EXHIBIT 4.2
NOVASTAR MORTGAGE FUNDING CORPORATION,
as Company
and
______________________________________,
as Owner Trustee
TRUST AGREEMENT
Dated as of ____________________
relating to
NOVASTAR MORTGAGE FUNDING TRUST, SERIES __________
NOVASTAR HOME EQUITY LOAN ASSET-BACKED BONDS, SERIES __________
Table of Contents
ARTICLE I Definitions..............................................................................................
Section 1.01. Definitions......................................................................................
Section 1.02. Other Definitional Provisions....................................................................
ARTICLE II Organization............................................................................................
Section 2.01. Name.............................................................................................
Section 2.02. Office...........................................................................................
Section 2.03. Purposes and Powers..............................................................................
Section 2.04. Appointment of Owner Trustee.....................................................................
Section 2.05. Initial Capital Contribution of Owner Trust Estate...............................................
Section 2.06. Declaration of Trust.............................................................................
Section 2.07. Liability of the Holders of the Certificates.....................................................
Section 2.08. Title to Trust Property..........................................................................
Section 2.09. Situs of Trust...................................................................................
Section 2.10. Representations and Warranties of the Company....................................................
Section 2.11. Payment of Trust Fees............................................................................
Section 2.12. Investment Company...............................................................................
ARTICLE III Conveyance of the Mortgage Loans; Certificates.........................................................
Section 3.01. Conveyance of the Initial Mortgage Loans.........................................................
Section 3.02. Initial Ownership................................................................................
Section 3.03. The Certificates.................................................................................
Section 3.04. Authentication of Certificates...................................................................
Section 3.05. Registration of and Limitations on Transfer and Exchange of Certificates.........................
Section 3.06. Mutilated, Destroyed, Lost or Stolen Certificates................................................
Section 3.07. Persons Deemed Certificateholders................................................................
Section 3.08. Access to List of Certificateholders' Names and Addresses........................................
Section 3.09. Maintenance of Office or Agency..................................................................
Section 3.10. Certificate Paying Agent.........................................................................
Section 3.11. Pre-Funding Amount and Interest Coverage Amount..................................................
Section 3.12. Purchase of Subsequent Mortgage Loans............................................................
ARTICLE IV Authority and Duties of Owner Trustee...................................................................
Section 4.01. General Authority................................................................................
Section 4.02. General Duties...................................................................................
Section 4.03. Action upon Instruction..........................................................................
Section 4.04. No Duties Except as Specified under this Trust Agreement, Basic Documents or in Instructions.....
Section 4.05. Restrictions.....................................................................................
Section 4.06. Prior Notice to Certificateholders with Respect to Certain Matters...............................
Section 4.07. Action by Certificateholders with Respect to Certain Matters.....................................
Section 4.08. Action by Certificateholders with Respect to Bankruptcy..........................................
Section 4.09. Restrictions on Certificateholders' Power........................................................
Section 4.10. Majority Control.................................................................................
Section 4.11. Optional Termination by the Servicer.............................................................
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ARTICLE V Application of Trust Funds...............................................................................
Section 5.01. Distributions....................................................................................
Section 5.02. Method of Payment................................................................................
Section 5.03. Tax Returns......................................................................................
Section 5.04. Statements to Certificateholders.................................................................
ARTICLE VI Concerning the Owner Trustee............................................................................
Section 6.01. Acceptance of Trusts and Duties..................................................................
Section 6.02. Furnishing of Documents..........................................................................
Section 6.03. Representations and Warranties...................................................................
Section 6.04. Reliance; Advice of Counsel......................................................................
Section 6.05. Not Acting in Individual Capacity................................................................
Section 6.06. Owner Trustee Not Liable for Certificates or Related Documents...................................
Section 6.07. Owner Trustee May Own Certificates and Bonds.....................................................
Section 6.08. Payments from Owner Trust Estate.................................................................
Section 6.09. Doing Business in Other Jurisdictions............................................................
Section 6.10. Liability of Certificate Registrar and Certificate Paying Agent..................................
ARTICLE VII Compensation of Owner Trustee..........................................................................
Section 7.01. Owner Trustee's Fees and Expenses................................................................
Section 7.02. Indemnification..................................................................................
ARTICLE VIII Termination of Trust Agreement........................................................................
Section 8.01. Termination of Trust Agreement...................................................................
ARTICLE IX Successor Owner Trustees and Additional Owner Trustees..................................................
Section 9.01. Eligibility Requirements for Owner Trustee.......................................................
Section 9.02. Resignation or Removal of Owner Trustee..........................................................
Section 9.03. Successor Owner Trustee..........................................................................
Section 9.04. Merger or Consolidation of Owner Trustee.........................................................
Section 9.05. Appointment of Co-Trustee or Separate Trustee....................................................
ARTICLE X Miscellaneous............................................................................................
Section 10.01. Amendments......................................................................................
Section 10.02. No Legal Title to Owner Trust Estate............................................................
Section 10.03. Limitations on Rights of Others.................................................................
Section 10.04. Notices.........................................................................................
Section 10.05. Severability....................................................................................
Section 10.06. Separate Counterparts...........................................................................
Section 10.07. Successors and Assigns..........................................................................
Section 10.08. No Petition.....................................................................................
Section 10.09. No Recourse.....................................................................................
Section 10.10. Headings........................................................................................
Section 10.11. Governing Law...................................................................................
Section 10.12. Integration.....................................................................................
Section 10.13. Third Party Beneficiary.........................................................................
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This Trust Agreement, dated as of ______________ (this "Trust Agreement"),
between NovaStar Mortgage Funding Corporation, as the company (the "Company"),
and ___________________________, a ___________ banking corporation, as owner
trustee (the "Owner Trustee").
WITNESSETH THAT:
In consideration of the mutual agreements herein contained, the Company and
the Owner Trustee agree as follows:
ARTICLE I
Definitions
-----------
Section 1.01. Definitions.
-----------
For all purposes of this Trust Agreement, except as otherwise expressly
provided herein or unless the context otherwise requires, capitalized terms not
otherwise defined herein shall have the meanings assigned to such terms in
Appendix A to the Indenture, dated as of _____________________, between
NovaStar Mortgage Funding Trust, Series ___________, as Issuer,
____________________________, as Bond Administrator, and ___________________
______________________, as Indenture Trustee, which is incorporated by
referenced herein. All other capitalized terms used herein shall have the
meanings specified herein.
Section 1.02. Other Definitional Provisions.
-----------------------------
(a) All terms defined in this Trust Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein.
(b) As used in this Trust Agreement and in any certificate or other
document made or delivered pursuant hereto or thereto, accounting terms not
defined in this Trust Agreement or in any such certificate or other document,
and accounting terms partly defined in this Trust Agreement or in any such
certificate or other document to the extent not defined, shall have the
respective meanings given to them under generally accepted accounting
principles. To the extent that the definitions of accounting terms in this
Trust Agreement or in any such certificate or other document are inconsistent
with the meanings of such terms under generally accepted accounting principles,
the definitions contained in this Trust Agreement or in any such certificate or
other document shall control.
(c) The words "hereof," "herein," "hereunder" and words of similar import
when used in this Trust Agreement shall refer to this Trust Agreement as a whole
and not to any particular provision of this Trust Agreement; Article, Section
and Exhibit references contained in this Trust Agreement are references to
Articles, Sections and Exhibits in or to this Trust Agreement unless otherwise
specified; and the term "including" shall mean "including without limitation".
(d) The definitions contained in this Trust Agreement are applicable to
the singular as well as the plural forms of such terms and to the masculine as
well as to the feminine and neuter genders of such terms.
(e) Any agreement, instrument or statute defined or referred to herein or
in any instrument or certificate delivered in connection herewith means such
agreement, instrument or statute as from time to time amended, modified or
supplemented and includes (in the case of agreements or instruments) references
to all attachments thereto and instruments incorporated therein; references to a
Person are also to its permitted successors and assigns.
ARTICLE II
Organization
------------
Section 2.01. Name.
----
The trust created hereby (the "Trust") shall be known as "NovaStar Mortgage
Funding Trust, Series ___________", in which name the Owner Trustee may conduct
the business of the Trust, make and execute contracts and other instruments on
behalf of the Trust, and xxx and be sued.
Section 2.02. Office.
------
The office of the Trust shall be in care of the Owner Trustee at the
Corporate Trust Office or at such other address in ________________ as the Owner
Trustee may designate by written notice to the Certificateholders and the
Company.
Section 2.03. Purposes and Powers.
-------------------
The purpose of the Trust is to engage in the following activities:
(a) to execute, issue and deliver the Bonds pursuant to the Indenture and
the Certificates pursuant to this Trust Agreement and to sell the Bonds and the
Certificates;
(b) to pay the organizational, startup and transactional expenses of the
Trust;
(c) to hold, assign, grant, transfer, pledge and convey the Mortgage Loans
pursuant to the Indenture and to hold, manage and distribute to the
Certificateholders pursuant to Section 5.01 hereof, any portion of the Mortgage
Loans released from the Lien of, and remitted to the Trust pursuant to, the
Indenture;
(d) to purchase and hold the Initial Mortgage Loans pursuant to this Trust
Agreement and to purchase and hold the Subsequent Mortgage Loans pursuant to the
Mortgage Loan Purchase Agreement;
(e) to enter into, execute, deliver and perform its obligations under the
Basic Documents to which it is to be a party and to enter into and to consummate
the transactions contemplated thereby;
(f) if directed in writing by holders of Certificates representing more
than 50% of the beneficial interests in the Trust, to sell the Trust Estate
subsequent to the satisfaction and discharge of the Indenture, all for the
benefit of the holders of the Certificates;
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(g) to make a REMIC election, on behalf of the Issuer, for federal income
tax purposes with respect to the Owner Trust Estate;
(h) to engage in those activities, including entering into, executing and
delivering agreements, that are necessary, suitable or convenient to accomplish
the foregoing or are incidental thereto or connected therewith; and
(i) subject to compliance with the Basic Documents, to engage in such
other activities as may be required in connection with conservation of the Owner
Trust Estate and the making of distributions to the Certificateholders and the
Bondholders.
The Trust is hereby authorized to engage in the foregoing activities. The
Trust shall not engage in any activity other than in connection with the
foregoing to the extent limited, or other than as expressly required or
authorized by the terms of this Trust Agreement or the other Basic Documents.
Section 2.04. Appointment of Owner Trustee.
----------------------------
The Company hereby appoints the Owner Trustee as trustee of the Trust
effective as of the date hereof, to have all the rights, powers and duties set
forth herein.
Section 2.05. Initial Capital Contribution of Owner Trust Estate.
--------------------------------------------------
The Company hereby sells, assigns, transfers, conveys and sets over to the
Trust, as of the date hereof, the sum of $1,000. The Owner Trustee hereby
acknowledges receipt in trust from the Company, as of the date hereof, of the
foregoing contribution, which shall constitute the initial corpus of the Trust
and shall be deposited in the Certificate Distribution Account. The Owner
Trustee also acknowledges on behalf of the Trust the receipt in trust of the
Mortgage Loans from the Company pursuant to Section 3.01 hereof, and the rights
with respect to the representations and warranties made by the Seller under the
Mortgage Loan Purchase Agreement and all other amounts constituting part of the
Trust Estate (such items plus all other amounts or items included in the Trust
Estate from time to time, the "Owner Trust Estate").
Section 2.06. Declaration of Trust.
--------------------
The Owner Trustee hereby declares that it shall hold the Owner Trust Estate
in trust upon and subject to the conditions set forth herein for the use and
benefit of the Certificateholders, subject to the obligations of the Trust under
the Basic Documents. It is the intention of the parties hereto that the Trust
constitute a "business trust" under the Business Trust Statute and that this
Trust Agreement constitute the governing instrument of such business trust. It
is the intention of the parties hereto that, for federal and state income and
state and local franchise tax purposes, the Trust shall not be treated as (i) an
association subject separately to taxation as a corporation, (ii) a "publicly
traded partnership" as defined in Treasury Regulation Section 1.7704-1 or (iii)
a "taxable mortgage pool" as defined in Section 7701(i) of the Code but instead
shall elect to be treated as a REMIC, and that the Bonds shall be REMIC Regular
Interests and the provisions of this Trust Agreement shall be interpreted to
further this intention. Except as otherwise provided in this Trust Agreement,
the rights of the Certificateholders will be those of holders of a REMIC
Residual Interest and beneficial owners of the Trust. Effective as of the date
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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 2.07. Liability of the Holders of the Certificates.
--------------------------------------------
The holders of the Certificates shall be jointly and severally liable
directly to and shall indemnify the Trust and the Owner Trustee for all losses,
claims, damages, liabilities and expenses of the Trust and the Owner Trustee
(including Expenses, to the extent not paid by the Servicer pursuant to Section
2.11 hereof or out of the Owner Trust Estate); provided, however, that the
holders of the Certificates shall not be liable for payments required to be made
on the Bonds or the Certificates, or for any losses incurred by a
Certificateholder in the capacity of an investor in the Certificates or a
Bondholder in the capacity of an investor in the Bonds. The holders of the
Certificates shall be liable for and shall promptly pay any entity level taxes
imposed on the Trust. In addition, any third party creditors of the Trust,
including the Bond Insurer (other than in connection with the obligations
described in the second preceding sentence for which the holders of the
Certificates shall not be liable) shall be deemed third party beneficiaries of
this paragraph. The obligations of the holders of the Certificates under this
paragraph shall be evidenced by the Certificates.
Section 2.08. Title to Trust Property.
-----------------------
Except with respect to the Mortgage Loans, which will be assigned of record
to the Indenture Trustee pursuant to the Indenture, legal title to the Owner
Trust Estate shall be vested at all times in the Trust as a separate legal
entity except where applicable law in any jurisdiction requires title to any
part of the Owner Trust Estate to be vested in a trustee or trustees, in which
case title shall be deemed to be vested in the Owner Trustee, a co-trustee
and/or a separate trustee, as the case may be.
Section 2.09. Situs of Trust.
--------------
The Trust will be located and administered in the State of ________. All
bank accounts maintained by the Owner Trustee on behalf of the Trust shall be
located in the State of ________. The Trust shall not have any employees in any
state other than ________; provided, however, that nothing herein shall restrict
or prohibit the Owner Trustee from having employees within or without the State
of ________ or taking actions outside the State of ________. Payments will be
received by the Trust only in __________, ______________, or ________, and
payments will be made by the Trust only from __________ or ________. The only
office of the Trust will be at the Corporate Trust Office in the State of
________.
Section 2.10. Representations and Warranties of the Company.
---------------------------------------------
The Company hereby represents and warrants to the Owner Trustee and the
Bond Insurer that:
(a) 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.
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(b) The Company is duly qualified to do business as a foreign corporation
in good standing and has obtained all necessary licenses and approvals in all
jurisdictions in which the ownership or lease of its property or the conduct of
its business shall require such qualifications and in which the failure to so
qualify would have a material adverse effect on the business, properties, assets
or condition (financial or other) of the Company.
(c) The Company has the power and authority to execute and deliver this
Trust Agreement and to carry out its terms; the Company has full power and
authority to convey and assign the property to be conveyed and assigned to and
deposited with the Trust as part of the Owner Trust Estate and the Company has
duly authorized such conveyance and assignment and deposit to the Trust by all
necessary corporate action; and the execution, delivery and performance of this
Trust Agreement have been duly authorized by the Company by all necessary
corporate action.
(d) The consummation of the transactions contemplated by this Trust
Agreement and the fulfillment of the terms hereof do not conflict with, result
in any breach of any of the terms and provisions of, or constitute (with or
without notice or lapse of time) a default under, the articles of incorporation
or bylaws of the Company, or any indenture, agreement or other instrument to
which the Company is a party or by which it is bound; nor result in the creation
or imposition of any Lien upon any of its properties pursuant to the terms of
any such indenture, agreement or other instrument (other than pursuant to the
Basic Documents); nor violate any law or, to the best of the Company's
knowledge, any order, rule or regulation applicable to the Company of any court
or of any federal or state regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Company or its
properties.
(e) The Trust is not required to register as an investment company under
the Investment Company Act and is not under the control of a Person required to
so register.
Section 2.11. Payment of Trust Fees.
---------------------
The Servicer shall pay the Owner Trustee Fee pursuant to Section 3.07 of
the Servicing Agreement and shall pay the Trust's expenses (including expenses
of the Owner Trustee and the Indenture Trustee) incurred with respect to the
performance of the Trust's duties under the Indenture pursuant to Section 5.06
of the Servicing Agreement, or, if such amounts are insufficient, the Owner
Trustee shall be paid pursuant to Section 7.01 hereof.
Section 2.12. Investment Company.
------------------
Neither the Company nor any holder of a Certificate shall take any action
which would cause the Trust to become an "investment company" which would be
required to register under the Investment Company Act.
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ARTICLE III
Conveyance of the Mortgage Loans; Certificates
----------------------------------------------
Section 3.01. Conveyance of the Initial Mortgage Loans.
----------------------------------------
The Company, concurrently with the execution and delivery hereof, does
hereby Grant to the Trust, without recourse, all its right, title and interest
in and to the Initial Mortgage Loans, including all interest and principal
received on or with respect to the Initial Mortgage Loans after the Cutoff Date
(other than payments of principal and interest due on the Mortgage Loans on or
before the Cutoff Date) the proceeds thereof and all rights under the Related
Documents (including the related Mortgage Files). In addition, the Company
hereby Grants to the Trust all of its right, title, and interest in, to, and
under the Mortgage Loan Purchase Agreement.
The conveyance of the Initial Mortgage Loans by the Company to the Trust
hereunder is intended to facilitate the simultaneous issuance of the Bonds under
the Indenture and issuance of the Certificates hereunder. The parties hereto
intend that the conveyance of the Initial Mortgage Loans by the Company to the
Trust hereunder constitute a sale by the Company to the Trust of all of the
Company's right, title and interest in and to the Initial Mortgage Loans.
However, if the transactions contemplated by this Trust Agreement are determined
to constitute a financing, the Company hereby Grants to the Trust a security
interest in the Owner Trust Estate and all distributions thereon and proceeds
thereof, and this Trust Agreement shall constitute a security agreement under
applicable law, and in such event, the parties hereto acknowledge that the Bond
Administrator, in addition to holding the Initial Mortgage Loans on behalf of
the Indenture Trustee for the benefit of the Bondholders and the Bond Insurer,
holds the Mortgage Loans as designee of the Trust.
Section 3.02. Initial Ownership.
-----------------
Upon the formation of the Trust by the contribution by the Company pursuant
to Section 2.05 and until the issuance of the Certificates, the Company shall be
the sole beneficial owner of the Trust. Upon the issuance of the Certificates,
the Certificateholders shall be the sole beneficial owners of the Trust.
Section 3.03. The Certificates.
----------------
The Certificates shall be issued in the form of one or more Certificates
each representing not less than a 10% Certificate Percentage Interest. The
Certificates shall initially be registered in the name of NovaStar Certificates
Financing Corporation ("NCFC"). The Certificates shall be executed on behalf of
the Trust by manual or facsimile signature of an authorized officer of the Owner
Trustee and authenticated in the manner provided in Section 3.04. Certificates
bearing the manual or facsimile signatures of individuals who were, at the time
when such signatures shall have been affixed, authorized to sign on behalf of
the Trust, shall be validly issued and entitled to the benefit of this Trust
Agreement, notwithstanding that such individuals or any of them shall have
ceased to be so authorized prior to the authentication and delivery of such
Certificates or did not hold such offices at the date of authentication and
delivery of such Certificates. A Person shall become a Certificateholder and
shall be entitled to the rights and
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subject to the obligations of a Certificateholder hereunder upon such Person's
acceptance of a Certificate duly registered in such Person's name, pursuant to
Section 3.05.
A transferee of a Certificate shall become a Certificateholder and shall be
entitled to the rights and subject to the obligations of a Certificateholder
hereunder upon such transferee's acceptance of a Certificate duly registered in
such transferee's name pursuant to and upon satisfaction of the conditions set
forth in Section 3.05.
Section 3.04. Authentication of Certificates.
------------------------------
The Owner Trustee shall cause all Certificates issued hereunder to be
executed and authenticated in the name and on behalf of the Trust, authenticated
and delivered to or upon the written order of the Company, signed by its
chairman of the board, its president or any vice president, without further
corporate action by the Company, in authorized denominations. No Certificate
shall entitle its holder to any benefit under this Trust Agreement or be valid
for any purpose unless there shall appear on such Certificate a certificate of
authentication substantially in the form set forth in Exhibit A, executed by the
Owner Trustee or the Certificate Registrar by manual signature; such
authentication shall constitute conclusive evidence that such Certificate shall
have been duly authenticated and delivered hereunder. All Certificates shall be
dated the date of their authentication.
Section 3.05. Registration of and Limitations on Transfer and Exchange of
-----------------------------------------------------------
Certificates.
------------
The Certificate Registrar shall keep or cause to be kept, a Certificate
Register in which, subject to such reasonable regulations as it may prescribe,
the Certificate Registrar shall provide for the registration of Certificates and
of transfers and exchanges of Certificates as herein provided,
_________________________ shall be the initial Certificate Registrar. If the
Certificate Registrar resigns or is removed, the Owner Trustee shall appoint a
successor Certificate Registrar.
Subject to satisfaction of the conditions set forth below with respect to
the Certificate, upon surrender for registration of transfer of any Certificate
at the office or agency maintained pursuant to Section 3.09, the Owner Trustee
or the Certificate Registrar shall execute, authenticate and deliver in the name
of the designated transferee or transferees, one or more new Certificates in
authorized denominations of a like aggregate amount dated the date of
authentication by the Owner Trustee or the Certificate Registrar. At the option
of a Certificateholder, Certificates may be exchanged for other Certificates of
authorized denominations of a like aggregate amount upon surrender of the
Certificates to be exchanged at the office or agency maintained pursuant to
Section 3.09.
Every Certificate presented or surrendered for registration of transfer or
exchange shall be accompanied by a written instrument of transfer in form
satisfactory to the Certificate Registrar duly executed by the Certificateholder
or such Certificateholder's attorney duly authorized in writing. Each
Certificate surrendered for registration of transfer or exchange shall be
canceled and subsequently disposed of by the Certificate Registrar in accordance
with its customary practice.
No service charge shall be made for any registration of transfer or
exchange of Certificates, but the Owner Trustee or the Certificate Registrar may
require payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer or exchange of Certificates.
No transfer, sale, pledge or other disposition of a Certificate shall be
made unless such transfer, sale, pledge or other disposition is exempt from the
registration requirements of the Securities Act and any applicable state
securities laws or is made in accordance with said Act and laws. In the event
of any such transfer, the Certificate Registrar or the Company shall prior to
such transfer require the transferee to execute and deliver to the Owner Trustee
and Certificate Registrar, (a) either (i) an investment letter in
substantially the form attached hereto as Exhibit C (or in such form and
substance reasonably satisfactory to the Certificate Registrar and the Company),
which investment letter shall not be an expense of the Trust, the Owner Trustee,
the Certificate Registrar, the Servicer, the Bond Insurer or the Company, and
which investment letter states that, among other things, such transferee (A) is
a "qualified institutional buyer" as defined under Rule 144A, acting for its own
account or the accounts of other "qualified institutional buyers" as defined
under Rule 144A and (B) is aware that the proposed Company intends to rely on
the exemption from registration requirements under the Securities Act of 1933,
as amended, provided by Rule 144A or (ii) (A) a written Opinion of Counsel
acceptable to and in form and substance satisfactory to the Certificate
Registrar, the Company, and the Bond Insurer that such transfer may be made
pursuant to an exemption, describing the applicable exemption and the basis
therefor, from said Act and laws or is being made pursuant to said Act and laws,
which Opinion of Counsel shall not be an expense of the Trust, the Owner
Trustee, the Certificate Registrar, the Servicer, the Bond Insurer or the
Company and (B) the transferee executes a representation letter, substantially
in the form of Exhibit D hereto, and the Company executes a representation
letter, substantially in the form of Exhibit E hereto, each acceptable to and in
form and substance satisfactory to the Certificate Registrar and the Company
certifying the facts surrounding such transfer, which representation letters
shall not be an expense of the Trust, the Owner Trustee, the Certificate
Registrar, the Servicer, the Bond Insurer or the Company and (b) the Certificate
of Non-Foreign Status (in substantially the form attached hereto as Exhibit F)
acceptable to and in form and substance reasonably satisfactory to the
Certificate Registrar and the Company, which certificate shall not be an expense
of the Trust, the Owner Trustee, the Certificate Registrar, the Servicer, the
Bond Insurer or the Company. If the Certificateholder is unable to provide a
Certificate of Non-Foreign Status, the Certificateholder must provide an Opinion
of Counsel as described above in this paragraph. The Certificateholder desiring
to effect such transfer shall, and does hereby agree to, indemnify the Trust,
the Owner Trustee, in its individual capacity, the Certificate Registrar, the
Servicer, the Bond Insurer and the Company against any liability that may result
if the transfer is not so exempt or is not made in accordance with such federal
and state laws or otherwise is not made in accordance with this Trust Agreement.
No transfer of a Certificate or any interest therein shall be made to any
employee benefit plan or certain other retirement plans and arrangements,
including, without limitation, individual retirement accounts and annuities,
Xxxxx plans and bank collective investment funds and insurance company general
or separate accounts in which such plans, accounts or arrangements are invested,
that are subject to ERISA, or Section 4975 of the Code (collectively, "Plan"),
any Person acting, directly or indirectly on behalf of any such Plan or any
Person acquiring such
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Certificates with assets of a Plan ("Plan Assets"). Any transferee of
Certificates must provide a certification in the form of Exhibit G to this Trust
Agreement, which the Company, the Owner Trustee, the Certificate Registrar and
the Servicer may rely upon without further inquiry or investigation. No
certification will be required in connection with the initial transfer or pledge
of any such Certificate by the Company to an affiliate of the Company (in which
case, the Company or any affiliate thereof shall have deemed to have represented
that such affiliate is not a Plan or a Person investing Plan Assets of any Plan)
and the Owner Trustee shall be entitled to rely conclusively upon a written
representation from the Company of the status of such transferee as an affiliate
of the Company.
In addition, no transfer, sale, assignment, pledge or other disposition of
a Certificate shall be made unless the proposed transferee executes a
representation letter substantially in the form of Exhibit D, or substantially
in the form of Exhibit H hereto, that (1) the transferee is acquiring the
Certificate for its own behalf and is not acting as agent or custodian for any
other person or entity in connection with such acquisition and (2) if the
transferee is a partnership, grantor trust or S corporation for federal income
tax purposes, the Certificates are not more than 50% of the assets of the
partnership, grantor trust or S corporation.
No offer, sale, transfer, pledge, hypothecation or other disposition
(including any pledge, sale or transfer under a repurchase transaction or
securities loan) of any Certificate shall be made to any transferee unless,
prior to such disposition, the proposed Company delivers to the Owner Trustee an
Opinion of Counsel, rendered by a law firm generally recognized to be qualified
to opine concerning the tax aspects of asset securitization, to the effect that
such transfer (including any disposition permitted following any default under
any pledge or repurchase transaction) will not cause the Trust to be (i) treated
as an association taxable as a corporation for federal income tax purposes, (ii)
taxable as a taxable mortgage pool as defined in Section 7701(i) of the Code or
(iii) taxable as a "publicly traded partnership" as defined in Treasury
Regulation section 1.7704-1.
No Person shall become a Certificateholder until it shall establish its
non-foreign status by submitting to the Certificate Paying Agent an IRS Form W9
and the Certificate of Non-Foreign Status set forth in Exhibit F hereto.
No sale or other transfer of record or beneficial ownership of a
Certificate (whether pursuant to a purchase, a transfer resulting from a default
under a secured lending agreement or otherwise) shall be made to a Disqualified
Organization or an agent of a Disqualified Organization. The transfer, sale or
other disposition of a Certificate (whether pursuant to a purchase, a transfer
resulting from a default under a secured lending agreement or otherwise) to a
Disqualified Organization shall be deemed to be of no legal force or effect
whatsoever and such transferee shall not be deemed to be a Certificateholder for
any purpose hereunder, including, but not limited to, the receipt of
distributions on such Certificate. Furthermore, in no event shall the Owner
Trustee accept surrender for transfer, registration of transfer, or register the
transfer, of any Certificate nor authenticate and make available any new
Certificate unless the Owner Trustee has received an affidavit from the proposed
transferee in the form attached hereto as Exhibit I. Each holder of a
Certificate by his acceptance thereof, shall be deemed for all purposes to have
consented to the provisions of this Section 3.05.
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Section 3.06. Mutilated, Destroyed, Lost or Stolen Certificates.
-------------------------------------------------
If any mutilated Certificate shall be surrendered to the Certificate
Registrar, or if the Certificate Registrar shall receive evidence to its
satisfaction of the destruction, loss or theft of any Certificate and there
shall be delivered to the Certificate Registrar and the Owner Trustee such
security or indemnity as may be required by them to save each of them harmless,
then in the absence of notice to the Certificate Registrar or the Owner Trustee
that such Certificate has been acquired by a bona fide purchaser, the Owner
Trustee shall execute in the name and on behalf of the Trust and the Owner
Trustee or the Certificate Registrar, shall authenticate and deliver, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate of like tenor and denomination. In connection
with the issuance of any new Certificate under this Section 3.06, the Owner
Trustee or the Certificate Registrar may require the payment of a sum sufficient
to cover any expenses of the Owner Trustee or the Certificate Registrar
(including fees and expenses of counsel) and any tax or other governmental
charge that may be imposed in connection therewith. Any duplicate Certificate
issued pursuant to this Section 3.06 shall constitute conclusive evidence of
ownership in the Trust, as if originally issued, whether or not the lost, stolen
or destroyed Certificate shall be found at any time.
Section 3.07. Persons Deemed Certificateholders.
---------------------------------
Prior to due presentation of a Certificate for registration of transfer,
the Trust, the Owner Trustee, the Certificate Registrar or any Certificate
Paying Agent may treat the Person in whose name any Certificate is registered in
the Certificate Register as the owner of such Certificate for the purpose of
receiving distributions pursuant to Section 5.02 and for all other purposes
whatsoever, and none of the Trust, the Owner Trustee, the Certificate Registrar
or any Paying Agent shall be bound by any notice to the contrary.
Section 3.08. Access to List of Certificateholders' Names and Addresses.
---------------------------------------------------------
The Certificate Registrar shall furnish or cause to be furnished to the
Company or the Owner Trustee, within 15 days after receipt by the Certificate
Registrar of a written request therefor from the Company or the Owner Trustee, a
list, in such form as the Company or the Owner Trustee, as the case may be, may
reasonably require, of the names and addresses of the Certificateholders as of
the most recent Record Date. Each Certificateholder, by receiving and holding a
Certificate, shall be deemed to have agreed not to hold any of the Trust, the
Company, the Certificate Registrar or the Owner Trustee in its individual
capacity accountable by reason of the disclosure of its name and address,
regardless of the source from which such information was derived.
Section 3.09. Maintenance of Office or Agency.
-------------------------------
The Owner Trustee on behalf of the Trust, shall maintain in Wilmington,
Delaware, an office or offices or agency or agencies where Certificates may be
surrendered for registration of transfer or exchange and where notices and
demands to or upon the Owner Trustee in respect of the Certificates and the
Basic Documents may be served. The Owner Trustee initially designates the
Corporate Trust Office as its office for such purposes. The Owner Trustee shall
give prompt
10
written notice to the Company and the Certificateholders of any change in the
location of the Certificate Register or any such office or agency.
Section 3.10. Certificate Paying Agent.
------------------------
The Certificate Paying Agent shall make distributions to Certificateholders
from the Certificate Distribution Account on behalf of the Trust in accordance
with the provisions of the Certificates and Section 5.01 hereof from payments
remitted to the Certificate Paying Agent by the Indenture Trustee pursuant to
Section 3.05 of the Indenture. __________________________ is hereby appointed
as Certificate Paying Agent and _____________________________ hereby accepts
such appointment and further agrees that it will be bound by the provisions of
this Trust Agreement relating to the Certificate Paying Agent and shall:
(i) hold all sums held by it for the payment of amounts due with
respect to the Certificates in trust for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or otherwise disposed of
as herein provided;
(ii) give the Owner Trustee notice of any default by the Trust of
which it has actual knowledge in the making of any payment required to be made
with respect to the Certificates;
(iii) at any time during the continuance of any such default, upon the
written request of the Owner Trustee forthwith pay to the Owner Trustee on
behalf of the Trust all sums so held in Trust by such Certificate Paying Agent;
(iv) immediately resign as Certificate Paying Agent and forthwith pay
to the Owner Trustee on behalf of the Trust all sums held by it in trust for the
payment of Certificates if at any time it ceases to meet the standards under
this Section 3.10 required to be met by the Certificate Paying Agent at the time
of its appointment;
(v) comply with all requirements of the Code with respect to the
withholding from any payments made by it on any Certificates of any applicable
withholding taxes imposed thereon and with respect to any applicable reporting
requirements in connection therewith;
(vi) deliver to the Owner Trustee a copy of the report to
Certificateholders prepared with respect to each Payment Date by the Servicer
pursuant to Section 4.01 of the Servicing Agreement; and
(vii) not institute bankruptcy proceedings against the Issuer in
connection with this Trust Agreement.
The Trust may revoke such power and remove the Certificate Paying Agent if
it determines in its sole discretion that the Certificate Paying Agent shall
have failed to perform its obligations under this Trust Agreement in any
material respect. ________________________ shall be permitted to resign as
Certificate Paying Agent upon 30 days written notice to the Owner Trustee and
the Bond Insurer; provided _________________________ is also resigning as Paying
Agent under the Indenture at such time. In the event that __________________
shall no longer be the Certificate Paying Agent under this Trust Agreement and
Paying Agent under the
11
Indenture, the Owner Trustee shall appoint a successor to act as Certificate
Paying Agent (which shall be a bank or trust company) and which shall also be
the successor Paying Agent under the Indenture. The Owner Trustee shall request
such successor Certificate Paying Agent or any additional Certificate Paying
Agent appointed by the Owner Trustee to execute and deliver to the Owner Trustee
an instrument accepting the terms of this Section 3.10 as it relates to the
Certificate Paying Agent. The Certificate Paying Agent shall return all
unclaimed funds to the Trust and upon removal of a Certificate Paying Agent such
Certificate Paying Agent shall also return all funds in its possession to the
Trust. The provisions of Sections 6.01, 6.03, 6.04 and 7.01 shall apply to the
Certificate Paying Agent to the extent applicable. Any reference in this Trust
Agreement to the Certificate Paying Agent shall include any copaying agent
unless the context requires otherwise.
The Certificate Paying Agent shall establish and maintain with itself a
trust account (the "Certificate Distribution Account") in which the Certificate
Paying Agent shall deposit, on the same day as it is received from the Bond
Administrator, each remittance received by the Certificate Paying Agent with
respect to payments made pursuant to the Indenture. The Certificate Paying
Agent shall make all distributions to Certificateholders, from moneys on deposit
in the Certificate Distribution Account.
The Certificate Paying Agent shall be paid by the Bond Administrator from
sources other than the Trust Estate.
Section 3.11. Pre-Funding Amount and Interest Coverage Amount.
-----------------------------------------------
On the Closing Date, (i) proceeds of the offering of the Bonds in an amount
equal to the Original Pre-Funded Amount shall be deposited into the Pre-Funding
Account as contemplated by Section 8.08 of the Indenture; (ii) proceeds of the
offering of the Bonds in an amount equal to the Interest Coverage Amount shall
be deposited into the Interest Coverage Account as contemplated by Section 8.09
of the Indenture; (iii) the Original Pre-Funded Amount and the Interest Coverage
Amount shall become part of the Owner Trust Estate under this Trust Agreement;
and (iv) the Original Pre-Funded Amount and the Interest Coverage Amount shall
become part of the Trust Estate and the Collateral under the Indenture.
Section 3.12. Purchase of Subsequent Mortgage Loans.
-------------------------------------
On each Subsequent Transfer Date, (i) the Seller shall sell, and the
Company shall purchase, the Subsequent Mortgage Loans, and the Company shall
resell, and the Trust shall purchase, the Subsequent Mortgage Loans, as
contemplated by and subject to the conditions set forth in Section 2.2 of the
Mortgage Loan Purchase Agreement; (ii) in consideration for the Purchase of the
Subsequent Mortgage Loans, the Trust shall instruct the Bond Administrator to
transfer funds in the Pre-Funding Account to the Company, who shall in turn
transfer such funds to the Seller as contemplated by and subject to the
conditions set forth in Section 8.08 of the Indenture, (iii) the Subsequent
Mortgage Loan shall become part of the Owner Trust Estate under this Trust
Agreement and (iv) the Subsequent Mortgage Loans shall become part of the Trust
Estate and the Collateral under the Indenture.
12
ARTICLE IV
Authority and Duties of Owner Trustee
-------------------------------------
Section 4.01. General Authority.
-----------------
The Owner Trustee is authorized, empowered and directed to execute and
deliver, on behalf of the Trust, each of the Basic Documents to which the Trust
is, or is to be, a party and each certificate or other document attached as an
exhibit to or contemplated by the Basic Documents to which the Trust is, or is
to be, a party and any amendment or other agreement or instrument described
herein, as evidenced conclusively by the Owner Trustee's execution thereof. In
addition to the foregoing, the Owner Trustee, in the name and on behalf of the
Trust, shall have the power and authority, and hereby is authorized and
empowered, but shall not be obligated, except as otherwise provided in this
Trust Agreement, to take all actions required of the Trust pursuant to the Basic
Documents.
Section 4.02. General Duties.
--------------
It shall be the duty of the Owner Trustee to discharge (or cause to be
discharged) all of the responsibilities expressly required to be performed by it
pursuant to the terms of this Trust Agreement and the Basic Documents to which
the Trust is a party and to discharge such responsibilities in the interests of
the Certificateholders, subject to the Basic Documents and in accordance with
the provisions of this Trust Agreement.
Section 4.03. Action upon Instruction.
-----------------------
Subject to this Article IV and in accordance with the terms of the Basic
Documents, the Certificateholders may by written instruction direct the Owner
Trustee in the management of the Trust. Such direction may be exercised at any
time by written instruction of the Certificateholders pursuant to this Article
IV.
Notwithstanding the foregoing, the Owner Trustee shall not be required to
take any action hereunder or under any Basic Document if the Owner Trustee shall
have reasonably determined, or shall have been advised by counsel, that such
action is likely to result in liability on the part of the Owner Trustee or is
contrary to the terms hereof or of any Basic Document or is otherwise contrary
to law.
Whenever the Owner Trustee is unable to decide between alternative courses
of action permitted or required by the terms of this Trust Agreement or under
any Basic Document, or in the event that the Owner Trustee is unsure as to the
application of any provision of this Trust Agreement or any Basic Document or
any such provision is ambiguous as to its application, or is, or appears to be,
in conflict with any other applicable provision, or in the event that this Trust
Agreement permits any determination by the Owner Trustee or is silent or is
incomplete as to the course of action that the Owner Trustee is required to take
with respect to a particular set of facts, the Owner Trustee shall promptly give
notice (in such form as shall be appropriate under the circumstances) to the
Certificateholders (with a copy to the Bond Insurer) requesting instruction as
to the course of action to be adopted, and to the extent the Owner Trustee acts
in good faith in accordance with any written instruction of the
Certificateholders (with the consent of the Bond Insurer), the Owner Trustee
shall not be liable on account of such action to any
13
Person. If the Owner Trustee shall not have received appropriate instruction
within 10 days of such notice (or within such shorter period of time as
reasonably may be specified in such notice or may be necessary under the
circumstances) it may, but shall be under no duty to, take or refrain from
taking such action not inconsistent with this Trust Agreement or the Basic
Documents, as it shall deem to be in the best interests of the
Certificateholders, the Bondholders and the Bond Insurer, and the Owner Trustee
shall have no liability to any Person for such action or inaction.
Section 4.04. No Duties Except as Specified under this Trust Agreement,
---------------------------------------------------------
Basic Documents or in Instructions.
----------------------------------
Notwithstanding any other provision herein or elsewhere, 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, this Trust Agreement or any document contemplated hereby to
which the Trust or the Owner Trustee is a party, except as expressly provided
(a) in this Trust Agreement, (b) in the Basic Documents and (c) in any document
or instruction delivered to the Owner Trustee pursuant to Section 4.03; and no
implied duties or obligations shall be read into this Trust Agreement or any
Basic Document against the Owner Trustee. The Owner Trustee shall have no
responsibility (i) to file any financing or continuation statement in any public
office at any time, (ii) to otherwise perfect or maintain the perfection of any
security interest or lien granted to it hereunder, (iii) to record this Trust
Agreement or any Basic Document or (iv) to prepare or file any Securities and
Exchange Commission filing for the Trust. The Owner Trustee nevertheless agrees
that it will, at its own cost and expense, promptly take all action as may be
necessary to discharge any liens on any part of the Owner Trust Estate that
result from actions by, or claims against, the Owner Trustee that are not
related to the ownership or the administration of the Owner Trust Estate.
Section 4.05. Restrictions.
------------
The Owner Trustee or the Company (or an Affiliate thereof) shall not take
any action (i) that is inconsistent with the purposes of the Trust set forth in
Section 2.03 or (ii) that, to the actual knowledge of the Owner Trustee based on
an Opinion of Counsel rendered by a law firm generally recognized to be
qualified to opine concerning the tax aspects of asset securitization, would
result in the Trust becoming taxable as a corporation for federal income tax
purposes or (iii) would result in the amendment or modification of the Basic
Documents or this Trust Agreement without the prior written consent of the Bond
Insurer. The Certificateholders shall not direct the Owner Trustee to take
action that would violate the provisions of this Section 4.05.
The Owner Trustee shall not convey or transfer any of the Trust's
properties or assets, including those included in the Trust Estate, to any
person unless (i) it shall have received an Opinion of Counsel rendered by a law
firm generally recognized to be qualified to opine concerning the tax aspects of
asset securitization to the effect that such transaction will not have any
material adverse tax consequence to the Trust or any Certificateholder and (ii)
such conveyance or transfer shall not violate the provisions of Section 3.16(b)
of the Indenture.
14
The Trust shall not commingle its assets with those of any other entity.
The Trust shall maintain its financial and accounting books and records separate
from those of any other entity. Except as expressly set forth herein, the Trust
shall pay its indebtedness, operating expenses and liabilities from its own
funds, and the Trust shall not pay the indebtedness, operating expenses and
liabilities of any other entity. The Trust shall maintain appropriate minutes
or other records of all appropriate actions and shall maintain its office
separate from the offices of the Company.
Section 4.06. Prior Notice to Certificateholders with Respect to Certain
----------------------------------------------------------
Matters.
-------
With respect to the following matters, the Owner Trustee shall not take
action unless at least 30 days before the taking of such action, the Owner
Trustee shall have notified the Certificateholders and the Bond Insurer in
writing of the proposed action and the Certificateholders and the Bond Insurer
shall not have notified the Owner Trustee in writing prior to the 30th day after
such notice is given that such Certificateholders and the Bond Insurer have
withheld consent or provided alternative direction (provided, however, that any
direction by the Certificateholders shall require the prior consent of the Bond
Insurer):
(a) the initiation of any claim or lawsuit by the Trust (except claims or
lawsuits brought in connection with the collection of cash distributions due and
owing under the Mortgage Loans) and the compromise of any action, claim or
lawsuit brought by or against the Trust (except with respect to the
aforementioned claims or lawsuits for collection of cash distributions due and
owing under the Mortgage Loans);
(b) the election by the Trust to file an amendment to the Certificate of
Trust (unless such amendment is required to be filed under the Business Trust
Statute);
(c) the amendment or other change to this Trust Agreement or any Basic
Document in circumstances where the consent of any Bondholder or the Bond
Insurer is required;
(d) the amendment or other change to this Trust Agreement or any Basic
Document in circumstances where the consent of any Bondholder or the Bond
Insurer is not required and such amendment materially adversely affects the
interest of the Certificateholders;
(e) the appointment pursuant to the Indenture of a successor Bond
Registrar, Paying Agent, Bond Administrator, Indenture Trustee or, pursuant to
this Trust Agreement, of a successor Certificate Registrar or Certificate Paying
Agent or the consent to the assignment by the Bond Registrar, Paying Agent, Bond
Administrator, Indenture Trustee, Certificate Registrar or Certificate Paying
Agent of its obligations under the Indenture or this Trust Agreement, as
applicable;
(f) the consent to the calling or waiver of any default under any Basic
Document;
(g) the consent to the assignment by the Bond Administrator, the Indenture
Trustee or Servicer of their respective obligations under any Basic Document;
(h) except as provided in Article VIII hereof, dissolve, terminate or
liquidate the Trust in whole or in part;
15
(i) merge or consolidate the Trust with or into any other entity, or convey
or transfer all or substantially all of the Trust's assets to any other entity;
(j) cause the Trust to incur, assume or guaranty any indebtedness other
than as set forth in this Trust Agreement;
(k) perform any act that conflicts with any other Basic Document;
(l) perform any act which would make it impossible to carry on the ordinary
business of the Trust as described in Section 2.03 hereof;
(m) confess a judgment against the Trust;
(n) possess Trust assets or assign the Trust's right to property for other
than a Trust purpose;
(o) cause the Trust to lend any funds to any entity; or
(p) change the Trust's purpose and powers from those enumerated in this
Trust Agreement.
Section 4.07. Action by Certificateholders with Respect to Certain
----------------------------------------------------
Matters.
-------
The Owner Trustee shall not have the power, except upon the direction of
the Certificateholders, and with the consent of the Bond Insurer, (a) to remove
or replace the Servicer under the Servicing Agreement pursuant to Sections 6.01
and 6.02 thereof or to remove or replace the Bond Administrator or the Indenture
Trustee under the Indenture pursuant to Section 6.08 thereof, (b) except as
expressly provided in the Basic Documents, sell the Mortgage Loans after the
termination of the Indenture, (c) institute proceedings to have the Trust
declared or adjudicated to be bankrupt or insolvent, (d) consent to the
institution of bankruptcy or insolvency proceedings against the Trust, (e) file
a petition or consent to a petition seeking reorganization or relief on behalf
of the Trust under any applicable federal or state law relating to bankruptcy,
(f) consent to the appointment of a receiver, liquidate, assignee, trustee,
sequestrate (or any similar official) of the Trust or a substantial portion of
the property of the Trust, (g) make any assignment for the benefit of the
Trust's creditors, (h) cause the Trust to admit in writing its inability to pay
its debts generally as they become due, (i) take any action or cause the Trust
to take any action, in furtherance of any of the foregoing clauses (c) through
(i) (any of such clauses, a "Bankruptcy Action"). So long as the Indenture and
the Insurance Agreement remain in effect and no Bond Insurer Default exists, no
Certificateholder shall have the power to take, and shall not take, any
Bankruptcy Action with respect to the Trust or the Company or direct the Owner
Trustee to take any Bankruptcy Action with respect to the Trust or the Company.
The Owner Trustee shall take the actions referred to in the preceding sentence
only upon written instructions signed by the Certificateholders and with the
consent of the Bond Insurer.
Section 4.08. Action by Certificateholders with Respect to Bankruptcy.
-------------------------------------------------------
The Owner Trustee shall not have the power to commence a voluntary
proceeding in bankruptcy relating to the Trust without the unanimous prior
approval of all Certificateholders
16
and the consent of the Bond Insurer, the Bondholders and the Owner Trustee and
the delivery to the Owner Trustee by each such Certificateholder of a
certificate certifying that such Certificateholder reasonably believes that the
Trust is insolvent. This paragraph shall survive for one year and one day
following termination of this Trust Agreement.
Section 4.09. Restrictions on Certificateholders' Power.
-----------------------------------------
The Certificateholders shall not direct the Owner Trustee to take or to
refrain from taking any action if such action or inaction would be contrary to
any obligation of the Trust or the Owner Trustee under this Trust Agreement or
any of the Basic Documents or would be contrary to Section 2.03, nor shall the
Owner Trustee be obligated to follow any such direction, if given.
Section 4.10. Majority Control.
----------------
Except as expressly provided herein, any action that may be taken by the
Certificateholders under this Trust Agreement may be taken by the holders of
Certificates evidencing not less than a majority of the outstanding Certificate
Percentage Interests of the Certificates. Except as expressly provided herein,
any written notice of the Certificateholders delivered pursuant to this Trust
Agreement shall be effective if signed by holders of Certificates evidencing not
less than a majority of the outstanding Certificate Principal Balance of the
Certificates at the time of the delivery of such notice.
Section 4.11. Optional Termination by the Servicer.
------------------------------------
Pursuant to Section 3.23 of the Servicing Agreement and Section 8.07 of the
Indenture, the Servicer shall have the right to repurchase 100% of the Mortgage
Loans in each Group, which will cause the redemption of the Bonds.
ARTICLE V
Application of Trust Funds
--------------------------
Section 5.01. Distributions.
-------------
On each Payment Date, the Certificate Paying Agent shall distribute to the
Certificateholders, on a pro rata basis based on the Certificate Percentage
Interests thereof, all funds on deposit in the Certificate Distribution Account
and available therefor (as provided in Section 3.05 of the Indenture) for such
Payment Date as reduced by any amount owing to the Owner Trustee hereunder and
any Expenses of the Trust remaining unpaid.
In the event that any withholding tax is imposed on the distributions (or
allocations of income) to a Certificateholder, such tax shall reduce the amount
otherwise distributable to such Certificateholder in accordance with this
Section 5.01. The Certificate Paying Agent is hereby authorized and directed to
retain or cause to be retained from amounts otherwise distributable to the
Certificateholders sufficient funds for the payment of any tax that is legally
owed by the Trust (but such authorization shall not prevent the Trust from
contesting any such tax in appropriate proceedings, and withholding payment of
such tax, if permitted by law, pending the outcome of such proceedings). The
amount of any withholding tax imposed with respect to a Certificateholder shall
be treated as cash distributed to such Certificateholder at the time it is
17
withheld by the Certificate Paying Agent and remitted to the appropriate taxing
authority. If there is a possibility that withholding tax is payable with
respect to a distribution (such as a distribution to a non-U.S.
Certificateholder), the Certificate Paying Agent may in its sole discretion
withhold such amounts in accordance with this paragraph (b).
Distributions to Certificateholders shall be subordinated to the creditors
of the Trust, including the Bondholders and the Bond Insurer.
Section 5.02. Method of Payment.
-----------------
Subject to Section 8.01(c), distributions required to be made to
Certificateholders on any Payment Date as provided in Section 5.01 shall be made
to each Certificateholder of record on the preceding Record Date either by, in
the case of any Certificateholder owning Certificates having a Certificate
Percentage Interest of 100%, wire transfer, in immediately available funds, to
the account of such holder at a bank or other entity having appropriate
facilities therefor, if such Certificateholder shall have provided to the
Certificate Registrar appropriate written instructions at least five Business
Days prior to such Record Date or, if not, by check mailed to such
Certificateholder at the address of such holder appearing in the Certificate
Register.
Section 5.03. Tax Returns.
-----------
The Bond Administrator shall (a) maintain (or cause to be maintained) the
books of the Trust on a calendar year basis using the accrual method of
accounting, (b) deliver (or cause to be delivered) to each Certificateholder as
may be required by the Code and applicable Treasury Regulations, including the
REMIC Provisions, such information as may be required to enable each
Certificateholder to prepare its federal and state income tax returns, (c)
prepare and file or cause to be prepared and filed such tax returns relating to
the Trust as may be required by the Code and applicable Treasury Regulations
(including timely making one or more elections to treat the Trust as a REMIC for
federal income tax purposes and any other such elections as may from time to
time be required or appropriate under any applicable state or federal statutes,
rules or regulations), (d) collect or cause to be collected any withholding tax
as described in and in accordance with Section 5.01 of this Trust Agreement with
respect to income or distributions to Certificateholders and prepare or cause to
be prepared the appropriate forms relating thereto and (e) maintain records as
required by the REMIC Provisions.
Section 5.04. Statements to Certificateholders.
--------------------------------
On each Payment Date, the Certificate Paying Agent shall send to each
Certificateholder the statement or statements provided to the Owner Trustee and
the Certificate Paying Agent by the Bond Administrator pursuant to Section 7.05
of the Indenture with respect to such Payment Date.
18
ARTICLE VI
Concerning the Owner Trustee
----------------------------
Section 6.01. Acceptance of Trusts and Duties.
-------------------------------
The Owner Trustee accepts the trusts hereby created and agrees to perform
its duties hereunder with respect to such trusts but only upon the terms of this
Trust Agreement. Each of the Owner Trustee and the Certificate Paying Agent also
agrees to disburse all moneys actually received by it constituting part of the
Owner Trust Estate upon the terms of the Basic Documents and this Trust
Agreement. The Owner Trustee in its individual capacity shall not personally be
answerable or accountable hereunder or under any Basic Document under any
circumstances, except to the Trust or the Certificateholders (i) for its own
willful misconduct, gross negligence or bad faith or grossly negligent failure
to act or (ii) in the case of the inaccuracy of any representation or warranty
contained in Section 6.03 expressly made by the Owner Trustee. In particular,
but not by way of limitation (and subject to the exceptions set forth in the
preceding sentence):
The Owner Trustee shall not be liable with respect to any action taken or
omitted to be taken by it in accordance with the instructions of the
Certificateholders permitted under this Trust Agreement;
No provision of this Trust Agreement or any Basic Document shall require
the Owner Trustee to expend or risk funds or otherwise incur in its individual
capacity any financial liability in the performance of any of its rights, duties
or powers hereunder or under any Basic Document if the Owner Trustee shall have
reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured or provided
to it in its individual capacity;
Under no circumstances shall the Owner Trustee be liable for indebtedness
evidenced by or arising under any of the Basic Documents, including the
principal of and interest on the Bonds;
The Owner Trustee shall not be responsible for or in respect of the
validity or sufficiency of this Trust Agreement or for the due execution hereof
by the Company or Depositor or for the form, character, genuineness,
sufficiency, value or validity of any of the Owner Trust Estate, or for or in
respect of the validity or sufficiency of the Basic Documents, the Bonds, the
Certificates, other than the certificate of authentication on the Certificates,
if executed by the Owner Trustee, and the Owner Trustee shall in no event assume
or incur any liability, duty, or obligation to any Bondholder or to any
Certificateholder, other than as expressly provided for herein or expressly
agreed to in the Basic Documents;
The Owner Trustee shall not be liable for the default or misconduct of the
Company, Bond Administrator, the Indenture Trustee, Certificate Registrar, the
Servicer or any other party under any of the Basic Documents or otherwise and
the Owner Trustee shall have no obligation or liability to perform the
obligations of the Trust under this Trust Agreement or the Basic Documents that
are required to be performed by the Bond Administrator or Indenture Trustee
under the Indenture or the Seller under the Mortgage Loan Purchase Agreement;
and
19
The Owner Trustee shall be under no obligation to exercise any of the
rights or powers vested in it or duties imposed by this Trust Agreement, or to
institute, conduct or defend any litigation under this Trust Agreement or
otherwise or in relation to this Trust Agreement or any Basic Document, at the
request, order or direction of any of the Certificateholders, unless such
Certificateholders have offered to the Owner Trustee security or indemnity
satisfactory to it against the costs, expenses and liabilities that may be
incurred by the Owner Trustee therein or thereby. The right of the Owner
Trustee to perform any discretionary act enumerated in this Trust Agreement or
in any Basic Document shall not be construed as a duty.
Section 6.02. Furnishing of Documents.
-----------------------
The Owner Trustee shall furnish to the Securityholders promptly upon
receipt of a written reasonable request therefor, duplicates or copies of all
reports, notices, requests, demands, certificates, financial statements and any
other instruments furnished to the Owner Trustee under the Basic Documents.
Section 6.03. Representations and Warranties.
------------------------------
The Owner Trustee, in its individual capacity, hereby represents and
warrants to the Company, for the benefit of the Certificateholders and the Bond
Insurer that:
(a) It is a banking corporation duly organized and validly existing in good
standing under the laws of the State of Delaware. It has all requisite
corporate power and authority to execute, deliver and perform its obligations
under this Trust Agreement;
(b) It has taken all corporate action necessary to authorize the execution
and delivery by it of this Trust Agreement, and this Trust Agreement will be
executed and delivered by one of its officers who is duly authorized to execute
and deliver this Trust Agreement on its behalf;
(c) The execution, delivery, authentication and performance by it of this
Trust Agreement will not require the authorization, consent or approval of, the
giving of notice to, the filing or registration with, or the taking of any other
action with respect to, any governmental authority or agency;
(d) Neither the execution nor the delivery by it of this Trust Agreement,
nor the consummation by it of the transactions contemplated hereby nor
compliance by it with any of the terms or provisions hereof will contravene any
federal or Delaware law, governmental rule or regulation governing the banking
or trust powers of the Owner Trustee or any judgment or order binding on it, or
constitute any default under its charter documents or bylaws or any indenture,
mortgage, contract, agreement or instrument to which it is a party or by which
any of its properties may be bound;
(e) This Trust Agreement, assuming due authorization, execution and
delivery by the Company, constitutes a valid, legal and binding obligation of
the Owner Trustee, enforceable against it in accordance with the terms hereof
subject to applicable bankruptcy, insolvency, reorganization, moratorium and
other laws affecting the enforcement of creditors' rights generally and to
general principles of equity, regardless of whether such enforcement is
considered in a proceeding in equity or at law;
20
(f) The Owner Trustee is not in default with respect to any order or decree
of any court or any order, regulation or demand of any Federal, state, municipal
or governmental agency, which default might have consequences that would
materially and adversely affect the condition (financial or other) or operations
of the Owner Trustee or its properties or might have consequences that would
materially adversely affect its performance hereunder; and
(g) No litigation is pending or, to the best of the Owner Trustee's
knowledge, threatened against the Owner Trustee which would prohibit its
entering into this Trust Agreement or performing its obligations under this
Trust Agreement.
Section 6.04. Reliance; Advice of Counsel.
---------------------------
The Owner Trustee shall incur no liability to anyone in acting upon any
signature, instrument, notice, resolution, request, consent, order, certificate,
report, opinion, Bond, or other document or paper believed by it to be genuine
and believed by it to be signed by the proper party or parties. The Owner
Trustee may accept a certified copy of a resolution of the board of directors or
other governing body of any corporate party as conclusive evidence that such
resolution has been duly adopted by such body and that the same is in full force
and effect. As to any fact or matter the method of determination of which is not
specifically prescribed herein, the Owner Trustee may for all purposes hereof
rely on a certificate, signed by the president or any vice president or by the
treasurer or other authorized officers of the relevant party, as to such fact or
matter and such certificate shall constitute full protection to the Owner
Trustee for any action taken or omitted to be taken by it in good faith in
reliance thereon.
In the exercise or administration of the Trust hereunder and in the
performance of its duties and obligations under this Trust Agreement or the
Basic Documents, the Owner Trustee may act directly or through its agents,
attorneys, custodians or nominees (including persons acting under a power of
attorney) pursuant to agreements entered into with any of them, and the Owner
Trustee shall not be liable for the conduct or misconduct of such agents,
attorneys, custodians or nominees (including persons acting under a power of
attorney) if such persons have been selected by the Owner Trustee with
reasonable care and 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 in its individual capacity for anything done,
suffered or omitted in good faith by it in accordance with the written opinion
or advice of any such counsel, accountants or other such Persons and not
contrary to this Trust Agreement or any Basic Document.
Section 6.05. Not Acting in Individual Capacity.
---------------------------------
Except as provided in this Article VI, in accepting the trusts hereby
created Wilmington Trust Company acts solely as Owner Trustee 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 Trust Agreement or
any Basic Document shall look only to the Owner Trust Estate for payment or
satisfaction thereof.
21
Section 6.06. Owner Trustee Not Liable for Certificates or Related
----------------------------------------------------
Documents.
---------
The recitals contained herein and in the Certificates (other than the
signatures of the Owner Trustee on the Certificates) shall be taken as the
statements of the Company and the Owner Trustee assumes no responsibility for
the correctness thereof. The Owner Trustee makes no representations as to the
validity or sufficiency of this Trust Agreement, of any Basic Document or of the
Certificates (other than the signatures of the Owner Trustee on the
Certificates) or the Bonds, or of any Related Documents. The Owner Trustee shall
at no time have any responsibility or liability with respect to the sufficiency
of the Owner Trust Estate or its ability to generate the payments to be
distributed to Certificateholders under this Trust Agreement or the Bondholders
under the Indenture, including compliance by the Company or the Seller with any
warranty or representation made under any Basic Document or in any related
document or the accuracy of any such warranty or representation, or any action
of the Certificate Paying Agent, the Certificate Registrar or the Indenture
Trustee taken in the name of the Owner Trustee.
Section 6.07. Owner Trustee May Own Certificates and Bonds.
--------------------------------------------
The Owner Trustee in its individual or any other capacity may, subject to
Section 3.05, become the owner or pledge of Certificates or Bonds and may deal
with the Company, the Seller, the Certificate Paying Agent, the Certificate
Registrar, the Bond Administrator and the Indenture Trustee in transactions with
the same rights as it would have if it were not Owner Trustee.
Section 6.08. Payments from Owner Trust Estate.
--------------------------------
All payments to be made by the Owner Trustee under this Trust Agreement or
any of the Basic Documents to which the Owner Trustee is a party shall be made
only from the income and proceeds of the Owner Trust Estate or from other
amounts required to be provided by the Certificateholders and only to the extent
that the Owner Trustee shall have received income or proceeds from the Owner
Trust Estate or the Certificateholders to make such payments in accordance with
the terms hereof. ___________________________, in its individual capacity, shall
not be liable for any amounts payable under this Trust Agreement or any of the
Basic Documents to which the Owner Trustee is a party.
Section 6.09. Doing Business in Other Jurisdictions.
-------------------------------------
Notwithstanding anything contained herein to the contrary, neither
____________________________ nor the Owner Trustee shall be required to take any
action in any jurisdiction other than in the State of Delaware if the taking of
such action will, even after the appointment of a co-trustee or separate trustee
in accordance with Section 9.05 hereof, (i) require the consent or approval or
authorization or order of or the giving of notice to, or the registration with
or the taking of any other action in respect of, any state or other governmental
authority or agency of any jurisdiction other than the State of Delaware; (ii)
result in any fee, tax or other governmental charge under the laws of the State
of Delaware becoming payable by ____________________________; or (iii) subject
________________________ to personal jurisdiction in any jurisdiction other than
the State of Delaware for causes of action arising from
22
acts unrelated to the consummation of the transactions by
______________________________ or the Owner Trustee, as the case may be,
contemplated hereby.
Section 6.10. Liability of Certificate Registrar and Certificate Paying
---------------------------------------------------------
Agent.
-----
All provisions affording protection to or limiting the liability of the
Owner Trustee shall inure as well to the Certificate Registrar and Certificate
Paying Agent.
ARTICLE VII
Compensation of Owner Trustee
-----------------------------
Section 7.01. Owner Trustee's Fees and Expenses.
---------------------------------
The Owner Trustee shall receive as compensation for its services hereunder
such fees as have been separately agreed upon among the Servicer, the Company
and the Owner Trustee, and the Owner Trustee shall be reimbursed by the Company
or the Servicer for its reasonable expenses hereunder and under the Basic
Documents, including the reasonable compensation, expenses and disbursements of
such agents, representatives, experts and counsel as the Owner Trustee may
reasonably employ in connection with the exercise and performance of its rights
and its duties hereunder and under the Basic Documents. The amount of the Owner
Trustee Fee shall be paid by the Servicer to the Owner Trustee pursuant to
Section 3.7(a)(viii) of the Servicing Agreement.
Section 7.02. Indemnification.
---------------
The Company shall indemnify, defend and hold harmless _________________ and
its successors, assigns, agents officers, employees, directors, and servants
(collectively, the "Indemnified Parties") from and against, any and all
liabilities, obligations, losses, damages, taxes, claims, actions and suits, and
any and all reasonable costs, expenses and disbursements (including reasonable
legal fees and expenses) of any kind and nature whatsoever (collectively,
"Expenses") which may at any time be imposed on, incurred by, or asserted
against the Owner Trustee or any Indemnified Party in any way relating to or
arising out of this Trust Agreement, the Basic Documents, the Owner Trust
Estate, the administration of the Owner Trust Estate or the action or inaction
of the Owner Trustee hereunder, provided, that:
(a) the Company shall not be liable for or required to indemnify an
Indemnified Party from and against Expenses arising or resulting from the Owner
Trustee's willful misconduct, gross negligence or bad faith or as a result of
the inaccuracy of a representation or warranty contained in Section 6.03
expressly made by the Owner Trustee;
(b) with respect to any such claim, the Indemnified Party shall have given
the Company written notice thereof promptly after the Indemnified Party shall
have actual knowledge thereof;
(c) while maintaining control over its own defense, the Company shall
consult with the Indemnified Party in preparing such defense; and
23
(d) notwithstanding anything in this Trust Agreement to the contrary, the
Company shall not be liable for settlement of any claim by an Indemnified Party
entered into without the prior consent of the Company which consent shall not be
unreasonably withheld.
The indemnities contained in this Section shall survive the resignation or
removal of the Owner Trustee or the termination of this Trust Agreement. In the
event of any claim, action or proceeding for which indemnity will be sought
pursuant to this Section 7.02, the Owner Trustee's choice of legal counsel, if
other than the legal counsel retained by the Owner Trustee in connection with
the execution and delivery of this Trust Agreement, shall be subject to the
approval of the Company, which approval shall not be unreasonably withheld. In
addition, upon written notice to the Owner Trustee and with the consent of the
Owner Trustee which consent shall not be unreasonably withheld, the Company has
the right to assume the defense of any claim, action or proceeding against the
Owner Trustee.
ARTICLE VIII
Termination of Trust Agreement
------------------------------
Section 8.01. Termination of Trust Agreement.
------------------------------
This Trust Agreement (other than Article VII) and the Trust shall terminate
and be of no further force or effect, and the Owner Trustee at the written
direction of the Certificateholders shall cause the Trust to execute and file a
certificate of cancellation upon the earliest of the final distribution of all
moneys or other property or proceeds of the Owner Trust Estate in accordance
with the terms of the Indenture and this Trust Agreement, the Payment Date in
____________________, or the distribution of all of the assets of the Owner
Trust Estate, in accordance with written instructions provided to the Owner
Trustee by holders of a majority of the Certificates, following the optional
redemption of the Bonds by the Issuer pursuant to Section 8.07 of the Indenture;
provided in each case that all amounts owing to the Bondholders and the Bond
Insurer to the extent payable from the Owner Trust Estate or proceeds thereof
have been paid in full and that all obligations under the Indenture have been
discharged. The bankruptcy, liquidation, dissolution, death or incapacity of any
Certificateholder shall not (x) operate to terminate this Trust Agreement or the
Trust or (y) entitle such Certificateholder's legal representatives or heirs to
claim an accounting or to take any action or proceeding in any court for a
partition or winding up of all or any part of the Trust or the Owner Trust
Estate or (z) otherwise affect the rights, obligations and liabilities of the
parties hereto.
Except as provided in Section 8.01(a), none of the Company or any
Certificateholder shall be entitled to revoke or terminate this Trust Agreement
or the Trust.
Notice of any termination of the Trust, specifying the Payment Date upon
which Certificateholders shall surrender their Certificates to the Certificate
Paying Agent for payment of the final distribution and cancellation, shall be
given by the Certificate Paying Agent by letter to Certificateholders and the
Bond Insurer mailed within five Business Days of receipt of notice of the final
payment on the Bonds from the Bond Administrator, stating the Payment Date upon
or with respect to which final payment of the Certificates shall be made upon
presentation and surrender of the Certificates at the office of the Certificate
Paying Agent therein designated, the amount of any such final payment and that
the Record Date otherwise applicable to such
24
Payment Date is not applicable, payments being made only upon presentation and
surrender of the Certificates at the office of the Certificate Payment Agent
therein specified. The Certificate Paying Agent shall give such notice to the
Owner Trustee and the Certificate Registrar at the time such notice is given to
Certificateholders. Upon presentation and surrender of the Certificates, the
Certificate Paying Agent shall cause to be distributed to Certificateholders
amounts distributable on such Payment Date pursuant to Section 5.01.
In the event that all of the Certificateholders shall not surrender their
Certificates for cancellation within six months after the date specified in the
above mentioned written notice, the Certificate Paying Agent shall give a second
written notice to the remaining Certificateholders to surrender their
Certificates for cancellation and receive the final distribution with respect
thereto. Subject to applicable laws with respect to escheat of funds, if within
one year following the Payment Date on which final payment of the Certificates
was to have been made pursuant to Section 3.05 of the Indenture, all the
Certificates shall not have been surrendered for cancellation, the Certificate
Paying Agent may take appropriate steps, or may appoint an agent to take
appropriate steps, to contact the remaining Certificateholders concerning
surrender of their Certificates, and the cost thereof shall be paid out of the
funds and other assets that shall remain subject to this Trust Agreement. Any
funds remaining in the Certificate Distribution Account after exhaustion of such
remedies shall be distributed by the Certificate Paying Agent to the holder of
the Certificate.
Upon the winding up of the Trust and its termination, the Owner Trustee
shall cause the Certificate of Trust to be canceled by filing a certificate of
cancellation with the Secretary of State in accordance with the provisions of
Section 3810(d) of the Business Trust Statute of Delaware.
ARTICLE IX
Successor Owner Trustees and Additional Owner Trustees
------------------------------------------------------
Section 9.01. Eligibility Requirements for Owner Trustee.
------------------------------------------
The Owner Trustee shall at all times be a corporation reasonably acceptable
to the Bond Insurer and satisfying the provisions of Section 3807(a) of the
Business Trust Statute; authorized to exercise corporate trust powers; having a
combined capital and surplus of at least $50,000,000 and subject to supervision
or examination by federal or state authorities; and having (or having a parent
that has) a rating of at least Baa3 or is otherwise acceptable to the Bond
Insurer, [Xxxxx'x] and [Standard & Poor's]. If such corporation shall publish
reports of condition at least annually pursuant to law or to the requirements of
the aforesaid supervising or examining authority, then for the purpose of this
Section, the combined capital and surplus of such corporation shall be deemed to
be its combined capital and surplus as set forth in its most recent report of
condition so published. In case at any time the Owner Trustee shall cease to be
eligible in accordance with the provisions of this Section 9.01, the Owner
Trustee shall resign immediately in the manner and with the effect specified in
Section 9.02.
25
Section 9.02. Resignation or Removal of Owner Trustee.
---------------------------------------
The Owner Trustee may at any time resign and be discharged from the trusts
hereby created by giving 30 days prior written notice thereof to the Bond
Insurer and the Company. Upon receiving such notice of resignation, the Company
shall promptly appoint a successor Owner Trustee with the consent of the Bond
Insurer which will not be unreasonably withheld, by written instrument, in
duplicate, one copy of which instrument shall be delivered to the resigning
Owner Trustee and one copy to the successor Owner Trustee. If no successor Owner
Trustee shall have been so appointed and have accepted appointment within 30
days after the giving of such notice of resignation, the resigning Owner Trustee
may petition any court of competent jurisdiction for the appointment of a
successor Owner Trustee reasonably acceptable to the Certificateholders and the
Bond Insurer.
If at any time the Owner Trustee shall cease to be eligible in accordance
with the provisions of Section 9.01 and shall fail to resign after written
request therefor by the Company or the Bond Insurer, or if at any time the Owner
Trustee shall be legally unable to act, or shall be adjudged bankrupt or
insolvent, or a receiver of the Owner Trustee or of its property shall be
appointed, or any public officer shall take charge or control of the Owner
Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, then the Company may remove the Owner Trustee with
the consent of the Bond Insurer and shall remove the Owner Trustee at the
direction of the Bond Insurer.
Any resignation or removal of the Owner Trustee and appointment of a
successor Owner Trustee pursuant to any of the provisions of this Section shall
not become effective until acceptance of appointment by the successor Owner
Trustee pursuant to Section 9.03 and payment of all fees and expenses owed to
the outgoing Owner Trustee. The Servicer shall provide notice of such
resignation or removal of the Owner Trustee to each of the Rating Agencies and
the Bond Insurer.
Section 9.03. Successor Owner Trustee.
-----------------------
Any successor Owner Trustee appointed pursuant to Section 9.02 shall
execute, acknowledge and deliver to the Bond Administrator and to its
predecessor Owner Trustee an instrument accepting such appointment under this
Trust Agreement, and thereupon the resignation or removal of the predecessor
Owner Trustee shall become effective, and such successor Owner Trustee, without
any further act, deed or conveyance, shall become fully vested with all the
rights, powers, duties and obligations of its predecessor under this Trust
Agreement, with like effect as if originally named as Owner Trustee. Upon the
written request of such successor Owner Trustee, the predecessor Owner Trustee
shall upon payment of its fees and expenses, deliver to the successor Owner
Trustee all documents and statements and monies held by it under this Trust
Agreement; and the predecessor Owner Trustee shall execute and deliver such
instruments and do such other things as may reasonably be required for fully and
certainly vesting and confirming in the successor Owner Trustee all such rights,
powers, duties and obligations.
26
No successor Owner Trustee shall accept appointment as provided in this
Section 9.03 unless at the time of such acceptance such successor Owner Trustee
shall be eligible pursuant to Section 9.01.
Upon acceptance of appointment by a successor Owner Trustee pursuant to
this Section 9.03, the Owner Trustee shall mail notice thereof to all
Certificateholders, the Bond Administrator, the Bondholders, the Bond Insurer
and the Rating Agencies.
Section 9.04. Merger or Consolidation of Owner Trustee.
----------------------------------------
Any Person into which the Owner Trustee may be merged or converted or with
which it may be consolidated, or any Person resulting from any merger,
conversion or consolidation to which the Owner Trustee shall be a party, or any
Person succeeding to all or substantially all of the corporate trust business of
the Owner Trustee, shall be the successor of the Owner Trustee hereunder,
without the execution or filing of any instrument or any further act on the part
of any of the parties hereto, anything herein to the contrary notwithstanding;
provided, that such Person shall be eligible pursuant to Section 9.01 and,
provided, further, that the Owner Trustee shall provide written notice of such
merger or consolidation to the Rating Agencies and the Bond Insurer.
Section 9.05. Appointment of Co-Trustee or Separate Trustee.
---------------------------------------------
Notwithstanding any other provisions of this Trust Agreement, at any time,
for the purpose of meeting any legal requirements of any jurisdiction in which
any part of the Owner Trust Estate may at the time be located, the Owner Trustee
shall have the power and authority to execute and deliver all instruments to
appoint one or more Persons to act as co-trustee, jointly with the Owner
Trustee, or as separate trustee or trustees, of all or any part of the Owner
Trust Estate, and to vest in such Person, in such capacity, such title to the
Trust or any part thereof and, subject to the other provisions of this Section,
such powers, duties, obligations, rights and trusts as the Owner Trustee or the
Bond Insurer may consider necessary or desirable. No co-trustee or separate
trustee under this Trust Agreement shall be required to meet the terms of
eligibility as a successor Owner Trustee pursuant to Section 9.01 and no notice
of the appointment of any co-trustee or separate trustee shall be required
pursuant to Section 9.03, except that notice to, and the consent of, the Bond
Insurer shall be required for appointment of a co-trustee.
Each separate trustee and co-trustee shall, to the extent permitted by law,
be appointed and act subject to the following provisions and conditions:
All rights, powers, duties and obligations conferred or imposed upon the
Owner Trustee shall be conferred upon and exercised or performed by the Owner
Trustee and such separate trustee or co-trustee jointly (it being understood
that such separate trustee or co-trustee is not authorized to act separately
without the Owner Trustee joining in such act), except to the extent that under
any law of any jurisdiction in which any particular act or acts are to be
performed, the Owner Trustee shall be incompetent or unqualified to perform such
act or acts, in which event such rights, powers, duties and obligations
(including the holding of title to the Owner Trust Estate or any portion thereof
in any such jurisdiction) shall be exercised and performed singly by such
separate trustee or co-trustee, but solely at the direction of the Owner
Trustee;
27
No trustee under this Trust Agreement shall be personally liable by reason
of any act or omission of any other trustee under this Trust Agreement; and
The Owner Trustee may at any time accept the resignation of or remove any
separate trustee or co-trustee.
Any notice, request or other writing given to the Owner Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Trust Agreement and the
conditions of this Article IX. Each separate trustee and co-trustee, upon its
acceptance of the trusts conferred, shall be vested with the estates or property
specified in its instrument of appointment, either jointly with the Owner
Trustee or separately, as may be provided therein, subject to all the provisions
of this Trust Agreement, specifically including every provision of this Trust
Agreement relating to the conduct of, affecting the liability of, or affording
protection to, the Owner Trustee. Each such instrument shall be filed with the
Owner Trustee.
Any separate trustee or co-trustee may at any time appoint the Owner
Trustee as its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Trust Agreement on its behalf and in its name. If any separate trustee or co-
trustee shall die, become incapable of acting, resign or be removed, all of its
estates, properties, rights, remedies and trusts shall vest in and be exercised
by the Owner Trustee, to the extent permitted by law, without the appointment of
a new or successor co-trustee or separate trustee.
ARTICLE X
Miscellaneous
-------------
Section 10.01. Amendments.
----------
This Trust Agreement may be amended from time to time by the parties hereto
(with the prior written consent of the Bond Insurer and with prior notice to the
Rating Agencies) as specified in this Section, provided that any amendment,
except as provided in subparagraph (e) below, shall be accompanied by an Opinion
of Counsel addressed to the Owner Trustee and obtained by the Servicer to the
effect that such amendment complies with the provisions of this Section and
would not cause the Trust (if NCFC was not the holder of 100% of the
Certificates or if the Bond Insurance Policy is outstanding) to be subject to an
entity level tax for federal income tax purposes.
If the purpose of the amendment (as detailed therein) is to correct any
mistake, eliminate any inconsistency, cure any ambiguity or deal with any matter
not covered (i.e. to give effect to the intent of the parties and, if
applicable, to the expectations of the Certificateholders), it shall not be
necessary to obtain the consent of any Certificateholder, but the Owner Trustee
shall be furnished with (i) a letter from each of the Rating Agencies that the
amendment will not result in the downgrading or withdrawal of the rating then
assigned to any Bond or the rating then assigned to any Bond without taking into
account the Bond Insurance Policy or (ii) an Opinion of Counsel obtained by the
Servicer to the effect that such action will not adversely affect in any
28
material respect the interests of any Certificateholders or the Bond Insurer,
and the consent of the Bond Insurer shall be obtained.
If the purpose of the amendment is to prevent the imposition of any federal
or state taxes at any time that any Security is outstanding, it shall not be
necessary to obtain the consent of any Certificateholder, but the Owner Trustee
and the Bond Insurer shall be furnished with an Opinion of Counsel obtained by
the Servicer that such amendment is necessary or helpful to prevent the
imposition of such taxes and is not materially adverse to any Certificateholder
or the Bond Insurer and the consent of the Bond Insurer shall be obtained.
If the purpose of the amendment is to add or eliminate or change any
provision of the Trust Agreement other than as contemplated in (b) and (c)
above, the amendment shall require (i) an Opinion of Counsel obtained by the
Servicer to the effect that such action will not adversely affect in any
material respect the interests of any Certificateholders or the Bond Insurer,
(ii) the consent of the Bond Insurer and (iii) either (A) a letter from each of
the Rating Agencies that the amendment will not result in the downgrading or
withdrawal of the rating then assigned to any Bond or the rating then assigned
to any Bond without taking into account the Bond Insurance Policy or (B) the
consent of the Indenture Trustee and the holders of Certificates evidencing a
majority of the Certificate Principal Balance of the Certificates; provided,
however, that no such amendment shall (1) reduce in any manner the amount of, or
delay the timing of, payments received that are required to be distributed on
any Certificate without the consent of the related Certificateholder and the
Bond Insurer, or (2) reduce the aforesaid percentage of Certificates the holders
of which are required to consent to any such amendment, without the consent of
the holders of all such Certificates then outstanding.
If the purpose of the amendment is to provide for the holding of any of the
Certificates in book-entry form, it shall require the consent of holders of all
such Certificates then outstanding; provided, that the Opinion of Counsel
specified in subparagraph (a) above shall not be required.
If the purpose of the amendment is to provide for the issuance of
additional certificates representing an interest in the Trust, it shall not be
necessary to obtain the consent of any Certificateholder, but the Owner Trustee
shall be furnished with (i) an Opinion of Counsel obtained by the Servicer to
the effect that such action will not adversely affect in any material respect
the interests of any Certificateholders or the Bond Insurer or (ii) a letter
from each of the Rating Agencies that the amendment will not result in the
downgrading or withdrawal of the rating then assigned to any Bonds or the rating
then assigned to the Bonds without taking into account the Bond Insurance Policy
and the consent of the Bond Insurer shall be obtained.
Promptly after the execution of any such amendment or consent, the Servicer
shall furnish written notification of the substance of such amendment or consent
to each Certificateholder, the Indenture Trustee, the Bond Administrator, the
Bond Insurer and each of the Rating Agencies. It shall not be necessary for the
consent of Certificateholders or the Indenture Trustee pursuant to this Section
10.01 to approve the particular form of any proposed amendment or consent, but
it shall be sufficient if such consent shall approve the substance thereof. The
manner of obtaining such consents (and any other consents of Certificateholders
provided for in this Trust Agreement or in any other Basic Document) and of
evidencing the
29
authorization of the execution thereof by Certificateholders shall be subject to
such reasonable requirements as the Owner Trustee may prescribe.
In connection with the execution of any amendment to any agreement to which
the Trust is a party, other than this Trust Agreement, the Owner Trustee shall
be entitled to receive and conclusively rely upon an Opinion of Counsel to the
effect that such amendment is authorized or permitted by the documents subject
to such amendment and that all conditions precedent in the Basic Documents for
the execution and delivery thereof by the Trust or the Owner Trustee, as the
case may be, have been satisfied.
Promptly after the execution of any amendment to the Certificate of Trust,
the Owner Trustee shall cause the filing of such amendment with the Secretary of
State of the State of Delaware.
Section 10.02. No Legal Title to Owner Trust Estate.
------------------------------------
The Certificateholders shall not have legal title to any part of the Owner
Trust Estate. The Certificateholders shall be entitled to receive distributions
with respect to their undivided beneficial interests therein only in accordance
with Articles V and VIII. No transfer, by operation of law or otherwise, of any
right, title or interest of the Certificateholders to and in their beneficial
ownership interest in the Owner Trust Estate shall operate to terminate this
Trust 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 10.03. Limitations on Rights of Others.
-------------------------------
Except for Section 2.07, the provisions of this Trust Agreement are solely
for the benefit of the Owner Trustee, the Indemnified Parties, the Company, the
Certificateholders, the Bond Insurer and, to the extent expressly provided
herein, the Indenture Trustee and the Bondholders, and nothing in this Trust
Agreement (other than Section 2.07), whether express or implied, shall be
construed to give to any other Person any legal or equitable right, remedy or
claim in the Owner Trust Estate or under or in respect of this Trust Agreement
or any covenants, conditions or provisions contained herein.
Section 10.04. Notices.
-------
Unless otherwise expressly specified or permitted by the terms hereof, all
notices and other communications shall be in writing and shall be deemed given
upon receipt, to the Owner Trustee at:__________________________________________
Attention:_______________________, to the Company at: NovaStar Mortgage Funding
Corporation, 0000 Xxxx 00xx Xxxxx, Xxxxx 000, Xxxxxxxx, Xxxxxx 00000,
Attention: Xxxxx Xxxxxxxx; to the Bond Administrator at________________________
_______________________________________________________, Attention:_____________
__________________; to the Bond Insurer at:_____________________________________
____________________, Attention:______________________; to [Moody's] at:________
___________________________________________________________, Attention:_________
_______________________; to [Standard & Poor's] at______________________________
___________________________,
30
Attention: ______________________ or, as to each party, at such other address as
shall be designated by such party in a written notice to each other party.
Any notice required or permitted to be given to a Certificateholder shall
be given by first-class mail, postage prepaid, at the address of such
Certificateholder as shown in the Certificate Register. Any notice so mailed
within the time prescribed in this Trust Agreement shall be conclusively
presumed to have been duly given, whether or not the Certificateholder receives
such notice.
A copy of any notice delivered to the Owner Trustee or the Trust shall also
be delivered to the Company.
Section 10.05. Severability.
------------
Any provision of this Trust Agreement that is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
Section 10.06. Separate Counterparts.
---------------------
This Trust Agreement may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original,
but all such counterparts shall together constitute but one and the same
instrument.
Section 10.07. Successors and Assigns.
----------------------
All representations, warranties, covenants and agreements contained herein
shall be binding upon, and inure to the benefit of, each of the Company, the
Bond Insurer, the Owner Trustee and its successors and each Certificateholder
and its successors and permitted assigns, all as herein provided. Any request,
notice, direction, consent, waiver or other instrument or action by a
Certificateholder shall bind the successors and assigns of such
Certificateholder.
Section 10.08. No Petition.
-----------
The Owner Trustee, by entering into this Trust Agreement and each
Certificateholder, by accepting a Certificate, hereby covenant and agree that
they will not at any time institute against the Company or the Trust, or join in
any institution against the Company or the Trust of, any bankruptcy proceedings
under any United States federal or state bankruptcy or similar law in connection
with any obligations to the Certificates, the Bonds, this Trust Agreement or any
of the Basic Documents. This Section shall survive for one year following the
termination of this Trust Agreement.
Section 10.09. No Recourse.
-----------
Each Certificateholder by accepting a Certificate acknowledges that such
Certificateholder's Certificates represent beneficial interests in the Trust
only and do not
31
represent interests in or obligations of the Company, the Seller, the Owner
Trustee, the Bond Administrator, the Indenture Trustee or any Affiliate thereof
and no recourse may be had against such parties or their assets, except as may
be expressly set forth or contemplated in this Trust Agreement, the Certificates
or the Basic Documents.
Section 10.10. Headings.
--------
The headings of the various Articles and Sections herein are for
convenience of reference only and shall not define or limit any of the terms or
provisions hereof.
Section 10.11. GOVERNING LAW.
-------------
THIS TRUST AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF ________, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
Section 10.12. Integration.
-----------
This Trust Agreement constitutes the entire agreement among the parties
hereto pertaining to the subject matter hereof and supersedes all prior
agreements and understanding pertaining thereto.
Section 10.13. Third Party Beneficiary.
-----------------------
The Bond Insurer shall be a third party beneficiary hereof and shall be
entitled to enforce the provisions hereof as if a party hereto. This provision
shall not be construed to limit or modify in any way the fiduciary obligation of
the Owner Trustee to the beneficial owners of the Trust.
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IN WITNESS WHEREOF, the Company and the Owner Trustee have caused their
names to be signed hereto by their respective officers thereunto duly
authorized, all as of the day and year first above written.
NOVASTAR MORTGAGE FUNDING CORPORATION,
as Company
By: _________________________________
Name:
Title:
_____________________________________,
as Owner Trustee
By: _________________________________
Name:
Title:
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