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EXHIBIT 10.2
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DEPOSIT TRUST AGREEMENT
BETWEEN
FUND AMERICA INVESTORS CORPORATION II,
AS DEPOSITOR,
WILMINGTON TRUST COMPANY,
AS OWNER TRUSTEE
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
AS TRUST PAYING AGENT,
AND
NATIONAL MORTGAGE CORPORATION,
AS SERVICER
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FUND AMERICA INVESTORS TRUST 1997-NMC1
COLLATERALIZED MORTGAGE OBLIGATIONS
SERIES 1997-NMC1
DATED AS OF SEPTEMBER 1, 1997
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TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS.....................................................................1
SECTION 1.1. Capitalized Terms...................................................1
SECTION 1.2. Other Definitional Provisions.......................................5
ARTICLE II ORGANIZATION...................................................................5
SECTION 2.1. Name................................................................5
SECTION 2.2. Office..............................................................5
SECTION 2.3. Purposes and Powers.................................................6
SECTION 2.4. Appointment of Owner Trustee........................................6
SECTION 2.5. Initial Capital Contribution of Owner Trust Estate..................6
SECTION 2.6. Declaration of Trust................................................6
SECTION 2.7. Liability of the Holders............................................7
SECTION 2.8. Title to Trust Property.............................................7
SECTION 2.9. Situs of Trust......................................................7
SECTION 2.10. Representations and Warranties of the Company; Covenant of the
Company...........................................................8
SECTION 2.11. Federal Income Tax Provisions......................................9
ARTICLE III CERTIFICATES AND TRANSFER OF INTERESTS.......................................11
SECTION 3.1. Initial Ownership..................................................11
SECTION 3.2. The Certificates...................................................11
SECTION 3.3. Execution, Authentication and Delivery of Trust Certificates.......12
SECTION 3.4. Registration of Transfer and Exchange of Trust Certificates........12
SECTION 3.5. Mutilated, Destroyed, Lost or Stolen Certificates..................13
SECTION 3.6. Persons Deemed Owners..............................................13
SECTION 3.7. Access to List of Holders' Names and Addresses.....................13
SECTION 3.8. Maintenance of Office or Agency....................................14
SECTION 3.9. Appointment of Trust Paying Agent..................................14
SECTION 3.10. Restrictions on Transfer of Certificates..........................14
ARTICLE IV ACTIONS BY OWNER TRUSTEE......................................................16
SECTION 4.1. Prior Notice to Holders with Respect to Certain Matters............16
SECTION 4.2. Action by Holders with Respect to Bankruptcy.......................18
SECTION 4.3. Restrictions on Holders' Power.....................................18
SECTION 4.4. Majority Control...................................................18
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ARTICLE V APPLICATION OF TRUST FUNDS; CERTAIN DUTIES.....................................19
SECTION 5.1. Establishment of Certificate Distribution Account..................19
SECTION 5.2. Application Of Trust Funds.........................................19
SECTION 5.3. Method of Payment..................................................20
SECTION 5.4. Segregation of Moneys; No Interest.................................20
ARTICLE VI AUTHORITY AND DUTIES OF OWNER TRUSTEE.........................................20
SECTION 6.1. General Authority..................................................20
SECTION 6.2. General Duties.....................................................21
SECTION 6.3. Action upon Instruction............................................21
SECTION 6.4. No Duties Except as Specified in this Agreement, the Basic
Documents or any Instructions.....................................22
SECTION 6.5. No Action Except Under Specified Documents or Instructions.........23
SECTION 6.6. Restrictions.......................................................23
ARTICLE VII CONCERNING THE OWNER TRUSTEE.................................................23
SECTION 7.1. Acceptance of Trusts and Duties....................................23
SECTION 7.2. Furnishing of Documents............................................24
SECTION 7.3 Representations and Warranties.....................................24
SECTION 7.4. Reliance; Advice of Counsel........................................25
SECTION 7.5. Not Acting in Individual Capacity..................................25
SECTION 7.6. Owner Trustee Not Liable for Certificates or Mortgage Loans........26
SECTION 7.7. Owner Trustee May Own Certificates and Bonds.......................26
SECTION 7.8. Licenses..........................................................26
ARTICLE VIII COMPENSATION OF OWNER TRUSTEE...............................................26
SECTION 8.1. Owner Trustee's Fees and Expenses..................................26
SECTION 8.2. Indemnification....................................................27
SECTION 8.3. Payments to the Owner Trustee......................................27
SECTION 8.4. Servicer Liability.................................................27
ARTICLE IX TERMINATION OF TRUST AGREEMENT................................................28
SECTION 9.1. Termination of Trust Agreement.....................................28
ARTICLE X SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES.........................29
SECTION 10.1. Eligibility Requirements for Owner Trustee........................29
SECTION 10.2. Resignation or Removal of Owner Trustee...........................29
SECTION 10.3. Successor Owner Trustee...........................................30
SECTION 10.4. Merger or Consolidation of Owner Trustee..........................30
SECTION 10.5. Appointment of Co-Trustee or Separate Trustee.....................30
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ARTICLE XI MISCELLANEOUS.................................................................32
SECTION 11.1. Supplements and Amendments........................................32
SECTION 11.2. No Legal Title to Owner Trust Estate in Holders...................33
SECTION 11.3. Limitations on Rights of Others...................................33
SECTION 11.4. Notices...........................................................33
SECTION 11.5. Severability......................................................34
SECTION 11.6. Separate Counterparts.............................................34
SECTION 11.7. Successors and Assigns............................................34
SECTION 11.8. No Petition.......................................................34
SECTION 11.9. No Recourse.......................................................34
SECTION 11.10. Headings.........................................................34
SECTION 11.11. GOVERNING LAW....................................................34
SECTION 11.12. Grant of Certificateholder Rights to Bond Insurer................35
SECTION 11.13. Third-Party Beneficiary..........................................35
SECTION 11.14. Suspension and Termination of Bond Insurer's Rights..............35
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DEPOSIT TRUST AGREEMENT
This DEPOSIT TRUST AGREEMENT, dated as of September 1, 1997, between
FUND AMERICA INVESTORS CORPORATION II, a Delaware corporation, as depositor (the
"Company"), WILMINGTON TRUST COMPANY, a Delaware banking corporation, as owner
trustee (the "Owner Trustee") and NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
a national banking association, as trust paying agent (the "Trust Paying
Agent"), and NATIONAL MORTGAGE CORPORATION, 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
Bond Account.
"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).
"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.
"BOND ACCOUNT" shall have the meaning assigned thereto in the
Indenture.
"BOND INSURER" shall mean MBIA Insurance Corporation, a New York stock
insurance company.
"BOND INSURER DEFAULT" shall have the meaning assigned to such term in
the Indenture.
"BONDS" shall mean the Issuer's Collateralized Mortgage Obligations,
Series 1997-NMC1.
"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 banking
institutions in the State of New York, the State of Colorado, the State of
Delaware, 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 S 3801 et seq., as the same may be amended from time
to time.
"CAPITAL ACCOUNT" shall have the meaning assigned thereto in Section
2.11(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 Fund America Investors Corporation II, 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 ▇▇▇▇▇▇
Square North, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇; or at
such other address in the State of Delaware as the Owner Trustee may designate
by notice to the Certificateholders and the Company, or the principal corporate
trust office of any successor Owner Trustee (the address (which shall be in the
State of Delaware) of which the successor owner trustee will notify the
Certificateholder and the Company).
"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
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 September 1, 1997, by
and between the Issuer and the Indenture Trustee.
"INDENTURE TRUSTEE" means Norwest Bank Minnesota, National Association,
as Indenture Trustee under the Indenture.
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"INSURANCE AGREEMENT" means the Insurance Agreement, dated as of
September 1, 1997, among MBIA Insurance Corporation, as insurer, the Issuer,
National Mortgage Corporation, as Seller and Servicer, the Company and the
Indenture Trustee.
"INSURANCE POLICY" shall mean the policy issued by the Bond Insurer for
the benefit of the holders of the Bonds.
"ISSUER" shall mean Fund America Investor Trust 1997-NMC1, the Delaware
business trust created pursuant to this Agreement.
"MANAGEMENT AGREEMENT" shall mean the Management Agreement dated as of
September 1, 1997, between the Trust and Norwest Bank Minnesota, National
Association, as Manager.
"MORTGAGE LOAN CONTRIBUTION AGREEMENT" shall mean that certain Mortgage
Loan Contribution Agreement, dated as of September 1, 1997, between the Company,
as transferor, and the Issuer, as transferee.
"MORTGAGE LOAN SALE AGREEMENT" shall mean that certain Mortgage Loan
Sale Agreement, dated as of September 1, 1997, among NMC, as seller, and the
Company, as purchaser.
"NMC" shall mean National Mortgage Corporation, a Colorado corporation.
"NMFC" shall mean National Mortgage Financial Corporation, a Colorado
corporation.
"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.
"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 October 27, 1997.
"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.
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"PERMITTED INVESTMENTS" shall have the meaning assigned to such term in
the Indenture.
"PROSPECTIVE HOLDER" shall have the meaning set forth in Section
3.11(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
Company, the Servicer, the Bond 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 Bonds that it maintains without taking into
account the Bond 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
September 1, 1997, among the Trust, as Issuer, the Indenture Trustee, and NMC,
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).
"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.
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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.
(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 "Fund
America Investors Trust 1997-NMC1," 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 ▇▇▇ 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 Bond Insurer and the Company.
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SECTION 2.3. PURPOSES AND POWERS. The purpose of the Trust is to engage
in the following activities:
(i) to issue the Bonds pursuant to the Indenture and to
sell such Bonds;
(ii) with the proceeds of the sale of the Bonds, to pay
the organizational, start-up and transactional expenses of the Trust
and to pay the balance to the Company 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;
(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 Bondholders; 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 Company hereby appoints
the Owner Trustee as trustee of the Trust effective as of the date hereof, to
have all the rights, powers and duties set forth herein.
SECTION 2.5. INITIAL CAPITAL CONTRIBUTION OF OWNER TRUST ESTATE. The
Company 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 Company, 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
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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 Bonds 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 Bonds 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
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 non-assessable.
SECTION 2.8. TITLE TO TRUST PROPERTY.
(a) Subject to the Indenture, 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
on behalf of the Trust shall be located in the State of Delaware, the State of
Minnesota or the State of Colorado. 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, New York, Minnesota or Colorado, and
payments will be made by the Trust only from Delaware, New York, Minnesota or
Colorado. The only office of the Trust will be at the Corporate Trust Office in
Delaware.
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SECTION 2.10. REPRESENTATIONS AND WARRANTIES OF THE COMPANY; COVENANT
OF THE COMPANY.
(a) The Company hereby represents and warrants to the Owner
Trustee and the Bond Insurer that:
(i) The Company is duly organized and validly
existing as a corporation in good standing under the laws of the State
of Delaware, with power and authority to own its properties and to
conduct its business as such properties are currently owned and such
business is presently conducted.
(ii) The Company has the power and authority to
execute and deliver this Agreement and to carry out its terms; the
Company has full power and authority to transfer and assign the
property to be transferred and assigned to and deposited with the Trust
and the Company has duly authorized such transfer and assignment 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 Company 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
Company, or any indenture, agreement or other instrument to which the
Company is a party or by which it is bound; nor result in the creation
or imposition of any lien upon any of its properties pursuant to the
terms of any such indenture, agreement or other instrument (other than
pursuant to the Basic Documents); nor violate any law or, to the best
of the Company's knowledge, any order, rule or regulation applicable to
the Company of any court or of any Federal or state regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over the Company or its properties.
(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 Company 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 Company of its obligations under, or the validity or
enforceability of, this Agreement.
(v) The representations and warranties of the
Company in Section 3(a) of the Mortgage Loan Contribution Agreement are
true and correct.
(b) Each Certificateholder covenants with the Owner Trustee
and the Bond Insurer that during the continuance of this Agreement, and while it
holds Certificates, it will
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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 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 2.11(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 2.11(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(j), 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-
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1(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 1.704-1(b)(2)(ii)(d). After the occurrence of an
allocation of income or gain to a Holder in accordance with this Section
2.11(f), to the extent permitted by Regulations Section 1.704-1(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
1.704-1(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 1.704-1(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 Holdership
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 1.704-1(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 1.704-1(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 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
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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 75
days after the close of each Taxable Year, a 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) The Holders shall designate a Holder as the tax matters
partner for the Trust within the meaning of Section 6231(a)(7) of the Code (the
Tax Matters Partner"), and shall notify the Indenture Trustee, the Manager (as
defined in Section 5.2(d)) and the Owner Trustee in writing of the name and
address of such 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 Company pursuant to Section 2.5 and until the issuance of
the Certificates, the Company 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 a Trust
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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,
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 National Mortgage Finance Corporation ("NMFC"),
as the Company's designee. 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 letter from the Prospective Holder certifying
as to the representations set forth in Section 3.11(a), (b) and (c). Each
Certificate surrendered for
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registration of transfer or exchange shall be canceled and disposed of by the
Owner Trustee in accordance with its customary practice.
No service charge shall be made for any registration of transfer or
exchange of 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 transfer
or exchanges of Certificates for a period of 15 days preceding the Payment Date
with respect to the Certificates.
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 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 Company 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
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current list of Certificateholders. Each Certificateholder, by receiving and
holding a Certificate, shall be deemed to have agreed not to hold any of the
Company, the Certificate Registrar or the Owner Trustee accountable by reason of
the disclosure of its name and address, regardless of the source from which such
information was derived.
SECTION 3.8. MAINTENANCE OF OFFICE OR AGENCY. The Owner Trustee shall
maintain an office or offices or agency or agencies where 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 Wilmington
Trust Company as its principal corporate trust office for such purposes. The
Owner Trustee shall give prompt written notice to the Company and to the
Certificateholders of any change in the location of the Certificate Register or
any such office or agency.
SECTION 3.9. APPOINTMENT OF 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 and the Bond 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. 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 or NMFC,
shall represent and warrant, in writing, to the Owner Trustee and the
Certificate Registrar and any of their respective successors that:
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(i) Such Person is (A) a "qualified institutional buyer"
as defined in Rule 144A under the Securities Act of 1933, as amended
(the "Securities Act"), and is aware that the seller of 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 Company and NMFC).
(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 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, FUND AMERICA INVESTORS CORPORATION II) 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."
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(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 this certificate or any beneficial interest
therein shall be made to any person unless the Owner Trustee has received a
certificate from the Transferee to the effect that such transferee (i) is not a
person which is an employee benefit plan, trust or account subject to Title I of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA") or
Section 4975 of the Code or a governmental plan, defined in Section 3(32) of
ERISA subject to any federal, state or local law which is, to a material extent,
similar to the foregoing provisions of ERISA or the Code (any such person being
a "plan") and (ii) is not an entity, including an insurance company separate
account or general account, whose underlying assets include plan assets by
reason of a plan's investment in the entity.
(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
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 Bond Insurer in
writing of the proposed action and neither the Certificateholders nor the Bond
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 Bond Insurer
have withheld consent or the Certificateholders have provided alternative
direction (any direction by the Certificateholders shall require the prior
consent of the Bond Insurer):
(a) the initiation of any claim or lawsuit by the Trust
(except claims or lawsuits brought in connection with the collection of the
Mortgage Loans) and the compromise of any
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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 Bond
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 Bond
Insurer is not required and such amendment materially adversely affects the
interest of the Certificateholders;
(e) the appointment pursuant to the Indenture of a successor
Bond Registrar, Trust Paying Agent or Indenture Trustee or pursuant to this
Agreement of a successor Certificate Registrar or Trust Paying Agent, or the
consent to the assignment by the Bond 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;
(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.
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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 Company and NMC.
The Owner Trustee shall not have the power, except upon the direction
of the Certificateholders with the consent of the Bond 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 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 Bond Insurer Default exists, no
Certificateholder shall have the power to take, and shall not take, any
Bankruptcy Action with respect to the Trust or 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 Bond
Insurer, the unanimous prior approval of all Certificateholders and the Bond
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.
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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 Fund America Investors Trust 1997-NMC1." 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
Bond Insurer and such other persons entitled to distributions therefrom. Except
as otherwise expressly provided 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 Bond 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
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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.
(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 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 Bonds,
the Certificates and the Basic Documents to which the Trust is to be a party and
each certificate or other document
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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 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
Company shall approve, as evidenced conclusively by the Owner Trustee's or the
Company's execution thereof, directly to the Authenticating Agent to
authenticate and deliver Bonds in the aggregate principal amount of
$121,765,000. 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. It shall be the duty of the Owner Trustee:
(a) to discharge (or cause to be discharged) all of its
responsibilities pursuant to the terms of this Agreement and the 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; the Owner Trustee shall not be responsible for
taking any action with respect to the Indenture or any other of the Basic
Documents unless a Responsible Office of the Owner Trustee has actual knowledge
of the facts which require such action or has received written notice of the
need to take such action; the Owner Trustee shall not be responsible for any
matter regarding the Investment Company Act of 1940, as amended (or any
successor statute) or the rules or regulations thereunder; and
(b) to obtain and preserve the Issuer's qualification to do
business in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of the Indenture, the
Bonds, the Mortgage Loans and each other instrument and agreement included in
the Trust Estate.
SECTION 6.3. ACTION UPON INSTRUCTION.
(a) Subject to Article IV and in accordance with the terms of
the 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 Bond
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.
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(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 Bond 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 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 Owner Trustee 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 that are not related to the
ownership or the administration of the Owner Trust Estate.
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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 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 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 or under any Basic Document under any circumstances,
except (i) for its own willful misconduct or negligence or (ii) in the case of
the inaccuracy of any representation or warranty contained in Section 7.3
expressly made by the Owner Trustee. In particular, but not by way of limitation
(and subject to the exceptions set forth in the preceding sentence):
(a) the Owner Trustee shall not be liable for any error of
judgment made by a responsible officer of the Owner Trustee;
(b) the Owner Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in accordance with the instructions of
the 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 Bonds;
(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 Company or for the form, character, genuineness,
sufficiency, value or validity of any of the Owner Trust Estate or for or in
respect of the validity or sufficiency of the Basic Documents, other than the
certificate of
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authentication on the Certificates, and the Owner Trustee shall in no event
assume or incur any liability, duty, or obligation to any Bondholder or to any
Certificateholder, other than as expressly provided for herein and in the Basic
Documents;
(f) the Owner Trustee shall not be liable for the default
or misconduct of the Seller, the Company, the Indenture Trustee 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 or the Servicer under the Servicing
Agreement; and
(g) the Owner Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Agreement, or to
institute, conduct or defend any litigation under this Agreement or otherwise or
in relation to this Agreement or any Basic Document, at the request, order or
direction of any of the Certificateholders, unless such Certificateholders have
offered to the Owner Trustee security or indemnity satisfactory to it against
the costs, expenses and liabilities that may be incurred by the Owner Trustee
therein or thereby. The right of the Owner Trustee to perform any discretionary
act enumerated in this 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.
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 Company shall
furnish to Bondholders 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 Company 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 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.
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(b) The Trust Paying Agent hereby represents and warrants
to the Company and the Bond 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, bond, or other document or paper believed
by it to be genuine and believed by it to be signed by the proper party or
parties. The Owner Trustee may accept a certified copy of a resolution of the
board of directors or other governing body of any corporate party as conclusive
evidence that such resolution has been duly adopted by such body and that the
same is in full force and effect. As to any fact or matter the method of the
determination of which is not specifically prescribed herein, the Owner Trustee
may for all purposes hereof rely on a certificate, signed by the president or
any vice president or by the treasurer or other authorized officers of the
relevant party, as to such fact or matter and such certificate shall constitute
full protection to the Owner Trustee for any action taken or omitted to be taken
by it in good faith in reliance thereon.
(b) In the exercise or administration of the trusts
hereunder and in the performance of its duties and obligations under this
Agreement or the Basic Documents, the Owner Trustee (i) may act directly or
through its agents or attorneys pursuant to agreements entered into with any of
them, and the Owner Trustee shall not be liable for the 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
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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 Company, and the Owner Trustee assumes no
responsibility for the correctness thereof. The Owner Trustee makes no
representations as to the validity or sufficiency of this Agreement, of any
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 Bonds, 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
Bondholders 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 Company 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 BONDS. The Owner
Trustee in its individual or any other capacity may become the owner or pledgee
of Certificates or Bonds and may deal with the Company, the Indenture Trustee
and the Servicer in banking transactions with the same rights as it would have
if it were not Owner Trustee.
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.
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 NMC and the Owner Trustee,
and the Owner Trustee shall be entitled to be reimbursed by NMC 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. Such fees and expenses are as set forth on
Exhibit D hereto. The Certificateholders shall be responsible and liable for the
payment of such fees and expenses,
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pro rata based upon their respective Percentage Interests, 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 liable as
obligor for, and shall indemnify the Owner Trustee 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
defnese 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
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 or (2) the Certificateholders
shall have authorized the employment of counsel for the Indemnified Party at the
expense of 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.
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ARTICLE IX
TERMINATION OF TRUST AGREEMENT
SECTION 9.1. TERMINATION OF TRUST AGREEMENT.
(a) This Agreement (other than Article VIII) and the Trust
shall terminate and be of no further force or effect on the earlier of: (i) the
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 ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (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
Company shall not (x) operate to terminate this Agreement or the 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
Company, the Servicer, the Bond 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
Bond 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 3820 of the Business Trust Statute.
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ARTICLE X
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
SECTION 10.1. ELIGIBILITY REQUIREMENTS FOR OWNER TRUSTEE. The Owner
Trustee shall at all times be a corporation satisfying the provisions of Section
3807(a) of the Business Trust Statute; authorized to exercise corporate powers;
having a combined capital and surplus of at least $50,000,000 and subject to
supervision or examination by Federal or state authorities; and having (or
having a parent that has) a rating of at least "Baa3" by ▇▇▇▇▇'▇ and "A-1" by
Standard & Poor's and being acceptable to the Bond Insurer. If such corporation
shall publish reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for the
purpose of this Section, the combined capital and surplus of such corporation
shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. In case at any time the Owner Trustee
shall cease to be eligible in accordance with the provisions of this Section,
the Owner Trustee shall resign immediately in the manner and with the effect
specified in Section 10.2.
SECTION 10.2 RESIGNATION OR REMOVAL OF OWNER TRUSTEE. 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
Bond Insurer. Upon receiving such notice of resignation, the Servicer shall
promptly appoint a successor Owner Trustee (acceptable to the Bond 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 Bond 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 Bond Insurer, or the Certificateholders or
the Servicer with the consent of the Bond Insurer, may remove the Owner Trustee.
If the Certificateholders or the Servicer or the Bond Insurer shall remove the
Owner Trustee under the authority of the immediately preceding sentence, the
Bond Insurer, or the Servicer with the consent of the Bond 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 Bond 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
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to each of the Rating Agencies, the Indenture Trustee, the Trust Paying Agent
and the Bond Insurer.
SECTION 10.3. SUCCESSOR OWNER TRUSTEE. Any successor Owner Trustee
appointed pursuant to Section 10.2 shall execute, acknowledge and deliver to the
Company, the Indenture Trustee, the Bond 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 Bond
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 and expenses deliver to
the successor Owner Trustee all documents and statements and moneys held by it
under this Agreement; and the Company 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 Company shall mail notice of the successor of such Owner
Trustee to all Certificateholders, the Indenture Trustee, the Trust Paying
Agent, the Bondholders, the Bond Insurer and the Rating Agencies. If the Company
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 Company.
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 Bond
Insurer to act as co-
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35
trustee, 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 Bond Insurer and the Owner Trustee may
consider necessary or desirable. No co-trustee or separate trustee under this
Agreement shall be required to meet the terms of eligibility as a successor
trustee pursuant to Section 10.1 and no notice of the appointment of any
co-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 co-trustee, 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.
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ARTICLE XI
MISCELLANEOUS
SECTION 11.1. SUPPLEMENTS AND AMENDMENTS. This Agreement may be amended
by the Company, and the Owner Trustee, with the prior consent of the Bond
Insurer, and with prior written notice to the Rating Agencies, but without the
consent of any of the Bondholders 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 Bondholders or the Certificateholders; provided,
however, such action shall not adversely affect in any material respect the
interests of any Bondholder or Certificateholder or the rights of the Bond
Insurer. An amendment described above shall be deemed not to adversely affect in
any material respect the interests of any Bondholder or Certificateholder 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 Company and
the Owner Trustee, with the prior written consent of the Rating Agencies and
with the prior written consent of the Indenture Trustee, the Bond Insurer, the
Holders (as defined in the Indenture) of Bonds evidencing more than 50% of the
Outstanding Amount of the Bonds, 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 Bondholders 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 Bondholders, the Certificateholders or the Bond Insurer, (b)
reduce the aforesaid percentage of the Outstanding Amount of the Bonds 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
Bonds and the Bond Insurer, and in the case of clause (b) without the consent of
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 Bond
Insurer and each of the Rating Agencies.
It shall not be necessary for the consent of Certificateholders, the
Bondholders 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.
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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 Company, the Certificateholders, the Bond Insurer and, to the
extent expressly provided herein, the Indenture Trustee and the Bondholders, 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 Company, Fund America Investors Corporation II, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇'▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇; (iii) if to the Bond Insurer, MBIA Insurance
Corporation, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Fund America
Investors Trust 1997-NMC1, Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇; (iv) if to the Trust Paying
Agent, Norwest Bank Minnesota, National Association, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Fund America 1997-NMC1, telecopy: (410)
884-2360; (v) if to National Mortgage Corporation, to Harlequin Plaza, Suite
330S, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇
▇▇▇▇▇, telecopy (▇▇▇) ▇▇▇-▇▇▇▇ 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.
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(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
Company, the Bond 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 Bondholder by accepting the benefits of this Agreement, hereby
covenant and agree that they will not at any time institute against the Company
or the Trust, or join in any institution against the Company or the Trust of,
any bankruptcy, 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 Bonds, 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 Company, 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.
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
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39
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
SECTION 11.12. GRANT OF CERTIFICATEHOLDER RIGHTS TO BOND INSURER.
(a) In consideration for the issuance of the Certificates and
for the guarantee of the Bonds by the Bond Insurer pursuant to the Insurance
Policy, the holders of the Certificates hereby grant to the Bond 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 Bond
Insurer by the holders of the Trust Interest shall be subject to Section 11.14.
(b) The rights of the Bond Insurer to direct certain actions
and consent to certain actions of the Certificateholders hereunder will
terminate at such time as the Balance of the Bonds has been reduced to zero and
the Bond Insurer has been reimbursed for any amounts owed under the Insurance
Policy and the Insurance Agreement and the Bond Insurer has no further
obligation under the Insurance Policy.
SECTION 11.13. THIRD-PARTY BENEFICIARY. The Bond Insurer is an intended
third-party beneficiary of this Agreement, and this Agreement shall be binding
upon and inure to the benefit of the Bond Insurer; provided that,
notwithstanding the foregoing, for so long as a Bond Insurer Default is
continuing with respect to its obligations under the Bond Insurance Policy, the
Bondholders shall succeed to the Bond Insurer's rights hereunder. Without
limiting the generality of the foregoing, all covenants and agreements in this
Agreement that expressly confer rights upon the Bond Insurer shall be for the
benefit of and run directly to the Bond Insurer, and the Bond 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 BOND INSURER'S RIGHTS.
During the continuation of a Bond Insurer Default, rights granted or
reserved to the Bond Insurer hereunder shall vest instead in the Owners;
provided that the Bond Insurer shall be entitled to any distributions in
reimbursement of the Bond Insurer Reimbursement Amount, and the Bond Insurer
shall retain those rights under Section 11.1 to consent to any amendment of this
Agreement.
At such time as either (i) the Bond Balance of the Bonds has been
reduced to zero or (ii) the Insurance Policy has been terminated and in either
case of (i) or (ii) the Bond Insurer has been reimbursed for all amounts owed
under the Insurance Policy and the Insurance Agreement (and the Bond Insurer no
longer has any obligation under the Insurance Policy, except for breach
35
40
thereof by the Bond Insurer), then the rights and benefits granted or reserved
to the Bond 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 Bond
Insurer following such termination to the extent that such rights and benefits
are applicable to the Certificateholders.
[Signatures follow]
36
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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.
FUND AMERICA INVESTORS CORPORATION II,
as Depositor
By:
-----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
WILMINGTON TRUST COMPANY,
in its individual capacity only as
specifically set forth herein and
otherwise not in its individual capacity,
but solely as Owner Trustee
By:
-----------------------------------------
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:
-----------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
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The Servicer hereby acknowledges its obligations under this Agreement
and agrees to act in accordance therewith.
NATIONAL MORTGAGE CORPORATION
By:
-----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Executive Vice President
38
43
EXHIBIT A-1
TO THE TRUST AGREEMENT
(FORM OF CERTIFICATE)
44
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, FUND AMERICA INVESTORS CORPORATION II) 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 THEREIN SHALL BE MADE
TO ANY PERSON UNLESS THE OWNER TRUSTEE HAS RECEIVED A CERTIFICATE FROM THE
TRANSFEREE TO THE EFFECT THAT SUCH TRANSFEREE (I) IS NOT A PERSON WHICH IS AN
EMPLOYEE BENEFIT PLAN, TRUST OR ACCOUNT SUBJECT TO TITLE I OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA") OR SECTION 4975 OF
THE CODE OR A GOVERNMENTAL PLAN, DEFINED IN SECTION 3(32) OF ERISA SUBJECT TO
ANY FEDERAL, STATE OR LOCAL LAW WHICH IS, TO A MATERIAL EXTENT, SIMILAR TO THE
FOREGOING PROVISIONS OF ERISA OR THE CODE (ANY SUCH PERSON BEING A "PLAN") AND
(II) IS NOT AN ENTITY, INCLUDING AN INSURANCE COMPANY SEPARATE ACCOUNT OR
GENERAL ACCOUNT, WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS BY REASON OF A
PLAN'S INVESTMENT IN THE ENTITY.
THIS 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 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.
1
45
FUND AMERICA INVESTORS TRUST 1997-NMC1
CERTIFICATE
No. 0001
THIS CERTIFIES THAT ____________________________ (the "Owner") is the
registered owner of a 100% Percentage Interest of the Trust Interest in Fund
America Investors Trust 1997-NMC1 (the "Trust") existing under the laws of the
State of Delaware and created pursuant to that certain Deposit Trust Agreement,
dated as of September 1, 1997 (the "Trust Agreement"), between Fund America
Investors Corporation II, 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.
2
46
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.
FUND AMERICA INVESTORS TRUST 1997-NMC1
By: Wilmington Trust Company, not in its
individual capacity but solely as
Owner Trustee under the Trust Agreement
By:
-----------------------------------------
Authorized Signatory
DATED: September ___, 1997
CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within-mentioned
Agreement.
--------------------------------------------
as Authenticating Agent
By:
-----------------------------------------
Authorized Signatory
3
47
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.
4
48
EXHIBIT B
TO THE TRUST AGREEMENT
CERTIFICATE OF TRUST OF
FUND AMERICA INVESTORS TRUST 1997-NMC1
THIS CERTIFICATE OF TRUST OF FUND AMERICA INVESTORS TRUST 1997-NMC1
(the "Trust"), dated as of September 30, 1997, is being duly executed and filed
by Wilmington Trust Company, a Delaware banking corporation, as trustee, to form
a business trust under the Delaware Business Trust Act (12 Del. Code, S 3801 et
seq.).
1. NAME. The name of the business trust formed hereby is FUND AMERICA
INVESTORS TRUST 1997-NMC1.
2. DELAWARE TRUSTEE. The name and business address of the trustee of
the Trust in the State of Delaware is Wilmington Trust Company of ▇▇▇▇▇▇ Square
North, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇. Attention:
___________.
IN WITNESS WHEREOF, the undersigned, being the sole trustee of the
Trust, has executed this Certificate of Trust as of the date first above
written.
WILMINGTON TRUST COMPANY, not
in its individual capacity
but solely as Owner Trustee
under a Deposit Trust Agreement, dated
as of September 1, 1997.
By:
-----------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
49
EXHIBIT C
FORM OF INVESTMENT LETTER
50
___________, 1997
Fund America Investors Corporation II
▇▇▇▇ ▇. ▇▇▇▇▇▇▇'▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Wilmington Trust Company
▇▇▇▇▇▇ Square North
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Re: Fund America Investors Trust 1997-NMC1 (the "Issuer")
Collateralized Mortgage Obligations, Series 1997-NMC1
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 September 1, 1997 (the
"Trust Agreement"), between Fund America Investors Corporation II, 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.
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 only 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
C-1
51
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 is not (i) is not a person which is an employee benefit
plan, trust or account subject to Title I of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") or Section 4975 of the Code or a
governmental plan, defined in Section 3(32) of ERISA subject to any federal,
state or local law which is, to a material extent, similar to the foregoing
provisions of ERISA or the Code (any such person being a "plan") and (ii) is not
an entity, including an insurance company separate account or general account,
whose underlying assets include plan assets by reason of a plan's investment in
the entity and 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
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52
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]
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By:
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Name:
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Title:
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