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EXHIBIT 10.124
EXECUTION COPY
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TRUST AGREEMENT
among
FINANCIAL ASSET SECURITIES CORP.,
as Depositor,
MEGO MORTGAGE CORPORATION,
as the Company,
WILMINGTON TRUST COMPANY,
as Owner Trustee
and
FIRST TRUST OF NEW YORK, NATIONAL ASSOCIATION,
as Co-Owner Trustee
Dated as of May 1, 1997
MEGO MORTGAGE HOME LOAN OWNER TRUST 1997-2 Home Loan
Asset Backed Securities, Series 1997-2
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TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS
Section 1.1 Capitalized Terms.............................................I-1
Section 1.2 Other Definitional Provisions.................................I-4
ARTICLE II
ORGANIZATION
Section 2.1 Name.........................................................II-1
Section 2.2 Office.......................................................II-1
Section 2.3 Purposes and Powers..........................................II-1
Section 2.4 Appointment of Owner Trustee.................................II-2
Section 2.5 Initial Capital Contribution of Owner Trust Estate...........II-2
Section 2.6 Declaration of Trust.........................................II-2
Section 2.7 Title to Trust Property......................................II-2
Section 2.8 Situs of Trust...............................................II-3
Section 2.9 Representations and Warranties of the Depositor and the
Company; Covenant of the Company.............................II-3
Section 2.10 Federal Income Tax Allocations...............................II-5
ARTICLE III
RESIDUAL CERTIFICATES AND TRANSFER OF INTERESTS
Section 3.1 Initial Ownership...........................................III-1
Section 3.2 The Residual Certificates...................................III-1
Section 3.3 Execution, Authentication and Delivery of Residual
Certificates................................................III-1
Section 3.4 Registration of Transfer and Exchange of Residual
Certificates................................................III-1
Section 3.5 Mutilated, Destroyed, Lost or Stolen Residual Certificates..III-2
Section 3.6 Persons Deemed Owners.......................................III-3
Section 3.7 Access to List of Owners' Names and Addresses...............III-3
Section 3.8 Maintenance of Office or Agency.............................III-3
Section 3.9 Appointment of Paying Agent.................................III-3
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Section 3.10 Restrictions on Transfer of Residual Certificates...........III-4
ARTICLE IV
ACTIONS BY OWNER TRUSTEE
Section 4.1 Prior Notice to Owners with Respect to Certain Matters.......IV-1
Section 4.2 Action by Owners with Respect to Certain Matters.............IV-3
Section 4.3 Action by Owners with Respect to Bankruptcy..................IV-3
Section 4.4 Restrictions on Owners' Power................................IV-3
Section 4.5 Majority Control.............................................IV-3
ARTICLE V
APPLICATION OF TRUST FUNDS; CERTAIN DUTIES
Section 5.1 Establishment of Trust Account................................V-1
Section 5.2 Application Of Trust Funds....................................V-1
Section 5.3 Method of Payment.............................................V-2
Section 5.4 Segregation of Moneys; No Interest............................V-2
Section 5.5 Accounting and Reports to the Residual
Certificateholders, Owners, the Internal Revenue Service and
Others........................................................V-2
Section 5.6 Signature on Returns..........................................V-3
ARTICLE VI
AUTHORITY AND DUTIES OF OWNER TRUSTEE
Section 6.1 General Authority............................................VI-1
Section 6.2 General Duties...............................................VI-1
Section 6.3 Action upon Instruction......................................VI-1
Section 6.4 No Duties Except as Specified in this Agreement, the
Transaction Documents or in Instructions.....................VI-2
Section 6.5 No Action Except Under Specified Documents or
Instructions.................................................VI-3
Section 6.6 Restrictions.................................................VI-3
ARTICLE VII
CONCERNING THE OWNER TRUSTEE
Section 7.1 Acceptance of Trusts and Duties.............................VII-1
Section 7.2 Furnishing of Documents.....................................VII-2
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Section 7.3 Representations and Warranties..............................VII-2
Section 7.4 Reliance; Advice of Counsel.................................VII-3
Section 7.5 Not Acting in Individual Capacity..........................VII-4
Section 7.6 Owner Trustee Not Liable for Residual Certificates or
Home Loans..................................................VII-4
Section 7.7 Owner Trustee May Own Residual Certificates and Notes.......VII-4
Section 7.8 Licenses....................................................VII-5
Section 7.9 Rights of Co-Owner Trustee..................................VII-5
ARTICLE VIII
COMPENSATION OF OWNER TRUSTEE
Section 8.1 Owner Trustee's Fees and Expenses..........................VIII-1
Section 8.2 Indemnification............................................VIII-1
Section 8.3 Payments to the Owner Trustee..............................VIII-1
ARTICLE IX
TERMINATION OF TRUST AGREEMENT
Section 9.1 Termination of Trust Agreement...............................IX-1
ARTICLE X
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
Section 10.1 Eligibility Requirements for Owner Trustee....................X-1
Section 10.2 Resignation or Removal of Owner Trustee or Co-Owner
Trustee.......................................................X-1
Section 10.3 Successor Owner Trustee or Co-Owner Trustee...................X-2
Section 10.4 Merger or Consolidation of Owner Trustee......................X-3
Section 10.5 Appointment of Co-Owner Trustee or Separate Owner
Trustee.......................................................X-3
ARTICLE XI
MISCELLANEOUS
Section 11.1 Supplements and Amendments...................................XI-1
Section 11.2 No Legal Title to Owner Trust Estate in Owners...............XI-2
Section 11.3 Limitations on Rights of Others..............................XI-2
Section 11.4 Notices......................................................XI-2
Section 11.5 Severability.................................................XI-3
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Section 11.6 Separate Counterparts........................................XI-3
Section 11.7 Successors and Assigns.......................................XI-3
Section 11.8 No Petition..................................................XI-3
Section 11.9 Covenants of Company.........................................XI-3
Section 11.10 No Recourse..................................................XI-3
Section 11.11 Headings.....................................................XI-4
Section 11.12 GOVERNING LAW................................................XI-4
Section 11.13 Third-Party Beneficiary......................................XI-4
Section 11.14 Inconsistencies with Sale and Servicing Agreement............XI-4
EXHIBIT A Form of Residual Certificate
EXHIBIT B Certificate of Trust
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TRUST AGREEMENT, dated as of May 1, 1997, among FINANCIAL ASSET
SECURITIES CORP., a Delaware corporation, as Depositor (the "Depositor"), MEGO
MORTGAGE CORPORATION, a Delaware corporation (the "Company"), WILMINGTON TRUST
COMPANY, a Delaware banking corporation, as Owner Trustee (the "Owner Trustee")
and FIRST TRUST OF NEW YORK, NATIONAL ASSOCIATION, as Co-Owner Trustee (the
"Co-Owner Trustee").
ARTICLE I
DEFINITIONS
Section 1.1 Capitalized Terms. For all purposes of this Agreement, the
following terms shall have the meanings set forth below:
"Agreement" shall mean this Trust Agreement, as the same may be amended
and supplemented from time to time.
"Administration Agreement" shall mean the Administration Agreement,
dated as of May 1, 1997 among the Issuer, the Company, and First Trust of New
York, National Association, as Administrator.
"Administrator" shall mean First Trust of New York, National
Association, or any successor in interest thereto, in its capacity as
Administrator under the Administration Agreement.
"Benefit Plan" shall have the meaning assigned to such term in Section
3.10.
"Business Trust Statute" shall mean Chapter 38 of Title 12 of the
Delaware Code, 12 Del. Code Section 3801 et seq., as the same may be amended
from time to time.
"Residual Certificate" shall mean any Residual Certificate; a form of
which is attached hereto as Exhibit A.
"Certificate Distribution Account" shall have the meaning assigned to
such term in the Sale and Servicing Agreement.
"Certificate of Trust" shall mean the Certificate of Trust in the form
of Exhibit C to be filed for the Trust pursuant to Section 3810(a) of the
Business Trust Statute.
"Certificate Register" and "Certificate Registrar" shall mean the
register mentioned in, and the registrar appointed pursuant to, Section 3.4.
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"Residual Certificateholder" or "Holder" shall mean a Person in whose
name a Residual Certificate is registered.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
Treasury Regulations promulgated thereunder.
"Co-Owner Trustee" shall mean First Trust of New York, National
Association.
"Company" shall mean Mego Mortgage Corporation, a Delaware corporation.
"Corporate Trust Office" shall mean, with respect to the Owner Trustee,
the principal corporate trust office of the Owner Trustee located at Xxxxxx
Square North, 0000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx, XX 00000-0000, Attention:
Corporate Trust Administration; or at such other address in the State of
Delaware as the Owner Trustee may designate by notice to the Owners and the
Company, or the principal corporate trust office of any successor Owner Trustee
(the address (which shall be in the State of Delaware) of which the successor
owner trustee will notify the Owners and the Company).
"ERISA" shall have the meaning assigned thereto in Section 3.10.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Expenses" shall have the meaning assigned to such term in Section 8.2.
"Indenture" shall mean the Indenture, dated as of May 1, 1997, by and
between the Issuer and the Indenture Trustee.
"Indenture Trustee" means First Trust of New York, National Association,
as Indenture Trustee under the Indenture.
"Insurance Agreement" shall mean the Insurance Agreement, dated as of
May 1, 1997, among the Issuer, the Depositor, the Affiliated Holder, Greenwich
Capital Financial Products, Inc., the Company, as Seller, Servicer and Claims
Administrator, the Master Servicer, the Indenture Trustee as Indenture Trustee,
Co-Owner Trustee and Contract of Insurance Holder and the Securities Insurer.
"Issuer" shall mean Mego Mortgage Home Loan Owner Trust 1997-2, the
Delaware business trust created pursuant to this Agreement.
"Non-permitted Foreign Holder" shall have the meaning set forth in
Section 3.10.
"Non-U.S. Person" shall mean an individual, corporation, partnership or
other person other than a citizen or resident of the United States, a
corporation, partnership or other entity created or organized in or under the
laws of the United States or any political subdivision
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thereof, an estate that is subject to U.S. federal income tax regardless of the
source of its income, or a trust if a court within the United States is able to
exercise primary supervision over the administration of the trust and one or
more United States trustees have authority to control all substantial decisions
of the trust..
"Owner" shall mean each Holder of a Residual Certificate.
"Owner Trust Estate" shall mean the contribution of $1 referred to in
Section 2.5 and the Trust Estate (as defined in the Indenture).
"Owner Trustee" shall mean Wilmington Trust Company, a Delaware banking
corporation, not in its individual capacity but solely as owner trustee under
this Agreement, and any successor owner trustee hereunder.
"Paying Agent" shall mean the Co-Owner Trustee or any successor in
interest thereto or any other paying agent or co-paying agent appointed pursuant
to Section 3.9 and authorized by the Issuer to make payments to and
distributions from the Certificate Distribution Account, including payments on
the Residual Certificates on behalf of the Issuer.
"Percentage Interest" shall mean with respect to each Residual
Certificate, the percentage portion of all of the Residual Interest evidenced
thereby as stated on the face of such Residual Certificate.
"Prospective Owner" shall have the meaning set forth in Section 3.10(a).
"Rating Agency Condition" means, with respect to any action to which a
Rating Agency Condition applies, that each Rating Agency shall have been given
10 days (or such shorter period as is acceptable to each Rating Agency) prior
notice thereof and that each of the Rating Agencies shall have notified the
Seller, the Servicer, the Securities Insurer, the Owner Trustee, Co-Owner
Trustee, and the Issuer in writing that such action will not result in a
reduction or withdrawal of the then current rating of the Notes.
"Record Date" shall mean as to each Distribution Date the last Business
Day of the month immediately preceding the month in which such Distribution Date
occurs.
"Residual Interest" shall mean the right to receive distributions of
Distributable Excess Spread, if any, and certain other funds, if any, on each
Distribution Date, pursuant to Sections 5.01(c) and 5.03 of the Sale and
Servicing Agreement.
"Sale and Servicing Agreement" shall mean the Sale and Servicing
Agreement dated as of the date hereof, among the Trust as Issuer, the Depositor,
the Indenture Trustee as Indenture Trustee, Contract of Insurance Holder and
Co-Owner Trustee, Norwest Bank Minnesota, N.A., as Master Servicer, and the
Company, as Seller, Servicer and Claims Administrator.
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"Secretary of State" shall mean the Secretary of State of the State of
Delaware.
"Securities Insurer" shall mean MBIA Insurance Corporation.
"Securities Insurer Default" shall mean the failure of the Securities
Insurer to make payments under the Guaranty Policy, if such failure has not been
remedied with ten (10) days of notice thereof, or the entry of an order or
decree with respect to the Securities Insurer in any insolvency or bankruptcy
proceedings which remain unstayed or undischarged for 90 days.
"Transaction Documents" shall have the meaning set forth in the Sale and
Servicing Agreement.
"Treasury Regulations" shall mean regulations, including proposed or
temporary regulations, promulgated under the Code. References herein to specific
provisions of proposed or temporary regulations shall include analogous
provisions of final Treasury Regulations or other successor Treasury
Regulations.
"Trust" shall mean the trust established by this Agreement.
"Underwriter" shall mean Greenwich Capital Markets, Inc.
Section 1.2 Other Definitional Provisions.
(a) Capitalized terms used herein and not otherwise defined
herein have the meanings assigned to them in the Sale and Servicing Agreement
or, if not defined therein, in the Indenture.
(b) All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein.
(c) As used in this Agreement and in any certificate or other
document made or delivered pursuant hereto or thereto, accounting terms not
defined in this Agreement or in any such certificate or other document, and
accounting terms partly defined in this Agreement or in any such certificate or
other document to the extent not defined, shall have the respective meanings
given to them under generally accepted accounting principles. To the extent that
the definitions of accounting terms in this Agreement or in any such certificate
or other document are inconsistent with the meanings of such terms under
generally accepted accounting principles, the definitions contained in this
Agreement or in any such certificate or other document shall control.
(d) The words "hereof", "herein", "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement; Section and Exhibit
references contained in this
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Agreement are references to Sections and Exhibits in or to this Agreement unless
otherwise specified; and the term "including" shall mean "including without
limitation".
(e) The definitions contained in this Agreement are applicable to
the singular as well as the plural forms of such terms and to the masculine as
well as to the feminine and neuter genders of such terms.
(f) Any agreement, instrument or statute defined or referred to
herein or in any instrument or certificate delivered in connection herewith
means such agreement, instrument or statute as from time to time amended,
modified or supplemented and includes (in the case of agreements or instruments)
references to all attachments thereto and instruments incorporated therein;
references to a Person are also to its permitted successors and assigns.
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ARTICLE II
ORGANIZATION
Section 2.1 Name. The Trust created hereby shall be known as "Mego
Mortgage Home Loan Owner Trust 1997-2", in which name the Owner Trustee may
conduct the business of the Trust, make and execute contracts and other
instruments on behalf of the Trust and xxx and be sued.
Section 2.2 Office. The office of the Trust shall be in care of the
Owner Trustee at the Corporate Trust Office or at such other address in Delaware
as the Owner Trustee may designate by written notice to the Owners, the
Securities Insurer, and the Company.
Section 2.3 Purposes and Powers. (a) The purpose of the Trust is to
engage in the following activities:
(i) to issue the Notes pursuant to the Indenture and the
Residual Certificates pursuant to this Agreement and to sell such Notes
and such Residual Certificates;
(ii) with the proceeds of the sale of the Notes and the Residual
Certificates, to fund start-up and transactional expenses of the Trust
and to pay the balance to the Depositor and the Company, as their
interests may appear pursuant to the Sale and Servicing Agreement;
(iii) to assign, grant, transfer, pledge, mortgage and convey
the Trust Estate pursuant to the Indenture and to hold, manage and
distribute to the Owners pursuant to the terms of the Sale and Servicing
Agreement any portion of the Trust Estate released from the lien of, and
remitted to the Trust pursuant to, the Indenture;
(iv) to enter into and perform its obligations under the
Transaction Documents to which it is to be a party;
(v) to engage in those activities, including entering into
agreements, that are necessary, suitable or convenient to accomplish the
foregoing or are incidental thereto or connected therewith; and
(vi) subject to compliance with the Transaction Documents, to
engage in such other activities as may be required in connection with
conservation of the Owner Trust Estate and the making of distributions
to the Owners and the Noteholders;
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The Trust is hereby authorized to engage in the foregoing activities. The Trust
shall not engage in any activity other than in connection with the foregoing or
other than as required or authorized by the terms of this Agreement or the
Transaction Documents.
Section 2.4 Appointment of Owner Trustee. The Depositor hereby appoints
the Owner Trustee as trustee of the Trust effective as of the date hereof, to
have all the rights, powers and duties set forth herein.
Section 2.5 Initial Capital Contribution of Owner Trust Estate. The
Depositor hereby sells, assigns, transfers, conveys and sets over to the Owner
Trustee, as of the date hereof, the sum of $1. The Owner Trustee hereby
acknowledges receipt in trust from the Depositor, as of the date hereof, of the
foregoing contribution, which shall constitute the initial Owner Trust Estate
and shall be deposited in the Certificate Distribution Account. The Company
shall pay organizational expenses of the Trust as they may arise or shall, upon
the request of the Owner Trustee, promptly reimburse the Owner Trustee for any
such expenses paid by the Owner Trustee.
Section 2.6 Declaration of Trust. The Owner Trustee hereby declares that
it will hold the Owner Trust Estate in trust upon and subject to the conditions
set forth herein for the use and benefit of the Owners, subject to the
obligations of the Trust under the Transaction Documents. It is the intention of
the parties hereto that the Trust constitute a business trust under the Business
Trust Statute and that this Agreement constitute the governing instrument of
such business trust. It is the intention of the parties hereto that, solely for
income and franchise tax purposes, the Trust shall be treated as a partnership,
with the assets of the partnership being the Home Loans and other assets held by
the Trust, the partners of the partnership being the holders of the Residual
Certificates and the Notes being non-recourse debt of the partnership. The
parties agree that, unless otherwise required by appropriate tax authorities,
the Trust will file or cause to be filed annual or other necessary returns,
reports and other forms consistent with the characterization of the Trust as a
partnership for such tax purposes. Effective as of the date hereof, the Owner
Trustee shall have all rights, powers and duties set forth herein and in the
Business Trust Statute with respect to accomplishing the purposes of the Trust.
Section 2.7 Title to Trust Property.
(a) Subject to the Indenture, legal title to all the Owner Trust
Estate shall be vested at all times in the Trust as a separate legal entity
except where applicable law in any jurisdiction requires title to any part of
the Owner Trust Estate to be vested in a trustee or trustees, in which case
title shall be deemed to be vested in the Owner Trustee, the Co-Owner Trustee
and/or a separate trustee, as the case may be.
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(b) The Owners shall not have legal title to any part of the
Owner Trust Estate. No transfer by operation of law or otherwise of any interest
of the Owners shall operate to terminate this Agreement or the trusts hereunder
or entitle any transferee to an accounting or to the transfer to it of any part
of the Owner Trust Estate.
Section 2.8 Situs of Trust. The Trust will be located and administered
in the state of Delaware. All bank accounts maintained by the Owner Trustee on
behalf of the Trust shall be located in the State of Delaware or the State of
New York, except with respect to the Co-Owner Trustee. The Trust shall not have
any employees; provided, however, that nothing herein shall restrict or prohibit
the Owner Trustee from having employees within or without the State of Delaware.
Payments will be received by the Trust only in Delaware or New York, and
payments will be made by the Trust only from Delaware or New York, except with
respect to the Co-Owner Trustee. The only office of the Trust will be at the
Corporate Trust Office in Delaware.
Section 2.9 Representations and Warranties of the Depositor and the
Company; Covenant of the Company.
(a) The Depositor hereby represents and warrants to the Owner
Trustee, the Co-Owner Trustee and the Securities Insurer that:
(i) The Depositor is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Delaware
and has all licenses necessary to carry on its business as now being
conducted. The Depositor has the power and authority to execute and
deliver this Agreement and to perform in accordance herewith; the
execution, delivery and performance of this Agreement (including all
instruments of transfer to be delivered pursuant to this Agreement) by
the Depositor and the consummation of the transactions contemplated
hereby have been duly and validly authorized by all necessary action of
the Depositor; this Agreement evidences the valid, binding and
enforceable obligation of the Depositor; and all requisite action has
been taken by the Depositor to make this Agreement valid, binding and
enforceable upon the Depositor in accordance with its terms, subject to
the effect of bankruptcy, insolvency, reorganization, moratorium and
other, similar laws relating to or affecting creditors' rights generally
or the application of equitable principles in any proceeding, whether at
law or in equity.;
(ii) The consummation of the transactions contemplated by this
Agreement will not result in (i) the breach of any terms or provisions
of the Articles of Incorporation or Bylaws of the Depositor, (ii) the
breach of any term or provision of, or conflict with or constitute a
default under or result in the acceleration of any obligation under, any
material agreement, indenture or loan or credit agreement or other
material instrument to which the Depositor, or its property is subject,
or (iii) the violation of any law, rule, regulation, order, judgment or
decree to which the Depositor or its respective property is subject;
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(iii) The Depositor is not in default with respect to any order
or decree of any court or any order, regulation or demand of any
federal, state, municipal or other governmental agency, which default
might have consequences that would materially and adversely affect the
condition (financial or otherwise) or operations of the Depositor or its
properties or might have consequences that would materially and
adversely affect its performance hereunder.
(b) The Company hereby represents and warrants to the Owner
Trustee, the Co-Owner Trustee and the Securities 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
property or the conduct of its business shall require such
qualifications.
(iii) The Company has the power and authority to execute and
deliver this Agreement and to carry out its terms; and the execution,
delivery and performance of this Agreement has been duly authorized by
the Company by all necessary corporate action.
(iv) The consummation of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof do not conflict with,
result in any breach of any of the terms and provisions of, or
constitute (with or without notice or lapse of time) a default under,
the articles of incorporation or by-laws of the Company, or any
indenture, agreement or other instrument to which the Company is a party
or by which it is bound; nor result in the creation or imposition of any
lien upon any of its properties pursuant to the terms of any such
indenture, agreement or other instrument (other than pursuant to the
Transaction Documents); nor violate any law or, to the best of the
Company's knowledge, any order, rule or regulation applicable to the
Company of any court or of any Federal or state regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over the Company or its properties.
(v) There are no proceedings or investigations pending or, to
the Company's best knowledge, threatened, before any court, regulatory
body, administrative agency or other governmental instrumentality having
jurisdiction over the Company or its properties: (i) asserting the
invalidity of this Agreement, (ii) seeking to prevent the consummation
of any of the transactions contemplated by this Agreement or (iii)
seeking any determination or ruling that might materially and
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adversely affect the performance by the Company of its obligations
under, or the validity or enforceability of, this Agreement.
(c) The Company covenants with the Owner Trustee, the Co-Owner
Trustee and the Securities Insurer that during the continuance of this Agreement
it will comply in all respects with the provisions of its Certificate of
Incorporation in effect from time to time.
Section 2.10 Federal Income Tax Allocations. Net income of the Trust for
any month, as determined for Federal income tax purposes (and each item of
income, gain, loss and deduction entering into the computation thereof), shall
be allocated to the holders of the Residual Certificates, on a pro rata basis.
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ARTICLE III
RESIDUAL CERTIFICATES AND TRANSFER OF INTERESTS
Section 3.1 Initial Ownership. Upon the formation of the Trust by the
contribution by the Depositor pursuant to Section 2.5 and until the issuance of
the Residual Certificates, the Depositor shall be the sole Owner of the Trust.
Section 3.2 The Residual Certificates. The Residual Certificates shall
not be issued with a principal or notional amount. The Residual Certificates
shall be executed on behalf of the Trust by manual or facsimile signature of a
Trust Officer of the Owner Trustee or the Co-Owner Trustee. Residual
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 valid and binding obligations of the Trust,
notwithstanding that such individuals or any of them shall have ceased to be so
authorized prior to the authentication and delivery of such Residual
Certificates or did not hold such offices at the date of authentication and
delivery of such Residual Certificates.
A transferee of a Residual Certificate shall become an Owner, and shall
be entitled to the rights and subject to the obligations of an Owner hereunder
and under the Sale and Servicing Agreement, upon such transferee's acceptance of
a Residual Certificate duly registered in such transferee's name pursuant to
Section 3.4.
Section 3.3 Execution, Authentication and Delivery of Residual
Certificates. Concurrently with the sale of the Home Loans to the Trust pursuant
to the Sale and Servicing Agreement, the Owner Trustee or the Co-Owner Trustee
shall cause the Residual Certificates representing 100% of the Percentage
Interests of the Residual Interest to be executed on behalf of the Trust,
authenticated and delivered to or upon the written order of the Depositor,
signed by its chairman of the board, its president or any vice president,
without further corporate action by the Depositor, in authorized denominations.
No Residual Certificate shall entitle its holder to any benefit under this
Agreement, or shall be valid for any purpose, unless there shall appear on such
Residual Certificate a certificate of authentication substantially in the form
set forth in Exhibit A, executed by the Owner Trustee or the Administrator, as
the Owner Trustee's authenticating agent, by manual or facsimile signature; such
authentication shall constitute conclusive evidence that such Residual
Certificate shall have been duly authenticated and delivered hereunder. All
Residual Certificates shall be dated the date of their authentication.
Section 3.4 Registration of Transfer and Exchange of Residual
Certificates. The Certificate Registrar shall keep or cause to be kept, at the
office or agency maintained pursuant to Section 3.8, a Certificate Register in
which, subject to such reasonable regulations as it may prescribe, the Owner
Trustee shall provide for the registration of Residual Certificates and of
transfers and exchanges of Residual Certificates as herein provided. The
Administrator shall be the initial Certificate Registrar.
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Upon surrender for registration of transfer of any Residual Certificate
at the office or agency maintained pursuant to Section 3.8, the Owner Trustee or
Co-Owner Trustee shall execute, authenticate and deliver (or shall cause the
Administrator as its authenticating agent to authenticate and deliver), in the
name of the designated transferee or transferees, one or more new Residual
Certificates in authorized denominations of a like aggregate amount dated the
date of authentication by the Owner Trustee or any authenticating agent. At the
option of an Owner, Residual Certificates may be exchanged for other Residual
Certificates of authorized denominations of a like aggregate amount upon
surrender of the Residual Certificates to be exchanged at the office or agency
maintained pursuant to Section 3.8.
Every Residual Certificate presented or surrendered for registration of
transfer or exchange shall be accompanied by a written instrument of transfer in
form satisfactory to the Owner Trustee and the Certificate Registrar duly
executed by the Owner or his attorney duly authorized in writing. In addition,
each Residual Certificate presented or surrendered for registration of transfer
and exchange must be accompanied by a letter from the Prospective Owner
certifying as to the representations set forth in Sections 3.10(a) and (b). Each
Residual Certificate surrendered for registration of transfer or exchange shall
be canceled and disposed of by the Owner Trustee in accordance with its
customary practice.
No service charge shall be made for any registration of transfer or
exchange of Residual 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 Residual Certificates.
The preceding provisions of this Section notwithstanding, the Owner
Trustee shall not make and the Certificate Registrar shall not register transfer
or exchanges of Residual Certificates for a period of 15 days preceding the due
date for any payment with respect to the Residual Certificates.
Section 3.5 Mutilated, Destroyed, Lost or Stolen Residual Certificates.
If (a) any mutilated Residual 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 Residual 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 that such Residual Certificate
shall have been acquired by a bona fide purchaser, the Owner Trustee on behalf
of the Trust shall execute and the Owner Trustee, or the Administrator as the
Owner Trustee's authenticating agent, shall authenticate and deliver, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Residual Certificate, a new Residual Certificate of like tenor and denomination.
In connection with the issuance of any new Residual Certificate under this
Section, the Owner Trustee or the Certificate Registrar may require the payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection therewith. Any duplicate Residual Certificate issued
pursuant to this Section shall constitute conclusive
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evidence of ownership in the Trust, as if originally issued, whether or not the
lost, stolen or destroyed Residual Certificate shall be found at any time.
Section 3.6 Persons Deemed Owners. Prior to due presentation of a
Residual Certificate for registration of transfer, the Owner Trustee or the
Certificate Registrar may treat the Person in whose name any Residual
Certificate shall be registered in the Certificate Register as the owner of such
Residual Certificate for the purpose of receiving distributions pursuant to
Section 5.2 and for all other purposes whatsoever, and neither the Owner Trustee
nor the Certificate Registrar shall be bound by any notice to the contrary.
Section 3.7 Access to List of Owners' Names and Addresses. The
Certificate Registrar shall furnish or cause to be furnished to the Master
Servicer, the Servicer, the Depositor, the Securities Insurer and the Indenture
Trustee within 15 days after receipt by the Owner Trustee of a request therefor
from the Master Servicer, the Servicer, the Depositor, the Securities Insurer or
the Indenture Trustee in writing, a list, in such form as the Master Servicer,
the Servicer, the Depositor or the Indenture Trustee may reasonably require, of
the names and addresses of the Owners as of the most recent Record Date. If
three or more Residual Certificateholders or one or more Holders of Residual
Certificates together evidencing not less than a 25% Percentage Interest in the
Residual Certificates apply in writing to the Owner Trustee, and such
application states that the applicants desire to communicate with other Residual
Certificateholders with respect to their rights under this Agreement or under
the Residual Certificates and such application is accompanied by a copy of the
communication that such applicants propose to transmit, then the Owner Trustee
shall, within five Business Days after the receipt of such application, afford
such applicants access during normal business hours to the current list of
Residual Certificateholders. Each Owner, by receiving and holding a Residual
Certificate, shall be deemed to have agreed not to hold any of the Depositor,
the Company, the Certificate Registrar or the Owner Trustee accountable by
reason of the disclosure of its name and address, regardless of the source from
which such information was derived.
Section 3.8 Maintenance of Office or Agency. The Owner Trustee shall
maintain an office or offices or agency or agencies where Residual 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 Residual Certificates
and the Transaction Documents may be served. The Owner Trustee initially
designates the Administrator's office in St. Xxxx, Minnesota as its principal
corporate trust office for such purposes. The Owner Trustee shall give prompt
written notice to the Company and to the Residual Certificateholders of any
change in the location of the Certificate Register or any such office or agency.
Section 3.9 Appointment of Paying Agent. The Owner Trustee hereby
appoints the Co-Owner Trustee as Paying Agent under this Agreement. The Paying
Agent shall make distributions to Residual Certificateholders from the
Certificate Distribution Account pursuant to Section 5.2 hereof and Section 5.01
of the Sale and Servicing Agreement and shall report the amounts of such
distributions to the Owner Trustee. The Paying Agent shall have the
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revocable power to withdraw funds from the Certificate Distribution Account for
the purpose of making the distributions referred to above. In the event that the
Co-Owner Trustee shall no longer be the Paying Agent hereunder, the Owner
Trustee shall appoint a successor to act as Paying Agent (which shall be a bank
or trust company) acceptable to the Securities Insurer. The Owner Trustee shall
cause such successor Paying Agent or any additional Paying Agent appointed by
the Owner Trustee to execute and deliver to the Owner Trustee an instrument in
which such successor Paying Agent or additional Paying Agent shall agree with
the Owner Trustee that as Paying Agent, such successor Paying Agent or
additional Paying Agent will hold all sums, if any, held by it for payment to
the Owners in trust for the benefit of the Residual Certificateholders entitled
thereto until such sums shall be paid to such Owners. The Paying Agent shall
return all unclaimed funds to the Owner Trustee, and upon removal of a Paying
Agent, such Paying Agent shall also return all funds in its possession to the
Owner Trustee. The provisions of Sections 7.1, 7.3, 7.4 and 8.1 shall apply to
the Co-Owner Trustee also in its role as Paying Agent, for so long as the
Co-Owner Trustee shall act as Paying Agent and, to the extent applicable, to any
other paying agent appointed hereunder. Any reference in this Agreement to the
Paying Agent shall include any co-paying agent unless the context requires
otherwise. Notwithstanding anything herein to the contrary, the Co-Owner Trustee
and the Paying Agent shall be the same entity as the Indenture Trustee under the
Indenture and the Sale and Servicing Agreement, unless a Securities Insurer
Default has occurred and is continuing. In such event, the Co-Owner Trustee and
the Paying Agent shall resign and the Owner Trustee shall assume the duties and
obligations of the Co-Owner Trustee and the Paying Agent hereunder and under the
Sale and Servicing Agreement; provided, however, that the Indenture Trustee
shall continue to perform its duties as Contract of Insurance Holder under the
Sale and Servicing Agreement. In addition, in such event, the Indenture Trustee
shall agree to continue to make claims under the Guaranty Policy on behalf of
the Owner Trustee for the benefit of the Residual Certificateholders pursuant to
the Sale and Servicing Agreement.
Section 3.10 Restrictions on Transfer of Residual Certificates.
(a) No Residual Certificate may be acquired, by or for the
account of (i) an employee benefit plan (as defined in Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) that is subject to the provisions of Title I of ERISA, (ii) a
plan described in Section 4975(e)(1) of the Internal Revenue Code of
1986, as amended, or (iii) any entity, including an insurance company
separate account or general account, whose underlying assets include
plan assets by reason of a plan's investment in the entity (each, a
"Benefit Plan"). By accepting and holding a Residual Certificate, the
Owner thereof shall be deemed to have represented and warranted that it
is not a Benefit Plan.
(b) Each prospective purchaser and any subsequent transferee of
a Residual Certificate (each, a "Prospective Owner"), other than the
Company or a wholly-owned subsidiary of the Company, shall represent and
warrant, in writing, to the Owner Trustee and the Certificate Registrar
and any of their respective successors that:
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(i) Such Person is (A) a "qualified institutional buyer"
as defined in Rule 144A under the Securities Act of 1933, as
amended (the "Securities Act"), and is aware that the seller of
such Residual Certificate may be relying on the exemption from
the registration requirements of the Securities Act provided by
Rule 144A and is acquiring such Residual Certificate for its own
account or for the account of one or more qualified
institutional buyers for whom it is authorized to act, or (B) a
Person involved in the organization or operation of the Trust or
an affiliate of such Person within the meaning of Rule 3a-7 of
the Investment Company Act of 1940, as amended (including, but
not limited to, the Seller or the Company).
(ii) Such Person understands that such Residual
Certificate has not been and will not be registered under the
Securities Act and may be offered, sold, pledged or otherwise
transferred only to a person whom the seller reasonably believes
is (A) a qualified institutional buyer or (B) a Person involved
in the organization or operation of the Trust or an affiliate of
such Person, in a transaction meeting the requirements of Rule
144A under the Securities Act and in accordance with any
applicable securities laws of any state of the United States.
(iii) Such Person understands that each Residual
Certificate bears a legend to the following effect:
THIS RESIDUAL CERTIFICATE HAS NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), OR ANY STATE SECURITIES LAWS. THIS RESIDUAL
CERTIFICATE MAY BE DIRECTLY OR INDIRECTLY OFFERED OR
SOLD OR OTHERWISE DISPOSED OF (INCLUDING PLEDGED) BY THE
HOLDER HEREOF ONLY TO (I) A "QUALIFIED INSTITUTIONAL
BUYER" AS DEFINED IN RULE 144A UNDER THE ACT, IN A
TRANSACTION THAT IS REGISTERED UNDER THE ACT AND
APPLICABLE STATE SECURITIES LAWS OR THAT IS EXEMPT FROM
THE REGISTRATION REQUIREMENTS OF THE ACT PURSUANT TO
RULE 144A OR [(II) A PERSON INVOLVED IN THE ORGANIZATION
OR OPERATION OF THE TRUST OR AN AFFILIATE OF SUCH A
PERSON WITHIN THE MEANING OF RULE 3a-7 OF THE INVESTMENT
COMPANY ACT OF 1940], AS AMENDED (INCLUDING, BUT NOT
LIMITED TO, MEGO MORTGAGE CORPORATION) IN A TRANSACTION
THAT IS REGISTERED UNDER THE ACT AND APPLICABLE STATE
SECURITIES LAWS OR THAT IS EXEMPT FROM THE
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REGISTRATION REQUIREMENTS OF THE ACT AND SUCH LAWS. NO
PERSON IS OBLIGATED TO REGISTER THIS RESIDUAL
CERTIFICATE UNDER THE ACT OR ANY STATE SECURITIES LAWS."
(iv) Such Person shall comply with the provisions of
Section 3.10(b), as applicable, relating to the ERISA
restrictions with respect to the acceptance or acquisition of
such Residual Certificate.
(c) Each Prospective Owner, other than the Company, shall
either:
(i) represent and warrant, in writing, to the Owner
Trustee and the Certificate Registrar and any of their
respective successors that the Prospective Owner is not (A) an
"employee benefit plan" within the meaning of Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or (B) a "plan" within the meaning of Section
4975(e)(1) of the Code (any such plan or employee benefit plan,
a "Plan") or (C) any entity, including an insurance company
separate account or general account, whose underlying assets
include plan assets by reason of a plan's investment in the
entity and is not directly or indirectly purchasing such
Residual Certificate on behalf of, as investment manager of, as
named fiduciary of, as trustee of, or with assets of a Plan; or
(ii) furnish to the Owner Trustee and the Certificate
Registrar and any of their respective successors an opinion of
counsel acceptable to such persons that (A) the proposed
issuance or transfer of such Residual Certificate to such
Prospective Owner will not cause any assets of the Trust to be
deemed assets of a Plan, or (B) the proposed issuance or
transfer of such Residual Certificate will not cause the Owner
Trustee or the Certificate Registrar or any of their respective
successors to be a fiduciary of a Plan within the meaning of
Section 3(21) of ERISA and will not give rise to a transaction
described in Section 406 of ERISA or Section 4975(c)(1) of the
Code for which a statutory or administrative exemption is
unavailable.
(d) By its acceptance of a Residual Certificate, each Prospective Owner
agrees and acknowledges that no legal or beneficial interest in all or any
portion of the Residual Certificates may be transferred directly or indirectly
to an individual, corporation, partnership or other person unless such
transferee is not a Non-U.S. Person (any such person being referred to herein as
a "Non-permitted Foreign Holder"), and any such purported transfer shall be void
and have no effect.
(e) Neither The Owner Trustee nor the Administrator shall execute, or
countersign and deliver, any Residual Certificate in connection with any
transfer thereof unless the transferor shall have provided to the Owner Trustee
or the Administrator a certificate,
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substantially in the form attached as Exhibit D to this Agreement, signed by the
transferee or a Non-permitted Foreign Holder, which certificate shall contain
the consent of the transferee to any amendments of this Agreement as may be
required to effectuate further the foregoing restrictions on transfer of any
Residual Certificate to Non-permitted Foreign Holders, and an agreement by the
transferee that it will not transfer any Residual Certificate without providing
to Certificate Registrar on behalf of the Owner Trustee a certificate
substantially in the form attached as Exhibit D to this Agreement.
(f) Each Residual Certificate shall bear an additional legend referring
to the foregoing restrictions contained in paragraphs (c) and (d) above.
(g) The Prospective Owner of a Residual Certificate shall obtain an
opinion of counsel to the effect that, as a matter of Federal income tax law,
such Prospective Owner is permitted to accept the transfer of a Residual
Certificate.
(h) No Residual Certificate may not be transferred without an Opinion of
Counsel to the effect that such transfer would not jeopardize the tax treatment
of the Trust, would not subject the Trust to an entity-level tax, and would not
jeopardize the status of the Notes as debt for all purposes.
(i) The Residual Certificates shall not be listed for trading on an
established securities market, nor be readily tradeable on a secondary market,
nor be transferable through the substantial equivalent of a secondary market,
nor shall the Issuer be permitted to have more than 100 partners, for income tax
purposes, all within the meaning of Code Section 7704, and its attendant
regulations, as applicable. If requested, in the discretion of the Owner
Trustee, transfer of a Residual Certificate shall be made only if accompanied by
an opinion of counsel satisfactory to the Owner Trustee or the Co-Owner Trustee,
which opinion of counsel shall not be an expense of the Issuer, the Owner
Trustee, the Servicer or the Seller, to the effect such transfer will not cause
the Issuer to be a publicly traded partnership taxable as a corporation and will
not cause the termination of the Issuer under the federal income tax rules
applicable to partnerships.
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ARTICLE IV
ACTIONS BY OWNER TRUSTEE
Section 4.1 Prior Notice to Owners with Respect to Certain Matters. With
respect to the following matters, the Owner Trustee shall not take action, and
the Owners shall not direct the Owner Trustee to take any action, unless at
least 30 days before the taking of such action, the Owner Trustee shall have
notified the Owners and the Securities Insurer in writing of the proposed action
and the Owners and/or the Securities Insurer shall not have notified the Owner
Trustee in writing prior to the 30th day after such notice is given that such
Owners and/or the Securities Insurer have withheld consent or the Owners have
provided alternative direction (any direction by the Owners shall require the
prior consent of the Securities Insurer):
(a) the initiation of any claim or lawsuit by the Trust (except
claims or lawsuits brought in connection with the collection of the Home Loans)
and the compromise of any action, claim or lawsuit brought by or against the
Trust (except with respect to the aforementioned claims or lawsuits for
collection of the Home Loans);
(b) the election by the Trust to file an amendment to the
Certificate of Trust (unless such amendment is required to be filed under the
Business Trust Statute);
(c) the amendment or other change to this Agreement or any
Transaction Document in circumstances where the consent of any Noteholder or the
Securities Insurer is required;
(d) the amendment or other change to this Agreement or any
Transaction Document in circumstances where the consent of any Noteholder or the
Securities Insurer is not required and such amendment materially adversely
affects the interest of the Owners;
(e) the appointment pursuant to the Indenture of a successor Note
Registrar, Paying Agent or Indenture Trustee or pursuant to this Agreement of a
successor Certificate Registrar, or the consent to the assignment by the Note
Registrar, Paying Agent or Indenture Trustee or Certificate Registrar of its
obligations under the Indenture or this Agreement, as applicable.
(f) the consent to the calling or waiver of any default of any
Transaction Document;
(g) the consent to the assignment by the Indenture Trustee, the
Master Servicer or Servicer of their respective obligations under any
Transaction Document;
(h) except as provided in Article IX hereof, dissolve, terminate
or liquidate the Trust in whole or in part;
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(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 the Notes, as set forth in this Agreement;
(k) do any act that conflicts with any other Transaction
Document;
(l) do any act which would make it impossible to carry on the
ordinary business of the Trust;
(m) confess a judgment against the Trust;
(n) possess Trust assets, or assign the Trust's right to
property, for other than a Trust purpose;
(o) cause the Trust to lend any funds to any entity; or
(p) change the Trust's purpose and powers from those set forth in
this Trust Agreement.
In addition the Trust shall not commingle its assets with those of any
other entity. The Trust shall maintain its financial and accounting books and
records separate from those of any other entity. Except as expressly set forth
herein, the Trust shall pay its indebtedness, operating expenses from its own
funds, and the Trust shall not pay the indebtedness, operating expenses and
liabilities of any other entity. The Trust shall maintain appropriate minutes or
other records of all appropriate actions and shall maintain its office separate
from the offices of the Company, the Depositor, and any of their respective
affiliates. This Agreement is and shall be the only agreement among the parties
hereto with respect to the creation, operation and termination of the Trust. For
accounting purposes, the Trust shall be treated as an entity separate and
distinct from any Owner. The pricing and other material terms of all
transactions and agreements to which the Trust is a party shall be intrinsically
fair to all parties thereto.
The Owner Trustee shall not have the power, except upon the direction of
the Majority Securityholders with the consent of the Securities Insurer, and to
the extent otherwise consistent with the Transaction Documents, to (i) remove or
replace the Master Servicer, the Servicer or the Indenture Trustee, (ii)
institute proceedings to have the Trust declared or adjudicated a bankrupt or
insolvent, (iii) consent to the institution of bankruptcy or insolvency
proceedings against the Trust, (iv) file a petition or consent to a petition
seeking reorganization or relief on behalf of the Trust under any applicable
federal or state law relating to bankruptcy, (v) consent to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator (or any similar official)
of the Trust or a substantial portion of the property of the Trust, (vi) make
any assignment for the benefit of the Trust's creditors, (vii) cause the Trust
to admit in writing its inability to pay its debts generally as they become
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due, or (viii) take any action, or cause the Trust to take any action, in
furtherance of any of the foregoing (any of the above, a "Bankruptcy Action").
So long as the Indenture and the Insurance Agreement remain in effect and no
Securities Insurer Default exists, no Residual Certificateholder shall have the
power to take, and shall not take, any Bankruptcy Action with respect to the
Trust or direct the Owner Trustee to take any Bankruptcy Action with respect to
the Trust.
Section 4.2 Action by Owners with Respect to Certain Matters. The Owner
Trustee shall not have the power, except upon the direction of the Owners and
the consent of the Securities Insurer, to (a) remove the Administrator pursuant
to the Administration Agreement, (b) appoint a successor Administrator pursuant
to the Administration Agreement, (c) remove the Master Servicer pursuant to the
Sale and Servicing Agreement, (d) remove the Servicer pursuant to the Servicing
Agreement, or (e) sell the Home Loans after the termination of the Indenture.
The Owner Trustee shall take the actions referred to in the preceding sentence
only upon written instructions signed by the Owners and only after obtaining the
consent of the Securities Insurer.
Section 4.3 Action by Owners 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 consent and approval of the
Securities Insurer, the unanimous prior approval of all Owners and the
Securities Insurer and the delivery to the Owner Trustee by each such Owner of a
certificate certifying that such Owner reasonably believes that the Trust is
insolvent.
Section 4.4 Restrictions on Owners' Power. The Owners shall not direct
the Owner Trustee to take or refrain from taking any action if such action or
inaction would be contrary to any obligation of the Trust or the Owner Trustee
under this Agreement or any of the Transaction Documents or would be contrary to
Section 2.3 nor shall the Owner Trustee be obligated to follow any such
direction, if given.
Section 4.5 Majority Control. Except as expressly provided herein, any
action that may be taken by the Owners under this Agreement may be taken by the
Holders of more than a 50% Percentage Interest in the Residual Certificates.
Except as expressly provided herein, any written notice of the Owners delivered
pursuant to this Agreement shall be effective if signed by Holders of Residual
Certificates evidencing more than a 50% Percentage Interest in the Residual
Certificates at the time of the delivery of such notice.
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ARTICLE V
APPLICATION OF TRUST FUNDS; CERTAIN DUTIES
Section 5.1 Establishment of Trust Account. The Owner Trustee shall
cause the Indenture Trustee, to establish and maintain with First Trust of New
York, National Association for the benefit of the Owner Trustee or Co-Owner
Trustee one or more Eligible Accounts which while the Co-Owner Trustee holds
such Trust Account shall be entitled "CERTIFICATE DISTRIBUTION ACCOUNT, FIRST
TRUST OF NEW YORK, NATIONAL ASSOCIATION, AS CO-OWNER TRUSTEE, IN TRUST FOR THE
MEGO MORTGAGE HOME LOAN ASSET BACKED SECURITIES, SERIES 1997-2". Funds shall be
deposited in the Certificate Distribution Account as required by the Sale and
Servicing Agreement.
All of the right, title and interest of the Co-Owner Trustee or Owner
Trustee in all funds on deposit from time to time in the Certificate
Distribution Account and in all proceeds thereof shall be held for the benefit
of the Owners, the Securities Insurer and such other persons entitled to
distributions therefrom. Except as otherwise expressly provided herein or in the
Sale and Servicing Agreement, the Certificate Distribution Account shall be
under the sole dominion and control of the Owner Trustee or Co-Owner Trustee for
the benefit of the Owners, the Securities Insurer and the Servicer.
In addition to the foregoing, the Certificate Distribution Account is a
Trust Account under the Sale and Servicing Agreement and constitutes part of the
Trust Estate pledged by the Trust to the Indenture Trustee under the Indenture.
The Certificate Distribution Account shall be subject to and established and
maintained in accordance with the applicable provisions of the Sale and
Servicing Agreement and the Indenture, including, without limitation, the
provisions of Sections 5.01(c) and 5.03 of the Sale and Servicing Agreement
regarding distributions from the Certificate Distribution Account.
The Company agrees to direct and shall have the sole authority to direct
the Owner Trustee or Co-Owner Trustee, or their successor in interest, as to the
Permitted Investments in which the funds on deposit in the Trust Accounts (as
such term is defined in the Sale and Servicing Agreement) may be invested.
Section 5.2 Application Of Trust Funds.
(a) On each Distribution Date, the Owner Trustee or Co-Owner
Trustee shall direct the Paying Agent to make the distributions and payments set
forth in Sections 5.01(c) and 5.03 of the Sale and Servicing Agreement from
amounts on deposit in the Note Distribution Account and the Certificate
Distribution Account, respectively.
(b) On or before the third Business Day following each
Distribution Date, the Owner Trustee shall cause the Paying Agent to send to
each Owner the Statement to
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Securityholders prepared pursuant to Section 6.02 of the Sale and Servicing
Agreement with respect to such Distribution Date.
(c) In the event that any withholding tax is imposed on the
Trust's payment (or allocations of income) to an Owner, such tax shall reduce
the amount otherwise distributable to the Owner in accordance with this Section.
The Owner Trustee is hereby authorized and directed to retain from amounts
otherwise distributable to the Owners sufficient funds for the payment of any
tax that is legally owed by the Trust (but such authorization shall not prevent
the Owner Trustee from contesting any such tax in appropriate proceedings, and
withholding payment of such tax, if permitted by law, pending the outcome of
such proceedings). The amount of any withholding tax imposed with respect to an
Owner shall be treated as cash distributed to such Owner at the time it is
withheld by the Trust and remitted to the appropriate taxing authority. If there
is a possibility that withholding tax is payable with respect to a distribution
(such as a distribution to a non-U.S. Owner), the Owner Trustee may in its sole
discretion withhold such amounts in accordance with this paragraph (c). In the
event that an Owner wishes to apply for a refund of any such withholding tax,
the Owner Trustee shall reasonably cooperate with such owner in making such
claim so long as such Owner agrees to reimburse the Owner Trustee for any
out-of-pocket expenses incurred.
Section 5.3 Method of Payment. Distributions required to be made to
Owners on any Distribution Date shall be made to each Owner of record on the
preceding Record Date in the manner set forth in Section 5.03 of the Sale and
Servicing Agreement.
Section 5.4 Segregation of Moneys; No Interest. Subject to Sections 4.1
and 5.2, moneys received by the Owner Trustee hereunder and deposited into the
Certificate Distribution Account will be segregated except to the extent
required otherwise by law or the Sale and Servicing Agreement and shall be
invested in Permitted Investments at the direction of the Company. The Owner
Trustee shall not be liable for payment of any interest in respect of such
moneys.
Section 5.5 Accounting and Reports to the Residual Certificateholders,
Owners, the Internal Revenue Service and Others. The Owner Trustee shall (a)
maintain (or cause to be maintained) the books of the Trust on a calendar year
basis on the accrual method of accounting, and such books shall be maintained
separate from those of any other entity and reflect the separate interest of the
Trust, (b) deliver to each Owner, as may be required by the Code and applicable
Treasury Regulations, such information as may be required to enable each Owner
to prepare its federal and state income tax returns, (c) file such tax return
relating to the Trust (including a partnership information return, IRS Form
1065), and make such elections as may from time to time be required or
appropriate under any applicable state or Federal statute or rule or regulation
thereunder so as to maintain the Trust's characterization as a partnership for
Federal income tax purposes, (d) cause such tax returns to be signed in the
manner required by law and (e) collect or cause to be collected any withholding
tax as described in and in accordance with Section 5.2(c) with respect to income
or distributions to Owners. The Owner Trustee shall elect under Section 1278 of
the Code to include in income
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currently any market discount that accrues with respect to the Home Loans. The
Owner Trustee shall not make the election provided under Section 754 of the
Code.
Section 5.6 Signature on Returns.
The Owner Trustee shall sign on behalf of the Trust the tax
returns of the Trust, unless applicable law requires an Owner to sign such
documents, in which case such documents shall be signed by the Company.
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ARTICLE VI
AUTHORITY AND DUTIES OF OWNER TRUSTEE
Section 6.1 General Authority. The Owner Trustee is authorized and
directed to execute and deliver or cause to be executed and delivered the Notes,
the Residual Certificates and the Transaction Documents to which the Trust is to
be a party and each certificate or other document attached as an exhibit to or
contemplated by the Transaction Documents to which the Trust is to be a party
and any amendment or other agreement or instrument described in Article III, in
each case, in such form as the Company shall approve, as evidenced conclusively
by the Owner Trustee's execution thereof, and, on behalf of the Trust, to direct
the Indenture Trustee to authenticate and deliver Classes of Notes in the
following aggregate principal amounts: Class A-1 Notes, $15,950,000; Class A-2
Notes, $8,100,000; Class A-3 Notes, $6,750,000; Class A-4 Notes, $13,600,000;
and Class A-5 Notes, $14,394,841. The Administrator on behalf of the Owner
Trustee shall authenticate and deliver the Residual Certificates. In addition to
the foregoing, the Owner Trustee is authorized, but shall not be obligated, to
take all actions required of the Trust, pursuant to the Transaction Documents.
Section 6.2 General Duties. It shall be the duty of the Owner Trustee:
(a) to discharge (or cause to be discharged) all of its
responsibilities pursuant to the terms of this Agreement and the Transaction
Documents to which the Trust is a party and to administer the Trust in the
interest of the Owners, subject to the Transaction Documents and in accordance
with the provisions of this Agreement. Notwithstanding the foregoing, the Owner
Trustee shall be deemed to have discharged its duties and responsibilities
hereunder and under the Transaction Documents to the extent the Administrator or
the Co-Owner Trustee has agreed in the Administration Agreement or this
Agreement, respectively, to perform any act or to discharge any duty of the
Owner Trustee or the Trust hereunder or under any Transaction Document, and the
Owner Trustee shall not be held liable for the default or failure of the
Administrator or the Co-Owner Trustee to carry out its obligations under the
Administration Agreement or this Agreement, respectively; and
(b) to obtain and preserve, the Issuer's qualification to do
business in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of the Indenture, the
Notes, the Trust Estate and each other instrument and agreement included in the
Trust Estate.
Section 6.3 Action upon Instruction.
(a) Subject to Article IV and in accordance with the terms of the
Transaction Documents, the Owners may by written instruction direct the Owner
Trustee in the management of the Trust but only to the extent consistent with
the limited purpose of the
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Trust. Such direction may be exercised at any-time by written instruction of the
Owners pursuant to Article IV.
(b) The Owner Trustee shall not be required to take any action
hereunder or under any Transaction Document if the Owner Trustee shall have
reasonably determined, or shall have been advised by counsel, that such action
is likely to result in liability on the part of the Owner Trustee or is contrary
to the terms hereof or of any Transaction Document or is otherwise contrary to
law.
(c) Whenever the Owner Trustee is unable to decide between
alternative courses of action permitted or required by the terms of this
Agreement or under any Transaction Document, the Owner Trustee shall promptly
give notice (in such form as shall be appropriate under the circumstances) to
the Owners and the Securities Insurer requesting instruction from the Owners as
to the course of action to be adopted, and to the extent the Owner Trustee acts
in good faith in accordance with any written instruction of the Owners received,
the Owner Trustee shall not be liable on account of such action to any Person.
If the Owner Trustee shall not have received appropriate instruction within 10
days of such notice (or within such shorter period of time as reasonably may be
specified in such notice or may be necessary under the circumstances) it may,
but shall be under no duty to, take or refrain from taking such action, not
inconsistent with this Agreement or the Transaction Documents, as it shall deem
to be in the best interests of the Owners, and shall have no liability to any
Person for such action or inaction.
(d) In the event that the Owner Trustee is unsure as to the
application of any provision of this Agreement or any Transaction Document or
any such provision is ambiguous as to its application, or is, or appears to be,
in conflict with any other applicable provision, or in the event that this
Agreement permits any determination by the Owner Trustee or is silent or is
incomplete as to the course of action that the Owner Trustee is required to take
with respect to a particular set of facts, the Owner Trustee may give notice (in
such form as shall be appropriate under the circumstances) to the Owners
requesting instruction and, to the extent that the Owner Trustee acts or
refrains from acting in good faith in accordance with any such instruction
received, the Owner Trustee shall not be liable, on account of such action or
inaction, to any Person. If the Owner Trustee shall not have received
appropriate instruction within 10 days of such notice (or within such shorter
period of time as reasonably may be specified in such notice or may be necessary
under the circumstances) it may, but shall be under no duty to, take or refrain
from taking such action, not inconsistent with this Agreement or the Transaction
Documents, as it shall deem to be in the best interests of the Owners, and shall
have no liability to any Person for such action or inaction.
Section 6.4 No Duties Except as Specified in this Agreement, the
Transaction Documents or in Instructions. The Owner Trustee shall not have any
duty or obligation to manage, make any payment with respect to, register,
record, sell, dispose of, or otherwise deal with the Owner Trust Estate, or to
otherwise take or refrain from taking any action under, or
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in connection with, any document contemplated hereby to which the Owner Trustee
is a party, except as expressly provided by the terms of this Agreement, any
Transaction Document or in any document or written instruction received by the
Owner Trustee pursuant to Section 6.3; and no implied duties or obligations
shall be read into this Agreement or any Transaction Document against the Owner
Trustee. The Owner Trustee shall have no responsibility for filing any financing
or continuation statement in any public office at any time or to otherwise
perfect or maintain the perfection of any security interest or lien granted to
it hereunder or to prepare or file any Securities and Exchange Commission filing
for the Trust or to record this Agreement or any Transaction Document. The Owner
Trustee nevertheless agrees that it will, at its own cost and expense, promptly
take all action as may be necessary to discharge any liens on any part of the
Owner Trust Estate that result from actions by, or claims against, the Owner
Trustee that are not related to the ownership or the administration of the Owner
Trust Estate.
Section 6.5 No Action Except Under Specified Documents or Instructions.
The Owner Trustee shall not manage, control, use, sell, dispose of or otherwise
deal with any part of the Owner Trust Estate except (i) in accordance with the
powers granted to and the authority conferred upon the Owner Trustee pursuant to
this Agreement, (ii) in accordance with the Transaction Documents and (iii) in
accordance with any document or instruction delivered to the Owner Trustee
pursuant to Section 6.3.
Section 6.6 Restrictions. The Owner Trustee shall not take any action
(a) that is inconsistent with the purposes of the Trust set forth in Section 2.3
or (b) that, to the actual knowledge of the Owner Trustee, would result in the
Trust's becoming taxable as a corporation for Federal income tax purposes. The
Owners shall not direct the Owner Trustee to take action that would violate the
provisions of this Section.
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ARTICLE VII
CONCERNING THE OWNER TRUSTEE
Section 7.1 Acceptance of Trusts and Duties. The Owner Trustee accepts
the trusts hereby created and agrees to perform its duties hereunder with
respect to such trusts but only upon the terms of this Agreement and the
Transaction Documents. The Owner Trustee also agrees to disburse all moneys
actually received by it constituting part of the Owner Trust Estate upon the
terms of the Transaction Documents and this Agreement. The Owner Trustee shall
not be answerable or accountable hereunder or under any Transaction Document
under any circumstances, except (i) for its own willful misconduct or gross
negligence or (ii) in the case of the inaccuracy of any representation or
warranty contained in Section 7.3 expressly made by the Owner Trustee. In
particular, but not by way of limitation (and subject to the exceptions set
forth in the preceding sentence):
(a) the Owner Trustee shall not be liable for any error of
judgment made by a responsible officer of the Owner Trustee;
(b) the Owner Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in accordance with the instructions of
the Administrator or the Owners;
(c) no provision of this Agreement or any Transaction Document
shall require the Owner Trustee to expend or risk funds or otherwise incur any
financial liability in the performance of any of its rights or powers hereunder
or under any Transaction Document if the Owner Trustee shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured or provided to it;
(d) under no circumstances shall the Owner Trustee be liable for
indebtedness evidenced by or arising under any of the Transaction Documents,
including the principal of and interest on the Notes;
(e) the Owner Trustee shall not be responsible for or in respect
of the validity or sufficiency of this Agreement or for the due execution hereof
by the Depositor or the Company or for the form, character, genuineness,
sufficiency, value or validity of any of the Owner Trust Estate or for or in
respect of the validity or sufficiency of the Transaction Documents, other than
the certificate of authentication on the Residual Certificates, and the Owner
Trustee shall in no event assume or incur any liability, duty, or obligation to
any Noteholder or to any Owner, other than as expressly provided for herein and
in the Transaction Documents;
(f) the Owner Trustee shall not be liable for the default or
misconduct of the Administrator, the Seller, the Company, the Indenture Trustee,
the Master Servicer or the Servicer under any of the Transaction Documents or
otherwise and the Owner Trustee shall
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have no obligation or liability to perform the obligations of the Trust under
this Agreement or the Transaction Documents that are required to be performed by
the Administrator under the Administration Agreement, the Indenture Trustee
under the Indenture, the Master Servicer under the Sale and Servicing Agreement,
or the Servicer under the Servicing Agreement; and
(g) the Owner Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Agreement, or to institute,
conduct or defend any litigation under this Agreement or otherwise or in
relation to this Agreement or any Transaction Document, at the request, order or
direction of any of the Owners, unless such Owners have offered to the Owner
Trustee security or indemnity satisfactory to it against the costs, expenses and
liabilities that may be incurred by the Owner Trustee therein or thereby. The
right of the Owner Trustee to perform any discretionary act enumerated in this
Agreement or in any Transaction Document shall not be construed as a duty, and
the Owner Trustee shall not be answerable for other than its gross negligence or
willful misconduct in the performance of any such act provided, that the Owner
Trustee shall be liable for its negligence or willful misconduct in the event
that it assumes the duties and obligations of the Co-Owner Trustee under the
Sale and Servicing Agreement pursuant to Section 10.5 hereof.
Section 7.2 Furnishing of Documents. The Owner Trustee shall furnish (a)
to the Owners promptly upon receipt of a written request therefor, duplicates or
copies of all reports, notices, requests, demands, certificates, financial
statements and any other instruments furnished to the Owner Trustee under the
Transaction Documents and (b) to Noteholders promptly upon written request
therefor, copies of the Sale and Servicing Agreement, the Administration
Agreement and the Trust Agreement.
Section 7.3 Representations and Warranties.
(a) The Owner Trustee hereby represents and warrants to the
Depositor and the Company, for the benefit of the Owners, that:
(i) It is a banking corporation duly organized and validly
existing in good standing under the laws of the State of Delaware. It
has all requisite corporate power and authority to execute, deliver and
perform its obligations under this Agreement.
(ii) It has taken all corporate action necessary to authorize
the execution and delivery by it of this Agreement, and this Agreement
will be executed and delivered by one of its officers who is duly
authorized to execute and deliver this Agreement on its behalf.
(iii) Neither the execution nor the delivery by it of this
Agreement nor the consummation by it of the transactions contemplated
hereby nor compliance by it with any of the terms or provisions hereof
will contravene any Federal or Delaware law, governmental rule or
regulation governing the banking or trust powers of the
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Owner Trustee or any judgment or order binding on it, or constitute any
default under its charter documents or by-laws or any indenture,
mortgage, contract, agreement or instrument to which it is a party or by
which any of its properties may be bound.
(b) The Co-Owner Trustee hereby represents and warrants to the
Depositor and the Company and the Securities Insurer, for the benefit of the
Owners, that:
(i) It is a national banking association duly organized and
validly existing in good standing under the laws of the United States.
It has all requisite corporate power and authority to execute, deliver
and perform its obligations under this Agreement.
(ii) It has taken all corporate action necessary to authorize
the execution and delivery by it of this Agreement, and this Agreement
will be executed and delivered by one of its officers who is duly
authorized to execute and deliver this Agreement on its behalf.
(iii) Neither the execution nor the delivery by it of this
Agreement nor the consummation by it of the transactions contemplated
hereby nor compliance by it with any of the terms or provisions hereof
will contravene any Federal or Minnesota law, governmental rule or
regulation governing the banking or trust powers of the Co-Owner Trustee
or any judgment or order binding on it, or constitute any default under
its charter documents or by-laws or any indenture, mortgage, contract,
agreement or instrument to which it is a party or by which any of its
properties may be bound.
Section 7.4 Reliance; Advice of Counsel.
(a) The Owner Trustee shall incur no liability to anyone in
acting upon any signature, instrument, notice, resolution, request, consent,
order, certificate, report, opinion, bond, or other document or paper believed
by it to be genuine and believed by it to be signed by the proper party or
parties. The Owner Trustee may accept a certified copy of a resolution of the
board of directors or other governing body of any corporate party as conclusive
evidence that such resolution has been duly adopted by such body and that the
same is in full force and effect. As to any fact or matter the method of the
determination of which is not specifically prescribed herein, the Owner Trustee
may for all purposes hereof rely on a certificate, signed by the president or
any vice president or by the treasurer or other authorized officers of the
relevant party, as to such fact or matter and such certificate shall constitute
full protection to the Owner Trustee for any action taken or omitted to be taken
by it in good faith in reliance thereon.
(b) In the exercise or administration of the trusts hereunder and
in the performance of its duties and obligations under this Agreement or the
Transaction Documents, the Owner Trustee (i) may act directly or through its
agents or attorneys pursuant to agreements entered into with any of them, and
the Owner Trustee shall not be liable for the
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conduct or misconduct of such agents or attorneys if such agents or attorneys
shall have been selected by the Owner Trustee with reasonable care, and (ii) may
consult with counsel, accountants and other skilled persons to be selected with
reasonable care and employed by it. The Owner Trustee shall not be liable for
anything done, suffered or omitted in good faith by it in accordance with the
written opinion or advice of any such counsel, accountants or other such persons
and not contrary to this Agreement or any Transaction Document.
Section 7.5 Not Acting in Individual Capacity. Except as provided in
this Article VII, in accepting the trusts hereby created Wilmington Trust
Company acts solely as Owner Trustee hereunder and not in its individual
capacity and all Persons having any claim against the Owner Trustee by reason of
the transactions contemplated by this Agreement or any Transaction Document
shall look only to the Owner Trust Estate for payment or satisfaction thereof.
Section 7.6 Owner Trustee Not Liable for Residual Certificates or Home
Loans. The recitals contained herein and in the Residual Certificates (other
than the signature and countersignature of the Owner Trustee on the Residual
Certificates) shall be taken as the statements of the Depositor and the Company,
and the Owner Trustee assumes no responsibility for the correctness thereof. The
Owner Trustee makes no representations as to the validity or sufficiency of this
Agreement, of any Transaction Document or of the Residual Certificates (other
than the signature and countersignature of the Owner Trustee on the Residual
Certificates and as specified in Section 7.3) or the Notes, or of any Home Loans
or related documents. The Owner Trustee shall at no time have any responsibility
or liability for or with respect to the legality, validity and enforceability of
any Home Loan, or the perfection and priority of any security interest created
by any Home Loan or the maintenance of any such perfection and priority, or for
or with respect to the sufficiency of the Owner Trust Estate or its ability to
generate the payments to be distributed to Owners under this Agreement or the
Noteholders under the Indenture, including, without limitation: the existence,
condition and ownership of any Property; the existence and enforceability of any
insurance thereon; the existence and contents of any Home Loan on any computer
or other record thereof; the validity of the assignment of any Home Loan to the
Trust or of any intervening assignment; the completeness of any Home Loan; the
performance or enforcement of any Home Loan; the compliance by the Depositor,
the Company, the Master Servicer or the Servicer with any warranty or
representation made under any Transaction Document or in any related document or
the accuracy of any such warranty or representation or any action of the
Administrator, the Indenture Trustee, the Master Servicer or the Servicer or any
subservicer taken in the name of the Owner Trustee.
Section 7.7 Owner Trustee May Own Residual Certificates and Notes. The
Owner Trustee in its individual or any other capacity may become the owner or
pledgee of Residual Certificates or Notes and may deal with the Depositor, the
Company, the Administrator, the Indenture Trustee and the Servicer in banking
transactions with the same rights as it would have if it were not Owner Trustee.
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Section 7.8 Licenses. The Owner Trustee shall cause the Trust to use its
best efforts to obtain and maintain the effectiveness of any licenses required
in connection with this Agreement and the Transaction Documents and the
transactions contemplated hereby and thereby until such time as the Trust shall
terminate in accordance with the terms hereof.
Section 7.9 Rights of Co-Owner Trustee. The Co-Owner Trustee shall be
entitled to all the rights and benefits conferred upon the Owner Trustee in
Article VII of this Agreement.
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ARTICLE VIII
COMPENSATION OF OWNER TRUSTEE
Section 8.1 Owner Trustee's Fees and Expenses. The Owner Trustee shall
receive as compensation for its services hereunder such fees as have been
separately agreed upon before the date hereof between the Company and the Owner
Trustee, and the Owner Trustee shall be entitled to be reimbursed by the Company
for its other reasonable expenses hereunder, including the reasonable
compensation, expenses and disbursements of such agents, representatives,
experts and counsel as the Owner Trustee may employ in connection with the
exercise and performance of its rights and its duties hereunder.
Section 8.2 Indemnification. The Company shall be liable as primary
obligor, and the Servicer as secondary obligor pursuant to the Administration
Agreement, for, and shall indemnify the Owner Trustee, the Co-Owner Trustee and
their successors, assigns, agents and servants (collectively, the "Indemnified
Parties") from and against, any and all liabilities, obligations, losses,
damages, taxes, claims, actions and suits, and any and all reasonable costs,
expenses and disbursements (including reasonable legal fees and expenses) of any
kind and nature whatsoever (collectively, "Expenses") which may at any time be
imposed on, incurred by, or asserted against the Owner Trustee or any
Indemnified Party in any way relating to or arising out of this Agreement, the
Transaction Documents, the Owner Trust Estate, the administration of the Owner
Trust Estate or the action or inaction of the Owner Trustee or the Co-Owner
Trustee hereunder, except only that the Company shall not be liable for or
required to indemnify an Indemnified Party from and against Expenses arising or
resulting from any of the matters described in the third sentence of Section 7.1
hereof. The indemnities contained in this Section shall survive the resignation
or termination of the Owner Trustee or the termination of this Agreement. In any
event of any claim, action or proceeding for which indemnity will be sought
pursuant to this Section, the Owner Trustee's or Co-Owner Trustee's choice of
legal counsel shall be subject to the approval of the Company, which approval
shall not be unreasonably withheld.
Section 8.3 Payments to the Owner Trustee. Any amounts paid to the Owner
Trustee pursuant to this Article VIII shall be deemed not to be a part of the
Owner Trust Estate immediately after such payment.
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ARTICLE IX
TERMINATION OF TRUST AGREEMENT
Section 9.1 Termination of Trust Agreement.
(a) This Agreement (other than Article VIII) and the Trust shall
terminate and be of no further force or effect on the earlier of (i) the
satisfaction and discharge of the Indenture pursuant to Section 4.01 of the
Indenture and the termination of the Sale and Servicing Agreement and (ii) the
expiration of 21 years from the death of the last survivor of the descendants of
Xxxxxx X. Xxxxxxx (the late ambassador of the United States to the Court of St.
James's) alive on the date hereof. The bankruptcy, liquidation, dissolution,
death or incapacity of any Owner shall not (x) operate to terminate this
Agreement or the Trust, nor (y) entitle such Owner's legal representatives or
heirs to claim an accounting or to take any action or proceeding in any court
for a partition or winding up of all or any part of the Trust or Owner Trust
Estate nor (z) otherwise affect the rights, obligations and liabilities of the
parties hereto.
(b) The Residual Certificates shall be subject to an early
redemption or termination at the option of the Company, the Master Servicer or
the Securities Insurer in the manner and subject to the provisions of Section
11.01 of the Sale and Servicing Agreement.
(c) Except as provided in Sections 9.1(a) and (b) above, none of
the Depositor, the Company, the Securities Insurer nor any Owner shall be
entitled to revoke or terminate the Trust.
(d) Notice of any termination of the Trust, specifying the
Distribution Date upon which the Residual Certificateholders shall surrender
their Residual Certificates to the Paying Agent for payment of the final
distributions and cancellation, shall be given by the Owner Trustee to the
Certificateholders, the Securities Insurer and the Rating Agencies mailed within
five Business Days of receipt by the Owner Trustee of notice of such termination
pursuant to Section 9.1(a) or (b) above, which notice given by the Owner Trustee
shall state (i) the Distribution Date upon or with respect to which final
payment of the Residual Certificates shall be made upon presentation and
surrender of the Residual Certificates at the office of the Paying Agent therein
designated, (ii) the amount of any such final payment and (iii) that the Record
Date otherwise applicable to such Distribution Date is not applicable, payments
being made only upon presentation and surrender of the Residual Certificates at
the office of the Paying Agent therein specified. The Owner Trustee shall give
such notice to the Certificate Registrar (if other than the Owner Trustee) and
the Paying Agent at the time such notice is given to Residual
Certificateholders. Upon presentation and surrender of the Residual
Certificates, the Paying Agent shall cause to be distributed to Residual
Certificateholders amounts distributable on such Distribution Date pursuant to
Sections 5.01(c) and 5.03 of the Sale and Servicing Agreement.
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In the event that all of the Residual Certificateholders shall
not surrender their Residual Certificates for cancellation within six months
after the date specified in the above mentioned written notice, the Co-Owner
Trustee shall give a second written notice to the remaining Certificateholders
to surrender their Residual Certificates for cancellation and receive the final
distribution with respect thereto. If within one year after the second notice
all the Residual Certificates shall not have been surrendered for cancellation,
the Co-Owner Trustee may take appropriate steps, or may appoint an agent to take
appropriate steps, to contact the remaining Residual Certificateholders
concerning surrender of their Residual Certificates, and the cost thereof shall
be paid out of the funds and other assets that shall remain subject to this
Agreement. Any funds remaining in the Trust after exhaustion of such remedies
shall be distributed by the Co-Owner Trustee to the Residual Certificateholders
on a pro rata basis.
(e) Upon the winding up of the Trust and its termination, the
Owner Trustee shall cause the Certificate of Trust to be canceled by filing a
certificate of cancellation with the Secretary of State in accordance with the
provisions of Section 3820 of the Business Trust Statute.
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ARTICLE X
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
Section 10.1 Eligibility Requirements for Owner Trustee. The Owner
Trustee shall at all times be a corporation satisfying the provisions of Section
3807(a) of the Business Trust Statute; authorized to exercise corporate powers;
having a combined capital and surplus of at least $50,000,000 and subject to
supervision or examination by Federal or state authorities; and having (or
having a parent which has) a long-term rating of at least "A-1" by Standard &
Poor's and "Baa3" by Moody's and being acceptable to the Securities Insurer. If
such corporation shall publish reports of condition at least annually, pursuant
to law or to the requirements of the aforesaid supervising or examining
authority, then for the purpose of this Section, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In
case at any time the Owner Trustee shall cease to be eligible in accordance with
the provisions of this Section, the Owner Trustee shall resign immediately in
the manner and with the effect specified in Section 10.2.
Section 10.2 Resignation or Removal of Owner Trustee or Co-Owner
Trustee. The Owner Trustee or Co-Owner Trustee may at any time resign and be
discharged from the trusts hereby created by giving written notice thereof to
the Administrator, the Indenture Trustee, the Securities Insurer and the
Company. Upon receiving such notice of resignation, the Administrator shall
promptly appoint a successor Owner Trustee or Co-Owner Trustee (acceptable to
the Securities Insurer) by written instrument, in duplicate, one copy of which
instrument shall be delivered to the resigning Owner Trustee and one copy to the
successor Owner Trustee or Co-Owner Trustee. If no successor Owner Trustee or
Co-Owner Trustee shall have been so appointed and have accepted appointment
within 30 days after the giving of such notice of resignation, the resigning
Owner Trustee or Co-Owner Trustee or the Securities Insurer may petition any
court of competent jurisdiction for the appointment of a successor Owner Trustee
or Co-Owner Trustee.
If at any time the Owner Trustee or Co-Owner Trustee shall cease to be
eligible in accordance with the provisions of Section 10.1 and shall fail to
resign after written request therefor by the Administrator, or if at any time
the Owner Trustee or Co-Owner Trustee shall be legally unable to act, or shall
be adjudged bankrupt or insolvent, or a receiver of the Owner Trustee or
Co-Owner Trustee or of its property shall be appointed, or any public officer
shall take charge or control of the Owner Trustee or Co-Owner Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, then the Securities Insurer, or the Administrator with the consent
of the Securities Insurer, may remove the Owner Trustee or Co-Owner Trustee. If
the Administrator or the Securities Insurer shall remove the Owner Trustee or
Co-Owner Trustee under the authority of the immediately preceding sentence, the
Securities Insurer, or the Administrator with the consent of the Securities
Insurer, shall promptly appoint a successor Owner Trustee or Co-Owner Trustee by
written instrument in duplicate, one copy of which instrument shall be delivered
to the
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outgoing Owner Trustee or Co-Owner Trustee so removed and one copy to the
successor Owner Trustee or Co-Owner Trustee and payment of all fees owed to the
outgoing Owner Trustee or Co-Owner Trustee.
Any resignation or removal of the Owner Trustee or Co-Owner Trustee and
appointment of a successor Owner Trustee or Co-Owner Trustee pursuant to any of
the provisions of this Section shall not become effective until (i) acceptance
of appointment by the successor Owner Trustee or Co-Owner Trustee pursuant to
Section 10.3 written approval by the Securities Insurer and payment of all fees
and expenses owed to the outgoing Owner Trustee or Co-Owner Trustee. The
Administrator shall provide notice of such resignation or removal of the Owner
Trustee or Co-Owner Trustee to each of the Rating Agencies and the Securities
Insurer.
Section 10.3 Successor Owner Trustee or Co-Owner Trustee. Any successor
Owner Trustee or Co-Owner Trustee appointed pursuant to Section 10.2 shall
execute, acknowledge and deliver to the Administrator, the Securities Insurer
and to its predecessor Owner Trustee or Co-Owner Trustee an instrument accepting
such appointment under this Agreement, and thereupon the resignation or removal
of the predecessor Owner Trustee or Co-Owner Trustee shall become effective and
such successor Owner Trustee or Co-Owner Trustee (if acceptable to the
Securities Insurer), without any further act, deed or conveyance, shall become
fully vested with all the rights, powers, duties, and obligations of its
predecessor under this Agreement, with like effect as if originally named as
Owner Trustee or Co-Owner Trustee. The predecessor Owner Trustee or Co-Owner
Trustee shall upon payment of its fees and expenses deliver to the successor
Owner Trustee or Co-Owner Trustee all documents and statements and monies held
by it under this Agreement; and the Administrator and the predecessor Owner
Trustee or Co-Owner Trustee shall execute and deliver such instruments and do
such other things as may reasonably be required for fully and certainly vesting
and confirming in the successor Owner Trustee or Co-Owner Trustee all such
rights, powers, duties, and obligations.
No successor Owner Trustee or Co-Owner Trustee shall accept appointment
as provided in this Section unless at the time of such acceptance such successor
Owner Trustee or Co-Owner Trustee shall be eligible pursuant to Section 10.1.
Upon acceptance of appointment by a successor Owner Trustee or Co-Owner
Trustee pursuant to this Section, the Administrator shall mail notice of the
successor of such Owner Trustee or Co-Owner Trustee to all Owners, the Indenture
Trustee, the Noteholders, the Securities Insurer and the Rating Agencies. If the
Administrator fails to mail such notice within 10 days after acceptance of
appointment by the successor Owner Trustee or Co-Owner Trustee, the successor
Owner Trustee or Co-Owner Trustee shall cause such notice to be mailed at the
expense of the Administrator.
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Section 10.4 Merger or Consolidation of Owner Trustee. Any corporation
into which the Owner Trustee or the Co-Owner Trustee may be merged or converted
or with which either may be consolidated or any corporation resulting from any
merger, conversion or consolidation to which the Owner Trustee or the Co-Owner
Trustee shall be a party, or any corporation succeeding to all or substantially
all of the corporate trust business of the Owner Trustee or the Co-Owner
Trustee, shall be the successor of the Owner Trustee or the Co-Owner Trustee, as
the case may be, hereunder, provided such corporation shall be eligible pursuant
to Section 10.1, without the execution or filing of any instrument or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding; provided further that the Owner Trustee or the
Co-Owner Trustee, as the case may be, shall mail notice of such merger or
consolidation to the Rating Agencies.
Section 10.5 Appointment of Co-Owner Trustee or Separate Owner Trustee.
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Owner Trust Estate or any Mortgaged Property may at the time be located,
and for the purpose of performing certain duties and obligations of the Owner
Trustee with respect to the Trust and the Residual Certificates under the Sale
and Servicing Agreement, the Administrator and the Owner Trustee acting jointly
shall have the power and shall execute and deliver all instruments to appoint
one or more Persons approved by the Owner Trustee and acceptable to the
Securities Insurer to act as co-owner trustee, jointly with the Owner Trustee,
or separate owner trustee or separate owner trustees, of all or any part of the
Owner Trust Estate, and to vest in such Person, in such capacity, such title to
the Trust, or any part thereof, and, subject to the other provisions of this
Section, such powers, duties, obligations, rights and trusts as the
Administrator, the Securities Insurer and the Owner Trustee may consider
necessary or desirable. If the Administrator shall not have joined in such
appointment within 25 days after the receipt by it of a request so to do, the
Owner Trustee (with the consent of the Securities Insurer) shall have the power
to make such appointment. No Co-Owner Trustee or separate Owner Trustee under
this Section 10.5 shall be required to meet the terms of eligibility as a
successor trustee pursuant to Section 10.1 and no notice of the appointment of
any co-owner trustee or separate Owner Trustee shall be required pursuant to
Section 10.3.
The Owner Trustee hereby appoints the Indenture Trustee as Co-Owner
Trustee for the purpose of (i) establishing and maintaining the Certificate
Distribution Account and making the distributions therefrom to the Persons
entitled thereto pursuant to Sections 5.01(c) and 5.03 of the Sale and Servicing
Agreement and (ii) holding the Contract of Insurance on behalf of the Trust,
facilitating claims under the Contract of Insurance and for purposes of holding
record ownership of each FHA Loan. The Owner Trustee and the Co-Owner Trustee
each agree that upon the occurrence and continuation of a Securities Insurer
Default, the Co-Owner Trustee shall resign and the Owner Trustee shall assume
the duties and obligations of the Co-Owner Trustee under the Sale and Servicing
Agreement (other than its duties as Contract of Insurance Holder thereunder) and
this Agreement, including without limitation, the obligations of the Co-Owner
Trustee as Paying Agent pursuant to Section 3.9 hereof.
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Each separate owner trustee and co-owner trustee shall, to the extent
permitted by law, be appointed and act subject to the following provision and
conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon the Owner Trustee shall be conferred upon and exercised or
performed by the Owner Trustee and such separate owner trustee or
co-owner trustee jointly (it being understood that such separate owner
trustee or co-owner trustee is not authorized to act separately without
the Owner Trustee joining in such act), except to the extent that under
any law of any jurisdiction in which any particular act or acts are to
be performed, the Owner Trustee shall be incompetent or unqualified to
perform such act or acts, in which event such rights, powers, duties,
and obligations (including the holding of title to the Trust or any
portion thereof in any such jurisdiction) shall be exercised and
performed singly by such separate owner trustee or co-owner trustee but
solely at the direction of the Owner Trustee; provided that Co-Owner
Trustee, in performing its duties and obligations under the Sale and
Servicing Agreement, may act separately in its capacity as Co-Owner
Trustee without the Owner Trustee joining in such Acts.
(ii) no owner trustee under this Agreement shall be personally
liable by reason of any act or omission of any other owner trustee under
this Agreement; and
(iii) the Administrator and the Owner Trustee acting jointly may
at any time accept the resignation of or remove any separate owner
trustee or co-owner trustee.
Any notice, request or other writing given to the Owner Trustee shall be
deemed to have been given to the separate owner trustees and co-owner trustees,
as if given to each of them. Every instrument appointing any separate owner
trustee or co-owner trustee, other than this Agreement, shall refer to this
Agreement and to the conditions of this Article. Each separate owner trustee and
co-owner trustee, upon its acceptance of appointment, shall be vested with the
estates specified in its instrument of appointment, either jointly with the
Owner Trustee or separately, as may be provided therein, subject to all the
provisions of this Agreement, specifically including every provision of this
Agreement relating to the conduct of, affecting the liability of, or affording
protection to, the Owner Trustee. Each such instrument shall be filed with the
Owner Trustee and a copy thereof given to the Administrator.
Any separate owner trustee or co-owner trustee may at any time appoint
the Owner Trustee as its agent or attorney-in-fact with full power and
authority, to the extent not prohibited by law, to do any lawful act under or in
respect of this Agreement on its behalf and in its name. If any separate owner
trustee or co-owner trustee shall die, become incapable of acting, resign or be
removed, all of its estates, properties, rights, remedies and trusts shall vest
in and be exercised by the Owner Trustee, to the extent permitted by law,
without the appointment of a new or successor trustee.
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The Co-Owner Trustee, in its capacity as Co-Owner Trustee, shall not
have any rights, duties or obligations except as expressly provided in this
Agreement and the Sale and Servicing Agreement.
X-5
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ARTICLE XI
MISCELLANEOUS
Section 11.1 Supplements and Amendments. This Agreement may be amended
by the Depositor, the Company and the Owner Trustee, with the prior consent of
the Securities Insurer, and with prior written notice to the Rating Agencies and
the Securities Insurer, but without the consent of any of the Noteholders or the
Owners or the Indenture Trustee, to cure any ambiguity, to correct or supplement
any provisions in this Agreement or for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions in this Agreement
or of modifying in any manner the rights of the Noteholders or the Owners
provided, however, that such action shall not adversely affect in any material
respect the interests of any Noteholder or Owner or the rights of the Securities
Insurer. An amendment described above shall be deemed not to adversely affect in
any material respect the interests of any Noteholder or Owner if (i) an opinion
of counsel is obtained to such effect, and (ii) the party requesting the
amendment satisfies the Rating Agency Condition with respect to such amendment.
This Agreement may also be amended from time to time by the Depositor,
the Company and the Owner Trustee, with the prior written consent of the Rating
Agencies and with the prior written consent of the Indenture Trustee, the
Securities Insurer, the Holders (as defined in the Indenture) of Notes
evidencing more than 50% of the Percentage Interests in the Notes, the Holders
of Residual Certificates evidencing more than 50% of the Percentage Interests in
the Residual Certificates, for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement or
of modifying in any manner the rights of the Noteholders or the Owners;
provided, however, that no such amendment shall (a) increase or reduce in any
manner the amount of, or accelerate or delay the timing of, collections of
payments on the Home Loans or distributions that shall be required to be made
for the benefit of the Noteholders or the Residual Certificateholders or the
Securities Insurer (b) reduce the aforesaid percentage of the Outstanding Amount
of the Notes or the Percentage Interests required to consent to any such
amendment, in either case of clause (a) or (b) without the consent of the
holders of all the outstanding Notes and Residual Certificates and the
Securities Insurer, and in the case of clause (b) without the consent of the
holders of all the outstanding Residual Certificates.
Promptly after the execution of any such amendment or consent, the Owner
Trustee shall furnish written notification of the substance of such amendment or
consent to each Residual Certificateholder, the Indenture Trustee, the
Securities Insurer and each of the Rating Agencies.
It shall not be necessary for the consent of Owners, the Noteholders or
the Indenture Trustee pursuant to this Section to approve the particular form of
any proposed amendment or consent, but it shall be sufficient if such consent
shall approve the substance thereof. The manner of obtaining such consents (and
any other consents of Owners provided for in this
XI-1
46
Agreement or in any other Transaction Document) and of evidencing the
authorization of the execution thereof by Residual Certificateholders shall be
subject to such reasonable requirements as the Owner Trustee may prescribe.
Promptly after the execution of any amendment to the Certificate of
Trust, the Owner Trustee shall cause the filing of such amendment with the
Secretary of State.
Prior to the execution of any amendment to this Agreement or the
Certificate of Trust, the Owner Trustee shall be entitled to receive and rely
upon an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Agreement. The Owner Trustee may, but shall not
be obligated to, enter into any such amendment which affects the Owner Trustee's
own rights, duties or immunities under this Agreement or otherwise.
Section 11.2 No Legal Title to Owner Trust Estate in Owners. The Owners
shall not have legal title to any part of the Owner Trust Estate. The Owners
shall be entitled to receive distributions with respect to their undivided
ownership interest therein only in accordance with Articles V and IX. No
transfer, by operation of law or otherwise, of any right, title, or interest of
the Owners to and in their ownership interest in the Owner Trust Estate shall
operate to terminate this Agreement or the trusts hereunder or entitle any
transferee to an accounting or to the transfer to it of legal title to any part
of the Owner Trust Estate.
Section 11.3 Limitations on Rights of Others. The provisions of this
Agreement are solely for the benefit of the Owner Trustee, the Co-Owner Trustee,
the Depositor, the Company, the Owners, the Administrator, the Securities
Insurer and, to the extent expressly provided herein, the Indenture Trustee and
the Noteholders, and nothing in this Agreement, whether express or implied,
shall be construed to give to any other Person any legal or equitable right,
remedy or claim in the Owner Trust Estate or under or in respect of this
Agreement or any covenants, conditions or provisions contained herein.
Section 11.4 Notices. (a) Unless otherwise expressly specified or
permitted by the terms hereof, all notices shall be in writing and shall be
deemed given upon receipt by the intended recipient or three Business Days after
mailing if mailed by certified mail, postage prepaid (except that notice to the
Owner Trustee shall be deemed given only upon actual receipt by the Owner
Trustee), at the following addresses: (i) if to the Owner Trustee, its Corporate
Trust Office; (ii) if to the Depositor, Financial Asset Securities Corp., 000
Xxxxxxxxx Xxxx, Xxxxxxxxx, Xxxxxxxxxxx 00000, Attention: Xxxxx XxXxxxxx, Vice
President; (iii) if to the Company, Mego Mortgage Corporation, 0000 Xxxxxxxx
Xxxxxx, Xxxxx 000 Xxxxxxx, Xxxxxxx 00000, Attention: Xxxx X. Xxxxx, President;
(iv) if to the Securities Insurer, MBIA Insurance Corporation, 000 Xxxx Xxxxxx,
Xxxxxx, Xxx Xxxx 00000, Attention: IPM-SF, telephone: 000-000-0000,
confirmation: 000-000-0000; (v) if to the Co-Owner Trustee, First Trust of New
York, National Association, 000 Xxxx Xxxxx Xxxxxx, Xx. Xxxx, Xxxxxxxxx 00000,
Attention: Structured Finance/Mego Mortgage 1997-2 Corporate Trust Department;
XI-2
47
or, as to each such party, at such other address as shall be designated by such
party in a written notice to each other party.
(b) Any notice required or permitted to be given to an Owner shall be
given by first-class mail, postage prepaid, at the address of such Owner as
shown in the Certificate Register. Any notice so mailed within the time
prescribed in this Agreement shall be conclusively presumed to have been duly
given, whether or not the Owner receives such notice.
Section 11.5 Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
Section 11.6 Separate Counterparts. This Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
Section 11.7 Successors and Assigns. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, the
Depositor, the Company, the Securities Insurer, the Owner Trustee, the Co-Owner
Trustee and its successors and each owner and its successors and permitted
assigns, all as herein provided. Any request, notice, direction, consent, waiver
or other instrument or action by an Owner shall bind the successors and assigns
of such Owner.
Section 11.8 No Petition. The Owner Trustee, by entering into this
Agreement, each Owner, by accepting a Residual Certificate, and the Indenture
Trustee and each Noteholder by accepting the benefits of this Agreement, hereby
covenant and agree that they will not at any time institute against the Company,
any wholly-owned subsidiary of the Company, the Depositor or the Trust, or join
in any institution against the Company, any wholly-owned subsidiary of the
Company, or the Trust of, any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings, or other proceedings under any United
States Federal or state bankruptcy or law in connection with any obligations
relating to the Residual Certificates, the Notes, this Agreement or any of the
Transaction Documents.
Section 11.9 Covenants of Company. The Company shall not institute at
any time any Bankruptcy proceeding against the Trust or any wholly-owned
subsidiary of the Company, under any United States Federal or state bankruptcy
or similar law in connection with any obligations relating to the Residual
Certificates, the Notes, the Trust Agreement or any of the Transaction
Documents.
Section 11.10 No Recourse. Each Owner by accepting a Residual
Certificate acknowledges that such Owner's Trust Certificate represents a
beneficial interest in the Trust
XI-3
48
only and does not represent an interest in or an obligation of the Seller, the
Servicer, the Company, the Depositor, the Administrator, the Owner Trustee, the
Co-Owner Trustee or any Affiliate thereof and no recourse may be had against
such parties or their assets, except as may be expressly set forth or
contemplated in this Agreement, the Residual Certificates or the Transaction
Documents.
Section 11.11 Headings. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
Section 11.12 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 11.13 Third-Party Beneficiary. The parties hereto acknowledge
that the Securities Insurer is an express third party beneficiary hereof
entitled to enforce any rights reserved to it hereunder as if it were actually a
party hereto.
Section 11.14 Inconsistencies with Sale and Servicing Agreement.
In the event certain provisions of this Agreement conflict with the
provisions of the Sale and Servicing Agreement, the parties hereto agree that
the provisions of the Sale and Servicing Agreement shall be controlling.
XI-4
49
IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement
to be duly executed by their respective officers hereunto duly authorized, as of
the day and year first above written.
FINANCIAL ASSET SECURITIES CORP.,
Depositor
By:___________________________________
Name:
Title:
MEGO MORTGAGE CORPORATION
By:___________________________________
Name:
Title:
WILMINGTON TRUST COMPANY,
not in its individual capacity but
solely as Owner Trustee
By:___________________________________
Name:
Title:
FIRST TRUST OF NEW YORK, NATIONAL
ASSOCIATION, not in its individual
capacity but solely as Co-Owner
Trustee and Paying Agent
By:___________________________________
Name:
Title:
50
EXHIBIT A
TO THE TRUST AGREEMENT
(FORM OF RESIDUAL CERTIFICATE]
THE RESIDUAL CERTIFICATE IN THE TRUST REPRESENTED BY THIS RESIDUAL CERTIFICATE
HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS. THIS RESIDUAL INTEREST MAY BE
DIRECTLY OR INDIRECTLY OFFERED OR SOLD OR OTHERWISE DISPOSED OF (INCLUDING
PLEDGED) BY THE HOLDER HEREOF ONLY TO (I) A "QUALIFIED INSTITUTIONAL BUYER" AS
DEFINED IN RULE 144A UNDER THE ACT, IN A TRANSACTION THAT IS REGISTERED UNDER
THE ACT AND APPLICABLE STATE SECURITIES LAWS OR THAT IS EXEMPT FROM THE
REGISTRATION REQUIREMENTS OF THE ACT PURSUANT TO RULE 144A OR (II) A PERSON
INVOLVED IN THE ORGANIZATION OR OPERATION OF THE TRUST OR AN AFFILIATE OF SUCH A
PERSON WITHIN THE MEANING OF RULE 3A-7 OF THE INVESTMENT COMPANY ACT OF 1940, AS
AMENDED (INCLUDING, BUT NOT LIMITED TO, MEGO MORTGAGE CORPORATION) IN A
TRANSACTION THAT IS REGISTERED UNDER THE ACT AND APPLICABLE STATE SECURITIES
LAWS OR THAT IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND SUCH
LAWS. NO PERSON IS OBLIGATED TO REGISTER THIS RESIDUAL INTEREST UNDER THE ACT OR
ANY STATE SECURITIES LAWS.
NO TRANSFER OF THIS RESIDUAL OR ANY BENEFICIAL INTEREST THEREIN SHALL BE MADE TO
ANY PERSON UNLESS THE OWNER TRUSTEE HAS RECEIVED A CERTIFICATE FROM THE
TRANSFEREE TO THE EFFECT THAT SUCH TRANSFEREE (I) IS NOT A PERSON WHICH IS AN
EMPLOYEE BENEFIT PLAN, TRUST OR ACCOUNT SUBJECT TO TITLE I OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA") OR SECTION 4975 OF
THE CODE OR A GOVERNMENTAL PLAN, DEFINED IN SECTION 3(32) OF ERISA SUBJECT TO
ANY FEDERAL, STATE OR LOCAL LAW WHICH IS, TO A MATERIAL EXTENT, SIMILAR TO THE
FOREGOING PROVISIONS OF ERISA OR THE CODE (ANY SUCH PERSON BEING A "PLAN") AND
(II) IS NOT AN ENTITY, INCLUDING AN INSURANCE COMPANY SEPARATE ACCOUNT OR
GENERAL ACCOUNT, WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS BY REASON OF A
PLAN'S INVESTMENT IN THE ENTITY.
[THIS AGREEMENT IS NONTRANSFERABLE. NOTWITHSTANDING ANYTHING HEREIN OR IN THE
TRUST AGREEMENT TO THE CONTRARY, ANY ATTEMPTED TRANSFER OF THIS RESIDUAL
CERTIFICATE SHALL BE NULL AND VOID FOR ALL PURPOSES.]
A-1
51
MEGO MORTGAGE HOME LOAN OWNER TRUST 1997-2
RESIDUAL CERTIFICATE
No. _____
THIS CERTIFIES THAT
__________________________________ (the "Owner") is the registered owner of a
_____% residual interest in MEGO MORTGAGE HOME LOAN OWNER TRUST 1997-2 (the
"Trust") existing under the laws of the State of Delaware and created pursuant
to the Trust Agreement dated as of May 1, 1997 (the "Trust Agreement") between
FINANCIAL ASSET SECURITIES CORP., as Depositor, MEGO MORTGAGE CORPORATION, as
the Company, WILMINGTON TRUST COMPANY, not in its individual capacity but solely
in its fiduciary capacity as owner trustee under the Trust Agreement (the "Owner
Trustee") and First Trust of New York, National Association, as Co-Owner Trustee
(the "Co-Owner Trustee"). Initially capitalized terms used but not defined
herein have the meanings assigned to them in the Trust Agreement. The Owner
Trustee, on behalf of the Issuer and not in its individual capacity, has
executed this Residual Certificate by one of its duly authorized signatories as
set forth below. This Residual Certificate is one of the Residual Certificates
referred to in the Trust Agreement and is issued under and is subject to the
terms, provisions and conditions of the Trust Agreement to which the holder of
this Residual Certificate by virtue of the acceptance hereof agrees and by which
the holder hereof is bound. Reference is hereby made to the Trust Agreement and
the Sale and Servicing Agreement for the rights of the holder of this Residual
Certificate, as well as for the terms and conditions of the Trust created by the
Trust Agreement.
The holder, by its acceptance hereof, agrees
not to transfer this Residual Certificate [except in accordance with terms and
provisions of the Agreement].
A-2
52
THIS RESIDUAL 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.
IN WITNESS WHEREOF, the Owner Trustee, on
behalf of the Trust and not in its individual capacity, has caused this Residual
Certificate to be duly executed.
MEGO MORTGAGE HOME LOAN OWNER TRUST
1997-2
By: Wilmington Trust Company, not in its individual
capacity but solely as Owner Trustee under the
Trust Agreement
By:______________________________________________
Authorized Signatory
DATED: May __, 1997
CERTIFICATE OF AUTHENTICATION
This is one of the Residual Certificates referred to in the
within-mentioned Agreement.
FIRST TRUST OF NEW YORK, NATIONAL
ASSOCIATION, as Authenticating Agent
By:______________________________________________
Authorized Signatory
A-3
53
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 Instrument, and all rights thereunder, hereby irrevocably
constituting and appointing
-------------------------------------------------------------------- Attorney to
transfer said Instrument 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-4
54
EXHIBIT B
TO THE TRUST AGREEMENT
CERTIFICATE OF TRUST OF
MEGO MORTGAGE HOME LOAN OWNER TRUST 1997-2
THIS Certificate of Trust of MEGO MORTGAGE HOME LOAN OWNER TRUST 1997-2
(the "Trust"), dated as of May 1, 1997, is being duly executed and filed by
Wilmington Trust Company, a Delaware banking corporation, as trustee, to form a
business trust under the Delaware Business Trust Act (12 Del. Code, Section 3801
et seq.).
1. Name. The name of the business trust formed hereby is MEGO MORTGAGE
HOME LOAN OWNER TRUST 1997-2.
2. Delaware Trustee. The name and business address of the trustee of the
Trust in the State of Delaware is Wilmington Trust Company of Xxxxxx Square
North, 0000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000.
Attention:___________.
IN WITNESS WHEREOF, the undersigned, being the sole trustee of the
Trust, has executed this Certificate of Trust as of the date first above
written.
Wilmington Trust Company, not in its
individual capacity but solely as Owner
Trustee under a Trust Agreement dated as
of May 1, 1997.
By:_____________________________________
Name:
Title:
B-1
