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DEPOSIT TRUST AGREEMENT
AMONG
FINANCIAL ASSET SECURITIES CORP.,
AS DEPOSITOR,
WILMINGTON TRUST COMPANY,
AS OWNER TRUSTEE
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
AS TRUST PAYING AGENT,
AND
CITY NATIONAL BANK OF WEST VIRGINIA,
AS SERVICER
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CITY CAPITAL HOME LOAN TRUST 1998-4
ASSET-BACKED NOTES
SERIES 1998-4
DATED AS OF NOVEMBER 1, 1998
TABLE OF CONTENTS
ARTICLE I DEFINITIONS.............................................................................................1
Section 1.1. Capitalized Terms...........................................................................1
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Section 1.2. Other Definitional Provisions...............................................................5
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ARTICLE II ORGANIZATION...........................................................................................5
Section 2.1. Name........................................................................................5
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Section 2.2. Office......................................................................................6
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Section 2.3. Purposes and Powers.........................................................................6
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Section 2.4. Appointment of Owner Trustee................................................................6
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Section 2.5. Initial Capital Contribution of Owner Trust Estate..........................................6
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Section 2.6. Declaration of Trust........................................................................7
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Section 2.7. Liability of the Holders....................................................................7
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Section 2.8. Title to Trust Property.....................................................................7
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Section 2.9. Situs of Trust..............................................................................8
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Section 2.10. Representations and Warranties of the Depositor; Covenant of the Depositor.................8
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Section 2.11. Federal Income Tax Provisions.............................................................10
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ARTICLE III CERTIFICATES AND TRANSFER OF INTERESTS...............................................................13
Section 3.1. Initial Ownership..........................................................................13
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Section 3.2. The Certificates...........................................................................13
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Section 3.3. Execution, Authentication and Delivery of Trust Certificates...............................13
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Section 3.4. Registration of Transfer and Exchange of Trust Certificates................................13
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Section 3.5. Mutilated, Destroyed, Lost or Stolen Certificates..........................................14
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Section 3.6. Persons Deemed Owners......................................................................15
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Section 3.7. Access to List of Holders' Names and Addresses.............................................15
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Section 3.8. Maintenance of Office or Agency............................................................15
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Section 3.9. Appointment of Trust Paying Agent..........................................................15
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Section 3.10. Restrictions on Transfer of Certificates..................................................16
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ARTICLE IV ACTIONS BY OWNER TRUSTEE..............................................................................18
Section 4.1. Prior Notice to Holders with Respect to Certain Matters....................................18
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Section 4.2. Action by Holders with Respect to Bankruptcy...............................................20
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Section 4.3. Restrictions on Holders'Power..............................................................20
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Section 4.4. Majority Control...........................................................................20
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ARTICLE V APPLICATION OF TRUST FUNDS; CERTAIN DUTIES.............................................................20
Section 5.1. Establishment of Certificate Distribution Account..........................................20
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Section 5.2. Application of Trust Funds.................................................................21
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Section 5.3. Method of Payment..........................................................................22
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Section 5.4. Segregation of Moneys; No Interest.........................................................22
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ARTICLE VI AUTHORITY AND DUTIES OF OWNER TRUSTEE.................................................................22
Section 6.1. General Authority..........................................................................22
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Section 6.2. General Duties.............................................................................22
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Section 6.3. Action upon Instruction....................................................................23
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Section 6.4. No Duties Except as Specified in this Agreement, the Basic Documents or Any Instructions...24
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Section 6.5. No Action Except Under Specified Documents or Instructions.................................24
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Section 6.6. Restrictions...............................................................................24
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ARTICLE VII CONCERNING THE OWNER TRUSTEE.........................................................................25
Section 7.1. Acceptance of Trusts and Duties............................................................25
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Section 7.2. Furnishing of Documents....................................................................26
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Section 7.3. Representations and Warranties.............................................................26
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Section 7.4. Reliance; Advice of Counsel................................................................27
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Section 7.5. Not Acting in Individual Capacity..........................................................27
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Section 7.6. Owner Trustee Not Liable for Certificates or Home Loans....................................28
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Section 7.7. Owner Trustee May Own Certificates and Notes...............................................28
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Section 7.8. Licenses...................................................................................28
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ARTICLE VIII COMPENSATION OF OWNER TRUSTEE.......................................................................28
Section 8.1. Owner Trustee's Fees and Expenses..........................................................28
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Section 8.2. Indemnification............................................................................29
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Section 8.3. Payments to the Owner Trustee..............................................................30
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ARTICLE IX TERMINATION OF TRUST AGREEMENT........................................................................30
Section 9.1. Termination of Trust Agreement.............................................................30
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ARTICLE X SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES.................................................31
Section 10.1. Eligibility Requirements for Owner Trustee................................................31
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Section 10.2. Resignation or Removal of Owner Trustee...................................................31
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Section 10.3. Successor Owner Trustee...................................................................32
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Section 10.4. Merger or Consolidation of Owner Trustee..................................................32
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Section 10.5. Appointment of Co-Trustee or Separate Trustee.............................................33
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ARTICLE XI CONTRIBUTION OF HOME LOANS............................................................................34
Section 11.1. Agreement to Contribute and Convey........................................................34
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Section 11.2. Conveyance of Home Loans..................................................................34
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Section 11.3. Assignment of Related Rights and Remedies.................................................35
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Section 11.4. Closing...................................................................................36
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Section 11.5. Servicing.................................................................................36
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Section 11.6. Grant of a Security Interest..............................................................36
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ARTICLE XII MISCELLANEOUS........................................................................................37
Section 12.1. Supplements and Amendments................................................................37
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Section 12.2. No Legal Title to Owner Trust Estate in Holders...........................................38
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Section 12.3. Limitations on Rights of Others...........................................................39
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Section 12.4. Notices...................................................................................39
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Section 12.5. Severability..............................................................................40
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Section 12.6. Separate Counterparts.....................................................................40
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Section 12.7. Successors and Assigns....................................................................40
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Section 12.8. No Petition...............................................................................40
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Section 12.9. No Recourse...............................................................................40
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Section 12.10. Headings.................................................................................40
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Section 12.11. GOVERNING LAW............................................................................41
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Section 12.12. Grant of Certificateholder Rights to Note Insurer........................................41
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Section 12.13. Third Party Beneficiary..................................................................41
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Section 12.14. Suspension and Termination of Note Insurer's Rights......................................42
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Exhibit A Form of Certificate
Exhibit B Form of Certificate of Trust
Exhibit C Form of Transferee Certificate
Exhibit D Fees and Expenses of the Owner Trustee
Exhibit E Home Loan Schedule
Exhibit F Form of Cross-Receipt
DEPOSIT TRUST AGREEMENT
This DEPOSIT TRUST AGREEMENT, dated as of November 1, 1998, among
FINANCIAL ASSET SECURITIES CORP., a Delaware corporation, as Depositor (the
"Depositor"), WILMINGTON TRUST COMPANY, a Delaware banking corporation, as Owner
Trustee (the "Owner Trustee"), NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, a
national banking association, as Trust Paying Agent (in such capacity, the
"Trust Paying Agent"), and CITY NATIONAL BANK OF WEST VIRGINIA, as Servicer (the
"Servicer"), is entered into for the limited purposes set forth herein.
ARTICLE I
DEFINITIONS
SECTION 1.1. CAPITALIZED TERMS.
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For all purposes of this Agreement, the following terms shall have the
meanings set forth below:
"ACCOUNTS" shall mean, collectively, the Collection Account and the
Note 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 Home Loan Sale Agreement, the Insurance Agreement, the Custodial Agreement,
and the Indenture.
"BUSINESS DAY" shall mean any day other than (i) a Saturday or Sunday
or (ii) a day that is either a legal holiday or a day on which banking
institutions in the State of New York, the State of West Virginia, the State of
Delaware, the State of Maryland, the State of Minnesota, 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 Section 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).
"CERTIFICATE" shall mean a certificate evidencing the beneficial
interest of a Certificateholder in the Trust, substantially in the form attached
hereto as Exhibit A.
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"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
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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.
"CLOSING DATE" shall mean November 30, 1998.
"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.
"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 Depositor, or the principal
corporate trust office of any successor Owner Trustee (the address (which shall
be in the State of Delaware) of which the successor owner trustee will notify
the Certificateholder and the Depositor).
"CUSTODIAL AGREEMENT" shall mean the Custodial Agreement, dated as of
November 1, 1998, between the Indenture Trustee and the Custodian.
"CUSTODIAN" shall mean Norwest Bank Minnesota, National Association.
"DEPOSITOR" shall mean Financial Asset Securities Corp., a Delaware
corporation.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"EXPENSES" shall have the meaning assigned to such term in Section 8.2.
"HOLDER NONRECOURSE DEBT MINIMUM GAIN" shall have the meaning set forth
for "partner nonrecourse debt minimum gain" in Treasury Regulations Section
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).
"HOME LOAN SALE AGREEMENT" shall mean that certain Home Loan Sale
Agreement, dated as of November 1, 1998, among City National Bank of West
Virginia, as Seller, City Capital Markets Corporation, as Transferor, and the
Depositor.
"INDENTURE" shall mean the Indenture, dated as of November 1, 1998, by
and among the Issuer, and Norwest Bank Minnesota, National Association, as
Indenture Trustee, Note Administrator and Custodian.
"INDENTURE TRUSTEE" means Norwest Bank Minnesota, National Association,
as Indenture Trustee under the Indenture.
"INSURANCE AGREEMENT" means the Insurance Agreement, dated as of
November 1, 1998, among MBIA Insurance Corporation, as Insurer, the Issuer, City
National Bank of West Virginia, as Seller and Servicer, City Capital Markets
Corporation, as Transferor, the Depositor, Greenwich Capital Financial Products,
Inc., and Norwest Bank Minnesota, National Association, as Master Servicer and
Indenture Trustee.
"INSURANCE POLICY" shall mean the financial guaranty insurance policy
issued by the Note Insurer for the benefit of the holders of the Notes.
"ISSUER" shall mean City Capital Home Loan Trust 1998-4, the Delaware
business trust created pursuant to this Agreement.
"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 (treated as a corporation or
partnership for federal income tax purposes) created or organized in or under
the laws of the United States, any state thereof, or the District of Columbia,
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 persons have the authority to control all substantial decisions of
the trust.
"NOTE ACCOUNT" shall have the meaning assigned thereto in the
Indenture.
"NOTE INSURER" shall mean MBIA Insurance Corporation, a New York stock
insurance company.
"NOTE INSURER DEFAULT" shall have the meaning assigned to such term in
the Indenture.
"NOTES" shall mean the Issuer's Asset-Backed Notes, Series 1998-4.
"OWNER TRUST ESTATE" shall mean the contribution of $1 referred to in
Section 2.5 hereof plus any additional contributions made pursuant to Article
XI.
"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 December 28, 1998.
"PERCENTAGE INTEREST" shall mean with respect to any Certificate the
percentage portion of all of the Trust Interest evidenced thereby as stated on
the face of such Certificate.
"PERMITTED INVESTMENTS" shall have the meaning assigned to such term in
the Indenture.
"PROSPECTIVE HOLDER" shall have the meaning set forth in Section
3.10(a).
"RATING AGENCY CONDITION" means, with respect to any action to which a
Rating Agency Condition applies, that each Rating Agency shall have been given
10 days (or such shorter period as is acceptable to each Rating Agency) prior
notice thereof and that each of the Rating Agencies shall have notified the
Depositor, the Servicer, the Note Insurer, the Owner Trustee, and the Issuer in
writing that such action will not result in a reduction or withdrawal of the
then current "implied" rating of the Notes that it maintains without taking into
account the Note Insurance.
"RECORD DATE" shall mean as to each Payment Date the last Business Day
of the month immediately preceding the month in which such Payment Date occurs.
"SERVICING AGREEMENT" shall mean the Servicing Agreement dated as of
November 1, 1998, among the Trust, as Issuer, City National Bank of West
Virginia, as Servicer, and Norwest Bank Minnesota, National Association, as
Indenture Trustee and Master 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).
"TRANSFEROR" shall mean City Capital Markets Corporation, a Delaware
corporation.
"TREASURY REGULATIONS" shall mean regulations, including proposed or
temporary regulations, promulgated under the Code. References herein to specific
provisions of proposed or temporary regulations shall include analogous
provisions of final Treasury Regulations or other successor Treasury
Regulations.
"TRUST" shall mean the trust established by this Agreement.
"TRUST INTEREST" shall mean the right to receive, on each Payment Date,
distributions of the amounts, if any, released to the Issuer pursuant to Section
8.02(d) of the Indenture or pursuant to Section 2.05 of the Servicing Agreement.
"TRUST MINIMUM GAIN" shall have the meaning set forth for "partnership
minimum gain" in Treasury Regulations 1.704-2(b)(2) and 1.704-2(d). In
accordance with Treasury Regulations Section 1.704-2(d), the amount of Trust
Minimum Gain is determined by first computing, for each nonrecourse liability of
the Trust, any gain the Trust would realize if it disposed of the property
subject to that liability for no consideration other than full satisfaction of
the liability, and then aggregating the separately computed gains. A Holder's
share of Trust Minimum Gain shall be determined in accordance with Treasury
Regulations Section 1.704-2(g)(1).
"TRUST PAYING AGENT" shall mean any paying agent or co-paying agent
appointed pursuant to Section 3.9 and authorized by the Owner Trustee to make
payments to and distributions from the Certificate Distribution Account.
SECTION 1.2. OTHER DEFINITIONAL PROVISIONS.
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(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.
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The Trust created hereby shall be known as "City Capital Home Loan
Trust 1998-4," 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.
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The office of the Trust shall be in care of the Owner Trustee at the
Corporate Trust Office or at such other address in Delaware as the Owner Trustee
may designate by written notice to the Certificateholders, the Note Insurer and
the Depositor.
SECTION 2.3. PURPOSES AND POWERS.
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The purpose of the Trust is to engage in the following activities:
(i) to issue the Notes pursuant to the Indenture and to sell such
Notes;
(ii) with the proceeds of the sale of the Notes, to pay the
organizational, start-up, and transactional expenses of the Trust and
to pay the balance to the Depositor pursuant to Article XI;
(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 Noteholders; and
(vii) to issue the Certificates pursuant to this Agreement.
The Trust is hereby authorized by the initial Certificateholders to engage in
the foregoing activities. The Trust shall not engage in any activity other than
in connection with the foregoing or other than as required or authorized by the
terms of this Agreement or the Basic Documents.
SECTION 2.4. APPOINTMENT OF OWNER TRUSTEE.
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The Depositor hereby appoints the Owner Trustee as trustee of the Trust
effective as of the date hereof, to have all the rights, powers, and duties set
forth herein.
SECTION 2.5. INITIAL CAPITAL CONTRIBUTION OF OWNER TRUST ESTATE.
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The Depositor hereby sells, assigns, transfers, conveys, and sets over
to the Owner Trustee, as of the date hereof, the sum of $1. The Owner Trustee
hereby acknowledges receipt in trust from the Depositor, as of the date hereof,
of the foregoing contribution, which shall constitute the initial Owner Trust
Estate and shall be deposited in the Certificate Distribution Account. The
Certificateholders shall pay organizational expenses of the Trust as they may
arise or shall, upon the request of the Owner Trustee, promptly reimburse the
Owner Trustee for any such expenses paid by the Owner Trustee.
SECTION 2.6. DECLARATION OF TRUST.
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The Owner Trustee hereby declares that it will hold the Owner Trust
Estate in trust upon and subject to the conditions set forth herein for the use
and benefit of the Holders, subject to the obligations of the Trust under the
Basic Documents. It is the intention of the parties hereto that the Trust
constitute a business trust under the Business Trust Statute and that this
Agreement constitute the governing instrument of such business trust. It is the
intention of the parties hereto that, solely for income and franchise tax
purposes, after issuance of the Certificates, the Trust shall be treated as a
partnership, with the assets of the partnership being the Home Loans and other
assets held by the Trust, the partners of the partnership being the holders of
the Certificates and the Notes being non-recourse debt of the partnership (or,
if there is only one Certificateholder, that the Trust shall be disregarded as
an entity separate from such Holder, with the assets held by the Trust being
treated as assets of the Holder and the Notes being treated as non-recourse debt
of the Holder). The parties agree that, unless otherwise required by appropriate
tax authorities or unless the Trust is disregarded as an entity separate from
its sole Certificateholder for income and franchise tax purposes, the Owner
Trustee will file or cause to be filed annual or other necessary returns,
reports, and other forms consistent with the characterization of the Trust as a
partnership for such tax purposes pursuant to Section 2.11(k). The parties agree
that no 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.
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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.
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(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.
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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 States of Delaware, Minnesota, Maryland, California,
West Virginia, or New York. 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, Maryland, California, or West
Virginia, and payments will be made by the Trust only from Delaware, New York,
Minnesota, Maryland, California, or West Virginia. The only office of the Trust
will be at the Corporate Trust Office in Delaware.
SECTION 2.10. REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR; COVENANT
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OF THE DEPOSITOR.
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(a) The Depositor hereby represents and warrants to the Owner Trustee
and the Note Insurer that:
(i) The Depositor is duly organized and validly existing as a
corporation in good standing under the laws of the State of Delaware,
with power and authority to own its properties and to conduct its
business as such properties are currently owned and such business is
presently conducted.
(ii) The Depositor has the power and authority to execute and
deliver this Agreement and to carry out its terms; the Depositor has
full power and authority to transfer and assign the property to be
transferred and assigned to and deposited with the Trust and the
Depositor has duly authorized such transfer and assignment and deposit
to the Trust by all necessary corporate action; and the execution,
delivery and performance of this Agreement has been duly authorized by
the Depositor by all necessary corporate action.
(iii) The consummation of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof do not conflict
with, result in any breach of any of the terms and provisions of, or
constitute (with or without notice or lapse of time) a default under,
the certificate of incorporation or by-laws of the Depositor, or any
indenture, agreement, or other instrument to which the Depositor is a
party or by which it is bound; nor result in the creation or
imposition of any lien upon any of its properties pursuant to the
terms of any such indenture, agreement, or other instrument (other
than pursuant to the Basic Documents); nor violate any law or, to the
best of the Depositor's knowledge, any order, rule, or regulation
applicable to the Depositor of any court or of any Federal or state
regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over the Depositor or its
properties.
(iv) There are no actions, suits, proceedings, or investigations
pending or notice of which has been received in writing before any
court, regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over the Depositor or its
properties: (x) asserting the invalidity of this Agreement, (y)
seeking to prevent the consummation of any of the transactions
contemplated by this Agreement, or (z) seeking any determination or
ruling that should reasonably be expected to materially and adversely
affect the performance by the Depositor of its obligations under, or
the validity or enforceability of, this Agreement or have a material
adverse effect on the financial condition of the Depositor.
(v) The Depositor is not in violation of, and its execution and
delivery of this Agreement and its performance and compliance with the
terms of this Agreement will not constitute a violation of, any law,
any order, or decree of any court or arbiter, or any order,
regulation, or demand of any federal, state, or local governmental or
regulatory authority, which violation is likely to affect materially
and adversely either the ability of the Depositor to perform its
obligations under this Agreement or the financial condition of the
Depositor.
(vi) The Depositor has no knowledge of any recent adverse
financial condition or event with respect to itself that is likely to
materially and adversely affect its ability to perform its obligations
under this Agreement.
(vii) The Depositor has not failed to obtain any consent,
approval, authorization, or order of, and has not failed to cause any
registration or qualification with, any court or regulatory authority
or other governmental body having jurisdiction over the Depositor,
which consent, approval, authorization, order, registration, or
qualification is required for, and the absence of which would
materially and adversely affect, the legal and valid execution,
delivery, and performance of this Agreement by the Depositor. No
consent or approval of any other person or entity is necessary for the
Depositor to perform its obligations hereunder or, if any such consent
or approval is necessary, such consent or approval has previously been
obtained.
(viii) Assuming the accuracy of the representations and
warranties of the Seller and City Capital in Sections 4(a)(7) and
5(a)(vii), respectively, of the Home Loan Sale Agreement, immediately
prior to the transfer and assignment herein contemplated, either (x)
the Depositor held good title to, and was the sole owner of, each Home
Loan or (y) the Depositor had a valid security interest in each Home
Loan, in each case free and clear of any liens, pledges, encumbrances
or other security interests and immediately upon the transfer and
assignment of the Home Loans herein contemplated, the Trust will
acquire from the Depositor all of the Depositor's interest in the Home
Loans free and clear of any lien, pledge, encumbrance or other
security interest of any kind.
(b) The representations and warranties of City National Bank of West
Virginia with respect to the Home Loans set forth in Section 4 to the Home Loan
Sale Agreement are hereby incorporated by reference in their entirety and are
assigned to the Trust in lieu of any other representations and warranties of the
Depositor in respect of the Home Loans. Nothing herein shall be deemed to limit
in any respect either the representations and warranties of City National Bank
of West Virginia or the rights and remedies assigned by the Depositor to the
Trust against City National Bank of West Virginia on account of a breach thereof
under the Home Loan Sale Agreement.
(c) Except for the representations and warranties of the Depositor in
Section 2.10(a) hereof, the Depositor is transferring, selling and conveying the
Home Loans, without recourse to the Depositor and without representations or
warranties of any kind, express, or implied, by the Depositor, whether statutory
or otherwise, including, without limitation, any warranties of transfer,
merchantability, or fitness for a particular, or the Trust's intended, use, or
purposes.
(d) Each Certificateholder covenants with the Owner Trustee and the
Note Insurer that during the continuance of this Agreement, and while it holds
Certificates, it will comply in all respects with the provisions of its
certificate of incorporation in effect from time to time.
SECTION 2.11. FEDERAL INCOME TAX PROVISIONS.
-----------------------------
If the Trust is treated as a partnership (rather than disregarded as a
separate entity) for federal income tax purposes pursuant to Section 2.6, the
following provisions shall apply:
(a) A separate capital account (a "Capital Account") shall be
established and maintained for each Certificateholder in accordance with
Treasury Regulations 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 1.704-1(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 Percentage Interest
and the transferee is admitted as provided herein (a "Transferee Holder"), the
distributive shares of the various items of profit and loss allocable among the
Holders during such Taxable Year shall be allocated between the transferor and
the Transferee Holder (at the election of the Holders (including the transferor,
but excluding the Transferee Holder)) either (i) as if the Taxable Year had
ended on the date of the transfer or (ii) based on the number of days of such
Taxable Year that each was a Holder without regard to the results of Trust
activities in the respective portions of such Taxable Year in which the
transferor and Transferee Holder were Holders.
(i) "Profit" and "loss" and any items of income, gain, expense or loss
referred to in this Section 2.11 shall be determined in accordance with federal
income tax accounting principles as modified by Treasury Regulations Section
1.704-1(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 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 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 Depositor
pursuant to Section 2.5 and until the issuance of the Certificates, the
Depositor shall be the sole beneficiary of the Trust.
SECTION 3.2. THE CERTIFICATES.
----------------
The Certificates shall be issued without a principal amount and shall
evidence beneficial ownership interests in the Trust. The Certificates shall be
printed, lithographed, or engraved or may be produced in any other manner as is
reasonably acceptable to the Owner Trustee, as evidenced by its execution
thereof. The Certificates shall be executed on behalf of the Trust by manual or
facsimile signature of a Trust 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 Home Loans to the Trust
pursuant to Article XI hereof, the Owner Trustee shall cause the Certificates,
representing 100% of the Percentage Interests of the Trust Interest, to be
executed on behalf of the Trust, authenticated and delivered to the Transferor,
as designee of the Depositor. No Certificate shall entitle its holder to any
benefit under this Agreement, or shall be valid for any purpose, unless there
shall appear on such Certificate a certificate of authentication substantially
in the form set forth in Exhibit A, executed by the Owner Trustee or the Owner
Trustee's authenticating agent, by manual or facsimile signature; such
authentication shall constitute conclusive evidence that such Certificate shall
have been duly authenticated and delivered hereunder. All Certificates shall be
dated the date of their authentication.
SECTION 3.4. REGISTRATION OF TRANSFER AND EXCHANGE OF TRUST
---------------------------------------------------------
CERTIFICATES.
------------
The Certificate Registrar shall keep or cause to be kept, at the office
or agency maintained pursuant to Section 3.8, a Certificate Register in which,
subject to such reasonable regulations as it may prescribe, the Owner Trustee
shall provide for the registration of Certificates and of transfers and
exchanges of Certificates as herein provided. The Owner Trustee shall be the
initial Certificate Registrar.
Upon surrender for registration of transfer of any Certificate at the
office or agency maintained pursuant to Section 3.8, the Owner Trustee shall
execute, authenticate and deliver (or shall cause its authenticating agent to
authenticate and deliver), in the name of the designated transferee or
transferees, one or more new Certificates of a like Percentage Interest dated
the date of authentication by the Owner Trustee or any authenticating agent. At
the option of a Certificateholder, Certificates may be exchanged for other
Certificates of a like Percentage Interest upon surrender of the Certificates to
be exchanged at the office or agency maintained pursuant to Section 3.8.
Every Certificate presented or surrendered for registration of transfer
or exchange shall be accompanied by a written instrument of transfer in form
satisfactory to the Owner Trustee and the Certificate Registrar duly executed by
the Certificateholder or his attorney duly authorized in writing. In addition,
each Certificate presented or surrendered for registration of transfer and
exchange must be accompanied by a letter from the Prospective Holder certifying
as to the representations set forth in Section 3.10(a), (b), and (c). Each
Certificate surrendered for registration of transfer or exchange shall be
canceled and disposed of by the Owner Trustee in accordance with its customary
practice.
No service charge shall be made for any registration of transfer or
exchange of 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, and provided that the requirements of Section 8-405 of
the relevant Uniform Commercial Code have been met, 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 Depositor and the Trust Paying Agent no later than ten days prior
to each Payment Date, a list of the names and addresses of the
Certificateholders as of the most recent Record Date. If three or more
Certificateholders or one or more Holders of Certificates, together evidencing
Percentage Interests totaling not less than 25%, apply in writing to the Owner
Trustee, and such application states that the applicants desire to communicate
with other Certificateholders with respect to their rights under this Agreement
or under the Certificates and such application is accompanied by a copy of the
communication that such applicants propose to transmit, then the Owner Trustee
shall, within five Business Days after the receipt of such application, afford
such applicants access during normal business hours to the current list of
Certificateholders. Each Certificateholder, by receiving and holding a
Certificate, shall be deemed to have agreed not to hold any of the Depositor,
the Certificate Registrar, or the Owner Trustee accountable by reason of the
disclosure of its name and address, regardless of the source from which such
information was derived.
SECTION 3.8. MAINTENANCE OF OFFICE OR AGENCY.
-------------------------------
The Owner Trustee shall maintain an office or offices or agency or
agencies where Certificates may be surrendered for registration of transfer or
exchange and where notices and demands to or upon the Owner Trustee in respect
of the Certificates and the Basic Documents may be served. The Owner Trustee
initially designates Wilmington Trust Company as its principal corporate trust
office for such purposes. The Owner Trustee shall give prompt written notice to
the Depositor and to the Certificateholders of any change in the location of the
Certificate Register or any such office or agency.
SECTION 3.9. APPOINTMENT OF TRUST PAYING AGENT.
---------------------------------
The Owner Trustee hereby appoints Norwest Bank Minnesota, National
Association, as Trust Paying Agent under this Agreement. The Trust Paying Agent
shall make distributions to Certificateholders from the Certificate Distribution
Account pursuant to Section 5.2 and shall report to the Owner Trustee on the
Payment Date via facsimile transmission of a distribution statement the amounts
of such distributions to the Certificateholders. The Trust Paying Agent shall
have the revocable power to withdraw funds from the Certificate Distribution
Account for the purpose of making the distributions referred to above. In the
event that Norwest Bank Minnesota, National Association, shall no longer be the
Trust Paying Agent hereunder, the Owner Trustee shall appoint a successor to act
as Trust Paying Agent (which shall be a bank or trust company) acceptable to the
Certificateholders and the Note Insurer. The Owner Trustee shall cause such
successor Trust Paying Agent or any additional Trust Paying Agent appointed by
the Owner Trustee to execute and deliver to the Owner Trustee an instrument in
which such successor Trust Paying Agent or additional Trust Paying Agent shall
agree with the Owner Trustee that as Trust Paying Agent, such successor Trust
Paying Agent or additional Trust Paying Agent will hold all sums, if any, held
by it for payment to the Certificateholders in trust for the benefit of the
Certificateholders entitled thereto until such sums shall be paid to such
Certificateholders. 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 Depositor and any
affiliate, shall represent and warrant, in writing, to the Owner Trustee and the
Certificate Registrar and any of their respective successors that:
(i) Such Person is (A) a "qualified institutional buyer" as
defined in Rule 144A under the Securities Act of 1933, as amended (the
"Securities Act"), and is aware that the seller of the Certificate may
be relying on the exemption from the registration requirements of the
Securities Act provided by Rule 144A and is acquiring such Certificate
for its own account or for the account of one or more qualified
institutional buyers for whom it is authorized to act, or (B) a Person
involved in the organization or operation of the Trust or an affiliate
of such Person within the meaning of Rule 3a-7 of the Investment
Company Act of 1940, as amended (including, but not limited to, the
Depositor and any affiliate).
(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, CITY CAPITAL MARKETS CORPORATION)
IN A TRANSACTION THAT IS REGISTERED UNDER THE ACT AND
APPLICABLE STATE SECURITIES LAWS OR THAT IS EXEMPT FROM
THE REGISTRATION REQUIREMENTS OF THE ACT AND SUCH LAWS.
NO PERSON IS OBLIGATED TO REGISTER THIS CERTIFICATE
UNDER THE ACT OR ANY STATE SECURITIES LAWS."
(b) By its acceptance of a Certificate, each Prospective Holder agrees
and acknowledges that no legal or beneficial interest in all or any portion of
any Certificate may be transferred directly or indirectly to an entity that
holds certificates of beneficial interest 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 paragraphs (b) through (d) above.
(f) Notwithstanding any of the foregoing, the Certificates shall not be
transferable without the prior written consent of the Note Insurer.
(g) Notwithstanding any of the foregoing, the Owner Trustee shall
assure that (i) the Certificates are transferable only in Percentage Interests
of 10% or more, (ii) no transfer of a Certificate shall be effected if, as a
result of such transfer, the Certificates would be deemed to be held by more
than 100 holders or beneficial owners within the meaning of Treasury Regulation
Section 1.7704-1(h)(1)(ii), (iii) the Certificates will not be listed or traded
on any established securities exchange market within the meaning of Treasury
Regulation Section 1.7704-1, and (iv) the Certificates are not held by any
Non-U.S. Persons.
ARTICLE IV
ACTIONS BY OWNER TRUSTEE
SECTION 4.1. PRIOR NOTICE TO HOLDERS WITH RESPECT TO CERTAIN
---------------------------------------------------------
MATTERS.
-------
With respect to the following matters, the Owner Trustee shall not take
action, and the Certificateholders shall not direct the Owner Trustee to take
any action, unless at least 30 days before the taking of such action, the Owner
Trustee shall have notified the Certificateholders and the Note Insurer in
writing of the proposed action and neither the Certificateholders nor the Note
Insurer shall have notified the Owner Trustee in writing prior to the 30th day
after such notice is given that such Certificateholders and/or the Note Insurer
have withheld consent or the Certificateholders have provided alternative
direction (any direction by the Certificateholders shall require the prior
consent of the Note Insurer):
(a) the initiation of any claim or lawsuit by the Trust (except claims
or lawsuits brought in connection with the collection of the Home Loans) and the
compromise of any action, claim or lawsuit brought by or against the Trust
(except with respect to the aforementioned claims or lawsuits for collection of
the Home Loans); (b) the election by the Trust to file an amendment to the
Certificate of Trust (unless such amendment is required to be filed under the
Business Trust Statute);
(c) the amendment or other change to this Agreement or any Basic
Document in circumstances where the consent of any Holder or the Note Insurer is
required;
(d) the amendment or other change to this Agreement or any Basic
Document in circumstances where the consent of any Holder or the Note Insurer is
not required and such amendment materially adversely affects the interest of the
Certificateholders;
(e) the appointment pursuant to the Indenture of a successor Note
Registrar, Trust Paying Agent, or Indenture Trustee or pursuant to this
Agreement of a successor Certificate Registrar or Trust Paying Agent, or the
consent to the assignment by the Note Registrar, Paying Agent, or Indenture
Trustee or Certificate Registrar or Trust Paying Agent of its obligations under
the Indenture or this Agreement, as applicable.
(f) the consent to the calling or waiver of any default of any Basic
Document;
(g) the consent to the assignment by the Indenture Trustee or Servicer
of their respective obligations under any Basic Document;
(h) except as provided in Article IX hereof, dissolve, terminate or
liquidate the Trust in whole or in part;
(i) merge or consolidate the Trust with or into any other entity, or
convey or transfer all or substantially all of the Trust's assets to any other
entity;
(j) cause the Trust to incur, assume or guaranty any indebtedness other
than as set forth in this Agreement or the Basic Documents;
(k) do any act that conflicts with any other Basic Document;
(l) do any act which would make it impossible to carry on the ordinary
business of the Trust as described in Section 2.3 hereof;
(m) confess a judgment against the Trust;
(n) possess Trust assets, or assign the Trust's right to property, for
other than a Trust purpose;
(o) cause the Trust to lend any funds to any entity; or
(p) change the Trust's purpose and powers from those set forth in this
Trust Agreement.
In addition the Trust shall not commingle its assets with those of any
other entity. The Trust shall maintain its financial and accounting books and
records separate from those of any other entity. Except as expressly set forth
herein, the Trust shall pay its indebtedness, operating expenses, and
liabilities from its own funds, and the Trust shall not pay the indebtedness,
operating expenses, and liabilities of any other entity. The Trust shall
maintain appropriate minutes or other records of all appropriate actions and
shall maintain its office separate from the offices of the Depositor and City
National Bank of West Virginia.
The Owner Trustee shall not have the power, except upon the direction
of the Certificateholders with the consent of the Note Insurer, and to the
extent otherwise consistent with the Basic Documents, to (i) remove or replace
the Servicer or the Indenture Trustee, (ii) institute proceedings to have the
Trust declared or adjudicated bankrupt or insolvent, (iii) consent to the
institution of bankruptcy or insolvency proceedings against the Trust, (iv) file
a petition or consent to a petition seeking reorganization or relief on behalf
of the Trust under any applicable federal or state law relating to bankruptcy,
(v) consent to the appointment of a receiver, liquidator, assignee, trustee,
sequestrator, or any similar official of the Trust or a substantial portion of
the property of the Trust, (vi) make any assignment for the benefit of the
Trust's creditors, (vii) cause the Trust to admit in writing its inability to
pay its debts generally as they become due, and (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 Note Insurer Default exists, no
Certificateholder shall have the power to take, and shall not take, any
Bankruptcy Action with respect to the Trust or direct the Owner Trustee to take
any Bankruptcy Action with respect to the Trust.
SECTION 4.2. ACTION BY HOLDERS WITH RESPECT TO BANKRUPTCY.
--------------------------------------------
The Owner Trustee shall not have the power to commence a voluntary
proceeding in bankruptcy relating to the Trust without the consent and approval
of the Note Insurer, the unanimous prior approval of all Certificateholders and
the Note Insurer and the delivery to the Owner Trustee by each such
Certificateholder of a certification that such Certificateholder reasonably
believes that the Trust is insolvent.
SECTION 4.3. RESTRICTIONS ON HOLDERS' POWER.
------------------------------
The Certificateholders shall not direct the Owner Trustee to take or
refrain from taking any action if such action or inaction would be contrary to
any obligation of the Trust or the Owner Trustee under this Agreement or any of
the Basic Documents or would be contrary to Section 2.3 nor shall the Owner
Trustee be obligated to follow any such direction, if given.
SECTION 4.4. MAJORITY CONTROL.
----------------
Except as expressly provided herein, any action that may be taken by
the Certificateholders under this Agreement may be taken by the Holders of
Certificates evidencing more than 50% of the Percentage Interest in the Trust
Interest and such action shall be binding upon all Certificateholders. Except as
expressly provided herein, any written notice of the Certificateholders
delivered pursuant to this Agreement shall be effective if signed by Holders of
Certificates evidencing more than 50% of the Percentage Interest in the Trust
Interest at the time of the delivery of such notice and such action shall be
binding upon all Certificateholders.
ARTICLE V
APPLICATION OF TRUST FUNDS; CERTAIN DUTIES
SECTION 5.1. ESTABLISHMENT OF CERTIFICATE DISTRIBUTION ACCOUNT.
-------------------------------------------------
The Owner Trustee shall cause the Trust Paying Agent, for the benefit
of the Certificateholders, to establish and maintain with Norwest Bank
Minnesota, National Association, for the benefit of the Owner Trustee one or
more Accounts that while the Trust Paying Agent holds such Account shall be
entitled "Certificate Distribution Account, Norwest Bank Minnesota, National
Association, as Trust Paying Agent, in trust for the Holders of Certificates
evidencing beneficial interests in City Capital Home Loan Trust 1998-4." Funds
shall be deposited in the Certificate Distribution Account as required by the
Indenture or, following satisfaction and release of the Indenture, by the
Servicing Agreement.
All of the right, title, and interest of the Owner Trustee in all funds
on deposit from time to time in the Certificate Distribution Account and in all
proceeds thereof shall be held for the benefit of the Certificateholders, the
Note Insurer, and such other persons entitled to distributions therefrom. Except
as otherwise expressly provided herein, the Certificate Distribution Account
shall be under the sole dominion and control of the Owner Trustee for the
benefit of the Certificateholders and the Note Insurer.
SECTION 5.2. APPLICATION OF TRUST FUNDS.
--------------------------
(a) On each Payment Date, the Trust Paying Agent shall distribute to
the Certificateholders, on the basis of their respective Percentage Interests,
all amounts then on deposit in the Certificate Distribution Account.
(b) On each Payment Date, the Trust Paying Agent shall send to
Certificateholders the statement provided to the Owner Trustee by the Indenture
Trustee pursuant to Section 2.08(d) of the Indenture with respect to such
Payment Date. If the Trust Paying Agent is an entity other than the Indenture
Trustee, the Owner Trustee shall provide a copy of such statement to the Trust
Paying Agent to enable it to perform its duties under this Section 5.2(b).
(c) In the event that any withholding tax is imposed under federal,
state, or local law on the Trust's payment (or allocations of income) to a
Certificateholder, such tax shall reduce the amount otherwise distributable to
such Certificateholder in accordance with this Section. The Owner Trustee, and
the Trust Paying Agent on its behalf, is hereby authorized and directed to
retain in the Certificate Distribution Account from amounts otherwise
distributable to the Certificateholders sufficient funds for the payment of any
tax that is legally owed by the Trust (but such authorization shall not prevent
the Owner Trustee from contesting any such tax in appropriate proceedings, and
withholding payment of such tax, if permitted by law, pending the outcome of
such proceedings). The Certificate Registrar will provide the Trust Paying Agent
with a statement indicating the amount of any such withholding tax. The amount
of any withholding tax imposed with respect to a Certificateholder shall be
treated as cash distributed to such Certificateholder at the time it is withheld
by the Trust and remitted to the appropriate taxing authority from the
Certificate Distribution Account at the direction of the Owner Trustee or the
Trust Paying Agent on its behalf. If there is a possibility that withholding tax
is payable with respect to a distribution (such as a distribution to a
Certificateholder who is a Non-U.S. Person), the Trust Paying Agent may in its
sole discretion withhold such amounts in accordance with this paragraph (c). In
the event that a Certificateholder wishes to apply for a refund of any such
withholding tax, the Owner Trustee and the Trust Paying Agent shall reasonably
cooperate with such Certificateholder in making such claim so long as such
Certificateholder agrees to reimburse the Owner Trustee for any out-of-pocket
expenses incurred.
(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 Trust Paying Agent shall be entitled to receive, from the cash flow on the
Home Loans and prior to any payment to the Certificateholders on each Payment
Date, a reasonable fee on each Payment Date not to exceed the Indenture Trustee
Fee that would have been payable to the Indenture Trustee on such Payment Date
if the Indenture was still in effect.
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 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 Notes, the Certificates, and the Basic
Documents to which the Trust is to be a party and each certificate or other
document attached as an exhibit to or contemplated by the Basic Documents to
which the Trust is to be a party and any amendment or other agreement or
instrument described in Article III, in each case, in such form as the Owner
Trustee shall approve, as evidenced conclusively by the Owner Trustee's
execution thereof. In addition, the Owner Trustee is authorized and directed, on
behalf of the Trust, to execute and deliver to the Authenticating Agent, the
Issuer Request and the Issuer Order referred to in Section 2.11 of the
Indenture, in such form as the Depositor shall approve, as evidenced
conclusively by the Owner Trustee's or the Depositor's execution thereof,
directly to the Authenticating Agent to authenticate and deliver Notes in the
aggregate principal amount of $168,173,000. 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 Notes, the Home
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 Note redemptions requested
by the Certificateholders, and shall take all actions and deliver all documents
that the Trust is required to take and deliver in accordance with Section 4.01
and Article X of the Indenture in order to effect any redemption requested by
the Certificateholders.
(b) The Owner Trustee shall not be required to take any action
hereunder or under any Basic Document if the Owner Trustee shall have reasonably
determined, or shall have been advised by counsel, that such action is likely to
result in liability on the part of the Owner Trustee or is contrary to the terms
hereof or of any Basic Document or is otherwise contrary to law.
(c) Whenever the Owner Trustee is unable to decide between alternative
courses of action permitted or required by the terms of this Agreement or under
any Basic Document, the Owner Trustee shall promptly give notice (in such form
as shall be appropriate under the circumstances) to the Certificateholders and
the Note Insurer requesting instruction from the Certificateholders as to the
course of action to be adopted, and to the extent the Owner Trustee acts in good
faith in accordance with any written instruction of the Certificateholders
received, the Owner Trustee shall not be liable on Account of such action to any
Person. If the Owner Trustee shall not have received appropriate instruction
within 10 days of such notice (or within such shorter period of time as
reasonably may be specified in such notice or may be necessary under the
circumstances) it may, but shall be under no duty to, take or refrain from
taking such action, not inconsistent with this Agreement or the Basic Documents,
as it shall deem to be in the best interests of the Certificateholders, and
shall have no liability to any Person for such action or inaction.
(d) In the event that the Owner Trustee is unsure as to the application
of any provision of this Agreement or any Basic Document or any such provision
is ambiguous as to its application, or is, or appears to be, in conflict with
any other applicable provision, or in the event that this Agreement permits any
determination by the Owner Trustee or is silent or is incomplete as to the
course of action that the Owner Trustee is required to take with respect to a
particular set of facts, the Owner Trustee may give notice (in such form as
shall be appropriate under the circumstances) to the Certificateholders
requesting instruction and, to the extent that the Owner Trustee acts or
refrains from acting in good faith in accordance with any such instruction
received, the 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 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.
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. There shall be no implied duties of
the Owner Trustee under this Agreement or under 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 Notes;
(e) the Owner Trustee shall not be responsible for or in respect of the
validity or sufficiency of this Agreement or for the due execution hereof by the
Depositor or for the form, character, genuineness, sufficiency, value, or
validity of any of the Owner Trust Estate or for or in respect of the validity
or sufficiency of the Basic Documents, other than the certificate of
authentication on the Certificates, and the Owner Trustee shall in no event
assume or incur any liability, duty, or obligation to any Noteholder or to any
Certificateholder, other than as expressly provided for herein and in the Basic
Documents;
(f) the Owner Trustee shall not be liable for the default or misconduct
of the Seller, the Depositor, the Indenture Trustee, the Master Servicer 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 and the Master
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 Depositor shall furnish to Noteholders promptly upon
written request therefor, copies of the Servicing Agreement and the Indenture.
SECTION 7.3. REPRESENTATIONS AND WARRANTIES.
------------------------------
(a) The Owner Trustee hereby represents and warrants to the Depositor
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.
(b) The Trust Paying Agent hereby represents and warrants to the
Depositor and the Note Insurer for the benefit of the Certificateholders, that:
(i) It is a banking association duly organized and validly
existing in good standing under the laws of the United States of
America. It has all requisite corporate power and authority to
execute, deliver, and perform its obligations under this Agreement.
(ii) It has taken all corporate action necessary to authorize the
execution and delivery by it of this Agreement, and this Agreement
will be executed and delivered by one of its officers who is duly
authorized to execute and deliver this Agreement on its behalf.
(iii) Neither the execution nor the delivery by it of this
Agreement nor the consummation by it of the transactions contemplated
hereby nor compliance by it with any of the terms or provisions hereof
will contravene any Federal law, governmental rule, or regulation
governing the banking or trust powers of the Trust Paying Agent or any
judgment or order binding on it, or constitute any default under its
charter documents or by-laws.
SECTION 7.4. RELIANCE; ADVICE OF COUNSEL.
---------------------------
(a) The Owner Trustee shall incur no liability to anyone in acting upon
any signature, instrument, notice, resolution, request, consent, order,
certificate, report, opinion, 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, including officers' certificates under the
Indenture.
(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 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 HOME LOANS.
-------------------------------------------------------
The recitals contained herein and in the Certificates (other than the
signature and countersignature of the Owner Trustee on the Certificates) shall
be taken as the statements of the Depositor, and the Owner Trustee assumes no
responsibility for the correctness thereof. The Owner Trustee makes no
representations as to the validity or sufficiency of this Agreement, of any
Basic Document, of the Certificates (other than the signature and
countersignature of the Owner Trustee on the Certificates and as specified in
Section 7.3), of the Notes, or of any Home Loans or related documents. The Owner
Trustee shall at no time have any responsibility or liability for or with
respect to the legality, validity, and enforceability of any Home Loan, or the
perfection and priority of any security interest created by any Home Loan or the
maintenance of any such perfection and priority, or for or with respect to the
sufficiency of the Owner Trust Estate or its ability to generate the payments to
be distributed to Certificateholders under this Agreement or the Noteholders
under the Indenture, including, without limitation, the existence, condition and
ownership of any Mortgaged Property, the existence and enforceability of any
insurance thereon, the existence and contents of any Home Loan on any computer
or other record thereof, the validity of the assignment of any Home Loan to the
Trust or of any intervening assignment, the completeness of any Home Loan, the
performance or enforcement of any Home Loan, the compliance by the Depositor 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, the Master Servicer or
the Servicer or any subservicer taken in the name of the Owner Trustee.
SECTION 7.7. OWNER TRUSTEE MAY OWN CERTIFICATES AND NOTES.
--------------------------------------------
The Owner Trustee in its individual or any other capacity may become
the owner or pledgee of Certificates or Notes and may deal with the Depositor,
the Indenture Trustee, the Master Servicer 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 an annual fee as agreed upon before the date hereof between the
Indenture Trustee and the Owner Trustee. The Owner Trustee shall be entitled to
be reimbursed by City National Bank of West Virginia for the Owner Trustee's
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
in the fee agreement attached hereto as Exhibit D.
---------
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 defense thereof, the
Certificateholders shall not be liable to the Indemnified Party under this
Section 8.2 for any legal or other expenses subsequently incurred by such
Indemnified Party in connection with the defense of such action; provided,
however, that this sentence shall not be in effect if (1) the 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.
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 Home Loans and the disposition of all REO
Properties and the remittance of all funds due hereunder with respect to such
Home Loans and REO Properties or the disposition of the Home 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 Depositor
shall not (x) operate to terminate this Agreement or the Trust, (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, or (z) otherwise affect the
rights, obligations, and liabilities of the parties hereto.
(b) Except as provided in Section 9.1(a) above, none of the Depositor,
the Servicer, the Note Insurer or any Certificateholder shall be entitled to
revoke or terminate the Trust.
(c) Notice of any termination of the Trust, specifying the Payment Date
upon which the Certificateholders shall surrender their Certificates to the
Owner Trustee for payment of the final distributions and cancellation, shall be
given by the Owner Trustee to the Certificateholders, the Note Insurer, the
Rating Agencies and the Trust Paying Agent mailed within five Business Days of
receipt by the Owner Trustee of notice of such termination pursuant to Section
9.1(a) above, which notice given by the Owner Trustee shall state (i) the
Payment Date upon or with respect to which final payment of the Certificates
shall be made upon presentation and surrender of the Certificates at the office
of the Owner Trustee therein designated, (ii) the amount of any such final
payment, and (iii) that the Record Date otherwise applicable to such Payment
Date is not applicable, payments being made only upon presentation and surrender
of the Certificates at the office of the Owner Trustee therein specified. The
Owner Trustee shall give such notice to the Certificate Registrar (if other than
the Owner Trustee) and the Trust Paying Agent at the time such notice is given
to Certificateholders. The Owner Trustee shall give notice to the Trust Paying
Agent of each presentation and surrender of Certificates promptly, and the Trust
Paying Agent shall promptly cause to be distributed to the related
Certificateholders amounts distributable on such Payment Date pursuant to
Section 5.2(a).
(d) Upon the winding up of the Trust and its termination, the Owner
Trustee shall cause the Certificate of Trust to be canceled by filing a
certificate of cancellation with the Secretary of State in accordance with the
provisions of Section 3820 of the Business Trust Statute.
ARTICLE X
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
SECTION 10.1. ELIGIBILITY REQUIREMENTS FOR OWNER TRUSTEE.
------------------------------------------
The Owner Trustee shall at all times be a corporation satisfying the
provisions of Section 3807(a) of the Business Trust Statute; authorized to
exercise 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
Note Insurer. If such corporation shall publish reports of condition at least
annually, pursuant to law or to the requirements of the aforesaid supervising or
examining authority, then for the purpose of this Section, the combined capital
and surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In
case at any time the Owner Trustee shall cease to be eligible in accordance with
the provisions of this Section, the Owner Trustee shall resign immediately in
the manner and with the effect specified in Section 10.2.
SECTION 10.2. RESIGNATION OR REMOVAL OF OWNER TRUSTEE.
---------------------------------------
The Owner Trustee may at any time resign and be discharged from the
trusts hereby created by giving written notice thereof to the Servicer, the
Indenture Trustee, and the Note Insurer. Upon receiving such notice of
resignation, the Servicer shall promptly appoint a successor Owner Trustee
(acceptable to the Note Insurer) by written instrument, in duplicate, one copy
of which instrument shall be delivered to the resigning Owner Trustee and one
copy to the successor Owner Trustee. If no successor Owner Trustee shall have
been so appointed and have accepted appointment within 30 days after the giving
of such notice of resignation, the resigning Owner Trustee or the Note Insurer
may petition any court of competent jurisdiction for the appointment of a
successor Owner Trustee.
If at any time the Owner Trustee shall cease to be eligible in
accordance with the provisions of Section 10.1 and shall fail to resign after
written request therefor by the Certificateholders or the Servicer, or if at any
time the Owner Trustee shall be legally unable to act, or shall be adjudged
bankrupt or insolvent, or a receiver of the Owner Trustee or of its property
shall be appointed, or any public officer shall take charge or control of the
Owner Trustee or of its property or affairs for the purpose of rehabilitation,
conservation, or liquidation, then the Note Insurer, or the Certificateholders
or the Servicer with the consent of the Note Insurer, may remove the Owner
Trustee. If the Certificateholders or the Servicer or the Note Insurer shall
remove the Owner Trustee under the authority of the immediately preceding
sentence, the Note Insurer, or the Servicer with the consent of the Note
Insurer, shall promptly appoint a successor Owner Trustee by written instrument
in duplicate, one copy of which instrument shall be delivered to the outgoing
Owner Trustee so removed and one copy to the successor Owner Trustee and payment
of all fees owed to the outgoing Owner Trustee.
Any resignation or removal of the Owner Trustee and appointment of a
successor Owner Trustee pursuant to any of the provisions of this Section shall
not become effective until acceptance of appointment by the successor Owner
Trustee pursuant to Section 10.3 receipt of written approval by the Note Insurer
and payment of all fees and expenses owed to the outgoing Owner Trustee. The
Servicer shall provide notice of such resignation or removal of the Owner
Trustee to each of the Rating Agencies, the Indenture Trustee, the Trust Paying
Agent and the Note Insurer.
SECTION 10.3. SUCCESSOR OWNER TRUSTEE.
-----------------------
Any successor Owner Trustee appointed pursuant to Section 10.2 shall
execute, acknowledge, and deliver to the Servicer, the Depositor, the Indenture
Trustee, the Note Insurer, and to its predecessor Owner Trustee an instrument
accepting such appointment under this Agreement, and thereupon the resignation
or removal of the predecessor Owner Trustee shall become effective and such
successor Owner Trustee (if acceptable to the Note Insurer), without any further
act, deed, or conveyance, shall become fully vested with all the rights, powers,
duties, and obligations of its predecessor under this Agreement, with like
effect as if originally named as Owner Trustee. The predecessor Owner Trustee
shall upon payment of its fees and expenses deliver to the successor Owner
Trustee all documents and statements and moneys held by it under this Agreement;
and the Depositor and the predecessor Owner Trustee shall execute and deliver
such instruments and do such other things as may reasonably be required for
fully and certainly vesting and confirming in the successor Owner Trustee all
such rights, powers, duties, and obligations.
No successor Owner Trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor Owner Trustee shall
be eligible pursuant to Section 10.1.
Upon acceptance of appointment by a successor Owner Trustee pursuant to
this Section, the Servicer shall mail notice of the successor of such Owner
Trustee to all Certificateholders, the Indenture Trustee, the Trust Paying
Agent, the Noteholders, the Note Insurer and the Rating Agencies. If the
Servicer fails to mail such notice within 10 days after acceptance of
appointment by the successor Owner Trustee, the successor Owner Trustee shall
cause such notice to be mailed at the expense of the Depositor.
SECTION 10.4. MERGER OR CONSOLIDATION OF OWNER TRUSTEE.
----------------------------------------
Any corporation into which the Owner Trustee may be merged or converted
or with which it may be consolidated or any corporation resulting from any
merger, conversion, or consolidation to which the Owner Trustee shall be a
party, or any corporation succeeding to all or substantially all of the
corporate trust business of the Owner Trustee, shall be the successor of the
Owner Trustee hereunder, provided such corporation shall be eligible pursuant to
Section 10.1, without the execution or filing of any instrument or any further
act on the part of any of the parties hereto, anything herein to the contrary
notwithstanding; provided further that the Owner Trustee shall mail notice of
such merger or consolidation to the Rating Agencies.
SECTION 10.5. APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.
---------------------------------------------
Notwithstanding any other provisions of this Agreement, at any time,
for the purpose of meeting any legal requirements of any jurisdiction in which
any part of the Owner Trust Estate or any Mortgaged Property may at the time be
located, and for the purpose of performing certain duties and obligations of the
Owner Trustee with respect to the Trust and the Certificates, the Owner Trustee
shall have the power and shall execute and deliver all instruments to appoint
one or more Persons approved by the Owner Trustee and acceptable to the Note
Insurer to act as co-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 Note 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.
ARTICLE XI
CONTRIBUTION OF HOME LOANS
SECTION 11.1. AGREEMENT TO CONTRIBUTE AND CONVEY.
----------------------------------
The Issuer acknowledges that the net proceeds from the sale of the
Notes ($168,378,147.70) will be paid to the Depositor or its designee, and the
Issuer will issue the Certificates to the order of the Depositor or its
designee, in consideration of the transfer of the Home Loans and the related
rights, title, and interests thereunder and the rights of the Depositor pursuant
to the Home Loan Sale Agreement (collectively, the "Consideration"). As and for
the Consideration and subject to the terms and conditions set forth herein, the
Depositor agrees to contribute and convey, and the Trust agrees to accept and
acquire, all of the Depositor's right, title, and interest in and to the Home
Loans identified on the schedule (the "Home Loan Schedule") annexed hereto as
Exhibit E. The Home Loan Schedule will set forth as to each Home Loan the items
---------
specified in the definition of "Home Loan Schedule" in the Indenture.
The aggregate of the principal balances of the Home Loans being
contributed and conveyed pursuant to this Agreement as of the close of business
on the Cut-off Date, after application of all payments of principal received in
respect of such Home Loans before the Cut-off Date (the "Initial Pool Principal
Balance"), is set forth on the Cross Receipt executed concurrently herewith in
the form of Exhibit F attached hereto (the "Cross Receipt"). Simultaneously with
---------
and in consideration of the Depositor's contribution, transfer, sale and
conveyance of the Home Loans to the Trust, the Trust shall cause the Notes to be
issued and delivered to the Depositor or its designee and the Certificates to be
issued to the order of the Depositor or its designee. The transfer and
conveyance of the Home Loans shall take place on the Closing Date.
SECTION 11.2. CONVEYANCE OF HOME LOANS.
------------------------
(a) Effective as of the Closing Date, subject only to receipt of the
Consideration and the delivery of the Home Loan File (as defined in the Home
Loan Sale Agreement) for each Home Loan pursuant to subsection (c) below, the
Depositor does hereby sell, contribute, assign, transfer, and otherwise convey
to the Trust, without recourse, representation, or warranty (other than as
expressly set forth in Section 2.10 (a) hereof), and the Trust does hereby
accept, assume, and acquire, all of the Depositor's right, title, and interest
in and to the Home Loans identified on the Home Loan Schedule, and the Trust
hereby assumes and agrees to perform and be bound by each and all of the
covenants, agreements, duties, and obligations of the Depositor arising under or
relating to such Home Loans.
(b) The Trust and its assignees shall be entitled to receive all
payments of principal and interest received on or with respect to the Home Loans
on and after the Cut-off Date, and all other recoveries of principal and
interest collected on or after the Cut-off Date and each of the rights of the
Depositor pursuant to representations, warranties, and indemnities in favor of
the Depositor contained in the Home Loan Sale Agreement.
(c) In connection with its contribution and conveyance of the Home
Loans pursuant to subsection (a) above, the terms of the Home Loan Sale
Agreement govern the delivery of the Home Loan Files to the Custodian, on behalf
of the Indenture Trustee, the Noteholders, and the Note Insurer, and the
Depositor assigns all of its rights under the Home Loan Sale Agreement to the
Trust.
(d) In connection with its conveyance of the Home Loans pursuant to
subsection (a) above, the Depositor shall deliver to the Trust or its designee
in respect of such Home Loans, on or before the Closing Date, all amounts, if
any, received on each Home Loan on and after the Cut-off Date held by or on
behalf of the Depositor.
(e) The Depositor shall, at any time upon the request of the Trust,
without limiting the obligations of the Depositor under this Agreement, execute,
acknowledge, and deliver all such additional documents and instruments and all
such further assurances and will do or cause to be done all such further acts
and things as may be proper or reasonably necessary to carry out the intent of
this Agreement.
SECTION 11.3. ASSIGNMENT OF RELATED RIGHTS AND REMEDIES.
-----------------------------------------
(a) Effective as of the Closing Date, subject only to delivery of the
Home Loan File for each Home Loan pursuant to Section 11.2(c) hereof, the
Depositor does hereby assign, transfer, and otherwise convey to the Trust,
without recourse, representation, or warranty (other than as expressly set forth
in Section 2.10(a) hereof), and the Trust does hereby accept, assume, and
acquire, to be held jointly and severally with the Depositor, all of the
Depositor's rights and remedies under the Home Loan Sale Agreement and the Trust
hereby assumes and agrees to perform and be bound by each and all of the
covenants and agreements of the Depositor arising under the Home Loan Sale
Agreement relating to such rights and remedies and the exercise or enforcement
thereof.
(b) Simultaneously with the exercise of any rights and remedies or any
notices given to City National Bank of West Virginia by the Trust under the Home
Loan Sale Agreement, the Trust shall give the Depositor, the Transferor and the
Note Insurer notice thereof, including, without limitation, copies of all
notices given to City National Bank of West Virginia.
(c) This Section 11.3 provides the sole remedies available to the
Trust, its successors and assignees, respecting any breach (i) of
representations and warranties with respect to the Home Loans to which reference
is made in Section 2.10(b) or (ii) on the part of the Depositor under Section
2.10 hereof.
SECTION 11.4. CLOSING.
-------
The closing of the conveyance of the Home Loans (the "Closing") shall
be held at the offices of Hunton & ▇▇▇▇▇▇▇▇, Riverfront Plaza, East Tower, ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ at 10:00 a.m., Eastern time, on the
Closing Date.
The Closing shall be subject to each of the following conditions:
(a) All terms and conditions of this Agreement required to be complied
with on or before the Closing Date shall have been complied with and the
Depositor shall have the ability to comply with all terms and conditions and
perform all duties and obligations required to be complied with or performed
after the Closing Date.
(b) The Trust shall have paid all costs and expenses payable by it to
the Depositor or otherwise pursuant to this Agreement.
Both parties shall use their best efforts to perform their respective
obligations hereunder in a manner that will enable the Trust to acquire the Home
Loans on the Closing Date. Notwithstanding the foregoing, satisfaction by the
Depositor or Trust of its respective obligations under the foregoing provisions
of this Section 11.4 shall not be conditions precedent to the obligation of the
Depositor or Trust, respectively, to close the transactions contemplated by this
Agreement.
SECTION 11.5. SERVICING.
---------
As of the Cut-off Date, the Home Loans will be serviced by City
National Bank of West Virginia (in such capacity, the "Servicer") pursuant to
the terms of the Servicing Agreement.
SECTION 11.6. GRANT OF A SECURITY INTEREST.
----------------------------
It is the express intent of the parties hereto that the conveyance of
the Home Loans by the Depositor to the Trust as provided in Section 11.2(a)
hereof be, and be construed as, a complete and absolute transfer by the
Depositor to the Trust of all of the Depositor's right, title, and interest in
and to the Home Loans and not as a pledge of the Home Loans by the Depositor to
the Trust to secure a debt or other obligation of the Depositor. However, if,
notwithstanding the aforementioned intent of the parties, the Home Loans are
held to be property of the Depositor, then (a) it is the express intent of the
parties that such conveyance be deemed a pledge of the Home Loans by the
Depositor to the Trust to secure a debt or other obligation of the Depositor,
and (b) (i) this Agreement shall also be deemed to be a security agreement
within the meaning of Article 9 of the New York Uniform Commercial Code; (ii)
the conveyance provided for in Section 11.2(a) hereof shall be deemed to be a
grant by the Depositor to the Trust of a security interest in all of the
Depositor's right, title and interest in and to the Home Loans, and all amounts
payable to the holder of the Home Loans in accordance with the terms thereof,
and all proceeds of the conversion, voluntary, or involuntary, of the foregoing
into cash, instruments, securities, or other property, including without
limitation all such amounts, other than investment earnings from time to time
held or invested pursuant to and in accordance with the provisions of the
Servicing Agreement or the Indenture, as applicable, whether in the form of
cash, instruments, securities, or other property; (iii) the subsequent pledge of
the Home Loans by the Trust to the Indenture Trustee as contemplated by the
preamble hereto shall be deemed to be an assignment of any security interest
created hereunder; (iv) in the event that the Trust is disregarded as a separate
entity from the Depositor in the event of insolvency of the Depositor, the
Depositor also shall be deemed to have granted to the Indenture Trustee a
security interest in all of the Depositor's right, title and interest in and to
the Owner Trust Estate; (v) the possession by the Depositor or the Trust or any
of their respective agents, including, without limitation, the Indenture Trustee
or its agent, of the notes or other instruments evidencing the indebtedness of
the obligors under the related Home Loans (the "Mortgage Notes") and such other
items of property relating to the Home Loans as constitute instruments, money,
negotiable documents, or chattel paper shall be deemed to be "possession by the
secured party" for purposes of perfecting the security interest pursuant to
Section 9-305 of the New York Uniform Commercial Code; and (vi) notifications to
persons (other than the Indenture Trustee) holding such property, and
acknowledgments, receipts, or confirmations from persons holding such property,
shall be deemed notifications to, or acknowledgments, receipts, or confirmations
from, financial intermediaries, bailees, or agents (as applicable) of the
secured party for the purpose of perfecting such security interest under
applicable law. The Depositor and the Trust shall, to the extent consistent with
this Agreement, take such actions as may be necessary to ensure that, if this
Agreement were deemed to create a security interest in the Home Loans, or the
Owner Trust Estate, as the case may be, such security interest would be deemed
to be a perfected security interest of first priority under applicable law and
will be maintained as such throughout the term of this Agreement and the
Indenture.
ARTICLE XII
MISCELLANEOUS
SECTION 12.1. SUPPLEMENTS AND AMENDMENTS.
--------------------------
This Agreement may be amended by the Depositor, the Trust Paying Agent,
and the Owner Trustee, with the prior consent of the Note Insurer, and with
prior written notice to the Rating Agencies, but without the consent of any of
the Noteholders or the Certificateholders or the Indenture Trustee, to cure any
ambiguity, to correct or supplement any provisions in this Agreement, or for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of this Agreement or of modifying in any manner the rights of
the Noteholders or the Certificateholders; provided however, such action shall
not adversely affect in any material respect the interests of any Noteholder or
Certificateholder or the rights of the Note Insurer. An amendment described
above shall be deemed not to adversely affect in any material respect the
interests of any Noteholder 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 Depositor,
the Trust Paying Agent, and the Owner Trustee, with the prior written consent of
the Rating Agencies and with the prior written consent of the Indenture Trustee,
the Note Insurer, the Holders (as defined in the Indenture) of Notes evidencing
more than 50% of the Outstanding Amount of the Notes, the Holders of
Certificates evidencing more than 50% of the Percentage Interests of the Trust
Interest and if the party requesting such amendment satisfies the Rating Agency
Condition with respect to such amendment, for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement or of modifying in any manner the rights of the Noteholders or
the Certificateholders; provided however, no such amendment shall (a) increase
or reduce in any manner the amount of, or accelerate or delay the timing of,
collections of payments on the Home Loans or distributions that shall be
required to be made for the benefit of the Noteholders, the Certificateholders
or the Note Insurer, or (b) reduce the aforesaid percentage of the Outstanding
Amount of the Notes or the Percentage Interests required to consent to any such
amendment, in either case of clause (a) or (b) without the consent of the
holders of all the outstanding Notes and the Note 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 Note
Insurer and each of the Rating Agencies.
It shall not be necessary for the consent of Certificateholders, the
Noteholders, or the Indenture Trustee pursuant to this Section to approve the
particular form of any proposed amendment or consent, but it shall be sufficient
if such consent shall approve the substance thereof. The manner of obtaining
such consents (and any other consents of Certificateholders provided for in this
Agreement or in any other Basic Document) and of evidencing the authorization of
the execution thereof by Certificateholders shall be subject to such reasonable
requirements as the Owner Trustee may prescribe.
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 12.2. 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 12.3. LIMITATIONS ON RIGHTS OF OTHERS.
-------------------------------
The provisions of this Agreement are solely for the benefit of the
Owner Trustee, the Depositor, the Certificateholders, the Trust Paying Agent,
and to the extent expressly provided herein, the Indenture Trustee, the Note
Insurer, and the Noteholders, and nothing in this Agreement, whether express or
implied, shall be construed to give to any other Person any legal or equitable
right, remedy or claim in the Owner Trust Estate or under or in respect of this
Agreement or any covenants, conditions, or provisions contained herein. Nothing
in this section, however, shall alter or modify in any way, the fiduciary
obligations of the Owner Trustee to the Certificateholders pursuant to this
Agreement, and nothing in this section shall create any fiduciary obligation of
the Owner Trustee to any Person, other than to the Certificateholders.
SECTION 12.4. NOTICES.
-------
(a) Unless otherwise expressly specified or permitted by the terms
hereof, all communications provided for or permitted hereunder shall be in
writing and shall be deemed to have been given if (1) personally delivered, (2)
upon receipt by the intended recipient or three Business Days after mailing if
mailed by certified mail, postage prepaid (except that notice to the Owner
Trustee shall be deemed given only upon actual receipt by the Owner Trustee),
(3) sent by express courier delivery service and received by the intended
recipient, or (4) except with respect to notices sent to the Owner Trustee,
transmitted by telex or facsimile transmission (or any other type of electronic
transmission agreed upon by the parties and confirmed by a writing delivered by
any of the means described in (1), (2) or (3), at the following addresses: (i)
if to the Owner Trustee, its Corporate Trust Office; (ii) if to the Depositor,
Financial Asset Securities Corp., ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, Attention: City Capital Home Loan Trust 1998-4, Telecopy No.: (203)
629-4640; (iii) if to the Note Insurer, MBIA Insurance Corporation, ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Insured Portfolio Management-SF (City
Capital Home Loan Trust 1998-4), Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇; (iv) if to the
Trust Paying Agent, Norwest Bank Minnesota, National Association, ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: City Capital
Home Loan Trust 1998-4, Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇, with a copy to Norwest at
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: City Capital
Home Loan Trust 1998-4, Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇; (v) if to City National
Bank of West Virginia, to ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇ or, as to each such
party, at such other address as shall be designated by such party in a written
notice to each other party.
(b) Any notice required or permitted to be given to a Certificateholder
shall be given by first-class mail, postage prepaid, at the address of such
Certificateholder as shown in the Certificate Register. Any notice so mailed
within the time prescribed in this Agreement shall be conclusively presumed to
have been duly given, whether or not the Certificateholder receives such notice.
SECTION 12.5. 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 12.6. 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 12.7. SUCCESSORS AND ASSIGNS.
----------------------
All covenants and agreements contained herein shall be binding upon,
and inure to the benefit of, the Depositor, the Note Insurer, the Owner Trustee,
and its successors and each owner and its successors and permitted assigns, all
as herein provided. Any request, notice, direction, consent, waiver, or other
instrument or action by a Certificateholder shall bind the successors and
assigns of such Certificateholder.
SECTION 12.8. NO PETITION.
-----------
The Owner Trustee, by entering into this Agreement, each
Certificateholder, by accepting a Certificate, and the Indenture Trustee and
each Noteholder by accepting the benefits of this Agreement, hereby covenant and
agree that they will not at any time institute against the Depositor or the
Trust, or join in any institution against the Depositor or the Trust of, any
bankruptcy, reorganization, arrangement, insolvency, or liquidation proceedings,
or other proceedings under any United States Federal or state bankruptcy or law
in connection with any obligations relating to the Certificates, the Notes, this
Agreement, or any of the Basic Documents.
SECTION 12.9. NO RECOURSE.
-----------
Each Certificateholder by accepting a Certificate acknowledges that
such Certificateholder's Certificate represents a beneficial interest in the
Trust only and does not represent an interest in or an obligation of the
Servicer, the Depositor, the Owner Trustee, or any Affiliate thereof and no
recourse may be had against such parties or their assets, except as may be
expressly set forth or contemplated in this Agreement, the Certificates, or the
Basic Documents.
SECTION 12.10. HEADINGS.
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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 12.11. GOVERNING LAW.
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THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
SECTION 12.12. GRANT OF CERTIFICATEHOLDER RIGHTS TO NOTE INSURER.
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(a) In consideration for the issuance of the Certificates and for the
guarantee of the Notes by the Note Insurer pursuant to the Insurance Policy, the
holders of the Certificates hereby grant to the Note Insurer the right to act as
the holder of 100% of the outstanding Certificates for the purpose of exercising
the rights of the Certificateholders under this Agreement without the consent of
the Certificateholders, including the voting rights of such holders hereunder,
but excluding those rights requiring the consent of all such holders under
Section 12.1 and any rights of such holders to distributions under Section
5.2(a); provided that the preceding grant of rights to the Note Insurer by the
holders of the Trust Interest shall be subject to Section 12.14. Nothing in this
section, however, shall alter or modify in any way, the fiduciary obligations of
the Owner Trustee to the Certificateholders pursuant to this Agreement, and
nothing in this section shall create any fiduciary obligation of the Owner
Trustee to any Person, other than to the Certificateholders.
(b) The rights of the Note Insurer to direct certain actions and
consent to certain actions of the Certificateholders hereunder will terminate at
such time as the Balance of the Notes has been reduced to zero and the Note
Insurer has been reimbursed for any amounts owed under the Insurance Policy and
the Insurance Agreement and the Note Insurer has no further obligation under the
Insurance Policy.
SECTION 12.13. THIRD PARTY BENEFICIARY.
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The Note Insurer is an intended third-party beneficiary of this
Agreement, and this Agreement shall be binding upon and inure to the benefit of
the Note Insurer; provided that, notwithstanding the foregoing, for so long as a
Note Insurer Default is continuing with respect to its obligations under the
Insurance Policy, the Noteholders shall succeed to the Note Insurer's rights
hereunder. Without limiting the generality of the foregoing, all covenants and
agreements in this Agreement that expressly confer rights upon the Note Insurer
shall be for the benefit of and run directly to the Note Insurer, and the Note
Insurer shall be entitled to rely on and enforce such covenants to the same
extent as if it were a party to this Agreement. Nothing in this section,
however, shall alter or modify in any way, the fiduciary obligations of the
Owner Trustee to the Certificateholders pursuant to this Agreement, and nothing
in this section shall create any fiduciary obligation of the Owner Trustee to
any Person, other than to the Certificateholders.
SECTION 12.14. SUSPENSION AND TERMINATION OF NOTE INSURER'S RIGHTS.
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During the continuation of a Note Insurer Default, rights granted or
reserved to the Note Insurer hereunder shall vest instead in the holders of the
Notes; provided that the Note Insurer shall be entitled to any distributions in
reimbursement of any amounts due and owing the Note Insurer under the Insurance
Agreement, and the Note Insurer shall retain those rights under Section 12.1 to
consent to any amendment of this Agreement.
At such time as either (i) the Note Balance of the Notes has been
reduced to zero or (ii) the Insurance Policy has been terminated and in either
case of (i) or (ii) the Note Insurer has been reimbursed for all amounts owed
under the Insurance Policy and the Insurance Agreement (and the Note Insurer no
longer has any obligation under the Insurance Policy, except for breach thereof
by the Note Insurer), then the rights and benefits granted or reserved to the
Note Insurer hereunder (including the rights to direct certain actions and
receive certain notices) shall terminate and the Certificateholders shall be
entitled to the exercise of such rights and to receive such benefits of the Note
Insurer following such termination to the extent that such rights and benefits
are applicable to the Certificateholders.
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.
FINANCIAL ASSET SECURITIES CORP.,
as Depositor
By: /s/ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
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Title: Vice President
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WILMINGTON TRUST COMPANY,
as Owner Trustee
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Authorized Signatory
CITY NATIONAL BANK OF WEST VIRGINIA,
as Servicer
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title: Chief Financial Officer
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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, as Trust Paying Agent
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title: Assistant Vice President
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