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DEPOSIT TRUST AGREEMENT
BETWEEN
RESIDENTIAL ASSET FUNDING CORPORATION,
AS DEPOSITOR,
WILMINGTON TRUST COMPANY,
AS OWNER TRUSTEE
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
AS TRUST PAYING AGENT,
AND
MORTGAGE LENDERS NETWORK USA, INC.,
AS SERVICER
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MORTGAGE LENDERS NETWORK HOME EQUITY LOAN TRUST 1998-3
ASSET BACKED NOTES
SERIES 1998-3
DATED AS OF DECEMBER 1, 1998
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS..................................................1
SECTION 1.1 Capitalized Terms.......................................1
SECTION 1.2 Other Definitional Provisions...........................5
Article II ORGANIZATION................................................6
SECTION 2.1 Name ..................................................6
SECTION 2.2 Office..................................................6
SECTION 2.3 Purposes and Powers.....................................6
SECTION 2.4 Appointment of Owner Trustee............................7
SECTION 2.5 Initial Capital Contribution of Owner Trust Estate......7
SECTION 2.6 Declaration of Trust....................................7
SECTION 2.7 Liability of the Holders................................8
SECTION 2.8 Title to Trust Property.................................8
SECTION 2.9 Situs of Trust..........................................8
SECTION 2.10 Representations and Warranties of the Depositor;
Covenant of the Depositor.........................8
SECTION 2.11 Federal Income Tax Provisions...........................9
ARTICLE III CERTIFICATES AND TRANSFER OF INTERESTS....................12
SECTION 3.1 Initial Ownership......................................12
SECTION 3.2 The Certificates.......................................12
SECTION 3.3 Execution, Authentication and Delivery of Trust
Certificates.....................................13
SECTION 3.4 Registration of Transfer and Exchange of Trust
Certificates.....................................13
SECTION 3.5 Mutilated, Destroyed, Lost or Stolen Certificates......14
SECTION 3.6 Persons Deemed Owners..................................14
SECTION 3.7 Access to List of Holders' Names and Addresses.........15
SECTION 3.8 Maintenance of Office or Agency........................15
SECTION 3.9 Appointment of Trust Paying Agent......................15
SECTION 3.10 Restrictions on Transfer of Certificates...............16
ARTICLE IV ACTIONS BY OWNER TRUSTEE...................................18
SECTION 4.1 Prior Notice to Holders with Respect to Certain
Matters..........................................18
SECTION 4.2 Action by Holders with Respect to Bankruptcy...........20
SECTION 4.3 Restrictions on Holders' Power.........................20
SECTION 4.4 Majority Control.......................................20
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ARTICLE V APPLICATION OF TRUST FUNDS; CERTAIN DUTIES..................20
SECTION 5.1 Establishment of Certificate Distribution Account......20
SECTION 5.2 Application Of Trust Funds.............................21
SECTION 5.3 Method of Payment......................................22
SECTION 5.4 Segregation of Moneys; No Interest.....................22
ARTICLE VI AUTHORITY AND DUTIES OF OWNER TRUSTEE......................23
SECTION 6.1 General Authority......................................23
SECTION 6.2 General Duties.........................................23
SECTION 6.3 Action upon Instruction................................24
SECTION 6.4 No Duties Except as Specified in this Agreement,
the Basic Documents or any Instructions.........25
SECTION 6.5 No Action Except Under Specified Documents or
Instructions....................................25
SECTION 6.6 Restrictions...........................................25
ARTICLE VII CONCERNING THE OWNER TRUSTEE..............................25
SECTION 7.1 Acceptance of Trusts and Duties........................25
SECTION 7.2 Furnishing of Documents................................27
SECTION 7.3 Representations and Warranties.........................27
SECTION 7.4 Reliance; Advice of Counsel............................28
SECTION 7.5 Not Acting in Individual Capacity......................29
SECTION 7.6 Owner Trustee Not Liable for Certificates or Mortgage
Loans...........................................29
SECTION 7.7 Owner Trustee May Own Certificates and Notes...........29
SECTION 7.8 Licenses...............................................30
ARTICLE VIII COMPENSATION OF OWNER TRUSTEE............................30
SECTION 8.1 Owner Trustee's Fees and Expenses......................30
SECTION 8.2 Indemnification........................................30
SECTION 8.3 Payments to the Owner Trustee..........................31
SECTION 8.4 Servicer Liability.....................................31
ARTICLE IX TERMINATION OF TRUST AGREEMENT.............................31
SECTION 9.1 Termination of Trust Agreement.........................31
ARTICLE X SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES......32
SECTION 10.1 Eligibility Requirements for Owner Trustee.............32
SECTION 10.2 Resignation or Removal of Owner Trustee................33
SECTION 10.3 Successor Owner Trustee................................33
SECTION 10.4 Merger or Consolidation of Owner Trustee...............34
SECTION 10.5 Appointment of Co-Trustee or Separate Trustee..........34
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ARTICLE XI MISCELLANEOUS..............................................36
SECTION 11.1 Supplements and Amendments.............................36
SECTION 11.2 No Legal Title to Owner Trust Estate in Holders........37
SECTION 11.3 Limitations on Rights of Others........................37
SECTION 11.4 Notices................................................37
SECTION 11.5 Severability...........................................38
SECTION 11.6 Separate Counterparts..................................38
SECTION 11.7 Successors and Assigns.................................38
SECTION 11.8 No Petition............................................38
SECTION 11.9 No Recourse............................................38
SECTION 11.10 Headings............................................39
SECTION 11.11 GOVERNING LAW.......................................39
SECTION 11.12 Grant of Certificateholder Rights to Note Insurer...39
SECTION 11.13 Third-Party Beneficiary.............................39
SECTION 11.14 Suspension and Termination of Note Insurer's Rights.40
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DEPOSIT TRUST AGREEMENT
This DEPOSIT TRUST AGREEMENT, dated as of December 1, 1998, among
RESIDENTIAL ASSET FUNDING CORPORATION, a Delaware corporation, as depositor (the
"Depositor"), WILMINGTON TRUST COMPANY, a Delaware banking corporation, as owner
trustee (the "Owner Trustee"), NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, a
national banking association, as trust paying agent (the "Trust Paying Agent"),
and MORTGAGE LENDERS NETWORK USA, INC., as servicer (the "Servicer"), for the
limited purposes set forth herein.
ARTICLE I
DEFINITIONS
SECTION 1.1 CAPITALIZED TERMS. For all purposes of this Agreement, the
following terms shall have the meanings set forth below:
"ACCOUNTS" shall mean, collectively, the Collection Account and the
Note Accounts.
"AGREEMENT" shall mean this Deposit Trust Agreement, as may be
amended and supplemented from time to time.
"ANNUAL TAX REPORTS" shall have the meaning assigned thereto in
Section 2.11(k).
"AUTHORIZED OFFICER" shall have the meaning assigned thereto in the
Indenture.
"BASIC DOCUMENTS" shall mean this Agreement, the Servicing
Agreement, the Mortgage Loan Sale Agreement, the Mortgage Loan Contribution
Agreement, the Management Agreement, the Insurance Agreement and the Indenture.
"BUSINESS DAY" shall mean any day other than (i) a Saturday or
Sunday or (ii) a day that is either a legal holiday or a day on which the Note
Insurer or banking institutions in the State of New York, the State of
Connecticut, the State of Maryland, the State of Delaware, the State of North
Carolina, or the state in which the Trust Paying Agent's office from which
payments will be made to Certificateholders are authorized or obligated by law,
regulation or executive order to be closed.
"BUSINESS TRUST STATUTE" shall mean Chapter 38 of Title 12 of I the
Delaware Code, 12 Del. Code ss. 3801 et seq., as the same may be amended from
time to time.
"CAPITAL ACCOUNT" shall have the meaning assigned thereto in Section
2.1l(a).
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"CERTIFICATE" shall mean a certificate evidencing the beneficial
interest of a Certificateholder in the Trust, substantially in the form attached
hereto as Exhibit A.
"CERTIFICATE DISTRIBUTION ACCOUNT" shall have the meaning assigned
to such term in Section 5.1.
"CERTIFICATE OF TRUST" shall mean the Certificate of Trust in the
form of Exhibit B to be filed for the Trust pursuant to Section 3810(a) of the
Business Trust Statute.
"CERTIFICATE REGISTER" and "Certificate Registrar" shall mean the
register mentioned and the registrar appointed pursuant to Section 3.4.
"CERTIFICATEHOLDER" OR "HOLDER" shall mean a Person in whose name a
Certificate is registered.
"CODE" shall mean the Internal Revenue Code of 1986, as amended,
and, where appropriate in context, Treasury Regulations promulgated thereunder.
"COLLECTION ACCOUNT" shall have the meaning assigned thereto in the
Servicing Agreement.
"COMPANY" shall mean MLN Capital Corporation I, a Delaware
corporation.
"CORPORATE TRUST OFFICE" shall mean, with respect to the Owner
Trustee, the principal corporate trust office of the Owner Trustee located at
Xxxxxx Square North, 0000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000-0000,
Attention: Corporate Trust Administration; or at such other address in the State
of Delaware as the Owner Trustee may designate by notice to the
Certificateholders and the Depositor, or the principal corporate trust office of
any successor Owner Trustee (the address (which shall be in the State of
Delaware) of which the successor owner trustee will notify the Certificateholder
and the Depositor).
"DEPOSITOR" shall mean Residential Asset Funding Corporation, a
Delaware corporation.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"EXPENSES" shall have the meaning assigned to such term in Section
8.2.
"HOLDER NONRECOURSE DEBT MINIMUM GAIN" shall have the meaning set
forth for "partner nonrecourse debt minimum gain" in Treasury Regulations
Section
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1.704-2(i)(2). A Holder's share of Holder Nonrecourse Debt Minimum Gain
shall be determined in accordance with Treasury Regulations Section
1.704-2(i)(5).
"INDENTURE" shall mean the Indenture, dated as of December 1, 1998,
by and between the Issuer and the Indenture Trustee.
"INDENTURE TRUSTEE" means Norwest Bank Minnesota, National
Association, as Indenture Trustee under the Indenture.
"INSURANCE AGREEMENT" means the Insurance Agreement, dated as of
December 1, 1998, among MBIA Insurance Corporation, as insurer, the Issuer,
Mortgage Lenders Network USA, Inc., as Seller and Servicer, the Depositor and
the Indenture Trustee.
"INSURANCE POLICY" shall mean the policy issued by the Note Insurer
for the benefit of the holders of the Notes.
"ISSUER" shall mean Mortgage Lenders Network Home Equity Loan Trust
1998-3, the Delaware business trust created pursuant to this Agreement.
"MANAGEMENT AGREEMENT" shall mean the Management Agreement dated as
of December 1, 1998, between the Trust and Norwest Bank Minnesota, National
Association, as Manager.
"MORTGAGE LENDERS NETWORK" shall mean Mortgage Lenders Network USA,
Inc. a Delaware corporation.
"MORTGAGE LOAN CONTRIBUTION AGREEMENT" shall mean that certain
Mortgage Loan Contribution Agreement, dated as of December 1, 1998, between the
Depositor, as transferor, and the Issuer, as transferee.
"MORTGAGE LOAN SALE AGREEMENT" shall mean that certain Mortgage Loan
Sale Agreement, dated as of December 1, 1998, between Mortgage Lenders Network
USA, Inc., as seller, and the Depositor, as purchaser.
"NON-U.S. PERSON" shall mean an individual, corporation, partnership
or other person other than a citizen or resident of the United States, a
corporation, partnership or other entity created or organized in or under the
laws of the United States or any political subdivision thereof, an estate that
is subject to U.S. federal income tax regardless of the source of its income or
a trust if (i) a court in the United States is able to exercise primary
supervision over the administration of the trust and (ii) one or more United
States fiduciaries have the authority to control all substantial decisions of
the trust.
"NOTE ACCOUNT" shall have the meaning assigned thereto in the
Indenture.
"NOTE INSURER" shall mean MBIA Insurance Corporation, a New York
stock insurance company.
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"NOTE INSURER DEFAULT" shall have the meaning assigned to such term
in the Indenture.
"NOTES"shall mean the Mortgage Lenders Network Home Equity Loan
Trust 1998-3 Asset Backed Notes, Series 1998-3.
"OWNER TRUST ESTATE" shall mean the Trust Estate (as defined in the
Indenture), including the contribution of $1 referred to in Section 2.5 hereof.
"OWNER TRUSTEE" shall mean Wilmington Trust Company, a Delaware
banking corporation, not in its individual capacity but solely as owner trustee
under this Agreement, and any successor owner trustee hereunder.
"PAYMENT DATE" SHALL mean the twenty-fifth day of each month or, if
such twenty-fifth day is not a Business Day, the next succeeding Business Day,
commencing January 25, 1999.
"PERCENTAGE INTEREST" shall mean with respect to any Certificate the
percentage portion of all of the Trust Interest evidenced thereby as stated on
the face of such Certificate.
"PERMITTED INVESTMENTS" shall have the meaning assigned to such term
in the Indenture.
"PROSPECTIVE HOLDER" shall have the meaning set forth in Section 3.1
l(a).
"RATING AGENCY CONDITION" means, with respect to any action to which
a Rating Agency Condition applies, that each Rating Agency shall have been given
10 days (or such shorter period as is acceptable to each Rating Agency) prior
notice thereof and that each of the Rating Agencies shall have notified the
Depositor, the Servicer, the Note Insurer, the Owner Trustee and the Issuer in
writing that such action will not result in a reduction or withdrawal of the
then current "implied" rating of the Notes that it maintains without taking into
account the Note Insurance.
"RECORD DATE" shall mean as to each Payment Date the last Business
Day of the month immediately preceding the month in which such Payment Date
occurs.
"SERVICING AGREEMENT" shall mean the Servicing Agreement dated as of
December 1, 1998, among the Trust, as Issuer, the Indenture Trustee and Mortgage
Lenders Network USA, Inc., as Servicer.
"SECRETARY OF STATE" shall mean the Secretary of State of the State
of Delaware.
"TAXABLE YEAR" shall have the meaning assigned thereto in Section
2.11(j).
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"TAX MATTERS PARTNER" shall have the meaning assigned thereto in
Section 2.11(l).
"TREASURY REGULATIONS" shall mean regulations, including proposed or
temporary regulations, promulgated under the Code. References herein to specific
provisions of proposed or temporary regulations shall include analogous
provisions of final Treasury Regulations or other successor Treasury
Regulations.
"TRUST" shall mean the trust established by this Agreement.
"TRUST INTEREST" shall mean the right to receive, on each Payment
Date, distributions of the amounts, if any, released to the Issuer pursuant to
Section 8.02(d) of the Indenture or pursuant to Section 2.05 of the Servicing
Agreement.
"TRUST MINIMUM GAIN" shall have the meaning set forth for
"partnership minimum gain" in Treasury Regulations 1.704-2(b)(2) and 1.704-2(d).
In accordance with Treasury Regulations Section 1.704-2(d), the amount of Trust
Minimum Gain is determined by first computing, for each nonrecourse liability of
the Trust, any gain the Trust would realize if it disposed of the property
subject to that liability for no consideration other than full satisfaction of
the liability, and then aggregating the separately computed gains. A Holder's
share of Trust Minimum Gain shall be determined in accordance with Treasury
Regulations Section 1.704-2(g)(1).
"TRUST PAYING AGENT" shall mean any paying agent or co-paying agent
appointed pursuant to Section 3.9 and authorized by the Owner Trustee to make
payments to and distributions from the Certificate Distribution Account.
SECTION 1.2 OTHER DEFINITIONAL PROVISIONS.
(a) Capitalized terms used herein and not otherwise defined herein
have the meanings assigned to them in the Servicing Agreement or, if not defined
therein, in the Indenture.
(b) All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein.
(c) As used in this Agreement and in any certificate or other
document made or delivered pursuant hereto or thereto, accounting terms not
defined in this Agreement or in any such certificate or other document, and
accounting terms partly defined in this Agreement or in any such certificate or
other document to the extent not defined, shall have the respective meanings
given to them under generally accepted accounting principles. To the extent that
the definitions of accounting terms in this Agreement or in any such certificate
or other document are inconsistent with the meanings of such terms under
generally accepted accounting principles, the definitions contained in this
Agreement or in any such certificate or other document shall control.
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(d) The words "hereof," "herein," "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement; Section and Exhibit
references contained in this Agreement are references to Sections and Exhibits
in or to this Agreement unless otherwise specified; and the term "including"
shall mean "including without limitation".
(e) The definitions contained in this Agreement are applicable to
the singular as well as the plural forms of such terms and to the masculine as
well as to the feminine and neuter genders of such terms.
(f) Any agreement, instrument or statute defined or referred to
herein or in any instrument or certificate delivered in connection herewith
means such agreement, instrument or statute as from time to time amended,
modified or supplemented and includes (in the case of agreements or instruments)
references to all attachments thereto and instruments incorporated therein;
references to a Person are also to its permitted successors and assigns.
ARTICLE II
ORGANIZATION
SECTION 2.1 NAME. The Trust created hereby shall be known as "Mortgage Lenders
Network Home Equity Loan Trust 1998-3," in which name the Owner Trustee may
conduct the business of the Trust, make and execute contracts and other
instruments on behalf of the Trust and xxx and be sued.
SECTION 2.2 OFFICE. The office of the Trust shall be in care of the Owner
Trustee at the Corporate Trust Office or at such other address in Delaware as
the Owner Trustee may designate by written notice to the Certificateholders, the
Note Insurer and the Depositor.
SECTION 2.3 PURPOSES AND POWERS. The purpose of the Trust is to engage in the
following activities:
(i) to issue the Notes pursuant to the Indenture and to sell such
Notes;
(ii) with the proceeds of the sale of the Notes, to pay the
organizational, startup and transactional expenses of the Trust and to pay
the balance to the Depositor pursuant to the Mortgage Loan Contribution
Agreement;
(iii) to assign, grant, transfer, pledge, mortgage and convey the
Owner Trust Estate pursuant to the Indenture and to hold, manage and
distribute to the Holders any portion of the Owner Trust Estate released
from the lien of, and remitted to the Trust pursuant to, the Indenture;
(iv) to enter into and perform its obligations under the Basic
Documents to which it is or is to be a party;
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(v) to engage in those activities, including entering into
agreements, that are necessary, suitable or convenient to accomplish the
foregoing or are incidental thereto or connected therewith;
(vi) subject to compliance with the 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 and payments to
the Holders and the Noteholders; and
(vii) to issue the Certificates pursuant to this Agreement.
The Trust is hereby authorized by the initial Certificateholders to engage in
the foregoing activities. The Trust shall not engage in any activity other than
in connection with the foregoing or other than as required or authorized by the
terms of this Agreement or the Basic Documents.
SECTION 2.4 APPOINTMENT OF OWNER TRUSTEE. The Depositor hereby appoints the
Owner Trustee as trustee of the Trust effective as of the date hereof, to have
all the rights, powers and duties set forth herein.
SECTION 2.5 INITIAL CAPITAL CONTRIBUTION OF OWNER TRUST ESTATE. The Depositor
hereby sells, assigns, transfers, conveys and sets over to the Owner Trustee, as
of the date hereof, the sum of $1. The Owner Trustee hereby acknowledges receipt
in trust from the Depositor, as of the date hereof, of the foregoing
contribution, which shall constitute the initial Owner Trust Estate and shall be
deposited in the Certificate Distribution Account. The Certificateholders shall
pay organizational expenses of the Trust as they may arise or shall, upon the
request of the Owner Trustee, promptly reimburse the Owner Trustee for any such
expenses paid by the Owner Trustee.
SECTION 2.6 DECLARATION OF TRUST. The Owner Trustee hereby declares that it will
hold the Owner Trust Estate in trust upon and subject to the conditions set
forth herein for the use and benefit of the Holders, 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 Agreement constitute the governing instrument of such
business trust. It is the intention of the parties hereto that, solely for
income and franchise tax purposes, after issuance of the Certificates, the Trust
shall be treated as a partnership, with the assets of the partnership being the
Mortgage Loans and other assets held by the Trust, the partners of the
partnership being the holders of the Certificates and the Notes being
non-recourse debt of the partnership (or, if there is only one
Certificateholder, that the Trust shall be disregarded as an entity separate
from such Holder, with the assets held by the Trust being treated as assets of
the Holder and the Notes being treated as non-recourse debt of the Holder). The
parties agree that, unless otherwise required by appropriate tax authorities or
unless the Trust is disregarded as an entity separate from its sole
Certificateholder for income and franchise tax purposes, the Owner Trustee will
file or cause to be filed annual or other necessary returns, reports and other
forms consistent with the characterization of the Trust as a partnership for
such tax purposes pursuant to Section 2.11(k). The parties agree that no
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election will be made to treat the Trust or the Owner Trust Estate as a real
estate mortgage investment conduit as defined in Section 860D of the Code.
Effective as of the date hereof, the Owner Trustee shall have all rights, powers
and duties set forth herein and in the Business Trust Statute with respect to
accomplishing the purposes of the Trust. The Owner Trustee shall file the
Certificate of Trust with the Secretary of State.
SECTION 2.7 LIABILITY OF THE HOLDERS. No Holder shall have any personal
liability for any liability or obligation of the Trust. The Certificates shall
be fully paid and nonassessable.
SECTION 2.8 TITLE TO TRUST PROPERTY
(a) Legal title to all of 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 and/or a separate trustee, as the case may be.
(b) The Certificateholders shall not have legal title to any part of
the Owner Trust Estate. No transfer by operation of law or otherwise of any
interest of the Certificateholders shall operate to terminate this Agreement or
the trusts hereunder or entitle any transferee to an Accounting or to the
transfer to it of any part of the Owner Trust Estate.
SECTION 2.9 SITUS OF TRUST. The Trust will be located and administered in the
state of Delaware. All accounts maintained at a bank by the Owner Trustee or the
Indenture Trustee on behalf of the Trust shall be located in the State of
Delaware, the State of Minnesota or the State of Connecticut. The Trust shall
not have any employees; provided, however, nothing herein shall restrict or
prohibit the Owner Trustee from having employees within or without the State of
Delaware. Payments will be received by the Trust only in Delaware, Minnesota or
Connecticut, and payments will be made by the Trust only from Delaware,
Minnesota or Connecticut. The only office of the Trust will be at the Corporate
Trust Office in Delaware.
SECTION 2.10 REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR; COVENANT OF
THE DEPOSITOR.The Depositor hereby represents and warrants to
the Owner Trustee and the Note Insurer that:
(i) The Depositor is duly organized and validly existing as a
corporation in good standing under the laws of the State of Delaware, with
power and authority to own its properties and to conduct its business as
such properties are currently owned and such business is presently
conducted.
(ii) The Depositor has the power and authority to execute and
deliver this Agreement and to carry out its terms; the Depositor has full
power and authority to transfer and assign the property to be transferred
and assigned to and deposited with the Trust and the Depositor has duly
authorized such transfer and assignment
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and deposit to the Trust by all necessary corporate action; and the
execution, delivery and performance of this Agreement has been duly
authorized by the Depositor by all necessary corporate action.
(iii) The consummation of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof do not conflict with,
result in any breach of any of the terms and provisions of, or constitute
(with or without notice or lapse of time) a default under, the certificate
of incorporation or by-laws of the Depositor, or any indenture, agreement
or other instrument to which the Depositor 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 Depositor's knowledge, any order, rule or
regulation applicable to the Depositor of any court or of any Federal or
state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Depositor or its properties.
(iv) There are no proceedings or investigations pending or notice of
which has been received in writing before any court, regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over the Depositor or its properties: (x) asserting the
invalidity of this Agreement, (y) seeking to prevent the consummation of
any of the transactions contemplated by this Agreement or (z) seeking any
determination or ruling that should reasonably be expected to materially
and adversely affect the performance by the Depositor of its obligations
under, or the validity or enforceability of, this Agreement.
(v) The representations and warranties of the Depositor in Section 3(a)
of the Mortgage Loan Contribution Agreement are true and correct.
(vi) The Depositor has duly executed and delivered this Agreement, and
this Agreement constitutes the legal, valid and binding obligation of the
Depositor, enforceable against the Depositor, in accordance with its
terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, moratorium or similar laws affecting the
enforcement of creditors' rights generally and by the application of
equitable principles.
(b) Each Certificateholder covenants with the Owner Trustee and the
Note Insurer that during the continuance of this Agreement, and while it holds
Certificates, it will comply in all respects with the provisions of its
Certificate of Incorporation in effect from time to time.
SECTION 2.11 FEDERAL INCOME TAX PROVISIONS. If the Trust is treated as a
partnership (rather than disregarded as a separate entity) for federal income
tax purposes pursuant to Section 2.6, the following provisions shall apply:
(a) A separate capital account (a "Capital Account") shall be
established and maintained for each Certificateholder in accordance with
Treasury Regulations
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Section 1.704-1 (b)(2)(iv). No Certificateholder shall be entitled to interest
on its Capital Account or any capital contribution made by such Holder to the
Trust.
(b) Upon termination of the Trust pursuant to Article IX, any
amounts available for distribution to Holders shall be distributed to the
Holders with positive Capital Account balances in accordance with such balances.
For purposes of this Section 2.1l(b), the Capital Account of each Holder shall
be determined after all adjustments made in accordance with this Section 2.11
resulting from the Trust's operations and from all sales and dispositions of all
or any part of the assets of the Trust. Any distributions pursuant to this
Section 2.1l(b) shall be made by the end of the Taxable Year in which the
termination occurs (or, if later, within 90 days after the date of the
termination).
(c) No Certificateholder shall be required to restore any deficit
balance in its Capital Account. Furthermore, no Holder shall be liable for the
return of the Capital Account of, or of any capital contribution made to the
Trust by, another Holder.
(d) Profit and loss of the Trust for each Taxable Year shall be
allocated to the Certificateholders in accordance with their respective
Percentage Interests.
(e) Notwithstanding any provision to the contrary, (i) any expense
of the Trust that is a "nonrecourse deduction" within the meaning of Treasury
Regulations Section 1.704-2(b)(1) shall be allocated in accordance with the
Holders' respective Percentage Interests, (ii) any expense of the Trust that is
a "partner nonrecourse deduction" within the meaning of Treasury Regulations
Section 1.704-2(i)(2) shall be allocated in accordance with Treasury Regulations
Section 1.704-2(i)(1), (iii) if there is a net decrease in Trust Minimum Gain
within the meaning of Treasury Regulations Section 1.704-2(f)(1) for any Taxable
Year, items of gain and income shall be allocated among the Holders in
accordance with Treasury Regulations Section 1.704-2(f) and the ordering rules
contained in Treasury Regulations Section 1.704-2(i), and (iv) if there is a net
decrease in Holder Nonrecourse Debt Minimum Gain within the meaning of Treasury
Regulations Section 1.704-2(i)(4) for any Taxable Year, items of gain and income
shall be allocated among the Holders in accordance with Treasury Regulations
Section 1.704-2(i)(4) and the ordering rules contained in Treasury Regulations
Section 1.704-2(j). A Holder's "interest in partnership profits" for purposes of
determining its share of the nonrecourse liabilities of the Trust within the
meaning of Treasury Regulations Section 1.752-3(a)(3) shall be such Holder's
Percentage Interest.
(f) If a Holder receives in any Taxable Year an adjustment,
allocation, or distribution described in subparagraphs (4), (5), or (6) of
Treasury Regulations Section 1.704-l(b)(2)(ii)(d) that causes or increases a
negative balance in such Holder's Capital Account that exceeds the sum of such
Holder's shares of Trust Minimum Gain and Holder Nonrecourse Debt Minimum Gain,
as determined in accordance with Treasury Regulations Sections 1.704-2(g) and
1.704-2(i), such Holder shall be allocated specially for such Taxable Year (and,
if necessary, later Taxable Years) items of income and gain in an amount and
manner sufficient to eliminate such negative Capital Account balance as quickly
as possible as provided in Treasury Regulations Section 1.704-l(b)(2)(ii)(d).
After the occurrence of an allocation of income or gain to a Holder in
accordance with
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this Section 2.11(f), to the extent permitted by Regulations
Section 1.704-l(b), items of expense or loss shall be allocated to such Holder
in an amount necessary to offset the income or gain previously allocated to such
Holder under this Section 2.11(f).
(g) Loss shall not be allocated to a Holder to the extent that such
allocation would cause a deficit in such Holder's Capital Account (after
reduction to reflect the items described in Treasury Regulations Section
1.704-l(b)(2)(ii)(d)(4), (5) and (6)) to exceed the sum of such Holder's shares
of Trust Minimum Gain and Holder Nonrecourse Debt Minimum Gain. Any loss in
excess of that limitation shall be allocated to all the Holders in accordance
with their respective Percentage Interests. After the occurrence of an
allocation of loss to a Holder in accordance with this Section 2.11(g), to the
extent permitted by Treasury Regulations Section 1.704-l(b), profit shall be
allocated to such Holder in an amount necessary to offset the loss previously
allocated to such Holder under this Section 2.11(g).
(h) If a Holder transfers any part or all of its Percentage Interest
and the transferee is admitted as provided herein (a "Transferee Holder"), the
distributive shares of the various items of profit and loss allocable among the
Holders during such Taxable Year shall be allocated between the transferor and
the Transferee Holder (at the election of the Holders (including the transferor,
but excluding the Transferee Holder)) either (i) as if the Taxable Year had
ended on the date of the transfer or (ii) based on the number of days of such
Taxable Year that each was a Holder without regard to the results of Trust
activities in the respective portions of such Taxable Year in which the
transferor and Transferee Holder were Holders.
(i) "Profit" and "loss" and any items of income, gain, expense or
loss referred to in this Section 2.11 shall be determined in accordance with
federal income tax accounting principles as modified by Treasury Regulations
Section 1.704-l(b)(2)(iv), except that profits and losses shall not include
items of income, gain, and expense that are specially allocated pursuant to
Sections 2.11(e), 2.11(f) or 2.11(g) hereof. All allocations of income, profits,
gains, expenses, and losses (and all items contained therein) for federal income
tax purposes shall be identical to all allocations of such items set forth in
this Section 2.11, except as otherwise required by Section 704(c) of the Code
and Section 1.704-l(b)(4) of the Treasury Regulations.
(j) The taxable year of the Trust (the "Taxable Year") shall be the
calendar year or such other taxable year as may be required by Section 706(b) of
the Code.
(k) At the Trust's expense, the Owner Trustee shall (i) prepare, or
cause to be prepared, and file or cause to be filed such tax returns relating to
the Trust (including a partnership information return, IRS Form 1065) as are
required by applicable federal, state, and local law, (ii) cause such returns to
be signed in the manner required by law, (iii) make such elections as may from
time to time be required or appropriate under any applicable law so as to
maintain the Trust's classification as a partnership for tax purposes, (iv)
prepare and deliver, or cause to be prepared and delivered, to the Holders, no
later than 120 days after the close of each Taxable Year (or no later than April
15th), a
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Schedule K-1, a copy of the Trust's informational tax return (IRS Form
1065), and such other reports (collectively, the "Annual Tax Reports") setting
forth in sufficient detail all such information and data with respect to the
transactions effected by or involving the Trust during such Taxable Year as
shall enable the each Holder to prepare its federal, state, and local income tax
returns in accordance with the laws then prevailing, and (v) collect, or cause
to be collected, any withholding tax as described in Section 5.2(c) with respect
to income or distributions to Certificateholders.
(l) Mortgage Lenders Network USA, Inc. shall be designated as the
tax matters partner for the Trust within the meaning of Section 6231(a)(7) of
the Code (the "Tax Matters Partner"). The Tax Matters Partner shall have the
right and obligation to take all actions authorized and required, respectively,
by the Code for the Tax Matters Partner. The Tax Matters Partner shall have the
right to retain professional assistance in respect of any audit or controversy
proceeding initiated with respect to the Trust by the Internal Revenue Service
or any state or local taxing authority, and all expenses and fees incurred by
the Tax Matters Partner on behalf of the Trust shall constitute expenses of the
Trust. In the event the Tax Matters Partner receives notice of a final
partnership adjustment under Section 6223(a)(2) of the Code, the Tax Matters
Partner shall either (i) file a court petition for judicial review of such
adjustment within the period provided under Section 6226(a) of the Code, a copy
of which petition shall be mailed to all other Holders on the date such petition
is filed, or (ii) mail a written notice to all other Holders, within such
period, that describes the Tax Matters Partner's reasons for determining not to
file such a petition.
(m) Except as otherwise provided in this Section 2.11, the Holders
shall instruct the Owner Trustee as to whether to make any available election
under the Code or any applicable state or local tax law on behalf of the Trust.
Notwithstanding the foregoing, any Holder may request that the Owner Trustee
make an election under section 754 of the Code; provided that the requesting
Holder shall agree to bear the cost of preparing such election and any
additional accounting expenses of the Trust incurred as a result of such
election.
ARTICLE III
CERTIFICATES AND TRANSFER OF INTERESTS
SECTION 3.1 INITIAL OWNERSHIP. Upon the formation of the Trust by the
contribution by the Depositor pursuant to Section 2.5 and until the issuance of
the Certificates, the Depositor shall be the sole beneficiary of the Trust.
SECTION 3.2 THE CERTIFICATES. The Certificates shall be issued without a
principal amount and shall evidence beneficial ownership interests in the Trust.
The Certificates shall be printed, lithographed or engraved or may be produced
in any other manner as is reasonably acceptable to the Owner Trustee, as
evidenced by its execution thereof. The Certificates shall be executed on behalf
of the Trust by manual or facsimile signature of an Authorized Officer of the
Owner Trustee. Certificates bearing the manual or facsimile signatures of
individuals who were, at the time when such signatures shall have been affixed,
authorized to sign on behalf of the Trust, shall be valid,
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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 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 Section 3.4.
SECTION 3.3 EXECUTION, AUTHENTICATION AND DELIVERY OF TRUST CERTIFICATES.
Concurrently with the initial transfer of the Mortgage Loans to the Trust
pursuant to the Mortgage Loan Contribution Agreement, the Owner Trustee shall
cause the Certificates, representing 100% of the Percentage Interests of the
Trust Interest, to be executed on behalf of the Trust, authenticated and
delivered to the Company, as the designee of the Depositor. No Certificate shall
entitle its holder to any benefit under this Agreement, or shall 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 Owner Trustee's authenticating agent, by manual or
facsimile 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 3.4 REGISTRATION OF TRANSFER AND EXCHANGE OF TRUST CERTIFICATES. The
Certificate Registrar shall keep or cause to be kept, at the office or agency
maintained pursuant to Section 3.8, a Certificate Register in which, subject to
such reasonable regulations as it may prescribe, the Owner Trustee shall provide
for the registration of Certificates and of transfers and exchanges of
Certificates as herein provided. The Owner Trustee shall be the initial
Certificate Registrar.
Upon surrender for registration of transfer of any Certificate at
the office or agency maintained pursuant to Section 3.8, the Owner Trustee shall
execute, authenticate and deliver (or shall cause its authenticating agent to
authenticate and deliver), in the name of the designated transferee or
transferees, one or more new Certificates of a like Percentage Interest dated
the date of authentication by the Owner Trustee or any authenticating agent. At
the option of a Certificateholder, Certificates may be exchanged for other
Certificates of a like Percentage Interest upon surrender of the Certificates to
be exchanged at the office or agency maintained pursuant to Section 3.8.
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 Owner Trustee and the Certificate Registrar duly
executed by the Certificateholder or his attorney duly authorized in writing. In
addition, each Certificate presented or surrendered for registration of transfer
and exchange must be accompanied by a representation letter from the Prospective
Holder certifying as to the representations set forth in Section 3.11(a), (b)
and (c). Each Certificate surrendered for registration of
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transfer or exchange shall be canceled and disposed of by the Owner Trustee in
accordance with its customary practice.
No service charge shall be made for any registration of transfer or
exchange of 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.
The preceding provisions of this Section notwithstanding, the Owner
Trustee shall not make and the Certificate Registrar shall not register
transfers or exchanges of Certificates for a period of 15 days preceding the
Payment Date with respect to the Certificates.
Notwithstanding anything contained herein to the contrary, the Owner
Trustee shall not be responsible for ascertaining whether any transfer complies
with the registration provisions or exemptions from the Securities Act of 1933,
as amended, the Securities Act of 1934, as amended, applicable state securities
law or the Investment Company Act of 1940; provided, however, that if a
certificate is specifically required to be delivered to the Owner Trustee by a
purchaser or transferee of a Certificate, the Owner Trustee shall be under a
duty to examine the same to determine whether it conforms to the requirements of
this Trust Agreement and shall promptly notify the party delivering the same if
such certificate does not so conform.
SECTION 3.5 MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES. If (a) any
mutilated Certificate shall be surrendered to the Certificate Registrar, or if
the Certificate Registrar shall receive evidence to its satisfaction of the
destruction, loss or theft of any Certificate and (b) there shall be delivered
to the Certificate Registrar and the Owner Trustee such security or indemnity as
may be required by them to save each of them harmless, then in the absence of
notice that such Certificate shall have been acquired by a bona fide purchaser,
the Owner Trustee on behalf of the Trust shall execute and the Owner Trustee, or
the Owner Trustee's authenticating agent, shall authenticate and deliver, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate of like Percentage Interest. In connection with
the issuance of any new Certificate under this Section, the Owner Trustee or the
Certificate Registrar may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection therewith.
Any duplicate Certificate issued pursuant to this Section shall constitute
conclusive evidence of ownership in the Trust, as if originally issued, whether
or not the lost, stolen or destroyed Certificate shall be found at any time.
SECTION 3.6 PERSONS DEEMED OWNERS. Each person by virtue of becoming a
Certificateholder in accordance with this Agreement shall be deemed to be bound
by the terms of this Agreement. Prior to due presentation of a Certificate for
registration of transfer, the Owner Trustee or the Certificate Registrar may
treat the Person in whose name any Certificate shall be registered in the
Certificate Register as the owner of such Certificate for the purpose of
receiving distributions pursuant to Section 5.2 and for all
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other purposes whatsoever, and neither the Owner Trustee nor the Certificate
Registrar shall be bound by any notice to the contrary.
SECTION 3.7 ACCESS TO LIST OF HOLDERS' NAMES AND ADDRESSES. The Owner Trustee
shall furnish or cause to be furnished to the Servicer, the Depositor and the
Trust Paying Agent immediately prior to each Payment Date, a list of the names
and addresses of the Certificateholders as of the most recent Record Date. If
three or more Certificateholders or one or more Holders of Certificates,
together evidencing Percentage Interests totaling not less than 25%, apply in
writing to the Owner Trustee, and such application states that the applicants
desire to communicate with other Certificateholders with respect to their rights
under this Agreement or under the Certificates and such application is
accompanied by a copy of the communication that such applicants propose to
transmit, then the Owner Trustee shall, within five Business Days after the
receipt of such application, afford such applicants access during normal
business hours to the current list of Certificateholders. Each
Certificateholder, by receiving and holding a Certificate, shall be deemed to
have agreed not to hold any of the Depositor, the Certificate Registrar or the
Owner Trustee accountable by reason of the disclosure of its name and address,
regardless of the source from which such information was derived.
SECTION 3.8 MAINTENANCE OF OFFICE OR AGENCY. The Owner Trustee shall maintain an
office or offices or agency or agencies where 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
of Wilmington Trust Company as its principal corporate trust office for such
purposes. The Owner Trustee shall give prompt written notice to the Depositor
and to the Certificateholders of any change in the location of the Certificate
Register or any such office or agency.
SECTION 3.9 APPOINTMENT OF TRUST PAYING AGENT. The Owner Trustee hereby appoints
Norwest Bank Minnesota, National Association, as Trust Paying Agent under this
Agreement. The Trust Paying Agent shall make distributions to Certificateholders
from the Certificate Distribution Account pursuant to Section 5.2 and shall
report to the Owner Trustee on the Payment Date via facsimile transmission of a
distribution statement the amounts of such distributions to the
Certificateholders. The Trust Paying Agent shall have the revocable power to
withdraw funds from the Certificate Distribution Account for the purpose of
making the distributions referred to above. In the event that Norwest Bank
Minnesota, National Association, shall no longer be the Trust Paying Agent
hereunder, the Owner Trustee shall appoint a successor to act as Trust Paying
Agent (which shall be a bank or trust company) acceptable to the
Certificateholders, Mortgage Lenders Network, so long as Mortgage Lenders
Network is acting as Servicer, and the Note Insurer. The Owner Trustee shall
cause such successor Trust Paying Agent or any additional Trust Paying Agent
appointed by the Owner Trustee to execute and deliver to the Owner Trustee an
instrument in which such successor Trust Paying Agent or additional Trust Paying
Agent shall agree with the Owner Trustee that as Trust Paying Agent, such
successor Trust Paying Agent or additional Trust Paying Agent will hold all
sums, if any, held by it for payment to the Certificateholders in trust for the
benefit of the Certificateholders entitled thereto until such sums shall be paid
to such Certificateholders.
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After one year from the date of receipt, the Trust Paying Agent shall promptly
return all unclaimed funds to the Owner Trustee, and upon removal of a Trust
Paying Agent, such Trust Paying Agent shall also return all funds in its
possession to the Owner Trustee. The provisions of Sections 7.1, 7.3(b), 7.4,
8.1, and 10.2 as to resignations, shall apply to the Trust Paying Agent to the
same extent as if it were named therein and, to the extent applicable, to any
other paying agent appointed hereunder. Any reference in this Agreement to the
Trust Paying Agent shall include any co-paying agent unless the context requires
otherwise.
SECTION 3.10 RESTRICTIONS ON TRANSFER OF CERTIFICATES.
(a) Each prospective purchaser and any subsequent transferee of a
Certificate (each, a "Prospective Holder"), other than the Company, shall
represent and warrant, in writing, to the Owner Trustee and the Certificate
Registrar and any of their respective successors that:
(i) Such Person is (A) a "qualified institutional buyer" as
defined in Rule 144A under the Securities Act of 1933, as amended (the
"Securities Act"), and is aware that the seller of the Certificate may be
relying on the exemption from the registration requirements of the
Securities Act provided by Rule 144A and is acquiring such Certificate for
its own account or for the account of one or more qualified institutional
buyers for whom it is authorized to act, or (B) a Person involved in the
organization or operation of the Trust or an affiliate of such Person
within the meaning of Rule 3a-7 of the Investment Company Act of 1940, as
amended (including, but not limited to, the Depositor).
(ii) Such Person understands that the Certificates have not been
and will not be registered under the Securities Act and may be offered,
sold, pledged or otherwise transferred only to a person whom the seller
reasonably believes is (C) a qualified institutional buyer or (D) a Person
involved in the organization or operation of the Trust or an affiliate of
such Person, in a transaction meeting the requirements of Rule 144A under
the Securities Act and in accordance with any applicable securities laws
of any state of the United States.
(iii) Such Person understands that the Certificates bear a legend
to the following effect:
"THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE
SECURITIES LAWS. THIS CERTIFICATE MAY BE DIRECTLY OR INDIRECTLY
OFFERED OR SOLD OR OTHERWISE DISPOSED OF (INCLUDING PLEDGED) BY THE
HOLDER HEREOF ONLY TO (I) A "QUALIFIED INSTITUTIONAL BUYER" AS
DEFINED IN RULE 144A UNDER THE ACT, IN A TRANSACTION THAT IS
REGISTERED UNDER THE
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ACT AND APPLICABLE STATE SECURITIES LAWS OR THAT IS EXEMPT FROM THE
REGISTRATION REQUIREMENTS OF THE PURSUANT TO RULE 144A OR (II) A
PERSON INVOLVED IN THE ORGANIZATION OR OPERATION OF THE TRUST OR AN
AFFILIATE OF SUCH A PERSON WITHIN THE MEANING OF RULE 3a-7 OF THE
INVESTMENT COMPANY ACT OF 1940, AS AMENDED (INCLUDING, BUT NOT
LIMITED TO, MLN RESIDUAL HOLDING CORPORATION I) IN A TRANSACTION
THAT IS REGISTERED UNDER THE ACT AND APPLICABLE STATE SECURITIES
LAWS OR THAT IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE ACT
AND SUCH LAWS. NO PERSON IS OBLIGATED TO REGISTER THIS CERTIFICATE
UNDER THE ACT OR ANY STATE SECURITIES LAWS."
(b) By its acceptance of a Certificate, each Prospective Holder
agrees and acknowledges that no legal or beneficial interest in all or any
portion of any Certificate may be transferred directly or indirectly to an
entity that holds residual securities as nominee to facilitate the
clearance and settlement of such securities through electronic book-entry
changes in Accounts of participating organizations (a "Book-Entry
Nominee") and any such purported transfer shall be void and have no
effect.
(c) No transfer of a Certificate or any beneficial interest
therein shall be made to any person unless the Note Insurer has given its
prior written consent to such transfer and the Owner Trustee has received
a representation letter from the Transferee to the effect that such
transferee (i) is not a person which is an employee benefit plan, trust or
account subject to Title I of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA") or Section 4975 of the Code or a
governmental plan, as defined in Section 3(32) of ERISA, subject to any
federal, state or local law which is, to a material extent, similar to the
foregoing provisions of ERISA or the Code (any such person being a
"Plan"), (ii) is not an entity, including an insurance company separate
account or general account, whose underlying assets include "plan assets"
by reason of a Plan's investment in the entity and (iii) is not directly
or indirectly purchasing such Certificate or interest therein on behalf
of, as investment manager of, as named fiduciary of, as trustee of, or
with the assets of a Plan.
(d) The Owner Trustee shall not execute, and shall not
countersign and deliver, a Certificate in connection with any transfer
thereof unless the transferor shall have provided to the Owner Trustee a
certificate, substantially in the form attached as Exhibit C to this
Agreement, signed by the transferee, which certificate shall contain the
consent of the transferee to any amendments of this Agreement as may be
required to effectuate further the foregoing restrictions on transfer of
the Certificates to Book-Entry Nominees, and an agreement by the
transferee that it will not transfer a Certificate
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without providing to the Owner Trustee a certificate substantially in the form
attached as Exhibit C to this Agreement.
(e) The Certificates shall bear an additional legend referring to
the restrictions contained in paragraph (b) above.
ARTICLE IV
ACTIONS BY OWNER TRUSTEE
SECTION 4.1 PRIOR NOTICE TO HOLDERS WITH RESPECT TO CERTAIN MATTERS.
With respect to the following matters, the Owner Trustee shall not
take action, and the Certificateholders shall not direct the Owner Trustee to
take any action, unless at least 30 days before the taking of such action, the
Owner Trustee shall have notified the Certificateholders and the Note Insurer in
writing of the proposed action and neither the Certificateholders nor the Note
Insurer shall have notified the Owner Trustee in writing prior to the 30th day
after such notice is given that such Certificateholders and/or the Note Insurer
have withheld consent or the Certificateholders have provided alternative
direction (any direction by the Certificateholders shall require the prior
consent of the Note Insurer):
(a) the initiation of any claim or lawsuit by the Trust (except
claims or lawsuits brought in connection with the collection of 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 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 Agreement or any Basic
Document in circumstances where the consent of any Holder or the Note
Insurer is required;
(d) the amendment or other change to this Agreement or any Basic
Document in circumstances where the consent of any Holder or the Note
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 Note
Registrar, Trust Paying Agent or Indenture Trustee or pursuant to this
Agreement of a successor Certificate Registrar or Paying Agent, or the
consent to the assignment by the Note Registrar, Paying Agent or Indenture
Trustee or Certificate Registrar or Trust Paying Agent of its obligations
under the Indenture or this Agreement, as applicable.
(f) the consent to the calling or waiver of any default of any
Basic Document;
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(g) the consent to the assignment by the Indenture Trustee or
Servicer of their respective obligations under any Basic Document;
(h) except as provided in Article IX hereof, dissolve, terminate
or liquidate the Trust in whole or in part;
(i) merge or consolidate the Trust with or into any other entity,
or convey or transfer all or substantially all of the Trust's assets to
any other entity;
(j) cause the Trust to incur, assume or guaranty any indebtedness
other than as set forth in this Agreement or the Basic Documents;
(k) do any act that conflicts with any other Basic Document;
(l) do any act which would make it impossible to carry on the
ordinary business of the Trust as described in Section 2.3 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 set forth in
this Trust Agreement.
In addition the Trust shall not commingle its assets with those of
any other entity. The Trust shall maintain its financial and accounting books
and records separate from those of any other entity. Except as expressly set
forth herein, the Trust shall pay its indebtedness, operating expenses 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 Depositor, the Company and
Mortgage Lenders Network.
The Owner Trustee shall not have the power, except upon the
direction of the Certificateholders with the consent of the Note Insurer, and to
the extent otherwise consistent with the Basic Documents, to (i) remove or
replace the Servicer or the Indenture Trustee, (ii) institute proceedings to
have the Trust declared or adjudicated a bankruptcy or insolvent, (iii) consent
to the institution of bankruptcy or insolvency proceedings against the Trust,
(iv) file a petition or consent to a petition seeking reorganization or relief
on behalf of the Trust under any applicable federal or state law relating to
bankruptcy, (v) consent to the appointment of a receiver, liquidator, assignee,
trustee, sequestrator (or any similar official) of the Trust or a substantial
portion of the property of the Trust, (vi) make any assignment for the benefit
of the Trust's creditors, (vii) cause the Trust to admit in writing its
inability to pay its debts generally as they become due, (viii) take any action,
or cause the Trust to take any action, in furtherance of
19
any of the foregoing (any of the above, a "Bankruptcy Action"). So long as the
Indenture and the Insurance Agreement remain in effect and no Note Insurer
Default exists, no Certificateholder shall have the power to take, and shall not
take, any Bankruptcy Action with respect to the Trust or direct the Owner
Trustee to take any Bankruptcy Action with respect to the Trust.
SECTION 4.2 ACTION BY HOLDERS WITH RESPECT TO BANKRUPTCY. The Owner Trustee
shall not have the power to commence a voluntary proceeding in bankruptcy
relating to the Trust without the consent and approval of the Note Insurer, the
unanimous prior approval of all Certificateholders and the Note Insurer and the
delivery to the Owner Trustee by each such Certificateholder of a certification
that such Certificateholder reasonably believes that the Trust is insolvent.
SECTION 4.3 RESTRICTIONS ON HOLDERS' POWER. The Certificateholders shall not
direct the Owner Trustee to take or refrain from taking any action if such
action or inaction would be contrary to any obligation of the Trust or the Owner
Trustee under this Agreement or any of the Basic Documents or would be contrary
to Section 2.3 nor shall the Owner Trustee be obligated to follow any such
direction, if given.
SECTION 4.4 MAJORITY CONTROL. Except as expressly provided herein, any action
that may be taken by the Certificateholders under this Agreement may be taken by
the Holders of Certificates evidencing more than 50% of the Percentage Interest
in the Trust Interest and such action shall be binding upon all
Certificateholders. Except as expressly provided herein, any written notice of
the Certificateholders delivered pursuant to this Agreement shall be effective
if signed by Holders of Certificates evidencing more than 50% of the Percentage
Interest in the Trust Interest at the time of the delivery of such notice and
such action shall be binding upon all Certificateholders.
ARTICLE V
APPLICATION OF TRUST FUNDS; CERTAIN DUTIES
SECTION 5.1 ESTABLISHMENT OF CERTIFICATE DISTRIBUTION ACCOUNT. The Owner Trustee
shall cause the Trust Paying Agent, for the benefit of the Certificateholders,
to establish and maintain with Norwest Bank Minnesota, National Association, for
the benefit of the Owner Trustee one or more Accounts that while the Trust
Paying Agent holds such Account shall be entitled "Certificate Distribution
Account, Norwest Bank Minnesota, National Association, as Trust Paying Agent, in
trust for the Holders of Certificates evidencing beneficial interests in
Mortgage Lenders Network Home Equity Loan Trust 1998-3." Funds shall be
deposited in the Certificate Distribution Account as required by the Indenture
or, following satisfaction and release of the Indenture, by the Servicing
Agreement.
All of the right, title and interest of the Owner Trustee in all
funds on deposit from time to time in the Certificate Distribution Account and
in all proceeds thereof shall be held for the benefit of the Certificateholders,
the Note Insurer and such other persons entitled to distributions therefrom.
Except as otherwise expressly provided
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herein, the Certificate Distribution Account shall be under the sole dominion
and control of the Owner Trustee for the benefit of the Certificateholders and
the Note Insurer.
SECTION 5.2 APPLICATION OF TRUST FUNDS.
(a) On each Payment Date, the Trust Paying Agent shall distribute
to the Certificateholders, on the basis of their respective Percentage
Interests, all amounts then on deposit in the Certificate Distribution
Account.
(b) On each Payment Date, the Trust Paying Agent shall send to
Certificateholders the statement provided to the Owner Trustee by the
Indenture Trustee pursuant to Section 2.08(d) of the Indenture with
respect to such Payment Date. If the Trust Paying Agent is an entity other
than the Indenture Trustee, the Owner Trustee shall provide a copy of such
statement to the Trust Paying Agent to enable it to perform its duties
under this Section 5.2(b).
(c) In the event that any withholding tax is imposed under
federal, state, or local tax on the Trust's payment (or allocations of
income) to a Certificateholder, such tax shall reduce the amount otherwise
distributable to such Certificateholder in accordance with this Section.
The Owner Trustee, and the Trust Paying Agent on its behalf, is hereby
authorized and directed to retain in the Certificate Distribution Account
from amounts otherwise distributable to the Certificateholders sufficient
funds for the payment of any tax that is legally owed by the Trust (but
such authorization shall not prevent the Owner Trustee from contesting any
such tax in appropriate proceedings, and withholding payment of such tax,
if permitted by law, pending the outcome of such proceedings). The
Certificate Registrar will provide the Trust Paying Agent with a statement
indicating the amount of any such withholding tax. The amount of any
withholding tax imposed with respect to a Certificateholder shall be
treated as cash distributed to such Certificateholder at the time it is
withheld by the Trust and remitted to the appropriate taxing authority
from the Certificate Distribution Account at the direction of the Owner
Trustee or the Trust Paying Agent on its behalf. If there is a possibility
that withholding tax is payable with respect to a distribution (such as a
distribution to a Certificateholder who is a Non-U.S. Person), the Trust
Paying Agent may in its sole discretion withhold such amounts in
accordance with this paragraph (c). In the event that a Certificateholder
wishes to apply for a refund of any such withholding tax, the Owner
Trustee and the Trust Paying Agent shall reasonably cooperate with such
Certificateholder in making such claim so long as such Certificateholder
agrees to reimburse the Owner Trustee for any out-of-pocket expenses
incurred.
Any Holder which is organized under the laws of a jurisdiction
outside the United States shall, on or prior to the date such Holder becomes a
Holder, (a) so notify the Trust, the Owner Trustee and the Trust Paying Agent,
(b) (i) provide the Trust, the Owner Trustee and the Trust Paying Agent with
Internal Revenue Service form 1001, 4224, 8709 or W-8, as appropriate, or (ii)
notify the Trust, the Owner Trustee and the Trust Paying Agent that it is not
entitled to an exemption from United States withholding tax or a reduction in
the rate thereof on payments of interest. Any such Holder agrees by its
acceptance of a Certificate, on an ongoing basis, to provide like certification
for each
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taxable year and to notify the Trust, the Owner Trustee and the Trust Paying
Agent should subsequent circumstances arise affecting the information provided
in clauses (a) and (b) above. The Trust, the Owner Trustee and the Trust Paying
Agent shall be fully protected in relying upon, and each Holder by its
acceptance of a Certificate hereunder agrees to indemnify and hold the Trust,
the Owner Trustee and the Trust Paying Agent harmless against all claims or
liability of any kind arising in connection with or related to their reliance
upon any documents, forms or information provided by any Holder. In addition, if
the Trust Paying Agent has not withheld taxes on any payment made to any Holder,
and the Trust Paying Agent is subsequently required to remit to any taxing
authority any such amount not withheld, such Holder shall return such amount to
the Trust Paying Agent upon written demand by the Trust Paying Agent. Neither
the Owner Trustee nor the Trust Paying Agent shall be liable for damages to any
Holder due to a violation of the Code unless and only to the extent such
liability is caused by the Owner Trustee's or the Trust Paying Agent's failure
to act in accordance with its standard of care under this Agreement.
(d) Notwithstanding anything to the contrary herein, at any time
after the Indenture is no longer in effect but while this Agreement remains in
effect, the manager under the Management Agreement (the "Manager") shall be
entitled to a fee on each Payment Date equal to the Indenture Trustee Fee that
would have been payable to the Indenture Trustee on such Payment Date if the
Indenture were still in effect. Such fee shall be distributed to the Manager
from funds in the Certificate Distribution Account prior to distribution of any
such funds to Certificateholders. Also, in such event, the Servicer shall
provide the same information to the Manager that it would have provided to the
Indenture Trustee pursuant to the Servicing Agreement, as well as any other
information concerning the Mortgage Loans as may be reasonably requested by the
Manager to enable the Manager to perform its obligations under the Management
Agreement. On each such Payment Date, the Trust Paying Agent shall mail to each
Certificateholder a statement detailing the amount remitted to the Trust Paying
Agent by the Servicer on the related Deposit Date and setting forth the amount
of the Monthly Servicing Fee and fees paid to the Manager with respect to such
Payment Date, and the aggregate amount distributed to Certificateholders on such
Payment Date.
SECTION 5.3 METHOD OF PAYMENT. Distributions required to be made to
Certificateholders on any Payment Date shall be made to each Certificateholder
of record on the preceding Record Date either by 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 Trust Paying Agent appropriate written instructions at least five
Business Days prior to such Payment Date, or, if not, by check mailed to such
Certificateholder at the address of such Holder appearing in the Certificate
Register.
SECTION 5.4 SEGREGATION OF MONEYS; NO INTEREST. Subject to Sections 5.1 and 5.2,
moneys received by the Trust Paying Agent hereunder and deposited into the
Certificate Distribution Account will be segregated except to the extent
required otherwise by law and, if the Holders of more than 50% of the
Certificates so direct, shall be invested in Permitted Investments maturing no
later than one Business Day prior to the
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related Payment Date at the direction of such Certificateholders. The Trust
Paying Agent shall not be liable for payment of any interest or losses in
respect of such moneys. Investment gains shall be for the account of and paid to
the Certificateholders.
ARTICLE VI
AUTHORITY AND DUTIES OF OWNER TRUSTEE
SECTION 6.1 GENERAL AUTHORITY. The Owner Trustee is authorized and directed to
execute and deliver or cause to be executed and delivered the Notes, the
Certificates and the Basic Documents to which the Trust is to be a party and
each certificate or other document attached as an exhibit to or contemplated by
the Basic Documents to which the Trust is to be a party and any amendment or
other agreement or instrument described in Article III, in each case, in such
form as the Depositor and the Owner Trustee shall approve, as evidenced
conclusively by the Owner Trustee's execution thereof. In addition, the Owner
Trustee is authorized and directed, on behalf of the Trust, to execute and
deliver to the Authenticating Agent the Issuer Request and the Issuer Order
referred to in Section 2.11 of the Indenture, in such form as the Depositor
shall approve, as evidenced conclusively by the Owner Trustee's or the
Depositor's execution thereof, directly to the Authenticating Agent to
authenticate and deliver Notes in the aggregate principal amount of
$114,925,000. In addition to the foregoing, the Owner Trustee is authorized, but
shall not be obligated, to take all actions required of the Trust, pursuant to
the Basic Documents.
SECTION 6.2 GENERAL DUTIES.
(a) It shall be the duty of the Owner Trustee:
(i) to discharge (or cause to be discharged) all of its
responsibilities pursuant to the terms of this Agreement and the Basic
Documents to which the Trust is a party and to administer the Trust in the
interest of the Certificateholders, subject to the Basic Documents and in
accordance with the provisions of this Agreement; and
(ii) to obtain and preserve (or cause to be obtained and
preserved) the Issuer's qualification to do business in each jurisdiction
in which such qualification is or shall be necessary to protect the
validity and enforceability of the Indenture, the Notes, the Mortgage
Loans and each other instrument and agreement included in the Trust
Estate. The Servicer agrees to perform the obligations of the Owner
Trustee under this Section 6.2(a)(ii), other than with respect to the
obligation to obtain and preserve the Issuer's qualification to do
business in the State of Delaware which shall remain the obligation of the
Owner Trustee hereunder.
(b) The Owner Trustee shall not be responsible for taking any
action on behalf of the Trust under any Basic Document unless specifically
directed in writing to do so in accordance with Section 6.3 of this
Agreement.
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(c) The Owner Trustee shall not be responsible for any matter
regarding the Securities Act, the Exchange Act or the Investment Company
Act of 1940, as amended, or the rules or regulations thereunder.
SECTION 6.3 ACTION UPON INSTRUCTION.
(a) Subject to 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 but only to the extent
consistent with the limited purpose of the Trust. Such direction may be
exercised at anytime by written instruction of the Certificateholders
pursuant to Article IV. Without limiting the generality of the foregoing,
the Owner Trustee shall act as directed by the Certificateholders in
connection with Note redemptions requested by the Certificateholders, and
shall take all actions and deliver all documents that the Trust is
required to take and deliver in accordance with Section 4.01 and Article X
of the Indenture in order to effect any redemption requested by the
Certificateholders.
(b) The Owner Trustee shall not be required to take any action
hereunder or under any Basic Document if the Owner Trustee shall have
reasonably determined, or shall have been advised by counsel, that such
action is likely to result in liability on the part of the Owner Trustee
or is contrary to the terms hereof or of any Basic Document or is
otherwise contrary to law.
(c) Whenever the Owner Trustee is unable to decide between
alternative courses of action permitted or required by the terms of this
Agreement or under any Basic Document, the Owner Trustee shall promptly
give notice (in such form as shall be appropriate under the circumstances)
to the Certificateholders and the Note Insurer requesting instruction from
the Certificateholders 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 received, the Owner Trustee
shall not be liable on account of such action to any Person. If the Owner
Trustee shall not have received appropriate instruction within 10 days of
such notice (or within such shorter period of time as reasonably may be
specified in such notice or may be necessary under the circumstances) it
may, but shall be under no duty to, take or refrain from taking such
action, not inconsistent with this Agreement or the Basic Documents, as it
shall deem to be in the best interests of the Certificateholders, and
shall have no liability to any Person for such action or inaction.
(d) In the event that the Owner Trustee is unsure as to the
application of any provision of this Agreement or any 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 Agreement permits any determination by the Owner Trustee or is
silent or is incomplete as to the course of action that the Owner Trustee
is required to take with respect to a particular set of facts, the Owner
Trustee may give notice (in such form as shall be appropriate under the
circumstances) to the Certificateholders requesting instruction and, to
the extent that the Owner Trustee acts or refrains from acting in good
faith in accordance with any such instruction received, the
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Owner Trustee shall not be liable, on account of such action or inaction,
to any Person. If the Owner Trustee shall not have received appropriate
instruction within 10 days of such notice (or within such shorter period
of time as reasonably may be specified in such notice or may be necessary
under the circumstances) it may, but shall be under no duty to, take or
refrain from taking such action, not inconsistent with this Agreement or
the Basic Documents, as it shall deem to be in the best interests of the
Certificateholders, and shall have no liability to any Person for such
action or inaction.
SECTION 6.4 NO DUTIES EXCEPT AS SPECIFIED IN THIS AGREEMENT, THE BASIC DOCUMENTS
OR ANY INSTRUCTIONS. The Owner Trustee shall not have any duty or obligation to
manage, make any payment with respect to, register, record, sell, dispose of, or
otherwise deal with the Owner Trust Estate, or to otherwise take or refrain from
taking any action under, or in connection with, any document contemplated hereby
to which the Trust is a party, except as expressly provided by the terms of this
Agreement, any Basic Document or in any document or written instruction received
by the Owner Trustee pursuant to Section 6.3; and no implied duties or
obligations shall be read into this Agreement or any Basic Document against the
Owner Trustee. The Owner Trustee shall have no responsibility for filing any
financing or continuation statement in any public office at any time or to
otherwise perfect or maintain the perfection of any security interest or lien
granted to it hereunder or to prepare or file any Securities and Exchange
Commission filing for the Trust or to record this Agreement or any Basic
Document. The Owner Trustee nevertheless agrees that it will, at its own cost
and expense, promptly take all action as may be necessary to discharge any liens
on any part of the Owner Trust Estate that result from actions by, or claims
against, the Owner Trustee in its individual capacity that are not related to
the ownership or the administration of the Owner Trust Estate.
SECTION 6.5 NO ACTION EXCEPT UNDER SPECIFIED DOCUMENTS OR INSTRUCTIONS. The
Owner Trustee shall not manage, control, use, sell, dispose of or otherwise deal
with any part of the Owner Trust Estate except (i) in accordance with the powers
granted to and the authority conferred upon the Owner Trustee pursuant to this
Agreement, (ii) in accordance with the Basic Documents and (iii) in accordance
with any document or instruction delivered to the Owner Trustee pursuant to
Section 6.3.
SECTION 6.6 RESTRICTIONS. The Owner Trustee shall not take any action (a) that
violates or results in a breach of or is inconsistent with the purposes of the
Trust set forth in Section 2.3 or (b) that, to the actual knowledge of the Owner
Trustee, would result in the Trust's becoming taxable as a corporation for
Federal income tax purposes. The Certificateholders shall not direct the Owner
Trustee to take action that would violate the provisions of this Section.
ARTICLE VII
CONCERNING THE OWNER TRUSTEE
SECTION 7.1 ACCEPTANCE OF TRUSTS AND DUTIES. The Owner Trustee accepts the
trusts hereby created and agrees to perform its duties hereunder with respect to
such trusts but only upon the terms of this Agreement and the Basic Documents.
The Owner
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Trustee 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
Agreement. The Owner Trustee shall not be answerable or accountable hereunder
under any circumstances, except (i) for its own willful misconduct or gross
negligence or (ii) in the case of the inaccuracy of any representation or
warranty contained in Section 7.3 expressly made by the Owner Trustee in its
individual capacity. In particular, but not by way of limitation (and subject to
the exceptions set forth in the preceding sentence):
(a) the Owner Trustee shall not be liable for any error of
judgment made by a responsible officer of the Owner Trustee;
(b) the Owner Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in accordance with the instructions of
the Certificateholders;
(c) no provision of this Agreement or any Basic Document shall
require the Owner Trustee to expend or risk funds or otherwise incur any
financial liability in the performance of any of its rights 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;
(d) 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 Notes;
(e) the Owner Trustee shall not be responsible for or in respect
of the validity or sufficiency of this Agreement or for the due execution hereof
by the Depositor or 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, other than the certificate of
authentication on the Certificates, and the Owner Trustee shall in no event
assume or incur any liability, duty, or obligation to any Noteholder or to any
Certificateholder, other than as expressly provided for herein and in the Basic
Documents;
(f) the Owner Trustee shall not be liable for the default or
misconduct of the Seller, the Depositor, the Indenture Trustee, the Trust Paying
Agent, the Manager or the Servicer under any of the Basic Documents or otherwise
and the Owner Trustee shall have no obligation or liability to perform the
obligations of the Trust under this Agreement or the Basic Documents that are
required to be performed by the Indenture Trustee under the Indenture, the
Servicer under the Servicing Agreement, the Trust Paying Agent under this
Agreement or the Manager under the Management Agreement; and
(g) the Owner Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Agreement, or to institute,
conduct or defend any litigation under this Agreement or otherwise or in
relation to this Agreement or any Basic Document, at the request, order or
direction of any of the Certificateholders, unless such
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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 Agreement or in any Basic
Document shall not be construed as a duty, and the Owner Trustee shall not be
answerable for other than its gross negligence or willful misconduct in the
performance of any such act.
(h) Notwithstanding anything contained herein to the contrary,
neither Wilmington Trust Company 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 (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 any jurisdiction or any
political subdivisions thereof in existence on the date hereof other than the
State of Delaware becoming payable by Wilmington Trust Company; or (iii) subject
Wilmington Trust Company to personal jurisdiction in any jurisdiction other than
the State of Delaware for causes of action arising from acts unrelated to the
consummation of the transactions by Wilmington Trust Company or the Owner
Trustee, as the case may be, contemplated hereby. The Owner Trustee shall be
entitled to obtain advice of counsel (which advice shall be an expense of
Mortgage Lenders Network) to determine whether any action required to be taken
pursuant to the Agreement results in the consequences described in clauses (i),
(ii) and (iii) of the preceding sentence. In the event that said counsel advises
the Owner Trustee that such action will result in such consequences, the Owner
Trustee will appoint an additional trustee pursuant to Section 10.5 hereof to
proceed with such action.
SECTION 7.2 FURNISHING OF DOCUMENTS. The Owner Trustee shall furnish to the
Certificateholders promptly upon receipt of a written request therefor,
duplicates or copies of all reports, notices, requests, demands, certificates,
financial statements and any other instruments furnished to the Owner Trustee
under the Basic Documents. On behalf of the Owner Trustee, the Depositor shall
furnish to Noteholders promptly upon written request therefor, copies of the
Servicing Agreement and the Indenture.
SECTION 7.3 REPRESENTATIONS AND WARRANTIES.
(a) The Owner Trustee hereby represents and warrants to the
Depositor, the Owner Trustee for the benefit of the Certificateholders, that:
(i) It is a banking corporation duly organized and validly existing
in good standing under the laws of the State of Delaware. It has all
requisite corporate power and authority to execute, deliver and perform
its obligations under this Agreement.
(ii) It has taken all corporate action necessary to authorize the
execution and delivery by it of this Agreement, and this Agreement will be
executed and
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delivered by one of its officers who is duly authorized to execute and
deliver this Agreement on its behalf.
(iii) Neither the execution nor the delivery by it of this Agreement
nor the consummation by it of the transactions contemplated hereby nor
compliance by it with any of the terms or provisions hereof will
contravene any Federal or Delaware law, governmental rule or regulation
governing the banking or trust powers of the Owner Trustee or any judgment
or order binding on it, or constitute any default under its charter
documents or by-laws.
(b) The Trust Paying Agent hereby represents and warrants to the
Depositor and the Note Insurer for the benefit of the Certificateholders, that:
(i) It is a banking association duly organized and validly
existing in good standing under the laws of the United States of America.
It has all requisite corporate power and authority to execute, deliver and
perform its obligations under this Agreement.
(ii) It has taken all corporate action necessary to authorize the
execution and delivery by it of this Agreement, and this Agreement will be
executed and delivered by one of its officers who is duly authorized to
execute and deliver this Agreement on its behalf.
(iii) Neither the execution nor the delivery by it of this
Agreement nor the consummation by it of the transactions contemplated
hereby nor compliance by it with any of the terms or provisions hereof
will contravene any Federal law, governmental rule or regulation governing
the banking or trust powers of the Trust Paying Agent or any judgment or
order binding on it, or constitute any default under its charter documents
or by-laws.
SECTION 7.4 RELIANCE; ADVICE OF COUNSEL.
(a) The Owner Trustee shall incur no liability to anyone in
acting upon any signature, instrument, notice, resolution, request, consent,
order, certificate, report, opinion, Note, or other document or paper believed
by it to be genuine and believed by it to be signed by the proper party or
parties. The Owner Trustee may accept a certified copy of a resolution of the
board of directors or other governing body of any corporate party as conclusive
evidence that such resolution has been duly adopted by such body and that the
same is in full force and effect. As to any fact or matter the method of the
determination of which is not specifically prescribed herein, the Owner Trustee
may for all purposes hereof rely on a certificate, signed by the president or
any vice president or by the treasurer or other authorized officers of the
relevant party, as to such fact or matter and such certificate shall constitute
full protection to the Owner Trustee for any action taken or omitted to be taken
by it in good faith in reliance thereon.
(b) In the exercise or administration of the trusts hereunder and
in the performance of its duties and obligations under this Agreement or the
Basic Documents,
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the Owner Trustee (i) may act directly or through its agents or attorneys
pursuant to agreements entered into with any of them, and the Owner Trustee
shall not be liable for the conduct or misconduct of such agents or attorneys if
such agents or attorneys shall have been selected by the Owner Trustee with
reasonable care, and (ii) may consult with counsel, accountants and other
skilled persons to be selected with reasonable care and employed by it. The
Owner Trustee shall not be liable for anything done, suffered or omitted in good
faith by it in accordance with the written opinion or advice of any such
counsel, Accountants or other such persons and not contrary to this Agreement or
any Basic Document.
SECTION 7.5 NOT ACTING IN INDIVIDUAL CAPACITY. Except as provided in this
Article VII, in accepting the trusts hereby created, Wilmington Trust Company
acts solely as Owner Trustee hereunder and not in its individual capacity, and
all Persons having any claim against the Owner Trustee by reason of the
transactions contemplated by this Agreement or any Basic Document shall look
only to the Owner Trust Estate for payment or satisfaction thereof.
SECTION 7.6 OWNER TRUSTEE NOT LIABLE FOR CERTIFICATES OR MORTGAGE LOANS. The
recitals contained herein and in the Certificates (other than the signature and
countersignature of the Owner Trustee on the Certificates) shall be taken as the
statements of the Depositor, and the Owner Trustee assumes no responsibility for
the correctness thereof. The Owner Trustee makes no representations as to the
validity or sufficiency of this Agreement, of any Basic Document or of the
Certificates (other than the signature and countersignature of the Owner Trustee
on the Certificates and as specified in Section 7.3) or the Notes, or of any
Mortgage Loans or related documents. The Owner Trustee shall at no time have any
responsibility or liability for or with respect to the legality, validity and
enforceability of any Mortgage Loan, or the perfection and priority of any
security interest created by any Mortgage Loan or the maintenance of any such
perfection and priority, or for or with respect to the sufficiency of the Owner
Trust Estate or its ability to generate the payments to be distributed to
Certificateholders under this Agreement or the Noteholders under the Indenture,
including, without limitation, the existence, condition and ownership of any
Mortgaged Property, the existence and enforceability of any insurance thereon,
the existence and contents of any Mortgage Loan on any computer or other record
thereof, the validity of the assignment of any Mortgage Loan to the Trust or of
any intervening assignment, the completeness of any Mortgage Loan, the
performance or enforcement of any Mortgage Loan, the compliance by the Depositor
or the Servicer 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 Indenture Trustee or the Servicer or any
subservicer taken in the name of the Owner Trustee.
SECTION 7.7 OWNER TRUSTEE MAY OWN CERTIFICATES AND NOTES. The Owner Trustee in
its individual or any other capacity may become the owner or pledgee of
Certificates or Notes and may deal with the Depositor, the Indenture Trustee and
the Servicer in banking transactions with the same rights as it would have if it
were not Owner Trustee.
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SECTION 7.8 LICENSES. The Owner Trustee shall cause the Trust to use its best
efforts to obtain and maintain the effectiveness of any licenses required in
connection with this Agreement and the Basic Documents and the transactions
contemplated hereby and thereby until such time as the Trust shall terminate in
accordance with the terms hereof. The Servicer agrees to perform the obligations
of the Owner Trustee under this Section 7.8, other than with respect to the
obligation to obtain and maintain the effectiveness of any licenses required in
the State of Delaware which shall remain the obligation of the Owner Trustee
hereunder.
ARTICLE VIII
COMPENSATION OF OWNER TRUSTEE
SECTION 8.1 OWNER TRUSTEE'S FEES AND EXPENSES. The Owner Trustee shall receive
as compensation for its services hereunder such fees as have been separately
agreed upon before the date hereof between Mortgage Lenders Network and the
Owner Trustee, and the Owner Trustee shall be entitled to be reimbursed by
Mortgage Lenders Network for its other reasonable expenses hereunder, including
the reasonable compensation, expenses and disbursements of such agents,
representatives, experts and counsel as the Owner Trustee may employ in
connection with the exercise and performance of its rights and its duties
hereunder. Mortgage Lenders Network shall be responsible and liable for the
payment of such fees and expenses and shall pay such fees and expenses promptly
after receipt of a written invoice therefor from the Owner Trustee.
SECTION 8.2 INDEMNIFICATION. The Certificateholders shall be jointly and
severally liable as obligor for, and shall indemnify the Owner Trustee (in its
individual and trust capacities) and the Trust Paying Agent and their respective
successors, assigns, agents and servants (collectively, the "Indemnified
Parties") from and against, any and all liabilities, obligations, losses,
damages, taxes, claims, actions and suits, and any and all reasonable costs,
expenses and disbursements (including reasonable legal fees and expenses) of any
kind and nature whatsoever (collectively, "Expenses") which may at any time be
imposed on, incurred by, or asserted against any Indemnified Party in any way
relating to or arising out of this Agreement, the Basic Documents, the Owner
Trust Estate, the administration of the Owner Trust Estate or the action or
inaction of the Owner Trustee or the Trust Paying Agent hereunder, except only
that the Certificateholders shall not be liable for or required to indemnify an
Indemnified Party from and against Expenses arising or resulting from any of the
matters described in the third sentence of Section 7.1. The indemnities
contained in this Section shall survive the resignation or termination of the
Owner Trustee or the Trust Paying Agent or the termination of this Agreement. In
any event of any claim, action or proceeding for which indemnity will be sought
pursuant to this Section, the Certificateholders will be entitled to participate
therein, with counsel selected by such Holders and reasonably satisfactory to
the Indemnified Parties, and after notice from Certificateholders to the
Indemnified Parties of its election to assume the defense thereof, the
Certificateholders shall not be liable to the Indemnified Party under this
Section 8.2 for any legal or other expenses subsequently incurred by such
Indemnified Party in connection with the defense of such action; provided,
however, that this sentence shall not be in effect if (1) the
30
Certificateholders shall not have employed counsel reasonably satisfactory to
the Indemnified Party to represent the Indemnified Party within a reasonable
time after notice of commencement of the action, (2) the Certificateholders
shall have authorized the employment of counsel for the Indemnified Party at the
expense of the Certificateholders or (3) in the event any such claim involves a
possible imposition of criminal liability or penalty or a material civil penalty
on such Indemnified Party, a conflict of interest between such Indemnified Party
and the Certificateholders or another indemnitee or the granting of material
injunctive relief against such Indemnified Party, and such Indemnified Party
informs the Certificateholders that such Indemnified Party desires to be
represented by separate counsel, in which case, the reasonable fees and expenses
of such separate counsel shall be born by the Certificateholders. If the
Certificateholders assume the defense of any such proceeding, they shall be
entitled to settle such proceeding without any liability being assessed against
any Indemnified Party or, if such settlement provides for release of any such
Indemnified Party without any liability being assessed against any Indemnified
Party in connection with all matters relating to the proceeding which have been
asserted against such Indemnified Party in such proceeding by the other parties
to such settlement, without the consent of such Indemnified Party, but otherwise
only with the consent of such Indemnified Party. Certificateholders shall be
liable for this indemnification obligation pro rata, based upon their respective
Percentage Interests.
SECTION 8.3 PAYMENTS TO THE OWNER TRUSTEE. Any amounts paid to the Owner Trustee
or the Trust Paying Agent pursuant to this Article VIII shall be deemed not to
be a part of the Owner Trust Estate immediately after such payment.
SECTION 8.4 SERVICER LIABILITY. In the event the Certificateholders fail to pay
all or any portion of any fees, expenses or indemnification amounts to the Owner
Trustee or the Trust Paying Agent for which they are liable under this Article
VIII, the Servicer shall pay such amounts to the Owner Trustee or the Trust
Paying Agent, as the case may be, promptly after receipt of an invoice therefor
from the party entitled thereto.
ARTICLE IX
TERMINATION OF TRUST AGREEMENT
SECTION 9.1 TERMINATION OF TRUST AGREEMENT.
(a) This Agreement (other than Article VIII) shall terminate and
the Trust shall be dissolved, wound up and terminated and be of no further force
or effect on the earlier of: (i) the final payment or other liquidation of the
Mortgage Loans and the disposition of all REO Properties and the remittance of
all funds due hereunder with respect to such Mortgage Loans and REO Properties
or the disposition of the Mortgage Loans and REO Properties at the direction of
a majority of the Certificateholders, in either case after the satisfaction and
discharge of the Indenture pursuant to Section 4.01 of the Indenture; and (ii)
the expiration of 21 years from the death of the last survivor of the
descendants of Xxxxxx X. Xxxxxxx (the late ambassador of the United States to
the Court of St. James's). The bankruptcy, liquidation, dissolution, death or
incapacity of any Certificateholder or the Depositor shall not (x) operate to
terminate this Agreement or the
31
Trust, nor (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 Owner Trust Estate
nor (z) otherwise affect the rights, obligations and liabilities of the parties
hereto.
(b) Except as provided in Section 9.1(a) above, none of the
Depositor, the Servicer, the Note Insurer nor any Certificateholder shall be
entitled to revoke or terminate the Trust.
(c) Notice of any termination of the Trust, specifying the
Payment Date upon which the Certificateholders shall surrender their
Certificates to the Owner Trustee for payment of the final distributions and
cancellation, shall be given by the Owner Trustee to the Certificateholders, the
Note Insurer, the Rating Agencies and the Trust Paying Agent mailed within five
Business Days of receipt by the Owner Trustee of notice of such termination
pursuant to Section 9.1(a) above, which notice given by the Owner Trustee shall
state (i) the Payment Date upon or with respect to which final payment of the
Certificates shall be made upon presentation and surrender of the Certificates
at the office of the Owner Trustee therein designated, (ii) the amount of any
such final payment and (iii) that the Record Date otherwise applicable to such
Payment Date is not applicable, payments being made only upon presentation and
surrender of the Certificates at the office of the Owner Trustee therein
specified. The Owner Trustee shall give such notice to the Certificate Registrar
(if other than the Owner Trustee) and the Trust Paying Agent at the time such
notice is given to Certificateholders. The Owner Trustee shall give notice to
the Trust Paying Agent of each presentation and surrender of Certificates
promptly, and the Trust Paying Agent shall promptly cause to be distributed to
the related Certificateholders amounts distributable on such Payment Date
pursuant to Section 5.2(a).
(d) Upon the winding up of the Trust and its termination, the
Owner Trustee shall cause the Certificate of Trust to be canceled by filing a
certificate of cancellation with the Secretary of State in accordance with the
provisions of Section 3810 of the Business Trust Statute.
ARTICLE X
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
SECTION 10.1 ELIGIBILITY REQUIREMENTS FOR OWNER TRUSTEE. The Owner Trustee shall
at all times be a corporation satisfying the provisions of Section 3807(a) of
the Business Trust Statute; authorized to exercise 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" by Moody's and "A-1" by Standard & Poor's
(or otherwise acceptable to the Rating Agencies) and being acceptable to the
Note Insurer. If such corporation shall publish reports of condition at least
annually, pursuant to law or to the requirements of the aforesaid supervising or
examining authority, then for the purpose of this Section, the combined capital
and surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In
case
32
at any time the Owner Trustee shall cease to be eligible in accordance with the
provisions of this Section, the Owner Trustee shall resign immediately in the
manner and with the effect specified in Section 10.2.
SECTION 10.2 RESIGNATION OR REMOVAL OF OWNER TRUSTEE. The Owner Trustee may at
any time resign and be discharged from the trusts hereby created by giving
written notice thereof to the Servicer, the Indenture Trustee and the Note
Insurer. Upon receiving such notice of resignation, the Servicer shall promptly
appoint a successor Owner Trustee (acceptable to the Note Insurer) by written
instrument, in duplicate, one copy of which instrument shall be delivered to the
resigning Owner Trustee and one copy to the successor Owner Trustee. 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 or the Note Insurer may petition any court of competent
jurisdiction for the appointment of a successor Owner Trustee.
If at any time the Owner Trustee shall cease to be eligible in
accordance with the provisions of Section 10.1 and shall fail to resign after
written request therefor by the Certificateholders or the Servicer, 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 Note Insurer, or the Certificateholders or
the Servicer with the consent of the Note Insurer, may remove the Owner Trustee.
If the Certificateholders or the Servicer or the Note Insurer shall remove the
Owner Trustee under the authority of the immediately preceding sentence, the
Note Insurer, or the Servicer with the consent of the Note Insurer, shall
promptly appoint a successor Owner Trustee by written instrument in duplicate,
one copy of which instrument shall be delivered to the outgoing Owner Trustee so
removed and one copy to the successor Owner Trustee and payment of all fees owed
to the outgoing Owner Trustee.
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 10.3 written approval by the Note Insurer 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, the Indenture Trustee, the Trust Paying
Agent and the Note Insurer.
SECTION 10.3 SUCCESSOR OWNER TRUSTEE. Any successor Owner Trustee appointed
pursuant to Section 10.2 shall execute, acknowledge and deliver to the
Depositor, the Indenture Trustee, the Note Insurer and to its predecessor Owner
Trustee an instrument accepting such appointment under this Agreement, and
thereupon the resignation or removal of the predecessor Owner Trustee shall
become effective and such successor Owner Trustee (if acceptable to the Note
Insurer), without any further act, deed or conveyance, shall become fully vested
with all the rights, powers, duties, and obligations of its predecessor under
this Agreement, with like effect as if originally named as Owner Trustee. The
predecessor Owner Trustee shall upon payment of its fees
33
and expenses deliver to the successor Owner Trustee all documents and statements
and moneys held by it under this Agreement; and the Depositor and the
predecessor Owner Trustee shall execute and deliver such instruments and do such
other things as may reasonably be required for fully and certainly vesting and
confirming in the successor Owner Trustee all such rights, powers, duties, and
obligations.
No successor Owner Trustee shall accept appointment as provided in
this Section unless at the time of such acceptance such successor Owner Trustee
shall be eligible pursuant to Section 10.1.
Upon acceptance of appointment by a successor Owner Trustee pursuant
to this Section, the Depositor shall mail notice of the successor of such Owner
Trustee to all Certificateholders, the Indenture Trustee, the Trust Paying
Agent, the Noteholders, the Note Insurer and the Rating Agencies. If the
Depositor fails to mail such notice within 10 days after acceptance of
appointment by the successor Owner Trustee, the successor Owner Trustee shall
cause such notice to be mailed at the expense of the Depositor.
Any successor Owner Trustee appointed pursuant to this Section 10.2
shall file an amendment to the Certificate of Trust with the Secretary of State
identifying the name and principal place of business of such successor Owner
Trustee in the State of Delaware.
SECTION 10.4 MERGER OR CONSOLIDATION OF OWNER TRUSTEE. Any corporation into
which the Owner Trustee may be merged or converted or with which it may be
consolidated or any corporation resulting from any merger, conversion or
consolidation to which the Owner Trustee shall be a party, or any corporation
succeeding to all or substantially all of the corporate trust business of the
Owner Trustee, shall be the successor of the Owner Trustee hereunder, provided
such corporation shall be eligible pursuant to Section 10.1, without the
execution or filing of any instrument or any further act on the part of any of
the parties hereto, anything herein to the contrary notwithstanding; provided
further that the Owner Trustee shall mail notice of such merger or consolidation
to the Rating Agencies.
SECTION 10.5 APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.
Notwithstanding any other provisions of this Agreement, at any time,
for the purpose of meeting any legal requirements of any jurisdiction in which
any part of the Owner Trust Estate or any Mortgaged Property may at the time be
located, and for the purpose of performing certain duties and obligations of the
Owner Trustee with respect to the Trust and the Certificates, the Owner Trustee
shall have the power and shall execute and deliver all instruments to appoint
one or more Persons approved by the Owner Trustee and acceptable to the Note
Insurer to act as cotrustee, jointly with the Owner Trustee, or separate trustee
or separate 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 Note Insurer and the Owner Trustee may
consider necessary or desirable. No co-trustee or separate trustee under this
Agreement shall be
34
required to meet the terms of eligibility as a successor trustee pursuant to
Section 10.1 and no notice of the appointment of any co-trustee or separate
trustee shall be required pursuant to Section 10.3.
Each separate trustee and co-trustee shall, to the extent permitted
by law, be appointed and act subject to the following provision and conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon the Owner Trustee shall be conferred upon and exercised or
performed by the Owner Trustee and such separate 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 Trust or any portion thereof in any such jurisdiction) shall
be exercised and performed singly by such separate trustee or cotrustee,
but solely at the direction of the Owner Trustee;
(ii) no trustee under this Agreement shall be personally liable
by reason of any act or omission of any other trustee under this
Agreement; and
(iii) 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 the separate trustees and co-trustees, as
if given to each of them. Every instrument appointing any separate trustee or
co-trustee, other than this Agreement, shall refer to this Agreement and to the
conditions of this Article. Each separate trustee and co-trustee, upon its
acceptance of appointment, shall be vested with the estates specified in its
instrument of appointment, either jointly with the Owner Trustee or separately,
as may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Owner Trustee.
Each such instrument shall be filed with the Owner Trustee.
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
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 trustee.
35
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 SUPPLEMENTS AND AMENDMENTS. This Agreement may be amended by the
Depositor, and the Owner Trustee, with the prior consent of the Note Insurer,
and with prior written notice to the Rating Agencies, but without the consent of
any of the Noteholders or the Certificateholders or the Indenture Trustee, to
cure any ambiguity, to correct or supplement any provisions in this Agreement or
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions in this Agreement or of modifying in any
manner the rights of the Noteholders or the Certificateholders; provided,
however, such action shall not adversely affect in any material respect the
interests of any Noteholder or Certificateholder or the rights of the Note
Insurer. An amendment described above shall be deemed not to adversely affect in
any material respect the interests of any Noteholder if the party requesting the
amendment satisfies the Rating Agency Condition with respect to such amendment.
This Agreement may also be amended from time to time by the
Depositor and the Owner Trustee, with the prior written consent of the Rating
Agencies and with the prior written consent of the Indenture Trustee, the Note
Insurer, the Holders (as defined in the Indenture) of Notes evidencing more than
50% of the Outstanding Amount of the Notes, the Holders of Certificates
evidencing more than 50% of the Percentage Interests of the Trust Interest and
if the party requesting such amendment satisfies the Rating Agency Condition
with respect to such amendment, for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement or
of modifying in any manner the rights of the Noteholders or the
Certificateholders; provided, however, no such amendment shall (a) increase or
reduce in any manner the amount of, or accelerate or delay the timing of,
collections of payments on the Mortgage Loans or distributions that shall be
required to be made for the benefit of the Noteholders, the Certificateholders
or the Note Insurer, (b) reduce the aforesaid percentage of the Outstanding
Amount of the Notes or the Percentage Interests required to consent to any such
amendment, in either case of clause (a) or (b) without the consent of the
holders of all the outstanding Notes, the Note Insurer and the Holders of all
the outstanding Certificates.
Promptly after the execution of any such amendment or consent, the
Owner Trustee shall furnish written notification of the substance of such
amendment or consent to each Certificateholder, the Indenture Trustee, the Note
Insurer and each of the Rating Agencies.
It shall not be necessary for the consent of Certificateholders, the
Noteholders or the Indenture Trustee pursuant to this Section to approve the
particular form of any proposed amendment or consent, but it shall be sufficient
if such consent shall approve the substance thereof. The manner of obtaining
such consents (and any other consents of Certificateholders provided for in this
Agreement or in any other Basic Document) and of evidencing the authorization of
the execution thereof by Certificateholders shall be subject to such reasonable
requirements as the Owner Trustee may prescribe.
36
Promptly after the execution of any amendment to the Certificate of
Trust, the Owner Trustee shall cause the filing of such amendment with the
Secretary of State.
Prior to the execution of any amendment to this Agreement or the
Certificate of Trust, the Owner Trustee shall be entitled to receive and rely
upon an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Agreement. The Owner Trustee may, but shall not
be obligated to, enter into any such amendment which affects the Owner Trustee's
own rights, duties or immunities under this Agreement or otherwise.
SECTION 11.2 NO LEGAL TITLE TO OWNER TRUST ESTATE IN HOLDERS. 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 ownership interest therein only in accordance with
Articles V and IX. No transfer, by operation of law or otherwise, of any right,
title, or interest of the Certificateholders to and in their ownership interest
in the Owner Trust Estate shall operate to terminate this Agreement or the
trusts hereunder or entitle any transferee to an Accounting or to the transfer
to it of legal title to any part of the Owner Trust Estate.
SECTION 11.3 LIMITATIONS ON RIGHTS OF OTHERS. Except for Section 2.7, the
provisions of this Agreement are solely for the benefit of the Owner Trustee,
the Depositor, the Certificateholders, the Note Insurer and, to the extent
expressly provided herein, the Indenture Trustee and the Noteholders, and
nothing in this Agreement (other than Section 2.7), whether express or implied,
shall be construed to give to any other Person any legal or equitable right,
remedy or claim in the Owner Trust Estate or under or in respect of this
Agreement or any covenants, conditions or provisions contained herein.
SECTION 11.4 NOTICES.
(a) Unless otherwise expressly specified or permitted by the
terms hereof, all communications provided for or permitted hereunder shall be in
writing and shall be deemed to have been given if (1) personally delivered, (2)
upon receipt by the intended recipient or three Business Days after mailing if
mailed by certified mail, postage prepaid (except that notice to the Owner
Trustee shall be deemed given only upon actual receipt by the Owner Trustee),
(3) sent by express courier delivery service and received by the intended
recipient or (4) except with respect to notices sent to the Owner Trustee,
transmitted by telex or facsimile transmission (or any other type of electronic
transmission agreed upon by the parties and confirmed by a writing delivered by
any of the means described in (1), (2) or (3), at the following addresses: (i)
if to the Owner Trustee, its Corporate Trust Office; (ii) if to the Depositor,
Residential Asset Funding Corporation, c/o First Union National Bank
Incorporated, 000 Xxxxx Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxx Xxxxxxxx, 00000-0000,
Telecopy: (000) 000-0000; (iii) if to the Note Insurer, MBIA Insurance
Corporation, 000 Xxxx Xxxxxx, Xxxxxx, Xxx Xxxx 00000, Attention:
37
Mortgage Lenders Network Home Equity Loan Trust 1998-3, Telecopy: (914)
765-3810; (iv) if to the Trust Paying Agent, Norwest Bank Minnesota, National
Association, 00000 Xxxxxx Xxxx Xxxxxxx, Xxxxxxxx, Xxxxxxxx 00000, Attention:
Mortgage Lenders Network 1998-3, Telecopy: (000) 000-0000; (v) if to Mortgage
Lenders Network USA, Inc., Middlesex Corporate Center, 000 Xxxxx Xxxxxx,
Xxxxxxxxxx, Xxxxxxxxxxx 00000, Attention: General Counsel, Telecopy (860)
344-5707 or, as to each such party, at such other address as shall be designated
by such party in a written notice to each other party.
(b) Any notice required or permitted to be given to 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 Agreement shall be
conclusively presumed to have been duly given, whether or not the
Certificateholder receives such notice.
SECTION 11.5 SEVERABILITY. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
SECTION 11.6 SEPARATE COUNTERPARTS. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 11.7 SUCCESSORS AND ASSIGNS. All covenants and agreements contained
herein shall be binding upon, and inure to the benefit of, the Depositor, the
Note Insurer, the Owner Trustee and its successors and each owner and its
successors and permitted assigns, all as herein provided. Any request, notice,
direction, consent, waiver or other instrument or action by a Certificateholder
shall bind the successors and assigns of such Certificateholder.
SECTION 11.8 NO PETITION. The Owner Trustee, by entering into this Agreement,
each Certificateholder, by accepting a Certificate, and the Indenture Trustee
and each Noteholder by accepting the benefits of this Agreement, hereby covenant
and agree that they will not at any time institute against the Depositor or the
Trust, or join in any institution against MLN Capital Corporation I or the Trust
of, any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings, or other proceedings under any United States Federal or state
bankruptcy or law in connection with any obligations relating to the
Certificates, the Notes, this Agreement or any of the Basic Documents.
SECTION 11.9 NO RECOURSE. Each Certificateholder by accepting a Certificate
acknowledges that such Certificateholder's Certificate represents a beneficial
interest in the Trust only and does not represent an interest in or an
obligation of the Servicer, the Depositor, the Owner Trustee or any Affiliate
thereof and no recourse may be had against such parties or their assets, except
as may be expressly set forth or contemplated in this Agreement, the
Certificates or the Basic Documents.
38
SECTION 11.10 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 11.11 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF LAW
PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 11.12 GRANT OF CERTIFICATEHOLDER RIGHTS TO NOTE INSURER.
(a) In consideration for the issuance of the Certificates and for
the guarantee of the Notes by the Note Insurer pursuant to the Insurance Policy,
the holders of the Certificates hereby grant to the Note Insurer the right to
act as the holder of 100% of the outstanding Certificates for the purpose of
exercising the rights of the Certificateholders under this Agreement without the
consent of the Certificateholders, including the voting rights of such holders
hereunder, but excluding those rights requiring the consent of all such holders
under Section 11.1 and any rights of such holders to distributions under Section
5.2(a); provided that the preceding grant of rights to the Note Insurer by the
holders of the Trust Interest shall be subject to Section 11.14.
(b) The rights of the Note Insurer to direct certain actions and
consent to certain actions of the Certificateholders hereunder will terminate at
such time as the Balance of the Notes has been reduced to zero and the Note
Insurer has been reimbursed for any amounts owed under the Insurance Policy and
the Insurance Agreement and the Note Insurer has no further obligation under the
Insurance Policy.
The duties and responsibilities of the Owner Trustee shall be
limited to those expressly provided for in this Agreement. The parties hereto
agree that except for purposes of the foregoing sentence, the Owner Trustee
shall have no management responsibilities or owe any fiduciary duties to the
Note Insurer (or the Noteholders in the event they succeed to the Note Insurer's
rights).
Whenever in connection with its performance under this Agreement the
Owner Trustee receives inconsistent notices or advice from the Note Insurer and
the Certificateholders, the Owner Trustee need not take any action in respect of
such notices or advice unless and until Owner Trustee receives (a)
indemnification in respect of the matters noted in such notices or advice to its
satisfaction or (b) written direction signed by the Note Insurer and the
Certificateholders in respect thereof.
SECTION 11.13 THIRD-PARTY BENEFICIARY. The Note Insurer is an intended
third-party beneficiary of this Agreement, and this Agreement shall be binding
upon and inure to the benefit of the Note Insurer; provided that,
notwithstanding the foregoing, for so long as a Note Insurer Default is
continuing with respect to its obligations under the Note Insurance Policy, the
Noteholders shall succeed to the Note Insurer's rights hereunder. Without
limiting the generality of the foregoing, all covenants and agreements in this
39
Agreement that expressly confer rights upon the Note Insurer shall be for the
benefit of and run directly to the Note Insurer, and the Note Insurer shall be
entitled to rely on and enforce such covenants to the same extent as if it were
a party to this Agreement.
In addition, the Manager is an intended third-party beneficiary of
this Agreement for purposes of enforcing Section 5.2(d) hereof.
SECTION 11.14 SUSPENSION AND TERMINATION OF NOTE INSURER'S RIGHTS.
During the continuation of a Note Insurer Default, rights granted or
reserved to the Note Insurer hereunder shall vest instead in the
Certificateholders; provided that the Note Insurer shall be entitled to any
distributions of reimbursements as set forth in the Insurance Agreement and the
Note Insurer shall retain those rights under Section 11.1 to consent to any
amendment of this Agreement.
At such time as either (i) the Note Balance of the Notes has been
reduced to zero or (ii) the Insurance Policy has been terminated and in either
case of (i) or (ii) the Note Insurer has been reimbursed for all amounts owed
under the Insurance Policy and the Insurance Agreement (and the Note Insurer no
longer has any obligation under the Insurance Policy, except for breach thereof
by the Note Insurer), then the rights and benefits granted or reserved to the
Note Insurer hereunder (including the rights to direct certain actions and
receive certain notices) shall terminate and the Certificateholders shall be
entitled to the exercise of such rights and to receive such benefits of the Note
Insurer following such termination to the extent that such rights and benefits
are applicable to the Certificateholders.
[Signatures follow]
40
IN WITNESS WHEREOF, the parties hereto have caused this Deposit
Trust Agreement to be duly executed by their respective officers hereunto duly
authorized, as of the day and year first above written.
RESIDENTIAL ASSET FUNDING CORPORATION,
as Depositor
By: /s/ Xxxxxxx Xxxxxxxx
-------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Senior Vice President
WILMINGTON TRUST COMPANY,
in its individual capacity and as Owner Trustee
By: /s/ Xxxxx Xxxxxx
---------------------------------
Authorized Signatory
The Trust Paying Agent hereby acknowledges its appointment as Trust
Paying Agent under this Agreement and agrees to act in such capacity as
described herein.
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
By: /s/ Xxx Xxxx
----------------------
Name: Xxx Xxxx
Title: Assistant Vice President
The Servicer hereby acknowledges its obligations under this
Agreement and agrees to act in accordance therewith.
MORTGAGE LENDERS NETWORK USA, INC.
By: /s/ Xxxxxx Xxxxxxx
-----------------------------
Name: Xxxxxx Xxxxxxx
Title: Senior Vice President
41
EXHIBIT A-1
TO THE TRUST AGREEMENT
(FORM OF CERTIFICATE)
THE EQUITY INTEREST IN THE TRUST REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN
AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR ANY STATE SECURITIES LAWS. THIS EQUITY INTEREST MAY BE DIRECTLY OR
INDIRECTLY OFFERED OR SOLD OR OTHERWISE DISPOSED OF (INCLUDING PLEDGED) BY THE
HOLDER HEREOF ONLY TO (I) A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE
144A UNDER THE ACT, IN A TRANSACTION THAT IS REGISTERED UNDER THE ACT AND
APPLICABLE STATE SECURITIES LAWS OR THAT IS EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF THE ACT PURSUANT TO RULE 144A OR (II) A PERSON INVOLVED IN THE
ORGANIZATION OR OPERATION OF THE TRUST OR AN AFFILIATE OF SUCH A PERSON WITHIN
THE MEANING OF RULE 3A-7 OF THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED
(INCLUDING, BUT NOT LIMITED TO, MLN CAPITAL CORPORATION I) IN A TRANSACTION THAT
IS REGISTERED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS OR THAT IS
EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND SUCH LAWS. NO PERSON IS
OBLIGATED TO REGISTER THIS EQUITY INTEREST UNDER THE ACT OR ANY STATE SECURITIES
LAWS.
NO TRANSFER OF THIS CERTIFICATE OR ANY BENEFICIAL INTEREST HEREIN SHALL BE MADE
TO ANY PERSON UNLESS THE OWNER TRUSTEE HAS RECEIVED A REPRESENTATION LETTER FROM
THE TRANSFEREE TO THE EFFECT THAT SUCH TRANSFEREE (I) IS NOT A PERSON WHICH IS
AN EMPLOYEE BENEFIT PLAN, TRUST OR ACCOUNT SUBJECT TO TITLE I OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF
THE CODE OR A GOVERNMENTAL PLAN, AS DEFINED IN SECTION 3(32) OF ERISA, SUBJECT
TO ANY FEDERAL, STATE OR LOCAL LAW WHICH IS, TO A MATERIAL EXTENT, SIMILAR TO
THE FOREGOING PROVISIONS OF ERISA OR THE CODE (ANY SUCH PERSON BEING A "PLAN"),
(II) IS NOT AN ENTITY, INCLUDING AN INSURANCE COMPANY SEPARATE ACCOUNT OR
GENERAL ACCOUNT, WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS BY REASON OF A
PLAN'S INVESTMENT IN THE ENTITY AND (III) IS NOT DIRECTLY OR INDIRECTLY
PURCHASING THIS CERTIFICATE OR A BENEFICIAL INTEREST HEREIN ON BEHALF OR, AS
INVESTMENT MANAGER OF, AS TRUSTEE OF, OR WITH THE ASSETS OF A PLAN.
THIS CERTIFICATE MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF UNLESS,
PRIOR TO SUCH DISPOSITION, THE PROPOSED TRANSFEREE DELIVERS TO THE OWNER TRUSTEE
AND THE CERTIFICATE REGISTRAR A CERTIFICATE STATING THAT SUCH TRANSFEREE (A)
AGREES TO BE BOUND BY AND TO ABIDE BY THE TRANSFER RESTRICTIONS APPLICABLE TO
THIS CERTIFICATE; (B) IS NOT AN ENTITY THAT WILL
A-1
HOLD THIS CERTIFICATE AS NOMINEE TO FACILITATE THE CLEARANCE AND SETTLEMENT OF
SUCH SECURITY THROUGH ELECTRONIC BOOK-ENTRY CHANGES IN ACCOUNTS OF PARTICIPATING
ORGANIZATIONS; AND (C) UNDERSTANDS THAT IT MUST TAKE INTO ACCOUNT ITS PERCENTAGE
INTEREST OF THE TAXABLE INCOME RELATING TO THIS CERTIFICATE.
A-2
MORTGAGE LENDERS NETWORK HOME EQUITY LOAN TRUST 1998-3
CERTIFICATE
No. 0001
THIS CERTIFIES THAT MLN Capital Corporation I (the "Owner") is the
registered owner of a 100% Percentage Interest of the Trust Interest in Mortgage
Lenders Network Home Equity Loan Trust 1998-3 (the "Trust") existing under the
laws of the State of Delaware and created pursuant to that certain Deposit Trust
Agreement, dated as of December 1, 1998 (the "Trust Agreement"), between
Residential Asset Funding Corporation, as depositor, and Wilmington Trust
Company, in its individual capacity and in its fiduciary capacity as owner
trustee under the Trust Agreement (the "Owner Trustee"). Capitalized terms used
but not otherwise defined herein have the meanings assigned to such terms in the
Trust Agreement. The Owner Trustee, on behalf of the Issuer and not in its
individual capacity, has executed this Certificate by one of its duly authorized
signatories as set forth below. This Certificate is one of the Certificates
referred to in the Trust Agreement and is issued under and is subject to the
terms, provisions and conditions of the Trust Agreement to which the holder of
this Certificate by virtue of the acceptance hereof agrees and by which the
holder hereof is bound. Reference is hereby made to the Trust Agreement for the
rights of the holder of this Certificate, as well as for the terms and
conditions of the Trust created by the Trust Agreement.
The holder, by its acceptance hereof, agrees not to transfer this
Certificate except in accordance with terms and provisions of the Agreement.
A-3
THIS CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND
THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.
IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Trust and
not in its individual capacity, has caused this Certificate to be duly executed.
MORTGAGE LENDERS NETWORK HOME EQUITY LOAN TRUST 1998-3
By: Wilmington Trust Company, not in its individual
capacity but solely as Owner Trustee under the
Trust Agreement
By:_______________________________________
Authorized Signatory
DATED: December 1, 1998
CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within-mentioned
Agreement.
Wilmington Trust Company, not in its individual capacity
but solely as Owner Trustee as Authenticating Agent
By:________________________________________
Authorized Signatory
A-4
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
________________________________________________________________________________
(Please print or type name and address, including postal zip code, of assignee)
________________________________________________________________________________
the within Instrument, and all rights thereunder, hereby irrevocably
constituting and appointing___________________________ Attorney to transfer said
Instrument on the books of the Certificate Registrar, with full power of
substitution in the premises.
Dated:
____________
_______________________________________*/
Signature Guaranteed:
______________________________________*/
__________________
*/ NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Instrument in every particular, without
alteration, enlargement or any change whatever. Such signature must be
guaranteed by a member firm of the New York Stock Exchange or a commercial bank
or trust company.
A-5
EXHIBIT B
TO THE TRUST AGREEMENT
CERTIFICATE OF TRUST OF
MORTGAGE LENDERS NETWORK HOME EQUITY LOAN TRUST 1998-3
THIS CERTIFICATE OF TRUST OF MORTGAGE LENDERS NETWORK HOME EQUITY
LOAN TRUST 1998-3 (the "Trust"), dated as of December __, 1998, is being duly
executed and filed by Wilmington Trust Company, a Delaware banking corporation,
as trustee, to form a business trust under the Delaware Business Trust Act (12
Del. Code, S 3801 et seq.).
1. NAME. The name of the business trust formed hereby is Mortgage
Lenders Network Home Equity Loan Trust 1998-3.
2. DELAWARE TRUSTEE. The name and business address of the trustee of
the Trust in the State of Delaware is Wilmington Trust Company, Xxxxxx Square
North, 0000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000-0000.
Attention: Corporate Trust Administration.
3. EFFECTIVE DATE. This Certificate of Trust shall be effective upon
filing.
IN WITNESS WHEREOF, the undersigned, being the sole trustee of the
Trust, has executed this Certificate of Trust as of the date first above
written.
Wilmington Trust Company, not in its
individual capacity but solely as
Owner Trustee under a Deposit Trust
Agreement, dated as of December 1,
1998.
By:_________________________
Name:
Title:
B-1
EXHIBIT C
FORM OF INVESTMENT LETTER
______, 1998
Residential Asset Funding Corporation
c/o First Union Capital Markets
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Wilmington Trust Company
Xxxxxx Square North
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000-0000
Attention: Corporate Trust Administration
Re: Mortgage Lenders Network Home Equity Loan Trust 1998-3
(the "Issuer") Asset Backed Notes, Series 1998-3
Ladies and Gentlemen:
_________________________________________ (the "Holder") has
purchased or acquired, or intends to purchase or acquire from ________________,
the current Holder (the "Current Holder"), a Certificate representing a ___%
Percentage Interest (the "___% Certificate") in the Trust Interest for the
referenced Issuer, which represents an interest in the Issuer created pursuant
to that certain Deposit Trust Agreement, dated as of December 1, 1998 (the
"Trust Agreement"), between MLN Residual Holding Corporation I, as depositor,
and Wilmington Trust Company, as Owner Trustee. Capitalized terms used and not
otherwise defined herein have the meanings assigned to such terms in the Trust
Agreement.
CERTIFICATION
The undersigned, as an authorized officer or agent of the Holder,
hereby certifies, represents, warrants and agrees on behalf of the Holder as
follows:
1. The Holder is duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it was formed and is
authorized to invest in the ___% Certificate. The person executing this letter
on behalf of the Holder is duly authorized to do so on behalf of the Holder.
2. The Holder hereby acknowledges that no transfer of the ___%
Certificate may be made unless such transfer is exempt from the registration
requirements of the Securities Act of 1933, as amended (the "Securities Act");
and applicable state securities laws, or is made in accordance with the
Securities Act and such laws.
C-1
3. The Holder understands that the ___% Certificate has not been and
will not be registered under the Securities Act and may be offered, sold,
pledged or otherwise transferred apply to a person whom the transferor
reasonably believes is (A) a qualified institutional buyer (as defined in Rule
144A under the Securities Act) or (B) a Person involved in the organization or
operation of the Trust or an affiliate of such Person, in a transaction meeting
the requirements of Rule 144A under the Securities Act and in accordance with
any applicable securities laws of any state of the United States. The Holder
understands that the _% Certificate bears a legend to the foregoing effect.
4. The Holder is acquiring the ___% Certificate for its own account
or for accounts for which it exercises sole investment discretion, and not with
a view to or for sale or other transfer in connection with any distribution of
the ___% Certificate in any manner that would violate Section 5 of the
Securities Act or any applicable state securities laws, subject nevertheless to
any requirement of law that the disposition of the Holder's property shall at
all times be and remain within its control.
5. The Holder is (A) a "qualified institutional buyer" (a "QIB") as
defined in Rule 144A under the Securities Act, and is aware that the transferor
of the ___% Certificate may be relying on the exemption from the registration
requirements of the Securities Act provided by Rule 144A and is acquiring such
___% Certificate for its own Account or for the Account of one or more qualified
institutional buyers for whom it is authorized to act, or (B) a Person involved
in the organization or operation of the Trust or an affiliate of such Person
within the meaning of Rule 3a-7 of the Investment Company Act of 1940, as
amended (including, but not limited to, the Transferor). The Holder is able to
bear the economic risks of such an investment. The Holder is a QIB because
[STATE FACTUAL BASIS FOR QIB STATUS]
6. If the Holder sells or otherwise transfers the registered
ownership of such ___% Certificate, the Holder will comply with the restrictions
and requirements with respect to the transfer of the ownership of the ___%
Certificate under the Trust Agreement, and the Holder will obtain from any
subsequent purchaser or transferee substantially the same certifications,
representations, warranties and covenants as required under the Trust Agreement
in connection with such subsequent sale or transfer thereof.
7. The Holder is not an entity that will hold a ___% Certificate as
nominee (a "Book Entry Nominee") to facilitate the clearance and settlement of
such security through electronic book-entry changes in Accounts or participating
organizations.
8. The Holder (i) is not a person which is an employee benefit plan,
trust or account subject to Title I of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), or Section 4975 of the Code or a governmental
plan, as defined in Section 3(32) of ERISA, subject to any federal, state or
local law which is, to a material extent, similar to the foregoing provisions of
ERISA or the Code (any such person being a "Plan"), (ii) is not an entity,
including an insurance company separate account or general account, whose
underlying assets include "plan assets" by reason of a
C-2
Plan's investment in the entity and (iii) is not directly or indirectly
purchasing such ___% Certificate on behalf of, as investment manager of, as
named fiduciary of, as trustee of, or with assets of a Plan.
9. The Holder hereby agrees to indemnify each of the Issuer, the
Indenture Trustee and the Owner Trustee against any liability that may result if
the Holder's transfer of a ___% Certificate (or any portion thereof) is not
exempt from the registration requirements of the Securities Act and any
applicable state securities laws or is not made in accordance with such federal
and state laws. Such indemnification of the Issuer, the Owner Trustee shall
survive the termination of the related Trust Agreement.
IN WITNESS WHEREOF, the Holder has caused this instrument to be
executed on its behalf, pursuant to the authority of its Board of Directors, by
its duly authorized signatory this ____ day of __________, 199_.
[NAME OF HOLDER]
By:________________________
Name:
Title:
C-3
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