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EXHIBIT 10.5
EXECUTION COPY
TRUST AGREEMENT
among
FINANCIAL ASSET SECURITIES CORP.,
as Depositor,
MEGO MORTGAGE CORPORATION,
as the Company,
WILMINGTON TRUST COMPANY,
as Owner Trustee
and
FIRST TRUST OF NEW YORK, NATIONAL ASSOCIATION,
as Co-Owner Trustee
Dated as of February 1, 1997
MEGO MORTGAGE HOME LOAN OWNER TRUST 1997-1
Home Loan Asset Backed Securities, Series 1997-1
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TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS
Section 1.1 Capitalized Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1
Section 1.2 Other Definitional Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-5
ARTICLE II
ORGANIZATION
Section 2.1 Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-1
Section 2.2 Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-1
Section 2.3 Purposes and Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-1
Section 2.4 Appointment of Owner Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-2
Section 2.5 Initial Capital Contribution of Owner Trust Estate . . . . . . . . . . . . . . . . . . II-2
Section 2.6 Declaration of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-2
Section 2.7 Title to Trust Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-2
Section 2.8 Situs of Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-3
Section 2.9 Representations and Warranties of the Depositor and the Company;
Covenant of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-3
Section 2.10 Federal Income Tax Allocations . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-5
ARTICLE III
TRUST CERTIFICATES AND TRANSFER OF INTERESTS
Section 3.1 Initial Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-1
Section 3.2 The Trust Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-1
Section 3.3 Execution, Authentication and Delivery of Trust Certificates . . . . . . . . . . . . . III-1
Section 3.4 Registration of Transfer and Exchange of Trust Certificates . . . . . . . . . . . . . III-1
Section 3.5 Mutilated, Destroyed, Lost or Stolen Trust Certificates . . . . . . . . . . . . . . . . III-2
Section 3.6 Persons Deemed Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-3
Section 3.7 Access to List of Owners' Names and Addresses . . . . . . . . . . . . . . . . . . . . . III-3
Section 3.8 Maintenance of Office or Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-3
Section 3.9 Appointment of Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-3
Section 3.10 Restrictions on Transfer of Trust Certificate . . . . . . . . . . . . . . . . . . . . . III-4
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ARTICLE IV
ACTIONS BY OWNER TRUSTEE
Section 4.1 Prior Notice to Owners with Respect to Certain Matters . . . . . . . . . . . . . . . . IV-1
Section 4.2 Action by Owners with Respect to Certain Matters . . . . . . . . . . . . . . . . . . . IV-3
Section 4.3 Action by Owners with Respect to Bankruptcy . . . . . . . . . . . . . . . . . . . . . . IV-3
Section 4.4 Restrictions on Owners' Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-3
Section 4.5 Majority Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-3
ARTICLE V
APPLICATION OF TRUST FUNDS; CERTAIN DUTIES
Section 5.1 Establishment of Trust Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-1
Section 5.2 Application Of Trust Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-1
Section 5.3 Method of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-2
Section 5.4 Segregation of Moneys; No Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . V-2
Section 5.5 Accounting and Reports to the Certificateholder, Owners, the
Internal Revenue Service and Others . . . . . . . . . . . . . . . . . . . . . . . . . . V-2
Section 5.6 Signature on Returns; Tax Matters Partner . . . . . . . . . . . . . . . . . . . . . . . . V-3
ARTICLE VI
AUTHORITY AND DUTIES OF OWNER TRUSTEE
Section 6.1 General Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-1
Section 6.2 General Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-1
Section 6.3 Action upon Instruction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-1
Section 6.4 No Duties Except as Specified in this Agreement, the
Transaction Documents or in Instructions . . . . . . . . . . . . . . . . . . . . . . VI-2
Section 6.5 No Action Except Under Specified Documents or Instructions . . . . . . . . . . . . . . VI-3
Section 6.6 Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-3
ARTICLE VII
CONCERNING THE OWNER TRUSTEE
Section 7.1 Acceptance of Trusts and Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII-1
Section 7.2 Furnishing of Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII-2
Section 7.3 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII-2
Section 7.4 Reliance; Advice of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII-3
Section 7.5 Not Acting in Individual Capacity. . . . . . . . . . . . . . . . . . . . . . . . . . . VII-4
Section 7.6 Owner Trustee Not Liable for Trust Certificates or Home Loans . . . . . . . . . . . . . VII-4
Section 7.7 Owner Trustee May Own Trust Certificates and Notes . . . . . . . . . . . . . . . . . . VII-4
Section 7.8 Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII-5
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Section 7.9 Rights of Co-Owner Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII-5
ARTICLE VIII
COMPENSATION OF OWNER TRUSTEE
Section 8.1 Owner Trustee's Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . VIII-1
Section 8.2 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VIII-1
Section 8.3 Payments to the Owner Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . VIII-1
ARTICLE IX
TERMINATION OF TRUST AGREEMENT
Section 9.1 Termination of Trust Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . IX-1
ARTICLE X
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
Section 10.1 Eligibility Requirements for Owner Trustee . . . . . . . . . . . . . . . . . . . . . . . X-1
Section 10.2 Resignation or Removal of Owner Trustee or Co-Owner Trustee . . . . . . . . . . . . . . . X-1
Section 10.3 Successor Owner Trustee or Co-Owner Trustee . . . . . . . . . . . . . . . . . . . . . . . X-2
Section 10.4 Merger or Consolidation of Owner Trustee . . . . . . . . . . . . . . . . . . . . . . . . X-3
Section 10.5 Appointment of Co-Owner Trustee or Separate Owner Trustee . . . . . . . . . . . . . . . . X-3
ARTICLE XI
MISCELLANEOUS
Section 11.1 Supplements and Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XI-1
Section 11.2 No Legal Title to Owner Trust Estate in Owners . . . . . . . . . . . . . . . . . . . . XI-2
Section 11.3 Limitations on Rights of Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . XI-2
Section 11.4 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XI-2
Section 11.5 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XI-3
Section 11.6 Separate Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XI-3
Section 11.7 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XI-3
Section 11.8 No Petition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XI-3
Section 11.9 Covenants of Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XI-3
Section 11.10 No Recourse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XI-3
Section 11.11 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XI-4
Section 11.12 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XI-4
Section 11.13 Certificate and Residual Interest Instrument Transfer
Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XI-4
Section 11.14 Grant of Certificateholder and Residual Interest Holder Rights
to Securities Insurer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XI-4
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Section 11.15 Third-Party Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XI-5
EXHIBIT A Form of Certificate
EXHIBIT B Form of Residual Interest Instrument
EXHIBIT C Form of Certificate of Trust
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TRUST AGREEMENT, dated as of February 1, 1997, among FINANCIAL ASSET
SECURITIES CORP., a Delaware corporation, as Depositor (the "Depositor"), MEGO
MORTGAGE CORPORATION, a Delaware corporation (the "Company"), WILMINGTON TRUST
COMPANY, a Delaware banking corporation, as Owner Trustee (the "Owner Trustee")
and FIRST TRUST OF NEW YORK, NATIONAL ASSOCIATION, as Co-Owner Trustee (the
"Co-Owner Trustee").
ARTICLE I
DEFINITIONS
Section 1.1 Capitalized Terms. For all purposes of this Agreement,
the following terms shall have the meanings set forth below:
"Agreement" shall mean this Trust Agreement, as the same may be
amended and supplemented from time to time.
"Administration Agreement" shall mean the Administration Agreement,
dated as of February 1, 1997 among the Issuer, the Company, and First Trust of
New York, National Association, as Administrator.
"Administrator" shall mean First Trust of New York, National
Association, or any successor in interest thereto, in its capacity as
Administrator under the Administration Agreement.
"Benefit Plan" shall have the meaning assigned to such term in Section
11.12.
"Business Trust Statute" shall mean Chapter 38 of Title 12 of the
Delaware Code, 12 Del. Code Section 3801 et seq., as the same may be amended
from time to time.
"Certificate" shall mean any Class S Certificate; a form of which is
attached hereto as Exhibit A.
"Certificate Distribution Account" shall have the meaning assigned to
such term in the Sale and Servicing Agreement.
"Certificate of Trust" shall mean the Certificate of Trust in the form
of Exhibit C to be filed for the Trust pursuant to Section 3810(a) of the
Business Trust Statute.
"Certificate Owner" shall mean, with respect to a Book-Entry
Certificate, the Person who is the beneficial owner of such Book-Entry
Certificate, as reflected on the books of the Clearing Agency, or on the books
of a Person maintaining an account with such Clearing
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Agency (directly as a Clearing Agency Participant or as an indirect
participant, in each case in accordance with the rules of such Clearing
Agency).
"Certificate Register" and "Certificate Registrar" shall mean the
register mentioned in, and the registrar appointed pursuant to, Section 3.4.
"Certificateholder" or "Holder" shall mean a Person in whose name a
Certificate is registered.
"Class Notional Amount" shall have the same meaning as set forth in
the Sale and Servicing Agreement with respect to "Class S Notional Amount".
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
Treasury Regulations promulgated thereunder.
"Co-Owner Trustee" shall mean First Trust of New York, National
Association.
"Company" shall mean Mego Mortgage Corporation, a Delaware
corporation.
"Corporate Trust Office" shall mean, with respect to the Owner
Trustee, the principal corporate trust office of the Owner Trustee located at
Xxxxxx Square North, 0000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx, XX 00000-0000,
Attention: Corporate Trust Administration; or at such other address in the
State of Delaware as the Owner Trustee may designate by notice to the Owners
and the Company, or the principal corporate trust office of any successor Owner
Trustee (the address (which shall be in the State of Delaware) of which the
successor owner trustee will notify the Owners and the Company).
"Definitive Certificates" means a certificated form of security that
represents a Certificate or a Residual Interest Instrument.
"ERISA" shall have the meaning assigned thereto in Section 11.12.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Expenses" shall have the meaning assigned to such term in Section
8.2.
"Indenture" shall mean the Indenture, dated as of February 1, 1997, by
and between the Issuer and the Indenture Trustee.
"Indenture Trustee" means First Trust of New York, National
Association, as Indenture Trustee under the Indenture.
"Insurance Agreement" shall mean the Insurance Agreement, dated as of
February 1, 1997, among the Issuer, the Depositor, the Affiliated Holder,
Greenwich Capital Financial
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Products, Inc., the Company as Seller, Servicer and Claims Administrator, the
Master Servicer, the Indenture Trustee as Indenture Trustee, Co- Owner Trustee
and Contract of Insurance Holder and the Securities Insurer.
"Issuer" shall mean Mego Mortgage Home Loan Owner Trust 1997-1, the
Delaware business trust created pursuant to this Agreement.
"Non-permitted Foreign Holder" shall have the meaning set forth in
Section 3.10.
"Non-U.S. Person" shall mean an individual, corporation, partnership
or other person other than a citizen or resident of the United States, a
corporation, partnership or other entity created or organized in or under the
laws of the United States or any political subdivision thereof, an estate that
is subject to U.S. federal income tax regardless of the source of its income,
or a trust if a court within the United States is able to exercise primary
supervision over the administration of the trust and one or more United States
trustees have authority to control all substantial decisions of the trust..
"Owner" shall mean each Holder of a Certificate and each holder of a
Residual Interest Instrument, as applicable.
"Owner Trust Estate" shall mean the contribution of $1 referred to in
Section 2.5 and the Trust Estate (as defined in the Indenture).
"Owner Trustee" shall mean Wilmington Trust Company, a Delaware
banking corporation, not in its individual capacity but solely as owner trustee
under this Agreement, and any successor owner trustee hereunder.
"Paying Agent" shall mean the Co-Owner Trustee or any successor in
interest thereto or any other paying agent or co-paying agent appointed
pursuant to Section 3.9 and authorized by the Issuer to make payments to and
distributions from the Certificate Distribution Account, including payment of
principal of or interest on the Certificates on behalf of the Issuer.
"Percentage Interest" shall mean with respect to any Certificate, the
portion of the Certificates as a whole evidenced by such single Certificate,
expressed as a percentage rounded to five decimal places, equivalent to a
fraction, the numerator of which is the denomination represented by such single
Certificate and the denominator of which is the original Class Notional Amount.
With respect to each Residual Interest Instrument, the percentage portion of
all of the Residual Interest evidenced thereby as stated on the face of such
Residual Interest Instrument.
"Prospective Owner" shall have the meaning set forth in Section
3.10(a).
"Rating Agency Condition" means, with respect to any action to which a
Rating Agency Condition applies, that each Rating Agency shall have been given
10 days (or such
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shorter period as is acceptable to each Rating Agency) prior notice thereof and
that each of the Rating Agencies shall have notified the Seller, the Servicer,
the Securities Insurer, the Owner Trustee, Co-Owner Trustee, and the Issuer in
writing that such action will not result in a reduction or withdrawal of the
then current rating of the Notes and Certificates.
"Record Date" shall mean as to each Distribution Date the last
Business Day of the month immediately preceding the month in which such
Distribution Date occurs.
"Residual Interest" shall mean the right to receive distributions of
Excess Spread, if any, and certain other funds, if any, on each Distribution
Date, pursuant to Sections 5.01(c) and 5.03 of the Sale and Servicing
Agreement.
"Residual Interest Instrument" shall mean an instrument substantially
in the form attached as Exhibit B hereto and evidencing the Residual Interest.
"Residual Interestholder" shall mean any Holder of a Percentage
Interest of the Residual Interest Instruments.
"Sale and Servicing Agreement" shall mean the Sale and Servicing
Agreement dated as of the date hereof, among the Trust as Issuer, the
Depositor, the Indenture Trustee as Indenture Trustee, Contract of Insurance
Holder and Co-Owner Trustee, Norwest Bank Minnesota, N.A., as Master Servicer,
and the Company, as Seller, Servicer and Claims Administrator.
"Secretary of State" shall mean the Secretary of State of the State of
Delaware.
"Securities Insurer" shall mean MBIA Insurance Corporation.
"Securities Insurer Default" shall mean the failure of the Securities
Insurer to make payments under the Guaranty Policy, if such failure has not
been remedied with ten (10) days of notice thereof, or the entry of an order or
decree with respect to the Securities Insurer in any insolvency or bankruptcy
proceedings which remain unstayed or undischarged for 90 days.
"Transaction Documents" shall have the meaning set forth in the Sale
and Servicing Agreement.
"Treasury Regulations" shall mean regulations, including proposed or
temporary regulations, promulgated under the Code. References herein to
specific provisions of proposed or temporary regulations shall include
analogous provisions of final Treasury Regulations or other successor Treasury
Regulations.
"Trust" shall mean the trust established by this Agreement.
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"Trust Certificates" shall mean the Certificates and the Residual
Interest Instruments, collectively.
"Underwriter" shall mean Greenwich Capital Markets, Inc.
Section 1.2 Other Definitional Provisions.
(a) Capitalized terms used herein and not otherwise
defined herein have the meanings assigned to them in the Sale and Servicing
Agreement or, if not defined therein, in the Indenture.
(b) All terms defined in this Agreement shall have the
defined meanings when used in any certificate or other document made or
delivered pursuant hereto unless otherwise defined therein.
(c) As used in this Agreement and in any certificate or
other document made or delivered pursuant hereto or thereto, accounting terms
not defined in this Agreement or in any such certificate or other document, and
accounting terms partly defined in this Agreement or in any such certificate or
other document to the extent not defined, shall have the respective meanings
given to them under generally accepted accounting principles. To the extent
that the definitions of accounting terms in this Agreement or in any such
certificate or other document are inconsistent with the meanings of such terms
under generally accepted accounting principles, the definitions contained in
this Agreement or in any such certificate or other document shall control.
(d) The words "hereof", "herein", "hereunder" and words
of similar import when used in this Agreement shall refer to this Agreement as
a whole and not to any particular provision of this Agreement; Section and
Exhibit references contained in this Agreement are references to Sections and
Exhibits in or to this Agreement unless otherwise specified; and the term
"including" shall mean "including without limitation".
(e) The definitions contained in this Agreement are
applicable to the singular as well as the plural forms of such terms and to the
masculine as well as to the feminine and neuter genders of such terms.
(f) Any agreement, instrument or statute defined or
referred to herein or in any instrument or certificate delivered in connection
herewith means such agreement, instrument or statute as from time to time
amended, modified or supplemented and includes (in the case of agreements or
instruments) references to all attachments thereto and instruments incorporated
therein; references to a Person are also to its permitted successors and
assigns.
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ARTICLE II
ORGANIZATION
Section 2.1 Name. The Trust created hereby shall be known as
"Mego Mortgage Home Loan Owner Trust 1997-1", in which name the Owner Trustee
may conduct the business of the Trust, make and execute contracts and other
instruments on behalf of the Trust and xxx and be sued.
Section 2.2 Office. The office of the Trust shall be in care of
the Owner Trustee at the Corporate Trust Office or at such other address in
Delaware as the Owner Trustee may designate by written notice to the Owners,
the Securities Insurer, and the Company.
Section 2.3 Purposes and Powers. (a) The purpose of the Trust
is to engage in the following activities:
(i) to issue the Notes pursuant to the Indenture
and the Certificates pursuant to this Agreement and to sell such Notes
and such Certificates;
(ii) with the proceeds of the sale of the Notes
and the Certificates, to fund start-up and transactional expenses of
the Trust and to pay the balance to the Depositor and the Company, as
their interests may appear pursuant to the Sale and Servicing
Agreement;
(iii) to assign, grant, transfer, pledge, mortgage
and convey the Trust Estate pursuant to the Indenture and to hold,
manage and distribute to the Owners pursuant to the terms of the Sale
and Servicing Agreement any portion of the Trust Estate released from
the lien of, and remitted to the Trust pursuant to, the Indenture;
(iv) to enter into and perform its obligations
under the Transaction Documents to which it is to be a party;
(v) to engage in those activities, including
entering into agreements, that are necessary, suitable or convenient
to accomplish the foregoing or are incidental thereto or connected
therewith;
(vi) subject to compliance with the Transaction
Documents, to engage in such other activities as may be required in
connection with conservation of the Owner Trust Estate and the making
of distributions to the Owners and the Noteholders; and
(vii) to issue the Residual Interest Instruments
pursuant to this Agreement.
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The Trust is hereby authorized to engage in the foregoing activities. The
Trust shall not engage in any activity other than in connection with the
foregoing or other than as required or authorized by the terms of this
Agreement or the Transaction Documents.
Section 2.4 Appointment of Owner Trustee. The Depositor hereby
appoints the Owner Trustee as trustee of the Trust effective as of the date
hereof, to have all the rights, powers and duties set forth herein.
Section 2.5 Initial Capital Contribution of Owner Trust Estate.
The Depositor hereby sells, assigns, transfers, conveys and sets over to the
Owner Trustee, as of the date hereof, the sum of $1. The Owner Trustee hereby
acknowledges receipt in trust from the Depositor, as of the date hereof, of the
foregoing contribution, which shall constitute the initial Owner Trust Estate
and shall be deposited in the Certificate Distribution Account. The Company
shall pay organizational expenses of the Trust as they may arise or shall, upon
the request of the Owner Trustee, promptly reimburse the Owner Trustee for any
such expenses paid by the Owner Trustee.
Section 2.6 Declaration of Trust. The Owner Trustee hereby
declares that it will hold the Owner Trust Estate in trust upon and subject to
the conditions set forth herein for the use and benefit of the Owners, subject
to the obligations of the Trust under the Transaction Documents. It is the
intention of the parties hereto that the Trust constitute a business trust
under the Business Trust Statute and that this Agreement constitute the
governing instrument of such business trust. It is the intention of the parties
hereto that, solely for income and franchise tax purposes, the Trust shall be
treated as a partnership, with the assets of the partnership being the Home
Loans and other assets held by the Trust, the partners of the partnership being
the holders of the Trust Certificates and the Notes being non-recourse debt of
the partnership. The parties agree that, unless otherwise required by
appropriate tax authorities, the Trust will file or cause to be filed annual or
other necessary returns, reports and other forms consistent with the
characterization of the Trust as a partnership for such tax purposes.
Effective as of the date hereof, the Owner Trustee shall have all rights,
powers and duties set forth herein and in the Business Trust Statute with
respect to accomplishing the purposes of the Trust.
Section 2.7 Title to Trust Property.
(a) Subject to the Indenture, legal title to all the
Owner Trust Estate shall be vested at all times in the Trust as a separate
legal entity except where applicable law in any jurisdiction requires title to
any part of the Owner Trust Estate to be vested in a trustee or trustees, in
which case title shall be deemed to be vested in the Owner Trustee, the
Co-Owner Trustee and/or a separate trustee, as the case may be.
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(b) The Owners shall not have legal title to any part of
the Owner Trust Estate. No transfer by operation of law or otherwise of any
interest of the Owners shall operate to terminate this Agreement or the trusts
hereunder or entitle any transferee to an accounting or to the transfer to it
of any part of the Owner Trust Estate.
Section 2.8 Situs of Trust. The Trust will be located and
administered in the state of Delaware. All bank accounts maintained by the
Owner Trustee on behalf of the Trust shall be located in the State of Delaware
or the State of New York, except with respect to the Co- Owner Trustee. The
Trust shall not have any employees; provided, however, that nothing herein
shall restrict or prohibit the Owner Trustee from having employees within or
without the State of Delaware. Payments will be received by the Trust only in
Delaware or New York, and payments will be made by the Trust only from Delaware
or New York, except with respect to the Co-Owner Trustee. The only office of
the Trust will be at the Corporate Trust Office in Delaware.
Section 2.9 Representations and Warranties of the Depositor and
the Company; Covenant of the Company.
(a) The Depositor hereby represents and warrants to the
Owner Trustee, the Co-Owner Trustee and the Securities Insurer that:
(i) The Depositor is a corporation duly
organized, validly existing, and in good standing under the laws of
the State of Delaware and has all licenses necessary to carry on its
business as now being conducted. The Depositor has the power and
authority to execute and deliver this Agreement and to perform in
accordance herewith; the execution, delivery and performance of this
Agreement (including all instruments of transfer to be delivered
pursuant to this Agreement) by the Depositor and the consummation of
the transactions contemplated hereby have been duly and validly
authorized by all necessary action of the Depositor; this Agreement
evidences the valid, binding and enforceable obligation of the
Depositor; and all requisite action has been taken by the Depositor to
make this Agreement valid, binding and enforceable upon the Depositor
in accordance with its terms, subject to the effect of bankruptcy,
insolvency, reorganization, moratorium and other, similar laws
relating to or affecting creditors' rights generally or the
application of equitable principles in any proceeding, whether at law
or in equity.;
(ii) The consummation of the transactions
contemplated by this Agreement will not result in (i) the breach of
any terms or provisions of the Articles of Incorporation or Bylaws of
the Depositor, (ii) the breach of any term or provision of, or
conflict with or constitute a default under or result in the
acceleration of any obligation under, any material agreement,
indenture or loan or credit agreement or other material instrument to
which the Depositor, or its property is subject, or (iii) the
violation of any law, rule, regulation, order, judgment or decree to
which the Depositor or its respective property is subject;
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(iii) The Depositor is not in default with respect
to any order or decree of any court or any order, regulation or demand
of any federal, state, municipal or other governmental agency, which
default might have consequences that would materially and adversely
affect the condition (financial or otherwise) or operations of the
Depositor or its properties or might have consequences that would
materially and adversely affect its performance hereunder.
(b) The Company hereby represents and warrants to the
Owner Trustee, the Co-Owner Trustee and the Securities Insurer that:
(i) The Company is duly organized and validly
existing as a corporation in good standing under the laws of the State
of Delaware, with power and authority to own its properties and to
conduct its business as such properties are currently owned and such
business is presently conducted.
(ii) The Company is duly qualified to do business
as a foreign corporation in good standing, and has obtained all
necessary licenses and approvals in all jurisdictions in which the
ownership or lease of property or the conduct of its business shall
require such qualifications.
(iii) The Company has the power and authority to
execute and deliver this Agreement and to carry out its terms; and the
execution, delivery and performance of this Agreement has been duly
authorized by the Company by all necessary corporate action.
(iv) The consummation of the transactions
contemplated by this Agreement and the fulfillment of the terms hereof
do not conflict with, result in any breach of any of the terms and
provisions of, or constitute (with or without notice or lapse of time)
a default under, the articles of incorporation or by-laws of the
Company, or any indenture, agreement or other instrument to which the
Company is a party or by which it is bound; nor result in the creation
or imposition of any lien upon any of its properties pursuant to the
terms of any such indenture, agreement or other instrument (other than
pursuant to the Transaction Documents); nor violate any law or, to the
best of the Company's knowledge, any order, rule or regulation
applicable to the Company of any court or of any Federal or state
regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Company or its
properties.
(v) There are no proceedings or investigations
pending or, to the Company's best knowledge, threatened, before any
court, regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Company or its
properties: (i) asserting the invalidity of this Agreement, (ii)
seeking to prevent the consummation of any of the transactions
contemplated by this Agreement or (iii) seeking any determination or
ruling that might materially and
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adversely affect the performance by the Company of its obligations
under, or the validity or enforceability of, this Agreement.
(c) The Company covenants with the Owner Trustee, the
Co-Owner Trustee and the Securities Insurer that during the continuance of this
Agreement it will comply in all respects with the provisions of its Certificate
of Incorporation in effect from time to time.
Section 2.10 Federal Income Tax Allocations. Net income of the
Trust for any month, as determined for Federal income tax purposes (and each
item of income, gain, loss and deduction entering into the computation
thereof), shall be allocated to the holders of the Residual Interest
Instruments, on a pro rata basis.
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ARTICLE III
TRUST CERTIFICATES AND TRANSFER OF INTERESTS
Section 3.1 Initial Ownership. Upon the formation of the Trust by
the contribution by the Depositor pursuant to Section 2.5 and until the
issuance of the Trust Certificates, the Depositor shall be the sole Owner of
the Trust.
Section 3.2 The Trust Certificates. The Certificates (other than
the Residual Interest) shall be issued in minimum denominations of $100,000
notional amount and in integral multiples of $1,000 in excess thereof. The
Residual Interest Instruments shall not be issued with a principal or notional
amount. The Trust Certificates shall be executed on behalf of the Trust by
manual or facsimile signature of a Trust Officer of the Owner Trustee or the
Administrator. Trust Certificates bearing the manual or facsimile signatures
of individuals who were, at the time when such signatures shall have been
affixed, authorized to sign on behalf of the Trust, shall be valid and binding
obligations of the Trust, notwithstanding that such individuals or any of them
shall have ceased to be so authorized prior to the authentication and delivery
of such Trust Certificates or did not hold such offices at the date of
authentication and delivery of such Trust Certificates.
A transferee of a Trust Certificate shall become an Owner, and shall
be entitled to the rights and subject to the obligations of an Owner hereunder
and under the Sale and Servicing Agreement, upon such transferee's acceptance
of a Trust Certificate duly registered in such transferee's name pursuant to
Section 3.4.
Section 3.3 Execution, Authentication and Delivery of Trust
Certificates. Concurrently with the sale of the Home Loans to the Trust
pursuant to the Sale and Servicing Agreement, the Owner Trustee shall cause the
Certificates, in an aggregate notional amount equal to the initial Class
Notional Amount of the Certificates, and the Residual Interest Instruments
representing 100% of the Percentage Interests of the Residual Interest to be
executed on behalf of the Trust, authenticated and delivered to or upon the
written order of the Depositor, signed by its chairman of the board, its
president or any vice president, without further corporate action by the
Depositor, in authorized denominations. No Trust Certificate shall entitle its
holder to any benefit under this Agreement, or shall be valid for any purpose,
unless there shall appear on such Trust Certificate a certificate of
authentication substantially in the form set forth in Exhibits A and B,
executed by the Owner Trustee or the Administrator, as the Owner Trustee's
authenticating agent, by manual or facsimile signature; such authentication
shall constitute conclusive evidence that such Trust Certificate shall have
been duly authenticated and delivered hereunder. All Trust Certificates shall
be dated the date of their authentication.
Section 3.4 Registration of Transfer and Exchange of Trust
Certificates. The Certificate Registrar shall keep or cause to be kept, at the
office or agency maintained pursuant to Section 3.8, a Certificate Register in
which, subject to such reasonable regulations
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as it may prescribe, the Owner Trustee shall provide for the registration of
Trust Certificates and of transfers and exchanges of Trust Certificates as
herein provided. The Administrator shall be the initial Certificate Registrar.
Upon surrender for registration of transfer of any Trust Certificate
at the office or agency maintained pursuant to Section 3.8, the Owner Trustee
shall execute, authenticate and deliver (or shall cause the Administrator as
its authenticating agent to authenticate and deliver), in the name of the
designated transferee or transferees, one or more new Trust Certificates in
authorized denominations of a like aggregate amount dated the date of
authentication by the Owner Trustee or any authenticating agent. At the option
of an Owner, Trust Certificates may be exchanged for other Trust Certificates
of authorized denominations of a like aggregate amount upon surrender of the
Trust Certificates to be exchanged at the office or agency maintained pursuant
to Section 3.8.
Every Trust Certificate presented or surrendered for registration of
transfer or exchange shall be accompanied by a written instrument of transfer
in form satisfactory to the Owner Trustee and the Certificate Registrar duly
executed by the Owner or his attorney duly authorized in writing. In addition,
each Residual Interest Instrument presented or surrendered for registration of
transfer and exchange must be accompanied by a letter from the Prospective
Owner certifying as to the representations set forth in Sections 3.10(a) and
(b). Each Trust Certificate surrendered for registration of transfer or
exchange shall be canceled and disposed of by the Owner Trustee in accordance
with its customary practice.
No service charge shall be made for any registration of transfer or
exchange of Trust Certificates, but the Owner Trustee or the Certificate
Registrar may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer or
exchange of Trust Certificates.
The preceding provisions of this Section notwithstanding, the Owner
Trustee shall not make and the Certificate Registrar shall not register
transfer or exchanges of Trust Certificates for a period of 15 days preceding
the due date for any payment with respect to the Trust Certificates.
Section 3.5 Mutilated, Destroyed, Lost or Stolen Trust
Certificates. If (a) any mutilated Trust Certificate shall be surrendered to
the Certificate Registrar, or if the Certificate Registrar shall receive
evidence to its satisfaction of the destruction, loss or theft of any Trust
Certificate and (b) there shall be delivered to the Certificate Registrar and
the Owner Trustee such security or indemnity as may be required by them to save
each of them harmless, then in the absence of notice that such Trust
Certificate shall have been acquired by a bona fide purchaser, the Owner
Trustee on behalf of the Trust shall execute and the Owner Trustee, or the
Administrator as the Owner Trustee's authenticating agent, shall authenticate
and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost
or stolen Trust Certificate, a new Trust Certificate of like tenor and
denomination. In connection with the issuance of any new Trust Certificate
under this Section, the Owner Trustee or the Certificate
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Registrar may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection therewith. Any duplicate
Trust Certificate issued pursuant to this Section shall constitute conclusive
evidence of ownership in the Trust, as if originally issued, whether or not the
lost, stolen or destroyed Trust Certificate shall be found at any time.
Section 3.6 Persons Deemed Owners. Prior to due presentation of
a Trust Certificate for registration of transfer, the Owner Trustee or the
Certificate Registrar may treat the Person in whose name any Trust Certificate
shall be registered in the Certificate Register as the owner of such Trust
Certificate for the purpose of receiving distributions pursuant to Section 5.2
and for all other purposes whatsoever, and neither the Owner Trustee nor the
Certificate Registrar shall be bound by any notice to the contrary.
Section 3.7 Access to List of Owners' Names and Addresses. The
Certificate Registrar shall furnish or cause to be furnished to the Master
Servicer, the Servicer, the Depositor and the Indenture Trustee within 15 days
after receipt by the Owner Trustee of a request therefor from the Master
Servicer, the Servicer, the Depositor or the Indenture Trustee in writing, a
list, in such form as the Master Servicer, the Servicer, the Depositor or the
Indenture Trustee may reasonably require, of the names and addresses of the
Owners as of the most recent Record Date. If three or more Certificateholders
or one or more Holders of Certificates together evidencing not less than a 25%
Percentage Interest in the Certificates apply in writing to the Owner Trustee,
and such application states that the applicants desire to communicate with
other Certificateholders with respect to their rights under this Agreement or
under the Certificates and such application is accompanied by a copy of the
communication that such applicants propose to transmit, then the Owner Trustee
shall, within five Business Days after the receipt of such application, afford
such applicants access during normal business hours to the current list of
Certificateholders. Each Owner, by receiving and holding a Trust Certificate,
shall be deemed to have agreed not to hold any of the Depositor, the Company,
the Certificate Registrar or the Owner Trustee accountable by reason of the
disclosure of its name and address, regardless of the source from which such
information was derived.
Section 3.8 Maintenance of Office or Agency. The Owner Trustee
shall maintain an office or offices or agency or agencies where Trust
Certificates may be surrendered for registration of transfer or exchange and
where notices and demands to or upon the Owner Trustee in respect of the Trust
Certificates and the Transaction Documents may be served. The Owner Trustee
initially designates the Administrator's office in St. Xxxx, Minnesota as its
principal corporate trust office for such purposes. The Owner Trustee shall
give prompt written notice to the Company and to the Certificateholders of any
change in the location of the Certificate Register or any such office or
agency.
Section 3.9 Appointment of Paying Agent. The Owner Trustee
hereby appoints the Co-Owner Trustee as Paying Agent under this Agreement. The
Paying Agent shall make distributions to Certificateholders and Residual
Interestholders from the Certificate
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Distribution Account pursuant to Section 5.2 hereof and Section 5.01 of the
Sale and Servicing Agreement and shall report the amounts of such distributions
to the Owner Trustee. The Paying Agent shall have the revocable power to
withdraw funds from the Certificate Distribution Account for the purpose of
making the distributions referred to above. In the event that the Co-Owner
Trustee shall no longer be the Paying Agent hereunder, the Owner Trustee shall
appoint a successor to act as Paying Agent (which shall be a bank or trust
company) acceptable to the Securities Insurer. The Owner Trustee shall cause
such successor Paying Agent or any additional Paying Agent appointed by the
Owner Trustee to execute and deliver to the Owner Trustee an instrument in
which such successor Paying Agent or additional Paying Agent shall agree with
the Owner Trustee that as Paying Agent, such successor Paying Agent or
additional Paying Agent will hold all sums, if any, held by it for payment to
the Owners in trust for the benefit of the Certificateholders and Residual
Interestholders entitled thereto until such sums shall be paid to such Owners.
The Paying Agent shall return all unclaimed funds to the Owner Trustee, and
upon removal of a Paying Agent, such Paying Agent shall also return all funds
in its possession to the Owner Trustee. The provisions of Sections 7.1, 7.3,
7.4 and 8.1 shall apply to the Co- Owner Trustee also in its role as Paying
Agent, for so long as the Co-Owner Trustee shall act as Paying Agent and, to
the extent applicable, to any other paying agent appointed hereunder. Any
reference in this Agreement to the Paying Agent shall include any co-paying
agent unless the context requires otherwise. Notwithstanding anything herein
to the contrary, the Co-Owner Trustee and the Paying Agent shall be the same
entity as the Indenture Trustee under the Indenture and the Sale and Servicing
Agreement, unless a Securities Insurer Default has occurred and is continuing.
In such event, the Co-Owner Trustee and the Paying Agent shall resign and the
Owner Trustee shall assume the duties and obligations of the Co-Owner Trustee
and the Paying Agent hereunder and under the Sale and Servicing Agreement;
provided, however, that the Indenture Trustee shall continue to perform its
duties as Contract of Insurance Holder under the Sale and Servicing Agreement.
In addition, in such event, the Indenture Trustee shall agree to continue to
make claims under the Guaranty Policy on behalf of the Owner Trustee for the
benefit of the Certificateholders pursuant to the Sale and Servicing Agreement.
Section 3.10 Restrictions on Transfer of Trust Certificates.
(a) Neither any Certificate nor any Residual Interest
Instrument may be acquired, by or for the account of (i) an employee
benefit plan (as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")) that is subject to
the provisions of Title I of ERISA, (ii) a plan described in Section
4975(e)(1) of the Internal Revenue Code of 1986, as amended, or (iii)
any entity, including an insurance company separate account or general
account, whose underlying assets include plan assets by reason of a
plan's investment in the entity (each, a "Benefit Plan"). By
accepting and holding a Trust Certificate, the Owner thereof shall be
deemed to have represented and warranted that it is not a Benefit
Plan.
(b) Each prospective purchaser and any subsequent
transferee of a Trust Certificate (each, a "Prospective Owner"), other
than the Company or a wholly-owned
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subsidiary of the Company, shall represent and warrant, in writing, to
the Owner Trustee and the Certificate Registrar and any of their
respective successors that:
(i) Such Person is (A) a "qualified institutional
buyer" as defined in Rule 144A under the Securities Act of
1933, as amended (the "Securities Act"), and is aware that the
seller of such Trust Certificate may be relying on the
exemption from the registration requirements of the Securities
Act provided by Rule 144A and is acquiring such Trust
Certificate for its own account or for the account of one or
more qualified institutional buyers for whom it is authorized
to act, or (B) a Person involved in the organization or
operation of the Trust or an affiliate of such Person within
the meaning of Rule 3a-7 of the Investment Company Act of
1940, as amended (including, but not limited to, the Seller or
the Company).
(ii) Such Person understands that such Trust
Certificate has not been and will not be registered under the
Securities Act and may be offered, sold, pledged or otherwise
transferred only to a person whom the seller reasonably
believes is (A) a qualified institutional buyer or (B) a
Person involved in the organization or operation of the Trust
or an affiliate of such Person, in a transaction meeting the
requirements of Rule 144A under the Securities Act and in
accordance with any applicable securities laws of any state of
the United States.
(iii) Such Person understands that each Trust
Certificate bears a legend to the following effect:
"[THE RESIDUAL INTEREST IN THE TRUST REPRESENTED BY
THIS RESIDUAL INTEREST INSTRUMENT] [THIS CERTIFICATE]
HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
ANY STATE SECURITIES LAWS. THIS [RESIDUAL INTEREST]
[CERTIFICATE] MAY BE DIRECTLY OR INDIRECTLY OFFERED
OR SOLD OR OTHERWISE DISPOSED OF (INCLUDING PLEDGED)
BY THE HOLDER HEREOF ONLY TO (I) A "QUALIFIED
INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER
THE ACT, IN A TRANSACTION THAT IS REGISTERED UNDER
THE ACT AND APPLICABLE STATE SECURITIES LAWS OR THAT
IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE
ACT PURSUANT TO RULE 144A OR [(II) A PERSON INVOLVED
IN THE ORGANIZATION OR OPERATION OF THE TRUST OR AN
AFFILIATE OF SUCH A PERSON WITHIN THE MEANING OF RULE
3a-7 OF THE
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INVESTMENT COMPANY ACT OF 1940], AS AMENDED
(INCLUDING, BUT NOT LIMITED TO, MEGO MORTGAGE
CORPORATION) IN A TRANSACTION THAT IS REGISTERED
UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS OR
THAT IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF
THE ACT AND SUCH LAWS. NO PERSON IS OBLIGATED TO
REGISTER THIS RESIDUAL INTEREST INSTRUMENT UNDER THE
ACT OR ANY STATE SECURITIES LAWS."
(iv) Such Person shall comply with the provisions
of Section 3.10(b), as applicable, relating to the ERISA
restrictions with respect to the acceptance or acquisition of
such Residual Interest Instrument.
(c) Each Prospective Owner, other than the Company, shall
either:
(i) represent and warrant, in writing, to the
Owner Trustee and the Certificate Registrar and any of their
respective successors that the Prospective Owner is not (A) an
"employee benefit plan" within the meaning of Section 3(3) of
the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), or (B) a "plan" within the meaning of
Section 4975(e)(1) of the Code (any such plan or employee
benefit plan, a "Plan") or (C) any entity, including an
insurance company separate account or general account, whose
underlying assets include plan assets by reason of a plan's
investment in the entity and is not directly or indirectly
purchasing such Trust Certificate on behalf of, as investment
manager of, as named fiduciary of, as trustee of, or with
assets of a Plan; or
(ii) furnish to the Owner Trustee and the
Certificate Registrar and any of their respective successors
an opinion of counsel acceptable to such persons that (A) the
proposed issuance or transfer of such Trust Certificate to
such Prospective Owner will not cause any assets of the Trust
to be deemed assets of a Plan, or (B) the proposed issuance or
transfer of such Trust Certificate will not cause the Owner
Trustee or the Certificate Registrar or any of their
respective successors to be a fiduciary of a Plan within the
meaning of Section 3(21) of ERISA and will not give rise to a
transaction described in Section 406 of ERISA or Section
4975(c)(1) of the Code for which a statutory or administrative
exemption is unavailable.
(d) By its acceptance of a Residual Interest Instrument, each
Prospective Owner agrees and acknowledges that no legal or beneficial interest
in all or any portion of the Residual Interest Instruments may be transferred
directly or indirectly to an individual, corporation, partnership or other
person unless such transferee is not a Non-U.S. Person (any
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such person being referred to herein as a "Non-permitted Foreign Holder"), and
any such purported transfer shall be void and have no effect.
(e) Neither The Owner Trustee nor the Administrator shall execute,
or countersign and deliver, any Trust Certificate in connection with any
transfer thereof unless the transferor shall have provided to the Owner Trustee
or the Administrator a certificate, substantially in the form attached as
Exhibit D to this Agreement, signed by the transferee or a Non-permitted
Foreign Holder, which certificate shall contain the consent of the transferee
to any amendments of this Agreement as may be required to effectuate further
the foregoing restrictions on transfer of any Trust Certificate to
Non-permitted Foreign Holders, and an agreement by the transferee that it will
not transfer any Trust Certificate without providing to Certificate Registrar
on behalf of the Owner Trustee a certificate substantially in the form attached
as Exhibit D to this Agreement.
(f) Each Trust Certificate shall bear an additional legend
referring to the foregoing restrictions contained in paragraphs (c) and (d)
above.
(g) The Prospective Owner of a Residual Interest Instrument shall
obtain an opinion of counsel to the effect that, as a matter of Federal income
tax law, such Prospective Owner is permitted to accept the transfer of a
Residual Interest Instrument.
(h) The Residual Interest Instrument may not be transferred
without an Opinion of Counsel to the effect that such transfer would not
jeopardize the tax treatment of the Trust, would not subject the Trust to an
entity-level tax, and would not jeopardize the status of the Notes as debt for
all purposes.
(i) The Trust Certificates shall not be listed for trading on an
established securities market, nor be readily tradeable on a secondary market,
nor be transferable through the substantial equivalent of a secondary market,
nor shall the Issuer be permitted to have more than 100 partners, for income
tax purposes, all within the meaning of Code Section 7704, and its attendant
regulations, as applicable. If requested, in the discretion of the Owner
Trustee, transfer of a Trust Certificate shall be made only if accompanied by
an opinion of counsel satisfactory to the Owner Trustee or the Co-Owner
Trustee, which opinion of counsel shall not be an expense of the Issuer, the
Owner Trustee, the Servicer or the Seller, to the effect such transfer will not
cause the Issuer to be a publicly traded partnership taxable as a corporation
and will not cause the termination of the Issuer under the federal income tax
rules applicable to partnerships.
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ARTICLE IV
ACTIONS BY OWNER TRUSTEE
Section 4.1 Prior Notice to Owners with Respect to Certain
Matters. With respect to the following matters, the Owner Trustee shall not
take action, and the Owners shall not direct the Owner Trustee to take any
action, unless at least 30 days before the taking of such action, the Owner
Trustee shall have notified the Owners and the Securities Insurer in writing of
the proposed action and the Owners and/or the Securities Insurer shall not have
notified the Owner Trustee in writing prior to the 30th day after such notice
is given that such Owners and/or the Securities Insurer have withheld consent
or the Owners have provided alternative direction (any direction by the Owners
shall require the prior consent of the Securities Insurer):
(a) the initiation of any claim or lawsuit by the Trust
(except claims or lawsuits brought in connection with the collection of the
Home Loans) and the compromise of any action, claim or lawsuit brought by or
against the Trust (except with respect to the aforementioned claims or lawsuits
for collection of the Home Loans);
(b) the election by the Trust to file an amendment to the
Certificate of Trust (unless such amendment is required to be filed under the
Business Trust Statute);
(c) the amendment or other change to this Agreement or
any Transaction Document in circumstances where the consent of any Noteholder
or the Securities Insurer is required;
(d) the amendment or other change to this Agreement or
any Transaction Document in circumstances where the consent of any Noteholder
or the Securities Insurer is not required and such amendment materially
adversely affects the interest of the Owners;
(e) the appointment pursuant to the Indenture of a
successor Note Registrar, Paying Agent or Indenture Trustee or pursuant to this
Agreement of a successor Certificate Registrar, or the consent to the
assignment by the Note Registrar, Paying Agent or Indenture Trustee or
Certificate Registrar of its obligations under the Indenture or this Agreement,
as applicable.
(f) the consent to the calling or waiver of any default
of any Transaction Document;
(g) the consent to the assignment by the Indenture
Trustee, the Master Servicer or Servicer of their respective obligations under
any Transaction Document;
(h) except as provided in Article IX hereof, dissolve,
terminate or liquidate the Trust in whole or in part;
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(i) merge or consolidate the Trust with or into any other
entity, or convey or transfer all or substantially all of the Trust's assets to
any other entity;
(j) cause the Trust to incur, assume or guaranty any
indebtedness other than the Notes, as set forth in this Agreement;
(k) do any act that conflicts with any other Transaction
Document;
(l) do any act which would make it impossible to carry on
the ordinary business of the Trust;
(m) confess a judgment against the Trust;
(n) possess Trust assets, or assign the Trust's right to
property, for other than a Trust purpose;
(o) cause the Trust to lend any funds to any entity; or
(p) change the Trust's purpose and powers from those set
forth in this Trust Agreement.
In addition the Trust shall not commingle its assets with those of any
other entity. The Trust shall maintain its financial and accounting books and
records separate from those of any other entity. Except as expressly set forth
herein, the Trust shall pay its indebtedness, operating expenses from its own
funds, and the Trust shall not pay the indebtedness, operating expenses and
liabilities of any other entity. The Trust shall maintain appropriate minutes
or other records of all appropriate actions and shall maintain its office
separate from the offices of the Company, the Depositor, and any of their
respective affiliates. This Agreement is and shall be the only agreement among
the parties hereto with respect to the creation, operation and termination of
the Trust. For accounting purposes, the Trust shall be treated as an entity
separate and distinct from any Owner. The pricing and other material terms of
all transactions and agreements to which the Trust is a party shall be
intrinsically fair to all parties thereto.
The Owner Trustee shall not have the power, except upon the direction
of the Majority Securityholders with the consent of the Securities Insurer, and
to the extent otherwise consistent with the Transaction Documents, to (i)
remove or replace the Master Servicer, the Servicer or the Indenture Trustee,
(ii) institute proceedings to have the Trust declared or adjudicated a bankrupt
or insolvent, (iii) consent to the institution of bankruptcy or insolvency
proceedings against the Trust, (iv) file a petition or consent to a petition
seeking reorganization or relief on behalf of the Trust under any applicable
federal or state law relating to bankruptcy, (v) consent to the appointment of
a receiver, liquidator, assignee, trustee, sequestrator (or any similar
official) of the Trust or a substantial portion of the property of the Trust,
(vi) make any assignment for the benefit of the Trust's creditors,
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(vii) cause the Trust to admit in writing its inability to pay its debts
generally as they become due, or (viii) take any action, or cause the Trust to
take any action, in furtherance of any of the foregoing (any of the above, a
"Bankruptcy Action"). So long as the Indenture and the Insurance Agreement
remain in effect and no Securities Insurer Default exists, no Certificateholder
or Residual Interestholder shall have the power to take, and shall not take,
any Bankruptcy Action with respect to the Trust or direct the Owner Trustee to
take any Bankruptcy Action with respect to the Trust.
Section 4.2 Action by Owners with Respect to Certain Matters.
The Owner Trustee shall not have the power, except upon the direction of the
Owners and the consent of the Securities Insurer, to (a) remove the
Administrator pursuant to the Administration Agreement, (b) appoint a successor
Administrator pursuant to the Administration Agreement, (c) remove the Master
Servicer pursuant to the Sale and Servicing Agreement, (d) remove the Servicer
pursuant to the Servicing Agreement, or (e) sell the Home Loans after the
termination of the Indenture. The Owner Trustee shall take the actions
referred to in the preceding sentence only upon written instructions signed by
the Owners and only after obtaining the consent of the Securities Insurer.
Section 4.3 Action by Owners with Respect to Bankruptcy. The
Owner Trustee shall not have the power to commence a voluntary proceeding in
bankruptcy relating to the Trust without the consent and approval of the
Securities Insurer, the unanimous prior approval of all Owners and the
Securities Insurer and the delivery to the Owner Trustee by each such Owner of
a certificate certifying that such Owner reasonably believes that the Trust is
insolvent.
Section 4.4 Restrictions on Owners' Power. The Owners shall not
direct the Owner Trustee to take or refrain from taking any action if such
action or inaction would be contrary to any obligation of the Trust or the
Owner Trustee under this Agreement or any of the Transaction Documents or would
be contrary to Section 2.3 nor shall the Owner Trustee be obligated to follow
any such direction, if given.
Section 4.5 Majority Control. Except as expressly provided
herein, any action that may be taken by the Owners under this Agreement may be
taken by (i) the Holders of Certificates evidencing more than a 50% Percentage
Interest in the Certificates and (ii) the Majority Residual Interestholders.
Except as expressly provided herein, any written notice of the Owners delivered
pursuant to this Agreement shall be effective if signed by Holders of
Certificates evidencing (i) more than a 50% Percentage Interest in the
Certificates and (ii) the Majority Residual Interestholders at the time of the
delivery of such notice.
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ARTICLE V
APPLICATION OF TRUST FUNDS; CERTAIN DUTIES
Section 5.1 Establishment of Trust Account. The Owner Trustee
shall cause the Indenture Trustee, to establish and maintain with First Trust
of New York, National Association for the benefit of the Owner Trustee or
Co-Owner Trustee one or more Eligible Accounts which while the Co-Owner Trustee
holds such Trust Account shall be entitled "CERTIFICATE DISTRIBUTION ACCOUNT,
FIRST TRUST OF NEW YORK, NATIONAL ASSOCIATION, AS CO-OWNER TRUSTEE, IN TRUST
FOR THE MEGO MORTGAGE HOME LOAN ASSET BACKED SECURITIES, SERIES 1997-1". Funds
shall be deposited in the Certificate Distribution Account as required by the
Sale and Servicing Agreement.
All of the right, title and interest of the Co-Owner Trustee or Owner
Trustee in all funds on deposit from time to time in the Certificate
Distribution Account and in all proceeds thereof shall be held for the benefit
of the Owners, the Securities Insurer and such other persons entitled to
distributions therefrom. Except as otherwise expressly provided herein or in
the Sale and Servicing Agreement, the Certificate Distribution Account shall be
under the sole dominion and control of the Owner Trustee or Co-Owner Trustee
for the benefit of the Owners, the Securities Insurer and the Servicer.
In addition to the foregoing, the Certificate Distribution Account is
a Trust Account under the Sale and Servicing Agreement and constitutes part of
the Trust Estate pledged by the Trust to the Indenture Trustee under the
Indenture. The Certificate Distribution Account shall be subject to and
established and maintained in accordance with the applicable provisions of the
Sale and Servicing Agreement and the Indenture, including, without limitation,
the provisions of Sections 5.01(c) and 5.03 of the Sale and Servicing Agreement
regarding distributions from the Certificate Distribution Account.
The Company agrees to direct and shall have the sole authority to
direct the Owner Trustee or Co-Owner Trustee, or their successor in interest,
as to the Permitted Investments in which the funds on deposit in the Trust
Accounts (as such term is defined in the Sale and Servicing Agreement) may be
invested.
Section 5.2 Application Of Trust Funds.
(a) On each Distribution Date, the Owner Trustee or
Co-Owner Trustee shall direct the Paying Agent to make the distributions and
payments set forth in Sections 5.01(c) and 5.03 of the Sale and Servicing
Agreement from amounts on deposit in the Note Distribution Account and the
Certificate Distribution Account, respectively.
(b) On or before the third Business Day following each
Distribution Date, the Owner Trustee shall cause the Paying Agent to send to
each Owner the Statement to
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Securityholders prepared pursuant to Section 6.02 of the Sale and Servicing
Agreement with respect to such Distribution Date.
(c) In the event that any withholding tax is imposed on
the Trust's payment (or allocations of income) to an Owner, such tax shall
reduce the amount otherwise distributable to the Owner in accordance with this
Section. The Owner Trustee is hereby authorized and directed to retain from
amounts otherwise distributable to the Owners sufficient funds for the payment
of any tax that is legally owed by the Trust (but such authorization shall not
prevent the Owner Trustee from contesting any such tax in appropriate
proceedings, and withholding payment of such tax, if permitted by law, pending
the outcome of such proceedings). The amount of any withholding tax imposed
with respect to an Owner shall be treated as cash distributed to such Owner at
the time it is withheld by the Trust and remitted to the appropriate taxing
authority. If there is a possibility that withholding tax is payable with
respect to a distribution (such as a distribution to a non-U.S. Owner), the
Owner Trustee may in its sole discretion withhold such amounts in accordance
with this paragraph (c). In the event that an Owner wishes to apply for a
refund of any such withholding tax, the Owner Trustee shall reasonably
cooperate with such owner in making such claim so long as such Owner agrees to
reimburse the Owner Trustee for any out-of-pocket expenses incurred.
Section 5.3 Method of Payment. Distributions required to be made
to Owners on any Distribution Date shall be made to each Owner of record on the
preceding Record Date in the manner set forth in Section 5.03 of the Sale and
Servicing Agreement.
Section 5.4 Segregation of Moneys; No Interest. Subject to
Sections 4.1 and 5.2, moneys received by the Owner Trustee hereunder and
deposited into the Certificate Distribution Account will be segregated except
to the extent required otherwise by law or the Sale and Servicing Agreement and
shall be invested in Permitted Investments at the direction of the Company.
The Owner Trustee shall not be liable for payment of any interest in respect of
such moneys.
Section 5.5 Accounting and Reports to the Certificateholder,
Owners, the Internal Revenue Service and Others. The Owner Trustee shall (a)
maintain (or cause to be maintained) the books of the Trust on a calendar year
basis on the accrual method of accounting, and such books shall be maintained
separate from those of any other entity and reflect the separate interest of
the Trust, (b) deliver to each Owner, as may be required by the Code and
applicable Treasury Regulations, such information as may be required to enable
each Owner to prepare its federal and state income tax returns, (c) file such
tax return relating to the Trust (including a partnership information return,
IRS Form 1065), and make such elections as may from time to time be required or
appropriate under any applicable state or Federal statute or rule or regulation
thereunder so as to maintain the Trust's characterization as a partnership for
Federal income tax purposes, (d) cause such tax returns to be signed in the
manner required by law and (e) collect or cause to be collected any withholding
tax as described in and in accordance with Section 5.2(c) with respect to
income or distributions to Owners. The Owner Trustee shall elect under Section
1278 of the Code to include in income
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currently any market discount that accrues with respect to the Home Loans. The
Owner Trustee shall not make the election provided under Section 754 of the
Code.
Section 5.6 Signature on Returns.
The Owner Trustee shall sign on behalf of the Trust the tax
returns of the Trust, unless applicable law requires an Owner to sign such
documents, in which case such documents shall be signed by the Company.
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ARTICLE VI
AUTHORITY AND DUTIES OF OWNER TRUSTEE
Section 6.1 General Authority. The Owner Trustee is authorized
and directed to execute and deliver or cause to be executed and delivered the
Notes, the Trust Certificates and the Transaction Documents to which the Trust
is to be a party and each certificate or other document attached as an exhibit
to or contemplated by the Transaction Documents to which the Trust is to be a
party and any amendment or other agreement or instrument described in Article
III, in each case, in such form as the Company shall approve, as evidenced
conclusively by the Owner Trustee's execution thereof, and, on behalf of the
Trust, to direct the Indenture Trustee to authenticate and deliver Classes of
Notes in the following aggregate principal amounts: Class A-1 Notes,
$23,300,000; Class A-2 Notes, $25,950,000; Class A-3 Notes, $10,300,000; and
Class A-4 Notes, $26,603,605. The Administrator on behalf of the Owner Trustee
shall authenticate and deliver the Certificates and the Residual Interest
Instruments. In addition to the foregoing, the Owner Trustee is authorized, but
shall not be obligated, to take all actions required of the Trust, pursuant to
the Transaction Documents.
Section 6.2 General Duties. It shall be the duty of the Owner
Trustee:
(a) to discharge (or cause to be discharged) all of its
responsibilities pursuant to the terms of this Agreement and the Transaction
Documents to which the Trust is a party and to administer the Trust in the
interest of the Owners, subject to the Transaction Documents and in accordance
with the provisions of this Agreement. Notwithstanding the foregoing, the
Owner Trustee shall be deemed to have discharged its duties and
responsibilities hereunder and under the Transaction Documents to the extent
the Administrator or the Co-Owner Trustee has agreed in the Administration
Agreement or this Agreement, respectively, to perform any act or to discharge
any duty of the Owner Trustee or the Trust hereunder or under any Transaction
Document, and the Owner Trustee shall not be held liable for the default or
failure of the Administrator or the Co-Owner Trustee to carry out its
obligations under the Administration Agreement or this Agreement, respectively;
and
(b) to obtain and preserve, the Issuer's qualification to
do business in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of the Indenture, the
Notes, the Trust Estate and each other instrument and agreement included in the
Trust Estate.
Section 6.3 Action upon Instruction.
(a) Subject to Article IV and in accordance with the
terms of the Transaction Documents, the Owners may by written instruction
direct the Owner Trustee in the management of the Trust but only to the extent
consistent with the limited purpose of the Trust. Such direction may be
exercised at any-time by written instruction of the Owners pursuant to Article
IV.
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(b) The Owner Trustee shall not be required to take any
action hereunder or under any Transaction Document if the Owner Trustee shall
have reasonably determined, or shall have been advised by counsel, that such
action is likely to result in liability on the part of the Owner Trustee or is
contrary to the terms hereof or of any Transaction Document or is otherwise
contrary to law.
(c) Whenever the Owner Trustee is unable to decide
between alternative courses of action permitted or required by the terms of
this Agreement or under any Transaction Document, the Owner Trustee shall
promptly give notice (in such form as shall be appropriate under the
circumstances) to the Owners and the Securities Insurer requesting instruction
from the Owners as to the course of action to be adopted, and to the extent the
Owner Trustee acts in good faith in accordance with any written instruction of
the Owners received, the Owner Trustee shall not be liable on account of such
action to any Person. If the Owner Trustee shall not have received appropriate
instruction within 10 days of such notice (or within such shorter period of
time as reasonably may be specified in such notice or may be necessary under
the circumstances) it may, but shall be under no duty to, take or refrain from
taking such action, not inconsistent with this Agreement or the Transaction
Documents, as it shall deem to be in the best interests of the Owners, and
shall have no liability to any Person for such action or inaction.
(d) In the event that the Owner Trustee is unsure as to
the application of any provision of this Agreement or any Transaction Document
or any such provision is ambiguous as to its application, or is, or appears to
be, in conflict with any other applicable provision, or in the event that this
Agreement permits any determination by the Owner Trustee or is silent or is
incomplete as to the course of action that the Owner Trustee is required to
take with respect to a particular set of facts, the Owner Trustee may give
notice (in such form as shall be appropriate under the circumstances) to the
Owners requesting instruction and, to the extent that the Owner Trustee acts or
refrains from acting in good faith in accordance with any such instruction
received, the Owner Trustee shall not be liable, on account of such action or
inaction, to any Person. If the Owner Trustee shall not have received
appropriate instruction within 10 days of such notice (or within such shorter
period of time as reasonably may be specified in such notice or may be
necessary under the circumstances) it may, but shall be under no duty to, take
or refrain from taking such action, not inconsistent with this Agreement or the
Transaction Documents, as it shall deem to be in the best interests of the
Owners, and shall have no liability to any Person for such action or inaction.
Section 6.4 No Duties Except as Specified in this Agreement, the
Transaction Documents or in Instructions. The Owner Trustee shall not have any
duty or obligation to manage, make any payment with respect to, register,
record, sell, dispose of, or otherwise deal with the Owner Trust Estate, or to
otherwise take or refrain from taking any action under, or in connection with,
any document contemplated hereby to which the Owner Trustee is a party, except
as expressly provided by the terms of this Agreement, any Transaction Document
or in any document or written instruction received by the Owner Trustee
pursuant to Section 6.3;
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and no implied duties or obligations shall be read into this Agreement or any
Transaction Document against the Owner Trustee. The Owner Trustee shall have
no responsibility for filing any financing or continuation statement in any
public office at any time or to otherwise perfect or maintain the perfection of
any security interest or lien granted to it hereunder or to prepare or file any
Securities and Exchange Commission filing for the Trust or to record this
Agreement or any Transaction Document. The Owner Trustee nevertheless agrees
that it will, at its own cost and expense, promptly take all action as may be
necessary to discharge any liens on any part of the Owner Trust Estate that
result from actions by, or claims against, the Owner Trustee that are not
related to the ownership or the administration of the Owner Trust Estate.
Section 6.5 No Action Except Under Specified Documents or
Instructions. The Owner Trustee shall not manage, control, use, sell, dispose
of or otherwise deal with any part of the Owner Trust Estate except (i) in
accordance with the powers granted to and the authority conferred upon the
Owner Trustee pursuant to this Agreement, (ii) in accordance with the
Transaction Documents and (iii) in accordance with any document or instruction
delivered to the Owner Trustee pursuant to Section 6.3.
Section 6.6 Restrictions. The Owner Trustee shall not take any
action (a) that is inconsistent with the purposes of the Trust set forth in
Section 2.3 or (b) that, to the actual knowledge of the Owner Trustee, would
result in the Trust's becoming taxable as a corporation for Federal income tax
purposes. The Owners shall not direct the Owner Trustee to take action that
would violate the provisions of this Section.
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ARTICLE VII
CONCERNING THE OWNER TRUSTEE
Section 7.1 Acceptance of Trusts and Duties. The Owner Trustee
accepts the trusts hereby created and agrees to perform its duties hereunder
with respect to such trusts but only upon the terms of this Agreement and the
Transaction Documents. The Owner Trustee also agrees to disburse all moneys
actually received by it constituting part of the Owner Trust Estate upon the
terms of the Transaction Documents and this Agreement. The Owner Trustee shall
not be answerable or accountable hereunder or under any Transaction Document
under any circumstances, except (i) for its own willful misconduct or gross
negligence or (ii) in the case of the inaccuracy of any representation or
warranty contained in Section 7.3 expressly made by the Owner Trustee. In
particular, but not by way of limitation (and subject to the exceptions set
forth in the preceding sentence):
(a) the Owner Trustee shall not be liable for any error
of judgment made by a responsible officer of the Owner Trustee;
(b) the Owner Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in accordance with the
instructions of the Administrator or the Owners;
(c) no provision of this Agreement or any Transaction
Document shall require the Owner Trustee to expend or risk funds or otherwise
incur any financial liability in the performance of any of its rights or powers
hereunder or under any Transaction Document if the Owner Trustee shall have
reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured or provided
to it;
(d) under no circumstances shall the Owner Trustee be
liable for indebtedness evidenced by or arising under any of the Transaction
Documents, including the principal of and interest on the Notes;
(e) the Owner Trustee shall not be responsible for or in
respect of the validity or sufficiency of this Agreement or for the due
execution hereof by the Depositor or the Company or for the form, character,
genuineness, sufficiency, value or validity of any of the Owner Trust Estate or
for or in respect of the validity or sufficiency of the Transaction Documents,
other than the certificate of authentication on the Trust Certificates, and the
Owner Trustee shall in no event assume or incur any liability, duty, or
obligation to any Noteholder or to any Owner, other than as expressly provided
for herein and in the Transaction Documents;
(f) the Owner Trustee shall not be liable for the default
or misconduct of the Administrator, the Seller, the Company, the Indenture
Trustee, the Master Servicer or the Servicer under any of the Transaction
Documents or otherwise and the Owner Trustee shall
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have no obligation or liability to perform the obligations of the Trust under
this Agreement or the Transaction Documents that are required to be performed
by the Administrator under the Administration Agreement, the Indenture Trustee
under the Indenture, the Master Servicer under the Sale and Servicing
Agreement, or the Servicer under the Servicing Agreement; and
(g) the Owner Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Agreement, or to
institute, conduct or defend any litigation under this Agreement or otherwise
or in relation to this Agreement or any Transaction Document, at the request,
order or direction of any of the Owners, unless such Owners have offered to the
Owner Trustee security or indemnity satisfactory to it against the costs,
expenses and liabilities that may be incurred by the Owner Trustee therein or
thereby. The right of the Owner Trustee to perform any discretionary act
enumerated in this Agreement or in any Transaction Document shall not be
construed as a duty, and the Owner Trustee shall not be answerable for other
than its gross negligence or willful misconduct in the performance of any such
act provided, that the Owner Trustee shall be liable for its negligence or
willful misconduct in the event that it assumes the duties and obligations of
the Co-Owner Trustee under the Sale and Servicing Agreement pursuant to Section
10.5 hereof.
Section 7.2 Furnishing of Documents. The Owner Trustee shall
furnish (a) to the Owners promptly upon receipt of a written request therefor,
duplicates or copies of all reports, notices, requests, demands, certificates,
financial statements and any other instruments furnished to the Owner Trustee
under the Transaction Documents and (b) to Noteholders promptly upon written
request therefor, copies of the Sale and Servicing Agreement, the
Administration Agreement and the Trust Agreement.
Section 7.3 Representations and Warranties.
(a) The Owner Trustee hereby represents and warrants to
the Depositor and the Company, for the benefit of the Owners, that:
(i) It is a banking corporation duly organized
and validly existing in good standing under the laws of the State of
Delaware. It has all requisite corporate power and authority to
execute, deliver and perform its obligations under this Agreement.
(ii) It has taken all corporate action necessary
to authorize the execution and delivery by it of this Agreement, and
this Agreement will be executed and delivered by one of its officers
who is duly authorized to execute and deliver this Agreement on its
behalf.
(iii) Neither the execution nor the delivery by it
of this Agreement nor the consummation by it of the transactions
contemplated hereby nor compliance by it with any of the terms or
provisions hereof will contravene any Federal or Delaware law,
governmental rule or regulation governing the banking or trust powers
of the
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Owner Trustee or any judgment or order binding on it, or constitute
any default under its charter documents or by-laws or any indenture,
mortgage, contract, agreement or instrument to which it is a party or
by which any of its properties may be bound.
(b) The Co-Owner Trustee hereby represents and warrants
to the Depositor and the Company and the Securities Insurer, for the benefit of
the Owners, that:
(i) It is a national banking association duly
organized and validly existing in good standing under the laws of the
United States. It has all requisite corporate power and authority to
execute, deliver and perform its obligations under this Agreement.
(ii) It has taken all corporate action necessary
to authorize the execution and delivery by it of this Agreement, and
this Agreement will be executed and delivered by one of its officers
who is duly authorized to execute and deliver this Agreement on its
behalf.
(iii) Neither the execution nor the delivery by it
of this Agreement nor the consummation by it of the transactions
contemplated hereby nor compliance by it with any of the terms or
provisions hereof will contravene any Federal or Minnesota law,
governmental rule or regulation governing the banking or trust powers
of the Co-Owner Trustee or any judgment or order binding on it, or
constitute any default under its charter documents or by-laws or any
indenture, mortgage, contract, agreement or instrument to which it is
a party or by which any of its properties may be bound.
Section 7.4 Reliance; Advice of Counsel.
(a) The Owner Trustee shall incur no liability to anyone
in acting upon any signature, instrument, notice, resolution, request, consent,
order, certificate, report, opinion, bond, or other document or paper believed
by it to be genuine and believed by it to be signed by the proper party or
parties. The Owner Trustee may accept a certified copy of a resolution of the
board of directors or other governing body of any corporate party as conclusive
evidence that such resolution has been duly adopted by such body and that the
same is in full force and effect. As to any fact or matter the method of the
determination of which is not specifically prescribed herein, the Owner Trustee
may for all purposes hereof rely on a certificate, signed by the president or
any vice president or by the treasurer or other authorized officers of the
relevant party, as to such fact or matter and such certificate shall constitute
full protection to the Owner Trustee for any action taken or omitted to be
taken by it in good faith in reliance thereon.
(b) In the exercise or administration of the trusts
hereunder and in the performance of its duties and obligations under this
Agreement or the Transaction Documents, the Owner Trustee (i) may act directly
or through its agents or attorneys pursuant to agreements entered into with any
of them, and the Owner Trustee shall not be liable for the
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conduct or misconduct of such agents or attorneys if such agents or attorneys
shall have been selected by the Owner Trustee with reasonable care, and (ii)
may consult with counsel, accountants and other skilled persons to be selected
with reasonable care and employed by it. The Owner Trustee shall not be liable
for anything done, suffered or omitted in good faith by it in accordance with
the written opinion or advice of any such counsel, accountants or other such
persons and not contrary to this Agreement or any Transaction Document.
Section 7.5 Not Acting in Individual Capacity. Except as
provided in this Article VII, in accepting the trusts hereby created Wilmington
Trust Company acts solely as Owner Trustee hereunder and not in its individual
capacity and all Persons having any claim against the Owner Trustee by reason
of the transactions contemplated by this Agreement or any Transaction Document
shall look only to the Owner Trust Estate for payment or satisfaction thereof.
Section 7.6 Owner Trustee Not Liable for Trust Certificates or
Home Loans. The recitals contained herein and in the Trust Certificates (other
than the signature and countersignature of the Owner Trustee on the Trust
Certificates) shall be taken as the statements of the Depositor and the
Company, and the Owner Trustee assumes no responsibility for the correctness
thereof. The Owner Trustee makes no representations as to the validity or
sufficiency of this Agreement, of any Transaction Document or of the Trust
Certificates (other than the signature and countersignature of the Owner
Trustee on the Trust Certificates and as specified in Section 7.3) or the
Notes, or of any Home Loans or related documents. The Owner Trustee shall at
no time have any responsibility or liability for or with respect to the
legality, validity and enforceability of any Home Loan, or the perfection and
priority of any security interest created by any Home Loan or the maintenance
of any such perfection and priority, or for or with respect to the sufficiency
of the Owner Trust Estate or its ability to generate the payments to be
distributed to Owners under this Agreement or the Noteholders under the
Indenture, including, without limitation: the existence, condition and
ownership of any Property; the existence and enforceability of any insurance
thereon; the existence and contents of any Home Loan on any computer or other
record thereof; the validity of the assignment of any Home Loan to the Trust or
of any intervening assignment; the completeness of any Home Loan; the
performance or enforcement of any Home Loan; the compliance by the Depositor,
the Company, the Master Servicer or the Servicer with any warranty or
representation made under any Transaction Document or in any related document
or the accuracy of any such warranty or representation or any action of the
Administrator, the Indenture Trustee, the Master Servicer or the Servicer or
any subservicer taken in the name of the Owner Trustee.
Section 7.7 Owner Trustee May Own Trust Certificates and Notes.
The Owner Trustee in its individual or any other capacity may become the owner
or pledgee of Trust Certificates or Notes and may deal with the Depositor, the
Company, the Administrator, the Indenture Trustee and the Servicer in banking
transactions with the same rights as it would have if it were not Owner
Trustee.
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Section 7.8 Licenses. The Owner Trustee shall cause the Trust to
use its best efforts to obtain and maintain the effectiveness of any licenses
required in connection with this Agreement and the Transaction Documents and
the transactions contemplated hereby and thereby until such time as the Trust
shall terminate in accordance with the terms hereof.
Section 7.9 Rights of Co-Owner Trustee. The Co-Owner Trustee shall
be entitled to all the rights and benefits conferred upon the Owner Trustee in
Article VII of this Agreement.
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ARTICLE VIII
COMPENSATION OF OWNER TRUSTEE
Section 8.1 Owner Trustee's Fees and Expenses. The Owner Trustee
shall receive as compensation for its services hereunder such fees as have been
separately agreed upon before the date hereof between the Company and the Owner
Trustee, and the Owner Trustee shall be entitled to be reimbursed by the
Company for its other reasonable expenses hereunder, including the reasonable
compensation, expenses and disbursements of such agents, representatives,
experts and counsel as the Owner Trustee may employ in connection with the
exercise and performance of its rights and its duties hereunder.
Section 8.2 Indemnification. The Company shall be liable as
primary obligor, and the Servicer as secondary obligor pursuant to the
Administration Agreement, for, and shall indemnify the Owner Trustee, the
Co-Owner Trustee and their successors, assigns, agents and servants
(collectively, the "Indemnified Parties") from and against, any and all
liabilities, obligations, losses, damages, taxes, claims, actions and suits,
and any and all reasonable costs, expenses and disbursements (including
reasonable legal fees and expenses) of any kind and nature whatsoever
(collectively, "Expenses") which may at any time be imposed on, incurred by, or
asserted against the Owner Trustee or any Indemnified Party in any way relating
to or arising out of this Agreement, the Transaction Documents, the Owner Trust
Estate, the administration of the Owner Trust Estate or the action or inaction
of the Owner Trustee or the Co-Owner Trustee hereunder, except only that the
Company shall not be liable for or required to indemnify an Indemnified Party
from and against Expenses arising or resulting from any of the matters
described in the third sentence of Section 7.1 hereof. The indemnities
contained in this Section shall survive the resignation or termination of the
Owner Trustee or the termination of this Agreement. In any event of any claim,
action or proceeding for which indemnity will be sought pursuant to this
Section, the Owner Trustee's or Co-Owner Trustee's choice of legal counsel
shall be subject to the approval of the Company, which approval shall not be
unreasonably withheld.
Section 8.3 Payments to the Owner Trustee. Any amounts paid to
the Owner Trustee pursuant to this Article VIII shall be deemed not to be a
part of the Owner Trust Estate immediately after such payment.
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ARTICLE IX
TERMINATION OF TRUST AGREEMENT
Section 9.1 Termination of Trust Agreement.
(a) This Agreement (other than Article VIII) and the
Trust shall terminate and be of no further force or effect on the earlier of
(i) the satisfaction and discharge of the Indenture pursuant to Section 4.01 of
the Indenture and the termination of the Sale and Servicing Agreement and (ii)
the expiration of 21 years from the death of the last survivor of the
descendants of Xxxxxx X. Xxxxxxx (the late ambassador of the United States to
the Court of St. James's) alive on the date hereof. The bankruptcy,
liquidation, dissolution, death or incapacity of any Owner shall not (x)
operate to terminate this Agreement or the Trust, nor (y) entitle such Owner's
legal representatives or heirs to claim an accounting or to take any action or
proceeding in any court for a partition or winding up of all or any part of the
Trust or Owner Trust Estate nor (z) otherwise affect the rights, obligations
and liabilities of the parties hereto.
(b) The Certificates shall be subject to an early
redemption or termination at the option of the Company, the Master Servicer or
the Securities Insurer in the manner and subject to the provisions of Section
11.01 of the Sale and Servicing Agreement.
(c) Except as provided in Sections 9.1(a) and (b) above,
none of the Depositor, the Company, the Securities Insurer nor any Owner shall
be entitled to revoke or terminate the Trust.
(d) Notice of any termination of the Trust, specifying
the Distribution Date upon which the Certificateholders shall surrender their
Certificates to the Paying Agent for payment of the final distributions and
cancellation, shall be given by the Owner Trustee to the Certificateholders,
the Securities Insurer and the Rating Agencies mailed within five Business Days
of receipt by the Owner Trustee of notice of such termination pursuant to
Section 9.1(a) or (b) above, which notice given by the Owner Trustee shall
state (i) the Distribution Date upon or with respect to which final payment of
the Certificates shall be made upon presentation and surrender of the
Certificates at the office of the Paying Agent therein designated, (ii) the
amount of any such final payment and (iii) that the Record Date otherwise
applicable to such Distribution Date is not applicable, payments being made
only upon presentation and surrender of the Trust Certificates at the office of
the Paying Agent therein specified. The Owner Trustee shall give such notice
to the Certificate Registrar (if other than the Owner Trustee) and the Paying
Agent at the time such notice is given to Certificateholders. Upon
presentation and surrender of the Certificates, the Paying Agent shall cause to
be distributed to Certificateholders amounts distributable on such Distribution
Date pursuant to Sections 5.01(c) and 5.03 of the Sale and Servicing Agreement.
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In the event that all of the Certificateholders shall not
surrender their Trust Certificates for cancellation within six months after the
date specified in the above mentioned written notice, the Co-Owner Trustee
shall give a second written notice to the remaining Certificateholders to
surrender their Trust Certificates for cancellation and receive the final
distribution with respect thereto. If within one year after the second notice
all the Trust Certificates shall not have been surrendered for cancellation,
the Co-Owner Trustee may take appropriate steps, or may appoint an agent to
take appropriate steps, to contact the remaining Certificateholders concerning
surrender of their Trust Certificates, and the cost thereof shall be paid out
of the funds and other assets that shall remain subject to this Agreement. Any
funds remaining in the Trust after exhaustion of such remedies shall be
distributed by the Co-Owner Trustee to the Residual Interestholders on a pro
rata basis.
(e) Upon the winding up of the Trust and its termination,
the Owner Trustee shall cause the Certificate of Trust to be canceled by filing
a certificate of cancellation with the Secretary of State in accordance with
the provisions of Section 3820 of the Business Trust Statute.
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ARTICLE X
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
Section 10.1 Eligibility Requirements for Owner Trustee. The
Owner Trustee shall at all times be a corporation satisfying the provisions of
Section 3807(a) of the Business Trust Statute; authorized to exercise
corporate powers; having a combined capital and surplus of at least $50,000,000
and subject to supervision or examination by Federal or state authorities; and
having (or having a parent which has) a long-term rating of at least "A-1" by
Standard & Poor's and "Baa3" by Moody's and being acceptable to the Securities
Insurer. If such corporation shall publish reports of condition at least
annually, pursuant to law or to the requirements of the aforesaid supervising
or examining authority, then for the purpose of this Section, the combined
capital and surplus of such corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. In case at any time the Owner Trustee shall cease to be eligible in
accordance with the provisions of this Section, the Owner Trustee shall resign
immediately in the manner and with the effect specified in Section 10.2.
Section 10.2 Resignation or Removal of Owner Trustee or Co-Owner
Trustee. The Owner Trustee or Co-Owner Trustee may at any time resign and be
discharged from the trusts hereby created by giving written notice thereof to
the Administrator, the Indenture Trustee, the Securities Insurer and the
Company. Upon receiving such notice of resignation, the Administrator shall
promptly appoint a successor Owner Trustee or Co-Owner Trustee (acceptable to
the Securities Insurer) by written instrument, in duplicate, one copy of which
instrument shall be delivered to the resigning Owner Trustee and one copy to
the successor Owner Trustee or Co-Owner Trustee. If no successor Owner Trustee
or Co- Owner Trustee shall have been so appointed and have accepted appointment
within 30 days after the giving of such notice of resignation, the resigning
Owner Trustee or Co-Owner Trustee or the Securities Insurer may petition any
court of competent jurisdiction for the appointment of a successor Owner
Trustee or Co-Owner Trustee.
If at any time the Owner Trustee or Co-Owner Trustee shall cease to be
eligible in accordance with the provisions of Section 10.1 and shall fail to
resign after written request therefor by the Administrator, or if at any time
the Owner Trustee or Co-Owner Trustee shall be legally unable to act, or shall
be adjudged bankrupt or insolvent, or a receiver of the Owner Trustee or
Co-Owner Trustee or of its property shall be appointed, or any public officer
shall take charge or control of the Owner Trustee or Co-Owner Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, then the Securities Insurer, or the Administrator with the consent
of the Securities Insurer, may remove the Owner Trustee or Co-Owner Trustee. If
the Administrator or the Securities Insurer shall remove the Owner Trustee or
Co-Owner Trustee under the authority of the immediately preceding sentence, the
Securities Insurer, or the Administrator with the consent of the Securities
Insurer, shall promptly appoint a successor Owner Trustee or Co-Owner Trustee
by written instrument in duplicate, one copy of which instrument shall be
delivered to the
X-1
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outgoing Owner Trustee or Co-Owner Trustee so removed and one copy to the
successor Owner Trustee or Co-Owner Trustee and payment of all fees owed to the
outgoing Owner Trustee or Co-Owner Trustee.
Any resignation or removal of the Owner Trustee or Co-Owner Trustee
and appointment of a successor Owner Trustee or Co-Owner Trustee pursuant to
any of the provisions of this Section shall not become effective until (i)
acceptance of appointment by the successor Owner Trustee or Co-Owner Trustee
pursuant to Section 10.3 written approval by the Securities Insurer and payment
of all fees and expenses owed to the outgoing Owner Trustee or Co-Owner
Trustee. The Administrator shall provide notice of such resignation or removal
of the Owner Trustee or Co- Owner Trustee to each of the Rating Agencies and
the Securities Insurer.
Section 10.3 Successor Owner Trustee or Co-Owner Trustee. Any
successor Owner Trustee or Co-Owner Trustee appointed pursuant to Section 10.2
shall execute, acknowledge and deliver to the Administrator, the Securities
Insurer and to its predecessor Owner Trustee or Co- Owner Trustee an instrument
accepting such appointment under this Agreement, and thereupon the resignation
or removal of the predecessor Owner Trustee or Co-Owner Trustee shall become
effective and such successor Owner Trustee or Co-Owner Trustee (if acceptable
to the Securities Insurer), without any further act, deed or conveyance, shall
become fully vested with all the rights, powers, duties, and obligations of its
predecessor under this Agreement, with like effect as if originally named as
Owner Trustee or Co-Owner Trustee. The predecessor Owner Trustee or Co-Owner
Trustee shall upon payment of its fees and expenses deliver to the successor
Owner Trustee or Co-Owner Trustee all documents and statements and monies held
by it under this Agreement; and the Administrator and the predecessor Owner
Trustee or Co-Owner Trustee shall execute and deliver such instruments and do
such other things as may reasonably be required for fully and certainly vesting
and confirming in the successor Owner Trustee or Co-Owner Trustee all such
rights, powers, duties, and obligations.
No successor Owner Trustee or Co-Owner Trustee shall accept
appointment as provided in this Section unless at the time of such acceptance
such successor Owner Trustee or Co-Owner Trustee shall be eligible pursuant to
Section 10.1.
Upon acceptance of appointment by a successor Owner Trustee or
Co-Owner Trustee pursuant to this Section, the Administrator shall mail notice
of the successor of such Owner Trustee or Co-Owner Trustee to all Owners, the
Indenture Trustee, the Noteholders, the Securities Insurer and the Rating
Agencies. If the Administrator fails to mail such notice within 10 days after
acceptance of appointment by the successor Owner Trustee or Co-Owner Trustee,
the successor Owner Trustee or Co-Owner Trustee shall cause such notice to be
mailed at the expense of the Administrator.
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Section 10.4 Merger or Consolidation of Owner Trustee. Any
corporation into which the Owner Trustee 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 Owner Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Owner Trustee, shall be the successor of the Owner Trustee
hereunder, provided such corporation shall be eligible pursuant to Section
10.1, without the execution or filing of any instrument or any further act on
the part of any of the parties hereto, anything herein to the contrary
notwithstanding; provided further that the Owner Trustee shall mail notice of
such merger or consolidation to the Rating Agencies.
Section 10.5 Appointment of Co-Owner Trustee or Separate Owner
Trustee. Notwithstanding any other provisions of this Agreement, at any time,
for the purpose of meeting any legal requirements of any jurisdiction in which
any part of the Owner Trust Estate or any Mortgaged Property may at the time be
located, and for the purpose of performing certain duties and obligations of
the Owner Trustee with respect to the Trust and the Certificates under the Sale
and Servicing Agreement, the Administrator and the Owner Trustee acting jointly
shall have the power and shall execute and deliver all instruments to appoint
one or more Persons approved by the Owner Trustee and acceptable to the
Securities Insurer to act as co-owner trustee, jointly with the Owner Trustee,
or separate owner trustee or separate owner trustees, of all or any part of the
Owner Trust Estate, and to vest in such Person, in such capacity, such title to
the Trust, or any part thereof, and, subject to the other provisions of this
Section, such powers, duties, obligations, rights and trusts as the
Administrator, the Securities Insurer and the Owner Trustee may consider
necessary or desirable. If the Administrator shall not have joined in such
appointment within 25 days after the receipt by it of a request so to do, the
Owner Trustee (with the consent of the Securities Insurer) shall have the power
to make such appointment. No Co-Owner Trustee or separate Owner Trustee under
this Section 10.5 shall be required to meet the terms of eligibility as a
successor trustee pursuant to Section 10.1 and no notice of the appointment of
any co-owner trustee or separate Owner Trustee shall be required pursuant to
Section 10.3.
The Owner Trustee hereby appoints the Indenture Trustee as Co-Owner
Trustee for the purpose of (i) establishing and maintaining the Certificate
Distribution Account and making the distributions therefrom to the Persons
entitled thereto pursuant to Sections 5.01(c) and 5.03 of the Sale and
Servicing Agreement and (ii) holding the Contract of Insurance on behalf of the
Trust, facilitating claims under the Contract of Insurance and for purposes of
holding record ownership of each FHA Loan. The Owner Trustee and the Co-Owner
Trustee each agree that upon the occurrence and continuation of a Securities
Insurer Default, the Co-Owner Trustee shall resign and the Owner Trustee shall
assume the duties and obligations of the Co-Owner Trustee under the Sale and
Servicing Agreement (other than its duties as Contract of Insurance Holder
thereunder) and this Agreement, including without limitation, the obligations
of the Co-Owner Trustee as Paying Agent pursuant to Section 3.9 hereof.
Each separate owner trustee and co-owner trustee shall, to the extent
permitted by law, be appointed and act subject to the following provision and
conditions:
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(i) all rights, powers, duties and obligations
conferred or imposed upon the Owner Trustee shall be conferred upon
and exercised or performed by the Owner Trustee and such separate
owner trustee or co-owner trustee jointly (it being understood that
such separate owner trustee or co-owner trustee is not authorized to
act separately without the Owner Trustee joining in such act), except
to the extent that under any law of any jurisdiction in which any
particular act or acts are to be performed, the Owner Trustee shall be
incompetent or unqualified to perform such act or acts, in which event
such rights, powers, duties, and obligations (including the holding of
title to the Trust or any portion thereof in any such jurisdiction)
shall be exercised and performed singly by such separate owner trustee
or co-owner trustee but solely at the direction of the Owner Trustee;
provided that Co-Owner Trustee, in performing its duties and
obligations under the Sale and Servicing Agreement, may act separately
in its capacity as Co-Owner Trustee without the Owner Trustee joining
in such Acts.
(ii) no owner trustee under this Agreement shall
be personally liable by reason of any act or omission of any other
owner trustee under this Agreement; and
(iii) the Administrator and the Owner Trustee
acting jointly may at any time accept the resignation of or remove any
separate owner trustee or co-owner trustee.
Any notice, request or other writing given to the Owner Trustee shall
be deemed to have been given to the separate owner trustees and co-owner
trustees, as if given to each of them. Every instrument appointing any
separate owner trustee or co-owner trustee, other than this Agreement, shall
refer to this Agreement and to the conditions of this Article. Each separate
owner trustee and co-owner trustee, upon its acceptance of appointment, shall
be vested with the estates specified in its instrument of appointment, either
jointly with the Owner Trustee or separately, as may be provided therein,
subject to all the provisions of this Agreement, specifically including every
provision of this Agreement relating to the conduct of, affecting the liability
of, or affording protection to, the Owner Trustee. Each such instrument shall
be filed with the Owner Trustee and a copy thereof given to the Administrator.
Any separate owner trustee or co-owner trustee may at any time appoint
the Owner Trustee as its agent or attorney-in-fact with full power and
authority, to the extent not prohibited by law, to do any lawful act under or
in respect of this Agreement on its behalf and in its name. If any separate
owner trustee or co-owner trustee shall die, become incapable of acting, resign
or be removed, all of its estates, properties, rights, remedies and trusts
shall vest in and be exercised by the Owner Trustee, to the extent permitted by
law, without the appointment of a new or successor trustee.
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The Co-Owner Trustee, in its capacity as Co-Owner Trustee, shall not
have any rights, duties or obligations except as expressly provided in this
Agreement and the Sale and Servicing Agreement.
X-5
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ARTICLE XI
MISCELLANEOUS
Section 11.1 Supplements and Amendments. This Agreement may be
amended by the Depositor, the Company and the Owner Trustee, with the prior
consent of the Securities Insurer, and with prior written notice to the Rating
Agencies and the Securities Insurer, but without the consent of any of the
Noteholders or the Owners or the Indenture Trustee, to cure any ambiguity, to
correct or supplement any provisions in this Agreement or for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions in this Agreement or of modifying in any manner the rights of the
Noteholders or the Owners provided, however, that such action shall not
adversely affect in any material respect the interests of any Noteholder or
Owner or the rights of the Securities Insurer. An amendment described above
shall be deemed not to adversely affect in any material respect the interests
of any Noteholder or Owner if (i) an opinion of counsel is obtained to such
effect, and (ii) the party requesting the amendment satisfies the Rating Agency
Condition with respect to such amendment.
This Agreement may also be amended from time to time by the Depositor,
the Company and the Owner Trustee, with the prior written consent of the Rating
Agencies and with the prior written consent of the Indenture Trustee, the
Securities Insurer, the Holders (as defined in the Indenture) of Notes
evidencing more than 50% of the Percentage Interests in the Notes, the Holders
of Certificates evidencing more than 50% of the Percentage Interests in the
Certificates and the Majority Residual Interestholders, for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Agreement or of modifying in any manner the rights of the
Noteholders or the Owners; provided, however, that no such amendment shall (a)
increase or reduce in any manner the amount of, or accelerate or delay the
timing of, collections of payments on the Home Loans or distributions that
shall be required to be made for the benefit of the Noteholders or the
Certificateholders or the Securities Insurer (b) reduce the aforesaid
percentage of the Outstanding Amount of the Notes and the Class Notional
Balance of the Certificates or the Percentage Interests required to consent to
any such amendment, in either case of clause (a) or (b) without the consent of
the holders of all the outstanding Notes and Certificates and the Securities
Insurer, and in the case of clause (b) without the consent of the holders of
all the outstanding Residual Interest Instruments.
Promptly after the execution of any such amendment or consent, the
Owner Trustee shall furnish written notification of the substance of such
amendment or consent to each Certificateholder, the Indenture Trustee, the
Securities Insurer and each of the Rating Agencies.
It shall not be necessary for the consent of Owners, the Noteholders
or the Indenture Trustee pursuant to this Section to approve the particular
form of any proposed amendment or consent, but it shall be sufficient if such
consent shall approve the substance thereof. The
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manner of obtaining such consents (and any other consents of Owners provided
for in this Agreement or in any other Transaction Document) and of evidencing
the authorization of the execution thereof by Certificateholders shall be
subject to such reasonable requirements as the Owner Trustee may prescribe.
Promptly after the execution of any amendment to the Certificate of
Trust, the Owner Trustee shall cause the filing of such amendment with the
Secretary of State.
Prior to the execution of any amendment to this Agreement or the
Certificate of Trust, the Owner Trustee shall be entitled to receive and rely
upon an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Agreement. The Owner Trustee may, but shall
not be obligated to, enter into any such amendment which affects the Owner
Trustee's own rights, duties or immunities under this Agreement or otherwise.
Section 11.2 No Legal Title to Owner Trust Estate in Owners. The
Owners shall not have legal title to any part of the Owner Trust Estate. The
Owners shall be entitled to receive distributions with respect to their
undivided ownership interest therein only in accordance with Articles V and IX.
No transfer, by operation of law or otherwise, of any right, title, or interest
of the Owners to and in their ownership interest in the Owner Trust Estate
shall operate to terminate this Agreement or the trusts hereunder or entitle
any transferee to an accounting or to the transfer to it of legal title to any
part of the Owner Trust Estate.
Section 11.3 Limitations on Rights of Others. The provisions of
this Agreement are solely for the benefit of the Owner Trustee, the Co-Owner
Trustee, the Depositor, the Company, the Owners, the Administrator, the
Securities Insurer and, to the extent expressly provided herein, the Indenture
Trustee and the Noteholders, and nothing in this Agreement, whether express or
implied, shall be construed to give to any other Person any legal or equitable
right, remedy or claim in the Owner Trust Estate or under or in respect of this
Agreement or any covenants, conditions or provisions contained herein.
Section 11.4 Notices. (a) Unless otherwise expressly specified
or permitted by the terms hereof, all notices shall be in writing and shall be
deemed given upon receipt by the intended recipient or three Business Days
after mailing if mailed by certified mail, postage prepaid (except that notice
to the Owner Trustee shall be deemed given only upon actual receipt by the
Owner Trustee), at the following addresses: (i) if to the Owner Trustee, its
Corporate Trust Office; (ii) if to the Depositor, Financial Asset Securities
Corp., 000 Xxxxxxxxx Xxxx, Xxxxxxxxx, Xxxxxxxxxxx 00000, Attention: Xxxx
Xxxxxxxx, Senior Vice President; (iii) if to the Company, Mego Mortgage
Corporation, 0000 Xxxxxxxx Xxxxxx, Xxxxx 000 Xxxxxxx, Xxxxxxx 00000, Attention:
Xxxx X. Xxxxx, President; (iv) if to the Securities Insurer, MBIA Insurance
Corporation, 000 Xxxx Xxxxxx, Xxxxxx, Xxx Xxxx 00000, Attention: IPM-SF,
telephone: 000-000-0000, confirmation: 000-000-0000; (v) if to the Co- Owner
Trustee, First Trust of New York, National Association, 000 Xxxx Xxxxx Xxxxxx,
Xx. Xxxx, Xxxxxxxxx 00000, Attention: Structured Finance/Mego Mortgage 1997-1
Corporate Trust
XI-2
47
Department; or, as to each such party, at such other address as shall be
designated by such party in a written notice to each other party.
(b) Any notice required or permitted to be given to an Owner shall
be given by first-class mail, postage prepaid, at the address of such Owner as
shown in the Certificate Register. Any notice so mailed within the time
prescribed in this Agreement shall be conclusively presumed to have been duly
given, whether or not the Owner receives such notice.
Section 11.5 Severability. Any provision of this Agreement that
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
Section 11.6 Separate Counterparts. This Agreement may be
executed by the parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts shall
together constitute but one and the same instrument.
Section 11.7 Successors and Assigns. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, the
Depositor, the Company, the Securities Insurer, the Owner Trustee, the Co-Owner
Trustee and its successors and each owner and its successors and permitted
assigns, all as herein provided. Any request, notice, direction, consent,
waiver or other instrument or action by an Owner shall bind the successors and
assigns of such Owner.
Section 11.8 No Petition. The Owner Trustee, by entering into
this Agreement, each Owner, by accepting a Trust Certificate, and the Indenture
Trustee and each Noteholder by accepting the benefits of this Agreement, hereby
covenant and agree that they will not at any time institute against the
Company, any wholly-owned subsidiary of the Company, the Depositor or the
Trust, or join in any institution against the Company, any wholly-owned
subsidiary of the Company, or the Trust of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings under
any United States Federal or state bankruptcy or law in connection with any
obligations relating to the Trust Certificates, the Notes, this Agreement or
any of the Transaction Documents.
Section 11.9 Covenants of Company. The Company shall not
institute at any time any Bankruptcy proceeding against the Trust or any
wholly-owned subsidiary of the Company, under any United States Federal or
state bankruptcy or similar law in connection with any obligations relating to
the Trust Certificates, the Notes, the Trust Agreement or any of the
Transaction Documents.
Section 11.10 No Recourse. Each Owner by accepting a Trust
Certificate acknowledges that such Owner's Trust Certificate represents a
beneficial interest in the Trust
XI-3
48
only and does not represent an interest in or an obligation of the Seller, the
Servicer, the Company, the Depositor, the Administrator, the Owner Trustee, the
Co-Owner Trustee or any Affiliate thereof and no recourse may be had against
such parties or their assets, except as may be expressly set forth or
contemplated in this Agreement, the Trust Certificates or the Transaction
Documents.
Section 11.11 Headings. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
Section 11.12 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 11.13 Section 11.13 [Reserved].
Section 11.14 Grant of Certificateholder and Residual Interest
Holder Rights to Securities Insurer.
(a) In consideration for the guarantee of the
Certificates by the Securities Insurer pursuant to the Guaranty Policy, the
Certificateholders hereby grant to the Securities Insurer the right to act as
the Holder of 100% of the outstanding Certificates for the purpose of
exercising the rights of the Certificateholders under this Agreement without
the consent of the Certificateholders, including the voting rights of such
holders hereunder, but excluding those rights requiring the consent of all such
Holders under Section 11.1 and any rights of such Holders to distributions
under Sections 5.01(c) and 5.03 of the Sale and Servicing Agreement; provided
that the preceding grant of rights to the Securities Insurer by the
Certificateholders shall be subject to Section 11.16.
(b) In consideration for the issuance of the Residual
Interest Instruments and for the guarantee of the Certificates by the
Securities Insurer pursuant to the Guaranty Policy, the holders of the Residual
Interest Instruments hereby grant to the Securities Insurer the right to act as
the holder of 100% of the Residual Interest Instruments for the purpose of
exercising the rights of the holders of the Residual Interest under this
Agreement, including the voting rights of such holders hereunder, but excluding
those rights requiring the consent of all such holders under Section 11.1 and
any rights of such holders to Distributions under Sections 5.01(c) and 5.03 of
the Sale and Servicing Agreement; provided that the preceding grant of rights
to the Securities Insurer by the holders of the Residual Interest shall be
subject to Section 11.15.
(c) The rights of the Securities Insurer to direct
certain actions and consent to certain actions of the Certificateholders
hereunder will terminate at such time as the
XX-0
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Xxxxxxxx Xxxxxxx of the Certificates has been reduced to zero and the
Securities Insurer has been reimbursed for all Guaranteed Payments and any
other amounts owed under the Guaranty Policy and the Insurance Agreement and
the Securities Insurer has no further obligation under the Guaranty Policy.
Section 11.15 Third-Party Beneficiary. The parties hereto
acknowledge that the Securities Insurer is an express third party beneficiary
hereof entitled to enforce any rights reserved to it hereunder as if it were
actually a party hereto.
Section 11.16 Suspension and Termination of Securities Insurer's
Rights.
(a) During the continuation of a Securities Insurer
Default, rights granted or reserved to the Securities Insurer hereunder shall
vest instead in the Owners; provided that the Securities Insurer shall be
entitled to any distributions in reimbursement of the Securities Insurer
Reimbursement Amount, and the Securities Insurer shall retain those rights
under Section 11.1 to consent to any amendment of this Agreement.
At such time as either (i) the Class Notional Amount has been
reduced to zero or (ii) the Guaranty Policy has been terminated and in either
case of (i) or (ii) the Securities Insurer has been reimbursed for all
Guaranteed Payments and any other amounts owed under the Guaranty Policy and
the Insurance Agreement (and the Securities Insurer no longer has any
obligation under the Guaranty Policy, except for breach thereof by the
Securities Insurer), then the rights and benefits granted or reserved to the
Securities Insurer hereunder (including the rights to direct certain actions
and receive certain notices) shall terminate and the Owner shall be entitled to
the exercise of such rights and to receive such benefits of the Securities
Insurer following such termination to the extent that such rights and benefits
are applicable to the Owners.
Section 11.17 Inconsistencies with Sale and Servicing Agreement.
In the event certain provisions of this Agreement conflict with the
provisions of the Sale and Servicing Agreement, the parties hereto agree that
the provisions of the Sale and Servicing Agreement shall be controlling.
XI-5
50
IN WITNESS WHEREOF, the parties hereto have caused this Trust
Agreement to be duly executed by their respective officers hereunto duly
authorized, as of the day and year first above written.
FINANCIAL ASSET SECURITIES CORP.,
Depositor
By:
--------------------------------------
Name:
Title:
MEGO MORTGAGE CORPORATION
By:
--------------------------------------
Name:
Title:
WILMINGTON TRUST COMPANY,
not in its individual capacity but
solely as Owner Trustee
By:
--------------------------------------
Name:
Title:
FIRST TRUST OF NEW YORK, NATIONAL ASSOCIATION,
not in its individual capacity but solely as
Co-Owner Trustee and Paying Agent
By:
--------------------------------------
Name:
Title:
51
THIS CERTIFICATE DOES NOT REPRESENT AN INTEREST IN OR OBLIGATION OF FINANCIAL
ASSET SECURITIES CORP., MEGO MORTGAGE CORPORATION OR ANY OF THEIR RESPECTIVE
AFFILIATES, EXCEPT TO THE EXTENT DESCRIBED BELOW.
MEGO MORTGAGE HOME LOAN OWNER TRUST 1997-1
____% HOME LOAN ASSET BACKED CERTIFICATE
evidencing a [fractional undivided interest] in the Trust, as defined below,
the property of which includes a pool of Home Loans sold to the Trust by
Financial Asset Securities Corp.
NUMBER:______ FRACTIONAL UNDIVIDED INTEREST: __________/_________th
CUSIP NO. ______ ___
(See Reverse Pages for certain definitions)
THIS CERTIFIES THAT___________ is the
registered owner of a _________/__________th nonassessable, fully-paid,
fractional undivided interest in MEGO MORTGAGE HOME LOAN OWNER TRUST 1997-1
(the "Trust") formed by Financial Asset Securities Corp., a Delaware
corporation (the "Seller").
The Trust was created pursuant to a
Trust Agreement dated as of February 1, 1997 (as amended and supplemented from
time to time, the "Trust Agreement"), among the Seller, Financial Asset
Securities Corp., a Delaware corporation (the "Company"), Wilmington Trust
Company, as owner trustee (the "Owner Trustee") and First Trust of New York
National Association, as Co-Owner Trustee (the "Co-Owner Trustee"), a summary
of certain of the pertinent provisions of which is set forth below. To the
extent not otherwise defined herein, the capitalized terms used herein have the
meanings assigned to them in the Trust Agreement or the Sale and Servicing
Agreement dated as of February 1, 1997 (as amended and supplemented from time
to time, the "Sale and Servicing Agreement"), among the Trust, the Seller, Mego
Mortgage Corporation, as servicer (the "Servicer") and the Co-Owner Trustee, as
applicable.
This Certificate is one of the duly
authorized Certificates designated as "Mego Mortgage Home Loan Asset Backed
Certificates, Series 1997-1" (herein called the "Certificates") issued under
the Trust Agreement. Also issued under an Indenture dated as of February 1,
1997, between the Trust and First Trust of New York, National Association, as
Indenture Trustee, are the _____ classes of Notes designated as "Mego Mortgage
Asset Backed Notes, Series 1997-1, Class A-1, Class A-2, Class A-3 and Class
A-4 (collectively, the "Notes"). This Certificate is issued under and is
subject to the terms, provisions and conditions of the Trust Agreement to which
Trust Agreement the holder of this Certificate by virtue of the acceptance
hereof assents and by which such holder is bound. Payments of interest on this
Certificate shall be made by First Trust of New York,
52
National Association, in its capacity as Co-Owner Trustee under the Sale and
Servicing Agreement. The property of the Trust includes a pool of Initial Home
Loans and Subsequent Home Loans (collectively, the "Home Loans"), all monies
due thereunder on or after the respective Cut-off Dates thereof, certain bank
accounts and the proceeds thereof, proceeds from claims on certain insurance
policies and certain other rights under the Trust Agreement and the Sale and
Servicing Agreement and all proceeds of the foregoing. The rights of the
holders of the Certificates are subordinated to the rights of the holders of
the Notes, as set forth in the Sale and Servicing Agreement and the Indenture.
Under the Trust Agreement, there will
be distributed on the 25th day of each month or, if such 25th day is not a
Business Day, the next Business Day, (each, a "Distribution Date"), commencing
in March, 1997, to the person in whose name this Certificate is registered at
the close of business on the last Business Day of the month immediately
preceding the month in which each Distribution Date occurs (the "Record Date")
such Certificateholder's fractional undivided interest in the Certificateholder
Distributable Amount to Certificateholders on such Distribution Date pursuant
to Section 5.01 of the Sale and Servicing Agreement.
The holder of this Certificate
acknowledges and agrees that its rights to receive distributions in respect of
this Certificate are subordinated to the rights of the Noteholders as described
in the Sale and Servicing Agreement and the Indenture.
It is the intent of the Seller, the
Company, the Servicer and the Certificateholders that, for purposes of Federal,
state and local income and single business tax and any other income taxes, the
Trust will be treated as a partnership and the Certificateholders (including
the Company) will be treated as partners in that partnership. The Company and
the other Certificateholders by acceptance of a Certificate, agree to treat,
and to take no action inconsistent with the treatment of, the Certificates for
such tax purposes as partnership interests in the Trust.
Each Certificateholder or Certificate
Owner, by its acceptance of a Certificate or, in the case of a Certificate
Owner, a beneficial interest in a Certificate, covenants and agrees that such
Certificateholder or Certificate Owner, as the case may be, will not at any
time institute against the Company, or join in any institution against the
Company of, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, or other proceedings under any United States Federal
or state bankruptcy or similar law in connection with any obligations relating
to the Certificates, the Notes, the Trust Agreement or any of the Transaction
Documents.
Distributions on this Certificate will
be made as provided in the Trust Agreement, and the Indenture by the Indenture
Trustee by wire transfer or check mailed to the Certificateholder of record in
the Certificate Register without the presentation or surrender of this
Certificate or the making of any notation hereon, except that
53
with respect to Certificates registered on the Record Date in the name of the
nominee of the Clearing Agency (initially, such nominee to be Cede & Co.),
payments will be made by wire transfer in immediately available funds to the
account designated by such nominee. Except as otherwise provided in the Trust
Agreement and notwithstanding the above, the final distribution on this
Certificate will be made after due notice by the Co-Owner Trustee of the
pendency of such distribution and only upon presentation and surrender of this
Certificate at the office or agency maintained for the purpose by the Co-Owner
Trustee in the Borough of Manhattan, The City of New York.
Reference is hereby made to the further
provisions of this Certificate set forth on the reverse hereof, which further
provisions shall for all purposes have the same effect as if set forth at this
place.
[Remainder of page intentionally left blank]
54
Unless the certificate of
authentication hereon shall have been executed by an authorized officer of the
Owner Trustee, by manual or facsimile signature, this Certificate shall not
entitle the holder hereof to any benefit under the Trust Agreement or the Sale
and Servicing Agreement or be valid for any purpose.
THIS TRUST CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS,
AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.
IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Trust and not
in its individual capacity, has caused this Certificate to be duly executed.
MEGO MORTGAGE HOME LOAN OWNER TRUST 1997-1
By: Wilmington Trust Company, not in its
individual capacity but solely as Owner
Trustee under the Trust Agreement
By:
----------------------------------
Authorized Signatory
DATED:_________________
55
CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within-mentioned
Trust Agreement.
FIRST TRUST ON NEW YORK, NATIONAL
ASSOCIATION, as Authenticating Agent
By:_____________________________
Authorized Signatory
56
(REVERSE OF TRUST CERTIFICATE)
The Certificates do not represent an obligation of, or an interest in,
the Seller, the Servicer, the Company, the Depositor, the Owner Trustee, the
Co-Owner Trustee or any affiliates of any of them and no recourse may be had
against such parties or their assets, except as may be expressly set forth or
contemplated herein or in the Trust Agreement or the Transaction Documents. In
addition, this Certificate is not guaranteed by any governmental agency or
instrumentality and is limited in right of payment to certain collections and
recoveries respecting the Home Loans (and certain other amounts), all as more
specifically set forth herein, in the Sale and Servicing Agreement and in the
Indenture. A copy of each of the Sale and Servicing Agreement, the Indenture
and the Trust Agreement may be examined during normal business hours at the
principal office of the Seller, and at such other places, if any, designated by
the Seller, by any Certificateholder upon written request.
MBIA Insurance Corporation, as the Securities Insurer, has issued a
Guaranty Policy in the name of the Indenture Trustee for the benefit of the
Certificateholders, which policy guarantees payments on each Distribution Date
to the Indenture Trustee for the benefit of the Certificateholders of the
related Certificateholders' Interest Distributable Amount then payable on the
Certificates. Unless a Securities Insurer Default shall be continuing, the
Securities Insurer shall be deemed to be the Holder of 100% of the outstanding
Certificates for the purpose of exercising the rights, including voting rights,
of the Certificateholders under the Trust Agreement and the Sale and Servicing
Agreement. In addition, on each Distribution Date, after the
Certificateholders have been paid all amounts to which they are entitled, the
Securities Insurer will be entitled to be reimbursed for any unreimbursed
Guaranteed Payments and any other amounts owed under the Guaranty Policy.
The Trust Agreement permits, with certain exceptions therein provided,
the amendment thereof and the modification of the rights and obligations of the
Seller and the Company and the rights of the Certificateholders under the Trust
Agreement at any time by the Seller, the Company and the Owner Trustee with the
consent of the holders of the Notes and the Certificates each voting as a class
evidencing not less than a majority of the outstanding Notes and the Class
Notional Balance of the Certificates. Any such consent by the holder of this
Certificate shall be conclusive and binding on such holder and on all future
holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate. The Trust Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
holders of any of the Certificates.
As provided in the Trust Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registerable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies of the Certificate Registrar maintained by
the Co-Owner Trustee in the Borough of Manhattan, The City of New York,
accompanied by a written instrument of transfer in form satisfactory to the
Co-Owner Trustee and the Certificate Registrar duly executed by the holder
hereof or such holder's attorney duly
57
authorized in writing, and thereupon one or more new Certificates of authorized
denominations evidencing the same aggregate interest in the Trust will be
issued to the designated transferee. The initial Certificate Registrar
appointed under the Trust Agreement is the Co-Owner Trustee.
The Certificates are issuable only as registered Certificates without
coupons in denominations of $100,000 and in integral multiples of $1,000 in
excess thereof. As provided in the Trust Agreement and subject to certain
limitations therein set forth, Certificates are exchangeable for new
Certificates of authorized denominations evidencing the same aggregate
denomination, as requested by the holder surrendering the same. No service
charge will be made for any such registration of transfer or exchange, but the
Co-Owner Trustee or the Certificate Registrar may require payment of a sum
sufficient to cover any tax or governmental charge payable in connection
therewith.
The Owner Trustee, the Co-Owner Trustee, the Certificate Registrar and
any agent of the Owner Trustee, the Co-Owner Trustee or the Certificate
Registrar may treat the person in whose name this Certificate is registered as
the owner hereof for all purposes and none of the Owner Trustee, the Co-Owner
Trustee, the Certificate Registrar or any such agent shall be affected by any
notice to the contrary.
The obligations and responsibilities created by the Trust Agreement
and the Trust created thereby and the Sale and Servicing Agreement shall
terminate eighteen months after the payment to Certificateholders of all
amounts required to be paid to them pursuant to the Trust Agreement and the
Sale and Servicing Agreement and the disposition of all property held as part
of the Trust. The Majority Residual Interestholders may at their option
purchase the corpus of the Trust at a price specified in the Sale and Servicing
Agreement, and such purchase of the Home Loans and other property of the Trust
will effect early retirement of the Certificates; however, such right of
purchase is exercisable only on a Distribution Date on which the Pool Principal
Balance is less than or equal to 10% of the Original Pool Principal Balance of
the Home Loans.
The Certificates may not be acquired by (a) an employee benefit plan
(as defined in Section 3(3) of ERISA) that is subject to the provisions of
Title I of ERISA, (b) a plan described in Section 4975(e)(1) of the Code or (c)
any entity, including an insurance company separate account, whose underlying
assets include plan assets by reason of a plan's investment in the entity
(each, a "Benefit Plan"). By accepting and holding this Certificate, the
Holder hereof shall be deemed to have represented and warranted that it is not
a Benefit Plan.
58
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
________________________________________________________________________________
(Please print or type name and address, including postal zip code, of assignee)
________________________________________________________________________________
the within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
________________________________________________________________________________
Attorney to transfer said Certificate on the books of the Certificate
Registrar, with full power of substitution in the premises.
Dated:____________________
_____________________________________*/
Signature Guaranteed:
_____________________________________*/
__________________________
*/ NOTICE: The signature to this assignment must correspond with the
name as it appears upon the face of the within Certificate in every particular,
without alteration, enlargement or any change whatever. Such signature must be
guaranteed by a member firm of the New York Stock Exchange or a commercial bank
or trust company.
59
EXHIBIT A-2
TO THE TRUST AGREEMENT
[FORM OF CERTIFICATE ISSUED TO THE COMPANY]
60
EXHIBIT B
TO THE TRUST AGREEMENT
(FORM OF RESIDUAL INTEREST INSTRUMENT]
THE RESIDUAL INTEREST IN THE TRUST REPRESENTED BY THIS RESIDUAL INTEREST
INSTRUMENT HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS. THIS RESIDUAL
INTEREST MAY BE DIRECTLY OR INDIRECTLY OFFERED OR SOLD OR OTHERWISE DISPOSED OF
(INCLUDING PLEDGED) BY THE HOLDER HEREOF ONLY TO (I) A "QUALIFIED INSTITUTIONAL
BUYER" AS DEFINED IN RULE 144A UNDER THE ACT, IN A TRANSACTION THAT IS
REGISTERED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS OR THAT IS EXEMPT
FROM THE REGISTRATION REQUIREMENTS OF THE ACT PURSUANT TO RULE 144A OR (II) A
PERSON INVOLVED IN THE ORGANIZATION OR OPERATION OF THE TRUST OR AN AFFILIATE
OF SUCH A PERSON WITHIN THE MEANING OF RULE 3A-7 OF THE INVESTMENT COMPANY ACT
OF 1940, AS AMENDED (INCLUDING, BUT NOT LIMITED TO, MEGO MORTGAGE CORPORATION)
IN A TRANSACTION THAT IS REGISTERED UNDER THE ACT AND APPLICABLE STATE
SECURITIES LAWS OR THAT IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE ACT
AND SUCH LAWS. NO PERSON IS OBLIGATED TO REGISTER THIS RESIDUAL INTEREST UNDER
THE ACT OR ANY STATE SECURITIES LAWS.
NO TRANSFER OF THIS RESIDUAL INTEREST INSTRUMENT OR ANY BENEFICIAL INTEREST
THEREIN SHALL BE MADE TO ANY PERSON UNLESS THE OWNER TRUSTEE HAS RECEIVED A
CERTIFICATE FROM THE TRANSFEREE TO THE EFFECT THAT SUCH TRANSFEREE (I) IS NOT A
PERSON WHICH IS AN EMPLOYEE BENEFIT PLAN, TRUST OR ACCOUNT SUBJECT TO TITLE I
OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA") OR
SECTION 4975 OF THE CODE OR A GOVERNMENTAL PLAN, DEFINED IN SECTION 3(32) OF
ERISA SUBJECT TO ANY FEDERAL, STATE OR LOCAL LAW WHICH IS, TO A MATERIAL
EXTENT, SIMILAR TO THE FOREGOING PROVISIONS OF ERISA OR THE CODE (ANY SUCH
PERSON BEING A "PLAN") AND (II) IS NOT AN ENTITY, INCLUDING AN INSURANCE
COMPANY SEPARATE ACCOUNT OR GENERAL ACCOUNT, WHOSE UNDERLYING ASSETS INCLUDE
PLAN ASSETS BY REASON OF A PLAN'S INVESTMENT IN THE ENTITY.
[THIS AGREEMENT IS NONTRANSFERABLE. NOTWITHSTANDING ANYTHING HEREIN OR IN THE
TRUST AGREEMENT TO THE CONTRARY, ANY ATTEMPTED TRANSFER OF THIS RESIDUAL
INTEREST INSTRUMENT SHALL BE NULL AND VOID FOR ALL PURPOSES.]
61
MEGO MORTGAGE HOME LOAN OWNER TRUST 1997-1
RESIDUAL INTEREST CERTIFICATE
No. _____
THIS CERTIFIES THAT __________________________________ (the "Owner")
is the registered owner of a _____% residual interest in MEGO MORTGAGE HOME
LOAN OWNER TRUST 1997-1 (the "Trust") existing under the laws of the State of
Delaware and created pursuant to the Trust Agreement dated as of February 1,
1997 (the "Trust Agreement") between FINANCIAL ASSET SECURITIES CORP., as
Depositor, MEGO MORTGAGE CORPORATION, as the Company, WILMINGTON TRUST COMPANY,
not in its individual capacity but solely in its fiduciary capacity as owner
trustee under the Trust Agreement (the "Owner Trustee") and First Trust of New
York, National Association, as Co-Owner Trustee (the "Co-Owner Trustee").
Initially capitalized terms used but not defined herein have the meanings
assigned to them in the Trust Agreement. The Owner Trustee, on behalf of the
Issuer and not in its individual capacity, has executed this Residual Interest
Instrument by one of its duly authorized signatories as set forth below. This
Residual Interest Instrument is one of the Residual Interest Instruments
referred to in the Trust Agreement and is issued under and is subject to the
terms, provisions and conditions of the Trust Agreement to which the holder of
this Residual Interest Instrument by virtue of the acceptance hereof agrees and
by which the holder hereof is bound. Reference is hereby made to the Trust
Agreement and the Sale and Servicing Agreement for the rights of the holder of
this Residual Interest Instrument, as well as for the terms and conditions of
the Trust created by the Trust Agreement.
The holder, by its acceptance hereof, agrees not to transfer this
Residual Interest Instrument [except in accordance with terms and provisions of
the Agreement].
62
THIS RESIDUAL INTEREST INSTRUMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF
LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Trust and not
in its individual capacity, has caused this Residual Interest Instrument to be
duly executed.
MEGO MORTGAGE HOME LOAN OWNER TRUST
1997-1
By: Wilmington Trust Company, not
in its individual capacity but
solely as Owner Trustee under
the Trust Agreement
By:___________________________
Authorized Signatory
DATED: February __, 1997
CERTIFICATE OF AUTHENTICATION
This is one of the Residual Interest referred to in the
within-mentioned Agreement.
FIRST TRUST OF NEW YORK, NATIONAL
ASSOCIATION, as Authenticating Agent
By:_____________________________
Authorized Signatory
63
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
________________________________________________________________________________
(Please print or type name and address, including postal zip code, of assignee)
________________________________________________________________________________
the within Instrument, and all rights thereunder, hereby irrevocably
constituting and appointing
________________________________________________________________________________
Attorney to transfer said Instrument on the books of the Certificate
Registrar, with full power of substitution in the premises.
Dated:____________________
________________________________________*/
Signature Guaranteed:
________________________________________*/
__________________________
*/ NOTICE: The signature to this assignment must correspond with the name
as it appears upon the face of the within Certificate in every particular,
without alteration, enlargement or any change whatever. Such signature must be
guaranteed by a member firm of the New York Stock Exchange or a commercial bank
or trust company.
64
EXHIBIT C
TO THE TRUST AGREEMENT
CERTIFICATE OF TRUST OF
MEGO MORTGAGE HOME LOAN OWNER TRUST 1997-1
THIS Certificate of Trust of MEGO MORTGAGE HOME LOAN OWNER TRUST
1997-1 (the "Trust"), dated as of February 1, 1997, is being duly executed and
filed by Wilmington Trust Company, a Delaware banking corporation, as trustee,
to form a business trust under the Delaware Business Trust Act (12 Del. Code,
Section 3801 et seq.).
1. Name. The name of the business trust formed hereby is MEGO
MORTGAGE HOME LOAN OWNER TRUST 1997-1.
2. Delaware Trustee. The name and business address of the trustee
of the Trust in the State of Delaware is Wilmington Trust Company of Xxxxxx
Square North, 0000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000.
Attention:___________.
IN WITNESS WHEREOF, the undersigned, being the sole trustee of the
Trust, has executed this Certificate of Trust as of the date first above
written.
Wilmington Trust Company, not in its
individual capacity but solely as
Owner Trustee under a Trust Agreement
dated as of February 1, 1997.
By:_________________________________
Name:
Title:
