security shall be
registered in the Certificate Register as the owner of such Trust Security for
the purpose of receiving distributions pursuant to Section 5.2 and for all other
purposes whatsoever, and neither the Owner Trustee nor the Certificate Registrar
shall be bound by any notice to the contrary.
Section 3.7 Access to List of Owners' Names and Addresses. The
Certificate Registrar shall furnish or cause to be furnished to the Master
Servicer, the Servicer, the Depositor and the Indenture Trustee within 15 days
after receipt by the Owner Trustee of a request therefor from the Master
Servicer, the Servicer, the Depositor, or the Indenture Trustee in writing, a
list, in such form as the Master Servicer, the Servicer, the Depositor or the
Indenture Trustee may reasonably require, of the names and addresses of the
Owners as of the most recent Record Date. If three or more Certificateholders
together evidencing not less than a 25% Percentage Interest in the Certificates
apply in writing to the Owner Trustee, and such application states that the
applicants desire to communicate with other Certificateholders with respect to
their rights under this Agreement or under the Certificates and such application
is accompanied by a copy of the communication that such applicants propose to
transmit, then the Owner Trustee shall, within five Business Days after the
receipt of such application, afford such applicants access during normal
business hours to the current list of Certificateholders. Each Owner, by
receiving and holding a Certificate, shall be deemed to have agreed not to hold
any of the Depositor, the Company, the Certificate Registrar or the Owner
Trustee accountable by reason of the disclosure of its name and address,
regardless of the source from which such information was derived.
Section 3.8 Maintenance of Office or Agency. The Owner Trustee shall
maintain an office or offices or agency or agencies where Trust Securities may
be surrendered for registration of transfer or exchange and where notices and
demands to or upon the Owner Trustee in respect of the Trust Securities and the
Transaction Documents may be served. The Owner Trustee initially designates the
Administrator's office in St. Xxxx, Minnesota as its principal corporate trust
office for such purposes. The Owner Trustee shall give prompt written notice to
the Company and to the Securityholders of any change in the location of the
Certificate Register or any such office or agency.
Section 3.9 Appointment of Paying Agent. The Owner Trustee hereby
appoints the Co-Owner Trustee as Paying Agent under this Agreement. The Paying
Agent shall make distributions to Securityholders from the Certificate
Distribution Account pursuant to Section 5.2 hereof and Section 5.01 of the Sale
and Servicing Agreement and shall report the amounts of such distributions to
the Owner Trustee. The Paying Agent shall have the revocable power
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to withdraw funds from the Certificate Distribution Account for the purpose of
making the distributions referred to above. In the event that the Co-Owner
Trustee shall no longer be the Paying Agent hereunder, the Owner Trustee shall
appoint a successor to act as Paying Agent (which shall be a bank or trust
company). The Owner Trustee shall cause such successor Paying Agent or any
additional Paying Agent appointed by the Owner Trustee to execute and deliver to
the Owner Trustee an instrument in which such successor Paying Agent or
additional Paying Agent shall agree with the Owner Trustee that as Paying Agent,
such successor Paying Agent or additional Paying Agent will hold all sums, if
any, held by it for payment to the Owners in trust for the benefit of the
Securityholders entitled thereto until such sums shall be paid to such Owners.
The Paying Agent shall return all unclaimed funds to the Owner Trustee, and upon
removal of a Paying Agent, such Paying Agent shall also return all funds in its
possession to the Owner Trustee. The provisions of Sections 7.1, 7.3, 7.4 and
8.1 shall apply to the Co-Owner Trustee also in its role as Paying Agent, for so
long as the Co-Owner Trustee shall act as Paying Agent and, to the extent
applicable, to any other paying agent appointed hereunder. Any reference in this
Agreement to the Paying Agent shall include any co-paying agent unless the
context requires otherwise. Notwithstanding anything herein to the contrary, the
Co-Owner Trustee and the Paying Agent shall be the same entity as the Indenture
Trustee under the Indenture and the Sale and Servicing Agreement. In such event,
the Co-Owner Trustee and the Paying Agent shall resign and the Owner Trustee
shall assume the duties and obligations of the Co-Owner Trustee and the Paying
Agent hereunder and under the Sale and Servicing Agreement.
Section 3.10 Book-Entry Certificates. The Trust Certificates, upon
original issuance, will be issued in the form of a typewritten Trust Certificate
or Certificates representing Book-Entry Certificates, to be delivered to The
Depository Trust Company, the initial Clearing Agency, by, or on behalf of, the
Trust; provided, however, that one Definitive Trust Certificate (the Residual
Instrument) may be issued to the Company. Such Book-Entry Certificate or
Certificates shall initially be registered on the Certificate Register in the
name of Cede & Co., the nominee of the initial Clearing Agency, and no Owner of
a Book-Entry Certificate will receive a definitive Certificate representing such
Owner's interest in such Certificate, except as provided in this Section 3.10
and in Section 3.12. Unless and until Definitive Certificates, fully registered,
have been issued to Certificate Owners pursuant to Section 3.12:
(i) the provisions of this Section shall be in full force
and effect;
(ii) the Certificate Registrar and the Owner Trustee shall
be entitled to deal with the Clearing Agency for all purposes of this
Agreement (including the payment of principal of and interest on the
Certificates and the giving of instructions or directions hereunder) as
the sole Holder of such Certificates and shall have no obligation to the
related Certificate Owners;
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(iii) to the extent that the provisions of this Section
conflict with any other provisions of this Agreement, the provisions of
this Section shall control;
(iv) the rights of Certificate Owners shall be exercised
only through the Clearing Agency and shall be limited to those
established by law and agreements between such Certificate Owners and
the Clearing Agency and/or the Clearing Agency Participants. Pursuant to
the Certificate Depository Agreement, unless and until Definitive
Certificates are issued pursuant to Section 3.12, the initial Clearing
Agency will make book-entry transfers among the Clearing Agency
Participants and receive and transmit payments of principal of and
interest on the Certificates to such Clearing Agency Participants; and
(v) whenever this Agreement requires or permits actions to
be taken based upon instructions or directions of Holders of
Certificates evidencing a specified percentage of the Class Principal
Balance of the Certificates, the Clearing Agency shall be deemed to
represent such percentage only to the extent that it has received
instructions to such effect from Certificate Owners and/or Clearing
Agency Participants owning or representing, respectively, such required
percentage of the beneficial interest in the Certificates and has
delivered such instructions to the Owner Trustee.
Section 3.11 Notices to Clearing Agency. Whenever a notice or other
communication to the Certificateholders is required under this Agreement, unless
and until Definitive Certificates shall have been issued to Certificate Owners
pursuant to Section 3.12, the Owner Trustee shall give all such notices and
communications specified herein to be given to Certificateholders to the
Clearing Agency, and shall have no obligations to the Certificate Owners.
Section 3.12 Definitive Certificates. If (i) the Administrator advises
the Owner Trustee in writing that the Clearing Agency is no longer willing or
able to properly discharge its responsibilities with respect to the
Certificates, and the Administrator is unable to locate a qualified successor,
(ii) the Administrator at its option advises the Owner Trustee in writing that
it elects to terminate the book-entry system through the Clearing Agency or
(iii) after the occurrence of an Event of Default, Certificate Owners
representing beneficial interests aggregating at least 50% of the Class
Principal Balance of the Certificates advise the Clearing Agency in writing that
the continuation of a book-entry system through the Clearing Agency is no longer
in the best interest of the Certificate Owners, then the Clearing Agency shall
notify all Certificate Owners and the Owner Trustee of the occurrence of any
such event and of the availability of the Definitive Certificates to Certificate
Owners requesting the same. Upon surrender to the Owner Trustee of the
typewritten Certificate or Certificates representing the Book-Entry Certificates
by the Clearing Agency, accompanied by registration instructions, the Owner
Trustee shall execute and authenticate the Definitive Certificates in accordance
with the instructions of the Clearing Agency. Neither the Certificate Registrar
nor the Owner Trustee shall be liable for any delay in delivery of such
instructions and may conclusively rely on, and shall be protected in relying on,
such instructions. Upon the issuance of Definitive
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Certificates, the Owner Trustee shall recognize the Holders of the Definitive
Certificates as Certificateholders. The Definitive Certificates shall be
printed, lithographed or engraved or may be produced in any other manner as is
reasonably acceptable to the Owner Trustee, as evidenced by its execution
thereof.
Section 3.13 Restrictions on Transfer of Trust Securities.
(a) No Trust Security may be acquired, by or for the account of
(i) an employee benefit plan (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) that is
subject to the provisions of Title I of ERISA, (ii) a plan described in
Section 4975(e)(1) of the Internal Revenue Code of 1986, as amended, or
(iii) any entity, including an insurance company separate account or
general account, whose underlying assets include plan assets by reason
of a plan's investment in the entity (each, a "Benefit Plan"). By
accepting and holding a Trust Security, the Owner thereof shall be
deemed to have represented and warranted that it is not a Benefit Plan.
(b) Each prospective purchaser and any subsequent transferee of a
Residual Instrument (each, a "Prospective Owner"), other than the
Company or a wholly-owned subsidiary of the Company, shall represent and
warrant, in writing, to the Owner Trustee and the Certificate Registrar
and any of their respective successors that:
(i) Such Person is (A) a "qualified institutional buyer"
as defined in Rule 144A under the Securities Act of 1933, as
amended (the "Securities Act"), and is aware that the seller of
such Residual Instrument may be relying on the exemption from
the registration requirements of the Securities Act provided by
Rule 144A and is acquiring such Residual Instrument for its own
account or for the account of one or more qualified
institutional buyers for whom it is authorized to act, or (B) a
Person involved in the organization or operation of the Trust or
an affiliate of such Person within the meaning of Rule 3a-7 of
the Investment Company Act of 1940, as amended (including, but
not limited to, the Seller or the Company).
(ii) Such Person understands that such Residual Instrument
has not been and will not be registered under the Securities Act
and may be offered, sold, pledged or otherwise transferred only
to a person whom the seller reasonably believes is (A) a
qualified institutional buyer or (B) a Person involved in the
organization or operation of the Trust or an affiliate of such
Person, in a transaction meeting the requirements of Rule 144A
under the Securities Act and in accordance with any applicable
securities laws of any state of the United States.
(iii) Such Person understands that each Residual
Instrument bears a legend to the following effect:
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THIS RESIDUAL INSTRUMENT HAS NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), OR ANY STATE SECURITIES LAWS. THIS RESIDUAL
INSTRUMENT MAY BE DIRECTLY OR INDIRECTLY OFFERED OR SOLD
OR OTHERWISE DISPOSED OF (INCLUDING PLEDGED) BY THE
HOLDER HEREOF ONLY TO (I) A "QUALIFIED INSTITUTIONAL
BUYER" AS DEFINED IN RULE 144A UNDER THE ACT, IN A
TRANSACTION THAT IS REGISTERED UNDER THE ACT AND
APPLICABLE STATE SECURITIES LAWS OR THAT IS EXEMPT FROM
THE REGISTRATION REQUIREMENTS OF THE ACT PURSUANT TO
RULE 144A OR [(II) A PERSON INVOLVED IN THE ORGANIZATION
OR OPERATION OF THE TRUST OR AN AFFILIATE OF SUCH A
PERSON WITHIN THE MEANING OF RULE 3a-7 OF THE INVESTMENT
COMPANY ACT OF 1940], AS AMENDED (INCLUDING, BUT NOT
LIMITED TO, MEGO MORTGAGE CORPORATION) IN A TRANSACTION
THAT IS REGISTERED UNDER THE ACT AND APPLICABLE STATE
SECURITIES LAWS OR THAT IS EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF THE ACT AND SUCH LAWS. NO PERSON IS
OBLIGATED TO REGISTER THIS RESIDUAL INSTRUMENT UNDER THE
ACT OR ANY STATE SECURITIES LAWS."
(iv) Such Person shall comply with the provisions of
Section 3.13(b), as applicable, relating to the ERISA
restrictions with respect to the acceptance or acquisition of
such Residual Instrument.
(c) Each Prospective Owner, other than the Company, shall
either:
(i) represent and warrant, in writing, to the Owner
Trustee and the Certificate Registrar and any of their
respective successors that the Prospective Owner is not (A) an
"employee benefit plan" within the meaning of Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or (B) a "plan" within the meaning of Section
4975(e)(1) of the Code (any such plan or employee benefit plan,
a "Plan") or (C) any entity, including an insurance company
separate account or general account, whose underlying assets
include plan assets by reason of a plan's investment in the
entity and is not directly or indirectly purchasing such Trust
Security on behalf of, as investment manager of, as named
fiduciary of, as trustee of, or with assets of a Plan; or
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(ii) furnish to the Owner Trustee and the Certificate
Registrar and any of their respective successors an opinion of
counsel acceptable to such persons that (A) the proposed
issuance or transfer of such Trust Security to such Prospective
Owner will not cause any assets of the Trust to be deemed assets
of a Plan, or (B) the proposed issuance or transfer of such
Trust Security will not cause the Owner Trustee or the
Certificate Registrar or any of their respective successors to
be a fiduciary of a Plan within the meaning of Section 3(21) of
ERISA and will not give rise to a transaction described in
Section 406 of ERISA or Section 4975(c)(1) of the Code for which
a statutory or administrative exemption is unavailable.
(d) By its acceptance of a Residual Instrument, each Prospective
Owner agrees and acknowledges that no legal or beneficial
interest in all or any portion of the Residual Instruments may
be transferred directly or indirectly to an individual,
corporation, partnership or other person unless such transferee
is not a Non-U.S. Person (any such person being referred to
herein as a "Non-permitted Foreign Holder"), and any such
purported transfer shall be void and have no effect.
(e) Neither The Owner Trustee nor the Administrator shall
execute, or countersign and deliver, any Residual Instrument in
connection with any transfer thereof unless the transferor shall
have provided to the Owner Trustee or the Administrator a
certificate, substantially in the form attached as Exhibit E to
this Agreement, signed by the transferee or a Non-permitted
Foreign Holder, which certificate shall contain the consent of
the transferee to any amendments of this Agreement as may be
required to effectuate further the foregoing restrictions on
transfer of any Residual Instrument to Non-permitted Foreign
Holders, and an agreement by the transferee that it will not
transfer any Residual Instrument without providing to the
Certificate Registrar on behalf of the Owner Trustee a
certificate substantially in the form attached as Exhibit E to
this Agreement.
(f) Each Residual Instrument shall bear an additional legend
referring to the foregoing restrictions contained in paragraphs
(c) and (d) above.
(g) The Prospective Owner of a Residual Instrument shall obtain
an opinion of counsel to the effect that, as a matter of Federal
income tax law, such Prospective Owner is permitted to accept
the transfer of a Residual Instrument.
(h) No Residual Instrument may be transferred without an Opinion
of Counsel to the effect that such transfer would not jeopardize
the tax treatment of the Trust, would not subject the Trust to
an entity-level tax, and would not jeopardize the status of the
Notes as debt for all purposes.
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(i) The Residual Instruments shall not be listed for trading on
an established securities market, nor be readily tradeable on a
secondary market, nor be transferable through the substantial
equivalent of a secondary market, nor shall the Issuer be
permitted to have more than one hundred 100 partners, for income
tax purposes, all within the meaning of Code Section 7704, and
its attendant regulations, as applicable. If requested, in the
discretion of the Owner Trustee, transfer of a Residual
Instrument shall be made only if accompanied by an opinion of
counsel satisfactory to the Owner Trustee or the Co-Owner
Trustee, which opinion of counsel shall not be an expense of the
Issuer, the Owner Trustee, the Servicer or the Seller, to the
effect such transfer will not cause the Issuer to be a publicly
traded partnership taxable as a corporation and will not cause
the termination of the Issuer under the federal income tax rules
applicable to partnerships.
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ARTICLE IV
ACTIONS BY OWNER TRUSTEE
Section 4.1 Prior Notice to Certificateholders with Respect to Certain
Matters. With respect to the following matters, the Owner Trustee shall not take
action, and the Certificateholders shall not direct the Owner Trustee to take
any action, unless at least 30 days before the taking of such action, the Owner
Trustee shall have notified the Certificateholders in writing of the proposed
action and the Certificateholders shall not have notified the Owner Trustee in
writing prior to the 30th day after such notice is given that such
Certificateholders have withheld consent or the Certificateholders have provided
alternative direction:
(a) the initiation of any claim or lawsuit by the Trust (except
claims or lawsuits brought in connection with the collection of the Home Loans)
and the compromise of any action, claim or lawsuit brought by or against the
Trust (except with respect to the aforementioned claims or lawsuits for
collection of the Home Loans);
(b) the election by the Trust to file an amendment to the
Certificate of Trust (unless such amendment is required to be filed under the
Business Trust Statute);
(c) the amendment or other change to this Agreement or any
Transaction Document in circumstances where the consent of any Noteholder is
required;
(d) the amendment or other change to this Agreement or any
Transaction Document in circumstances where the consent of any Noteholder is not
required and such amendment materially adversely affects the interest of the
Certificateholders;
(e) the appointment pursuant to the Indenture of a successor Note
Registrar, Paying Agent or Indenture Trustee or pursuant to this Agreement of a
successor Certificate Registrar, or the consent to the assignment by the Note
Registrar, Paying Agent or Indenture Trustee or Certificate Registrar of its
obligations under the Indenture or this Agreement, as applicable;
(f) the consent to the calling or waiver of any default of any
Transaction Document;
(g) the consent to the assignment by the Indenture Trustee, the
Master Servicer or Servicer of their respective obligations under any
Transaction Document;
(h) except as provided in Article IX hereof, dissolve, terminate
or liquidate the Trust in whole or in part;
(i) merge or consolidate the Trust with or into any other entity,
or convey or transfer all or substantially all of the Trust's assets to any
other entity;
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(j) cause the Trust to incur, assume or guaranty any indebtedness
other than the Notes, as set forth in this Agreement;
(k) do any act that conflicts with any other Transaction
Document;
(l) do any act which would make it impossible to carry on the
ordinary business of the Trust;
(m) confess a judgment against the Trust;
(n) possess Trust assets, or assign the Trust's right to
property, for other than a Trust purpose;
(o) cause the Trust to lend any funds to any entity; or
(p) change the Trust's purpose and powers from those set forth in
this Trust Agreement.
In addition the Trust shall not commingle its assets with those of any
other entity. The Trust shall maintain its financial and accounting books and
records separate from those of any other entity. Except as expressly set forth
herein, the Trust shall pay its indebtedness, operating expenses from its own
funds, and the Trust shall not pay the indebtedness, operating expenses and
liabilities of any other entity. The Trust shall maintain appropriate minutes or
other records of all appropriate actions and shall maintain its office separate
from the offices of the Company, the Depositor, and any of their respective
affiliates. This Agreement is and shall be the only agreement among the parties
hereto with respect to the creation, operation and termination of the Trust. For
accounting purposes, the Trust shall be treated as an entity separate and
distinct from any Certificateholder. The pricing and other material terms of all
transactions and agreements to which the Trust is a party shall be intrinsically
fair to all parties thereto.
The Owner Trustee shall not have the power, except upon the direction of
the Certificateholders, and to the extent otherwise consistent with the
Transaction Documents, to (i) remove or replace the Master Servicer, the
Servicer or the Indenture Trustee, (ii) institute proceedings to have the Trust
declared or adjudicated a bankrupt or insolvent, (iii) consent to the
institution of bankruptcy or insolvency proceedings against the Trust, (iv) file
a petition or consent to a petition seeking reorganization or relief on behalf
of the Trust under any applicable federal or state law relating to bankruptcy,
(v) consent to the appointment of a receiver, liquidator, assignee, trustee,
sequestrator (or any similar official) of the Trust or a substantial portion of
the property of the Trust, (vi) make any assignment for the benefit of the
Trust's creditors, (vii) cause the Trust to admit in writing its inability to
pay its debts generally as they become due, or (viii) take any action, or cause
the Trust to take any action, in furtherance of any of the foregoing (any of the
above, a "Bankruptcy Action"). So long as the Indenture remains in effect, no
Certificateholder shall have the power to take, and shall
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27
not take, any Bankruptcy Action with respect to the Trust or the Company or
direct the Owner Trustee to take any Bankruptcy Action with respect to the Trust
or the Company.
Section 4.2 Action by Certificateholders with Respect to Certain
Matters. The Owner Trustee shall not have the power, except upon the direction
of the Certificateholders, to (a) remove the Administrator pursuant to the
Administration Agreement, (b) appoint a successor Administrator pursuant to the
Administration Agreement, (c) remove the Master Servicer pursuant to the Sale
and Servicing Agreement, (d) remove the Servicer pursuant to the Servicing
Agreement, or (e) sell the Home Loans after the termination of the Indenture.
The Owner Trustee shall take the actions referred to in the preceding sentence
only upon written instructions signed by the Certificateholders.
Section 4.3 Action by Certificateholders with Respect to Bankruptcy. The
Owner Trustee shall not have the power to commence a voluntary proceeding in
bankruptcy relating to the Trust without the unanimous prior approval of all
Certificateholders and the delivery to the Owner Trustee by each such
Certificateholder of a certificate certifying that such Certificateholder
reasonably believes that the Trust is insolvent.
Section 4.4 Restrictions on Owners' Power. The Owners shall not direct
the Owner Trustee to take or refrain from taking any action if such action or
inaction would be contrary to any obligation of the Trust or the Owner Trustee
under this Agreement or any of the Transaction Documents or would be contrary to
Section 2.3 nor shall the Owner Trustee be obligated to follow any such
direction, if given.
Section 4.5 Majority Control. Except as expressly provided herein, any
action that may be taken by the Certificateholders under this Agreement may be
taken by the Holders of Certificates evidencing more than a 50% of the Class
Principal Balance of the Certificates. Except as expressly provided herein, any
written notice of the Owners delivered pursuant to this Agreement shall be
effective if signed by Holders of Certificates evidencing more than 50% of the
Class Principal Balance of the Certificates at the time of the delivery of such
notice.
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ARTICLE V
APPLICATION OF TRUST FUNDS; CERTAIN DUTIES
Section 5.1 Establishment of Trust Account. The Owner Trustee shall
cause the Indenture Trustee, to establish and maintain with First Bank National
Association for the benefit of the Owner Trustee or Co-Owner Trustee one or more
Eligible Accounts which while the Co-Owner Trustee holds such Trust Account
shall be entitled "CERTIFICATE DISTRIBUTION ACCOUNT, FIRST BANK NATIONAL
ASSOCIATION, AS INDENTURE TRUSTEE AND CO-OWNER TRUSTEE, IN TRUST FOR THE MEGO
MORTGAGE HOME LOAN ASSET BACKED CERTIFICATES, SERIES 1997-3". Funds shall be
deposited in the Certificate Distribution Account as required by the Sale and
Servicing Agreement.
All of the right, title and interest of the Co-Owner Trustee or Owner
Trustee in all funds on deposit from time to time in the Certificate
Distribution Account and in all proceeds thereof shall be held for the benefit
of the Owners and such other persons entitled to distributions therefrom. Except
as otherwise expressly provided herein or in the Sale and Servicing Agreement,
the Certificate Distribution Account shall be under the sole dominion and
control of the Owner Trustee or Co-Owner Trustee for the benefit of the Owners
and the Servicer.
In addition to the foregoing, the Certificate Distribution Account is a
Trust Account under the Sale and Servicing Agreement and constitutes part of the
Trust Estate pledged by the Trust to the Indenture Trustee under the Indenture.
The Certificate Distribution Account shall be subject to and established and
maintained in accordance with the applicable provisions of the Sale and
Servicing Agreement and the Indenture, including, without limitation, the
provisions of Sections 5.01(c) and 5.03 of the Sale and Servicing Agreement
regarding distributions from the Certificate Distribution Account.
The Company agrees to direct and shall have the sole authority to direct
the Owner Trustee or Co-Owner Trustee, or their successor in interest, as to the
Permitted Investments in which the funds on deposit in the Trust Accounts (as
such term is defined in the Sale and Servicing Agreement) may be invested.
Section 5.2 Application Of Trust Funds.
(a) On each Distribution Date, the Owner Trustee or Co-Owner
Trustee shall direct the Paying Agent to make the distributions and payments set
forth in Sections 5.01(c) and 5.03 of the Sale and Servicing Agreement from
amounts on deposit in the Note Distribution Account and the Certificate
Distribution Account, respectively.
(b) On or before the third Business Day following each
Distribution Date, the Owner Trustee shall cause the Paying Agent to send to DTC
and each Residual Instrument
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Holder the statement provided to the Owner Trustee by the Servicer pursuant to
Section 6.02 of the Sale and Servicing Agreement with respect to such
Distribution Date.
(c) In the event that any withholding tax is imposed on the
Trust's payment (or allocations of income) to an Owner, such tax shall reduce
the amount otherwise distributable to the Owner in accordance with this Section.
The Owner Trustee is hereby authorized and directed to retain from amounts
otherwise distributable to the Owners sufficient funds for the payment of any
tax that is legally owed by the Trust (but such authorization shall not prevent
the Owner Trustee from contesting any such tax in appropriate proceedings, and
withholding payment of such tax, if permitted by law, pending the outcome of
such proceedings). The amount of any withholding tax imposed with respect to an
Owner shall be treated as cash distributed to such Owner at the time it is
withheld by the Trust and remitted to the appropriate taxing authority. If there
is a possibility that withholding tax is payable with respect to a distribution
(such as a distribution to a non-U.S. Owner), the Owner Trustee may in its sole
discretion withhold such amounts in accordance with this paragraph (c). In the
event that an Owner wishes to apply for a refund of any such withholding tax,
the Owner Trustee shall reasonably cooperate with such owner in making such
claim so long as such Owner agrees to reimburse the Owner Trustee for any
out-of-pocket expenses incurred.
Section 5.3 Method of Payment. Distributions required to be made to
Owners on any Distribution Date shall be made to each Owner of record on the
preceding Record Date in the manner set forth in Section 5.03 of the Sale and
Servicing Agreement.
Section 5.4 Segregation of Moneys; No Interest. Subject to Sections 4.1
and 5.2, moneys received by the Owner Trustee hereunder and deposited into the
Certificate Distribution Account will be segregated except to the extent
required otherwise by law or the Sale and Servicing Agreement and shall be
invested in Permitted Investments at the direction of the Company. The Owner
Trustee shall not be liable for payment of any interest in respect of such
moneys.
Section 5.5 Accounting and Reports to the Residual Instrument Holders,
Certificateholders, Owners, the Internal Revenue Service and Others. The Owner
Trustee shall (a) maintain (or cause to be maintained) the books of the Trust on
a calendar year basis on the accrual method of accounting, and such books shall
be maintained separate from those of any other entity and reflect the separate
interest of the Trust, (b) deliver to each Owner, as may be required by the Code
and applicable Treasury Regulations, such information as may be required to
enable each Owner to prepare its federal and state income tax returns, (c) file
such tax return relating to the Trust (including a partnership information
return, IRS Form 1065), and make such elections as may from time to time be
required or appropriate under any applicable state or Federal statute or rule or
regulation thereunder so as to maintain the Trust's characterization as a
partnership for Federal income tax purposes, (d) cause such tax returns to be
signed in the manner required by law and (e) collect or cause to be collected
any withholding tax as described in and in accordance with Section 5.2(c) with
respect to income or distributions to Owners. The Owner Trustee shall elect
under Section 1278 of the Code to
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include in income currently any market discount that accrues with respect to the
Home Loans. The Owner Trustee shall not make the election provided under Section
754 of the Code.
Section 5.6 Signature on Returns.
The Owner Trustee shall sign on behalf of the Trust the tax
returns of the Trust, unless applicable law requires an Owner to sign such
documents, in which case such documents shall be signed by the Company.
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ARTICLE VI
AUTHORITY AND DUTIES OF OWNER TRUSTEE
Section 6.1 General Authority. The Owner Trustee is authorized and
directed to execute and deliver or cause to be executed and delivered the Notes,
the Trust Securities and the Transaction Documents to which the Trust is to be a
party and each certificate or other document attached as an exhibit to or
contemplated by the Transaction Documents to which the Trust is to be a party
and any amendment or other agreement or instrument described in Article III, in
each case, in such form as the Company shall approve, as evidenced conclusively
by the Owner Trustee's execution thereof, and, on behalf of the Trust, to direct
the Indenture Trustee to authenticate and deliver Classes of Notes in the
following aggregate principal amounts: Class A-1 Notes, $33,400,000; Class A-2
Notes, $25,700,000; Class A-3 Notes, $6,500,000; Class A-4 Notes, $9,451,000;
Class M-1 Notes $16,213,000; and Class M- 2 Notes, $7,584,000; The Administrator
on behalf of the Owner Trustee shall authenticate and deliver the Certificates.
In addition to the foregoing, the Owner Trustee is authorized, but shall not be
obligated, to take all actions required of the Trust, pursuant to the
Transaction Documents.
Section 6.2 General Duties. It shall be the duty of the Owner Trustee:
(a) to discharge (or cause to be discharged) all of its
responsibilities pursuant to the terms of this Agreement and the Transaction
Documents to which the Trust is a party and to administer the Trust in the
interest of the Owners, subject to the Transaction Documents and in accordance
with the provisions of this Agreement. Notwithstanding the foregoing, the Owner
Trustee shall be deemed to have discharged its duties and responsibilities
hereunder and under the Transaction Documents to the extent the Administrator or
the Co-Owner Trustee has agreed in the Administration Agreement or this
Agreement, respectively, to perform any act or to discharge any duty of the
Owner Trustee or the Trust hereunder or under any Transaction Document, and the
Owner Trustee shall not be held liable for the default or failure of the
Administrator or the Co-Owner Trustee to carry out its obligations under the
Administration Agreement or this Agreement, respectively; and
(b) to obtain and preserve, the Issuer's qualification to do
business in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of the Indenture, the
Notes, the Trust Estate and each other instrument and agreement included in the
Trust Estate.
Section 6.3 Action upon Instruction.
(a) Subject to Article IV and in accordance with the terms of the
Transaction Documents, the Owners may by written instruction direct the Owner
Trustee in the management of the Trust but only to the extent consistent with
the limited purpose of the
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Trust. Such direction may be exercised at any-time by written instruction of the
Owners pursuant to Article IV.
(b) The Owner Trustee shall not be required to take any action
hereunder or under any Transaction Document if the Owner Trustee shall have
reasonably determined, or shall have been advised by counsel, that such action
is likely to result in liability on the part of the Owner Trustee or is contrary
to the terms hereof or of any Transaction Document or is otherwise contrary to
law.
(c) Whenever the Owner Trustee is unable to decide between
alternative courses of action permitted or required by the terms of this
Agreement or under any Transaction Document, the Owner Trustee shall promptly
give notice (in such form as shall be appropriate under the circumstances) to
the Owners requesting instruction from the Owners as to the course of action to
be adopted, and to the extent the Owner Trustee acts in good faith in accordance
with any written instruction of the Owners received, the Owner Trustee shall not
be liable on account of such action to any Person. If the Owner Trustee shall
not have received appropriate instruction within 10 days of such notice (or
within such shorter period of time as reasonably may be specified in such notice
or may be necessary under the circumstances) it may, but shall be under no duty
to, take or refrain from taking such action, not inconsistent with this
Agreement or the Transaction Documents, as it shall deem to be in the best
interests of the Owners, and shall have no liability to any Person for such
action or inaction.
(d) In the event that the Owner Trustee is unsure as to the
application of any provision of this Agreement or any Transaction Document or
any such provision is ambiguous as to its application, or is, or appears to be,
in conflict with any other applicable provision, or in the event that this
Agreement permits any determination by the Owner Trustee or is silent or is
incomplete as to the course of action that the Owner Trustee is required to take
with respect to a particular set of facts, the Owner Trustee may give notice (in
such form as shall be appropriate under the circumstances) to the Owners
requesting instruction and, to the extent that the Owner Trustee acts or
refrains from acting in good faith in accordance with any such instruction
received, the Owner Trustee shall not be liable, on account of such action or
inaction, to any Person. If the Owner Trustee shall not have received
appropriate instruction within 10 days of such notice (or within such shorter
period of time as reasonably may be specified in such notice or may be necessary
under the circumstances) it may, but shall be under no duty to, take or refrain
from taking such action, not inconsistent with this Agreement or the Transaction
Documents, as it shall deem to be in the best interests of the Owners, and shall
have no liability to any Person for such action or inaction.
Section 6.4 No Duties Except as Specified in this Agreement, the
Transaction Documents or in Instructions. The Owner Trustee shall not have any
duty or obligation to manage, make any payment with respect to, register,
record, sell, dispose of, or otherwise deal with the Owner Trust Estate, or to
otherwise take or refrain from taking any action under, or
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in connection with, any document contemplated hereby to which the Owner Trustee
is a party, except as expressly provided by the terms of this Agreement, any
Transaction Document or in any document or written instruction received by the
Owner Trustee pursuant to Section 6.3; and no implied duties or obligations
shall be read into this Agreement or any Transaction Document against the Owner
Trustee. The Owner Trustee shall have no responsibility for filing any financing
or continuation statement in any public office at any time or to otherwise
perfect or maintain the perfection of any security interest or lien granted to
it hereunder or to prepare or file any Securities and Exchange Commission filing
for the Trust or to record this Agreement or any Transaction Document. The Owner
Trustee nevertheless agrees that it will, at its own cost and expense, promptly
take all action as may be necessary to discharge any liens on any part of the
Owner Trust Estate that result from actions by, or claims against, the Owner
Trustee that are not related to the ownership or the administration of the Owner
Trust Estate.
Section 6.5 No Action Except Under Specified Documents or Instructions.
The Owner Trustee shall not manage, control, use, sell, dispose of or otherwise
deal with any part of the Owner Trust Estate except (i) in accordance with the
powers granted to and the authority conferred upon the Owner Trustee pursuant to
this Agreement, (ii) in accordance with the Transaction Documents and (iii) in
accordance with any document or instruction delivered to the Owner Trustee
pursuant to Section 6.3.
Section 6.6 Restrictions. The Owner Trustee shall not take any action
(a) that is inconsistent with the purposes of the Trust set forth in Section 2.3
or (b) that, to the actual knowledge of the Owner Trustee, would result in the
Trust's becoming taxable as a corporation for Federal income tax purposes. The
Owners shall not direct the Owner Trustee to take action that would violate the
provisions of this Section.
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ARTICLE VII
CONCERNING THE OWNER TRUSTEE
Section 7.1 Acceptance of Trusts and Duties. The Owner Trustee accepts
the trusts hereby created and agrees to perform its duties hereunder with
respect to such trusts but only upon the terms of this Agreement and the
Transaction Documents. The Owner Trustee also agrees to disburse all moneys
actually received by it constituting part of the Owner Trust Estate upon the
terms of the Transaction Documents and this Agreement. The Owner Trustee shall
not be answerable or accountable hereunder or under any Transaction Document
under any circumstances, except (i) for its own willful misconduct or gross
negligence or (ii) in the case of the inaccuracy of any representation or
warranty contained in Section 7.3 expressly made by the Owner Trustee. In
particular, but not by way of limitation (and subject to the exceptions set
forth in the preceding sentence):
(a) the Owner Trustee shall not be liable for any error of
judgment made by a responsible officer of the Owner Trustee;
(b) the Owner Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in accordance with the instructions of
the Administrator or the Owners;
(c) no provision of this Agreement or any Transaction Document
shall require the Owner Trustee to expend or risk funds or otherwise incur any
financial liability in the performance of any of its rights or powers hereunder
or under any Transaction Document if the Owner Trustee shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured or provided to it;
(d) under no circumstances shall the Owner Trustee be liable for
indebtedness evidenced by or arising under any of the Transaction Documents,
including the principal of and interest on the Notes;
(e) the Owner Trustee shall not be responsible for or in respect
of the validity or sufficiency of this Agreement or for the due execution hereof
by the Depositor or the Company or for the form, character, genuineness,
sufficiency, value or validity of any of the Owner Trust Estate or for or in
respect of the validity or sufficiency of the Transaction Documents, other than
the certificate of authentication on the Trust Securities, and the Owner Trustee
shall in no event assume or incur any liability, duty, or obligation to any
Noteholder or to any Owner, other than as expressly provided for herein and in
the Transaction Documents;
(f) the Owner Trustee shall not be liable for the default or
misconduct of the Administrator, the Seller, the Company, the Indenture Trustee,
the Master Servicer or the Servicer under any of the Transaction Documents or
otherwise and the Owner Trustee shall
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have no obligation or liability to perform the obligations of the Trust under
this Agreement or the Transaction Documents that are required to be performed by
the Administrator under the Administration Agreement, the Indenture Trustee
under the Indenture, the Master Servicer under the Sale and Servicing Agreement,
or the Servicer under the Servicing Agreement; and
(g) the Owner Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Agreement, or to institute,
conduct or defend any litigation under this Agreement or otherwise or in
relation to this Agreement or any Transaction Document, at the request, order or
direction of any of the Owners, unless such Owners have offered to the Owner
Trustee security or indemnity satisfactory to it against the costs, expenses and
liabilities that may be incurred by the Owner Trustee therein or thereby. The
right of the Owner Trustee to perform any discretionary act enumerated in this
Agreement or in any Transaction Document shall not be construed as a duty, and
the Owner Trustee shall not be answerable for other than its gross negligence or
willful misconduct in the performance of any such act provided, that the Owner
Trustee shall be liable for its negligence or willful misconduct in the event
that it assumes the duties and obligations of the Co-Owner Trustee under the
Sale and Servicing Agreement pursuant to Section 10.5 hereof.
Section 7.2 Furnishing of Documents. The Owner Trustee shall furnish (a)
to the Owners promptly upon receipt of a written request therefor, duplicates or
copies of all reports, notices, requests, demands, certificates, financial
statements and any other instruments furnished to the Owner Trustee under the
Transaction Documents and (b) to Noteholders promptly upon written request
therefor, copies of the Sale and Servicing Agreement, the Administration
Agreement and the Trust Agreement.
Section 7.3 Representations and Warranties.
(a) The Owner Trustee hereby represents and warrants to the
Depositor and the Company, for the benefit of the Owners, that:
(i) It is a banking corporation duly organized and validly
existing in good standing under the laws of the State of Delaware. It
has all requisite corporate power and authority to execute, deliver and
perform its obligations under this Agreement.
(ii) It has taken all corporate action necessary to
authorize the execution and delivery by it of this Agreement, and this
Agreement will be executed and delivered by one of its officers who is
duly authorized to execute and deliver this Agreement on its behalf.
(iii) Neither the execution nor the delivery by it of this
Agreement nor the consummation by it of the transactions contemplated
hereby nor compliance by it with any of the terms or provisions hereof
will contravene any Federal or Delaware law, governmental rule or
regulation governing the banking or trust powers of the
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Owner Trustee or any judgment or order binding on it, or constitute any
default under its charter documents or by-laws or any indenture,
mortgage, contract, agreement or instrument to which it is a party or by
which any of its properties may be bound.
(b) The Co-Owner Trustee hereby represents and warrants to the
Depositor and the Company that:
(i) It is a national banking association duly organized
and validly existing in good standing under the laws of the United
States. It has all requisite corporate power and authority to execute,
deliver and perform its obligations under this Agreement.
(ii) It has taken all corporate action necessary to
authorize the execution and delivery by it of this Agreement, and this
Agreement will be executed and delivered by one of its officers who is
duly authorized to execute and deliver this Agreement on its behalf.
(iii) Neither the execution nor the delivery by it of this
Agreement nor the consummation by it of the transactions contemplated
hereby nor compliance by it with any of the terms or provisions hereof
will contravene any Federal or Minnesota law, governmental rule or
regulation governing the banking or trust powers of the Co-Owner Trustee
or any judgment or order binding on it, or constitute any default under
its charter documents or by-laws or any indenture, mortgage, contract,
agreement or instrument to which it is a party or by which any of its
properties may be bound.
Section 7.4 Reliance; Advice of Counsel.
(a) The Owner Trustee shall incur no liability to anyone in
acting upon any signature, instrument, notice, resolution, request, consent,
order, certificate, report, opinion, bond, or other document or paper believed
by it to be genuine and believed by it to be signed by the proper party or
parties. The Owner Trustee may accept a certified copy of a resolution of the
board of directors or other governing body of any corporate party as conclusive
evidence that such resolution has been duly adopted by such body and that the
same is in full force and effect. As to any fact or matter the method of the
determination of which is not specifically prescribed herein, the Owner Trustee
may for all purposes hereof rely on a certificate, signed by the president or
any vice president or by the treasurer or other authorized officers of the
relevant party, as to such fact or matter and such certificate shall constitute
full protection to the Owner Trustee for any action taken or omitted to be taken
by it in good faith in reliance thereon.
(b) In the exercise or administration of the trusts hereunder and
in the performance of its duties and obligations under this Agreement or the
Transaction Documents, the Owner Trustee (i) may act directly or through its
agents or attorneys pursuant to agreements entered into with any of them, and
the Owner Trustee shall not be liable for the
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conduct or misconduct of such agents or attorneys if such agents or attorneys
shall have been selected by the Owner Trustee with reasonable care, and (ii) may
consult with counsel, accountants and other skilled persons to be selected with
reasonable care and employed by it. The Owner Trustee shall not be liable for
anything done, suffered or omitted in good faith by it in accordance with the
written opinion or advice of any such counsel, accountants or other such persons
and not contrary to this Agreement or any Transaction Document.
Section 7.5 Not Acting in Individual Capacity. Except as provided in
this Article VII, in accepting the trusts hereby created Wilmington Trust
Company acts solely as Owner Trustee hereunder and not in its individual
capacity and all Persons having any claim against the Owner Trustee by reason of
the transactions contemplated by this Agreement or any Transaction Document
shall look only to the Owner Trust Estate for payment or satisfaction thereof.
Section 7.6 Owner Trustee Not Liable for Trust Securities or Home Loans.
The recitals contained herein and in the Trust Securities (other than the
signature and countersignature of the Owner Trustee on the Trust Securities)
shall be taken as the statements of the Depositor and the Company, and the Owner
Trustee assumes no responsibility for the correctness thereof. The Owner Trustee
makes no representations as to the validity or sufficiency of this Agreement, of
any Transaction Document or of the Trust Securities (other than the signature
and countersignature of the Owner Trustee on the Trust Securities and as
specified in Section 7.3) or the Notes, or of any Home Loans or related
documents. The Owner Trustee shall at no time have any responsibility or
liability for or with respect to the legality, validity and enforceability of
any Home Loan, or the perfection and priority of any security interest created
by any Home Loan or the maintenance of any such perfection and priority, or for
or with respect to the sufficiency of the Owner Trust Estate or its ability to
generate the payments to be distributed to Owners under this Agreement or the
Noteholders under the Indenture, including, without limitation: the existence,
condition and ownership of any Property; the existence and enforceability of any
insurance thereon; the existence and contents of any Home Loan on any computer
or other record thereof; the validity of the assignment of any Home Loan to the
Trust or of any intervening assignment; the completeness of any Home Loan; the
performance or enforcement of any Home Loan; the compliance by the Depositor,
the Company, the Master Servicer or the Servicer with any warranty or
representation made under any Transaction Document or in any related document or
the accuracy of any such warranty or representation or any action of the
Administrator, the Indenture Trustee, the Master Servicer or the Servicer or any
subservicer taken in the name of the Owner Trustee.
Section 7.7 Owner Trustee May Own Trust Securities and Notes. The Owner
Trustee in its individual or any other capacity may become the owner or pledgee
of Trust Securities or Notes and may deal with the Depositor, the Company, the
Administrator, the Indenture Trustee and the Servicer in banking transactions
with the same rights as it would have if it were not Owner Trustee.
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Section 7.8 Licenses. The Owner Trustee shall cause the Trust to use its
best efforts to obtain and maintain the effectiveness of any licenses required
in connection with this Agreement and the Transaction Documents and the
transactions contemplated hereby and thereby until such time as the Trust shall
terminate in accordance with the terms hereof.
Section 7.9 Rights of Co-Owner Trustee. The Co-Owner Trustee shall be
entitled to all the rights and benefits conferred upon the Owner Trustee in
Article VII of this Agreement.
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ARTICLE VIII
COMPENSATION OF OWNER TRUSTEE
Section 8.1 Owner Trustee's Fees and Expenses. The Owner Trustee shall
receive as compensation for its services hereunder such fees as have been
separately agreed upon before the date hereof between the Company and the Owner
Trustee, and the Owner Trustee shall be entitled to be reimbursed by the Company
for its other reasonable expenses hereunder, including the reasonable
compensation, expenses and disbursements of such agents, representatives,
experts and counsel as the Owner Trustee may employ in connection with the
exercise and performance of its rights and its duties hereunder.
Section 8.2 Indemnification. The Company shall be liable as primary
obligor, and the Servicer as secondary obligor pursuant to the Administration
Agreement, for, and shall indemnify the Owner Trustee, the Co-Owner Trustee and
their successors, assigns, agents and servants (collectively, the "Indemnified
Parties") from and against, any and all liabilities, obligations, losses,
damages, taxes, claims, actions and suits, and any and all reasonable costs,
expenses and disbursements (including reasonable legal fees and expenses) of any
kind and nature whatsoever (collectively, "Expenses") which may at any time be
imposed on, incurred by, or asserted against the Owner Trustee or any
Indemnified Party in any way relating to or arising out of this Agreement, the
Transaction Documents, the Owner Trust Estate, the administration of the Owner
Trust Estate or the action or inaction of the Owner Trustee or the Co-Owner
Trustee hereunder, except only that the Company shall not be liable for or
required to indemnify an Indemnified Party from and against Expenses arising or
resulting from any of the matters described in the third sentence of Section 7.1
hereof. The indemnities contained in this Section shall survive the resignation
or termination of the Owner Trustee or the termination of this Agreement. In any
event of any claim, action or proceeding for which indemnity will be sought
pursuant to this Section, the Owner Trustee's or Co-Owner Trustee's choice of
legal counsel shall be subject to the approval of the Company, which approval
shall not be unreasonably withheld.
Section 8.3 Payments to the Owner Trustee. Any amounts paid to the Owner
Trustee pursuant to this Article VIII shall be deemed not to be a part of the
Owner Trust Estate immediately after such payment.
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ARTICLE IX
TERMINATION OF TRUST AGREEMENT
Section 9.1 Termination of Trust Agreement.
(a) This Agreement (other than Article VIII) and the Trust shall
terminate and be of no further force or effect on the earlier of (i) the
satisfaction and discharge of the Indenture pursuant to Section 4.01 of the
Indenture and the termination of the Sale and Servicing Agreement and (ii) the
expiration of 21 years from the death of the last survivor of the descendants of
Xxxxxx X. Xxxxxxx (the late ambassador of the United States to the Court of St.
James's) alive on the date hereof. The bankruptcy, liquidation, dissolution,
death or incapacity of any Owner shall not (x) operate to terminate this
Agreement or the Trust, nor (y) entitle such Owner's legal representatives or
heirs to claim an accounting or to take any action or proceeding in any court
for a partition or winding up of all or any part of the Trust or Owner Trust
Estate nor (z) otherwise affect the rights, obligations and liabilities of the
parties hereto.
(b) The Trust Securities shall be subject to an early redemption
or termination at the option of the Company or the Master Servicer in the manner
and subject to the provisions of Section 11.02 of the Sale and Servicing
Agreement.
(c) Except as provided in Sections 9.1(a) and (b) above, none of
the Depositor, the Company nor any Owner shall be entitled to revoke or
terminate the Trust.
(d) Notice of any termination of the Trust, specifying the
Distribution Date upon which the Securityholders shall surrender their Trust
Securities to the Paying Agent for payment of the final distributions and
cancellation, shall be given by the Owner Trustee to the Securityholders and the
Rating Agencies mailed within five Business Days of receipt by the Owner Trustee
of notice of such termination pursuant to Section 9.1(a) or (b) above, which
notice given by the Owner Trustee shall state (i) the Distribution Date upon or
with respect to which final payment of the Trust Securities shall be made upon
presentation and surrender of the Trust Securities at the office of the Paying
Agent therein designated, (ii) the amount of any such final payment and (iii)
that the Record Date otherwise applicable to such Distribution Date is not
applicable, payments being made only upon presentation and surrender of the
Trust Securities at the office of the Paying Agent therein specified. The Owner
Trustee shall give such notice to the Certificate Registrar (if other than the
Owner Trustee) and the Paying Agent at the time such notice is given to the
Securityholders. Upon presentation and surrender of the Trust Securities, the
Paying Agent shall cause to be distributed to the Securityholders amounts
distributable on such Distribution Date pursuant to Sections 5.01(c) and 5.03 of
the Sale and Servicing Agreement.
In the event that all of the Securityholders shall not surrender
their Trust Securities for cancellation within six months after the date
specified in the above mentioned
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written notice, the Co-Owner Trustee shall give a second written notice to the
remaining Securityholders to surrender their Trust Securities for cancellation
and receive the final distribution with respect thereto. If within one year
after the second notice all the Trust Securities shall not have been surrendered
for cancellation, the Co-Owner Trustee may take appropriate steps, or may
appoint an agent to take appropriate steps, to contact the remaining
Securityholders concerning surrender of their Trust Securities, and the cost
thereof shall be paid out of the funds and other assets that shall remain
subject to this Agreement. Any funds remaining in the Trust after exhaustion of
such remedies shall be distributed by the Co-Owner Trustee to the Residual
Instrument Holders on a pro rata basis.
(e) Upon the winding up of the Trust and its termination, the
Owner Trustee shall cause the Certificate of Trust to be canceled by filing a
certificate of cancellation with the Secretary of State in accordance with the
provisions of Section 3820 of the Business Trust Statute.
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ARTICLE X
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
Section 10.1 Eligibility Requirements for Owner Trustee. The Owner
Trustee shall at all times be a corporation satisfying the provisions of Section
3807(a) of the Business Trust Statute; authorized to exercise corporate powers;
having a combined capital and surplus of at least $50,000,000 and subject to
supervision or examination by Federal or state authorities; and having (or
having a parent which has) a long-term rating of at least "A" by Standard &
Poor's and "A2" by Moody's, "A" by DCR and "A" by Fitch. If such corporation
shall publish reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for the
purpose of this Section, the combined capital and surplus of such corporation
shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. In case at any time the Owner Trustee
shall cease to be eligible in accordance with the provisions of this Section,
the Owner Trustee shall resign immediately in the manner and with the effect
specified in Section 10.2.
Section 10.2 Resignation or Removal of Owner Trustee or Co-Owner
Trustee. The Owner Trustee or Co-Owner Trustee may at any time resign and be
discharged from the trusts hereby created by giving written notice thereof to
the Administrator, the Indenture Trustee and the Company. Upon receiving such
notice of resignation, the Administrator shall promptly appoint a successor
Owner Trustee or Co-Owner Trustee by written instrument, in duplicate, one copy
of which instrument shall be delivered to the resigning Owner Trustee or
Co-Owner Trustee and one copy to the successor Owner Trustee or Co-Owner
Trustee. If no successor Owner Trustee or Co-Owner Trustee shall have been so
appointed and have accepted appointment within 30 days after the giving of such
notice of resignation, the resigning Owner Trustee or Co-Owner Trustee may
petition any court of competent jurisdiction for the appointment of a successor
Owner Trustee or Co-Owner Trustee.
If at any time the Owner Trustee or Co-Owner Trustee shall cease to be
eligible in accordance with the provisions of Section 10.1 and shall fail to
resign after written request therefor by the Administrator, or if at any time
the Owner Trustee or Co-Owner Trustee shall be legally unable to act, or shall
be adjudged bankrupt or insolvent, or a receiver of the Owner Trustee or
Co-Owner Trustee or of its property shall be appointed, or any public officer
shall take charge or control of the Owner Trustee or Co-Owner Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, then the Administrator may remove the Owner Trustee or Co-Owner
Trustee. If the Administrator shall remove the Owner Trustee or Co-Owner Trustee
under the authority of the immediately preceding sentence, the Administrator
shall promptly appoint a successor Owner Trustee or Co-Owner Trustee by written
instrument in duplicate, one copy of which instrument shall be delivered to the
outgoing Owner Trustee or Co-Owner Trustee so removed and one copy to the
successor Owner Trustee or Co-Owner Trustee and payment of all fees owed to the
outgoing Owner Trustee or Co-Owner Trustee.
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Any resignation or removal of the Owner Trustee or Co-Owner Trustee and
appointment of a successor Owner Trustee or Co-Owner Trustee pursuant to any of
the provisions of this Section shall not become effective until acceptance of
appointment by the successor Owner Trustee or Co-Owner Trustee pursuant to
Section 10.3 and payment of all fees and expenses owed to the outgoing Owner
Trustee or Co-Owner Trustee. The Administrator shall provide notice of such
resignation or removal of the Owner Trustee or Co-Owner Trustee to each of the
Rating Agencies.
Section 10.3 Successor Owner Trustee or Co-Owner Trustee. Any successor
Owner Trustee or Co-Owner Trustee appointed pursuant to Section 10.2 shall
execute, acknowledge and deliver to the Administrator and to its predecessor
Owner Trustee or Co-Owner Trustee an instrument accepting such appointment under
this Agreement, and thereupon the resignation or removal of the predecessor
Owner Trustee or Co-Owner Trustee shall become effective and such successor
Owner Trustee or Co-Owner Trustee, without any further act, deed or conveyance,
shall become fully vested with all the rights, powers, duties, and obligations
of its predecessor under this Agreement, with like effect as if originally named
as Owner Trustee or Co-Owner Trustee. The predecessor Owner Trustee or Co-Owner
Trustee shall upon payment of its fees and expenses deliver to the successor
Owner Trustee or Co-Owner Trustee all documents and statements and monies held
by it under this Agreement; and the Administrator and the predecessor Owner
Trustee or Co-Owner Trustee shall execute and deliver such instruments and do
such other things as may reasonably be required for fully and certainly vesting
and confirming in the successor Owner Trustee or Co-Owner Trustee all such
rights, powers, duties, and obligations.
No successor Owner Trustee or Co-Owner Trustee shall accept appointment
as provided in this Section unless at the time of such acceptance such successor
Owner Trustee or Co-Owner Trustee shall be eligible pursuant to Section 10.1.
Upon acceptance of appointment by a successor Owner Trustee or Co-Owner
Trustee pursuant to this Section, the Administrator shall mail notice of the
successor of such Owner Trustee or Co-Owner Trustee to all Owners, the Indenture
Trustee, the Noteholders and the Rating Agencies. If the Administrator fails to
mail such notice within 10 days after acceptance of appointment by the successor
Owner Trustee or Co-Owner Trustee, the successor Owner Trustee or Co-Owner
Trustee shall cause such notice to be mailed at the expense of the
Administrator.
Section 10.4 Merger or Consolidation of Owner Trustee or Co-Owner
Trustee. Any corporation into which the Owner Trustee or the Co-Owner Trustee
may be merged or converted or with which either may be consolidated or any
corporation resulting from any merger, conversion or consolidation to which the
Owner Trustee or the Co-Owner Trustee shall be a party, or any corporation
succeeding to all or substantially all of the corporate trust business of the
Owner Trustee or the Co-Owner Trustee, shall be the successor of the Owner
Trustee or the Co-Owner Trustee, as the case may be, hereunder, provided such
corporation shall be eligible pursuant to Section 10.1, without the execution or
filing of any instrument or
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any further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding; provided further that the Owner Trustee or the
Co-Owner Trustee, as the case may be, shall mail notice of such merger or
consolidation to the Rating Agencies.
Section 10.5 Appointment of Co-Owner Trustee or Separate Owner Trustee.
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Owner Trust Estate or any Mortgaged Property may at the time be located,
and for the purpose of performing certain duties and obligations of the Owner
Trustee with respect to the Trust and the Trust Securities under the Sale and
Servicing Agreement, the Administrator and the Owner Trustee acting jointly
shall have the power and shall execute and deliver all instruments to appoint
one or more Persons approved by the Owner Trustee and to act as co-owner
trustee, jointly with the Owner Trustee, or separate owner trustee or separate
owner trustees, of all or any part of the Owner Trust Estate, and to vest in
such Person, in such capacity, such title to the Trust, or any part thereof,
and, subject to the other provisions of this Section, such powers, duties,
obligations, rights and trusts as the Administrator and the Owner Trustee may
consider necessary or desirable. If the Administrator shall not have joined in
such appointment within 25 days after the receipt by it of a request so to do,
the Owner Trustee shall have the power to make such appointment. No Co-Owner
Trustee or separate Owner Trustee under this Section 10.5 shall be required to
meet the terms of eligibility as a successor trustee pursuant to Section 10.1
and no notice of the appointment of any co-owner trustee or separate Owner
Trustee shall be required pursuant to Section 10.3.
The Owner Trustee hereby appoints the Indenture Trustee as Co-Owner
Trustee for the purpose of (i) establishing and maintaining the Certificate
Distribution Account and making the distributions therefrom to the Persons
entitled thereto pursuant to Sections 5.01(c) and 5.03 of the Sale and Servicing
Agreement.
Each separate owner trustee and co-owner trustee shall, to the extent
permitted by law, be appointed and act subject to the following provision and
conditions:
(i) all rights, powers, duties and obligations conferred
or imposed upon the Owner Trustee shall be conferred upon and exercised
or performed by the Owner Trustee and such separate owner trustee or
co-owner trustee jointly (it being understood that such separate owner
trustee or co-owner trustee is not authorized to act separately without
the Owner Trustee joining in such act), except to the extent that under
any law of any jurisdiction in which any particular act or acts are to
be performed, the Owner Trustee shall be incompetent or unqualified to
perform such act or acts, in which event such rights, powers, duties,
and obligations (including the holding of title to the Trust or any
portion thereof in any such jurisdiction) shall be exercised and
performed singly by such separate owner trustee or co-owner trustee but
solely at the direction of the Owner Trustee; provided that Co-Owner
Trustee, in performing its duties and obligations under the Sale and
Servicing Agreement, may act
X-3
45
separately in its capacity as Co-Owner Trustee without the Owner Trustee
joining in such Acts.
(ii) no owner trustee under this Agreement shall be
personally liable by reason of any act or omission of any other owner
trustee under this Agreement; and
(iii) the Administrator and the Owner Trustee acting
jointly may at any time accept the resignation of or remove any separate
owner trustee or co-owner trustee.
Any notice, request or other writing given to the Owner Trustee shall be
deemed to have been given to the separate owner trustees and co-owner trustees,
as if given to each of them. Every instrument appointing any separate owner
trustee or co-owner trustee, other than this Agreement, shall refer to this
Agreement and to the conditions of this Article. Each separate owner trustee and
co-owner trustee, upon its acceptance of appointment, shall be vested with the
estates specified in its instrument of appointment, either jointly with the
Owner Trustee or separately, as may be provided therein, subject to all the
provisions of this Agreement, specifically including every provision of this
Agreement relating to the conduct of, affecting the liability of, or affording
protection to, the Owner Trustee. Each such instrument shall be filed with the
Owner Trustee and a copy thereof given to the Administrator.
Any separate owner trustee or co-owner trustee may at any time appoint
the Owner Trustee as its agent or attorney-in-fact with full power and
authority, to the extent not prohibited by law, to do any lawful act under or in
respect of this Agreement on its behalf and in its name. If any separate owner
trustee or co-owner trustee shall die, become incapable of acting, resign or be
removed, all of its estates, properties, rights, remedies and trusts shall vest
in and be exercised by the Owner Trustee, to the extent permitted by law,
without the appointment of a new or successor trustee.
The Co-Owner Trustee, in its capacity as Co-Owner Trustee, shall not
have any rights, duties or obligations except as expressly provided in this
Agreement and the Sale and Servicing Agreement.
X-4
46
ARTICLE XI
MISCELLANEOUS
Section 11.1 Supplements and Amendments. This Agreement may be amended
by the Depositor, the Company and the Owner Trustee with prior written notice to
the Rating Agencies, but without the consent of any of the Noteholders or the
Owners or the Indenture Trustee, to cure any ambiguity, to correct or supplement
any provisions in this Agreement or for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions in this Agreement
or of modifying in any manner the rights of the Noteholders or the Owners
provided, however, that such action shall not adversely affect in any material
respect the interests of any Noteholder or Owner. An amendment described above
shall be deemed not to adversely affect in any material respect the interests of
any Noteholder or Owner if (i) an opinion of counsel is obtained to such effect,
and (ii) the party requesting the amendment satisfies the Rating Agency
Condition with respect to such amendment.
This Agreement may also be amended from time to time by the Depositor,
the Company and the Owner Trustee, with the prior written consent of the Rating
Agencies and with the prior written consent of the Indenture Trustee, the
Holders (as defined in the Indenture) of Notes evidencing more than 50% of the
Percentage Interests in the Notes and the Holders of Certificates evidencing
more than 50% of the Percentage Interests in the Certificates, for the purpose
of adding any provisions to or changing in any manner or eliminating any of the
provisions of this Agreement or of modifying in any manner the rights of the
Noteholders or the Owners; provided, however, that no such amendment shall (a)
increase or reduce in any manner the amount of, or accelerate or delay the
timing of, collections of payments on the Home Loans or distributions that shall
be required to be made for the benefit of the Noteholders or the Securityholders
or (b) reduce the aforesaid Percentage Interests required to consent to any such
amendment, in either case of clause (a) or (b) without the consent of the
holders of all the outstanding Notes or Trust Securities, as applicable.
Promptly after the execution of any such amendment or consent, the Owner
Trustee shall furnish written notification of the substance of such amendment or
consent to each Certificateholder, the Indenture Trustee and each of the Rating
Agencies.
It shall not be necessary for the consent of Owners, the Noteholders or
the Indenture Trustee pursuant to this Section to approve the particular form of
any proposed amendment or consent, but it shall be sufficient if such consent
shall approve the substance thereof. The manner of obtaining such consents (and
any other consents of Owners provided for in this Agreement or in any other
Transaction Document) and of evidencing the authorization of the execution
thereof by Securityholders shall be subject to such reasonable requirements as
the Owner Trustee may prescribe.
XI-1
47
Promptly after the execution of any amendment to the Certificate of
Trust, the Owner Trustee shall cause the filing of such amendment with the
Secretary of State.
Prior to the execution of any amendment to this Agreement or the
Certificate of Trust, the Owner Trustee shall be entitled to receive and rely
upon an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Agreement. The Owner Trustee may, but shall not
be obligated to, enter into any such amendment which affects the Owner Trustee's
own rights, duties or immunities under this Agreement or otherwise.
Notwithstanding the above, no supplement or amendment to this Agreement
shall be made without the consent of any Residual Instrument Holder, if such
amendment and/or supplement would modify in any manner the receipt of
distributions with respect to such Residual Instrument.
Section 11.2 No Legal Title to Owner Trust Estate in Owners. The Owners
shall not have legal title to any part of the Owner Trust Estate. The Owners
shall be entitled to receive distributions with respect to their undivided
ownership interest therein only in accordance with Articles V and IX. No
transfer, by operation of law or otherwise, of any right, title, or interest of
the Owners to and in their ownership interest in the Owner Trust Estate shall
operate to terminate this Agreement or the trusts hereunder or entitle any
transferee to an accounting or to the transfer to it of legal title to any part
of the Owner Trust Estate.
Section 11.3 Limitations on Rights of Others. The provisions of this
Agreement are solely for the benefit of the Owner Trustee, the Co-Owner Trustee,
the Depositor, the Company, the Owners, the Administrator and, to the extent
expressly provided herein, the Indenture Trustee and the Noteholders, and
nothing in this Agreement, whether express or implied, shall be construed to
give to any other Person any legal or equitable right, remedy or claim in the
Owner Trust Estate or under or in respect of this Agreement or any covenants,
conditions or provisions contained herein.
Section 11.4 Notices. (a) Unless otherwise expressly specified or
permitted by the terms hereof, all notices shall be in writing and shall be
deemed given upon receipt by the intended recipient or three Business Days after
mailing if mailed by certified mail, postage prepaid (except that notice to the
Owner Trustee shall be deemed given only upon actual receipt by the Owner
Trustee), at the following addresses: (i) if to the Owner Trustee, its Corporate
Trust Office; (ii) if to the Depositor, Financial Asset Securities Corp., 000
Xxxxxxxxx Xxxx, Xxxxxxxxx, Xxxxxxxxxxx 00000, Attention: Xxxxx XxXxxxxx, Vice
President; (iii) if to the Company, Mego Mortgage Corporation, 0000 Xxxxxxxx
Xxxxxx, Xxxxx 000 Xxxxxxx, Xxxxxxx 00000, Attention: Xxxx X. Xxxxx, President;
(iv) if to the Co-Owner Trustee, First Bank National Association, 000 Xxxx Xxxxx
Xxxxxx, Xx. Xxxx, Xxxxxxxxx 00000, Attention:
Structured Finance/Mego Mortgage 1997-3 Corporate Trust Department; or, as to
each such party, at such other address as shall be designated by such party in a
written notice to each other party.
XI-2
48
(b) Any notice required or permitted to be given to an Owner shall be
given by first-class mail, postage prepaid, at the address of such Owner as
shown in the Certificate Register. Any notice so mailed within the time
prescribed in this Agreement shall be conclusively presumed to have been duly
given, whether or not the Owner receives such notice.
Section 11.5 Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
Section 11.6 Separate Counterparts. This Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
Section 11.7 Successors and Assigns. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, the
Depositor, the Company, the Owner Trustee, the Co-Owner Trustee and its
successors and each owner and its successors and permitted assigns, all as
herein provided. Any request, notice, direction, consent, waiver or other
instrument or action by an Owner shall bind the successors and assigns of such
Owner.
Section 11.8 No Petition. The Owner Trustee, by entering into this
Agreement, each Owner, by accepting a Trust Security, and the Indenture Trustee
and each Noteholder by accepting the benefits of this Agreement, hereby covenant
and agree that they will not at any time institute against the Company, any
wholly-owned subsidiary of the Company, the Depositor or the Trust, or join in
any institution against the Company, any wholly-owned subsidiary of the Company,
or the Trust of, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, or other proceedings under any United States Federal or
state bankruptcy or law in connection with any obligations relating to the Trust
Securities, the Notes, this Agreement or any of the Transaction Documents.
Section 11.9 Covenants of Company. The Company shall not institute at
any time any Bankruptcy proceeding against the Trust or any wholly-owned
subsidiary of the Company, under any United States Federal or state bankruptcy
or similar law in connection with any obligations relating to the Trust
Securities, the Notes, the Trust Agreement or any of the Transaction Documents.
Section 11.10 No Recourse. Each Owner by accepting a Trust Security
acknowledges that such Owner's Trust Security represents a beneficial interest
in the Trust only and does not represent an interest in or an obligation of the
Seller, the Servicer, the Company, the Depositor, the Administrator, the Owner
Trustee, the Co-Owner Trustee or any Affiliate thereof and no recourse may be
had against such parties or their assets, except as may be
XI-3
49
expressly set forth or contemplated in this Agreement, the Trust Securities or
the Transaction Documents.
Section 11.11 Headings. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
Section 11.12 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 11.13 Inconsistencies with Sale and Servicing Agreement.
In the event certain provisions of this Agreement conflict with the
provisions of the Sale and Servicing Agreement, the parties hereto agree that
the provisions of the Sale and Servicing Agreement shall be controlling.
XI-4
50
IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement
to be duly executed by their respective officers hereunto duly authorized, as of
the day and year first above written.
FINANCIAL ASSET SECURITIES CORP.,
Depositor
By:____________________________________
Name:
Title:
MEGO MORTGAGE CORPORATION
By:____________________________________
Name:
Title:
WILMINGTON TRUST COMPANY,
not in its individual capacity but
solely as Owner Trustee
By:____________________________________
Name:
Title:
FIRST BANK NATIONAL ASSOCIATION, not in
its individual capacity but solely as
Co-Owner Trustee and Paying Agent
By:____________________________________
Name:
Title:
51
EXHIBIT A
[FORM OF CERTIFICATE]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO. HAS AN INTEREST HEREIN.
THIS CERTIFICATE DOES NOT REPRESENT AN INTEREST IN OR OBLIGATION OF
FINANCIAL ASSET SECURITIES CORP., MEGO MORTGAGE CORPORATION OR ANY OF THEIR
RESPECTIVE AFFILIATES.
MEGO MORTGAGE HOME LOAN OWNER TRUST 1997-3
____% HOME LOAN ASSET BACKED CERTIFICATE
evidencing a fractional undivided interest in the Trust, as defined below, the
property of which includes a pool of Home Loans sold to the Trust by Financial
Asset Securities Corp..
Initial Certificate Principal Original Certificate
Balance of this Certificate: Principal Balance:
$_____________ $_____________
NUMBER:_______ CUSIP NO. _________
(See Reverse Pages for certain definitions)
THIS CERTIFIES THAT___________ is the registered owner of the Percentage
Interest evidenced by this Certificate (obtained by dividing the initial
Certificate Principal Balance of this Certificate by the Original Certificate
Principal Balance of the Class of Certificates, both as specified above), in
certain distributions with respect to MEGO MORTGAGE Home Loan Owner Trust 1997-3
(the "Trust") formed by Financial Asset Securities Corp., a Delaware corporation
(the "Seller").
The Trust was created pursuant to a Trust Agreement dated as of June 14,
1997 (as amended and supplemented from time to time, the "Trust Agreement"),
among the Seller, Financial Asset Securities Corp., a Delaware corporation (the
"Company"), Wilmington Trust
A-1
52
Company, as owner trustee (the "Owner Trustee") and First Bank National
Association, as Co-Owner Trustee (the "Co-Owner Trustee"), a summary of certain
of the pertinent provisions of which is set forth below. To the extent not
otherwise defined herein, the capitalized terms used herein have the meanings
assigned to them in the Trust Agreement or the Sale and Servicing Agreement
dated as of June 14, 1997 (as amended and supplemented from time to time, the
"Sale and Servicing Agreement"), among the Trust, the Seller, Mego Mortgage
Corporation, as servicer (the "Servicer") and the Co-Owner Trustee, as
applicable.
This Certificate is one of the duly authorized Certificates designated
as "Mego Mortgage Home Loan Asset Backed Certificates, Series 1997-3", (herein
called the "Certificates") issued under the Trust Agreement. Also issued under
an Indenture dated as of June 14, 1997, between the Trust and First Bank
National Association, as Indenture Trustee, are the six classes of Notes
designated as "Mego Mortgage Home Loan Asset Backed Notes, Series 1997-3, Class
A-1, Class X-0, Xxxxx X-0, Class A-4, Class M-1 and Class M-2 (collectively, the
"Notes"). This Certificate is issued under and is subject to the terms,
provisions and conditions of the Trust Agreement to which Trust Agreement the
holder of this Certificate by virtue of the acceptance hereof assents and by
which such holder is bound. Payments of principal and interest on this
Certificate shall be made by First Bank National Association, in its capacity as
Co-Owner Trustee under the Sale and Servicing Agreement. The property of the
Trust includes a pool of Home Loans (the "Home Loans"), all monies due
thereunder on or after the Cut-Off Date, certain accounts and the proceeds
thereof, and certain other rights under the Trust Agreement and the Sale and
Servicing Agreement and all proceeds of the foregoing. The rights of the holders
of the Certificates are subordinated to the rights of the holders of the Notes,
as set forth in the Sale and Servicing Agreement and the Indenture.
Under the Trust Agreement, there will be distributed on the 25th day of
each month or, if such 25th day is not a Business Day, the next Business Day,
(each, a "Distribution Date"), commencing in July, 1997, to the person in whose
name this Certificate is registered at the close of business on the last
Business Day of the month immediately preceding the month in which each
Distribution Date occurs (the "Record Date") such Securityholders's fractional
undivided interest in the amounts distributable to Securityholders on such
Distribution Date pursuant to Section 5.01 of the Sale and Servicing Agreement.
The holder of this Certificate acknowledges and agrees that its rights
to receive distributions in respect of this Certificate are subordinated to the
rights of the Noteholders as described in the Sale and Servicing Agreement and
the Indenture.
It is the intent of the Seller, the Company, the Servicer and the
Securityholders that, for purposes of federal, state and local income and single
business tax and any other income taxes, the Trust will be treated as a
partnership and the Securityholders (including the Company) will be treated as
partners in that partnership. The Company and the other Securityholders by
acceptance of a Certificate, agree to treat, and to take no action inconsistent
with the treatment of, the Certificates for such tax purposes as partnership
interests in the Trust.
A-2
53
Each Securityholder or Certificate Owner, by its acceptance of a
Certificate or, in the case of a Certificate Owner, a beneficial interest in a
Certificate, covenants and agrees that such Securityholder or Certificate Owner,
as the case may be, will not at any time institute against the Company, or join
in any institution against the Company of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings under
any United States federal or state bankruptcy or similar law in connection with
any obligations relating to the Certificates, the Notes, the Trust Agreement or
any of the Transaction Documents.
Distributions on this Certificate will be made as provided in the Trust
Agreement and the Sale and Servicing Agreement by the Indenture Trustee by wire
transfer or check mailed to the Securityholder of record in the Certificate
Register without the presentation or surrender of this Certificate or the making
of any notation hereon, except that with respect to Certificates registered on
the Record Date in the name of the nominee of the Clearing Agency (initially,
such nominee to be Cede & Co.), payments will be made by wire transfer in
immediately available funds to the account designated by such nominee. Except as
otherwise provided in the Trust Agreement and notwithstanding the above, the
final distribution on this Certificate will be made after due notice by the
Co-Owner Trustee of the pendency of such distribution and only upon presentation
and surrender of this Certificate at the office or agency maintained for the
purpose by the Co-Owner Trustee in the Borough of Manhattan, The City of New
York.
Reference is hereby made to the further provisions of this Certificate
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
[Remainder of page intentionally left blank]
A-3
54
Unless the certificate of authentication hereon shall have been executed
by an authorized officer of the Owner Trustee, by manual or facsimile signature,
this Certificate shall not entitle the holder hereof to any benefit under the
Trust Agreement or the Sale and Servicing Agreement or be valid for any purpose.
THIS TRUST SECURITY SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND
THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.
IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Trust and not in
its individual capacity, has caused this Certificate to be duly executed.
MEGO MORTGAGE HOME LOAN OWNER TRUST
1997-3
By: Wilmington Trust Company, not in its individual
capacity but solely as Owner Trustee under the Trust
Agreement
By:_________________________________________________
Authorized Signatory
DATED: June 27, 1997
CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within-mentioned
Trust Agreement.
First Bank National Association, as
Administrator and Authenticating Agent
By:_________________________________________________
Authorized Signatory
A-4
55
(REVERSE OF TRUST SECURITY)
The Certificates do not represent an obligation of, or an interest in,
the Seller, the Master Servicer, the Servicer, the Company, the Depositor, the
Owner Trustee, the Co-Owner Trustee or any affiliates of any of them and no
recourse may be had against such parties or their assets, except as may be
expressly set forth or contemplated herein or in the Trust Agreement or the
Transaction Documents. In addition, this Certificate is not guaranteed by any
governmental agency or instrumentality and is limited in right of payment to
certain collections and recoveries respecting the Home Loans, all as more
specifically set forth herein, in the Sale and Servicing Agreement and in the
Indenture. A copy of each of the Sale and Servicing Agreement, the Indenture and
the Trust Agreement may be examined during normal business hours at the
principal office of the Co-Owner Trustee, and at such other places, if any,
designated by the Co-Owner Trustee, by any Securityholder upon written request.
The Trust Agreement permits, with certain exceptions therein provided,
the amendment thereof and the modification of the rights and obligations of the
Seller and the Company and the rights of the Securityholders under the Trust
Agreement at any time by the Seller, the Company and the Owner Trustee with the
consent of the holders of the Notes and the Certificates each voting as a class
evidencing not less than a majority of the outstanding Notes and the Class
Principal Balance of the Certificates. Any such consent by the holder of this
Certificate shall be conclusive and binding on such holder and on all future
holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate. The Trust Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
holders of any of the Certificates.
As provided in the Trust Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registerable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies of the Certificate Registrar maintained by
the Co-Owner Trustee in St. Xxxx, Minnesota, accompanied by a written instrument
of transfer in form satisfactory to the Co-Owner Trustee and the Certificate
Registrar duly executed by the holder hereof or such holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of authorized
denominations evidencing the same aggregate interest in the Trust will be issued
to the designated transferee. The initial Certificate Registrar appointed under
the Trust Agreement is the Co-Owner Trustee.
The Certificates are issuable only as registered Certificates without
coupons in denominations of $100,000 and in integral multiples of $1,000 in
excess thereof. As provided in the Trust Agreement and subject to certain
limitations therein set forth, Certificates are exchangeable for new
Certificates of authorized denominations evidencing the same aggregate
denomination, as requested by the holder surrendering the same. No service
charge will be made for any such registration of transfer or exchange, but the
Co-Owner Trustee or the Certificate Registrar may require payment of a sum
sufficient to cover any tax or governmental charge payable in connection
therewith.
The Owner Trustee, the Co-Owner Trustee, the Certificate Registrar and
any agent of the Owner Trustee, the Co-Owner Trustee or the Certificate
Registrar may treat the person in whose name this Certificate is registered as
the owner hereof for all purposes and none of the Owner Trustee, the Co-Owner
Trustee, the Certificate Registrar or any such agent shall be affected by any
notice to the contrary.
A-5
56
The obligations and responsibilities created by the Trust Agreement and
the Trust created thereby and the Sale and Servicing Agreement shall terminate
eighteen months after the payment to Securityholders of all amounts required to
be paid to them pursuant to the Trust Agreement and the Sale and Servicing
Agreement and the disposition of all property held as part of the Trust. The
Seller or the Master Servicer may at their option purchase the corpus of the
Trust at a price specified in the Sale and Servicing Agreement, and such
purchase of the Home Loans and other property of the Trust will effect early
retirement of the Certificates; however, such right of purchase is exercisable
only on a Distribution Date on which the Pool Principal Balance is less than or
equal to 10% of the Original Pool Principal Balance.
The Certificates may not be acquired by (a) an employee benefit plan (as
defined in Section 3(3) of ERISA) that is subject to the provisions of Title I
of ERISA, (b) a plan described in Section 4975(e)(1) of the Code or (c) any
entity, including an insurance company separate account or general account,
whose underlying assets include plan assets by reason of a plan's investment in
the entity (each, a "Benefit Plan"). By accepting and holding this Certificate,
the Holder hereof shall be deemed to have represented and warranted that it is
not a Benefit Plan.
A-6
57
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
--------------------------------------------------------------------------------
(Please print or type name and address, including postal zip code, of assignee)
--------------------------------------------------------------------------------
the within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
-------------------------------------------------------------------- Attorney to
transfer said Certificate on the books of the Certificate Registrar, with full
power of substitution in the premises.
Dated:_____________
*/
---------------------------------------------
Signature Guaranteed:
*/
---------------------------------------------
----------
*/ NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Certificate in every particular, without
alteration, enlargement or any change whatever. Such signature must be
guaranteed by a member firm of the New York Stock Exchange or a commercial bank
or trust company.
A-7
58
EXHIBIT B
TO THE TRUST AGREEMENT
[FORM OF RESIDUAL INSTRUMENT]
THE RESIDUAL INTEREST IN THE TRUST REPRESENTED BY THIS RESIDUAL INSTRUMENT HAS
NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), OR ANY STATE SECURITIES LAWS. THIS RESIDUAL INSTRUMENT MAY BE
DIRECTLY OR INDIRECTLY OFFERED OR SOLD OR OTHERWISE DISPOSED OF (INCLUDING
PLEDGED) BY THE HOLDER HEREOF ONLY TO (I) A "QUALIFIED INSTITUTIONAL BUYER" AS
DEFINED IN RULE 144A UNDER THE ACT, IN A TRANSACTION THAT IS REGISTERED UNDER
THE ACT AND APPLICABLE STATE SECURITIES LAWS OR THAT IS EXEMPT FROM THE
REGISTRATION REQUIREMENTS OF THE ACT PURSUANT TO RULE 144A OR (II) A PERSON
INVOLVED IN THE ORGANIZATION OR OPERATION OF THE TRUST OR AN AFFILIATE OF SUCH A
PERSON WITHIN THE MEANING OF RULE 3A-7 OF THE INVESTMENT COMPANY ACT OF 1940, AS
AMENDED (INCLUDING, BUT NOT LIMITED TO, MEGO MORTGAGE CORPORATION) IN A
TRANSACTION THAT IS REGISTERED UNDER THE ACT AND APPLICABLE STATE SECURITIES
LAWS OR THAT IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND SUCH
LAWS. NO PERSON IS OBLIGATED TO REGISTER THIS RESIDUAL INSTRUMENT UNDER THE ACT
OR ANY STATE SECURITIES LAWS.
NO TRANSFER OF THIS RESIDUAL INSTRUMENT OR ANY BENEFICIAL INTEREST THEREIN SHALL
BE MADE TO ANY PERSON UNLESS THE OWNER TRUSTEE HAS RECEIVED A CERTIFICATE FROM
THE TRANSFEREE TO THE EFFECT THAT SUCH TRANSFEREE (I) IS NOT A PERSON WHICH IS
AN EMPLOYEE BENEFIT PLAN, TRUST OR ACCOUNT SUBJECT TO TITLE I OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA") OR SECTION 4975 OF
THE CODE OR A GOVERNMENTAL PLAN, DEFINED IN SECTION 3(32) OF ERISA SUBJECT TO
ANY FEDERAL, STATE OR LOCAL LAW WHICH IS, TO A MATERIAL EXTENT, SIMILAR TO THE
FOREGOING PROVISIONS OF ERISA OR THE CODE (ANY SUCH PERSON BEING A "PLAN") AND
(II) IS NOT AN ENTITY, INCLUDING AN INSURANCE COMPANY SEPARATE ACCOUNT OR
GENERAL ACCOUNT, WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS BY REASON OF A
PLAN'S INVESTMENT IN THE ENTITY.
[THIS AGREEMENT IS NONTRANSFERABLE. NOTWITHSTANDING ANYTHING HEREIN OR IN THE
TRUST AGREEMENT TO THE CONTRARY, ANY ATTEMPTED TRANSFER OF THIS RESIDUAL
INSTRUMENT SHALL BE NULL AND VOID FOR ALL PURPOSES.]
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MEGO MORTGAGE HOME LOAN OWNER TRUST 1997-3
RESIDUAL INSTRUMENT
No. _____
THIS CERTIFIES THAT __________________________________ (the "Owner") is
the registered owner of a _____% residual interest in MEGO MORTGAGE HOME LOAN
OWNER TRUST 1997-3 (the "Trust") existing under the laws of the State of
Delaware and created pursuant to the Trust Agreement dated as of June 14, 1997
(the "Trust Agreement") between FINANCIAL ASSET SECURITIES CORP., as Depositor,
MEGO MORTGAGE CORPORATION, as the Company, WILMINGTON TRUST COMPANY, not in its
individual capacity but solely in its fiduciary capacity as owner trustee under
the Trust Agreement (the "Owner Trustee") and First Bank National Association,
as Co-Owner Trustee (the "Co-Owner Trustee"). Initially capitalized terms used
but not defined herein have the meanings assigned to them in the Trust
Agreement. The Owner Trustee, on behalf of the Issuer and not in its individual
capacity, has executed this Residual Instrument by one of its duly authorized
signatories as set forth below. This Residual Instrument is one of the Residual
Instruments referred to in the Trust Agreement and is issued under and is
subject to the terms, provisions and conditions of the Trust Agreement to which
the holder of this Residual Instrument by virtue of the acceptance hereof agrees
and by which the holder hereof is bound. Reference is hereby made to the Trust
Agreement and the Sale and Servicing Agreement for the rights of the holder of
this Residual Instrument, as well as for the terms and conditions of the Trust
created by the Trust Agreement.
The holder, by its acceptance hereof, agrees not to transfer this
Residual Instrument [except in accordance with terms and provisions of the
Agreement].
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THIS RESIDUAL INSTRUMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS,
AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.
IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Trust and not in
its individual capacity, has caused this Residual Instrument to be duly
executed.
MEGO MORTGAGE HOME LOAN OWNER TRUST
1997-3
By: Wilmington Trust Company, not in its individual
capacity but solely as Owner Trustee under the Trust
Agreement
By:_________________________________________________
Authorized Signatory
DATED: June 27, 1997
CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within-mentioned
Trust Agreement.
First Bank National Association, as
Administrator and Authenticating Agent
By:_________________________________________________
Authorized Signatory
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ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
--------------------------------------------------------------------------------
(Please print or type name and address, including postal zip code, of assignee)
--------------------------------------------------------------------------------
the within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
-------------------------------------------------------------------- Attorney to
transfer said Certificate on the books of the Certificate Registrar, with full
power of substitution in the premises.
Dated:_____________
*/
---------------------------------------------
Signature Guaranteed:
*/
---------------------------------------------
----------
*/ NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Certificate in every particular, without
alteration, enlargement or any change whatever. Such signature must be
guaranteed by a member firm of the New York Stock Exchange or a commercial bank
or trust company.
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EXHIBIT C
TO THE TRUST AGREEMENT
CERTIFICATE OF TRUST OF
MEGO MORTGAGE HOME LOAN OWNER TRUST 1997-3
THIS Certificate of Trust of MEGO MORTGAGE HOME LOAN OWNER TRUST 1997- 3
(the "Trust"), dated as of June 14, 1997, is being duly executed and filed by
Wilmington Trust Company, a Delaware banking corporation, as trustee, to form a
business trust under the Delaware Business Trust Act (12 Del. Code, Section 3801
et seq.).
1. Name. The name of the business trust formed hereby is MEGO MORTGAGE
HOME LOAN OWNER TRUST 1997-3.
2. Delaware Trustee. The name and business address of the trustee of the
Trust in the State of Delaware is Wilmington Trust Company of Xxxxxx Square
North, 0000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000.
Attention:___________.
IN WITNESS WHEREOF, the undersigned, being the sole trustee of the
Trust, has executed this Certificate of Trust as of the date first above
written.
Wilmington Trust Company, not in its
individual capacity but solely as Owner
Trustee under a Trust Agreement dated as
of June 14, 1997.
By______________________________________
Name:
Title:
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63
EXHIBIT D
TO THE TRUST AGREEMENT
(Form of Certificate Depository Agreement)
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EXHIBIT E
TRANSFER CERTIFICATE
First Bank National Association
000 Xxxx Xxxxx Xxxxxx
Xx. Xxxx, Xxxxxxxxx 00000
Attention: Structured Finance/Mego Mortgage Home Loan Owner Trust 1997-3
Financial Asset Securities Corp.
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Re: Trust Agreement, dated as of June 14, 1997, among Mego Mortgage
Corporation, Financial Asset Securities Corp., First Bank National
Association and Wilmington Trust Company, as Owner Trustee; Mego
Mortgage Home Loan Owner Trust 1997-3 Home Loan Asset-Backed
Notes and Certificates, Series 1997-3
Ladies and Gentlemen:
The undersigned (the "Transferee") has agreed to purchase from__________
___________ (the "Transferor") the following:
[Insert Residual Instrument(s) to be transferred]
A. Rule 144A "Qualified Institutional Buyers" should complete this
section
I. The Transferee is (check one):
____ (i) An insurance company, as defined in Section 2(13) of the
Securities Act of 1933, as amended (the "Securities Act"), (ii)
an investment company registered under the Investment Company
Act of 1940, as amended (the "Investment Company Act"), (iii) a
business development company as defined in Section 2(a)(48) of
the Securities Act, (iv) a Small Business Investment Company
licensed by the U.S. Small Business Administration under Section
301(c) or (d) of the Small Business Investment Act of 1958, (v)
a plan established and maintained by a state, its political
subdivisions, or any agency or instrumentality of a state or its
political subdivisions, for the benefit of its employees, (vi)
an employee benefit plan within the
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meaning of Title I of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), (vii) a business development
company as defined in Section 202(a)(22) of the Investment
Advisors Act of 1940, (viii) an organization described in
Section 501(c)(3) of the Internal Revenue Code, corporation
(other than a bank as defined in Section 3(a)(2) of the
Securities Act or a savings and loan association or other
institution referenced in Section 3(a)(2) of the Securities Act
or a foreign bank or savings and loan association or equivalent
institution), partnership, or Massachusetts or similar business
trust; or (ix) an investment advisor registered under the
Investment Advisors Act of 1940, which, for each of (i) through
(ix), owns and invests on a discretionary basis at least $100
million in securities other than securities of issuers
affiliated with the Transferee, securities issued or guaranteed
by the United States or a person controlled or supervised by and
acting as an instrumentality of the government of the United
States pursuant to authority granted by the Congress of the
United States, bank deposit notes and certificates of deposit,
loan participations, repurchase agreements, securities owned but
subject to a repurchase agreement, and currency, interest rate
and commodity swaps (collectively, "Excluded Securities");
____ a dealer registered pursuant to Section 15 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") that in
the aggregate owns and invests on a discretionary basis at least
$10 million of securities other than Excluded Securities and
securities constituting the whole or part of an unsold allotment
to, or subscription by, Transferee as a participant in a public
offering;
____ an investment company registered under the Investment Company
Act that is part of a family of investment companies (as defined
in Rule 144A of the Securities and Exchange Commission) which
own in the aggregate at least $100 million in securities other
than Excluded Securities and securities of issuers that are part
of such family of investment companies;
____ an entity, all of the equity owners of which are entities
described in this Paragraph A(I);
____ a bank as defined in Section 3(a)(2) of the Securities Act, any
savings and loan association or other institution as referenced
in Section 3(a)(5)(A) of the Securities Act, or any foreign bank
or savings and loan association or equivalent institution that
in the aggregate owns and invests on a discretionary basis at
least $100 million in securities other than Excluded Securities
and has an audited net worth of at least $25 million as
demonstrated in its latest annual financial statements, as of a
date not more than 16 months preceding the date of transfer of
the Residual Instruments
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to the Transferee in the case of a U.S. Bank or savings and loan
association, and not more than 18 months preceding such date in
the case of a foreign bank or savings association or equivalent
institution.
II. The Transferee is acquiring such Residual Instruments solely for its
own account, for the account of one or more others, all of which are "Qualified
Institutional Buyers" within the meaning of Rule 144A, or in its capacity as a
dealer registered pursuant to Section 15 of the Exchange Act acting in a
riskless principal transaction on behalf of a "Qualified Institutional Buyer".
The Transferee is not acquiring such Residual Instruments with a view to or for
the resale, distribution, subdivision or fractionalization thereof which would
require registration of the Residual Instruments under the Securities Act.
B. "Accredited Investors" should complete this Section
I. The Transferee is (check one):
____ a bank within the meaning of Section 3(a)(2) of the Securities
Act;
____ a savings and loan association or other institution defined in
Section 3(a)(5) of the Securities Act;
____ a broker or dealer registered pursuant to the Exchange Act;
____ an insurance company within the meaning of Section 2(13) of the
Securities Act;
____ an investment company registered under the Investment Company
Act;
____ an employee benefit plan within the meaning of Title I of ERISA,
which has total assets in excess of $5,000,000;
____ another entity which is an "accredited investor" within the
meaning of paragraph (fill in) of subsection (a) of Rule 501 of
the Securities and Exchange Commission.
II. The Transferee is acquiring such Residual Instruments solely for its
own account, for investment, and not with a view to or for the resale,
distribution, subdivision or fractionalization thereof which would require
registration of the Residual Instruments under the Securities Act.
C. If the Transferee is unable to complete one of paragraph A(I) or
paragraph B(I) above, the Transferee must furnish an opinion in form and
substance satisfactory to the Trustee of counsel satisfactory to the Trustee to
the effect that such purchase will not violate any applicable federal or state
securities laws.
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[To be completed by any Transferee acquiring an interest in
Residual Instruments or the Certificates]
D. The Transferee represents that it is not (A) an "employee benefit
plan" within the meaning of Section 3(3) of the Employee Retirement Income
Security Act of 19974, as amended ("ERISA"), or (B) a "plan" within the meaning
of Section 4975(e)(1) of the Code (any such plan or employee benefit plan, a
"Plan") or (C) any entity, including an insurance company separate account or
general account, whose underlying assets include plan assets by reason of a
plan's investment in the entity and is not directly or indirectly purchasing
such Trust Security on behalf of, as investment manager of, as named fiduciary
of, as trustee of, or with assets of a Plan.
[By its acceptance of a Residual Instrument, each Prospective Owner
thereof agrees and acknowledges that no legal or beneficial interest in all or
any portion of the Residual Instruments may be transferred directly or
indirectly to an individual, corporation, partnership or other person unless
such transferee is not a Non-U.S. Person (any such person being referred to
herein as a "Non-permitted Foreign Holder"), and any such purported transfer
shall be void and have no effect.]
(iii) the Transferee is an "accredited investor" as defined in
Rule 501(a) of Regulation D pursuant to the 1933 Act.
Very truly yours,
[NAME OF PURCHASER]
By:________________________
Title:_____________________
Dated:
THE FOREGOING IS ACKNOWLEDGED THIS ____ DAY OF __________, 199_.
[NAME OF SELLER]
By:________________________
Title:_____________________
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