PAINEWEBBER MORTGAGE ACCEPTANCE CORPORATION IV
(Depositor)
and
U.S. BANK NATIONAL ASSOCIATION, d/b/a FIRST BANK NATIONAL ASSOCIATION
(Grantor Trustee)
and
EMPIRE FUNDING CORP.
(Transferor)
--------------------------------------
GRANTOR TRUST AGREEMENT
Dated as of February 1, 1998
--------------------------------------
EMPIRE FUNDING GRANTOR TRUST 1998-1
================================================================================
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
Section 1.01. Definitions
ARTICLE II
CONVEYANCE OF HOME LOANS; ORIGINAL ISSUANCE OF GRANTOR TRUST CERTIFICATE
Section 2.01. Conveyance of the Home Loans
Section 2.02. Acceptance by Grantor Trustee; Authentication of Grantor Trust
Certificate
Section 2.03. Ownership and Possession of Home Loan Files
Section 2.04. Books and Records
Section 2.05. Delivery of Home Loan Documents
Section 2.06. Acceptance by the Grantor Trustee of the Home Loans;
Certain Substitutions; Certification by the Custodian
Section 2.07. Subsequent Transfers
Section 2.08. Release and Reconveyance of Home Loans
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01. Representations and Warranties of the Depositor
ARTICLE IV
THE GRANTOR TRUST CERTIFICATE
Section 4.01. The Grantor Trust Certificate
Section 4.02. Registration, Transfer and Exchange of Grantor Trust Certificate
Section 4.03. Mutilated, Destroyed, Lost or Stolen Grantor Trust Certificate
Section 4.04. Persons Deemed Owners
Section 4.05. Maintenance of Office or Agency
ARTICLE V
GRANTOR TRUST ACCOUNTS; PAYMENTS TO GRANTOR TRUST HOLDER
Section 5.01. Collection Account
Section 5.02. Distributions from Collection Account
Section 5.03. Pre-Funding Account
ARTICLE VI
CONCERNING THE GRANTOR TRUSTEE
Section 6.01. Duties of Grantor Trustee
Section 6.02. Certain Matters Affecting the Grantor Trustee
Section 6.03. Grantor Trustee not Required to Make Investigation
Section 6.04. Grantor Trustee's Fees
Section 6.05. Compliance with Code
Section 6.06. Eligibility Requirements for Grantor Trustee
Section 6.07. Resignation and Removal of Grantor Trustee
Section 6.08. Successor Grantor Trustee
Section 6.09. Merger or Consolidation of Grantor Trustee
Section 6.10. Authenticating Agent
ARTICLE VII
TERMINATION
Section 7.01. Termination
Section 7.02. Procedure Upon Termination of Grantor Trust
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.01. Binding Nature of Agreement; Assignment
Section 8.02. Entire Agreement
Section 8.03. Amendment
Section 8.04. Governing Law
Section 8.05. Notices
Section 8.06. Severability of Provisions
Section 8.07. Indulgences; No Waivers
Section 8.08. Headings Not To Affect Interpretation
Section 8.09. Benefits of Agreement
Section 8.10. Counterparts
Section 8.11. Security Interest
EXHIBIT A FORM OF GRANTOR TRUST CERTIFICATE
EXHIBIT B FORM OF INVESTMENT AND ERISA REPRESENTATION LETTER
EXHIBIT C FORM OF SUBSEQUENT TRANSFER AGREEMENT
THIS GRANTOR TRUST AGREEMENT ("Grantor Trust Agreement" or "Agreement"),
dated as of February 1, 1998, by and among PAINEWEBBER MORTGAGE ACCEPTANCE
CORPORATION IV, as Depositor, U.S. BANK NATIONAL ASSOCIATION, d/b/a FIRST BANK
NATIONAL ASSOCIATION, as Grantor Trustee and EMPIRE FUNDING CORP., as
Transferor.
The parties hereto intend that this Grantor Trust Agreement be construed so
as to create an "investment trust" formed to facilitate the direct investment by
the Grantor Trust Holder in the assets of the Grantor Trust Estate, within the
meaning of Section 301.7701-4(c) of the regulations of the U.S. Department of
the Treasury, and not a partnership or an association taxable as a corporation,
and that the rights, duties, and powers of the Grantor Trustee hereunder be
construed so as not to confer on the Grantor Trustee any power to vary the
investment of the Grantor Trust Holder by taking advantage of market
fluctuations to improve its rate of return.
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. Whenever used in this Agreement, the following
words and phrases, unless the context otherwise requires, shall have the
meanings specified in this Article. Capitalized terms used without definition
herein shall have the respective meanings assigned to them in the Sale and
Servicing Agreement.
Act: The Securities Act of 1933, as amended, and as it may be amended from
time to time.
Authenticating Agent: Any authenticating agent appointed by the Grantor
Trustee pursuant to Section 6.10.
Bankers Custodian: Bankers Trust Company of California, N.A., a national
banking association, as custodian pursuant to the Bankers Custodial Agreement.
Certificate Register and Certificate Registrar: Respectively, the register
maintained pursuant to and the registrar provided for in Section 4.02. The
initial Certificate Registrar is the Grantor Trustee.
Corporate Trust Office: The principal office of the Grantor Trustee at
which at any particular time its corporate trust business shall be administered,
which office at date of execution of this Agreement is located at 000 Xxxx Xxxxx
Xxxxxx, Xx. Xxxx, Xxxxxxxxx 00000; Attention: Corporate Trust Department, or at
such other address as the Grantor Trustee may designate from time to time by
notice to the Grantor Trust Holder and the Issuer, or the principal corporate
trust office of any successor Grantor Trustee at the address designated by such
successor Grantor Trustee by notice to the Grantor Trust Holder and the Issuer.
ERISA: The Employee Retirement Income Security Act of 1974, as amended from
time to time.
Grantor Trust Certificate: The pass-through certificate issued pursuant to
this Agreement, in substantially the form attached hereto as Exhibit A.
Grantor Trustee: U.S. Bank National Association, or any successor grantor
trustee appointed as herein provided.
Grantor Trustee Fee: With respect to any Payment Date, the fee payable to
the Grantor Trustee pursuant to Section 6.04 as compensation for its activities
hereunder.
Grantor Trust Estate: The corpus of the trust created by this Agreement,
consisting of (i) such Home Loans as from time to time are subject to this
Agreement as listed in the Home Loan Schedule, as the same may be amended or
supplemented from time to time including by the addition of Subsequent Loans,
the removal of Deleted Home Loans and the addition of Qualified Substitute Home
Loans, together with the Servicer's Home Loan Files and the Indenture Trustee's
Home Loan Files relating thereto and all proceeds thereof, (ii) the Mortgages
and security interests in Mortgaged Properties, (iii) all payments in respect of
interest due with respect to the Home Loans on or after the Cut-Off Date and all
payments in respect of principal received after the Cut-Off Date, (iv) such
assets as from time to time are identified as Foreclosure Property, (v) such
assets and funds as are from time to time deposited in the Collection Account
and the Pre-Funding Account, including amounts on deposit in such accounts which
are invested in Permitted Investments, (vi) the Depositor's rights under all
insurance policies with respect to the Home Loans and any Insurance Proceeds,
(vii) Net Liquidation Proceeds and Released Mortgaged Property Proceeds, (viii)
all rights of the Depositor under the Home Loan Purchase Agreement (other than
the Depositor's rights under Article V of the Home Loan Purchase Agreement,
which the Depositor shall not assign to the Grantor Trustee) pursuant to which
the Depositor acquired the Home Loans from the Transferor (including, without
limitation, all rights of the Transferor under the ICI Purchase Agreement, the
Preferred Purchase Agreement, the ICI Guarantee and the Preferred
Indemnification Agreement), and (ix) all proceeds of any of the foregoing.
Grantor Trust Holder: The Person in whose name the Grantor Trust
Certificate is registered in the Certificate Register.
Investment Representation Letter: As defined in Section 3.02(d).
Non-U.S. Person: A Person that is not considered under the Code (i) a
citizen or resident of the United States, (ii) a corporation, partnership
(except to the extent provided in applicable Treasury regulations) or other
entity created or organized in or under the laws of the United States or any
political subdivision thereof, (iii) an estate whose income from sources without
the United States is includible in gross income for United States federal income
tax purposes regardless of its source or (iv) a trust if a court within the
United States is able to exercise primary supervision over the administration of
such trust, and one or more United States fiduciaries have the authority to
control all substantial decisions of such trust (or, to the extent provided in
applicable Treasury regulations, certain trusts in existence on August 20, 1996
which are eligible to elect to be treated as U.S. Persons).
Officers' Certificate: Certificate signed on behalf of the applicable
entity by the Chairman of the Board, the Vice Chairman of the Board, the
President, any Senior Vice President or Vice President or Managing Director or
an Assistant Vice President (each, however denominated), the Treasurer, the
Secretary, one of the Assistant Treasurers or Assistant Secretaries, any Trust
Officer or other officer of the Depositor or the Corporate Trust Office of the
Grantor Trustee, as the case may be, customarily performing functions similar to
those performed by any of the above designated officers and also, with respect
to a particular matter, any other officer to whom such matter is referred
because of such officer's knowledge of and familiarity with the particular
subject, or an authorized officer of the Depositor, and delivered to the
Depositor and/or the Grantor Trustee, as the case may be.
Opinion of Counsel: A written opinion of counsel acceptable to the Grantor
Trustee, who, in the case of an opinion required pursuant to Section 4.02, may
be outside or salaried counsel for the Grantor Trust Holder or any affiliate of
the Grantor Trust Holder.
Percentage Interest: With respect to the Grantor Trust Certificate, the
undivided percentage interest as specified on the face of the Grantor Trust
Certificate.
Plan: As defined in Section 4.02(b).
Sale and Servicing Agreement: The Sale and Servicing Agreement, dated as of
February 1, 1998, among PaineWebber Mortgage Acceptance Corporation, as
depositor, Empire Funding Corp., as servicer and transferor, Empire Funding Home
Loan Owner Trust 1998-1, as issuer, and U.S. Bank National Association, d/b/a
First Bank National Association, as indenture trustee and grantor trustee.
Single Certificate: With respect to the Grantor Trust Certificate, a
certificate representing a minimum denomination of 100% Percentage Interest.
Subsequent Transfer Agreement: Each Subsequent Transfer Agreement executed
by the Grantor Trustee, Indenture Trustee and the Transferor substantially in
the form of Exhibit C attached hereto by which Subsequent Loans are sold and
assigned to the Grantor Trustee.
U.S. Bank Custodian: U.S. Bank National Association, d/b/a First Bank
National Association, a national banking association, as custodian pursuant to
the U.S. Bank Custodial Agreement.
ARTICLE II
CONVEYANCE OF HOME LOANS;
ORIGINAL ISSUANCE OF GRANTOR TRUST CERTIFICATE
Section 2.01. Conveyance of the Home Loans. As of the Closing Date, in
consideration of the Grantor Trustee's delivery of the Grantor Trust Certificate
and a collateral assignment of the Collection Account and the Pre-Funding
Account to the Depositor or its designee, upon the order of the Depositor, the
Depositor, as of the Closing Date and concurrently with the execution and
delivery hereof, does hereby sell, transfer, assign, set over and otherwise
convey to the Grantor Trustee, without recourse, but subject to the other terms
and provisions of this Agreement, all of the right, title and interest of the
Depositor in and to the Grantor Trust Estate. The foregoing sale, transfer,
assignment, set over and conveyance does not, and is not intended to, result in
a creation or an assumption by the Grantor Trustee of any obligation of the
Depositor, the Transferor or any other person in connection with the Grantor
Trust Estate or under any agreement or instrument relating thereto except as
specifically set forth herein.
Section 2.02. Acceptance by Grantor Trustee; Authentication of Grantor
Trust Certificate. As of the Closing Date, the Grantor Trustee acknowledges the
conveyance to it of the Grantor Trust Estate, including all right, title and
interest of the Depositor in and to the Grantor Trust Estate, receipt of which
is hereby acknowledged by the Grantor Trustee and declares that the Grantor
Trustee holds and will hold the Home Loans, rights and agreements and other
property, including property yet to be received in the Grantor Trust Estate, in
trust, upon the trusts herein set forth, for the benefit of all present and
future Grantor Trust Holders. Concurrently with such receipt and assignment, the
Grantor Trustee has executed, authenticated and delivered to or upon the order
of the Depositor, the Grantor Trust Certificate duly authenticated by the
Grantor Trustee in the authorized percentage of 100% Percentage Interest and
evidencing the entire beneficial ownership of the Grantor Trust Estate.
Section 2.03. Ownership and Possession of Home Loan Files. Upon the
issuance of the Grantor Trust Certificate, with respect to the Home Loans, the
ownership of each Debt Instrument, the related Mortgage and the contents of the
related Servicer's Home Loan File and the Grantor Trustee's Home Loan File shall
be vested in the Grantor Trustee for the benefit of the Grantor Trust Holder,
although possession of the Servicer's Home Loan Files (other than items required
to be maintained in the Grantor Trustee's Home Loan Files) on behalf of and for
the benefit of the Grantor Trust Holder shall remain with the Servicer, and each
Custodian shall take possession of the applicable Grantor Trustee's Home Loan
Files as contemplated in Section 2.06 hereof.
Section 2.04. Books and Records. The sale of each Home Loan shall be
reflected on the balance sheets and other financial statements of the Depositor,
as a sale of assets by the Depositor, under GAAP. Each of the Servicer and each
Custodian shall be responsible for maintaining, and shall maintain, a complete
set of books and records for each Home Loan which shall be clearly marked to
reflect the ownership of each Home Loan by the Grantor Trustee for the benefit
of the Grantor Trust Holder.
It is the intention of the parties hereto that the transfers and
assignments contemplated by this Agreement shall constitute a sale of the Home
Loans and the other property specified in Section 2.01 hereof from the Depositor
to the Grantor Trustee and such property shall not be property of the Depositor.
If the assignment and transfer of the Home Loans and the other property
specified in Section 2.01 hereof to the Grantor Trustee pursuant to this
Agreement or the conveyance of the Home Loans or any of such other property to
the Grantor Trustee is held or deemed not to be a sale or is held or deemed to
be a pledge of security for a loan, the Depositor intends that the rights and
obligations of the parties shall be established pursuant to the terms of this
Agreement and that, in such event, (i) the Depositor shall be deemed to have
granted and does hereby grant to the Grantor Trustee a first priority security
interest in the entire right, title and interest of the Depositor in and to the
Grantor Trust Estate pursuant to Section 2.01 hereof and all proceeds thereof
and (ii) this Agreement shall constitute a security agreement under applicable
law. Within ten (10) days of the Closing Date, the Depositor shall cause to be
filed UCC-1 financing statements naming the Grantor Trustee as "secured party"
and describing the Home Loans being sold by the Depositor to the Grantor Trust
with the office of the Secretary of State of the state in which the Depositor is
located.
Section 2.05. Delivery of Home Loan Documents.
(a) With respect to each Home Loan, the Depositor and the Transferor shall,
on the Closing Date, deliver or caused to be delivered to the applicable
Custodian, as the designated agent of the Grantor Trustee, each of the following
documents (collectively, the "Grantor Trustee's Home Loan File"):
(i) The original Debt Instrument, endorsed in blank or in the
following form: "Pay to the order of U.S. Bank National Association, as
Grantor Trustee under the Trust Agreement, dated as of February 1,
1998, Empire Funding Grantor Trust 1998-1, without recourse", with all
prior and intervening endorsements showing a complete chain of
endorsement from origination of the Home Loan to the Transferor;
(ii) If such Home Loan is a Mortgage Loan, the original
Mortgage with evidence of recording thereon (or, if the original
Mortgage has not been returned from the applicable public recording
office or is not otherwise available, a copy of the Mortgage certified
by a Responsible Officer of the Transferor or by the closing attorney
or by an officer of the title insurer or agent of the title insurer
which issued the related title insurance policy, if any, or commitment
therefor to be a true and complete copy of the original Mortgage
submitted for recording) and, if the Mortgage was executed pursuant to
a power of attorney, the original power of attorney with evidence of
recording thereon (or, if the original power of attorney has not been
returned from the applicable public recording office or is not
otherwise available, a copy of the power of attorney certified by a
Responsible Officer of the Transferor or by the closing attorney or by
an officer of the title insurer or agent of the title insurer which
issued the related title insurance policy, if any, or commitment
therefor, to be a true and complete copy of the original power of
attorney submitted for recording);
(iii) If such Home Loan is a Mortgage Loan, the original
executed Assignment of Mortgage, in recordable form. The Assignment of
Mortgage may be a blanket assignment, to the extent such assignment is
effective under applicable law, for Mortgages covering Mortgaged
Properties situated within the same county. If the Assignment of
Mortgage is in blanket form, an Assignment of Mortgage need not be
included in the individual Grantor Trustee's Home Loan File;
(iv) If such Home Loan is a Mortgage Loan, all original
intervening assignments of mortgage, with evidence of recording
thereon, showing a complete chain of assignment from origination of the
Home Loan to the Transferor (or, if any such assignment of mortgage has
not been returned from the applicable public recording office or is not
otherwise available, a copy of such assignment of mortgage certified by
a Responsible Officer of the Transferor or by the closing attorney or
by an officer of the title insurer or agent of the title insurer which
issued the related title insurance policy, if any, or commitment
therefor to be a true and complete copy of the original assignment
submitted for recording); and
(v) The original, or a copy certified by the Transferor to be
a true and correct copy of the original, of each assumption,
modification, written assurance or substitution agreement, if any.
(b) With respect to each Home Loan, the Transferor and the Depositor shall,
on the Closing Date, deliver or caused to be delivered to the Servicer, as the
designated agent of the Grantor Trustee, each of the following documents
(collectively, the "Servicer's Home Loan Files"): (i) an original or copy of
truth-in-lending disclosure, (ii) an original or copy of the credit application,
(iii) an original or copy of the consumer credit report, (iv) an original or
copy of verification of employment and income, or verification of
self-employment income, (v) if the Home Loan is a Combination Loan, an original
or copy of contract of work or written description with cost estimates, if any,
(vi) if the Home Loan is a Combination Loan for which the Transferor prepares an
inspection report, an original or copy of the report of inspection of
improvements to the Property, (vii) to the extent not included in (clause (ii)
of this Section 2.04(b), an original or copy of a written verification (or a
notice of telephonic verification, with written verification to follow) that the
Obligor at the time of origination was not more than 30 days delinquent on any
Superior Lien on the Mortgaged Property, (viii) a copy of the HUD-1 or HUD 1-A
Closing Statement indicating the sale price, or an existing Uniform Residential
Appraisal Report, or a Drive-by Appraisal documented on FHLMC Form 704, or a tax
assessment, or a full Uniform Residential Appraisal Report prepared by a
national appraisal firm in accordance with the Transferor's underwriting
guidelines, and (ix) an original or a copy of a title search as of the time of
origination with respect to the Property in accordance with the Transferor's
underwriting guidelines.
(c) The Grantor Trustee shall cause (i) U.S. Bank Custodian to take and
maintain continuous physical possession of the Grantor Trustee's Home Loan Files
held by it in the State of Minnesota and (ii) Bankers Custodian to take and
maintain continuous physical possession of the Grantor Trustee's Home Loan Files
held by it in the State of California, and in connection therewith, each such
Custodian shall act solely as agent for the Grantor Trust Holder in accordance
with the terms hereof and not as agent for the Transferor or any other party.
(d) Within 60 days after the Closing Date in the case of Initial Loan or,
in the case of the Subsequent Loans, within 60 days of the related Subsequent
Transfer Date, the Transferor, at its own expense, shall record each Assignment
of Mortgage (which may be a blanket assignment if permitted by applicable law)
in the appropriate real property or other records; provided, however, that the
Transferor need not record any such Assignment of Mortgage in any jurisdiction
under the laws of which, as evidenced by an Opinion of Counsel delivered by the
Transferor (at the Transferor's expense) to the Grantor Trustee, the Indenture
Trustee and the Rating Agencies, the recordation of such Assignment of Mortgage
is not necessary to protect the Grantor Trustee's and the Grantor Trust Holder's
interest in the related Home Loan. With respect to any Assignment of Mortgage as
to which the related recording information is unavailable within 60 days
following the Closing Date in the case of Initial Loans or, in the case of
Subsequent Loans, within 60 days of the related Subsequent Transfer Date, such
Assignment of Mortgage shall be submitted for recording within 30 days after
receipt of such information but in no event later than one year after the
Closing Date. The Grantor Trustee shall be required to retain a copy of each
Assignment of Mortgage submitted for recording. In the event that any such
Assignment of Mortgage is lost or returned unrecorded because of a defect
therein, the Transferor shall promptly prepare a substitute Assignment of
Mortgage or cure such defect, as the case may be, and thereafter the Transferor
shall be required to submit each such Assignment of Mortgage for recording.
(e) All recordings required pursuant to this Section 2.05 shall be
accomplished by and at the expense of the Transferor.
Section 2.06. Acceptance by the Grantor Trustee of the Home Loans; Certain
Substitutions; Certification by the Custodian.
(a) The Grantor Trustee agrees to cause each Custodian to execute and
deliver on the Closing Date an acknowledgment of receipt of the Grantor
Trustee's Home Loan File for each Home Loan held by it. The Grantor Trustee
declares that it will cause each Custodian to hold such documents and any
amendments, replacements or supplements thereto, as well as any other assets
included in the Grantor Trust Estate and delivered to such Custodian, in trust,
upon and subject to the conditions set forth herein. The Grantor Trustee agrees
to cause U.S. Bank Custodian to review each Grantor Trustee's Home Loan File
held by it within 45 days after the Closing Date (or, (i) with respect to any
Subsequent Loan or any Qualified Substitute Home Loan, within 45 days after the
conveyance of the related Home Loan to the Grantor Trust or (ii) with respect to
any Loan transferred from Bankers Custodian, within 45 days after the transfer
of the related Home Loan to U.S. Bank Custodian) and to cause U.S. Bank
Custodian to deliver to the Transferor, the Depositor, the Grantor Trustee and
the Servicer a certification (the "Custodian's Initial Certification") to the
effect that, as to each Home Loan listed in the Home Loan Schedule (other than
any Home Loan paid in full or any Home Loan specifically identified as an
exception to such certification), (i) all documents required to be delivered to
the Grantor Trustee pursuant to this Agreement are in its possession or in the
possession of U.S. Bank Custodian on its behalf (other than as expressly
permitted by Section 2.05 hereof), (ii) all documents delivered by the Depositor
and the Transferor to U.S. Bank Custodian pursuant to Section 2.05 hereof have
been reviewed by U.S. Bank Custodian and have not been mutilated or damaged and
appear regular on their face (handwritten additions, changes or corrections
shall not constitute irregularities if initialed by the Obligor) and relate to
such Home Loan, (iii) based on the examination of U.S. Bank Custodian on behalf
of the Grantor Trustee, and only as to the foregoing documents, the information
set forth on the Home Loan Schedule accurately reflects the information set
forth in the Grantor Trustee's Home Loan File and (iv) each Debt Instrument has
been endorsed as provided in Section 2.04 hereof. Neither the Grantor Trustee
nor U.S. Bank Custodian shall be under any duty or obligation (i) to inspect,
review or examine any such documents, instruments, certificates or other papers
to determine that they are genuine, enforceable or appropriate for the
represented purpose or that they are other than what they purport to be on their
face or (ii) to determine whether any Grantor Trustee's Home Loan File should
include any of the documents specified in Section 2.05(a)(v) hereof.
(b) The Servicer's Home Loan File shall be held in the custody of the
Servicer for the benefit of, and as agent for, the Grantor Trust Holder and the
Grantor Trustee as the owner thereof for so long as this Agreement continues in
full force and effect. It is intended that, by the Servicer's agreement pursuant
to this Section 2.06(b), the Grantor Trustee shall be deemed to have possession
of the Servicer's Home Loan Files for purposes of Section 9-305 of the Uniform
Commercial Code of the state in which such documents or instruments are located.
The Servicer shall promptly report to the Grantor Trustee any failure by it to
hold the Servicer's Home Loan File as herein provided and shall promptly take
appropriate action to remedy any such failure. In acting as custodian of such
documents and instruments, the Servicer agrees not to assert any legal or
beneficial ownership interest in the Home Loans or such documents or
instruments. The Servicer agrees to indemnify the Grantor Trust Holder and the
Grantor Trustee for any and all liabilities, obligations, losses, damages,
payments, costs or expenses of any kind whatsoever which may be imposed on,
incurred by or asserted against the Grantor Trust Holder or the Grantor Trustee
as the result of any act or omission by the Servicer relating to the maintenance
and custody of such documents or instruments which have been delivered to the
Servicer; provided, however, that the Servicer will not be liable for any
portion of any such amount resulting from the negligence or misconduct of the
Grantor Trust Holder or the Grantor Trustee; and provided, further, that the
Servicer will not be liable for any portion of any such amount resulting from
the Servicer's compliance with any instructions or directions consistent with
this Agreement issued to the Servicer by the Grantor Trustee. The Grantor
Trustee shall have no duty to monitor or otherwise oversee the Servicer's
performance as custodian hereunder.
(c) U.S. Bank Custodian shall, for the benefit of the Grantor Trust Holder,
review each Grantor Trustee's Home Loan File within 60 days after the date it
delivered a Custodian's Initial Certification and deliver to the Transferor, the
Depositor, the Grantor Trustee and the Servicer an updated certification (a
"Custodian's Updated Certification"), setting forth those exceptions listed on
the Custodian's Initial Certification which continue to exist on the date of
such Custodian's Updated Certification. With respect to any Home Loans which are
set forth as exceptions in the Custodian's Updated Certification because
recorded assignments or original or certified copies of Mortgages have not yet
been delivered to U.S. Bank Custodian, the Transferor shall cure such exceptions
by delivering such missing documents to U.S. Bank Custodian no later than 360
days after the Closing Date.
U.S. Bank Custodian agrees, for the benefit of the Grantor Trust Holder, to
review each Grantor Trustee's Home Loan File within 360 days after the Closing
Date with respect to Initial Loans or within 360 days after the applicable
Subsequent Transfer Date with respect to the Subsequent Loans, and to deliver to
the Transferor, the Depositor, the Grantor Trustee and the Servicer a final
certification (a "Custodian's Final Certification"), setting forth those
exceptions listed on the Custodian's Updated Certification which continue to
exist on the date of such Custodian's Final Certification.
In performing any such review, U.S. Bank Custodian may conclusively rely on
the Transferor as to the purported genuineness of any such document and any
signature thereon. Neither the Grantor Trustee nor U.S. Bank Custodian shall
have any responsibility for determining whether any document is valid and
binding, whether the text of any assignment or endorsement is in proper or
recordable form, whether any document has been recorded in accordance with the
requirements of any applicable jurisdiction or whether a blanket assignment is
permitted in any applicable jurisdiction. If a material defect in a document
constituting part of a Grantor Trustee's Home Loan File is discovered, then the
Depositor and Transferor shall comply with the cure, substitution and repurchase
provisions of Section 3.05 of the Sale and Servicing Agreement.
Section 2.07. Subsequent Transfers.
(a) Subject to the satisfaction of the conditions set forth in this Article
II and pursuant to the terms of the related Subsequent Transfer Agreement, in
consideration of the Indenture Trustee's delivery, on behalf of the Grantor
Trustee, on each Subsequent Transfer Date to or upon the order of the
Transferor, of all or a portion of the balance of funds in the Pre-Funding
Account, the Transferor shall on such Subsequent Transfer Date sell, transfer,
assign, set over and otherwise convey without recourse to the Grantor Trustee,
all of its right, title and interest in and to each Subsequent Loan listed on
the related Subsequent Loan Schedule. The transfer by the Transferor to the
Grantor Trustee of the Subsequent Loans set forth in the related Subsequent
Transfer Agreement shall be absolute and shall be intended by all parties hereto
to be treated as a sale by the Transferor to the Grantor Trustee. If the
assignment and transfer of the Subsequent Loans and the other property specified
in this Section 2.07(a) from the Transferor to the Grantor Trustee pursuant to
this Agreement is held or deemed not to be a sale or is held or deemed to be a
pledge of security for a loan, the Transferor intends that the rights and
obligations of the parties shall be established pursuant to the terms of this
Agreement and that, in such event, (i) the Transferor shall be deemed to have
granted and does hereby grant to the Grantor Trustee as of each Subsequent
Transfer Date a perfected, first priority security interest in the entire right,
title and interest of the Transferor in and to the related Subsequent Loans and
all other property conveyed to the Grantor Trustee pursuant to this Section
2.07(a) and all proceeds thereof, and (ii) this Agreement shall constitute a
security agreement under applicable law. The amount released to the Transferor
from the Pre-Funding Account shall be one hundred percent (100%) of the
aggregate Principal Balances of the Subsequent Loans as of the related Cut-Off
Date so transferred.
(b) The Indenture Trustee, on behalf of the Grantor Trustee and as provided
in Section 5.05 of the Sale and Servicing Agreement, shall contribute from the
Pre-Funding Account funds in an amount equal to one hundred percent (100%) of
the aggregate Principal Balances of the Subsequent Loans as of the related
Cut-Off Date so transferred to the Grantor Trustee and use such cash to purchase
the Subsequent Loans on behalf of the Grantor Trustee, along with the other
property and rights related thereto described in paragraph (a) above only upon
the satisfaction of each of the following conditions on or prior to the related
Subsequent Transfer Date:
(i) the Transferor shall have provided the Indenture Trustee,
Grantor Trustee and the Rating Agencies with an Addition Notice, which
notice shall be given no fewer than two Business Days prior to the
related Subsequent Transfer Date and shall designate the Subsequent
Loans to be sold to the Grantor Trustee and the aggregate Principal
Balances of such Subsequent Loans as of the related Cut-Off Date and
the Rating Agencies shall have provided written confirmation that the
purchase of such Subsequent Loans will not result in a downgrade,
withdrawal or qualification of the ratings then in effect for the
Outstanding Notes;
(ii) the Transferor shall have deposited in the Collection
Account all principal collected after the related Cut-Off Date and
interest payments collected after the related Cut-Off Date in respect
of each Subsequent Loan and the related Subsequent Cut-Off Date
Deposit;
(iii) the Transferor shall have delivered an Officer's
Certificate to the Indenture Trustee confirming that, as of each
Subsequent Transfer Date, the Transferor was not insolvent, would not
be made insolvent by such transfer and was not aware of any pending
insolvency;
(iv) the Pre-Funding Period shall not have ended;
(v) the Transferor shall have delivered to the Indenture
Trustee an Officer's Certificate confirming the satisfaction of each
condition precedent specified in this paragraph (b) and in the related
Subsequent Transfer Agreement;
(vi) the Transferor shall have delivered an Officer's
Certificate to the Indenture Trustee confirming that the
representations and warranties of the Transferor pursuant to Section
3.04 of the Sale and Servicing Agreement (other than to the extent
representations and warranties relate to statistical information as to
the characteristics of the Initial Loans in the aggregate) and pursuant
to Section 3.02 of the Sale and Servicing Agreement are true and
correct with respect to the Subsequent Loans and Transferor, as
applicable, as of the Subsequent Transfer Date;
(vii) the Grantor Trustee shall not purchase a Subsequent Loan
unless (A) the Rating Agencies shall consent thereto (which consent
shall not be unreasonably withheld and shall be evidenced by a letter
from the Rating Agencies) and (B) the following conditions shall have
been satisfied: (I) no Subsequent Loans may be 30 or more days
contractually delinquent as of the applicable Cut-Off Date; (II) the
lien securing any such Subsequent Loan must not be lower than third
priority; (III) such Subsequent Loan must have an outstanding Principal
Balance of at least $2,500 as of the applicable Cut-Off Date; (IV) the
first payment on such Subsequent Loan must be due no later than the
last day of the Due Period immediately succeeding the Due Period in
which it is transferred, unless the Transferor deposits into the
Collection Account 30 days' interest on such Subsequent Loan at the
Home Loan Interest Rate less the applicable Servicing Fee rate (each
such amount, a "Capitalized Interest Subsequent Deposit"), in which
event the first payment on such Subsequent Loan must be due no later
than the last day of the second Due Period following the Due Period in
which the transfer occurs; (V) such Subsequent Loan is a fully
amortizing loan with level payments over the remaining term of no fewer
than 10 years and no more than 25 years and the scheduled maturity will
be no later than June 2023; (VI) such Subsequent Loan must have a Home
Loan Interest Rate of at least 10.99%; (VII) any such Subsequent Loan
must have an original Combined Loan-to-Value Ratio of no more than
125%, (VIII) such Subsequent Loan must be underwritten, re-underwritten
or reviewed, as applicable, in accordance with the underwriting
guidelines of the Transferor in effect at such time or in a manner
similar to the Initial Loans, and (IX) following the purchase of such
Subsequent Loans by the Grantor Trustee, the Home Loans included in the
Pool must have a weighted average interest rate and a weighted average
remaining term to maturity as of each respective Cut-Off Date
comparable to those of the Initial Loans included in the initial Pool;
(viii) in connection with the transfer and assignment of the
Subsequent Loans, the Transferor shall satisfy the document delivery
requirements set forth in Section 2.05 hereof; and
(ix) each proposed Subsequent Loan must be listed on the Home
Loan Schedule hereto as the same may be amended from time to time with
the approval of the Depositor.
(c) In connection with each Subsequent Transfer Date and on the related
Payment Date, the Indenture Trustee shall determine (i) the amount and correct
dispositions of the Capitalized Interest Requirement and Pre-Funding Account
Earnings for such Payment Date in accordance with the provisions of the Sale and
Servicing Agreement and (ii) any other necessary matters in connection with the
administration of the Pre-Funding Account and the Capitalized Interest Account.
In the event that any amounts are released as a result of calculation error by
the Indenture Trustee from the Pre-Funding Account or from the Capitalized
Interest Account, the Indenture Trustee shall not be liable therefor and the
Transferor shall immediately repay such amounts to the Indenture Trustee.
Section 2.08. Release and Reconveyance of Home Loans.
(a) A Home Loan shall be released by the Grantor Trustee and reconveyed to
the Transferor at any time (i) after a repurchase or substitution pursuant to
Section 3.05 of the Sale and Servicing Agreement, (ii) after liquidation of the
Home Loan in accordance with Section 4.11 of the Sale and Servicing Agreement
and the deposit of all Recoveries thereon in the Collection Account, or (iii)
upon the termination of a Home Loan (due to, among other causes, a prepayment in
full of the Home Loan and sale or other disposition of the related Mortgaged
Property), if the Transferor delivers to the Grantor Trustee a written request
(A) identifying the Home Loan and the related Mortgaged Property to be released
and reconveyed, (B) requesting the release and reconveyance thereof, (C) setting
forth the amount deposited in the Collection Account with respect thereto, and
(D) certifying that the amount deposited in the Collection Account (x) equals
the Substitution Adjustment related to the Qualified Substitute Home Loan and
the Deleted Home Loan released from the lien of the Indenture pursuant to item
(i) above, or (y) equals the entire amount of Recoveries received with respect
to such Home Loan and the related Mortgaged property in the event of a release
from the lien of this Indenture pursuant to items (ii) or (iii) above.
(b) The Grantor Trustee shall, if requested by the Servicer, temporarily
release or cause either Custodian to temporarily to release to the Servicer the
Grantor Trustee's Home Loan File held by such Custodian pursuant to the
provisions of Section 7.02 of the Sale and Servicing Agreement upon compliance
by the Servicer with the provisions thereof.
(c) The Grantor Trustee shall assign to the Transferor all its rights under
the applicable Preferred Transaction Documents with respect to each Defective
Home Loan repurchased or substituted for by the Transferor.
(d) The Grantor Trustee shall assign to the Majority Residual
Interestholders who effected the termination of the Owner Trust and the Grantor
Trust pursuant to Section 11.02 of the Sale and Servicing Agreement, all its
rights under the applicable Preferred Transaction Documents with respect to each
Home Loan purchased by such Majority Residual Interestholders in connection with
such termination.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01. Representations and Warranties of the Depositor. The
Depositor hereby represents and warrants to the Grantor Trustee and the Grantor
Trust Holder that as of the Closing Date:
(a) The Depositor is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware
and has, and had at all relevant times, full power to own its property,
to carry on its business as currently conducted, to enter into and
perform its obligations under this Agreement and to create the Grantor
Trust pursuant to this Agreement;
(b) The execution and delivery of this Agreement by the
Depositor and its performance of and compliance with the terms of this
Agreement will not violate the Depositor's certificate of incorporation
or by-laws or constitute a default (or an event which, with notice or
lapse of time, or both, would constitute a default) under, or result in
the breach or acceleration of, any material contract, agreement or
other instrument to which the Depositor is a party or which may be
applicable to the Depositor or any of its assets;
(c) The Depositor has the full power and authority to enter
into and consummate the transactions contemplated by this Agreement,
has duly authorized the execution, delivery and performance of this
Agreement and has duly executed and delivered this Agreement. This
Agreement, assuming due authorization, execution and delivery by the
Grantor Trustee and the Transferor, constitutes a valid, legal and
binding obligation of the Depositor, enforceable against it in
accordance with the terms hereof, except as such enforcement may be
limited by bankruptcy, insolvency, reorganization, receivership,
moratorium or other similar laws relating to or affecting the rights of
creditors generally, and by general equity principles (regardless of
whether such enforcement is considered in a proceeding in equity or at
law);
(d) The Depositor is not in violation of, and the execution
and delivery of this Agreement by the Depositor and its performance and
compliance with the terms of this Agreement will not constitute a
violation with respect to, any order or decree of any court or any
order or regulation of any federal, state, municipal or governmental
agency having jurisdiction, which violation would materially and
adversely affect the condition (financial or otherwise) or operations
of the Depositor or its properties or materially and adversely affect
the performance of its duties hereunder;
(e) There are no actions or proceedings against, or
investigations of, the Depositor currently pending with regard to which
the Depositor has received service of process and no action or
proceeding against, or investigation of, the Depositor is, to the
knowledge of the Depositor, threatened or otherwise pending before any
court, administrative agency or other tribunal that (A) if determined
adversely, would prohibit its entering into this Agreement or render
the Grantor Trust Certificate invalid, (B) seek to prevent the issuance
of the Grantor Trust Certificate or the consummation of any of the
transactions contemplated by this Agreement or (C) if determined
adversely, would prohibit or materially and adversely affect the
performance by the Depositor of its obligations under, or the validity
or enforceability of, this Agreement or the Grantor Trust Certificate;
(f) No consent, approval, authorization or order of any court
or governmental agency or body is required for the execution, delivery
and performance by the Depositor of, or compliance by the Depositor
with, this Agreement or the Grantor Trust Certificate, or for the
consummation of the transactions contemplated by this Agreement, except
for such consents, approvals, authorizations and orders, if any, that
have been obtained prior to the Closing Date;
(g) The Depositor is solvent, is able to pay its debts as they
become due and has capital sufficient to carry on its business and its
obligations hereunder; it will not be rendered insolvent by the
execution and delivery of this Agreement or its obligations hereunder;
no petition of bankruptcy (or similar insolvency proceeding) has been
filed by or against the Depositor prior to the date hereof;
(h) The Depositor did not convey the Home Loans to the Grantor
Trustee with any intent to hinder, delay or defraud any of its
creditors; the Depositor will not be rendered insolvent as a result of
the conveyance of the Home Loans to the Grantor Trustee;
(i) As of the Closing Date, the Depositor had good title to,
and was the sole owner of, each Home Loan free and clear of any lien
other than any such lien released simultaneously with the sale
contemplated herein, and, immediately upon each transfer and assignment
herein contemplated, the Depositor will have delivered to the Grantor
Trustee good title to, and the Grantor Trustee will be the sole owner
of, each Home Loan free and clear of any lien;
(j) The Depositor acquired title to each of the Home Loans in
good faith, without notice of any adverse claim;
(k) No Officers' Certificate, statement, report or other
document prepared by the Depositor and furnished or to be furnished by
it pursuant to this Agreement or in connection with the transactions
contemplated hereby contains any untrue statement of material fact or
omits to state a material fact necessary to make the statements
contained herein or therein not misleading;
(l) The Depositor is not required to be registered as an
"investment company" under the Investment Company Act of 1940, as
amended; and
(m) The transfer, assignment and conveyance of the Debt
Instruments and the Mortgages by the Depositor pursuant to this
Agreement are not subject to the bulk transfer laws or any similar
statutory provisions in effect in any applicable jurisdiction.
ARTICLE IV
THE GRANTOR TRUST CERTIFICATE
Section 4.01. The Grantor Trust Certificate.
(a) The Grantor Trust Certificate shall be issued only in the minimum 100%
Percentage Interest of a Single Certificate and shall be substantially in the
form attached hereto as Exhibit A. On original issue the Grantor Trust
Certificate shall be executed and delivered by the Grantor Trustee to or upon
the order of the Depositor. The Grantor Trust Certificate shall be executed by
manual or facsimile signature on behalf of the Grantor Trustee by a Responsible
Officer thereof. The Grantor Trust Certificate bearing the manual or facsimile
signatures of individuals who were at any time the proper officers of the
Grantor Trustee shall bind the Grantor Trustee notwithstanding that such
individuals or any of them have ceased to hold such offices prior to the
authentication and delivery of such Grantor Trust Certificate. The Grantor Trust
Certificate shall not be entitled to any benefit under this Agreement, or be
valid for any purpose, unless manually countersigned by a Responsible Officer of
the Grantor Trustee, or unless there appears on the Grantor Trust Certificate a
certificate of authentication executed by the Authenticating Agent by manual
signature, and such countersignature or certificate upon the Grantor Trust
Certificate shall be conclusive evidence, and the only evidence, that the
Grantor Trust Certificate has been duly authenticated and delivered hereunder.
The Grantor Trust Certificate shall be dated the date of its authentication.
Section 4.02. Registration, Transfer and Exchange of Grantor Trust
Certificate.
(a) The Grantor Trustee shall cause to be kept at one of the offices or
agencies to be maintained in accordance with the provisions of Section 4.05 a
Certificate Register in which, subject to such reasonable regulations as it may
prescribe, the Grantor Trustee shall provide for the registration of the Grantor
Trust Certificate and of transfers and exchanges of the Grantor Trust
Certificate as herein provided. The Grantor Trustee shall act as, or shall
appoint, a Certificate Registrar for the purpose of registering the Grantor
Trust Certificate and transfers and exchanges of the Grantor Trust Certificate
as herein provided.
Upon surrender for registration or transfer of the Grantor Trust
Certificate at any office or agency maintained for such purpose pursuant to
Section 4.05 (and subject to the provisions of this Section 4.02) the Grantor
Trustee shall execute, and shall date, authenticate (or cause the Authenticating
Agent to authenticate) and deliver, in the name of the designated transferee or
transferees, a new Grantor Trust Certificate of a like 100% Percentage Interest.
At the option of the Grantor Trust Holder, the Grantor Trust Certificate
may be exchanged for a Grantor Trust Certificate of an authorized Percentage
Interest of a like 100% Percentage Interest upon surrender of the Grantor Trust
Certificate to be exchanged at any such office or agency. Whenever the Grantor
Trust Certificate is so surrendered for exchange, the Grantor Trustee shall
execute, and shall date, authenticate (or cause the Authenticating Agent to
authenticate) and deliver, the Grantor Trust Certificate which such Grantor
Trust Holder making the exchange is entitled to receive. The Grantor Trust
Certificate presented or surrendered for transfer or exchange shall (if so
required by the Certificate Registrar or the Grantor Trustee) be duly endorsed
by, or be accompanied by a written instrument of transfer in form satisfactory
to the Certificate Registrar duly executed by, the Grantor Trust Holder or his
attorney duly authorized in writing.
No service charge shall be made for any transfer or exchange of the Grantor
Trust Certificate, but the Grantor Trustee or the Certificate Registrar may
require payment from the Grantor Trust Holder of a sum sufficient to cover any
tax or governmental charge that may be imposed in connection with any transfer
or exchange of the Grantor Trust Certificate.
The Grantor Trust Certificate surrendered for transfer and exchange shall
be cancelled by the Certificate Registrar, the Grantor Trustee or the
Authenticating Agent in accordance with their standard procedures.
(b) No sale, transfer or other disposition by the Grantor Trust Holder of
the Grantor Trust Certificate (other than (i) the initial transfers of the
Grantor Trust Certificate by the Grantor Trustee to the Depositor, and by the
Depositor to the Issuer, and (ii) the pledge of the Grantor Trust Certificate by
the Issuer to the Indenture Trustee pursuant to the terms of the Indenture)
shall be made unless the Grantor Trustee shall have received either (i) a
representation letter from the proposed purchaser or transferee of the Grantor
Trust Certificate substantially in the form of paragraph 3 of Exhibit B attached
hereto, to the effect that such proposed purchaser or transferee is not a Person
which is an employee benefit plan subject to the fiduciary responsibility
provisions of ERISA or a plan subject to Section 4975 of the Code, or a
governmental plan as 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 (collectively, a "Plan"), or a Person acting on
behalf of any such Plan or using the assets of such Plan to acquire such
Certificate or (ii) if such Grantor Trust Certificate is presented for
registration in the name of such a Plan subject to the fiduciary responsibility
provisions of ERISA or Section 4975 of the Code (or comparable provisions of any
subsequent enactments), or a trustee of any such Plan, or a governmental plan as
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, or any other Person who is using the assets of any such Plan to effect
such acquisition, an Opinion of Counsel in form and substance satisfactory to
the Grantor Trustee to the effect that such acquisition and holding of the
Grantor Trust Certificate will not constitute or result in a "prohibited
transaction" within the meaning of Section 406 of ERISA or Section 4975 of the
Code, and will not subject the Grantor Trustee, the Certificate Registrar, the
Servicer or the Depositor to any obligation or liability under ERISA or Section
4975 of the Code. The Certificate Registrar shall not register the sale,
transfer, pledge or other disposition of the Grantor Trust Certificate unless
the Certificate Registrar has received notification and acknowledgment from the
Grantor Trustee that they have received either the representation letter
described in clause (i) above or the Opinion of Counsel described in clause (ii)
above. The costs of any of the foregoing representation letters or Opinions of
Counsel shall not be borne by any of the Depositor, the Grantor Trustee, or the
Grantor Trust. Any transfer, sale, pledge or other disposition of the Grantor
Trust Certificate that would constitute or result in a prohibited transaction
under Section 406 of ERISA or Section 4975 of the Code or otherwise violate the
provisions of this Section 3.02(b) shall be deemed absolutely null and void ab
initio, to the extent permitted under applicable law.
(c) No offer, sale or other transfer of the Grantor Trust Certificate shall
be made unless such transfer is made pursuant to an effective registration
statement or otherwise in accordance with the requirements under the Act, and
effective registration or qualification under applicable state securities laws,
or is made in a transaction which does not require such registration or
qualification. If a transfer (other than (i) the initial transfers of the
Grantor Trust Certificate by the Grantor Trustee to the Depositor, and by the
Depositor to the Issuer, and (ii) the pledge of the Grantor Trust Certificate by
the Issuer to the Indenture Trustee pursuant to the terms of the Indenture) is
to be made in reliance upon an exemption from the Act, and under the applicable
state securities laws, then either: (i) the Certificate Registrar shall require
that the transferee deliver to the Certificate Registrar an investment
representation letter (the "Investment Representation Letter") substantially in
the form of Exhibit B attached hereto, which Investment Representation Letter
shall certify, among other things, that the transferee is an institutional
"accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the
Act or a "qualified institutional buyer" as defined in Rule 144A under the Act,
and the Certificate Registrar may also require that the transferee deliver to
the Certificate Registrar an Opinion of Counsel if such transferee is not a
qualified institutional buyer within the meaning of Rule 144A under the Act; or
(ii) if the certifications described in the preceding clause (i) cannot be
provided (A) the Certificate Registrar shall require an Opinion of Counsel
reasonably satisfactory to the Certificate Registrar and the Depositor that such
transfer may be made pursuant to an exemption, describing the applicable
exemption and the basis therefor, from registration or qualification under the
Act, applicable state securities laws and other relevant laws, which Opinion of
Counsel shall not be an expense of the Certificate Registrar, the Depositor, the
Grantor Trust or the Grantor Trustee, and (B) the Certificate Registrar shall
require the transferor to execute a certification in form and substance
satisfactory to the Certificate Registrar setting forth the facts surrounding
such transfer. In each case, the Certificate Registrar will be entitled without
further investigation to rely upon such certification or Opinion of Counsel. The
Holder desiring to effect such transfer shall, and does hereby agree to,
indemnify the Certificate Registrar, the Grantor Trustee and the Depositor
against any liability that may result if the transfer is not so exempt or is not
made in accordance with such federal and state laws. None of the Depositor, the
Grantor Trustee or the Certificate Registrar is under any obligation to register
or qualify the Grantor Trust Certificate.
Unless the Grantor Trust Certificate has been registered under the Act, the
Grantor Trust Certificate shall bear a legend substantially to the following
effect:
THIS GRANTOR TRUST CERTIFICATE HAS NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS GRANTOR
TRUST CERTIFICATE NOR ANY INTEREST OR PARTICIPATION HEREIN
MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS
SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,
REGISTRATION, PROVIDED, HOWEVER, THAT THIS GRANTOR TRUST
CERTIFICATE SHALL BE PLEDGED BY THE HOLDER THEREOF TO THE
INDENTURE TRUSTEE PURSUANT TO THE TERMS OF THE INDENTURE.
THE HOLDER OF THIS GRANTOR TRUST CERTIFICATE BY ITS
ACCEPTANCE HEREOF AGREES NOT TO OFFER, SELL OR OTHERWISE
TRANSFER SUCH GRANTOR TRUST CERTIFICATE EXCEPT IN ACCORDANCE
WITH ALL APPLICABLE STATE SECURITIES LAWS AND (A) PURSUANT
TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, (B) FOR SO LONG AS THIS
GRANTOR TRUST CERTIFICATE IS ELIGIBLE FOR RESALE PURSUANT TO
RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A
PERSON WHO THE DEPOSITOR REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (C) TO AN
INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF
SUBPARAGRAPH (A)(1), (2), (3) OR (7) OF RULE 501 UNDER THE
SECURITIES ACT, OR (D) PURSUANT TO ANOTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT, SUBJECT IN EACH OF THE FOREGOING CASES TO
THE COMPLETION AND DELIVERY BY THE TRANSFEROR TO THE GRANTOR
TRUSTEE OF A CERTIFICATE OF TRANSFER IN THE FORM APPEARING
ON THE LAST PAGE OF THIS GRANTOR TRUST CERTIFICATE, EXCEPT
IN THE CASE OF THE PLEDGE DESCRIBED ABOVE AND THE INITIAL
TRANSFERS OF THIS GRANTOR TRUST CERTIFICATE BY THE GRANTOR
TRUSTEE TO THE DEPOSITOR, AND BY THE DEPOSITOR TO THE
ISSUER.
THE INITIAL INVESTOR IN THIS GRANTOR TRUST CERTIFICATE, AND
EACH SUBSEQUENT PURCHASER OF THIS GRANTOR TRUST CERTIFICATE,
BY PURCHASING THIS GRANTOR TRUST CERTIFICATE OR AN INTEREST
HEREIN, IS DEEMED TO HAVE AGREED TO COMPLY WITH CERTAIN
TRANSFER REQUIREMENTS SET FORTH IN THE GRANTOR TRUST
AGREEMENT. A TRANSFEREE IS ALSO REQUIRED TO DELIVER AN
INVESTMENT REPRESENTATION LETTER SUBSTANTIALLY IN THE FORM
OF EXHIBIT B TO THE GRANTOR TRUST AGREEMENT IF SUCH
TRANSFEREE IS A QUALIFIED INSTITUTIONAL BUYER OR AN
ACCREDITED INSTITUTIONAL INVESTOR, AND MAY ALSO BE REQUIRED
TO DELIVER AN OPINION OF COUNSEL IF SUCH TRANSFEREE IS NOT A
QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE
144A.
Section 4.03. Mutilated, Destroyed, Lost or Stolen Grantor Trust
Certificate. If (i) the Grantor Trust Certificate is surrendered to the Grantor
Trustee or the Authenticating Agent as mutilated or the Grantor Trustee or the
Authenticating Agent receives evidence to its satisfaction of the destruction,
loss or theft of the Grantor Trust Certificate, and (ii) there is delivered to
the Grantor Trustee or Authenticating Agent such security or indemnity as may be
required by them to hold each of them harmless, then, in the absence of notice
to the Grantor Trustee or Authenticating Agent that the Grantor Trust
Certificate has been acquired by a bona fide purchaser, the Grantor Trustee
shall execute and authenticate (or cause the Authenticating Agent to
authenticate) and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Grantor Trust Certificate, a new Grantor Trust
Certificate of like 100% Percentage Interest. Upon the issuance of a new Grantor
Trust Certificate under this Section, the Grantor Trustee or the Certificate
Registrar may require from the Grantor Trust Holder the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto and any other expense (including the fees and expenses of the
Grantor Trustee or Authenticating Agent) in connection therewith. Unless a bona
fide purchaser of the original Grantor Trust Certificate presents such Grantor
Trust Certificate, any duplicate Grantor Trust Certificate issued pursuant to
this Section shall constitute complete and indefeasible evidence of ownership in
the Grantor Trust, as if originally issued, whether or not the lost, stolen, or
destroyed Grantor Trust Certificate shall be found at any time.
Section 4.04. Persons Deemed Owners. Prior to the due presentation of the
Grantor Trust Certificate for registration or transfer, the Depositor, the
Grantor Trustee, the Certificate Registrar and any agent of the Depositor, the
Grantor Trustee or the Certificate Registrar may treat the Person in whose name
the Grantor Trust Certificate is registered as the owner of the Grantor Trust
Certificate for the purpose of receiving distributions pursuant to Section 4.02
and for all other purposes whatsoever, and neither the Depositor, the Grantor
Trustee, the Certificate Registrar nor any agent of the Depositor, the Grantor
Trustee or the Certificate Registrar shall be affected by notice to the
contrary.
Section 4.05. Maintenance of Office or Agency. The Grantor Trustee will
maintain, at its expense, an office or agency where the Grantor Trust
Certificate may be surrendered for registration or transfer or exchange and
where notices and demands to or upon the Certificate Registrar in respect of the
Grantor Trust Certificate and this Agreement may be served. The Grantor Trustee
initially designates the Corporate Trust Office and the principal corporate
trust office of the Authenticating Agent, if any, as its offices and agencies
for said purposes.
ARTICLE V
GRANTOR TRUST ACCOUNTS;
PAYMENTS TO GRANTOR TRUST HOLDER
Section 5.01. Collection Account. The Servicer, on behalf of the Grantor
Trustee shall establish and maintain with, and in the name of, the Indenture
Trustee, one or more collection accounts (the "Collection Account") for the
benefit of the Grantor Trust Holder pursuant to the terms of Section 5.01(a) of
the Sale and Servicing Agreement. The Servicer shall make deposits into the
Certificate Account in accordance with Section 5.01(b)(1) of the Sale and
Servicing Agreement. All amounts so deposited in the Collection Account shall be
held by the Indenture Trustee, on behalf of the Grantor Trustee, as part of the
Grantor Trust Estate as herein provided, subject to withdrawal as set forth in
Section 5.02.
Section 5.02. Distributions from Collection Account.
(a) On the second Business Day prior to each Payment Date, so long as the
Issuer or its assignee is the Grantor Trust Holder, the Indenture Trustee, in
accordance with Section 5.01(b)(2) of the Sale and Servicing Agreement, shall
withdraw from the Collection Account the Available Collection Amount for such
Payment Date and deposit such amount into the Note Payment Account. Such
deposits into the Note Payment Account from the Collection Account shall be
deemed to constitute distributions to and on behalf of the Grantor Trust Holder.
(b) The Indenture Trustee may also make withdrawals from the Collection
Account pursuant to Section 5.01(b)(3) of the Sale and Servicing Agreement.
Section 5.03. Pre-Funding Account. The Servicer, on behalf of the Grantor
Trustee shall establish and maintained with, and in the name of, the Indenture
Trustee, a Pre-Funding Account (the "Pre-Funding Account") for the benefit of
the Grantor Trust Holder pursuant to the terms of Section 5.05 of the Sale and
Servicing Agreement. On the Closing Date, the Grantor Trustee will deposit in
the Pre-Funding Account the Pre-Funding Amount. On each Subsequent Transfer
Date, upon satisfaction of the conditions set forth in Section 2.07 with respect
to such transfer, the Indenture Trustee, on behalf of the Grantor Trustee, shall
withdraw from the Pre-Funding Account an amount equal to the Principal Balances
of the Subsequent Loans transferred to the Grantor Trust on such Subsequent
Transfer Date and distribute such amount to or upon the order of the Transferor.
All other withdrawals from the Pre-Funding Account shall be made by the
Indenture Trustee pursuant to Section 5.05 of the Sale and Servicing Agreement.
ARTICLE VI
CONCERNING THE GRANTOR TRUSTEE
Section 6.01. Duties of Grantor Trustee. The Grantor Trustee undertakes to
perform such duties and only such duties as are specifically set forth in this
Agreement.
The Grantor Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Grantor Trustee which are specifically required to be furnished pursuant
to any provision of this Agreement, shall examine them to determine whether they
are in the form required by this Agreement but the Grantor Trustee shall not be
required to determine, confirm or recalculate information contained in such
instruments.
No provision of this Agreement shall be construed to relieve the Grantor
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct; provided, however, that:
(i) The duties and obligations of the Grantor Trustee shall be determined
solely by the express provisions of this Agreement, the Grantor Trustee shall
not be liable except for the performance of such duties and obligations as are
specifically set forth in this Agreement, no implied covenants or obligations
shall be read into this Agreement against the Grantor Trustee and, in the
absence of bad faith on the part of the Grantor Trustee, the Grantor Trustee may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or opinions furnished to the
Grantor Trustee and conforming to the requirements of this Agreement;
(ii) The Grantor Trustee shall not be personally liable with respect to any
action taken, suffered or omitted to be taken by it in good faith in accordance
with the direction of the Grantor Trust Holder relating to the time, method and
place of conducting any proceeding for any remedy available to the Grantor
Trustee, or exercising any trust or power conferred upon the Grantor Trustee,
under this Agreement; and
(iii) The Grantor Trustee shall not be personally liable for any error of
judgment made in good faith by any Responsible Officer, unless it shall be
proved that the Grantor Trustee or such Responsible Officer was negligent in
ascertaining the pertinent facts.
None of the provisions contained in this Agreement shall require the
Grantor Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties as Grantor Trustee
hereunder or in the exercise of any of its rights or powers if there is
reasonable ground for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.
Section 6.02. Certain Matters Affecting the Grantor Trustee. Except as
otherwise provided in Section 6.01:
(i) The Grantor Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, Officers' Certificate, certificate
of auditors or any other certificate, statement, instrument, opinion, report,
notice, request, consent, order, appraisal, bond or other paper or document
believed by it to be genuine and to have been signed or presented by the proper
party or parties;
(ii) The Grantor Trustee may consult with counsel, and any written advice
or Opinion of Counsel shall be full and complete authorization and protection in
respect of any action taken or suffered or omitted by it hereunder in good faith
and in accordance with such written advice or Opinion of Counsel;
(iii) The Grantor Trustee shall not be personally liable for any action
taken, suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon it by
this Agreement;
(iv) The Grantor Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents or
attorneys; and
(v) All rights of action under this Agreement or under the Grantor Trust
Certificate, enforceable by the Grantor Trustee, may be enforced by it without
the possession of the Grantor Trust Certificate, or the production thereof at
the trial or other proceeding relating thereto, and any such suit, action or
proceeding instituted by the Grantor Trustee shall be brought in its name for
the benefit the Grantor Trust Holder, subject to the provisions of this
Agreement.
Section 6.03. Grantor Trustee not Required to Make Investigation. The
Grantor Trustee shall not be bound to make any investigation into the facts or
matters stated in any resolution, certificate, statement, instrument, opinion,
report, notice, request, consent, order, or other paper or document (provided
the same appears regular on its face) or to take any remedial action, unless
directed in writing to do so by the Grantor Trust Holder; provided however, that
if the payment to the Grantor Trustee of the costs, expenses or liabilities
likely to be incurred by it in the making of any such investigation or the
taking of any such remedial action so directed by the Grantor Trust Holder is,
in the opinion of the Grantor Trustee, not reasonably assured to the Grantor
Trustee by the security afforded to it by the terms of this Agreement, the
Grantor Trustee may require reasonable agreement for the payment or
reimbursement of any such expense or security for any such liability as a
condition to so proceeding. The reasonable expense of every such investigation
so directed by the Grantor Trust Holder shall be paid by the Grantor Trust
Holder or, if paid by the Grantor Trustee, shall be repaid by the Grantor Trust
Holder upon demand.
Section 6.04. Grantor Trustee's Fees. The Grantor Trustee shall be entitled
to be paid the Grantor Trustee Fee pursuant to Section 5.10(c) of the Sale and
Servicing Agreement. Except as otherwise provided herein, the Grantor Trustee
will be responsible for all expenses it incurs in respect of any of its duties
or obligations hereunder and will not be entitled to any additional amounts. The
Trustee acknowledges and agrees that the Grantor Trustee Fee constitutes
reasonable compensation for its activities as Grantor Trustee hereunder.
Section 6.05. Compliance with Code. The Grantor Trustee shall be authorized
to and shall prepare and file and furnish to the Grantor Trust Holder, or cause
to be prepared and filed and furnished, all federal, and if applicable, state
and local income tax and information returns or reports relating to the Grantor
Trust (including, without limitation, information with respect to interest or
discount income, gain or loss with respect to the Home Loans and reinvestment
income, gain or loss with respect to the Pre-Funding Account and the Collection
Account) at the time and in the manner required by the Code. In connection with
the filing of any such returns, the Grantor Trustee shall have the right to
employ accountants and other personnel to assist in the preparation of such
filings.
Section 6.06. Eligibility Requirements for Grantor Trustee. The Grantor
Trustee hereunder shall at all times be a corporation having its principal
office in a state and city acceptable to the Depositor, organized and doing
business under the laws of such state or the United States of America,
authorized under such laws to exercise corporate trust powers, having a combined
capital and surplus of at least $50,000,000, or shall be a member of a bank
holding system, the aggregate combined capital and surplus of which is at least
$50,000,000, provided that the Grantor Trustee's separate capital and surplus
shall at all times be at least the amount specified in Section 310(a)(2) of the
Trust Indenture Act of 1939, and shall be subject to supervision or examination
by federal or state authority. If such corporation publishes reports of
condition at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purposes of this
Section the combined capital 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 Grantor Trustee shall cease to
be eligible in accordance with the provisions of this Section, the Grantor
Trustee shall resign immediately in the manner and with the effect specified in
Section 6.07.
Section 6.07. Resignation and Removal of Grantor Trustee. The Grantor
Trustee may resign and be discharged from the trust hereby created only by (i)
giving written notice of resignation to the Depositor and the Grantor Trust
Holder and (ii) arranging for a successor trustee to be appointed. The successor
trustee shall be acceptable to the Grantor Trust Holder, shall be eligible in
accordance with the provisions of Section 6.06, and shall be compensated solely
(A) pursuant to the provisions of this Agreement, and (B) if such arrangement is
not acceptable to such successor, pursuant to an arrangement between the
successor trustee and the resigning Grantor Trustee. Any such resignation of the
Grantor Trustee shall only be effective upon the appointment of a successor
trustee. Upon receiving such notice of resignation, the Grantor Trust Holder
shall promptly appoint a successor trustee by written instrument, in triplicate,
one copy of which instrument shall be delivered to the resigning Grantor
Trustee, one copy to the successor trustee and one copy to the Depositor. If no
successor trustee shall have been appointed and have accepted appointment within
60 days after the giving of such notice of resignation, the resigning Grantor
Trustee may petition any court of competent jurisdiction for the appointment of
a successor trustee.
If at any time the Trustee shall cease to be eligible in accordance with
the provisions of Section 6.06 and shall fail to resign after written request
for the Grantor Trustee's resignation by the Grantor Trust Holder, or if at any
time the Grantor Trustee shall become incapable of acting, or an order for
relief shall have been entered in any bankruptcy or insolvency proceeding with
respect to the Grantor Trustee, or a receiver of the Grantor Trustee or of its
property shall be appointed, or any public officer shall take charge or control
of the Grantor Trustee or of its property or affairs for the purpose of
rehabilitation, conversion or liquidation, or in order to change the status of
the Grantor Trust for state tax reasons, then the Grantor Trust Holder shall
remove the Grantor Trustee and appoint a successor trustee by written
instrument, in triplicate, one copy of which instrument shall be delivered to
the Grantor Trustee so removed, one copy to the successor trustee and one copy
to the Depositor.
The Grantor Trust Holder may at any time remove the Grantor Trustee and
appoint a successor trustee by written instrument or instruments, in triplicate,
signed by such holders or their attorneys-in-fact duly authorized, one complete
set of which instruments shall be delivered to the Depositor, one complete set
of which shall be delivered to the Grantor Trustee so removed and one complete
set of which shall be delivered to the successor so appointed.
Any resignation or removal of the Grantor Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section shall become
effective upon acceptance of appointment by the successor trustee as provided in
Section 6.08.
Section 6.08. Successor Grantor Trustee. Any successor trustee appointed as
provided in Section 6.07 shall execute, acknowledge and deliver to the Grantor
Trust Holder, the Depositor and to its predecessor trustee an instrument
accepting such appointment hereunder, and thereupon the resignation or removal
of the predecessor trustee shall become effective, and such successor trustee,
without any further act, deed or reconveyance, shall become fully vested with
all the rights, powers, duties and obligations of its predecessor hereunder,
with like effect as if originally named as trustee herein. The predecessor
trustee shall deliver to the successor trustee documents and statements relating
to the Grantor Trust Estate held by it hereunder, and the Depositor and the
predecessor trustee shall execute and deliver such instruments and do such other
things as may reasonably be required for more fully and certainly vesting and
confirming in the successor trustee all such rights, powers, duties and
obligations.
No successor trustee shall accept appointment as provided in this Section
unless at the time of such acceptance such successor trustee shall be eligible
under the provisions of Section 6.06.
Upon acceptance of appointment by a successor trustee as provided in this
Section, the Grantor Trustee shall mail notice of the succession of such trustee
hereunder to the Grantor Trust Holder at its address as shown in the Certificate
Register. If the Grantor Trustee fails to mail such notice within ten days after
acceptance of the successor trustee, the successor trustee shall cause such
notice to be mailed at the expense of the Grantor Trustee.
Section 6.09. Merger or Consolidation of Grantor Trustee. Any Person into
which the Grantor Trustee may be merged or converted or with which it may be
consolidated, to which it may sell or transfer its corporate trust business and
assets as a whole or substantially as a whole or any Person resulting from any
merger, sale, transfer, conversion or consolidation to which the Grantor Trustee
shall be a party, or any Person succeeding to the business of the Grantor
Trustee, shall be the successor of the Grantor Trustee hereunder, provided that
(i) such Person shall be eligible under the provisions of Section 6.06, without
the execution or filing of any paper or any further act on the part of any of
the parties hereto, anything herein to the contrary notwithstanding, and (ii)
the Grantor Trustee shall deliver an opinion of counsel to the Depositor to the
effect that such merger, consolidation, sale or transfer will not subject the
Grantor Trust to federal, state or local tax.
Section 6.10. Authenticating Agent. The Grantor Trustee may appoint an
Authenticating Agent, which shall be authorized to act on behalf of the Grantor
Trustee in authenticating the Grantor Trust Certificate. Wherever reference is
made in this Agreement to the authentication of the Grantor Trust Certificate by
the Grantor Trustee or the Grantor Trustee's countersignature, such reference
shall be deemed to include authentication on behalf of the Grantor Trustee by
the Authenticating Agent and a certification of authentication executed on
behalf of the Grantor Trustee by the Authenticating Agent. The Authenticating
Agent must be acceptable to the Depositor and must be a corporation organized
and doing business under the laws of the United States of America or of any
state, having a principal office and place of business in a state and city
acceptable to the Depositor, having a combined capital and surplus of at least
$15,000,000, authorized under such laws to do a trust business and subject to
supervision or examination by Federal or state authorities.
Any corporation into which the Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency business
of the Authenticating Agent, shall be the Authenticating Agent without the
execution or filing of any paper or any further act on the part of the Grantor
Trustee or the Authenticating Agent.
The Authenticating Agent may at any time resign by giving at least 30 day's
advance written notice of resignation to the Grantor Trustee and the Depositor.
The Grantor Trustee may at any time terminate the agency of the Authenticating
Agent by giving written notice to the Depositor. Upon receiving a notice of
resignation or upon such a termination, or in case at any time the
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section 6.10, the Grantor Trustee promptly shall appoint a
successor Authenticating Agent, which shall be acceptable to the Depositor, and
shall give written notice of such appointment to the Depositor, and shall mail
notice of such appointment to the Grantor Trust Holder. Any successor
Authenticating Agent upon acceptance of its appointment hereunder shall become
vested with all the rights, powers, duties and responsibilities of its
predecessor hereunder, with like effect as if originally named as Authenticating
Agent herein. No successor Authenticating Agent shall be appointed unless
eligible under the provisions of this Section 6.10.
The Authenticating Agent shall have no responsibility or liability for any
action taken by it as such at the direction of the Grantor Trustee. Any
compensation paid to the Authenticating Agent shall be at the expense of the
Grantor Trustee pursuant to Section 6.04.
ARTICLE VII
TERMINATION
Section 7.01. Termination. The respective obligations and responsibilities
of the Depositor and the Grantor Trustee created hereby and the Grantor Trust
created hereby shall terminate only upon the liquidation of all the Home Loans
or the Majority Residual Interest Holders' purchase of the all the Home Loans
pursuant to Section 11.02 of the Sale and Servicing Agreement; provided,
however, that in no event shall the trust created hereby continue beyond 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 of America to the
Court of St. James's, living on the date thereof.
Section 7.02. Procedure Upon Termination of Grantor Trust.
(a) Notice of any termination pursuant to the provisions of Section 7.01,
specifying the Payment Date upon which the final distribution shall be made,
shall be given promptly by the Grantor Trustee by first class mail to the
Grantor Trust Holder. Such notice shall specify (A) the Payment Date upon which
final distribution on the Grantor Trust Certificate will be made upon
presentation and surrender of the Grantor Trust Certificate at the Corporate
Trust Office, and (B) that the Record Date otherwise applicable to such Payment
Date is not applicable, distribution being made only upon presentation and
surrender of the Grantor Trust Certificate at the office or agency of the
Grantor Trustee therein specified. The Grantor Trustee shall give such notice to
the Depositor and the Certificate Registrar at the time such notice is given to
the Grantor Trust Holder.
(b) In the event that the Grantor Trust Holder does not surrender the
Grantor Trust Certificate for cancellation within three months after the time
specified in the above-mentioned written notice, the Grantor Trustee shall give
a second written notice to the Grantor Trust Holder to surrender the Grantor
Trust Certificate for cancellation and receive the final distribution with
respect thereto. If within one year after the second notice the Grantor Trust
Certificate shall not have been surrendered for cancellation, the Grantor
Trustee may take appropriate steps to contact the Grantor Trust Holder
concerning surrender of the Grantor Trust Certificate, and the cost thereof
shall be paid out of the amounts distributable to such Grantor Trust Holder. If
within two years after the second notice the Grantor Trust Certificate shall not
have been surrendered for cancellation, the Grantor Trustee shall, subject to
applicable state law relating to escheatment, hold all amounts distributable to
the Grantor Trust Holder for the benefit of the Grantor Trust Holder. No
interest shall accrue on any amount held by the Grantor Trustee and not
distributed to a Grantor Trust Holder due to such Grantor Trust Holder's failure
to surrender its Grantor Trust Certificate for payment of the final distribution
therein in accordance with this Section.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.01. Binding Nature of Agreement; Assignment. This Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
Section 8.02. Entire Agreement. This Agreement contains the entire
agreement and understanding among the parties hereto with respect to the subject
matter hereof, and supersedes all prior and contemporaneous agreements,
understandings, inducements and conditions, express or implied, oral or written,
of any nature whatsoever with respect to the subject matter hereof. The express
terms hereof control and supersede any course of performance and/or usage of the
trade inconsistent with any of the terms hereof.
Section 8.03. Amendment.
(a) This Agreement may be amended from time to time by the Depositor, the
Transferor and the Grantor Trustee with the consent of the Grantor Trust Holder;
provided, however, any amendments relating to or affecting Article VII or this
Section 8.03, or any other provision of this Agreement relating to termination
of the Grantor Trust, amendment of this Agreement, shall also require the
consent of all of the holders of all of the Notes.
(b) Promptly after the execution of any such amendment, the Grantor Trustee
shall furnish written notification of the substance of such amendment to the
Grantor Trust Holder and the Depositor.
(c) It shall be necessary for the consent of the Grantor Trust Holder under
this Section 8.03 for the Holders to approve the particular form of any proposed
amendment. The manner of obtaining such consent and of evidencing the
authorization of the execution thereof by the Grantor Trust Holder shall be
subject to such reasonable rules and procedures as the Grantor Trustee may
prescribe.
SECTION 8.04. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES APPLIED IN NEW YORK.
Section 8.05. Notices. All demands, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given when received by
(a) in the case of Depositor, to PaineWebber Mortgage Acceptance Corporation IV,
0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxx Xxxxxx,
Esq., (b) in the case of the Grantor Trustee, to U.S. Bank National Association,
d/b/a First Bank National Association, 000 Xxxx Xxxxx Xxxxxx, Xx. Xxxx,
Xxxxxxxxx 00000; Attention: Structured Finance/Empire Funding 1998-1, and (c) in
the case of the Transferor, to Empire Funding Corp., 0000 Xxxxx Xxxxx Xxxxx,
Xxxxxx, Xxxxx 00000, Attention: Xxxxxxx X. Xxxxx; or as to each party such other
address as may hereafter be furnished by such party to the other parties in
writing. Any notice required or permitted to be mailed to a Grantor Trust Holder
shall be given by first class mail, postage prepaid, at the address of such
Holder as shown in the Certificate Register. Any notice so mailed within the
time prescribed in this Agreement shall be conclusively presumed to have been
duly given, whether or not a Grantor Trust Holder receives such notice.
Section 8.06. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or the Grantor Trust
Certificate or the rights of the Grantor Trust Holder thereof.
Section 8.07. Indulgences; No Waivers. Neither the failure nor any delay on
the part of a party to exercise any right, remedy, power or privilege under this
Agreement shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, remedy, power or privilege preclude any other or further
exercise of the same or of any other right, remedy, power or privilege, nor
shall any waiver of any right, remedy, power or privilege with respect to any
occurrence be construed a waiver of such right, remedy, power or privilege with
respect to any other occurrence. No waiver shall be effective unless it is in
writing and is signed by the party asserted to have granted such waiver.
Section 8.08. Headings Not To Affect Interpretation. The headings contained
in this Agreement are for convenience of reference only, and they shall not be
used in the interpretation hereof.
Section 8.09. Benefits of Agreement. Nothing in this Agreement or in the
Grantor Trust Certificate, express or implied, shall give to any Person, other
than the parties to this Agreement and their successors hereunder and the
Grantor Trust Holder, any benefit or any legal or equitable right, power, remedy
or claim under this Agreement; provided, however, that notwithstanding the
foregoing, the holders of the Notes are and shall be intended third party
beneficiaries of this Agreement with respect to Section 8.03 hereof.
Section 8.10. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, and all of which
together shall constitute one and the same instrument.
Section 8.11. Security Interest. It is the express intent of the parties
hereto that the conveyance of the Home Loans and the other assets included in
the Grantor Trust Estate by the Depositor be treated for all purposes as a sale
by the Depositor of all of its right, title and interest in and to the Grantor
Trust Estate. The Depositor hereby pledges and grants to the Grantor Trust
Trustee a security interest in the Depositor's interest in the Grantor Trust
Estate to secure payment (in the event of recharacterization notwithstanding the
parties' intent) and performance by the Depositor of its obligations hereunder.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the Depositor, the Transferor and the Grantor Trustee
have caused their names to be signed hereto by their respective officers
thereunto duly authorized, all as of the day and year first written above.
PAINEWEBBER MORTGAGE ACCEPTANCE
CORPORATION IV, as Depositor
By:-----------------------------
Xxxxxxx X. Xxxxxx
Senior Vice President
EMPIRE FUNDING CORP.,
as Transferor
By:-----------------------------
Name:
Title:
U.S. BANK NATIONAL ASSOCIATION,
d/b/a FIRST BANK NATIONAL
ASSOCIATION, as Grantor Trustee
By:-----------------------------
Name:
Title:
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK)
On this --- day of February, 1998, before me, a notary public in and for
the State of New York, personally appeared Xxxxxxx X. Xxxxxx, known to me who,
being by me duly sworn, did depose and say that she resides at
-------------------; that she is a Senior Vice President of PaineWebber Mortgage
Acceptance Corporation IV, one of the parties that executed the foregoing
instrument and that she is authorized by PaineWebber Mortgage Acceptance
Corporation IV to sign her name thereto.
---------------------------
Notary Public
[NOTARIAL SEAL]
STATE OF ----------)
) ss.:
COUNTY OF ---------)
On this --- day of February, 1998, before me, a notary public in and for
the State of -------------, personally appeared -------------, known to me who,
being by me duly sworn, did depose and say that he resides at
-------------------; that he is a -------------------- of Empire Funding Corp.,
one of the parties that executed the foregoing instrument and that he is
authorized by Empire Funding Corp. to sign his name thereto.
---------------------------
Notary Public
[NOTARIAL SEAL]
STATE OF ------------)
) ss.:
COUNTY OF -----------)
On this --- day of February, 1998, before me, a notary public in and for
the State of ----------, personally appeared --------------, known to me who,
being by me duly sworn, did depose and say that he resides at
-------------------; that he is a -------------------- of U.S. Bank National
Association, d/b/a First Bank National Association, one of the parties that
executed the foregoing instrument and that he is authorized by U.S. Bank
National Association, d/b/a First Bank National Association to sign his name
thereto.
---------------------------
Notary Public
[NOTARIAL SEAL]
EXHIBIT A
FORM OF GRANTOR TRUST CERTIFICATE
THIS GRANTOR TRUST CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS.
NEITHER THIS GRANTOR TRUST CERTIFICATE NOR ANY INTEREST OR PARTICIPATION HEREIN
MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION, PROVIDED, HOWEVER, THAT THIS GRANTOR TRUST CERTIFICATE
SHALL BE PLEDGED BY THE HOLDER THEREOF TO THE INDENTURE TRUSTEE PURSUANT TO THE
TERMS OF THE INDENTURE.
THE HOLDER OF THIS GRANTOR TRUST CERTIFICATE BY ITS ACCEPTANCE HEREOF AGREES NOT
TO OFFER, SELL OR OTHERWISE TRANSFER SUCH GRANTOR TRUST CERTIFICATE EXCEPT IN
ACCORDANCE WITH ALL APPLICABLE STATE SECURITIES LAWS AND (A) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT, (B) FOR SO LONG AS THIS GRANTOR TRUST CERTIFICATE IS ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON WHO
THE DEPOSITOR REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS
DEFINED IN RULE 144A IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (C)
TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH
(A)(1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT, OR (D) PURSUANT TO
ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT, SUBJECT IN EACH OF THE FOREGOING CASES TO THE COMPLETION AND DELIVERY BY
THE TRANSFEROR TO THE GRANTOR TRUSTEE OF A CERTIFICATE OF TRANSFER IN THE FORM
APPEARING ON THE LAST PAGE OF THIS GRANTOR TRUST CERTIFICATE, EXCEPT IN THE CASE
OF THE PLEDGE DESCRIBED ABOVE AND THE INITIAL TRANSFERS OF THIS GRANTOR TRUST
CERTIFICATE BY THE GRANTOR TRUSTEE TO THE DEPOSITOR, AND BY THE DEPOSITOR TO THE
ISSUER.
THE INITIAL INVESTOR IN THIS GRANTOR TRUST CERTIFICATE, AND EACH SUBSEQUENT
PURCHASER OF THIS GRANTOR TRUST CERTIFICATE, BY PURCHASING THIS GRANTOR TRUST
CERTIFICATE OR AN INTEREST HEREIN, IS DEEMED TO HAVE AGREED TO COMPLY WITH
CERTAIN TRANSFER REQUIREMENTS SET FORTH IN THE GRANTOR TRUST AGREEMENT. A
TRANSFEREE IS ALSO REQUIRED TO DELIVER AN INVESTMENT REPRESENTATION LETTER
SUBSTANTIALLY IN THE FORM OF EXHIBIT B TO THE GRANTOR TRUST AGREEMENT IF SUCH
TRANSFEREE IS A QUALIFIED INSTITUTIONAL BUYER OR AN ACCREDITED INSTITUTIONAL
INVESTOR, AND MAY ALSO BE REQUIRED TO DELIVER AN OPINION OF COUNSEL IF SUCH
TRANSFEREE IS NOT A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE
144A.
THIS GRANTOR TRUST CERTIFICATE MAY NOT BE PURCHASED BY OR TRANSFERRED UNLESS THE
GRANTOR TRUSTEE SHALL HAVE RECEIVED EITHER (i) A REPRESENTATION LETTER FROM THE
PROPOSED PURCHASER OR TRANSFEREE OF SUCH GRANTOR TRUST CERTIFICATE IN FORM AND
SUBSTANCE SATISFACTORY TO THE GRANTOR TRUSTEE AND THE DEPOSITOR, TO THE EFFECT
THAT SUCH PROPOSED PURCHASER OR TRANSFEREE IS NOT A PERSON WHICH IS AN EMPLOYEE
BENEFIT PLAN SUBJECT TO THE FIDUCIARY RESPONSIBILITY PROVISIONS OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR A PLAN SUBJECT
TO SECTION 4975 OF THE CODE, OR A GOVERNMENTAL PLAN AS 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 (COLLECTIVELY,
A "PLAN"), OR A PERSON ACTING ON BEHALF OF ANY SUCH PLAN OR USING THE ASSETS OF
SUCH PLAN TO ACQUIRE SUCH GRANTOR TRUST CERTIFICATE OR (ii) IF SUCH GRANTOR
TRUST CERTIFICATE IS PRESENTED FOR REGISTRATION IN THE NAME OF SUCH A PLAN
SUBJECT TO THE FIDUCIARY RESPONSIBILITY PROVISIONS OF ERISA OR SECTION 4975 OF
THE CODE (OR COMPARABLE PROVISIONS OF ANY SUBSEQUENT ENACTMENTS), OR A TRUSTEE
OF ANY SUCH PLAN, OR A GOVERNMENTAL PLAN AS 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, OR ANY OTHER PERSON
WHO IS USING THE ASSETS OF ANY SUCH PLAN TO EFFECT SUCH ACQUISITION, AN OPINION
OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE GRANTOR TRUSTEE TO THE
EFFECT THAT SUCH ACQUISITION AND HOLDING OF SUCH GRANTOR TRUST CERTIFICATE
(WITHOUT REGARD TO THE IDENTITY OR NATURE OF THE OTHER HOLDERS OF SUCH GRANTOR
TRUST CERTIFICATE) WILL NOT CONSTITUTE OR RESULT IN A "PROHIBITED TRANSACTION"
WITHIN THE MEANING OF SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE, AND WILL
NOT SUBJECT THE GRANTOR TRUSTEE, THE CERTIFICATE REGISTRAR, THE SERVICER OR THE
DEPOSITOR TO ANY OBLIGATION OR LIABILITY UNDER ERISA OR SECTION 4975 OF THE
CODE.
THE HOLDER OF THIS GRANTOR TRUST CERTIFICATE WILL BE TREATED AS THE OWNER OF A
PRO RATA UNDIVIDED BENEFICIAL INTEREST IN THE HOME LOANS. EACH TRANSFEREE OF
THIS GRANTOR TRUST CERTIFICATE, BY ACCEPTANCE HEREOF, IS DEEMED TO HAVE ACCEPTED
THIS GRANTOR TRUST CERTIFICATE SUBJECT TO CERTAIN RESTRICTIONS ON
TRANSFERABILITY, AS SET FORTH IN SECTION 4.02 OF THE GRANTOR TRUST AGREEMENT.
EMPIRE FUNDING GRANTOR TRUST 1998-1
evidencing an interest in a trust
the assets of which consist primarily
of the Home Loans
Certificate No. __
Percentage Interest evidenced
by this Grantor Trust Certificate: 100%
First Payment Date: February, 1998
THIS CERTIFIES THAT U.S. BANK NATIONAL ASSOCIATION, d/b/a FIRST BANK
NATIONAL ASSOCIATION, as Indenture Trustee is the registered owner of the
Percentage Interest evidenced by this Grantor Trust Certificate in monthly
distributions to the Grantor Trust Holder with respect to the Grantor Trust
consisting of a trust the assets of which consist primarily of the Home Loans.
The Grantor Trust was created pursuant to a Trust Agreement dated as of February
1, 1998 ("Agreement") among PaineWebber Mortgage Acceptance Corporation IV (the
"Depositor"), (the "Transferor"), and U.S. Bank National Association, d/b/a
First Bank National Association, as Grantor Trustee (the "Grantor Trustee"), a
summary of certain of the pertinent provisions of which is set forth
hereinafter. To the extent not defined herein, the capitalized terms used herein
have the meanings ascribed to such terms in the Agreement. This Grantor Trust
Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the holder of this Grantor Trust
Certificate by virtue of the acceptance hereof assents and by which such holder
is bound.
Pursuant to the terms of the Agreement, distributions will be made on this
Grantor Trust Certificate to the Person in whose name this Grantor Trust
Certificate is registered at the close of business on the last day of the
calendar month preceding the month of such distribution, or if such day is not a
Business Day, the Business Day immediately preceding such day, in an amount
equal to the product of the Percentage Interest evidenced by this Grantor Trust
Certificate and the amount required to be distributed to the Grantor Trust
Holder on such Payment Date pursuant to Section 5.02 of the Agreement.
Distributions on this Grantor Trust Certificate will be made by the Grantor
Trustee by check mailed to the address of the Person entitled thereto, as such
name and address shall appear on the Certificate Register unless such Person
notifies the Grantor Trustee in writing at least five Business Days prior to a
Payment Date that such payments are to be made by wire transfer (at the expense
of the Grantor Trustee) of immediately available funds to the account specified
by such person. Notwithstanding the above, the final distribution on this
Grantor Trust Certificate will be made after due notice of the pendency of such
distribution and only upon presentation and surrender of this Grantor Trust
Certificate at the office or agency specified by the Trustee for that purpose in
the notice of final distribution.
No offer, sale, or other transfer of the Grantor Trust Certificate (other
than the initial transfers of the Grantor Trust Certificate by the Grantor
Trustee to the Depositor, and by the Depositor to the Issuer) shall be made
unless such transfer is made pursuant to an effective registration statement or
otherwise in accordance with the requirements under the Act, and effective
registration or qualification under applicable state securities laws, or is made
in a transaction which does not require such registration or qualification. If a
transfer (other than the initial transfer by the Grantor Trustee to the
Depositor or one by the Depositor or an affiliate thereof) is to be made in
reliance upon an exemption from the Act, and under the applicable state
securities laws, then either: (i) the Certificate Registrar shall require that
the transferee deliver to the Certificate Registrar an investment representation
letter (the "Investment Representation Letter") substantially in the form of
Exhibit B to the Grantor Trust Agreement, which Investment Representation Letter
shall certify, among other things, that the transferee is an institutional
"accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the
Act or a "qualified institutional buyer" as defined in Rule 144A under the Act,
and the Certificate Registrar may also require that the transferee deliver to
the Certificate Registrar an Opinion of Counsel if such transferee is not a
qualified institutional buyer within the meaning of Rule 144A under the Act; or
(ii) if the certifications described in the preceding clause (i) cannot be
provided (A) the Certificate Registrar shall require an Opinion of Counsel
reasonably satisfactory to the Certificate Registrar and the Depositor that such
transfer may be made pursuant to an exemption, describing the applicable
exemption and the basis therefor, from registration or qualification under the
Act, applicable state securities laws and other relevant laws, which Opinion of
Counsel shall not be an expense of the Certificate Registrar, the Depositor, the
Grantor Trust or the Grantor Trustee, and (B) the Certificate Registrar shall
require the transferor to execute a certification in form and substance
satisfactory to the Certificate Registrar setting forth the facts surrounding
such transfer. In each case, the Certificate Registrar will be entitled without
further investigation to rely upon such certification or Opinion of Counsel. A
Grantor Trust Holder desiring to effect such transfer shall, and does hereby
agree to, indemnify the Certificate Registrar, the Grantor Trustee and the
Depositor against any liability that may result if the transfer is not so exempt
or is not made in accordance with such federal and state laws. The Grantor Trust
Holder shall pledge the Grantor Trust Certificate to the Indenture Trustee
pursuant to the terms of the Indenture.
The Agreement does not permit the amendment of the Agreement and the
modification of the rights and obligations of the Depositor, the Grantor Trustee
and the Transferor and the rights of the Grantor Trust Holder under the
Agreement without the consent of Grantor Trust Holder; provided, however, any
amendments relating to or affecting Article VII or Section 8.03, or any other
provision of the Agreement relating to termination of the Grantor Trust or
amendment of the Agreement, shall require the consent of all of the holders of
all of the Notes.
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Grantor Trust Certificate is registrable in the
Certificate Register upon surrender of this Grantor Trust Certificate for
registration of transfer at the office or agency appointed by the Grantor
Trustee, duly endorsed by, or accompanied by an assignment in the form below or
other written instrument of transfer in form satisfactory to the Grantor Trustee
and the Certificate Registrar, duly executed by the holder hereof or such
holder's attorney duly authorized in writing, and thereupon a new Grantor Trust
Certificate of authorized 100% Percentage Interest will be issued to the
designated transferee.
The Grantor Trust Certificate is issuable only as a registered Grantor
Trust Certificate without coupons in the Percentage Interest specified in the
Agreement. As provided in the Agreement and subject to certain limitations
therein set forth, the Grantor Trust Certificate is exchangeable for a new
Grantor Trust Certificate of authorized 100% Percentage Interest, as requested
by the Grantor Trust Holder surrendering the same.
The Grantor Trust Holder may at any time remove the Grantor Trustee with or
without cause, and appoint a successor trustee. If such removal is without
cause, the Grantor Trust Holder shall be responsible for making satisfactory
arrangements for compensation of the successor trustee.
No service charge will be made for any such registration of transfer or
exchange, but the Grantor Trustee or the Certificate Registrar may require
payment from the Grantor Trust Holder of a sum sufficient to cover any tax or
other governmental charge payable in connection therewith.
The Depositor, the Grantor Trustee and the Certificate Registrar, and any
agent of the Depositor, the Grantor Trustee or the Certificate Registrar, may
treat the Person in whose name this Grantor Trust Certificate is registered as
the owner hereof for all purposes, and neither the Depositor, the Grantor
Trustee, the Certificate Registrar nor any such agent shall be affected by
notice to the contrary.
The obligations created by the Agreement in respect of the Grantor Trust
Certificate and the Grantor Trust created thereby shall terminate only upon the
liquidation of all the Home Loans or the Majority Residual Interest Holders'
purchase of the all the Home Loans pursuant to Section 11.02 of the Sale and
Servicing Agreement; provided, however, that the Trust Fund will in no event
continue beyond 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. Xxxxx, living on the date of the Agreement.
Unless this Grantor Trust Certificate has been countersigned by an
authorized officer of the Grantor Trustee, by manual signature, this Grantor
Trust Certificate shall not be entitled to any benefit under the Agreement or be
valid for any purpose.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the Grantor Trustee has caused this Grantor Trust
Certificate to be duly executed as of the date set forth below.
Dated:
U.S. BANK NATIONAL ASSOCIATION, d/b/a
FIRST BANK NATIONAL ASSOCIATION,
as Grantor Trustee
By: ---------------------------------
Name:
Title:
Countersigned:
U.S. BANK NATIONAL
ASSOCIATION, d/b/a FIRST
BANK NATIONAL ASSOCIATION,
as Grantor Trustee
By: ------------------------
Name:
Title:
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto ----------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
(Please print or typewrite name and address including postal zip code of
assignee)
the beneficial interest evidenced by the within Grantor Trust Certificate and
hereby authorizes the transfer of registration of such interest to assignee on
the Certificate Register of the Grantor Trust.
I (We) further direct the Certificate Registrar to issue a new Grantor
Trust Certificate of a like Percentage Interest, to the above named assignee and
deliver such Grantor Trust Certificate to the following address:
----------------------------------------------------------------
Social Security or other Identifying Number of Assignee:
-----------------------------------------------------------------
Dated:
------------------------------------
Signature by or on behalf of assignor
------------------------------------
Signature Guaranteed
[DISTRIBUTION INSTRUCTIONS]
The assignee should include the following for purposes of distribution:
Distributions shall be made, if the assignee is eligible to receive
distributions in immediately available funds, by wire transfer or otherwise, in
immediately available funds to ------------------- for the account of
------------------------------------ account number -----------, or, if mailed
by check, to -------------------------------. Applicable statements should be
mailed to ------------------------------------------------------------.
This information is provided by ---------------------, the assignee named
above, or ---------------------, as its agent.
EXHIBIT B
FORM OF INVESTMENT AND ERISA REPRESENTATION LETTER
U.S. Bank National Association, d/b/a First Bank National Association
as Grantor Trustee and Certificate Registrar
000 Xxxx Xxxxx Xxxxxx
Xx. Xxxx, Xxxxxxxxx 00000
Attention: Structured Finance/Empire Funding 1998-1
Re: Transfer of Empire Funding Grantor Trust 1998-1,
Grantor Trust Certificate
Ladies and Gentlemen:
This letter is delivered pursuant to Section 4.02 of the Trust Agreement
dated as of February 1, 1998 (the "Trust Agreement"), by and among PaineWebber
Mortgage Acceptance Corporation IV, as Depositor, Empire Funding Corp., as
Transferor, and U.S. Bank National Association, d/b/a First Bank National
Association, as Grantor Trustee, on behalf of the holders of Empire Funding
Grantor Trust 1998-1 Grantor Trust Certificate (the "Grantor Trust
Certificate"), in connection with the transfer by ------------------ (the
"Seller") to the undersigned (the "Purchaser") of a 100% Percentage Interest in
the Grantor Trust Certificate. Terms used but not defined herein shall have the
meanings ascribed thereto in the Trust Agreement.
In connection with such transfer, the undersigned hereby represents and
warrants to you as follows:
[[For Institutional Accredited Investors] 1. The Purchaser is an
"institutional accredited investor" (an entity meeting the requirements of Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act of 1933, as
amended (the "Securities Act")) and has such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of its investment in the Grantor Trust Certificate, and the Purchaser and
any accounts for which it is acting are each able to bear the economic risk of
the Purchaser's or such account's investment. The Purchaser is acquiring the
Grantor Trust Certificate purchased by it for its own account or for one or more
accounts (each of which is an "institutional accredited investor") as to each of
which the Purchaser exercises sole investment discretion. The Purchaser hereby
undertakes to reimburse the Grantor Trustee for any costs incurred by it in
connection with this transfer.]
[[For Qualified Institutional Buyers only] 1. The Purchaser is a "qualified
institutional buyer" within the meaning of Rule 144A ("Rule 144A") promulgated
under the Securities Act of 1933, as amended (the "Securities Act"). The
Purchaser is aware that the transfer is being made in reliance on Rule 144A, and
the Purchaser has had the opportunity to obtain the information required to be
provided pursuant to paragraph (d)(4)(i) of Rule 144A.]
2. The Purchaser's intention is to acquire the Grantor Trust Certificate
(a) for investment for the Purchaser's own account or (b) for resale to (i)
"qualified institutional buyers" in transactions under Rule 144A, and not in any
event with the view to, or for resale in connection with, any distribution
thereof, or (ii) to "institutional accredited investors" meeting the
requirements of Rule 501(a)(1), (2), (3) or (7) of Regulation D promulgated
under the Securities Act, pursuant to any other exemption from the registration
requirements of the Securities Act, subject in the case of this clause (ii) to
(a) the receipt by the Certificate Registrar of a letter substantially in the
form hereof, (b) the receipt by the Certificate Registrar of an opinion of
counsel acceptable to the Certificate Registrar that such reoffer, resale,
pledge or transfer is in compliance with the Securities Act, (c) the receipt by
the Certificate Registrar of such other evidence acceptable to the Certificate
Registrar that such reoffer, resale, pledge or transfer is in compliance with
the Securities Act and other applicable laws, and (d) a written undertaking to
reimburse the Grantor Trust for any costs incurred by it in connection with the
proposed transfer. The Purchaser understands that the Grantor Trust Certificate
(and any subsequent Grantor Trust Certificate) has not been registered under the
Securities Act, by reason of a specified exemption from the registration
provisions of the Securities Act which depends upon, among other things, the
bona fide nature of the Purchaser's investment intent (or intent to resell to
only certain investors in certain exempted transactions) as expressed herein.
3. The Purchaser is not a Person which is an employee benefit plan subject
to the fiduciary responsibility provisions of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") or a plan subject to Section 4975 of
the Internal Revenue Code of 1986, as amended (the "Code"), or a governmental
plan as 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 (collectively, a "Plan"), or a Person acting on behalf of any
such Plan or using the assets of such Plan to acquire such Grantor Trust
Certificate.
4. The Purchaser acknowledges that the Grantor Trust Certificate (and any
Grantor Trust Certificate issued on transfer or exchange thereof) has not been
registered or qualified under the Securities Act or the securities laws of any
State or any other jurisdiction, and that the Grantor Trust Certificate cannot
be resold unless it is registered or qualified thereunder or unless an exemption
from such registration or qualification is available.
5. The Purchaser hereby undertakes to be bound by the terms and conditions
of the Trust Agreement in its capacity as an owner of the Grantor Trust
Certificate (the "Grantor Trust Holder"), in all respects as if it were a
signatory thereto. This undertaking is made for the benefit of the Grantor
Trust, the Grantor Trustee, the Certificate Registrar and all Grantor Trust
Holders present and future.
6. The Purchaser will not sell or otherwise transfer any portion of the
Grantor Trust Certificate, except in compliance with Section 4.02 of the Trust
Agreement.
[Please make all payments due on the Grantor Trust
Certificate:*
----------------------------
FN
* Please select (a) or (b).
----------------------------
------- (a) by wire transfer to the following account at a bank or
entity in New York, New York, having appropriate facilities
therefore:
Account number ----------- Institution -----------
------- (b) by mailing a check or draft to the following address:
-------------------------
-------------------------
-------------------------
Very truly yours,
-------------------------
[The Purchaser]
By: ----------------------
Name:
Title
Dated: ----- ----, ----
Receipt hereby acknowledged:
EXHIBIT C
SUBSEQUENT TRANSFER AGREEMENT (the "Subsequent Transfer Agreement"), dated
as of [--------, 199--], between Empire Funding Corp. ("Transferor") and U.S.
BANK NATIONAL ASSOCIATION, d/b/a FIRST BANK NATIONAL ASSOCIATION, as grantor
trustee (in such capacity, the "Grantor Trustee") and indenture trustee (in such
capacity, the "Indenture Trustee").
W I T N E S S E T H
WHEREAS, pursuant to the terms of a Home Loan Purchase Agreement, dated as
of February 1, 1998 (the "Purchase Agreement"), between PaineWebber Mortgage
Acceptance Corporation IV, as Depositor (the "Depositor"), and the Transferor
has sold, transferred, assigned and otherwise conveyed to the Depositor all its
right, title and interest in and to certain Home Loans.
WHEREAS, pursuant to the terms of a Grantor Trust Agreement, dated as of
February 1, 1998 (the "Grantor Trust Agreement"), among the Depositor, the
Transferor and the Grantor Trustee, the Transferor has the obligation to sell,
transfer, assign and otherwise convey to the Grantor Trustee all its right,
title and interest in and to certain home loans as listed on Schedule I attached
hereto and the Related Documents thereto (as defined below) (the "Subsequent
Loans") pursuant to and in accordance with this Subsequent Transfer Agreement;
WHEREAS, the parties hereto desire that the Transferor sell all its right,
title and interest in and to the Subsequent Loans and the Related Documents to
the Grantor Trustee pursuant to the terms of this Subsequent Transfer Agreement;
and
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:
1 Definitions. Capitalized terms used but not defined herein have the
meanings assigned thereto in the Grantor Trust Agreement.
2. Sale of Subsequent Loans to Grantor Trustee. The Transferor concurrently
with the execution and delivery of this Subsequent Transfer Agreement, does
hereby sell, transfer, assign, set over, and otherwise convey to the Grantor
Trustee, without recourse but subject to the other terms and provisions of this
Agreement and the Grantor Trust Agreement, all of its right, title and interest
in and to the following, whether now existing or hereafter acquired and wherever
located: (i) such Subsequent Loans as listed in the Subsequent Loan Schedule, as
of the [_________ 1, 199_] (the "Cut-Off Date"), together with the Servicer's
Home Loan Files and the Grantor Trustee's Home Loan Files relating thereto and
all proceeds thereof, (ii) the Mortgages and security interests in Mortgaged
Properties, (iii) all payments in respect of interest due with respect to such
Subsequent Loans on or after the Cut-Off Date and all payments in respect of
principal received after the Cut-Off Date, (iv) the Transferor's rights under
all insurance policies with respect to such Subsequent Loans and any Insurance
Proceeds, and (v) all proceeds of any of the foregoing.
3. Obligations of the Transferor Upon Sale. In connection with any transfer
pursuant to Section 2 hereof, the Transferor further agrees, at its own expense,
on or prior to the Subsequent Transfer Date (a) to indicate in its books and
records that the Subsequent Loans have been sold to the Grantor Trustee pursuant
to this Subsequent Transfer Agreement and (b) to deliver to the Grantor Trustee
a computer file containing a true and complete list of all Subsequent Loans in
the format required by Section 2.2 of the Purchase Agreement.
In connection with any conveyance by the Transferor, the Transferor shall
on behalf of the Grantor Trustee deliver to, and deposit with U.S. Bank
Custodian, on behalf of the Grantor Trustee, on or before the Subsequent
Transfer Date the Related Documents (as defined in the Purchase Agreement) with
respect to each Subsequent Loan.
In connection with any conveyance by the Transferor, the Transferor shall
on behalf of the Grantor Trustee deliver to, and deposit with the Servicer, as
the designated agent of the Grantor Trustee, on or before the Subsequent
Transfer Date the Servicer's Home Loan File with respect to each Subsequent
Loan.
The Transferor further hereby confirms to the Grantor Trustee that, as of
the Subsequent Transfer Date it has caused the portions of the Transferor's
electronic ledger relating to the Subsequent Loans to be clearly and
unambiguously marked to indicate that the Subsequent Loans have been sold to the
Grantor Trustee.
The parties hereto intend that each of the transactions set forth herein be
a sale by the Transferor to the Grantor Trustee of all of the Transferor's
right, title and interest in and to the Subsequent Loans and other property
described above. In the event the transactions set forth herein are deemed not
to be a sale, the Transferor hereby grants to the Grantor Trustee a security
interest in all of the Transferor's right, title and interest in, to and under
the Subsequent Loans and other property described above, whether now existing or
hereafter created, to secure all of the Transferor's obligations hereunder; and
this Subsequent Transfer Agreement shall constitute a security agreement under
applicable law.
4. Payment of Purchase Price for the Subsequent Loans.
(a) In consideration of the sale of the Subsequent Loans from the
Transferor to the Grantor Trustee on the Subsequent Transfer Date, the Grantor
Trustee agrees to pay to the Transferor on the Subsequent Transfer Date by
transfer of immediately available funds, an amount equal to 100% of the
aggregate Principal Balances of the Subsequent Loans as of the Cut-Off Date.
(b) Within 60 days of the Subsequent Transfer Date, Transferor, at its own
expense, shall record each Assignment of Mortgage in favor of the Indenture
Trustee to the same extent required under Section 2.4 of the Purchase Agreement.
5. Transferor Representations and Warranties. (a) The Transferor hereby
makes the representations and warranties to the Issuer as of the Cut-Off Date
and the Subsequent Transfer Date specified in Section 3.1(a) of the Purchase
Agreement.
(b) The Transferor further represents and warrants to the Grantor Trustee
that with respect to the Subsequent Loans as of the Subsequent Transfer Date
each of the representations and warranties contained in Section 3.04 of the Sale
and Servicing Agreement are true and correct.
It is understood and agreed that the representations and warranties set
forth in this Section 5(b) shall survive delivery of the respective Subsequent
Loan Files to the Grantor Trustee on behalf of the Grantor Trust. In the event
that (a) any of the representations and warranties of the Transferor in Section
3.04 of the Sale and Servicing Agreement are determined to be untrue in a manner
that materially and adversely affects the value of, or the interests of the
Grantor Trust Holder in, any Subsequent Loan with respect to which such
representation or warranty is made and (b) the Transferor shall fail to cure
such breach within the time period specified in Section 3.05 of the Sale and
Servicing Agreement, the Transferor shall be obligated to repurchase or
substitute the affected Subsequent Loan(s) in accordance with the provisions of
Section 3.05 of the Sale and Servicing Agreement.
With respect to representations and warranties made by the Transferor
pursuant to this Section 5(b) that are made to the Transferor's best knowledge,
if it is discovered by any of the Transferor or the Grantor Trustee that the
substance of such representation and warranty is inaccurate and such inaccuracy
materially and adversely affects the value of the related Subsequent Loan,
notwithstanding the Transferor's lack of knowledge, such inaccuracy shall be
deemed a breach of the applicable representation and warranty.
6. Covenants of the Transferor. The Transferor hereby covenants that except
for the transfer hereunder, the Transferor will not sell, pledge, assign or
transfer to any other Person, or grant, create, incur, assume or suffer to exist
any lien on, any Subsequent Loan, or any interest therein; and the Transferor
will defend the right, title and interest of the Grantor Trustee, in, to and
under the Subsequent Loans, against all claims of third parties claiming through
or under the Transferor.
Whenever and so often as requested by the Grantor Trustee, or the
Transferor, the other party promptly will execute and deliver or cause to be
executed and delivered all such other and further instruments, documents, or
assurances, and promptly do or cause to be done all such other things, as may be
necessary and reasonably required to vest more fully in the requesting party all
rights, interests, powers, benefits, privileges and advantages conferred or
intended to be conferred upon it by this Agreement.
7. Termination. The respective obligations and responsibilities of the
Transferor and the Grantor Trustee created hereby shall terminate, except for
the Transferor's indemnity obligations as provided herein and in the Grantor
Trust Agreement, upon the termination of the Grantor Trust and Owner Trust as
provided in Article XI of the Sale and Servicing Agreement.
8. Governing Law. This Subsequent Transfer Agreement shall be governed by
and construed in accordance with the laws of the State of New York and the
obligations, rights and remedies of the parties hereunder shall be determined in
accordance with such laws.
9. Intention of the Parties. It is the intention of the parties that the
Grantor Trustee is purchasing, and the Transferor is selling, the Subsequent
Loans rather than pledging the Subsequent Loans to secure a loan by the Grantor
Trustee to the Transferor. The parties hereto each intend to treat the
transaction for accounting purposes as a sale by the Transferor, and a purchase
by the Grantor Trustee, of the Subsequent Loans. For federal income tax
purposes, the parties hereto each intend to treat the transaction as a transfer
to secure the indebtedness represented by the Notes. The Grantor Trustee will
have the right to review the Subsequent Loans and the related Subsequent Loan
Files to determine the characteristics of the Subsequent Loans which will affect
the federal income tax consequences of owning the Subsequent Loans and the
Transferor will cooperate with all reasonable requests made by the Grantor
Trustee in the course of such review.
10. The representations and warranties set forth in Article III shall
survive the purchase of the Subsequent Loans hereunder.
11. This Subsequent Transfer Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors and permitted
assigns. Except as otherwise provided in this Section 11 no other Person shall
have the right or obligation hereunder.
IN WITNESS WHEREOF, the Transferor, the Indenture Trustee and the Grantor
Trustee have caused this Subsequent Transfer Agreement to be duly executed on
their behalf by their respective officers thereunto duly authorized as of the
day and year first above written.
EMPIRE FUNDING CORP.,
as Transferor
By:----------------------------------------
Name:
Title:
U.S. BANK NATIONAL ASSOCIATION, d/b/a
FIRST BANK NATIONAL ASSOCIATION,
as Grantor Trustee and Indenture Trustee
By:----------------------------------------
Name:
Title:
SCHEDULE I
Subsequent Loan Schedule
