EXHIBIT 4.2
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NOVASTAR MORTGAGE FUNDING CORPORATION
as Company
and
____________________________
as Owner Trustee
_________________________________________
AMENDED AND RESTATED
TRUST AGREEMENT
Dated as of _______________
__________________________________________
NOVASTAR MORTGAGE FUNDING TRUST SERIES _______
COLLATERALIZED MORTGAGE OBLIGATION BONDS
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Table of Contents
Section Page
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ARTICLE I
Definitions.................................................................................1
1.01. Definitions......................................................................1
1.02. Other Definitional Provisions....................................................1
ARTICLE II
Organization................................................................................2
2.01. Name.............................................................................2
2.02. Office...........................................................................2
2.03. Purposes and Powers..............................................................2
2.04. Appointment of Owner Trustee.....................................................3
2.05. Initial Capital Contribution of Owner Trust Estate...............................3
2.06. Declaration of Trust.............................................................3
2.07. Liability of the Holders of the Certificates.....................................4
2.08. Title to Trust Property..........................................................4
2.09. Situs of Trust...................................................................4
2.10. Representations and Warranties of the Company....................................4
2.11. Payment of Trust Fees............................................................5
2.12. Investment Company...............................................................5
ARTICLE III
Conveyance of the Initial Mortgage Loans; Certificates......................................5
3.01. Conveyance of the Mortgage Loans.................................................5
3.02. Initial Ownership................................................................6
3.03. The Certificates.................................................................6
3.04. Authentication of Certificates...................................................6
3.05. Registration of and Limitations on Transfer and Exchange of Certificates.........7
3.06. Mutilated, Destroyed, Lost or Stolen Certificates...............................10
3.07. Persons Deemed Certificateholders...............................................10
3.08. Access to List of Certificateholders' Names and Addresses.......................10
3.09. Maintenance of Office or Agency.................................................10
3.10. Certificate Paying Agent........................................................11
3.11. Pre-Funding Amount and Interest Coverage Amount.................................12
3.12. Purchase of Subsequent Mortgage Loans...........................................12
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ARTICLE IV
Authority and Duties of Owner Trustee........................................................13
4.01. General Authority.................................................................13
4.02. General Duties....................................................................13
4.03. Action upon Instruction...........................................................13
4.04. No Duties Except as Specified under Specified Documents or in Instructions........14
4.05. Restrictions......................................................................14
4.06. Prior Notice to Certificateholders with Respect to Certain Matters................15
4.07. Action by Certificateholders with Respect to Certain Matters......................16
4.08. Action by Certificateholders with Respect to Bankruptcy...........................16
4.09. Restrictions on Certificateholders' Power.........................................17
4.10. Majority Control..................................................................17
4.11. Optional Redemption...............................................................17
ARTICLE V
Application of Trust Funds...................................................................17
5.01. Distributions.....................................................................17
5.02. Method of Payment.................................................................18
5.03. Tax Returns.......................................................................18
5.04. Statements to Certificateholders..................................................18
ARTICLE VI
Concerning the Owner Trustee.................................................................19
6.01. Acceptance of Trusts and Duties...................................................19
6.02. Furnishing of Documents...........................................................20
6.03. Representations and Warranties....................................................20
6.04. Reliance; Advice of Counsel.......................................................21
6.05. Not Acting in Individual Capacity.................................................21
6.06. Owner Trustee Not Liable for Certificates or Related Documents....................22
6.07. Owner Trustee May Own Certificates and Bonds......................................22
6.08. Payments from Owner Trust Estate..................................................22
6.09. Doing Business in Other Jurisdictions.............................................22
6.10. Liability of Certificate Registrar and Certificate Paying Agent...................23
ARTICLE VII
Compensation of Owner Trustee................................................................23
7.01. Owner Trustee's Fees and Expenses.................................................23
7.02. Indemnification...................................................................23
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ARTICLE VIII
Termination of Trust Agreement.............................................................24
8.01. Termination of Trust Agreement..................................................24
ARTICLE IX
Successor Owner Trustees and Additional Owner Trustees.....................................25
9.01. Eligibility Requirements for Owner Trustee......................................25
9.02. Replacement of Owner Trustee....................................................26
9.03. Successor Owner Trustee.........................................................26
9.04. Merger or Consolidation of Owner Trustee........................................27
9.05. Appointment of Co-Trustee or Separate Trustee...................................27
ARTICLE X
Miscellaneous..............................................................................28
10.01. Amendments......................................................................28
10.02. No Legal Title to Owner Trust Estate............................................30
10.03. Limitations on Rights of Others.................................................30
10.04. Notices.........................................................................30
10.05. Severability....................................................................31
10.06. Separate Counterparts...........................................................31
10.07. Successors and Assigns..........................................................31
10.08. No Petition.....................................................................31
10.09. No Recourse.....................................................................31
10.10. Headings........................................................................32
10.11. GOVERNING LAW...................................................................32
10.12. Integration.....................................................................32
10.13. Third Party Beneficiary.........................................................32
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EXHIBIT
Exhibit A - Form of Certificate.................................................A-1
Exhibit B - Certificate of Trust of NovaStar Home Equity Loan Trust.............B-1
Exhibit C - Form of Rule 144A Investment Representation.........................C-1
Exhibit D - Form of Investor Representation Letter..............................D-1
Exhibit E - Form of Transferor Representation Letter............................E-1
Exhibit F - Form of Certificate of Non-Foreign Status...........................F-1
Exhibit G - Form of ERISA Representation Letter.................................G-1
Exhibit H - Form of Representation Letter.......................................H-1
Exhibit I - Initial Trust Agreement.............................................I-1
This Amended and Restated Trust Agreement (which amends and restates the
Trust Agreement, dated _______________, between NovaStar Mortgage Funding
Corporation, as company (the "Company"), and ______________ , a Delaware banking
corporation, as owner trustee (the "Owner Trustee"), which is attached hereto as
Exhibit I), dated as of ______________ (as amended from time to time, this
"Trust Agreement"), between the Company and the Owner Trustee,
WITNESSETH THAT:
In consideration of the mutual agreements herein contained, the Company and
the Owner Trustee agree as follows:
ARTICLE I
Definitions
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Section 1.01. Definitions. For all purposes of this Trust Agreement,
except as otherwise expressly provided herein or unless the context otherwise
requires, capitalized terms not otherwise defined herein shall have the meanings
assigned to such terms in Appendix A to the Indenture, dated _________________,
between NovaStar Mortgage Funding Trust Series ________ Collateralized Mortgage
Obligation Bonds, as Issuer, and ____________________, as Indenture Trustee,
which is incorporated by referenced herein. All other capitalized terms used
herein shall have the meanings specified herein.
Section 1.02. Other Definitional Provisions.
(a) All terms defined in this Trust Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein.
(b) As used in this Trust Agreement and in any certificate or other
document made or delivered pursuant hereto or thereto, accounting terms not
defined in this Trust Agreement or in any such certificate or other document,
and accounting terms partly defined in this Trust 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
Trust 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 Trust Agreement or in any such certificate
or other document shall control.
(c) The words "hereof," "herein," "hereunder" and words of similar import
when used in this Trust Agreement shall refer to this Trust Agreement as a whole
and not to any particular provision of this Trust Agreement; Article, Section
and Exhibit references contained in this Trust Agreement are references to
Articles, Sections and Exhibits in or to this Trust Agreement unless otherwise
specified; and the term "including" shall mean "including without limitation".
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(d) The definitions contained in this Trust 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.
(e) Any agreement, instrument or statute defined or referred to herein or
in any instrument or certificate delivered in connection herewith means such
agreement, instrument or statute as from time to time amended, modified or
supplemented and includes (in the case of agreements or instruments) references
to all attachments thereto and instruments incorporated therein; references to a
Person are also to its permitted successors and assigns.
ARTICLE II
Organization
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Section 2.01. Name. The trust created hereby (the "Trust") shall be
known as "NovaStar Mortgage Funding Trust Series _______", 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 2.02. Office. The office of the Trust shall be in care of the
Owner Trustee at the Corporate Trust Office or at such other address in Delaware
as the Owner Trustee may designate by written notice to the Certificateholders
and the Company.
Section 2.03. Purposes and Powers. The purpose of the Trust is to engage
in the following activities:
(i) to issue the Bonds pursuant to the Indenture and the
Certificates pursuant to this Trust Agreement and to sell the Bonds and the
Certificates;
(ii) to pay the organizational, start-up and transactional expenses
of the Trust;
(iii) to hold, assign, grant, transfer, pledge and convey the
Mortgage Loans pursuant to the Indenture and to hold, manage and distribute
to the Certificateholders pursuant to Section 5.01 any portion of the
Mortgage Loans released from the Lien of, and remitted to the Trust
pursuant to the Indenture;
(iv) to purchase and hold the Initial Mortgage Loans pursuant to
this Trust Agreement and to purchase and hold the Subsequent Mortgage Loans
pursuant to the Mortgage Loan Purchase Agreement;
(v) to enter into and perform its obligations under the Basic
Documents to which it is to be a party;
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(vi) if directed by holders of Certificates representing more than
50% of the beneficial interests in the Trust, sell the Trust Estate
subsequent to the discharge of the Indenture, all for the benefit of the
holders of the Certificates;
(vii) 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
(viii) subject to compliance with the Basic Documents, to engage in
such other activities as may be required in connection with conservation of
the Owner Trust Estate and the making of distributions to the
Certificateholder and the Bondholders.
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 Trust Agreement or the
Basic Documents.
Section 2.04. Appointment of Owner Trustee. The Company 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 2.05. Initial Capital Contribution of Owner Trust Estate. The
Company hereby sells, assigns, transfers, conveys and sets over to the Trust, as
of the date hereof, the sum of $1. The Owner Trustee hereby acknowledges receipt
in trust from the Company, as of the date hereof, of the foregoing contribution,
which shall constitute the initial corpus of the Trust and shall be deposited in
the Certificate Distribution Account. The Owner Trustee also acknowledges on
behalf of the Trust the receipt in trust of the Mortgage Loans and the rights
with respect to the representations and warranties made by the Seller under the
Mortgage Loan Purchase Agreement and all other amounts constituting part of the
Trust Estate (such items plus all other amounts or items included in the Trust
Estate from time to time, the "Owner Trust Estate").
Section 2.06. Declaration of Trust. The Owner Trustee hereby declares that
it shall hold the Owner Trust Estate in trust upon and subject to the conditions
set forth herein for the use and benefit of the Certificateholders, subject to
the obligations of the Trust under the Basic Documents. It is the intention of
the parties hereto that the Trust constitute a "business trust" under the
Business Trust Statute and that this Trust Agreement constitute the governing
instrument of such business trust. It is the intention of the parties hereto
that, for federal and state income and state and local franchise tax purposes,
the Trust shall not be treated as (i) an association subject separately to
taxation as a corporation, (ii) a "publicly traded partnership" as defined in
Treasury Regulation Section 1.7704-1 or (iii) a "taxable mortgage pool" as
defined in Section 7701(i) of the Code, and that the Bonds shall be debt, and
the provisions of this Trust Agreement shall be interpreted to further this
intention. Except as otherwise provided in this Trust Agreement, the rights of
the Certificateholders will be those of equity owners of the Trust. 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.
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Section 2.07. Liability of the Holders of the Certificates. The Holders of
the Certificates shall be jointly and severally liable directly to and shall
indemnify the Trust and the Owner Trustee for all losses, claims, damages,
liabilities and expenses of the Trust and the Owner Trustee (including Expenses,
to the extent not paid by the Servicer pursuant to Section 2.11 or out of the
Owner Trust Estate); provided, however, that the Holders of the Certificates
shall not be liable for payments required to be made on the Bonds or the
Certificates, or for any losses incurred by a Certificateholder in the capacity
of an investor in the Certificates or a Bondholder in the capacity of an
investor in the Bonds. The Holders of the Certificates shall be liable for and
shall promptly pay any entity level taxes imposed on the Trust. In addition, any
third party creditors of the Trust, including the Bond Insurer (other than in
connection with the obligations described in the second preceding sentence for
which the Holders of the Certificates shall not be liable) shall be deemed third
party beneficiaries of this paragraph. The obligations of the Holders of the
Certificates under this paragraph shall be evidenced by the Certificates.
Section 2.08. Title to Trust Property. Except with respect to the Mortgage
Loans, which will be assigned of record to the Indenture Trustee pursuant to the
Indenture, legal title to 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, a co-trustee and/or a separate trustee, as the case may be.
Section 2.09. 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. The Trust shall
not have any employees in any state other than Delaware; provided, however, that
nothing herein shall restrict or prohibit the Owner Trustee from having
employees within or without the State of Delaware or taking actions outside the
State of Delaware in order to comply with Section 2.03. 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. The only office of the Trust will be
at the Corporate Trust Office in Delaware.
Section 2.10. Representations and Warranties of the Company. The Company
hereby represents and warrants to the Owner Trustee and the Bond Insurer 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 its
property or the conduct of its business shall require such qualifications
and in which the failure to so qualify would have a material adverse effect
on the business, properties, assets or condition (financial or other) of
the Company.
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(iii) The Company has the power and authority to execute and
deliver this Trust Agreement and to carry out its terms; the Company has
full power and authority to convey and assign the property to be conveyed
and assigned to and deposited with the Trust as part of the Owner Trust
Estate and the Company has duly authorized such conveyance and assignment
and deposit to the Trust by all necessary corporate action; and the
execution, delivery and performance of this Trust Agreement have been duly
authorized by the Company by all necessary corporate action.
(iv) The consummation of the transactions contemplated by this
Trust 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 bylaws 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 Basic 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) The Trust is not required to register as an investment
company under the Investment Company Act and is not under the control of a
Person required to so register.
Section 2.11. Payment of Trust Fees. The Servicer shall pay the Owner
Trustee Fee pursuant to Section 3.07 of the Servicing Agreement and shall pay
the Trust's expenses (including expenses of the Owner Trustee and the Indenture
Trustee) incurred with respect to the performance of the Trust's duties under
the Indenture pursuant to Section 5.06 of the Servicing Agreement, or, if such
amounts are insufficient, the Owner Trustee shall be paid pursuant to Section
5.01 hereof.
Section 2.12. Investment Company. Neither the Company nor any holder of a
Certificate shall take any action which would cause the Trust to become an
"investment company" which would be required to register under the Investment
Company Act.
ARTICLE III
Conveyance of the Initial Mortgage Loans;
Certificates
Section 3.01. Conveyance of the Mortgage Loans. The Company, concurrently
with the execution and delivery hereof, does hereby Grant to the Trust, without
recourse, all its right, title and interest in and to the Initial Mortgage
Loans, including all interest and principal received on or with respect to the
Initial Mortgage Loans after the Cut-off Date (other than payments of principal
and interest due on the Mortgage Loans on or before the Cut-off Date) the
proceeds thereof and all rights
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under the Related Documents (including the related Mortgage Files). In addition,
the Company hereby Grants to the Trust all of its right, title, and interest in,
to, and under the Mortgage Loan Purchase Agreement and the Mortgage Loan Sale
Agreement.
The conveyance of the Initial Mortgage Loans by the Company to the Trust
hereunder is intended to facilitate the simultaneous issuance of the Bonds under
the Indenture and issuance of the Certificates hereunder. The parties hereto
intend that the conveyance of the Initial Mortgage Loans by the Company to the
Trust hereunder constitute a sale by the Company to the Trust of all of the
Company's right, title and interest in and to the Initial Mortgage Loans.
However, if the transactions contemplated by this Trust Agreement are determined
to constitute a financing, the Company hereby Grants to the Trust a security
interest in the Owner Trust Estate and all distributions thereon and proceeds
thereof, and this Trust Agreement shall constitute a security agreement under
applicable law, and in such event, the parties hereto acknowledge that the
Indenture Trustee, in addition to holding the Initial Mortgage Loans for the
benefit of the Bondholders and the Bond Insurer, holds the Mortgage Loans as
designee of the Trust.
Section 3.02. Initial Ownership. Upon the formation of the Trust by the
contribution by the Company pursuant to Section 2.05 and until the conveyance of
the Initial Mortgage Loans pursuant to Section 3.01 and the issuance of the
Certificates, and thereafter except as otherwise permitted hereunder, the
Company shall be the sole Certificateholder.
Section 3.03. The Certificates. The Certificates shall be issued in the
form of one or more Certificates each representing not less than a 10%
Certificate Percentage Interest. The Certificates shall initially be registered
in the name of NovaStar Certificates Financing Corporation ("NCFC"). The
Certificates shall be executed on behalf of the Trust by manual or facsimile
signature of an authorized officer of the Owner Trustee and authenticated in the
manner provided in Section 3.04. Certificates bearing the manual or facsimile
signatures of individuals who were, at the time when such signatures shall have
been affixed, authorized to sign on behalf of the Trust, shall be validly issued
and entitled to the benefit of this Trust Agreement, notwithstanding that such
individuals or any of them shall have ceased to be so authorized prior to the
authentication and delivery of such Certificates or did not hold such offices at
the date of authentication and delivery of such Certificates. A Person shall
become a Certificateholder and shall be entitled to the rights and subject to
the obligations of a Certificateholder hereunder upon such Person's acceptance
of a Certificate duly registered in such Person's name, pursuant to Section
3.05.
A transferee of a Certificate shall become a Certificateholder and shall be
entitled to the rights and subject to the obligations of a Certificateholder
hereunder upon such transferee's acceptance of a Certificate duly registered in
such transferee's name pursuant to and upon satisfaction of the conditions set
forth in Section 3.05.
Section 3.04. Authentication of Certificates. The Owner Trustee shall
cause all Certificates issued hereunder to be executed and authenticated on
behalf of the Trust, authenticated and delivered to or upon the written order of
the Company, signed by its chairman of the board, its president or any vice
president, without further corporate action by the Company, in authorized
denominations. No
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Certificate shall entitle its holder to any benefit under this Trust Agreement
or be valid for any purpose unless there shall appear on such Certificate a
certificate of authentication substantially in the form set forth in Exhibit A,
executed by the Owner Trustee or the Certificate Registrar by manual signature;
such authentication shall constitute conclusive evidence that such Certificate
shall have been duly authenticated and delivered hereunder. All Certificates
shall be dated the date of their authentication.
Section 3.05. Registration of and Limitations on Transfer and Exchange of
Certificates. The Certificate Registrar shall keep or cause to be kept, a
Certificate Register in which, subject to such reasonable regulations as it may
prescribe, the Certificate Registrar shall provide for the registration of
Certificates and of transfers and exchanges of Certificates as herein
provided._________________________ shall be the initial Certificate Registrar.
If the Certificate Registrar resigns or is removed, the Owner Trustee shall
appoint a successor Certificate Registrar.
Subject to satisfaction of the conditions set forth below with respect to
the Certificate, upon surrender for registration of transfer of any Certificate
at the office or agency maintained pursuant to Section 3.09, the Owner Trustee
or the Certificate Registrar shall execute, authenticate and deliver in the name
of the designated transferee or transferees, one or more new Certificates in
authorized denominations of a like aggregate amount dated the date of
authentication by the Owner Trustee or the Certificate Registrar. At the option
of a Holder, Certificates may be exchanged for other Certificates of authorized
denominations of a like aggregate amount upon surrender of the Certificates to
be exchanged at the office or agency maintained pursuant to Section 3.09.
Every Certificate presented or surrendered for registration of transfer or
exchange shall be accompanied by a written instrument of transfer in form
satisfactory to the Certificate Registrar duly executed by the Holder or such
Holder's attorney duly authorized in writing. Each Certificate surrendered for
registration of transfer or exchange shall be canceled and subsequently disposed
of by the Certificate Registrar in accordance with its customary practice.
No service charge shall be made for any registration of transfer or
exchange of Certificates, but the Owner Trustee or the Certificate Registrar may
require payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer or exchange of Certificates.
No Person shall become a Certificateholder until it shall establish its
non-foreign status by submitting to the Certificate Paying Agent an IRS Form
W-9 and the Certificate of Non-Foreign Status set forth in Exhibit F hereto.
No transfer, sale, pledge or other disposition of a Certificate shall be
made unless such transfer, sale, pledge or other disposition is exempt from the
registration requirements of the Securities Act and any applicable state
securities laws or is made in accordance with said Act and laws. In the event of
any such transfer, the Certificate Registrar or the Company shall prior to such
transfer require the transferee to execute (a) either (i) an investment letter
in substantially the form attached hereto as Exhibit C (or in such form and
substance reasonably satisfactory to the Certificate
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Registrar and the Company) which investment letter shall not be an expense of
the Trust, the Owner Trustee, the Certificate Registrar, the Servicer, the Bond
Insurer or the Company and which investment letter states that, among other
things, such transferee (A) is a "qualified institutional buyer" as defined
under Rule 144A, acting for its own account or the accounts of other "qualified
institutional buyers" as defined under Rule 144A and (B) is aware that the
proposed transferor intends to rely on the exemption from registration
requirements under the Securities Act of 1933, as amended, provided by Rule 144A
or (ii) (A) a written Opinion of Counsel acceptable to and in form and substance
satisfactory to the Certificate Registrar, the Company and the Bond Insurer that
such transfer may be made pursuant to an exemption, describing the applicable
exemption and the basis therefor, from said Act and laws or is being made
pursuant to said Act and laws, which Opinion of Counsel shall not be an expense
of the Trust, the Owner Trustee, the Certificate Registrar, the Servicer, the
Bond Insurer or the Company and (B) the transferee executes a representation
letter, substantially in the form of Exhibit D hereto, and the transferor
executes a representation letter, substantially in the form of Exhibit E hereto,
each acceptable to and in form and substance satisfactory to the Certificate
Registrar and the Company certifying the facts surrounding such transfer, which
representation letters shall not be an expense of the Trust, the Owner Trustee,
the Certificate Registrar, the Servicer, the Bond Insurer or the Company and (b)
the Certificate of Non-Foreign Status (in substantially the form attached hereto
as Exhibit F) acceptable to and in form and substance reasonably satisfactory to
the Certificate Registrar and the Company, which certificate shall not be an
expense of the Trust, the Owner Trustee, the Certificate Registrar, the
Servicer, the Bond Insurer or the Company. If the Certificateholder is unable to
provide a Certificate of Non-Foreign Status, the Certificateholder must provide
an Opinion of Counsel as described above in this paragraph. The
Certificateholder desiring to effect such transfer shall, and does hereby agree
to, indemnify the Trust, the Owner Trustee, the Certificate Registrar, the
Servicer, the Bond Insurer and the Company against any liability that may result
if the transfer is not so exempt or is not made in accordance with such federal
and state laws. Neither an Opinion of Counsel nor a certification set forth in
clause (a) of this paragraph will be required in connection with the initial
transfer of any such Certificate by the Purchaser to NCFC pursuant to the
Certificates Sale Agreement or the pledge of any such Certificate by NCFC to
________________________ ("Broker") and the certification set forth in clause
(b) of this paragraph will not be required in connection with the pledge of any
such Certificate by NCFC to Broker.
No transfer of a Certificate or any interest therein shall be made to any
employee benefit plan or certain other retirement plans and arrangements,
including individual retirement accounts and annuities, Xxxxx plans and bank
collective investment funds and insurance company general or separate accounts
in which such plans, accounts or arrangements are invested, that are subject to
ERISA, or Section 4975 of the Code (collectively, "Plan"), any Person acting,
directly or indirectly, on behalf of any such Plan or any Person acquiring such
Certificates with "plan assets" of a Plan within the meaning of the Department
of Labor regulation promulgated at 29 C.F.R. (S)2510.3-101 ("Plan Assets")
unless the Company, the Owner Trustee, the Certificate Registrar and the
Servicer are provided with an Opinion of Counsel which establishes to the
satisfaction of the Company, the Owner Trustee, the Certificate Registrar and
the Servicer that the purchase of Certificates is permissible under applicable
law, will not constitute or result in any prohibited transaction under ERISA or
Section 4975 of the Code and will not subject the Company, the Owner Trustee,
the
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Certificate Registrar or the Servicer to any obligation or liability (including
obligations or liabilities under ERISA or Section 4975 of the Code) in addition
to those undertaken in this Trust Agreement, which Opinion of Counsel shall not
be an expense of the Company, the Owner Trustee, the Certificate Registrar, the
Bond Insurer or the Servicer. In lieu of such Opinion of Counsel, a Plan, any
Person acting, directly or indirectly, on behalf of any such Plan or any Person
acquiring such Certificates with Plan Assets of a Plan may provide a
certification in the form of Exhibit G to this Trust Agreement, which the
Company, the Owner Trustee, the Certificate Registrar and the Servicer may rely
upon without further inquiry or investigation. Neither an Opinion of Counsel nor
a certification will be required in connection with the initial transfer or
pledge of any such Certificate by the Company to an affiliate of the Company (in
which case, the Company or any affiliate thereof shall have deemed to have
represented that such affiliate is not a Plan or a Person investing Plan Assets
of any Plan) and the Owner Trustee shall be entitled to conclusively rely upon a
representation (which, upon the request of the Owner Trustee, shall be a written
representation) from the Company of the status of such transferee as an
affiliate of the Company.
In addition, no transfer, sale, assignment, pledge or other disposition of
a Certificate shall be made unless the proposed transferee executes a
representation letter substantially in the form of Exhibit D, or substantially
in the form of Exhibit H hereto, that (1) the transferee is acquiring the
Certificate for its own behalf and is not acting as agent or custodian for any
other person or entity in connection with such acquisition and (2) if the
transferee is a partnership, grantor trust or S corporation for federal income
tax purposes, the Certificates are not more than 50% of the assets of the
partnership, grantor trust or S corporation.
No offer, sale, transfer, pledge, hypothecation or other disposition
(including any pledge, sale or transfer under a repurchase transaction or
securities loan) of any Certificate shall be made to any transferee unless,
prior to such disposition, the proposed transferor delivers to the Owner Trustee
an Opinion of Counsel, rendered by a law firm generally recognized to be
qualified to opine concerning the tax aspects of asset securitization, to the
effect that such transfer (including any disposition permitted following any
default under any pledge or repurchase transaction) will not cause the Trust to
be (i) treated as an association taxable as a corporation for federal income tax
purposes, (ii) taxable as a taxable mortgage pool as defined in Section 7701(i)
of the Code or (iii) taxable as a "publicly traded partnership" as defined in
Treasury Regulation section 1.7704-1. Notwithstanding the foregoing, the
provisions of this paragraph shall not apply to the initial transfer of the
Certificates by the Company to the Purchaser pursuant to the Ownership Transfer
Agreement and by the Purchaser to NCFC pursuant to the Certificates Sale
Agreement.
Notwithstanding any other provisions of this Section 3.05 to the contrary,
(i) on the Closing Date, the Company may transfer the Certificates to the Seller
pursuant to the Mortgage Loan Purchase Agreement and the Seller may transfer the
Certificates to NCFC pursuant to the Certificates Sale Agreement and (ii) on or
after the Closing Date, NCFC may pledge the Certificates to secure its
obligations to Broker; provided, however, that Broker may not become the
registered owner of any of the Certificates without complying with the foregoing
provisions of this Section 3.05, as applicable.
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Section 3.06. Mutilated, Destroyed, Lost or Stolen Certificates. If (a)
any mutilated Certificate shall be surrendered to the Certificate Registrar, or
if the Certificate Registrar shall receive evidence to its satisfaction of the
destruction, loss or theft of any Certificate and (b) there shall be delivered
to the Certificate Registrar and the Owner Trustee such security or indemnity as
may be required by them to save each of them harmless, then in the absence of
notice to the Certificate Registrar or the Owner Trustee that such Certificate
has been acquired by a bona fide purchaser, the Owner Trustee shall execute on
behalf of the Trust and the Owner Trustee or the Certificate Registrar, shall
authenticate and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Certificate, a new Certificate of like tenor and
denomination. In connection with the issuance of any new Certificate under this
Section 3.06, the Owner Trustee or the Certificate Registrar may require the
payment of a sum sufficient to cover any expenses of the Owner Trustee or the
Certificate Registrar (including fees and expenses of counsel) and any tax or
other governmental charge that may be imposed in connection therewith. Any
duplicate Certificate issued pursuant to this Section 3.06 shall constitute
conclusive evidence of ownership in the Trust, as if originally issued, whether
or not the lost, stolen or destroyed Certificate shall be found at any time.
Section 3.07. Persons Deemed Certificateholders. Prior to due presentation
of a Certificate for registration of transfer, the Owner Trustee, the
Certificate Registrar or any Certificate Paying Agent may treat the Person in
whose name any Certificate is registered in the Certificate Register as the
owner of such Certificate for the purpose of receiving distributions pursuant to
Section 5.02 and for all other purposes whatsoever, and none of the Trust, the
Owner Trustee, the Certificate Registrar or any Paying Agent shall be bound by
any notice to the contrary.
Section 3.08. Access to List of Certificateholders' Names and Addresses.
The Certificate Registrar shall furnish or cause to be furnished to the Company
or the Owner Trustee, within 15 days after receipt by the Certificate Registrar
of a written request therefor from the Company or the Owner Trustee, a list, in
such form as the Company or the Owner Trustee, as the case may be, may
reasonably require, of the names and addresses of the Certificateholders as of
the most recent Record Date. Each Holder, by receiving and holding a
Certificate, shall be deemed to have agreed not to hold any of the Trust, 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 3.09. Maintenance of Office or Agency. The Owner Trustee on behalf
of the Trust, shall maintain in Wilmington, Delaware, an office or offices or
agency or agencies where Certificates may be surrendered for registration of
transfer or exchange and where notices and demands to or upon the Owner Trustee
in respect of the Certificates and the Basic Documents may be served. The Owner
Trustee initially designates the Corporate Trust Office as its office for such
purposes. The Owner Trustee shall give prompt written notice to the Company and
the Certificateholders of any change in the location of the Certificate Register
or any such office or agency.
Section 3.10. Certificate Paying Agent. (a) The Certificate Paying Agent
shall make distributions to Certificateholders from the Certificate Distribution
Account on behalf of the Trust in accordance with the provisions of the
Certificates and Section 5.01 hereof from payments remitted
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to the Certificate Paying Agent by the Indenture Trustee pursuant to Section
3.05 of the Indenture. The Trust hereby appoints _________________________ as
Certificate Paying Agent and __________________________ hereby accepts such
appointment and further agrees that it will be bound by the provisions of this
Trust Agreement relating to the Certificate Paying Agent and shall:
(i) hold all sums held by it for the payment of amounts due with
respect to the Certificates in trust for the benefit of the Persons
entitled thereto until such sums shall be paid to such Persons or otherwise
disposed of as herein provided;
(ii) give the Owner Trustee notice of any default by the Trust of
which it has actual knowledge in the making of any payment required to be
made with respect to the Certificates;
(iii) at any time during the continuance of any such default,
upon the written request of the Owner Trustee forthwith pay to the Owner
Trustee on behalf of the Trust all sums so held in Trust by such
Certificate Paying Agent;
(iv) immediately resign as Certificate Paying Agent and forthwith
pay to the Owner Trustee on behalf of the Trust all sums held by it in
trust for the payment of Certificates if at any time it ceases to meet the
standards under this Section 3.10 required to be met by the Certificate
Paying Agent at the time of its appointment;
(v) comply with all requirements of the Code with respect to the
withholding from any payments made by it on any Certificates of any
applicable withholding taxes imposed thereon and with respect to any
applicable reporting requirements in connection therewith;
(vi) deliver to the Owner Trustee a copy of the report to
Certificateholders prepared with respect to each Payment Date by the
Servicer pursuant to Section 4.01 of the Servicing Agreement; and
(vii) not institute bankruptcy proceedings against the Issuer in
connection with this Trust Agreement.
(b) The Trust may revoke such power and remove the Certificate Paying
Agent if it determines in its sole discretion that the Certificate Paying Agent
shall have failed to perform its obligations under this Trust Agreement in any
material respect. _______________________ shall be permitted to resign as
Certificate Paying Agent upon 30 days written notice to the Owner Trustee and
the Bond Insurer; provided__________________________ is also resigning as Paying
Agent under the Indenture at such time. In the event that ___________________
shall no longer be the Certificate Paying Agent under this Trust Agreement and
Paying Agent under the Indenture, the Owner Trustee shall appoint a successor to
act as Certificate Paying Agent (which shall be a bank or trust company) and
which shall also be the successor Paying Agent under the Indenture. The Owner
Trustee shall cause such successor Certificate Paying Agent or any additional
Certificate Paying Agent appointed by the Owner Trustee to execute and deliver
to the Owner Trustee an
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instrument accepting the terms of this Section 3.10 as it relates to the
Certificate Paying Agent. The Certificate Paying Agent shall return all
unclaimed funds to the Trust and upon removal of a Certificate Paying Agent such
Certificate Paying Agent shall also return all funds in its possession to the
Trust. The provisions of Sections 6.01, 6.03, 6.04 and 7.01 shall apply to the
Certificate Paying Agent to the extent applicable. Any reference in this Trust
Agreement to the Certificate Paying Agent shall include any co-paying agent
unless the context requires otherwise.
(c) The Certificate Paying Agent shall establish and maintain with itself
a trust account (the "Certificate Distribution Account") in which the
Certificate Paying Agent shall deposit, on the same day as it is received from
the Indenture Trustee, each remittance received by the Certificate Paying Agent
with respect to payments made pursuant to the Indenture. The Certificate Paying
Agent shall make all distributions to Certificates, from moneys on deposit in
the Certificate Distribution Account.
(d) The Certificate Paying Agent shall be paid by the Indenture Trustee
from sources other than the Trust Estate.
Section 3.11. Pre-Funding Amount and Interest Coverage Amount. On the
Closing Date, (i) proceeds of the offering of the Bonds in an amount equal to
the Original Pre-Funded Amount shall be deposited into the Pre-Funding Account
as contemplated by Section 8.08 of the Indenture; (ii) proceeds of the offering
of the Bonds in an amount equal to the Interest Coverage Amount shall be
deposited into the Interest Coverage Account as contemplated by Section 8.09 of
the Indenture; (iii) the Original Pre-Funded Amount and the Interest Coverage
Amount shall become part of the Owner Trust Estate under this Trust Agreement;
and (iv) the Original Pre-Funded Amount and the Interest Coverage Amount shall
become part of the Trust Estate and the Collateral under the Indenture.
Section 3.12. Purchase of Subsequent Mortgage Loans. On each Subsequent
Transfer Date, (i) the Trust shall purchase, and the Seller shall sell, the
Subsequent Mortgage Loans, as contemplated by and subject to the conditions set
forth in Section 2.2 of the Home Equity Loan Purchase Agreement; (ii) in
consideration for the Purchase of the Subsequent Mortgage Loans, the Trust shall
instruct the Indenture Trustee to transfer funds in the Pre-Funding Account to
the Seller as contemplated by and subject to the conditions set forth in Section
8.08 of the Indenture, (iii) the Subsequent Mortgage Loan shall become part of
the Owner Trust Estate under this Trust Agreement and (iv) the Subsequent
Mortgage Loans shall become part of the Trust Estate and the Collateral under
the Indenture.
ARTICLE IV
Authority and Duties of Owner Trustee
-------------------------------------
Section 4.01. General Authority. The Owner Trustee is authorized and
directed to execute and deliver the Basic Documents to which the Trust is to be
a party and each certificate or other document attached as an exhibit to or
contemplated by the Basic Documents to which the Trust is to be a party and any
amendment or other agreement or instrument described herein, as evidenced
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conclusively by the Owner Trustee's execution thereof. In addition to the
foregoing, the Owner Trustee is authorized, but shall not be obligated, except
as otherwise provided in this Trust Agreement, to take all actions required of
the Trust pursuant to the Basic Documents.
Section 4.02. General Duties. It shall be the duty of the Owner Trustee to
discharge (or cause to be discharged) all of its responsibilities pursuant to
the terms of this Trust Agreement and the Basic Documents to which the Trust is
a party and to administer the Trust in the interest of the Certificateholders,
subject to the Basic Documents and in accordance with the provisions of this
Trust Agreement.
Section 4.03. Action upon Instruction. (a) Subject to this Article IV and
in accordance with the terms of the Basic Documents, the Certificateholders may
by written instruction direct the Owner Trustee in the management of the Trust.
Such direction may be exercised at any time by written instruction of the
Certificateholders pursuant to this Article IV.
(b) Notwithstanding the foregoing, the Owner Trustee shall not be required
to take any action hereunder or under any Basic Document if the Owner Trustee
shall have reasonably determined, or shall have been advised by counsel, that
such action is likely to result in liability on the part of the Owner Trustee or
is contrary to the terms hereof or of any Basic Document or is otherwise
contrary to law.
(c) Whenever the Owner Trustee is required to decide between alternative
courses of action permitted or required by the terms of this Trust Agreement or
under any Basic Document, or in the event that the Owner Trustee is unsure as to
the application of any provision of this Trust Agreement or any Basic Document
or any such provision is ambiguous as to its application, or is, or appears to
be, in conflict with any other applicable provision, or in the event that this
Trust 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 shall promptly
give notice (in such form as shall be appropriate under the circumstances) to
the Certificateholders (with a copy to the Bond Insurer) requesting instruction
as to the course of action to be adopted, and to the extent the Owner Trustee
acts in good faith in accordance with any written instruction of the
Certificateholders (with the consent of the Bond Insurer), 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 Trust Agreement or the Basic Documents, as it shall deem to be in the best
interests of the Certificateholders, the Bondholders and the Bond Insurer, and
the Owner Trustee shall have no liability to any Person for such action or
inaction.
Section 4.04. No Duties Except as Specified under Specified 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 in connection with, any document contemplated
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hereby to which the Owner Trustee is a party, except as expressly provided (a)
in accordance with the powers granted to and the authority conferred upon the
Owner Trustee pursuant to this Trust Agreement, (b) in accordance with the Basic
Documents and (c) in accordance with any document or instruction delivered to
the Owner Trustee pursuant to Section 4.03; and no implied duties or obligations
shall be read into this Trust Agreement or any Basic Document against the Owner
Trustee. The Owner Trustee shall have no responsibility (i) to file any
financing or continuation statement in any public office at any time, (ii) to
otherwise perfect or maintain the perfection of any security interest or lien
granted to it hereunder, (iii) to record this Trust Agreement or any Basic
Document or (iv) to prepare or file any Securities and Exchange Commission
filing for the Trust. 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 4.05. Restrictions. (a) The Owner Trustee or the Company (or an
Affiliate thereof) shall not take any action (i) that is inconsistent with the
purposes of the Trust set forth in Section 2.03 or (ii) that, to the actual
knowledge of the Owner Trustee based on an Opinion of Counsel rendered by a law
firm generally recognized to be qualified to opine concerning the tax aspects of
asset securitization, would result in the Trust becoming taxable as a
corporation for federal income tax purposes or (iii) would result in the
amendment or modification of the Basic Documents or this Trust Agreement without
the prior written consent of the Bond Insurer. The Certificateholders shall not
direct the Owner Trustee to take action that would violate the provisions of
this Section 4.05.
(b) The Owner Trustee shall not convey or transfer any of the Trust's
properties or assets, including those included in the Trust Estate, to any
person unless (i) it shall have received an Opinion of Counsel rendered by a law
firm generally recognized to be qualified to opine concerning the tax aspects of
asset securitization to the effect that such transaction will not have any
material adverse tax consequence to the Trust or any Certificateholder and (ii)
such conveyance or transfer shall not violate the provisions of Section 3.16(b)
of the Indenture.
(c) The Trust shall not commingle its assets with those of any other
entity. The Trust shall maintain its financial and accounting books and records
separate from those of any other entity. Except as expressly set forth herein,
the Trust shall pay its indebtedness, operating expenses and liabilities from
its own funds, and the Trust shall not pay the indebtedness, operating expenses
and liabilities of any other entity. The Trust shall maintain appropriate
minutes or other records of all appropriate actions and shall maintain its
office separate from the offices of the Company.
Section 4.06. Prior Notice to Certificateholders with Respect to Certain
Matters. With respect to the following matters, the Owner Trustee shall not take
action unless at least 30 days before the taking of such action, the Owner
Trustee shall have notified the Certificateholders and the Bond Insurer in
writing of the proposed action and the Certificateholders and the Bond Insurer
shall
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not have notified the Owner Trustee in writing prior to the 30th day after such
notice is given that such Certificateholders and the Bond Insurer have withheld
consent or provided alternative direction (provided, however, that any direction
by the Certificateholders shall require the prior consent of the Bond Insurer):
(a) the initiation of any claim or lawsuit by the Trust (except claims or
lawsuits brought in connection with the collection of cash distributions due and
owing under the Mortgage 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 cash distributions due and
owing under the Mortgage 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 Trust Agreement or any Basic
Document in circumstances where the consent of any Bondholder or the Bond
Insurer is required;
(d) the amendment or other change to this Trust Agreement or any Basic
Document in circumstances where the consent of any Bondholder or the Bond
Insurer is not required and such amendment materially adversely affects the
interest of the Certificateholders;
(e) the appointment pursuant to the Indenture of a successor Bond
Registrar, Paying Agent or Indenture Trustee or, pursuant to this Trust
Agreement, of a successor Certificate Registrar or Certificate Paying Agent or
the consent to the assignment by the Bond Registrar, Paying Agent, Indenture
Trustee, Certificate Registrar or Certificate Paying Agent of its obligations
under the Indenture or this Trust Agreement, as applicable;
(f) the consent to the calling or waiver of any default under any Basic
Document;
(g) the consent to the assignment by the Indenture Trustee or Servicer of
their respective obligations under any Basic Document;
(h) except as provided in Article VIII hereof, dissolve, terminate or
liquidate the Trust in whole or in part;
(i) merge or consolidate the Trust with or into any other entity, or
convey or transfer all or substantially all of the Trust's assets to any other
entity;
(j) cause the Trust to incur, assume or guaranty any indebtedness other
than as set forth in this Trust Agreement;
(k) perform any act that conflicts with any other Basic Document;
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(l) perform any act which would make it impossible to carry on the
ordinary business of the Trust as described in Section 2.03 hereof;
(m) confess a judgment against the Trust;
(n) possess Trust assets or assign the Trust's right to property for other
than a Trust purpose;
(o) cause the Trust to lend any funds to any entity; or
(p) change the Trust's purpose and powers from those enumerated in this
Trust Agreement.
Section 4.07. Action by Certificateholders with Respect to Certain
Matters. The Owner Trustee shall not have the power, except upon the direction
of the Certificateholders, and with the consent of the Bond Insurer, to (a)
remove or replace the Servicer under the Servicing Agreement pursuant to
Sections 6.01 and 6.02 thereof or to remove or replace the Indenture Trustee
under the Indenture pursuant to Section 6.08 thereof, (b) except as expressly
provided in the Basic Documents, sell the Mortgage Loans after the termination
of the Indenture, (c) institute proceedings to have the Trust declared or
adjudicated to be bankrupt or insolvent, (d) consent to the institution of
bankruptcy or insolvency proceedings against the Trust, (e) 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, (f) 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, (g) make any assignment for the benefit of the Trust's creditors, (h)
cause the Trust to admit in writing its inability to pay its debts generally as
they become due, (i) take any action or cause the Trust to take any action, in
furtherance of any of the foregoing clauses (c) through (i) (any of such
clauses, a "Bankruptcy Action"). So long as the Indenture and the Insurance
Agreement remain in effect and no Bond Insurer Default exists, no
Certificateholder shall have the power to take, and shall 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.
The Owner Trustee shall take the actions referred to in the preceding sentence
only upon written instructions signed by the Certificateholders and with the
consent of the Bond Insurer.
Section 4.08. 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 consent of the Bond Insurer, the Bondholders and the
Owner Trustee 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. This paragraph shall survive
for one year and one day following termination of this Trust Agreement.
Section 4.09. Restrictions on Certificateholders' Power. The
Certificateholders shall not direct the Owner Trustee to take or to refrain from
taking any action if such action or inaction would
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be contrary to any obligation of the Trust or the Owner Trustee under this Trust
Agreement or any of the Basic Documents or would be contrary to Section 2.03,
nor shall the Owner Trustee be obligated to follow any such direction, if given.
Section 4.10. Majority Control. Except as expressly provided herein, any
action that may be taken by the Certificateholders under this Trust Agreement
may be taken by the Holders of Certificates evidencing not less than a majority
of the outstanding Certificate Percentage Interests of the Certificates. Except
as expressly provided herein, any written notice of the Certificateholders
delivered pursuant to this Trust Agreement shall be effective if signed by
Holders of Certificates evidencing not less than a majority of the outstanding
Certificate Principal Balance of the Certificates at the time of the delivery of
such notice.
Section 4.11. Optional Redemption. Upon receipt of written instructions
provided to the Owner Trustee by the Holder or Holders of 100% of the
Certificates, the Owner Trustee shall cause the Issuer to redeem the Bonds in
accordance with Section 8.07 of the Indenture and shall provide all necessary
notices on behalf of the Issuer to effect the foregoing, provided that such
Holder or Holders shall deposit with the Indenture Trustee an amount equal to
the aggregate redemption price specified under Section 8.07 of the Indenture,
which shall be applied by the Indenture Trustee solely to make such redemption
payments. The Owner Trustee shall not have the power to exercise the right of
the Issuer to redeem the Bonds pursuant to Section 7.05 of the Indenture, except
as provided above.
ARTICLE V
Application of Trust Funds
--------------------------
Section 5.01. Distributions. (a) On each Payment Date, the Certificate
Paying Agent shall distribute to the Certificateholders, on a pro rata basis
based on the Certificate Percentage Interests thereof, all funds on deposit in
the Certificate Distribution Account and available therefor (as provided in
Section 3.05 of the Indenture) for such Payment Date as reduced by any amount
owing to the Owner Trustee hereunder and any Expenses of the Trust remaining
unpaid.
(b) In the event that any withholding tax is imposed on the distributions
(or allocations of income) to a Certificateholder, such tax shall reduce the
amount otherwise distributable to such Certificateholder in accordance with this
Section 5.01. The Certificate Paying Agent is hereby authorized and directed to
retain or cause to be retained from amounts otherwise distributable to the
Certificateholders sufficient funds for the payment of any tax that is legally
owed by the Trust (but such authorization shall not prevent the Owner Trustee
from contesting any such tax in appropriate proceedings, and withholding payment
of such tax, if permitted by law, pending the outcome of such proceedings). The
amount of any withholding tax imposed with respect to a Certificateholder shall
be treated as cash distributed to such Certificateholder at the time it is
withheld by the Certificate Paying Agent 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.
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Certificateholder), the Certificate Paying Agent may in its sole discretion
withhold such amounts in accordance with this paragraph (b).
(c) Distributions to Certificateholders shall be subordinated to the
creditors of the Trust, including the Bondholders and the Bond Insurer.
Section 5.02. Method of Payment. Subject to Section 8.01(c), distributions
required to be made to Certificateholders on any Payment Date as provided in
Section 5.01 shall be made to each Certificateholder of record on the preceding
Record Date either by, in the case of any Certificateholder owning Certificates
having a Certificate Percentage Interest of 100%, wire transfer, in immediately
available funds, to the account of such Holder at a bank or other entity having
appropriate facilities therefor, if such Certificateholder shall have provided
to the Certificate Registrar appropriate written instructions at least five
Business Days prior to such Record Date or, if not, by check mailed to such
Certificateholder at the address of such Holder appearing in the Certificate
Register.
Section 5.03. Tax Returns. The Indenture Trustee shall (a) maintain (or
cause to be maintained) the books of the Trust on a calendar year basis using
the accrual method of accounting, (b) deliver (or cause to be delivered) to each
Certificateholder as may be required by the Code and applicable Treasury
Regulations, such information as may be required to enable each
Certificateholder to prepare its federal and state income tax returns, (c)
prepare and file or cause to be prepared and filed such tax returns relating to
the Trust as may be required by the Code and applicable Treasury Regulations
(making such elections as may from time to time be required or appropriate under
any applicable state or federal statutes, rules or regulations) and (d) collect
or cause to be collected any withholding tax as described in and in accordance
with Section 5.01 of this Trust Agreement with respect to income or
distributions to Certificateholders and prepare or cause to be prepared the
appropriate forms relating thereto.
Section 5.04. Statements to Certificateholders. On each Payment Date, the
Certificate Paying Agent shall send to each Certificateholder the statement or
statements provided to the Owner Trustee and the Certificate Paying Agent by the
Indenture Trustee pursuant to Section 7.05 of the Indenture with respect to such
Payment Date.
ARTICLE VI
Concerning the Owner Trustee
----------------------------
Section 6.01. 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 Trust Agreement. Each of
the Owner Trustee and the Certificate Paying Agent also agrees to disburse all
moneys actually received by it constituting part of the Owner Trust Estate upon
the terms of the Basic Documents and this Trust Agreement. The Owner Trustee
shall not be answerable or accountable hereunder or under any Basic Document
under any circumstances, except
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(i) for its own willful misconduct, gross negligence or bad faith or grossly
negligent failure to act or (ii) in the case of the inaccuracy of any
representation or warranty contained in Section 6.03 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 with respect to any action taken
or omitted to be taken by it in accordance with the instructions of the
Certificateholders permitted under this Trust Agreement;
(b) No provision of this Trust Agreement or any Basic Document shall
require the Owner Trustee to expend or risk funds or otherwise incur any
financial liability in the performance of any of its rights, duties or powers
hereunder or under any Basic Document if the Owner Trustee shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured or provided to it;
(c) Under no circumstances shall the Owner Trustee be liable for
indebtedness evidenced by or arising under any of the Basic Documents, including
the principal of and interest on the Bonds;
(d) The Owner Trustee shall not be responsible for or in respect of the
validity or sufficiency of this Trust Agreement or for the due execution hereof
by 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 Basic Documents, the Bonds, the Certificates, other than
the certificate of authentication on the Certificates, if executed by the Owner
Trustee and the Owner Trustee shall in no event assume or incur any liability,
duty, or obligation to any Bondholder or to any Certificateholder, other than as
expressly provided for herein or expressly agreed to in the Basic Documents;
(e) The Owner Trustee shall not be liable for the default or misconduct of
the Company, Indenture Trustee, Certificate Registrar or the Servicer under any
of the Basic Documents or otherwise and the Owner Trustee shall have no
obligation or liability to perform the obligations of the Trust under this Trust
Agreement or the Basic Documents that are required to be performed by the
Indenture Trustee under the Indenture or the Seller under the Home Equity Loan
Purchase Agreement; and
(f) The Owner Trustee shall be under no obligation to exercise any of the
rights or powers vested in it or duties imposed by this Trust Agreement, or to
institute, conduct or defend any litigation under this Trust Agreement or
otherwise or in relation to this Trust Agreement or any Basic Document, at the
request, order or direction of any of the Certificateholders, unless such
Certificateholders have offered to the Owner Trustee security or indemnity
satisfactory to it against the costs, expenses and liabilities that may be
incurred by the Owner Trustee therein or thereby. The right of the Owner Trustee
to perform any discretionary act enumerated in this Trust Agreement or in any
Basic Document shall not be construed as a duty.
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Section 6.02. Furnishing of Documents. The Owner Trustee shall furnish to
the Securityholders promptly upon receipt of a written reasonable request
therefor, duplicates or copies of all reports, notices, requests, demands,
certificates, financial statements and any other instruments furnished to the
Trust under the Basic Documents.
Section 6.03. Representations and Warranties. The Owner Trustee, in its
individual capacity, hereby represents and warrants to the Company, for the
benefit of the Certificateholders and the Bond Insurer that:
(a) 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 Trust Agreement;
(b) It has taken all corporate action necessary to authorize the execution
and delivery by it of this Trust Agreement, and this Trust Agreement will be
executed and delivered by one of its officers who is duly authorized to execute
and deliver this Trust Agreement on its behalf;
(c) The execution, delivery, authentication and performance by it of this
Trust Agreement will not require the authorization, consent or approval of, the
giving of notice to, the filing or registration with, or the taking of any other
action with respect to, any governmental authority or agency;
(d) Neither the execution nor the delivery by it of this Trust Agreement,
nor the consummation by it of the transactions contemplated hereby nor
compliance by it with any of the terms or provisions hereof will contravene any
federal or Delaware law, governmental rule or regulation governing the banking
or trust powers of the Owner Trustee or any judgment or order binding on it, or
constitute any default under its charter documents or bylaws or any indenture,
mortgage, contract, agreement or instrument to which it is a party or by which
any of its properties may be bound;
(e) This Trust Agreement, assuming due authorization, execution and
delivery by the Company, constitutes a valid, legal and binding obligation of
the Owner Trustee, enforceable against it in accordance with the terms hereof
subject to applicable bankruptcy, insolvency, reorganization, moratorium and
other laws affecting the enforcement of creditors' rights generally and to
general principles of equity, regardless of whether such enforcement is
considered in a proceeding in equity or at law;
(f) The Owner Trustee is not in default with respect to any order or
decree of any court or any order, regulation or demand of any Federal, state,
municipal or governmental agency, which default might have consequences that
would materially and adversely affect the condition (financial or other) or
operations of the Owner Trustee or its properties or might have consequences
that would materially adversely affect its performance hereunder; and
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(g) No litigation is pending or, to the best of the Owner Trustee's
knowledge, threatened against the Owner Trustee which would prohibit its
entering into this Trust Agreement or performing its obligations under this
Trust Agreement.
Section 6.04. 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 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 Trust hereunder and in the
performance of its duties and obligations under this Trust Agreement or the
Basic Documents, the Owner Trustee (i) may act directly or through its agents,
attorneys, custodians or nominees (including persons acting under a power of
attorney) pursuant to agreements entered into with any of them, and the Owner
Trustee shall not be liable for the conduct or misconduct of such agents,
attorneys, custodians or nominees (including persons acting under a power of
attorney) if such persons 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 Trust Agreement or
any Basic Document.
Section 6.05. Not Acting in Individual Capacity. Except as provided in this
Article VI, in accepting the trusts hereby created Wilmington Trust Company acts
solely as Owner Trustee here under and not in its individual capacity, and all
Persons having any claim against the Owner Trustee by reason of the transactions
contemplated by this Trust Agreement or any Basic Document shall look only to
the Owner Trust Estate for payment or satisfaction thereof.
Section 6.06. Owner Trustee Not Liable for Certificates or Related
Documents. The recitals contained herein and in the Certificates (other than the
signatures of the Owner Trustee on the Certificates) shall be taken as the
statements of 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 Trust Agreement, of any Basic Document or of the
Certificates (other than the signatures of the Owner Trustee on the
Certificates) or the Bonds, or of any Related Documents. The Owner Trustee shall
at no time have any responsibility or liability with respect to the sufficiency
of the Owner Trust Estate or its ability to generate the payments to be
distributed to Certificateholders under this Trust Agreement or the Bondholders
under the Indenture, including compliance by the Company or the Seller with any
warranty or representation made under any Basic
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Document or in any related document or the accuracy of any such warranty or
representation, or any action of the Certificate Paying Agent, the Certificate
Registrar or the Indenture Trustee taken in the name of the Owner Trustee.
Section 6.07. Owner Trustee May Own Certificates and Bonds. The Owner
Trustee in its individual or any other capacity may, subject to Section 3.05,
become the owner or pledgee of Certificates or Bonds and may deal with the
Company, the Seller, the Certificate Paying Agent, the Certificate Registrar and
the Indenture Trustee in transactions with the same rights as it would have if
it were not Owner Trustee.
Section 6.08. Payments from Owner Trust Estate. All payments to be made by
the Owner Trustee under this Trust Agreement or any of the Basic Documents to
which the Owner Trustee is a party shall be made only from the income and
proceeds of the Owner Trust Estate or from other amounts required to be provided
by the Certificateholders and only to the extent that the Owner Trust shall have
received income or proceeds from the Owner Trust Estate or the
Certificateholders to make such payments in accordance with the terms hereof.
Wilmington Trust Company, in its individual capacity, shall not be liable for
any amounts payable under this Trust Agreement or any of the Basic Documents to
which the Owner Trustee is a party.
Section 6.09. Doing Business in Other Jurisdictions. Notwithstanding
anything contained herein to the contrary, neither___________________ nor the
Owner Trustee shall be required to take any action in any jurisdiction other
than in the State of Delaware if the taking of such action will, even after the
appointment of a co-trustee or separate trustee in accordance with Section 9.05
hereof, (i) require the consent or approval or authorization or order of or the
giving of notice to, or the registration with or the taking of any other action
in respect of, any state or other governmental authority or agency of any
jurisdiction other than the State of Delaware; (ii) result in any fee, tax or
other governmental charge under the laws of the State of Delaware becoming
payable by Wilmington Trust Company; or (iii) subject___________________ to
personal jurisdiction in any jurisdiction other than the State of Delaware for
causes of action arising from acts unrelated to the consummation of the
transactions by Wilmington Trust Company or the Owner Trustee, as the case may
be, contemplated hereby.
Section 6.10. Liability of Certificate Registrar and Certificate Paying
Agent. All provisions affording protection to or limiting the liability of the
Owner Trustee shall inure as well to the Certificate Registrar and Certificate
Paying Agent.
ARTICLE VII
Compensation of Owner Trustee
-----------------------------
Section 7.01. 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 and as set forth in Appendix A to
the Indenture, and the Owner Trustee shall be reimbursed
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by the Company or the Servicer for its reasonable expenses hereunder and under
the Basic Documents, including the reasonable compensation, expenses and
disbursements of such agents, representatives, experts and counsel as the Owner
Trustee may reasonably employ in connection with the exercise and performance of
its rights and its duties hereunder and under the Basic Documents. The amount of
the Owner Trustee Fee shall be paid by the Servicer to the Owner Trustee
pursuant to Section 3.07(a)(viii) of the Servicing Agreement.
Section 7.02. Indemnification. The Company shall indemnify, defend and hold
harmless the Owner Trustee and its 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 Trust Agreement, the Basic Documents, the Owner Trust
Estate, the administration of the Owner Trust Estate or the action or inaction
of the Owner Trustee hereunder, provided, that:
(i) the Company shall not be liable for or required to indemnify
an Indemnified Party from and against Expenses arising or resulting from
the Owner Trustee's willful misconduct, gross negligence or bad faith or as
a result of any inaccuracy of a representation or warranty contained in
Section 6.03 expressly made by the Owner Trustee;
(ii) with respect to any such claim, the Indemnified Party shall
have given the Company written notice thereof promptly after the
Indemnified Party shall have actual knowledge thereof;
(iii) while maintaining control over its own defense, the Company
shall consult with the Indemnified Party in preparing such defense; and
(iv) notwithstanding anything in this Trust Agreement to the
contrary, the Company shall not be liable for settlement of any claim by an
Indemnified Party entered into without the prior consent of the Company
which consent shall not be unreasonably withheld.
The indemnities contained in this Section shall survive the resignation or
termination of the Owner Trustee or the termination of this Trust Agreement. In
the event of any claim, action or proceeding for which indemnity will be sought
pursuant to this Section 7.02, the Owner Trustee's choice of legal counsel, if
other than the legal counsel retained by the Owner Trustee in connection with
the execution and delivery of this Trust Agreement, shall be subject to the
approval of the Company, which approval shall not be unreasonably withheld. In
addition, upon written notice to the Owner Trustee and with the consent of the
Owner Trustee which consent shall not be unreasonably withheld, the Company has
the right to assume the defense of any claim, action or proceeding against the
Owner Trustee.
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ARTICLE VIII
Termination of Trust Agreement
------------------------------
Section 8.01. Termination of Trust Agreement. (a) This Trust Agreement
(other than Article VII) and the Trust shall terminate and be of no further
force or effect upon the earliest of (i) the final distribution of all moneys or
other property or proceeds of the Owner Trust Estate in accordance with the
terms of the Indenture and this Trust Agreement, (ii) the Payment Date in
______________, or (iii) the distribution of all of the assets of the Owner
Trust Estate, in accordance with written instructions provided to the Owner
Trustee by Holders of a majority of the Certificates, following the optional
redemption of the Bonds by the Issuer pursuant to Section 8.07 of the Indenture;
provided in each case that all amounts owing to the Bondholders and the Bond
Insurer to the extent payable from the Owner Trust Estate or proceeds thereof
have been paid in full and that all obligations under the Indenture have been
discharged. The bankruptcy, liquidation, dissolution, death or incapacity of any
Certificateholder shall not (x) operate to terminate this Trust Agreement or the
Trust or (y) entitle such Certificateholder's legal representatives or heirs to
claim an accounting or to take any action or proceeding in any court for a
partition or winding up of all or any part of the Trust or the Owner Trust
Estate or (z) otherwise affect the rights, obligations and liabilities of the
parties hereto.
(b) Except as provided in Section 8.01(a), neither the Company nor any
Certificateholder shall be entitled to revoke or terminate the Trust.
(c) Notice of any termination of the Trust, specifying the Payment Date
upon which Certificateholders shall surrender their Certificates to the
Certificate Paying Agent for payment of the final distribution and cancellation,
shall be given by the Certificate Paying Agent by letter to Certificateholders
and the Bond Insurer mailed within five Business Days of receipt of notice of
the final payment on the Bonds from the Indenture Trustee, stating (i) the
Payment Date upon or with respect to which final payment of the Certificates
shall be made upon presentation and surrender of the Certificates at the office
of the Certificate Paying Agent therein designated, (ii) the amount of any such
final payment and (iii) that the Record Date otherwise applicable to such
Payment Date is not applicable, payments being made only upon presentation and
surrender of the Certificates at the office of the Certificate Payment Agent
therein specified. The Certificate Paying Agent shall give such notice to the
Owner Trustee and the Certificate Registrar at the time such notice is given to
Certificateholders. Upon presentation and surrender of the Certificates, the
Certificate Paying Agent shall cause to be distributed to Certificateholders
amounts distributable on such Payment Date pursuant to Section 5.01.
In the event that all of the Certificateholders shall not surrender their
Certificates for cancellation within six months after the date specified in the
above mentioned written notice, the Certificate Paying Agent shall give a second
written notice to the remaining Certificateholders to surrender their
Certificates for cancellation and receive the final distribution with respect
thereto. Subject to applicable laws with respect to escheat of funds, if within
one year following the Payment Date on which final payment of the Certificates
was to have been made pursuant to Section 3.05 of
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the Indenture, all the Certificates shall not have been surrendered for
cancellation, the Certificate Paying Agent may take appropriate steps, or may
appoint an agent to take appropriate steps, to contact the remaining
Certificateholders concerning surrender of their Certificates, and the cost
thereof shall be paid out of the funds and other assets that shall remain
subject to this Trust Agree ment. Any funds remaining in the Certificate
Distribution Account after exhaustion of such remedies shall be distributed by
the Certificate Paying Agent to the Holder of the Certificate.
(d) Upon the winding up of the Trust and its termination, the Owner Trustee
shall cause the Certificate of Trust to be canceled by filing a certificate of
cancellation with the Secretary of State in accordance with the provisions of
Section 3810(d) of the Business Trust Statute.
ARTICLE IX
Successor Owner Trustees and Additional Owner Trustees
------------------------------------------------------
Section 9.01. Eligibility Requirements for Owner Trustee. The Owner Trustee
shall at all times be a corporation reasonably acceptable to the Bond Insurer
and satisfying the provisions of Section 3807(a) of the Business Trust Statute;
authorized to exercise corporate trust powers; having a combined capital and
surplus of at least $50,000,000 and subject to supervision or examination by
federal or state authorities; and having (or having a parent that has) a rating
of at least Baa3 or is otherwise acceptable to the Bond Insurer, Xxxxx'x and
Standard & Poor's. 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 9.01, the Owner Trustee shall
resign immediately in the manner and with the effect specified in Section 9.02.
Section 9.02. Replacement of Owner Trustee. The Owner Trustee may at any
time resign and be discharged from the trusts hereby created by giving 30 days
prior written notice thereof to the Bond Insurer and the Company. Upon receiving
such notice of resignation, the Company shall promptly appoint a successor Owner
Trustee with the consent of the Bond Insurer which will not be unreasonably
withheld, by written instrument, in duplicate, one copy of which instrument
shall be delivered to the resigning Owner Trustee and to the successor Owner
Trustee. If no successor Owner Trustee shall have been so appointed and have
accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Owner Trustee may petition any court of competent
jurisdiction for the appointment of a successor Owner Trustee reasonably
acceptable to the Certificateholders and the Bond Insurer.
If at any time the Owner Trustee shall cease to be eligible in accordance
with the provisions of Section 9.01 and shall fail to resign after written
request therefor by the Company or the Bond Insurer, or if at any time the Owner
Trustee shall be legally unable to act, or shall be adjudged bankrupt or
insolvent, or a receiver of the Owner Trustee or of its property shall be
appointed, or any
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public officer shall take charge or control of the Owner Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, then the Company may remove the Owner Trustee with the consent of
the Bond Insurer and shall remove the Owner Trustee at the direction of the Bond
Insurer.
Any resignation or removal of the Owner Trustee and appointment of a
successor Owner Trustee pursuant to any of the provisions of this Section shall
not become effective until acceptance of appointment by the successor Owner
Trustee pursuant to Section 9.03 and payment of all fees and expenses owed to
the outgoing Owner Trustee. The Servicer shall provide notice of such
resignation or removal of the Owner Trustee to each of the Rating Agencies and
the Bond Insurer.
Section 9.03. Successor Owner Trustee. Any successor Owner Trustee
appointed pursuant to Section 9.02 shall execute, acknowledge and deliver to the
Indenture Trustee and to its predecessor Owner Trustee an instrument accepting
such appointment under this Trust Agreement, and thereupon the resignation or
removal of the predecessor Owner Trustee shall become effective, and such
successor 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 Trust Agreement, with like effect as if originally named
as Owner Trustee. The predecessor Owner Trustee shall upon payment of its fees
and expenses deliver to the successor Owner Trustee all documents and statements
and monies held by it under this Trust Agreement; and the predecessor Owner
Trustee shall execute and deliver such instruments and do such other things as
may reasonably be required for fully and certainly vesting and confirming in the
successor Owner Trustee all such rights, powers, duties and obligations.
No successor Owner Trustee shall accept appointment as provided in this
Section 9.03 unless at the time of such acceptance such successor Owner Trustee
shall be eligible pursuant to Section 9.01.
Upon acceptance of appointment by a successor Owner Trustee pursuant to
this Section 9.03, the Owner Trustee shall mail notice thereof to all
Certificateholders, the Indenture Trustee, the Bondholders, the Bond Insurer and
the Rating Agencies.
Section 9.04. Merger or Consolidation of Owner Trustee. Any Person into
which the Owner Trustee may be merged or converted or with which it may be
consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Owner Trustee shall be a party, or any Person
succeeding to all or substantially all of the corporate trust business of the
Owner Trustee, shall be the successor of the Owner Trustee hereunder, without
the execution or filing of any instrument or any further act on the part of any
of the parties hereto, anything herein to the contrary notwithstanding;
provided, that such Person shall be eligible pursuant to Section 9.01 and,
provided, further, that the Owner Trustee shall mail notice of such merger or
consolidation to the Rating Agencies and the Bond Insurer.
Section 9.05. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Trust Agreement, at any time, for
the purpose of meeting any legal requirements
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of any jurisdiction in which any part of the Owner Trust Estate may at the time
be located, the Owner Trustee shall have the power and shall execute and deliver
all instruments to appoint one or more Persons to act as co-trustee, jointly
with the Owner Trustee, or as separate trustee or 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 Owner
Trustee or the Bond Insurer may consider necessary or desirable. No co-trustee
or separate trustee under this Trust Agreement shall be required to meet the
terms of eligibility as a successor Owner Trustee pursuant to Section 9.01 and
no notice of the appointment of any co-trustee or separate trustee shall be
required pursuant to Section 9.03, except that notice to, and the consent of,
the Bond Insurer shall be required for appointment of a co-trustee.
Each separate trustee and co-trustee shall, to the extent permitted by law,
be appointed and act subject to the following provisions and conditions:
(a) All rights, powers, duties and obligations conferred or imposed upon
the Owner Trustee shall be conferred upon and exercised or performed by the
Owner Trustee and such separate trustee or co-trustee jointly (it being
understood that such separate trustee or co-trustee is not authorized to act
separately without the Owner Trustee joining in such act), except to the extent
that under any law of any jurisdiction in which any particular act or acts are
to be performed, the Owner Trustee shall be incompetent or unqualified to
perform such act or acts, in which event such rights, powers, duties and
obligations (including the holding of title to the Owner Trust Estate or any
portion thereof in any such jurisdiction) shall be exercised and performed
singly by such separate trustee or co-trustee, but solely at the direction of
the Owner Trustee;
(b) No trustee under this Trust Agreement shall be personally liable by
reason of any act or omission of any other trustee under this Trust Agreement;
and
(c) The Owner Trustee may at any time accept the resignation of or remove
any separate trustee or co-trustee.
Any notice, request or other writing given to the Owner Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Trust Agreement and the
conditions of this Article IX. Each separate trustee and co-trustee, upon its
acceptance of the trusts conferred, shall be vested with the estates or property
specified in its instrument of appointment, either jointly with the Owner
Trustee or separately, as may be provided therein, subject to all the provisions
of this Trust Agreement, specifically including every provision of this Trust
Agreement relating to the conduct of, affecting the liability of, or affording
protection to, the Owner Trustee. Each such instrument shall be filed with the
Owner Trustee.
Any separate trustee or co-trustee may at any time appoint the Owner
Trustee as its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Trust Agreement on its behalf and in its name. If any separate trustee or co-
trustee shall die, become incapable of acting, resign or be removed, all of its
estates, properties,
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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
co-trustee or separate trustee.
ARTICLE X
Miscellaneous
-------------
Section 10.01. Amendments. (a) This Trust Agreement may be amended from
time to time by the parties hereto (with the prior written consent of the Bond
Insurer and with prior notice to the Rating Agencies) as specified in this
Section, provided that any amendment, except as provided in subparagraph (e)
below, shall be accompanied by an Opinion of Counsel addressed to the Owner
Trustee and obtained by the Servicer to the effect that such amendment (i)
complies with the provisions of this Section and (ii) would not cause the Trust
(if NCFC was not the Holder of 100% of the Certificates or if the Bond Insurance
Policy is outstanding) to be subject to an entity level tax for federal income
tax purposes.
(b) If the purpose of the amendment (as detailed therein) is to correct
any mistake, eliminate any inconsistency, cure any ambiguity or deal with any
matter not covered (i.e. to give effect to the intent of the parties and, if
applicable, to the expectations of the Holders), it shall not be necessary to
obtain the consent of any Holders, but the Owner Trustee shall be furnished with
(i) a letter from each of the Rating Agencies that the amendment will not result
in the downgrading or withdrawal of the rating then assigned to any Bond or the
rating then assigned to any Bond without taking into account the Bond Insurance
Policy or (ii) an Opinion of Counsel obtained by the Servicer to the effect that
such action will not adversely affect in any material respect the interests of
any Holders or the Bond Insurer, and the consent of the Bond Insurer shall be
obtained.
(c) If the purpose of the amendment is to prevent the imposition of any
federal or state taxes at any time that any Security is outstanding, it shall
not be necessary to obtain the consent of any Holder, but the Owner Trustee and
the Bond Insurer shall be furnished with an Opinion of Counsel obtained by the
Servicer that such amendment is necessary or helpful to prevent the imposition
of such taxes and is not materially adverse to any Holder or the Bond Insurer
and the consent of the Bond Insurer shall be obtained.
(d) If the purpose of the amendment is to add or eliminate or change any
provision of the Trust Agreement other than as contemplated in (b) and (c)
above, the amendment shall require (i) an Opinion of Counsel obtained by the
Servicer to the effect that such action will not adversely affect in any
material respect the interests of any Holders or the Bond Insurer, (ii) the
consent of the Bond Insurer and (iii) either (A) a letter from each of the
Rating Agencies that the amendment will not result in the downgrading or
withdrawal of the rating then assigned to any Bond or the rating then assigned
to any Bond without taking into account the Bond Insurance Policy or (B) the
consent of the Indenture Trustee and the Holders of Certificates evidencing a
majority of the Certificate Principal Balance of the Certificates; provided,
however, that no such amendment shall (1) reduce in any manner the amount of, or
delay the timing of, payments received that are required to be distributed
-29-
on any Certificate without the consent of the related Certificateholder and the
Bond Insurer, or (2) reduce the aforesaid percentage of Certificates the Holders
of which are required to consent to any such amendment, without the consent of
the Holders of all such Certificates then outstanding.
(e) If the purpose of the amendment is to provide for the holding of any
of the Certificates in book-entry form, it shall require the consent of Holders
of all such Certificates then outstanding; provided, that the Opinion of Counsel
specified in subparagraph (a) above shall not be required.
(f) If the purpose of the amendment is to provide for the issuance of
additional certificates representing an interest in the Trust, it shall not be
necessary to obtain the consent of any Holder, but the Owner Trustee shall be
furnished with (i) an Opinion of Counsel obtained by the Servicer to the effect
that such action will not adversely affect in any material respect the interests
of any Holders or the Bond Insurer and (ii) a letter from the each of the Rating
Agencies that the amendment will not result in the downgrading or withdrawal of
the rating then assigned to any Bonds or the rating then assigned to the Bonds
without taking into account the Bond Insurance Policy and the consent of the
Bond Insurer shall be obtained.
(g) Promptly after the execution of any such amendment or consent, the
Servicer shall furnish written notification of the substance of such amendment
or consent to each Certificateholder, the Indenture Trustee, the Bond Insurer
and each of the Rating Agencies. It shall not be necessary for the consent of
Certificateholders or the Indenture Trustee pursuant to this Section 10.01 to
approve the particular form of any proposed amendment or consent, but it shall
be sufficient if such consent shall approve the substance thereof. The manner of
obtaining such consents (and any other consents of Certificateholders provided
for in this Trust Agreement or in any other Basic Document) and of evidencing
the authorization of the execution thereof by Certificateholders shall be
subject to such reasonable requirements as the Owner Trustee may prescribe.
(h) In connection with the execution of any amendment to any agreement to
which the Trust is a party, other than this Trust Agreement, the Owner Trustee
shall be entitled to receive and conclusively rely upon an Opinion of Counsel to
the effect that such amendment is authorized or permitted by the documents
subject to such amendment and that all conditions precedent in the Basic
Documents for the execution and delivery thereof by the Trust or the Owner
Trustee, as the case may be, have been satisfied.
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 of the State of Delaware.
Section 10.02. No Legal Title to Owner Trust Estate. The Certificateholders
shall not have legal title to any part of the Owner Trust Estate solely by
virtue of their status as Certificateholders. The Certificateholders shall be
entitled to receive distributions with respect to their undivided beneficial
interests therein only in accordance with Articles V and VIII. No transfer, by
operation of law or otherwise, of any right, title or interest of the
Certificateholders to and in their ownership interest in the Owner Trust Estate
shall operate to terminate this Trust Agreement or the trusts
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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 10.03. Limitations on Rights of Others. Except for Section 2.07,
the provisions of this Trust Agreement are solely for the benefit of the Owner
Trustee, the Company, the Certificateholders, the Bond Insurer and, to the
extent expressly provided herein, the Indenture Trustee and the Bondholders, and
nothing in this Trust Agreement (other than Section 2.07), 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
Trust Agreement or any covenants, conditions or provisions contained herein.
Section 10.04. 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, to the Owner Trustee at: _________ ; Attention:
Corporate Trust Administration; to the Company at: NovaStar Mortgage Funding
Corporation, 0000 Xxxx 00xx Xxxxx, Xxxxx 000, Xxxxxxxx, Xxxxxx 00000, Attention:
Xxxxx Xxx; to the Indenture Trustee at:________________________________________
_________________________________________________________; to the Bond Insurer
at:________________________________________________________________________;
to [Rating Agency] at:___________________________, Attention:_______________; to
[Rating Agency] at ___________________________________________________ or, as to
each party, at such other address as shall be designated by such party in a
written notice to each other party.
(b) Any notice required or permitted to be given to a Certificateholder
shall be given by first-class mail, postage prepaid, at the address of such
Holder as shown in the Certificate Register. Any notice so mailed within the
time prescribed in this Trust Agreement shall be conclusively presumed to have
been duly given, whether or not the Certificateholder receives such notice.
(c) A copy of any notice delivered to the Owner Trustee or the Trust shall
also be delivered to the Company.
Section 10.05. Severability. Any provision of this Trust 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 10.06. Separate Counterparts. This Trust 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 10.07. Successors and Assigns. All representations, warranties,
covenants and agreements contained herein shall be binding upon, and inure to
the benefit of, each of the Company, the Bond Insurer, the Owner Trustee and its
successors and each Certificateholder and its successors
-31-
and permitted assigns, all as herein provided. Any request, notice, direction,
consent, waiver or other instrument or action by a Certificateholder shall bind
the successors and assigns of such Certificateholder.
Section 10.08. No Petition. The Owner Trustee, by entering into this Trust
Agreement and each Certificateholder, by accepting a Certificate, hereby
covenant and agree that they will not at any time institute against the Company
or the Trust, or join in any institution against the Company or the Trust of,
any bankruptcy proceedings under any United States federal or state bankruptcy
or similar law in connection with any obligations to the Certificates, the
Bonds, this Trust Agreement or any of the Basic Documents. This Section shall
survive for one year following the termination of this Trust Agreement.
Section 10.09. No Recourse. Each Certificateholder by accepting a
Certificate acknowledges that such Certificateholder's Certificates represent
beneficial interests in the Trust only and do not represent interests in or
obligations of the Company, the Seller, the Owner Trustee, the Indenture Trustee
or any Affiliate thereof and no recourse may be had against such parties or
their assets, except as may be expressly set forth or contemplated in this Trust
Agreement, the Certificates or the Basic Documents.
Section 10.10. Headings. The headings of the various Articles and Sections
herein are for convenience of reference only and shall not define or limit any
of the terms or provisions hereof.
Section 10.11. GOVERNING LAW. THIS TRUST 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 10.12. Integration. This Trust Agreement constitutes the entire
agreement among the parties hereto pertaining to the subject matter hereof and
supersedes all prior agreements and understanding pertaining thereto.
Section 10.13. Third Party Beneficiary. The Bond Insurer shall be a third
party beneficiary hereof and shall be entitled to enforce the provisions hereof
as if a party hereto. This provision shall not be construed to limit or modify
in any way the fiduciary obligation of the Owner Trustee to the beneficial
owners of the Trust.
IN WITNESS WHEREOF, the Company and the Owner Trustee have caused their names
to be signed hereto by their respective officers thereunto duly authorized, all
as of the day and year first above written.
NOVASTAR MORTGAGE FUNDING CORPORATION, as Company,
By: __________________________________
Name:__________________
Title:_________________
__________________________________, as Owner Trustee,
By: __________________________________
Name:__________________
Title:_________________
Acknowledged and Agreed:
______________________________,
as Certificate Registrar
and Certificate Paying Agent
By:____________________________
Name:
Title:
EXHIBIT A
[Form of Certificate]
[Face]
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE
RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT TO SUCH ACT AND LAWS OR
IS SOLD OR TRANSFERRED IN TRANSACTIONS WHICH ARE EXEMPT FROM REGISTRATION UNDER
SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN ACCORDANCE WITH
THE PROVISIONS OF SECTION 3.05 OF THE TRUST AGREEMENT REFERRED TO HEREIN.
NO TRANSFER OF THIS CERTIFICATE SHALL BE MADE UNLESS THE CERTIFICATE REGISTRAR
SHALL HAVE RECEIVED EITHER (i) A REPRESENTATION LETTER FROM THE TRANSFEREE OF
THIS CERTIFICATE TO THE EFFECT THAT SUCH TRANSFEREE IS NOT AN EMPLOYEE BENEFIT
PLAN SUBJECT TO THE FIDUCIARY RESPONSIBILITY PROVISIONS OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), OR A PERSON ACTING
ON BEHALF OF ANY SUCH PLAN OR USING THE ASSETS OF ANY SUCH PLAN, OR (ii) IF THIS
CERTIFICATE IS PRESENTED FOR REGISTRATION IN THE NAME OF A PLAN SUBJECT TO THE
FIDUCIARY RESPONSIBILITY PROVISIONS OF ERISA, OR SECTION 4975 OF THE CODE (OR
COMPARABLE PROVISIONS OF ANY SUBSEQUENT ENACTMENTS), OR A TRUSTEE OF ANY SUCH
PLAN, OR ANY OTHER PERSON WHO IS USING THE ASSETS OF ANY SUCH PLAN TO EFFECT
SUCH ACQUISITION, AN OPINION OF COUNSEL TO THE EFFECT THAT THE PURCHASE OR
HOLDING OF THIS CERTIFICATE WILL NOT RESULT IN THE ASSETS OF THE OWNER TRUST
ESTATE BEING DEEMED TO BE "PLAN ASSETS" AND SUBJECT TO THE FIDUCIARY
RESPONSIBILITY PROVISIONS OF ERISA OR THE PROHIBITED TRANSACTION PROVISIONS OF
THE CODE, WILL NOT CONSTITUTE OR RESULT IN A PROHIBITED TRANSACTION WITHIN THE
MEANING OF SECTION 406 OR SECTION 407 OF ERISA OR SECTION 4975 OF THE CODE, AND
WILL NOT SUBJECT THE OWNER TRUSTEE OR THE COMPANY TO ANY OBLIGATION OR
LIABILITY.
NO TRANSFER OF THIS CERTIFICATE SHALL BE MADE UNLESS THE CERTIFICATE REGISTRAR
SHALL HAVE RECEIVED A CERTIFICATE OF NON-FOREIGN STATUS CERTIFYING AS TO THE
TRANSFEREE'S STATUS AS A U.S. PERSON OR CORPORATION UNDER U.S. LAW.
THIS CERTIFICATE DOES NOT REPRESENT AN INTEREST IN OR OBLIGATION OF THE SELLER,
THE COMPANY, THE SERVICER, THE INDENTURE TRUSTEE, OR THE
A-2
OWNER TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES, EXCEPT AS EXPRESSLY
PROVIDED IN THE TRUST AGREEMENT OR THE BASIC DOCUMENTS.
A-3
Certificate No. ______________________
Certificate Percentage Interest of this Certificate: _______%
Cut-off Date: __________________
First Payment Date ________________
CUSIP NO.: __________________________
NOVASTAR MORTGAGE FUNDING TRUST, SERIES _________
COLLATERALIZED MORTGAGE OBLIGATION CERTIFICATES
Evidencing a fractional undivided equity interest in the Owner Trust
Estate, the property of which consists primarily of the Mortgage Loans in
NovaStar Mortgage Funding Trust Series ________ (the "Trust"), a Delaware
business trust formed by
NOVASTAR MORTGAGE FUNDING CORPORATION, as Company, pursuant to the
Trust Agreement referred to below.
This certifies that [name of Holder] is the registered owner of the
Certificate Percentage Interest represented hereby.
The Trust was created pursuant to a Trust Agreement, dated as of
_______________, as amended and restated by the Amended and Restated Trust
Agreement, dated as of _______________ (as amended and supplemented from time to
time, the "Trust Agreement"), between the Company and ______________, as owner
trustee (as amended and supplemented from time to time, the "Owner Trustee",
which term includes any successor entity under the Trust Agreement), a summary
of certain of the pertinent provisions of which is set forth hereinafter. 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.
This Certificate is one of a duly authorized issue of NovaStar Mortgage
Funding Trust, Series _________ Collateralized Mortgage Obligation Certificates
(herein called the "Certificates") issued under the Trust Agreement to which
reference is hereby made for a statement of the respective rights thereunder of
the Company, the Owner Trustee and the Holders of the Certificates and the terms
upon which the Certificates are executed and delivered. All terms used in this
Certificate which are defined in the Trust Agreement shall have the meanings
assigned to them in the Trust Agreement. The Owner Trust Estate consists of the
Mortgage Loans in the NovaStar Mortgage Funding Trust Series ________ and a Bond
Insurance Policy. The rights of the Holders of the Certificates are subordinated
to the rights of the Holders of the Bonds, as set forth in the Indenture.
A-4
There will be distributed on the _____ day of each month or, if such _____
day is not a Business Day, the next Business Day (each, a "Payment Date"),
commencing in ________________, to the Person in whose name this Certificate is
registered (i) with respect to the first Payment Date, on the Closing Date and
(ii) with respect to every other Payment Date, at the close of business on the
last Business Day of the month preceding the month of such Payment Date (the
"Record Date"), such Certificateholder's Certificate Percentage Interest in the
amount to be distributed to Certificateholders on such Payment Date.
The Certificateholder, by its acceptance of this Certificate, agrees that
it will look solely to the funds on deposit in the Payment Account that have
been released from the Lien of the Indenture for payment hereunder and that
neither the Owner Trustee in its individual capacity nor the Company is
personally liable to the Certificateholders for any amount payable under this
Certificate or the Trust Agreement or, except as expressly provided in the Trust
Agreement, subject to any liability under the Trust 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 Bondholders as described in the Indenture, dated as of
______________, between the Trust and ___________________________, as Indenture
Trustee (the "Indenture").
The Company and each Certificateholder, by acceptance of a Certificate,
agree to treat, and to take no action inconsistent with the treatment of, the
Certificates for federal, state and local income tax purposes as an equity
interest in the Trust.
Each Certificateholder, by its acceptance of a Certificate, covenants and
agrees that such Certificateholder will not at any time institute against the
Company, or join in any institution against 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
similar law in connection with any obligations relating to the Certificates, the
Bonds, the Trust Agreement or any of the Basic Documents.
Distributions on this Certificate will be made as provided in the Trust
Agreement by the Certificate Paying Agent by wire transfer or check mailed to
the Certificateholder of record in the Certificate Register without the
presentation or surrender of this Certificate or the making of any notation
hereon. 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 Certificate Paying Agent of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the office or agency
maintained by the Certificate Registrar for that purpose by the Trust 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.
A-5
Unless the certificate of authentication hereon shall have been executed by
an authorized officer of the Owner Trustee, or an authenticating agent by manual
signature, this Certificate shall not entitle the Holder hereof to any benefit
under the Trust Agreement or be valid for any purpose.
THIS CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
A-6
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.
___________________________, not in its individual capacity
but solely as Owner Trustee
Dated: By: _______________________
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within-mentioned Trust
Agreement.
___________________________, not in its individual capacity
but solely as Owner Trustee
By: _______________________
Authorized Signatory
or: _________________________________________
As Authenticating Agent of the Trustee
By: _________________________________________
Authorized Signatory
A-7
[REVERSE OF CERTIFICATE]
The Certificates do not represent an obligation of, or an interest in, the
Company, the Seller, the Servicer, the Indenture Trustee, the Owner Trustee or
any Affiliates of any of them and no recourse may be had against such parties or
their assets, except as expressly set forth or contemplated herein or in the
Trust Agreement or the Basic 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 with respect to the Mortgage
Loans, all as more specifically set forth herein and in the Trust Agreement. A
copy of the Trust Agreement may be examined by any Certificateholder upon
written request during normal business hours at the principal office of the
Company and at such other places, if any, designated by the Company.
The Trust Agreement permits the amendment thereof as specified below,
provided that any amendment be accompanied by the consent of the Bond Insurer
and an Opinion of Counsel to the Owner Trustee to the effect that such amendment
complies with the provisions of the Trust Agreement and, if NovaStar
Certificates Funding Corporation was not the Holder of 100% of the Certificates,
would not cause the Trust to be subject to an entity level tax. If the purpose
of the amendment is to correct any mistake, eliminate any inconsistency, cure
any ambiguity or deal with any matter not covered, it shall not be necessary to
obtain the consent of any Holder, but the Owner Trustee shall be furnished with
(A) a letter from each of the Rating Agencies that the amendment will not result
in the downgrading or withdrawal of the rating then assigned to any Bond or the
rating then assigned to any Bond without taking into account the Bond Insurance
Policy or (B) an Opinion of Counsel to the effect that such action will not
adversely affect in any material respect the interests of any Holders, and the
consent of the Bond Insurer shall be obtained. If the purpose of the amendment
is to prevent the imposition of any federal or state taxes at any time that any
Security is outstanding, it shall not be necessary to obtain the consent of the
any Holder, but the Owner Trustee shall be furnished with an Opinion of Counsel
that such amendment is necessary or helpful to prevent the imposition of such
taxes and is not materially adverse to any Holder and the consent of the Bond
Insurer shall be obtained. If the purpose of the amendment is to add or
eliminate or change any provision of the Trust Agreement, other than as
specified in the preceding two sentences, the amendment shall require (A) an
Opinion of Counsel to the effect that such action will not adversely affect in
any material respect the interests of any Holders, (B) the consent of the Bond
Insurer and (C) either (a) a letter from each of the Rating Agencies that the
amendment will not result in the downgrading or withdrawal of the rating then
assigned to any Bond or the rating then assigned to any Bond without taking into
account the Bond Insurance Policy or (b) the consent of the Indenture Trustee
and the Holders of the Certificates evidencing a majority of the Certificate
Principal Balance of the Certificates; provided, however, that no such amendment
shall (i) reduce in any manner the amount of, or delay the timing of, payments
received that are required to be distributed on any Certificate without the
consent of the related Certificateholder and the Bond Insurer, or (ii) reduce
the aforesaid percentage of Certificates the Holders of which are required to
consent to any such amendment without the consent of the Holders of all such
Certificates then outstanding.
A-8
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 Trust in the Borough of Manhattan, The City of New York, accompanied by a
written instrument of transfer in form satisfactory to 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 _____________________________.
Except as provided in the Trust Agreement, the Certificates are issuable
only in a minimum Certificate Percentage Interest of 10%. 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 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 Certificate Paying Agent, the Certificate Registrar
and any agent of the Owner Trustee, the Certificate Paying Agent, 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 Certificate Paying Agent, the Certificate Registrar or any such agent shall
be affected by any notice to the contrary.
The obligations and responsibilities created by the Trust Agreement and the
Trust created thereby shall terminate as and when provided in accordance with
the terms of the Trust Agreement.
A-9
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
_______________________________________________________________________________
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-10
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for the information of the
Certificate Paying Agent:
Distribution shall be made by wire transfer in immediately available funds to
______________________________________________
_________________________________________________________________
for the account of ________________________________________, account number
______________, or, if mailed by check, to ______________.
Applicable statements should be mailed to__________________.
______________________________
Signature of assignee or agent
(for authorization of wire
transfer only)
EXHIBIT B
TO THE TRUST AGREEMENT
CERTIFICATE OF TRUST OF
NovaStar Mortgage Funding Trust Series ________
-----------------------------------------------
THIS Certificate of Trust of NovaStar Mortgage Funding Trust Series
________ (the "Trust"), dated ________________, is being duly executed and filed
by ______________________, a Delaware banking corporation, as trustee, to form a
business trust under the Delaware Business Trust Act (12 Del. Code, (S) 3801 et
seq.).
1. Name. The name of the business trust formed hereby is NovaStar Mortgage
Funding Trust Series_____________.
2. Delaware Trustee. The name and business address of the trustee of the
Trust in the State of Delaware is ______________________, __________________,
__________, ______________, 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.
______________________,
not in its individual capacity but solely as
owner trustee under a Trust Agreement dated
as of _____________________
By:
________________________
Name:
Title:
EXHIBIT C
[FORM OF RULE 144A INVESTMENT REPRESENTATION]
Description of Rule 144A Securities, including numbers:
_______________________________________________
_______________________________________________
_______________________________________________
_______________________________________________
The undersigned seller, as registered holder (the "Seller"), intends to
transfer the Rule 144A Securities described above to the undersigned buyer (the
"Buyer").
1. In connection with such transfer and in accordance with the agreements
pursuant to which the Rule 144A Securities were issued, the Seller hereby
certifies the following facts: Neither the Seller nor anyone acting on its
behalf has offered, transferred, pledged, sold or otherwise disposed of the Rule
144A Securities, any interest in the Rule 144A Securities or any other similar
security to, or solicited any offer to buy or accept a transfer, pledge or other
disposition of the Rule 144A Securities, any interest in the Rule 144A
Securities or any other similar security from, or otherwise approached or
negotiated with respect to the Rule 144A Securities, any interest in the Rule
144A Securities or any other similar security with, any person in any manner, or
made any general solicitation by means of general advertising or in any other
manner, or taken any other action, that would constitute a distribution of the
Rule 144A Securities under the Securities Act of 1933, as amended (the "1933
Act"), or that would render the disposition of the Rule 144A Securities a
violation of Section 5 of the 1933 Act or require registration pursuant thereto,
and that the Seller has not offered the Rule 144A Securities to any person other
than the Buyer or another "qualified institutional buyer" as defined in Rule
144A under the 0000 Xxx.
2. The Buyer warrants and represents to, and covenants with, the Owner
Trustee and the Company (each as defined in the Amended and Restated Trust
Agreement (the "Agreement"), dated as of ______________, between NovaStar
Mortgage Funding Corporation, as Company, and _____________, as Owner Trustee)
pursuant to Section 3.05 of the Agreement and __________________________________
as indenture trustee, as follows:
a. The Buyer understands that the Rule 144A Securities have not been
registered under the 1933 Act or the securities laws of any state.
b. The Buyer considers itself a substantial, sophisticated
institutional investor having such knowledge and experience in financial
and business matters that it is capable of evaluating the merits and risks
of investment in the Rule 144A Securities.
C-2
c. The Buyer has been furnished with all information regarding the
Rule 144A Securities that it has requested from the Seller, the Indenture
Trustee, the Owner Trustee or the Servicer.
d. Neither the Buyer nor anyone acting on its behalf has offered,
transferred, pledged, sold or otherwise disposed of the Rule 144A
Securities, any interest in the Rule 144A Securities or any other similar
security to, or solicited any offer to buy or accept a transfer, pledge or
other disposition of the Rule 144A Securities, any interest in the Rule
144A Securities or any other similar security from, or otherwise approached
or negotiated with respect to the Rule 144A Securities, any interest in the
Rule 144A Securities or any other similar security with, any person in any
manner, or made any general solicitation by means of general advertising or
in any other manner, or taken any other action, that would constitute a
distribution of the Rule 144A Securities under the 1933 Act or that would
render the disposition of the Rule 144A Securities a violation of Section 5
of the 1933 Act or require registration pursuant thereto, nor will it act,
nor has it authorized or will it authorize any person to act, in such
manner with respect to the Rule 144A Securities.
e. The Buyer is a "qualified institutional buyer" as that term is
defined in Rule 144A under the 1933 Act and has completed either of the
forms of certification to that effect attached hereto as Annex 1 or Annex
2. The Buyer is aware that the sale to it is being made in reliance on Rule
144A. The Buyer is acquiring the Rule 144A Securities for its own account
or the accounts of other qualified institutional buyers, understands that
such Rule 144A Securities may be resold, pledged or transferred only (i) to
a person reasonably believed to be a qualified institutional buyer that
purchases for its own account or for the account of a qualified
institutional buyer to whom notice is given that the resale, pledge or
transfer is being made in reliance on Rule 144A, or (ii) pursuant to
another exemption from registration under the 1933 Act.
[3. The Buyer warrants and represents to, and covenants with, the
Seller, the Indenture Trustee, Owner Trustee, Servicer and the Company that
either (1) the Buyer is (A) not an employee benefit plan (within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")), or a plan (within the meaning of Section 4975(e)(1) of the Internal
Revenue Code of 1986 ("Code")), which (in either case) is subject to ERISA or
Section 4975 of the Code (both a "Plan"), and (B) is not directly or indirectly
purchasing the Rule 144A Securities on behalf of, as investment manager of, as
named fiduciary of, as trustee of, or with "plan assets" of a Plan, or (2) the
Buyer understands that registration of transfer of any Rule 144A Securities to
any Plan, or to any Person acting on behalf of any Plan, will not be made unless
such Plan delivers an opinion of its counsel, addressed and satisfactory to the
Certificate Registrar and the Company, to the effect that the purchase and
holding of the Rule 144A Securities by, on behalf of or with "plan assets" of
any Plan would not constitute or result in a prohibited transaction under
Section 406 of ERISA or Section 4975 of the Code, and would not subject the
Company, the Servicer, the Indenture Trustee or the Trust to any obligation or
liability (including liabilities under ERISA or Section 4975 of the Code) in
addition to those undertaken in the Agreement or any other liability.]
C-3
4. This document may be executed in one or more counterparts and by
the different parties hereto on separate counterparts, each of which, when so
executed, shall be deemed to be an original; such counterparts, together, shall
constitute one and the same document.
Capitalized terms used herein and not otherwise defined herein have
the meanings assigned to them in the Agreement.
IN WITNESS WHEREOF, each of the parties has executed this document as
of the date set forth below.
__________________________ __________________________
Print Name of Seller Print Name of Buyer
By:_______________________ By:_________________________
Name: Name:
Title: Title:
Taxpayer Identification: Taxpayer Identification:
No._______________________ No._________________________
Date:_____________________ Date:_______________________
C-4
ANNEX 1 TO EXHIBIT C
--------------------
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
--------------------------------------------------------
[For Buyers Other Than Registered Investment Companies]
The undersigned hereby certifies as follows in connection with the Rule
144A Investment Representation to which this Certification is attached:
1. As indicated below, the undersigned is the President, Chief Financial
Officer, Senior Vice President or other executive officer of the Buyer.
2. In connection with purchases by the Buyer, the Buyer is a "qualified
institutional buyer" as that term is defined in Rule 144A under the Securities
Act of 1933 ("Rule 144A") because (i) the Buyer owned and/or invested on a
discretionary basis $______________________/1/ in securities (except for the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year (such amount being calculated in accordance with Rule 144A) and (ii)
the Buyer satisfies the criteria in the category marked below.
___ Corporation, etc. The Buyer is a corporation (other than a bank, savings
and loan association or similar institution), Massachusetts or similar
business trust, partnership, or charitable organization described in
Section 501(c)(3) of the Internal Revenue Code.
___ Bank. The Buyer (a) is a national bank or banking institution organized
under the laws of any State, territory or the District of Columbia, the
business of which is substantially confined to banking and is supervised
by the State or territorial banking commission or similar official or is
a foreign bank or equivalent institution, and (b) has an audited net
worth of at least $25,000,000 as demonstrated in its latest annual
financial statements, a copy of which is attached hereto.
----------------------
/1/ Buyer must own and/or invest on a discretionary basis at least $100,000,000
in securities unless Buyer is a dealer, and, in that case, Buyer must own and/or
invest on a discretionary basis at least $10,000,000 in securities.
C-5
___ Savings and Loan. The Buyer (a) is a savings and loan association,
building and loan association, cooperative bank, homestead association
or similar institution, which is supervised and examined by a State or
Federal authority having supervision over any such institutions or is a
foreign savings and loan association or equivalent institution and (b)
has an audited net worth of at least $25,000,000 as demonstrated in its
latest annual financial statements.
___ Broker-Dealer. The Buyer is a dealer registered pursuant to Section 15
of the Securities Exchange Act of 1934.
___ Insurance Company. The Buyer is an insurance company whose primary and
predominant business activity is the writing of insurance or the
reinsuring of risks underwritten by insurance companies and which is
subject to supervision by the insurance commissioner or a similar
official or agency of a State or territory or the District of Columbia.
___ State or Local Plan. The Buyer is a plan established and maintained by
a State, its political subdivisions, or any agency or instrumentality
of the State or its political subdivisions, for the benefit of its
employees.
___ ERISA Plan. The Buyer is an employee benefit plan within the meaning
of Title I of the Employee Retirement Income Security Act of 1974.
___ Investment Adviser. The Buyer is an investment adviser registered
under the Investment Advisers Act of 1940.
___ SBIC. The Buyer is 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.
___ Business Development Company. The Buyer is a business development
company as defined in Section 202(a)(22) of the Investment Advisers Act
of 1940.
___ Trust Fund. The Buyer is a trust fund whose trustee is a bank or trust
company and whose participants are exclusively (a) plans established
and maintained by a State, its political subdivisions, or any agency or
instrumentality of the State or its political subdivisions, for the
benefit of its employees, or (b) employee benefit plans within the
meaning of Title I of the Employee Retirement Income Security Act of
1974, but is not a trust fund that includes as participants individual
retirement accounts or H.R. 10 plans.
3. The term "securities" as used herein does not include (i) securities
of issuers that are affiliated with the Buyer, (ii) securities that are part of
an unsold allotment to or subscription by the Buyer, if the Buyer is a dealer,
(iii) bank deposit notes and certificates of deposit, (iv) loan participations,
(v) repurchase agreements, (vi) securities owned but subject to a repurchase
agreement and (vii) currency, interest rate and commodity swaps.
C-6
4. For purposes of determining the aggregate amount of securities owned
and/or invested on a discretionary basis by the Buyer, the Buyer used the cost
of such securities to the Buyer and did not include any of the securities
referred to in the preceding paragraph. Further, in determining such aggregate
amount, the Buyer may have included securities owned by subsidiaries of the
Buyer, but only if such subsidiaries are consolidated with the Buyer in its
financial statements prepared in accordance with generally accepted accounting
principles and if the investments of such subsidiaries are managed under the
Buyer's direction. However, such securities were not included if the Buyer is a
majority-owned, consolidated subsidiary of another enterprise and the Buyer is
not itself a reporting company under the Securities Exchange Act of 1934.
5. The Buyer acknowledges that it is familiar with Rule 144A and
understands that the seller to it and other parties related to the Certificates
are relying and will continue to rely on the statements made herein because one
or more sales to the Buyer may be in reliance on Rule 144A.
___ ___ Will the Buyer be purchasing the Rule 144A
Yes No Securities only for the Buyer's own account?
6. If the answer to the foregoing question is "no", the Buyer agrees that,
in connection with any purchase of securities sold to the Buyer for the account
of a third party (including any separate account) in reliance on Rule 144A, the
Buyer will only purchase for the account of a third party that at the time is a
"qualified institutional buyer" within the meaning of Rule 144A. In addition,
the Buyer agrees that the Buyer will not purchase securities for a third party
unless the Buyer has obtained a current representation letter from such third
party or taken other appropriate steps contemplated by Rule 144A to conclude
that such third party independently meets the definition of "qualified
institutional buyer" set forth in Rule 144A.
7. The Buyer will notify each of the parties to which this certification is
made of any changes in the information and conclusions herein. Until such
notice is given, the Buyer's purchase of Rule 144A Securities will constitute a
reaffirmation of this certification as of the date of such purchase.
_______________________________________
Print Name of Buyer
By: __________________________________
Name:
Title:
Date:__________________________________
C-7
ANNEX 2 TO EXHIBIT C
--------------------
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
--------------------------------------------------------
[For Buyers That Are Registered Investment Companies]
The undersigned hereby certifies as follows in connection with the
Rule 144A Investment Representation to which this Certification is attached:
1. As indicated below, the undersigned is the President, Chief
Financial Officer or Senior Vice President of the Buyer or, if the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933 ("Rule 144A") because Buyer is part of a Family of
Investment Companies (as defined below), is such an officer of the Adviser.
2. In connection with purchases by Buyer, the Buyer is a "qualified
institutional buyer" as defined in SEC Rule 144A because (i) the Buyer is an
investment company registered under the Investment Company Act of 1940, and (ii)
as marked below, the Buyer alone, or the Buyer's Family of Investment Companies,
owned at least $100,000,000 in securities (other than the excluded securities
referred to below) as of the end of the Buyer's most recent fiscal year. For
purposes of determining the amount of securities owned by the Buyer or the
Buyer's Family of Investment Companies, the cost of such securities was used.
____ The Buyer owned $___________________ in securities (other than the
excluded securities referred to below) as of the end of the Buyer's
most recent fiscal year (such amount being calculated in accordance
with Rule 144A).
____ The Buyer is part of a Family of Investment Companies which owned in
the aggregate $______________ in securities (other than the excluded
securities referred to below) as of the end of the Buyer's most recent
fiscal year (such amount being calculated in accordance with Rule
144A).
3. The term "Family of Investment Companies" as used herein means
two or more registered investment companies (or series thereof) that have the
same investment adviser or investment advisers that are affiliated (by virtue of
being majority owned subsidiaries of the same parent or because one investment
adviser is a majority owned subsidiary of the other).
4. The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Buyer or are part of the
Buyer's Family of Investment Companies, (ii) bank deposit notes and certificates
of deposit, (iii) loan participations, (iv) repurchase agreements, (v)
securities owned but subject to a repurchase agreement and (vi) currency,
interest rate and commodity swaps.
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5. The Buyer is familiar with Rule 144A and understands that each of
the parties to which this certification is made are relying and will continue to
rely on the statements made herein because one or more sales to the Buyer will
be in reliance on Rule 144A. In addition, the Buyer will only purchase for the
Buyer's own account.
6. The undersigned will notify each of the parties to which this
certification is made of any changes in the information and conclusions herein.
Until such notice, the Buyer's purchase of Rule 144A Securities will constitute
a reaffirmation of this certification by the undersigned as of the date of such
purchase.
____________________________________
Print Name of Buyer
By:_________________________________
Name:____________________________
Title:___________________________
IF AN ADVISER:
____________________________________
Print Name of Buyer
Date:_______________________________
EXHIBIT D
FORM OF INVESTOR REPRESENTATION LETTER
, 19
NovaStar Mortgage Funding Corporation
_________________________________
_________________________________
_________________________________
_________________________________
_________________________________
_________________________________
Attention: Corporate Trust Administration
Re: NovaStar Mortgage Funding Trust Series 1997-2
Collateralized Mortgage Obligation Certificates
(the "Certificates")
--------------------
Ladies and Gentlemen:
___________________ (the "Purchaser") intends to purchase from
_____________________ (the "Seller") $___________ of the above-captioned
Certificates, issued pursuant to the Amended and Restated Trust Agreement (the
"Trust Agreement"), dated as of ___________________, between NovaStar Mortgage
Funding Corporation, as company (the "Company"), and _________________, as
owner trustee (the "Owner Trustee"), as acknowledged and agreed by
_____________________________ as Certificate Registrar. All terms used herein
and not otherwise defined shall have the meanings set forth in the Trust
Agreement. The Purchaser hereby certifies, represents and warrants to, and
covenants with, the Company and the Certificate Registrar that:
1. The Purchaser understands that (a) the Certificates have not
been and will not be registered or qualified under the Securities Act of
1933, as amended (the "Act") or any state securities law, (b) the Company
is not required to so register or qualify the Certificates, (c) the
Certificates may be resold only if registered and qualified pursuant to the
provisions of the Act or any state securities law, or if an exemption from
such registration and qualification is available, (d) the Trust Agreement
contains restrictions regarding the transfer of the Certificates and (e)
the Certificates will bear a legend to the foregoing effect.
D-2
2. The Purchaser is acquiring the Certificates for its own account
for investment only and not with a view to or for sale in connection with
any distribution thereof in any manner that would violate the Act or any
applicable state securities laws.
3. The Purchaser is (a) a substantial, sophisticated institutional
investor having such knowledge and experience in financial and business
matters, and, in particular, in such matters related to securities similar
to the Certificates, such that it is capable of evaluating the merits and
risks of investment in the Certificates, (b) able to bear the economic
risks of such an investment and (c) an "accredited investor" within the
meaning of Rule 501(a) promulgated pursuant to the Act.
4. The Purchaser has been furnished with, and has had an opportunity
to review (a) a copy of the Trust Agreement and (b) such other information
concerning the Certificates, the Mortgage Loans and the Company as has been
requested by the Purchaser from the Company or the Seller and is relevant
to the Purchaser's decision to purchase the Certificates. The Purchaser has
had any questions arising from such review answered by the Company or the
Seller to the satisfaction of the Purchaser.
5. The Purchaser has not and will not nor has it authorized or will
it authorize any person to (a) offer, pledge, sell, dispose of or otherwise
transfer any Certificate, any interest in any Certificate or any other
similar security to any person in any manner, (b) solicit any offer to buy
or to accept a pledge, disposition of other transfer of any Certificate,
any interest in any Certificate or any other similar security from any
person in any manner, (c) otherwise approach or negotiate with respect to
any Certificate, any interest in any Certificate or any other similar
security with any person in any manner, (d) make any general solicitation
by means of general advertising or in any other manner or (e) take any
other action, that (as to any of (a) through (e) above) would constitute a
distribution of any Certificate under the Act, that would render the
disposition of any Certificate a violation of Section 5 of the Act or any
state securities law, or that would require registration or qualification
pursuant thereto. The Purchaser will not sell or otherwise transfer any of
the Certificates, except in compliance with the provisions of the Trust
Agreement.
6. The Purchaser represents:
(i) that either (a) or (b) is satisfied, as marked below:
____ a. The Purchaser is not any employee benefit plan subject to
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or
the Internal Revenue Code of 1986 (the "Code"), a Person acting, directly or
indirectly, on behalf of any such plan or any Person acquiring such Certificates
with "plan assets" of a Plan within the meaning of the Department of Labor
regulation promulgated at 29 C.F.R. (S)2510.3-101; or
D-3
____ b. The Purchaser will provide the Company, the Owner Trustee,
the Certificate Registrar and the Servicer with either: (x) an opinion of
counsel, satisfactory to the Company, the Owner Trustee, the Certificate
Registrar and the Servicer, to the effect that the purchase and holding of a
Certificate by or on behalf of the Purchaser is permissible under applicable
law, will not constitute or result in a prohibited transaction under Section 406
of ERISA or Section 4975 of the Code (or comparable provisions of any subsequent
enactments) and will not subject the Company, the Owner Trustee, the Trust, the
Certificate Registrar or the Servicer to any obligation or liability (including
liabilities under ERISA or Section 4975 of the Code) in addition to those
undertaken in the Trust Agreement, which opinion of counsel shall not be an
expense of the Company, the Owner Trustee, the Trust, the Certificate Registrar
or the Servicer; or (y) in lieu of such opinion of counsel, a certification in
the form of Exhibit G to the Trust Agreement; and
(ii) the Purchaser is familiar with the prohibited transaction restrictions and
fiduciary responsibility requirements of Sections 406 and 407 of ERISA and
Section 4975 of the Code and understands that each of the parties to which this
certification is made is relying and will continue to rely on the statements
made in this paragraph 6.
7. The Purchaser is not a non-United States person.
Very truly yours,
By:
Name:
Title:
EXHIBIT E
FORM OF TRANSFEROR REPRESENTATION LETTER
______________, 19___
NovaStar Mortgage Funding Corporation
_________________________________
_________________________________
_________________________________
_________________________________
_________________________________
_________________________________
Attention: Corporate Trust Administration
Re: NovaStar Mortgage Funding Trust Series ________
Collateralized Mortgage Obligation Certificates
the "Certificates")
-------------------
Ladies and Gentlemen:
________________________________ (the "Purchaser") intends to purchase
from ______________________(the "Seller") a ___% Certificate Percentage Interest
of NovaStar Mortgage Funding Trust, Series ________ Collateralized Mortgage
Obligation Certificates (the "Certificates"), issued pursuant to the Amended and
Restated Trust Agreement (the "Trust Agreement"), dated as of ________________
between _____________________________, as company (the "Company"), and _________
_______, as owner trustee (the "Owner Trustee"), as acknowledged and agreed by
__________________________, as Certificate Registrar. All terms used herein and
not otherwise defined shall have the meanings set forth in the Trust Agreement.
The Seller hereby certifies, represents and warrants to, and covenants with, the
Company and the Certificate Registrar that:
Neither the Seller nor anyone acting on its behalf has (a) offered,
pledged, sold, disposed of or otherwise transferred any Certificate, any
interest in any Certificate or any other similar security to any person in any
manner, (b) has solicited any offer to buy or to accept a pledge, disposition or
other transfer of any Certificate, any interest in any Certificate or any other
similar security from any person in any manner, (c) has otherwise approached or
negotiated with respect to
E-2
any Certificate, any interest in any Certificate or any other similar security
with any person in any manner, (d) has made any general solicitation by means of
general advertising or in any other manner, or (e) has taken any other action,
that (as to any of (a) through (e) above) would constitute a distribution of the
Certificates under the Securities Act of 1933 (the "Act"), that would render the
disposition of any Certificate a violation of Section 5 of the Act or any state
securities law, or that would require registration or qualification pursuant
thereto. The Seller will not act, in any manner set forth in the foregoing
sentence with respect to any Certificate. The Seller has not and will not sell
or otherwise transfer any of the Certificates, except in compliance with the
provisions of the Trust Agreement.
Very truly yours,
(Seller)
By:
Name:
Title:
EXHIBIT F
CERTIFICATE OF NON-FOREIGN STATUS
This Certificate of Non-Foreign Status ("certificate") is delivered
pursuant to Section 3.05 of the Amended and Restated Trust Agreement, dated as
of _____________________ (the "Trust Agreement"), between NovaStar Mortgage
Funding Corporation, as Company, and ___ _____________________, as Owner
Trustee, in connection with the acquisition of, transfer to or possession by the
undersigned, whether as beneficial owner (the "Beneficial Owner"), or nominee on
behalf of the Beneficial Owner of the NovaStar Mortgage Funding Trust, Series
_______ Collateralized Mortgage Obligation Certificates (the "Certificate").
Capitalized terms used but not defined in this certificate have the respective
meanings given them in the Trust Agreement.
Each holder must complete Part I, Part II (if the holder is a nominee), and in
all cases sign and otherwise complete Part III.
In addition, each holder shall submit with the Certificate an IRS Form W-9
relating to such holder.
To confirm to the Trust that the provisions of Sections 871, 881 or 1446 of the
Internal Revenue Code (relating to withholding tax on foreign partners) do not
apply in respect of the Certificate held by the undersigned, the undersigned
hereby certifies:
Part I - Complete Either A or B
A. Individual as Beneficial Owner
1. I am (The Beneficial Owner is ) not a non-resident alien for
purposes of U.S. income taxation;
2. My (The Beneficial Owner's) name and home address are:
; and
3. My (The Beneficial Owner's) U.S. taxpayer identification
number (Social Security Number) is
.
B. Corporate, Partnership or Other Entity as Beneficial Owner
1. (Name of the Beneficial Owner) is not a
foreign corporation, foreign partnership, foreign trust or
foreign estate (as those terms are defined in the Code and
Treasury Regulations;
F-2
2. The Beneficial Owner's office address and place of
incorporation (if applicable) is
; and
3. The Beneficial Owner's U.S. employer identification number
is .
Part II - Nominees
If the undersigned is the nominee for the Beneficial Owner, the undersigned
certifies that this certificate has been made in reliance upon information
contained in:
an IRS Form W-9
a form such as this or substantially similar
provided to the undersigned by an appropriate person and (i) the undersigned
agrees to notify the Trust at least thirty (30) days prior to the date that the
form relied upon becomes obsolete, and (ii) in connection with change in
Beneficial Owners, the undersigned agrees to submit a new Certificate of Non-
Foreign Status to the Trust promptly after such change.
Part III - Declaration
The undersigned, as the Beneficial Owner or a nominee thereof, agrees to
notify the Trust within sixty (60) days of the date that the Beneficial Owner
becomes a foreign person. The undersigned understands that this certificate may
be disclosed to the Internal Revenue Service by the Trust and any false
statement contained therein could be punishable by fines, imprisonment or both.
F-3
Under penalties of perjury, I declare that I have examined this certificate
and to the best of my knowledge and belief it is true, correct and complete and
will further declare that I will inform the Trust of any change in the
information provided above, and, if applicable, I further declare that I have
the authority* to sign this document.
Name
Title (if applicable)
Signature and Date
*NOTE: If signed pursuant to a power of attorney, the power of attorney must
accompany this certificate.
EXHIBIT G
FORM OF ERISA REPRESENTATION LETTER
_____________, 199__
NovaStar Mortgage Funding Corporation
_________________________________
_________________________________
_________________________________
______________________________, as Owner Trustee
______________________________
______________________________
______________________________
________________________________, as Certificate Registrar
________________________________
________________________________
Re: NovaStar Mortgage Funding Trust, Series ________
Collateralized Mortgage Obligation Certificates
Dear Sirs:
__________________________________ (the "Transferee") intends to
acquire from _____________________ (the "Transferor") a ____% Certificate
Percentage Interest of NovaStar Mortgage Funding Trust, Series ________,
Collaterlized Mortgage Obligation Certificates (the "Certificates"), issued
pursuant to an Amended and Restated Trust Agreement (the "Trust Agreement"),
dated as of _______________, between NovaStar Mortgage Funding Corporation, as
company (the "Company"), and ________________, as trustee (the "Owner Trustee").
Capitalized terms used herein and not otherwise defined shall have the meanings
assigned thereto in the Trust Agreement.
The Transferee hereby certifies, represents and warrants to, and covenants
with, the Company, the Owner Trustee, the Certificate Registrar and the Servicer
that either:
(1) The Certificates (i) are not being acquired by, and will not be
transferred to, any employee benefit plan within the meaning of section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA") or other retirement arrangement, including individual retirement
accounts and annuities, Xxxxx plans and bank collective investment funds
and insurance company general or separate accounts in which such plans,
accounts or arrangements are invested, that is subject to Section 406 of
ERISA or Section 4975 of the Internal Revenue Code of 1986 (the "Code")
(any of the foregoing, a "Plan"), (ii)
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are not being acquired with "plan assets" of a Plan within the meaning of
the Department of Labor ("DOL") regulation, 29 C.F.R. (S) 2510.3-101, and
(iii) will not be transferred to any entity that is deemed to be investing
in plan assets within the meaning of the DOL regulation, 29 C.F.R. (S)
2510.3-101; or
(2) The purchase of the Certificates is permissible under applicable
law, will not constitute or result in any prohibited transaction under
ERISA or Section 4975 of the Code, will not subject the Company or the
Trustee to any obligation in addition to those undertaken in the Trust
Agreement and, with respect to each source of funds being used by the
Transferee to acquire the Certificates (each being referred to as a
"Source") and the following statements in either (a) or (b):
(a) the Transferee is an insurance company and (i) the Source is
assets of its "general account," (ii) the conditions set forth in PTCE
95-60 issued by the DOL have been satisfied and the purchase and
holding of Certificates by or on behalf of the Transferee are exempt
under PTCE 95-60 and (iii) the amount of reserves and liabilities for
such general account contracts held by or on behalf of any Plan do not
exceed 10% of the total reserves and liabilities of such general
account plus surplus as of the date hereof (for purposes of this
clause, all Plans maintained by the same employer (or affiliate
thereof) or employee organization are deemed to be a single Plan) in
connection with its purchase and holding of such Certificates; or
(b) the Transferee is an insurance company and (i) the Source is
assets of its "general account," (ii) the requirements of Section
401(c) of ERISA and the DOL regulations to be promulgated thereunder
("401(c) Regulations") have been satisfied and will continue to be
satisfied and (iii) the Transferee represents that it understands that
the operation of the general account after December 31, 1998 may
affect its ability to continue to hold the Certificates after the date
which is 18 months after the 401(c) Regulations become final and
unless a class exemption issued by the DOL or an exception under
Section 401(c) of ERISA is then available for the continued holding of
Certificates, if the assets of the general account constitute Plan
Assets, it will dispose of the Certificates prior to the date which is
18 months after the 401(c) Regulations become final.
(3) The Transferee is familiar with the prohibited transaction
restrictions and fiduciary responsibility requirements of Sections 406 and
407 of ERISA and Section 4975 of the Code and understands that each of the
parties to which this certification is made is relying and will continue to
rely on the statements made herein.
Very truly yours,
By:
Name:
Title:
EXHIBIT H
FORM OF REPRESENTATION LETTER
_____________, 199__
NovaStar Mortgage Funding Corporation
_________________________________
_________________________________
_________________________________
______________________________, as Owner Trustee
______________________________
______________________________
______________________________
_________________________________, as Certificate Registrar
_________________________________
_________________________________
Re: NovaStar Mortgage Funding Trust, Series ______
Collateralized Mortgage Obligation Certificates
Dear Sirs:
__________________________________ (the "Transferee") intends to
acquire from _____________________ (the "Transferor") a ___% Certificate
Percentage Interest of NovaStar Mortgage Funding Trust, Series _______
Collateralized Mortgage Obligation Certificates (the "Certificates"), issued
pursuant to an Amended and Restated Trust Agreement (the "Trust Agreement"),
dated as of ________________ among NovaStar Mortgage Funding Corporation, as
company (the "Company"), and _______________, as trustee (the "Owner Trustee").
Capitalized terms used herein and not otherwise defined shall have the meanings
assigned thereto in the Trust Agreement.
The Transferee hereby certifies, represents and warrants to, and
covenants with, the Company, the Owner Trustee, the Certificate Registrar and
the Servicer that:
(1) the Transferee is acquiring the Certificate for its own behalf and
is not acting as agent or custodian for any other person or entity in
connection with such acquisition; and
(2) the Transferee is not a partnership, grantor trust or S
corporation for federal income tax purposes, or, if the Transferee is a
partnership, grantor trust or S corporation for federal income tax
purposes, the Certificates are not more than 50% of the assets of the
partnership, grantor trust or S corporation.
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Very truly yours,
By:
Name:
Title:
EXHIBIT I
INITIAL TRUST AGREEMENT
