Exhibit 4.3
TRUST AGREEMENT
between
FIRST ALLIANCE MORTGAGE COMPANY,
as Seller
and
WILMINGTON TRUST COMPANY
as Owner Trustee
Dated as of June 1, 1998
FIRST ALLIANCE MORTGAGE LOAN TRUST 1998-2
CONTENTS
Page
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE...............................................................1
SECTION 1.1 Capitalized Terms.............................................................1
SECTION 1.2 Other Definitional Provisions.................................................4
ARTICLE II
ORGANIZATION.............................................................................................5
SECTION 2.1 Name..........................................................................5
SECTION 2.2 Office........................................................................5
SECTION 2.3 Purpose and Powers............................................................5
SECTION 2.4 Appointment of Owner Trustee..................................................6
SECTION 2.5 Initial Capital Contribution of the Owner Trust Estate........................6
SECTION 2.6 Declaration of Trust..........................................................6
SECTION 2.7 Liability of the Holders......................................................6
SECTION 2.8 Title to Trust Property.......................................................6
SECTION 2.9 Situs of Trust................................................................7
SECTION 2.10 Representations and Warranties of the Seller..................................7
SECTION 2.11 Federal Income Tax Allocations................................................8
ARTICLE III
THE CERTIFICATES.........................................................................................9
SECTION 3.1 Initial Certificate Ownership.................................................9
SECTION 3.2 Form of the Certificates......................................................9
SECTION 3.3 Execution, Authentication and Delivery........................................9
SECTION 3.4 Registration; Registration of Transfer and Exchange of Certificates..........10
SECTION 3.5 Mutilated; Destroyed; Lost or Stolen Certificates............................10
SECTION 3.6 Persons Deemed Certificateholders............................................11
SECTION 3.7 Access to List of Holders' Names and Addresses...............................11
SECTION 3.8 Maintenance of Office For Surrenders.........................................12
SECTION 3.9 Appointment of Trust Paying Agent............................................12
SECTION 3.10 Restriction on Transfers of Certificate......................................12
ARTICLE IV
ACTIONS BY OWNER TRUSTEE................................................................................16
SECTION 4.1 Prior Notice to Owners with Respect to Certain Matters.......................16
SECTION 4.2 Action by Holders with Respect to Certain Matters............................18
SECTION 4.3 Action by Holders with Respect to Bankruptcy.................................18
SECTION 4.4 Restrictions on Holders' Power...............................................18
SECTION 4.5 Majority Control.............................................................18
Page
ARTICLE V
APPLICATION OF OWNER TRUST ESTATE; CERTAIN DUTIES.......................................................19
SECTION 5.1 Establishment of Certificate Distribution Account............................19
SECTION 5.2 Application of Trust Funds...................................................19
SECTION 5.3 Method of Payment............................................................20
SECTION 5.4 Segregation of Moneys; No Interest...........................................20
SECTION 5.5 Accounting and Reports to the Certificateholders, the Internal
Revenue Service and Others...................................................20
SECTION 5.6 Signature on Returns; Tax Matters Partner....................................20
ARTICLE VI
AUTHORITY AND DUTIES OF THE OWNER TRUSTEE...............................................................22
SECTION 6.1 General Authority............................................................22
SECTION 6.2 General Duties...............................................................22
SECTION 6.3 Action upon Instruction by Owners............................................22
SECTION 6.4 No Duties Except as Specified in this Agreement, the Operative
Documents or in Instructions.................................................23
SECTION 6.5 No Action Except Under Specified Documents or Instructions...................24
SECTION 6.6 Restrictions.................................................................24
ARTICLE VII
CONCERNING THE OWNER TRUSTEE............................................................................25
SECTION 7.1 Acceptance of Trusts and Duties..............................................25
SECTION 7.2 Furnishing of Documents......................................................26
SECTION 7.3 Representations and Warranties of Owner Trustee..............................27
SECTION 7.4 Reliance; Advice of Counsel..................................................27
SECTION 7.5 Owner Trustee May Own Certificates and Notes.................................28
SECTION 7.6 Licenses.....................................................................28
ARTICLE VIII
COMPENSATION OF OWNER TRUSTEE...........................................................................29
SECTION 8.1 Owner Trustee's Fee and Expenses.............................................29
SECTION 8.2 Indemnification..............................................................29
SECTION 8.3 Payments to the Owner Trustee................................................30
ARTICLE IX
TERMINATION OF TRUST AGREEMENT..........................................................................31
SECTION 9.1 Termination of Trust Agreement...............................................31
ARTICLE X
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES..................................................32
SECTION 10.1 Eligibility Requirements for Owner Trustee...................................32
SECTION 10.2 Resignation or Removal of Owner Trustee......................................32
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Page
SECTION 10.3 Successor Owner Trustee......................................................33
SECTION 10.4 Merger or Consolidation of Owner Trustee.....................................33
SECTION 10.5 Appointment of Co-Trustee or Separate Trustee................................33
ARTICLE XI
MISCELLANEOUS...........................................................................................35
SECTION 11.1 Amendments Without Consent of Certificateholders or Owners
of the Notes.................................................................35
SECTION 11.2 Amendments With Consent of Certificateholders................................35
SECTION 11.3 Form of Amendments...........................................................35
SECTION 11.4 No Legal Title to Owner Trust Estate.........................................36
SECTION 11.5 Limitations on Rights of Others..............................................36
SECTION 11.6 Notices......................................................................36
SECTION 11.7 Severability.................................................................37
SECTION 11.8 Counterparts.................................................................37
SECTION 11.9 Successors and Assigns.......................................................37
SECTION 11.10 No Petition Covenant.........................................................37
SECTION 11.11 No Recourse..................................................................37
SECTION 11.12 Headings.....................................................................37
SECTION 11.13 Governing Law................................................................38
SECTION 11.14 Integration..................................................................38
SECTION 11.15 Third-Party Beneficiary......................................................38
SECTION 11.16 Suspension and Termination of Note Insurer's Rights..........................38
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TRUST AGREEMENT, dated as of June 1, 1998, between FIRST ALLIANCE
MORTGAGE COMPANY, a California corporation (the "Seller") and WILMINGTON TRUST
COMPANY, a Delaware corporation, not in its individual capacity but solely as
Owner Trustee (the "Owner Trustee").
The Seller and the Owner Trustee hereby agree as follows:
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1 Capitalized Terms. For all purposes of this Agreement, the
following terms shall have the meanings set forth below:
"Adjustable Rate Indenture" shall mean the Indenture, dated as
of June 1, 1998, between the Issuer and the Indenture Trustee relating to the
First Alliance Mortgage Loan Trust 1998-2 Adjustable Rate Mortgage Loan Asset
Backed Notes, Series 1998-2A.
"Agreement" shall mean this Trust Agreement, as the same may
be amended and supplemented from time to time.
"Bankruptcy Action" shall have the meaning assigned to such
term in Section 4.1 hereof.
"Business Trust Statute" shall mean Chapter 38 of Title 12 of
the Delaware Code, 12 Del. Code Section 3801 et seq., as the same may be amended
from time to time.
"Certificate" shall mean a certificate evidencing the
beneficial interest of a Certificateholder in the Trust, substantially in the
form attached hereto as Exhibit B.
"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 A to be filed for the Trust pursuant to Section 3810(a) of
the Business Trust Statute.
"Certificate Register" and "Certificate Registrar" shall mean
the register mentioned and the registrar appointed pursuant to Section 3.4.
"Certificateholder" or "Holder" shall mean a Person in whose
name a Certificate is registered.
"Code" shall mean the Internal Revenue Code of 1986, as
amended, and Treasury Regulations promulgated thereunder.
"Corporate Trust Office" shall mean, with respect to the Owner
Trustee, the principal corporate trust office of the Owner Trustee located at
Rodney Square North, 1100 N. Market Street, Wilmington, Delaware 19890-0001; or
at such other address in the State of Delaware as the Owner Trustee may
designate by notice to the Owners and the Seller, or the principal corporate
trust office of any successor Owner Trustee (the address (which shall be in the
State of Delaware) of which the successor owner trustee will notify the Owners,
the Holders and the Seller).
"Expenses" shall have the meaning assigned to such term in
Section 8.2.
"Fixed Rate Indenture" shall mean the Indenture, dated as of
June 1, 1998, between the Issuer and the Indenture Trustee relating to the First
Alliance Mortgage Loan Trust 1998-2 Fixed Rate Mortgage Loan Asset Backed Notes,
Series 1998-2F.
"Indemnification Agreement" shall mean the Indemnification
Agreement dated as of June 10, 1998 among the Note Insurer, the Seller, the
Issuer and Wheat First Securities, Inc., doing business as First Union Capital
Markets, a division of Wheat First Securities, Inc.
"Indentures" shall mean the Adjustable Rate Indenture and the
Fixed Rate Indenture.
"Indenture Trustee" means The Chase Manhattan Bank, as
Indenture Trustee under the Indentures.
"Insurance Agreement" shall mean the Insurance and Indemnity
Agreement, dated as of June 1, 1998, among the Seller, the Servicer, the Issuer,
the Indenture Trustee and the Note Insurer.
"Issuer" shall mean First Alliance Mortgage Loan Trust 1998-2,
the Delaware business trust created pursuant to this Agreement.
"Non-permitted Foreign Holder" shall have the meaning set
forth in Section 3.10.
"Non-U.S. Person" shall mean an individual, corporation,
partnership or other person other than a citizen or resident of the United
States, a corporation, partnership or other entity created or organized in or
under the laws of the United States or any political subdivision thereof, or an
estate or trust that is subject to U.S. federal income tax regardless of the
source of its income.
"Note Insurer" shall mean Financial Security Assurance Inc.
and its successors and assigns.
"Operative Documents" shall mean this Agreement, the Notes,
the Certificates, the Custodial Agreement, the Indentures, the Insurance
Agreement, the Indemnification Agreement, the Sale and Servicing Agreement and
the other documents and certificates delivered in connection therewith.
"Owner" shall mean each holder of a Note.
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"Owner Trust Estate" shall mean the Trust Estate (as defined
in the Indenture), including the contribution of $1 referred to in Section 2.5
hereof.
"Owner Trustee" shall mean Wilmington Trust Company, a
Delaware corporation, not in its individual capacity but solely as owner trustee
under this Agreement, and any successor owner trustee hereunder.
"Owner Trustee Fee": The fees payable to the Owner Trustee for
its services as owner trustee of the Trust, as provided in the fee agreement
between the Owner Trustee and the Seller.
"Percentage Interest" shall mean with respect to each
Certificate, the percentage portion of all of the Certificates evidenced thereby
as stated on the face of such Certificate.
"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 Seller, 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 rating of the related Series of Notes, without taking into account
the Note Insurance Policy relating to such Series of Notes.
"Record Date" shall mean as to each Payment Date the last day
of the calendar month immediately preceding the calendar month in which such
Payment Date occurs, whether or not such day is a Business Day.
"Sale and Servicing Agreement" shall mean the Sale and
Servicing Agreement dated as of the date hereof, among the Issuer, the Seller,
the Servicer and the Indenture Trustee.
"Secretary of State" shall mean the Secretary of State of the
State of Delaware.
"Seller" shall mean First Alliance Mortgage Company, a
California 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 Paying Agent" shall mean The Chase Manhattan Bank or
any successor in interest thereto or any other paying agent or co-paying agent
appointed pursuant to Section 3.9 and
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authorized by the Issuer to make payments to and distributions from the
Certificate Distribution Account, including payment of principal of or interest
on the Certificates on behalf of the Issuer.
SECTION 1.2 Other Definitional Provisions.
(a) Capitalized terms used herein and not otherwise defined
herein have the meanings assigned to them in the Sale and Servicing Agreement
or, if not defined therein, in the Indentures.
(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 the feminine and neuter genders of such terms.
(f) Any agreement, instrument or statute defined or referred
to herein or in any instrument or certificate delivered in connection herewith
means such agreement, instrument or statute as from time to time amended,
modified or supplemented and includes (in the case of agreements or instruments)
references to all attachments thereto and instruments incorporated therein;
references to a Person are also to its permitted successors and assigns.
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ARTICLE II
ORGANIZATION
SECTION 2.1 Name. The Trust created hereby shall be known as "First
Alliance Mortgage Loan Trust 1998-2", 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 sue and be sued on behalf of the Trust.
SECTION 2.2 Office. The office of the Trust shall be in care of the
Owner Trustee at the Corporate Trust Office or at such other address in Delaware
as the Owner Trustee may designate by written notice to the Certificateholders,
the Note Insurer, the Owners and the Seller.
SECTION 2.3 Purpose and Powers. The purpose of the Trust is to engage
in the following activities:
(i) to issue the Notes pursuant to the Indentures and the
Certificates pursuant to this Agreement and to sell the Notes and
Certificates;
(ii) with the proceeds of the sale of the Notes and the
Certificates, to pay the organizational, start-up and transactional
expenses of the Trust and to pay the balance to the Seller pursuant to
the Sale and Servicing Agreement;
(iii) to assign, grant, transfer, pledge, mortgage and convey
the Owner Trust Estate pursuant to the terms of the Indentures and to
hold, manage and distribute to the Certificateholders pursuant to the
terms of the Sale and Servicing Agreement any portion of the Owner
Trust Estate released from the lien of, and remitted to the Trust
pursuant to, the Indentures;
(iv) to enter into and perform its obligations under the
Operative Documents to which it is to be a party;
(v) to engage in those activities, including entering into
agreements, that are necessary, suitable or convenient to accomplish
the foregoing or are incidental thereto or connected therewith; and
(vi) subject to compliance with the Operative Documents, to
engage in such other activities as may be required in connection with
conservation of the assets of the Trust and the making of distributions
to the Certificateholders and the Owners of the Notes.
The Trust is hereby authorized to engage in the foregoing activities
and 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
Operative Documents.
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SECTION 2.4 Appointment of Owner Trustee. The Seller 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. The Owner Trustee
hereby accepts its appointment subject to the terms and conditions hereof.
SECTION 2.5 Initial Capital Contribution of the Owner Trust Estate. The
Seller 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 Seller, 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 Seller shall pay
the organizational expenses of the Trust as they may arise or shall, upon the
request of the Owner Trustee, promptly reimburse the Owner Trustee for any such
expenses paid by the Owner Trustee.
SECTION 2.6 Declaration of Trust. The Owner Trustee hereby declares
that it shall hold the Owner Trust Estate in trust upon and subject to the
conditions set forth herein for the use and benefit of the Certificateholders,
subject to the obligations of the Trust under the Operative Documents. It is the
intention of the parties hereto that the Trust shall constitute a business trust
under the Business Trust Statute and that this Agreement shall constitute the
governing instrument of such business trust. It is the intention of the parties
hereto that, for federal and state income and state and local franchise tax
purposes, the Trust shall not be treated as (i) an association subject
separately to taxation as a corporation, (ii) a "publicly traded partnership" as
defined in Treasury Regulation Section 1.7704-1 or (iii) a "taxable mortgage
pool" as defined in Section 7701(i) of the Code, and that each Series of Notes
shall be debt, and the provisions of this Trust Agreement shall be interpreted
to further this intention. Except as otherwise provided in this Trust Agreement,
the rights of the Certificateholders will be those of equity owners of the
Trust. Effective as of the date hereof, the Owner Trustee shall have the 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 pursuant to the Business Trust Statute with the
Secretary of State.
SECTION 2.7 Liability of the Holders. No Certificateholder shall have
any personal liability for any liability or obligation of the Trust. The
Certificates shall be fully paid and nonassessable.
SECTION 2.8 Title to Trust Property.
(a) Subject to the Indentures, 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, a co-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.
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SECTION 2.9 Situs of Trust. The Trust shall be located and administered
in the State of Delaware. All bank accounts maintained by the Owner Trustee on
behalf of the Trust shall be located in the State of Delaware or the State of
New York. The Trust shall not have any employees; provided, however, that
nothing herein shall restrict or prohibit the Owner Trustee from having
employees within or without the State of Delaware. Payments shall be received by
the Trust only in Delaware or New York, and payments will be made by the Trust
only from Delaware or New York. The only office of the Trust shall be the
Corporate Trust Office in Delaware.
SECTION 2.10 Representations and Warranties of the Seller. The Seller
hereby represents and warrants to the Owner Trustee and the Note Insurer that:
(a) The Seller has been duly organized and is validly existing
as a corporation in good standing under the laws of the State of
California, with power and authority to own its properties and to
conduct its business as such properties are presently owned and such
business is presently conducted.
(b) The Seller is duly qualified to do business as a foreign
corporation in good standing, and has obtained all necessary licenses
and approvals in all jurisdictions in which the ownership or lease of
property or the conduct of its business requires such qualifications.
(c) The Seller has the power and authority to execute and
deliver this Agreement and to carry out its terms; the Seller has full
power and authority to sell and assign the property to be sold and
assigned to and deposited with the Trust, and the Seller has duly
authorized such sale and assignment to the Trust by all necessary
corporate action; and the execution, delivery and performance of this
Agreement have been duly authorized by the Seller by all necessary
corporate action.
(d) The consummation of the transactions contemplated by this
Agreement and the fulfillment of the terms of this Agreement do not
conflict with, result in any breach of any of the terms and provisions
of or constitute (with or without notice or lapse of time) a default
under, the articles of incorporation or by-laws of the Seller, or any
indenture, agreement or other instrument to which the Seller 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
Operative Documents); nor violate any law or, to the best of the
Seller's knowledge, any order, rule or regulation applicable to the
Seller of any court or of any federal or state regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over the Seller or any of its properties.
(e) There are no proceedings or investigations pending or
notice of which has been received in writing before any court,
regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Seller or its properties:
(i) asserting the invalidity of this Agreement, (ii) seeking to prevent
the consummation of any of the transactions contemplated by this
Agreement or (iii) seeking any determination or
7
ruling that might materially and adversely affect the performance by
the Seller of its obligations under, or the validity or enforceability
of, this Agreement.
(f) The representations and warranties of the Seller in
Section 2.1 of the Sale and Servicing Agreement are true and correct.
(g) The Trust is not required to register as an investment
company under the Investment Company Act and is not under the control
of a Person required to so register.
SECTION 2.11 Federal Income Tax Allocations. Net income of the Trust
for any month, as determined for Federal income tax purposes (and each item of
income, gain, loss and deduction entering into the computation thereof), shall
be allocated to the Certificateholders, pro rata.
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ARTICLE III
THE CERTIFICATES
SECTION 3.1 Initial Certificate Ownership. Upon the formation of the
Trust by the contribution by the Seller pursuant to Section 2.5 and until the
issuance of the Certificates, the Seller shall be the sole owner of the Trust.
SECTION 3.2 Form of the Certificates.
(a) The Certificates shall be issued without a principal
amount in the form of one or more Certificates each representing not less than a
10% Percentage Interest. The Certificates shall be executed on behalf of the
Trust by manual or facsimile signature of an authorized signatory 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.
(b) The Certificates shall be typewritten, printed,
lithographed or engraved or produced by any combination of these methods (with
or without steel engraved borders) all as determined by the authorized signatory
of the Owner Trustee or the Owner Trustee's authenticating agent executing such
Certificates, as evidenced by their execution of such Certificates.
(c) 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. Concurrently with
the initial sale of the Mortgage Loans by the Seller to the Trust pursuant to
the Sale and Servicing Agreement, the Owner Trustee shall execute, or cause its
authenticating agent to execute the Certificates representing 100% of the
Percentage Interests of the Trust to be executed on behalf of the Trust,
authenticated and delivered to or upon the written order of the Seller, signed
by an Authorized Officer of the Seller, without further corporate action by the
Seller. The Certificates shall be registered in the name of First Alliance
Portfolio Services, Inc. The Trust shall not issue any other Certificate without
the prior written consent of the Note Insurer, provided, however, that such
consent shall not be unreasonably withheld. 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 B, executed by the Owner Trustee
or the Certificate Registrar 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.
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SECTION 3.4 Registration; Registration of Transfer and Exchange of
Certificates.
The Certificate Registrar shall cause to be kept at its office or
agency in New York, New York, or at its designated agent, a Certificate Register
in which, subject to such reasonable regulations as it may prescribe, it shall
provide for the registration of Certificates and of transfers and exchanges of
Certificates as herein provided. Upon any resignation of a Certificate
Registrar, the Owner Trustee shall promptly appoint a successor or, if it elects
not to make such an appointment, assume the duties of the Certificate Registrar.
The Chase Manhattan Bank shall be the initial Certificate Registrar.
Subject to Section 3.10, upon surrender for registration of transfer of
any Certificate at the office or agency of the Owner Trustee maintained pursuant
to Section 3.8, the Owner Trustee shall execute, and the Owner Trustee or the
Certificate Registrar shall authenticate and deliver in the name of the
designated transferee or transferees, a new Certificate or Certificates of the
same Percentage Interest and dated the date of authentication by the Owner
Trustee or the Certificate Registrar. The Certificate Registrar shall thereupon
provide the Rating Agencies with notice of such Certificate transfer.
At the option of a Certificateholder, Certificates may be exchanged for
other Certificates of a like aggregate Percentage Interest, upon surrender of
the Certificates to be exchanged at such office. Whenever any Certificates are
so surrendered for exchange, the Owner Trustee or the Certificate Registrar
shall execute, authenticate and deliver the Certificates which the
Certificateholder making the exchange is entitled to receive.
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 registration of transfer or exchange of
Certificates.
All Certificates surrendered for registration of transfer or exchange
shall be marked "canceled" by the Owner Trustee.
The preceding provisions of this Section notwithstanding, the Owner
Trustee shall not make, and the Certificate Registrar shall not register
transfers or exchanges of Certificates for a period of 15 days preceding the due
date for any payment with respect to the Certificates.
SECTION 3.5 Mutilated; Destroyed; Lost or Stolen Certificates.
(a) If (i) any mutilated Certificate is surrendered to the
Certificate Registrar, or the Certificate Registrar receives evidence to its
satisfaction of the destruction, loss or theft of any Certificate, and (ii)
there is delivered to the Certificate Registrar, the Owner Trustee and the Trust
such security or indemnity as may be required by them to hold each of them
harmless, then, in the absence of notice to the Certificate Registrar or the
Owner Trustee that such Certificate has been acquired by a bona fide purchaser,
the Owner Trustee shall execute on behalf of the Trust and the Owner Trustee or
the Certificate Registrar shall authenticate and deliver, in exchange for or in
lieu
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of any such mutilated, destroyed, lost or stolen Certificate, a replacement
Certificate of a like Percentage Interest; provided, however, that if any such
destroyed, lost or stolen Certificate, but not a mutilated Certificate, shall
have become or within seven days shall be due and payable, then instead of
issuing a replacement Certificate the Owner Trustee may pay such destroyed, lost
or stolen Certificate when so due or payable.
(b) In connection with the issuance of any replacement
Certificate under this Section 3.5, the Owner Trustee or the Certificate
Registrar may require the payment by the Holder of such Certificate of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto and any other reasonable expenses (including the fees and
expenses of the Owner Trustee and the Certificate Registrar) connected
therewith.
(c) Any duplicate Certificate issued pursuant to this Section
3.5 in replacement of any mutilated, destroyed, lost or stolen Certificate shall
constitute an original additional contractual obligation of the Trust, whether
or not the mutilated, destroyed, lost or stolen Certificate shall be found at
any time or be enforced by anyone, and shall be entitled to all the benefits of
this Agreement equally and proportionately with any and all other Certificates
duly issued hereunder.
(d) The provisions of this Section 3.5 are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Certificates.
SECTION 3.6 Persons Deemed Certificateholders. Prior to due
presentation of a Certificate for registration of transfer, the Owner Trustee,
the Certificate Registrar or any Trust Paying Agent may treat the Person in
whose name any Certificate shall be registered in the Certificate Registrar as
the owner of such Certificate for the purpose of receiving distributions
pursuant to Article V and for all other purposes whatsoever, and neither the
Owner Trustee, nor the Certificate Registrar nor the Trust Paying Agent shall be
affected 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 and the Seller,
within 15 days after receipt by the Owner Trustee of a request therefor from the
Servicer or the Seller in writing, a list, in such form as the Servicer or the
Seller may reasonably require, 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 a
Percentage Interest 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 Servicer, the
Seller, the Certificate Registrar or the Owner Trustee accountable by reason of
the disclosure of its name and address, regardless of the source from which
information was derived.
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SECTION 3.8 Maintenance of Office For Surrenders. 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
Operative Documents may be served. The Owner Trustee initially designates the
Corporate Trust Office as its principal office for such purposes. The Owner
Trustee shall give prompt written notice to the Seller and to the
Certificateholders and Owners 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 The Chase Manhattan Bank as the 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(a) and shall
report the amounts of such distributions to the Owner Trustee and the Servicer.
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. The Owner Trustee may revoke such power and remove the Trust
Paying Agent if the Owner Trustee determines in its sole discretion that the
Trust Paying Agent shall have failed to perform its obligations under this
Agreement in any material respect. If The Chase Manhattan Bank shall no longer
be the Trust Paying Agent, the Owner Trustee shall appoint a successor to act as
Trust Paying Agent (which shall be a bank or trust company acceptable to the
Seller, the Note Insurer and the Rating Agencies). 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 shall 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
Holders. The Trust Paying Agent shall return all unclaimed funds to the Trust
and upon removal of a Trust Paying Agent such Trust Paying Agent shall also
return all funds in its possession to the Trust. The provisions of Article VI
shall apply to the Owner Trustee also in its role as Trust Paying Agent, for so
long as the Owner Trustee shall act as Trust Paying Agent and, to the extent
applicable, to any other Trust Paying Agent (including The Chase Manhattan Bank)
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 Restriction on Transfers of Certificate.
(a) Each prospective purchaser and any subsequent transferee
of a Certificate (each, a "Prospective Holder"), other than First Alliance
Portfolio Services, Inc., shall either:
(i) represent and warrant, in writing, to the Owner
Trustee and the Certificate Registrar and any of their respective
successors that:
(A) Such Person is (I) 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
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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 (II) a Person involved in the
organization or operation of the Trust or an
affiliate of such Person within the meaning of Rule
3a-7 of the Investment Company Act of 1940, as
amended (including, but not limited to, the
Seller).
(B) Such Person understands that the
Certificate has not been and will not be registered
under the Securities Act and may be offered, sold,
pledged or otherwise transferred only to a person
whom the seller reasonably believes is (A) a
qualified institutional buyer or (B) a Person
involved in the organization or operation of the
Trust or an affiliate of such Person, in a
transaction meeting the requirements of Rule 144A
under the Securities Act and in accordance with any
applicable securities laws of any state of the
United States.
(C) Such Person understands that the
Certificate bears 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, FIRST
ALLIANCE MORTGAGE COMPANY) 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"; or
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(ii) furnish to the Owner Trustee and the
Certificate Registrar and any of their respective successors an opinion
of counsel acceptable to such persons that such transfer may be made
pursuant to an exemption to the Securities Act, describing the
applicable exemption and the basis therefor, or is being made pursuant
to the Securities Act, which opinion of counsel shall not be an expense
of the Trust, the Owner Trustee or the Certificate Registrar.
(b) Each Prospective Holder, other than First Alliance
Portfolio Services, Inc., shall represent and warrant, in writing, to the Owner
Trustee and the Certificate Registrar and any of their respective successors
that the Prospective Holder is not an "employee benefit plan" within the meaning
of Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), or a "plan" within the meaning of Section 4975(e)(1) of the
Code (any such plan or employee benefit plan, a "Plan") and is not directly or
indirectly purchasing such Certificate on behalf of, as investment manager of,
as named fiduciary of, as trustee of, or with assets of a Plan.
(c) 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 (i)
an entity that holds residual securities as nominee to facilitate the clearance
and settlement of such securities through electronic book-entry changes in
accounts of participating organizations (a "Book-Entry Nominee"), or (ii) an
individual, corporation, partnership or other person unless such transferee is
not a Non-U.S. Person (any such person being referred to herein as a
"Non-permitted Foreign Holder"), and any such purported transfer shall be void
and have no effect.
(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 an IRS Form W-9
and a certificate, signed by the transferee, that it is not a Book-Entry
Nominee or a Non-permitted Foreign Holder, which certificate shall contain the
consent of the transferee to any amendments of this Agreement as may be required
to effectuate further the foregoing restrictions on transfer of the Certificate
to Book-Entry Nominees or Non-permitted Foreign Holders, and an agreement by the
transferee that it will not transfer a Certificate without providing to the
Owner Trustee a certificate in the form provided above.
(e) The Certificates shall bear an additional legend referring
to the restrictions contained in paragraph (c) above.
(f) No offer, sale, transfer, pledge, hypothecation or other
disposition (including any pledge or transfer under a repurchase transaction or
securities loan) of any Certificate shall be made to any entity unless, prior to
such disposition, (i) the Note Insurer has given its prior written consent to
the offer, sale, transfer, pledge, hypothecation or other disposition; provided,
however, that such consent shall not be unreasonably withheld and (ii) the
Prospective Holder delivers to the Owner Trustee an opinion of counsel, rendered
by a law firm generally recognized to be qualified to opine concerning the tax
aspects of asset securitization, to the effect that such transfer (including any
disposition permitted following any default under any pledge or repurchase
transaction will not cause the Trust to be (i) treated as an association taxable
as a corporation for federal income tax
14
purposes, (ii) taxable as a taxable mortgage pool as defined in Section 7701(i)
of the Code or (iii) taxable as a "publicly traded partnership" as defined in
Treasury Regulation Section 1.7704-1. Notwithstanding the foregoing, the
provisions of this paragraph shall not apply to the initial transfer of the
Certificates to First Alliance Portfolio Services, Inc.
15
ARTICLE IV
ACTIONS BY OWNER TRUSTEE
SECTION 4.1 Prior Notice to Owners with Respect to Certain Matters. The
Owner Trustee shall not take action with respect to the following matters,
unless (i) the Owner Trustee shall have notified the Certificateholders, the
Rating Agencies and the Note Insurer in writing of the proposed action at least
30 days before the taking of such action, and (ii) 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 or the Note Insurer have withheld consent or provided
alternative direction (provided that any directions 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 and law suits brought in connection with the collection of the
Mortgage Loans) or the compromise of any action, claim or lawsuit brought by or
against the Trust (except claims and law suits brought in connection with the
collection of the Mortgage Loans);
(b) the election by the Trust to file an amendment to the
Certificate of Trust, (except to the extent such amendment is required under the
Business Trust Statute);
(c) the amendment or other change to this Agreement or any
Operative Documents in circumstances where the consent of any Owner of a Note or
the Note Insurer is required;
(d) the amendment or other change to this Agreement or any
Operative Documents in circumstances where the consent of any Owner of a Note or
the Note Insurer is not required and such amendment materially adversely affects
the interest of the Certificateholders;
(e) the appointment pursuant to an Indenture of a successor
Note Registrar, 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, Certificate Registrar or Trust Paying Agent of its obligations under
the Indentures or this Agreement, as applicable;
(f) the consent to the calling or waiver of any default of any
Operative Document;
(g) the consent to the assignment of the Indenture Trustee or
Servicer of their respective obligations under the Operative Document;
(h) except as provided in Article IX hereof, dissolve,
terminate or liquidate the Trust in whole or in part;
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(i) merge or consolidate the Trust with or into any other
entity, or convey or transfer all or substantially all of the Trust's assets to
any other entity;
(j) cause the Trust to incur, assume or guaranty any
indebtedness other than as set forth in this Agreement;
(k) do any act that conflicts with any other Operative
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 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 and any operating expenses from its
own funds, and the Trust shall not pay the indebtedness, operating expenses or
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 Seller and the Servicer.
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 Operative Documents, to (i) remove or
replace the Servicer or the Indenture Trustee, (ii) institute proceedings to
have the Trust declared or adjudicated a bankruptcy or insolvent, (iii) consent
to the institution of bankruptcy or insolvency proceedings against the Trust,
(iv) file a petition or consent to a petition seeking reorganization or relief
on behalf of the Trust under any applicable federal or state law relating to
bankruptcy, (v) consent to the appointment of a receiver, liquidator, assignee,
trustee, sequestrator (or any similar official) of the Trust or a substantial
portion of the property of the Trust, (vi) make any assignment for the benefit
of the Trust's creditors, (vii) cause the Trust to admit in writing its
inability to pay its debts generally as they become due or (viii) take any
action, or cause the Trust to take any action, in furtherance of any of the
foregoing (any of the above, a "Bankruptcy Action"). So long as an Indenture
remains 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.
17
SECTION 4.2 Action by Holders with Respect to Certain Matters. The
Owner Trustee shall not have the power to remove the Servicer under the Sale and
Servicing Agreement.
SECTION 4.3 Action by Holders with Respect to Bankruptcy. Neither the
Owner Trustee nor any Certificateholder shall have the power to commence a
voluntary proceeding in bankruptcy relating to the Trust without the consent and
approval of (i) the Note Insurer, (ii) the unanimous prior approval of all
Certificateholders and Owners of Notes, (iii) the Owner Trustee and (iv) the
Indenture Trustee and the delivery to the Owner Trustee by each such
Certificateholder of a certificate certifying that such Certificateholder
reasonably believes that the Trust is insolvent. This paragraph shall survive
for one year and one day following termination of this Agreement.
SECTION 4.4 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 Operative Documents or would be
contrary to Section 2.3, nor shall the Owner Trustee be obligated to follow any
such direction, if given.
SECTION 4.5 Majority Control. Except as expressly provided herein any
action that may be taken or consent that may be given or withheld or written
notice delivered by the Certificateholders under this Agreement may be taken by
Holders of Certificates representing not less than a majority of the
Certificates.
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ARTICLE V
APPLICATION OF OWNER TRUST ESTATE; CERTAIN DUTIES
SECTION 5.1 Establishment of Certificate Distribution Account. The
Owner Trustee shall cause the Servicer, for the benefit of the
Certificateholders, to establish and maintain with The Chase Manhattan Bank for
the benefit of the Owner Trustee a Trust Account which, while the Trust Paying
Agent holds such Account, shall be entitled "CERTIFICATE DISTRIBUTION ACCOUNT,
THE CHASE MANHATTAN BANK AS TRUST PAYING AGENT, IN TRUST FOR THE FIRST ALLIANCE
MORTGAGE LOAN ASSET BACKED CERTIFICATES, SERIES 1998-2." Funds shall be
deposited in the Certificate Distribution Account as required by the Indentures,
or following satisfaction or release of an Indenture, by the Sale and 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. Except
as otherwise expressly provided herein or in the Sale and Servicing Agreement,
the Certificate Distribution Account shall be under the sole dominion and
control of the Owner Trustee for the benefit of the Certificateholders.
SECTION 5.2 Application of Trust Funds.
(a) On each Payment Date, the Trust Paying Agent shall
distribute to the Certificateholders, pro rata, from amounts on deposit in the
Certificate Distribution Account the distributions as provided in Sections
3.5(b)(v) and 3.5(f)(v) of the Sale and Servicing Agreement with respect to such
Payment Date.
(b) In the event that any withholding tax is imposed on the
Trust's payment (or allocations of income) to a Certificateholder, such tax
shall reduce the amount otherwise distributable to the Certificateholder in
accordance with this Section. The Trust Paying Agent is hereby authorized and
directed to retain from amounts otherwise distributable to the
Certificateholders sufficient funds for the payment of any tax that is legally
owed by the Trust (but such authorization shall not prevent the Trust Paying
Agent from contesting any such tax in appropriate proceedings, and withholding
payment of such tax, if permitted by law, pending the outcome of such
proceedings). The amount of any withholding tax imposed with respect to a
Certificateholder shall be treated as cash distributed to such Holder at the
time it is withheld by the Trust Paying Agent and remitted to the appropriate
taxing authority. If there is a possibility that withholding tax is payable with
respect to a distribution (such as a distribution to a non-U.S. Holder), the
Trust Paying Agent may in its sole discretion withhold such amounts in
accordance with this paragraph (b). In the event that a Certificateholder wishes
to apply for a refund of any such withholding tax, the Trust Paying Agent shall
reasonably cooperate with such Certificateholder in making such claim so long as
such Certificateholder agrees to reimburse the Trust Paying Agent for any
out-of-pocket expenses incurred.
(c) Distributions to Certificateholders shall be subordinated
to the creditors of the Trust, including the Owners of each Series of Notes and
the Note Insurer.
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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 immediately preceding Record Date either by wire transfer, in
immediately available funds, to the account of such Certificateholder at a bank
or other entity having appropriate facilities therefor, if such
Certificateholder shall have provided to the Certificate Registrar appropriate
written instructions at least five Business Days prior to such Payment Date, or,
if not, by check mailed to such Certificateholder at the address of such
Certificateholder appearing in the Certificate Register.
SECTION 5.4 Segregation of Moneys; No Interest. Subject to Sections 5.1
and 5.2, moneys received by the Trust Paying Agent hereunder and deposited into
the Certificate Distribution Account will be segregated except to the extent
required otherwise by law and shall be invested, at the direction of the Seller,
in Eligible Investments maturing no later than one Business Day prior to the
related Payment Date. 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.
SECTION 5.5 Accounting and Reports to the Certificateholders, the
Internal Revenue Service and Others.
(a) The Indenture Trustee shall (i) maintain (or cause to be
maintained) the books of the Trust on a calendar year basis on the accrual
method of accounting, and such books shall be maintained separately from those
of any other entity and reflect the separate interest of the Trust, (ii) deliver
to each Certificateholder, as may be required by the Code and applicable
Treasury Regulations, such information as may be required (including Schedule
K-1) to enable such Certificateholder to prepare its federal and state income
tax returns and (iii) withhold from any income or distributions to
Certificateholders made pursuant to this Agreement, any tax required to be
withheld (as certified by the Seller).
(b) The Servicer shall (i) file such tax returns relating to
the Trust (including a partnership information return, IRS Form 1065), and make
such elections as may from time to time be required or appropriate under any
applicable state or federal statute or rule or regulation thereunder so as to
maintain the Trust's characterization as a partnership for federal income tax
purposes and (ii) cause such tax returns to be signed in the manner required by
law. The Servicer shall elect under Section 1278 of the Code to include in
income currently any market discount that accrues with respect to the Mortgage
Loans. The Servicer shall not make the election provided under Section 754 of
the Code.
SECTION 5.6 Signature on Returns; Tax Matters Partner.
(a) The Indenture Trustee shall sign on behalf of the Trust
the tax returns of the Trust, unless applicable law requires a Certificateholder
to sign such documents, in which case such documents shall be signed by the
Seller.
20
(b) The Seller shall be designated the "tax matters partner"
of the Trust pursuant to Section 6231(a)(7)(A) of the Code and applicable
Treasury Regulations.
21
ARTICLE VI
AUTHORITY AND DUTIES OF THE 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
Certificates and the Operative 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 Operative 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 Seller shall approve, as evidenced conclusively by the Owner
Trustee's execution thereof, and, on behalf of the Trust, to direct the
Indenture Trustee to authenticate and deliver the Adjustable Rate Notes in the
aggregate principal amount of $30,000,000 and the Fixed Rate Notes, in the
aggregate principal amount of $70,000,000. 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 Operative 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 Operative
Documents to which the Trust is a party and to administer the Trust in the
interest of the Certificateholders, and in accordance with the provisions of
this Agreement; and
(b) to obtain and preserve, the Trust'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 Indentures, the
Notes, and each other instrument and agreement included in the Owner Trust
Estate.
SECTION 6.3 Action upon Instruction by Owners.
(a) Subject to Article IV, 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 purposes of the Trust. Such
direction may be exercised at any time by written instruction of the
Certificateholders pursuant to Article IV.
(b) Notwithstanding the foregoing, the Owner Trustee shall not
be required to take any action hereunder or under any Operative 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 Operative 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 any Operative Document, or is unsure as to the application, intent,
interpretation or meaning of any provision of this agreement or the Operative
Documents, the Owner Trustee shall promptly give notice (in such form as shall
be
22
appropriate under the circumstances) to the Note Insurer and the
Certificateholders requesting instruction as to the course of action to be
adopted, and, to the extent the Owner Trustee acts in good faith in accordance
with any such instruction 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 instructions within ten 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 which is consistent, in its view, with this
Agreement or the Operative Documents, and as it shall deem to be the best
interests of the Certificateholders, and the Owner Trustee shall have no
liability to any Person for any 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 Operative 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 Operative
Documents, as it shall deem to be in the best interest 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
Operative Documents or in Instructions. The Owner Trustee shall not have any
duty or obligation to manage, make any payment with respect to, register,
record, sell, dispose of, or otherwise deal with the Owner Trust Estate, or to
otherwise take or refrain from taking any action under, or in connection with,
any document contemplated hereby to which the Owner Trustee is a party, except
as expressly provided by the terms of this Agreement, any Operative 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 Operative Document against the Owner Trustee. The Owner Trustee
shall have no responsibility for filing any financing or continuation statement
in any public office at any time or to otherwise perfect or maintain the
perfection of any security interest or lien granted to it hereunder or to
prepare or file any Securities and Exchange Commission filing for the Trust or
to record this Agreement or any Operative 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.
23
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 Operative 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.
24
ARTICLE VII
CONCERNING THE OWNER TRUSTEE
SECTION 7.1 Acceptance of Trusts and Duties. Except as otherwise
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 Operative Document shall
look only to the assets of the Trust for payment or satisfaction thereof. 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.
The Owner Trustee also agrees to disburse all moneys actually received by it
constituting part of the assets of the Trust upon the terms of the Operative
Documents and this Agreement. The Owner Trustee shall not be liable or
accountable hereunder or under any Operative Document under any circumstances,
except (i) for its own gross negligent action, its own gross negligent failure
to act or its own willful misconduct or (ii) in the case of the inaccuracy of
any representation or warranty contained in Section 7.3 and 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 at no time have any responsibility
or liability for or with respect to the legality, validity and enforceability of
any Mortgage Loan, or the perfection and priority of any security interest
created by any Mortgage Loan in any Property or the maintenance of any such
perfection and priority, or for or with respect to the sufficiency of the assets
of the Trust or their ability to generate the payments to be distributed to
Certificateholders under this Agreement or the Owners of the Notes under the
Indentures, including, without limitation: the existence, condition and
ownership of any Property; the existence and enforceability of any insurance
thereon; the existence and contents of any Mortgage Loan on any computer or
other record thereof; the validity of the assignment of any Mortgage Loan to the
Trust or of any intervening assignment; the completeness of any Mortgage Loan;
the performance or enforcement of any Mortgage Loan; the compliance by the
Seller or the Servicer with any warranty or representation made under any
Operative Document or in any related document or the accuracy of any such
warranty or representation or any action of the Indenture Trustee, the Custodian
or the Servicer or any subservicer taken in the name 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 Note Insurer or any Certificateholder;
(c) no provision of this Agreement or any Operative 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 Operative 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;
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(d) under no circumstances shall the Owner Trustee be liable
for indebtedness evidenced by or arising under any of the Operative Documents,
including the Fixed Rate Note Principal Balance and the Adjustable Rate Note
Principal Balance and the interest on the Notes;
(e) the Owner Trustee shall not be responsible for or in
respect of and makes no representation as to the validity or sufficiency of any
provision of this Agreement or for the due execution hereof by the Seller 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
Operative Documents, the Notes, the Certificates (other than the certificate of
authentication on the Certificates, if executed by the Owner Trustee) or of any
Mortgage Loans or any related documents, and the Owner Trustee shall in no event
assume or incur any liability, duty or obligation to any Owner of a Note or to
any Certificateholder, other than as expressly provided for herein and in the
Operative Documents;
(f) the Owner Trustee shall not be liable for the default or
misconduct of the Indenture Trustee, the Custodian, the Seller or the Servicer
under any of the Operative 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 Operative Documents that are required to be performed by
the Indenture Trustee under the Indentures, the Custodian under the Custodial
Agreement or the Seller or Servicer under the Sale and Servicing Agreement;
(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, the Underwriting Agreement or any Operative
Document, at the request, order or direction of any of the Note Insurer or any
of the Certificateholders, unless the Note Insurer or 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 Operative Document
shall not be construed as a duty, and the Owner Trustee shall not be answerable
for other than its negligence or willful misconduct in the performance of any
such act;
(h) The Owner Trustee shall have no responsibility for filing
any financing or continuation statement in any public office at any time or to
otherwise perfect or maintain the perfection of any security interest or lien
granted to it hereunder or to prepare, execute or file any Securities and
Exchange Commission filing or tax return for the Trust or to record this
Agreement or any Operative Document.
SECTION 7.2 Furnishing of Documents. The Owner Trustee shall furnish
(a) 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 Operative Documents, and (b) to the Note Insurer and the
Rating Agencies, copies of any reports, notices, requests, demands,
certificates, financial statements, and any other instruments relating to the
Trust, the Certificates or the Notes in the possession of the Owner Trustee,
that the Note Insurer shall request in writing.
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SECTION 7.3 Representations and Warranties of Owner Trustee. The Owner
Trustee hereby represents and warrants to the Seller, for the benefit of the
Certificateholders and the Note Insurer, that:
(a) It is a banking corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
(b) It has full power, authority and legal right to execute,
deliver and perform its obligations under this Agreement, and has taken all
necessary action to authorize the execution, delivery and performance by it of
this Agreement.
(c) The execution, delivery and performance by it of this
Agreement (i) shall not violate any provision of any law or regulation governing
the banking and trust powers of the Owner Trustee or any order, writ, judgment
or decree of any court, arbitrator or governmental authority applicable to the
Owner Trustee or any of its assets, (ii) shall not violate any provision of the
corporate charter or by-laws of the Owner Trustee, or (iii) shall not violate
any provision of, or constitute, with or without notice or lapse of time, a
default under, or result in the creation or imposition of any lien on any
properties included in the Trust pursuant to the provisions of any mortgage,
indenture, contract, agreement or other undertaking to which it is a party,
which violation, default or lien could reasonably be expected to have a
materially adverse effect on the Owner Trustee's performance or ability to
perform its duties as Owner Trustee under this Agreement or on the transactions
contemplated in this Agreement.
(d) This Agreement has been duly executed and delivered by the
Owner Trustee and constitutes the legal, valid and binding agreement of the
Owner Trustee, enforceable in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization, or
other similar law affecting the enforcement of creditors' rights in general and
by general principles of equity, regardless of whether such enforceability is
considered in a proceeding in equity or at law.
(e) The Owner Trustee is not in default with respect to any
order or decree of any court or any order, regulation or demand of any Federal,
state, municipal or governmental agency, which default might have consequences
that would materially and adversely affect the condition (financial or other) or
operations of the Owner Trustee or its properties or might have consequences
that would materially adversely affect its performance hereunder.
(f) No litigation is pending or, to the best of the Owner
Trustee's knowledge, threatened against the Owner Trustee which would prohibit
its entering into this Trust Agreement or performing its obligations under this
Trust Agreement.
SECTION 7.4 Reliance; Advice of Counsel.
(a) The Owner Trustee shall incur no liability to anyone in
acting upon any signature, instrument, notice, resolution, request, consent,
order, certificate, report, opinion, note or other document or paper believed by
it to be genuine and believed by it to be signed by the proper
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party or parties. The Owner Trustee may accept a certified copy of a resolution
of the board of directors or other governing body of any corporate party as
conclusive evidence that such resolution has been duly adopted by such body and
that the same is in full force and effect. As to any fact or matter the method
of the determination of which is not specifically prescribed herein, the Owner
Trustee may for all purposes hereof rely on a certificate, signed by the
president or any vice president or by the treasurer or other authorized officers
of the relevant party, as to such fact or matter, and such certificate shall
constitute full protection to the Owner Trustee for any action taken or omitted
to be taken by it in good faith in reliance thereon.
(b) In the exercise or administration of the Trust hereunder
and in the performance of its duties and obligations under this Agreement or the
Operative Documents, the Owner Trustee: (i) may act directly or through its
agents, attorneys, custodians or nominees, and the Owner Trustee shall not be
liable for the conduct or misconduct of such agents, attorneys, custodians or
nominees if such agents, attorneys, custodians or nominees shall have been
selected by the Owner Trustee with reasonable care and (ii) may consult with
counsel, accountants and other skilled professionals 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
opinion or advice of any such counsel, accountants or other such Persons and not
contrary to this Agreement or any of the Operative Documents.
(c) In providing any certificates required of the Issuer
pursuant to an Indenture, the Owner Trustee may rely on an Officer's Certificate
of the Seller or the Servicer in a form satisfactory to the Owner Trustee.
SECTION 7.5 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 Seller, the Indenture Trustee and
the Servicer in transactions in the same manner and with the same rights as it
would have if it were not the Owner Trustee.
SECTION 7.6 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 Operative Documents and the
transactions contemplated hereby and thereby until such time as the Trust shall
terminate in accordance with the terms hereof.
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ARTICLE VIII
COMPENSATION OF OWNER TRUSTEE
SECTION 8.1 Owner Trustee's Fee and Expenses. The Owner Trustee shall
receive from the Seller as compensation for its services hereunder such fees as
have been separately agreed upon before the date hereof between the Seller and
the Owner Trustee, and the Owner Trustee shall be entitled to be reimbursed by
the Seller for its other reasonable expenses hereunder, including the reasonable
compensation, expenses and disbursements of such agents, custodians, nominees,
representatives, experts and counsel as the Owner Trustee may employ in
connection with the exercise and performance of its rights and its duties
hereunder. The amount of the Owner Trustee Fee shall be paid to the Owner
Trustee pursuant to Section 3.5 of the Sale and Servicing Agreement.
SECTION 8.2 Indemnification. The Seller shall be liable as primary
obligor pursuant to the Sale and Servicing Agreement for, and shall indemnify
the Owner Trustee and its successors, assigns, agents and servants
(collectively, the "Indemnified Parties") from and against, any and all
liabilities, obligations, losses, damages, taxes, claims, actions and suits, and
any and all reasonable costs, expenses and disbursements (including reasonable
legal fees and expenses) of any kind and nature whatsoever (collectively,
"Expenses") which may at any time be imposed on, incurred by, or asserted
against the Owner Trustee or any Indemnified Party in any way relating to or
arising out of this Agreement, the Operative Documents, the Owner Trust Estate,
the administration of the Trust or the action or inaction of the Owner Trustee
hereunder, provided that:
(i) the Seller shall not be liable for or required to
indemnify an Indemnified Party from and against Expenses arising or resulting
from the Owner Trustee's willful misconduct, gross negligence or bad faith, as
specified in the fourth sentence of Section 7.1 or as a result of any inaccuracy
of a representation or warranty contained in Section 7.3 expressly made by the
Owner Trustee;
(ii) with respect to any such claim, the Indemnified Party
shall have given the Seller written notice thereof promptly after the
Indemnified Party shall have actual knowledge thereof;
(iii) while maintaining control over its own defense, the
Seller shall consult with the Indemnified Party in preparing such defense; and
(iv) notwithstanding anything in this Agreement to the
contrary, the Seller shall not be liable for settlement of any claim by an
Indemnified Party entered into without the prior consent of the Seller which
consent shall not be unreasonably withheld.
The indemnities contained in this Section shall survive the resignation
or termination of the Owner Trustee or the termination of this Agreement. In the
event of any claim, action or proceeding for which indemnity will be sought
pursuant to this Section 8.2, the Owner Trustee's choice of legal counsel, if
other than the legal counsel retained by the Owner Trustee in connection with
the execution and delivery of this Agreement, shall be subject to the approval
of the Seller, which
29
approval shall not be unreasonably withheld. In addition, upon written notice to
the Owner Trustee and with the consent of the Owner Trustee which consent shall
not be unreasonably withheld, the Seller has the right to assume the defense of
any claim, action or proceeding against the Owner Trustee.
SECTION 8.3 Payments to the Owner Trustee. Any amounts paid to the
Owner Trustee pursuant to this Article VIII shall be deemed not to be a part of
the Owner Trust Estate immediately after such payment.
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ARTICLE IX
TERMINATION OF TRUST AGREEMENT
SECTION 9.1 Termination of Trust Agreement.
(a) This Agreement (other than Article VIII) and the Trust
shall terminate and be of no further force or effect on the earlier of: (i) the
final distribution by the Indenture Trustee of all moneys or other property or
proceeds of the assets of the Trust in accordance with the terms of the
Indentures and (ii) the expiration of 21 years from the death of the last
survivor of the descendants of Joseph P. Kennedy (the late ambassador of the
United States to the Court of St. James's). The bankruptcy, liquidation,
dissolution, death or incapacity of any Certificateholder shall not (x) operate
to terminate this Agreement or the Trust, nor (y) entitle such
Certificateholder's legal representatives or heirs to claim an accounting or to
take any action or proceeding in any court for a partition or winding up of all
or any part of the Trust or the Owner Trust Estate or (z) otherwise affect the
rights, obligations and liabilities of the parties hereto.
(b) The Certificates shall be subject to an early redemption
or termination at the option of the Holders of a majority of the Certificates,
and in certain instances the Note Insurer, in the manner and subject to the
provisions of Section 5.2 of the Sale and Servicing Agreement.
(c) Except as provided in paragraphs (a) and (b) of this
Section 9.1, none of the Seller, the Servicer, the Note Insurer or any
Certificateholder shall be entitled to revoke or terminate the Trust.
(d) 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 distribution and
cancellation, shall be given by the Owner Trustee by letter to the Note Insurer,
the Rating Agencies and the Trust Paying Agent mailed within five Business Days
of receipt of notice of such termination, stating: (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 will give notice to the Trust Paying Agent
of each presentation and surrender of the Certificates and the Trust Paying
Agent shall cause to be distributed to Certificateholders amounts distributable
on such Payment Date pursuant to Section 5.3 of the Sale and Servicing
Agreement.
(e) Upon the winding up of the Trust and its termination, the
Owner Trustee shall cause the Certificate of Trust to be canceled by filing a
certificate of cancellation with the Secretary of State in accordance with the
provisions of Section 3810(d) of the Business Trust Statute.
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ARTICLE X
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
SECTION 10.1 Eligibility Requirements for Owner Trustee. The Owner
Trustee shall at all times be a corporation satisfying the provisions of Section
3807(a) of the Business Trust Statute; authorized to exercise corporate powers;
having a combined capital and surplus of at least $100,000,000 and subject to
supervision or examination by Federal or state authorities; and having (or
having a parent which has) a rating of at least "Baa3" by Moody's 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 30 days prior written notice thereof to the Seller, the Indenture
Trustee, the Rating Agencies and the Note Insurer. Upon receiving such notice of
resignation, the Seller 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 Indenture Trustee, 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 Indenture Trustee
with the consent of the Note Insurer, may remove the Owner Trustee. If the
Indenture Trustee or the Note Insurer shall remove the Owner Trustee under the
authority of the immediately preceding sentence, the Note Insurer, or the
Servicer with the consent of the Note Insurer, shall promptly appoint a
successor Owner Trustee by written instrument in duplicate, one copy of which
instrument shall be delivered to the outgoing Owner Trustee so removed and one
copy to the successor Owner Trustee and payment of all fees owed to the outgoing
Owner Trustee.
Any resignation or removal of the Owner Trustee and appointment of a
successor Owner Trustee pursuant to any of the provisions of this Section shall
not become effective until acceptance of appointment by the successor Owner
Trustee pursuant to Section 10.3, written approval by the Note Insurer and
payment of all fees and expenses owed to the outgoing Owner Trustee. The Seller
shall provide notice of such resignation or removal of the Owner Trustee to each
of the Rating Agencies and the Note Insurer.
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SECTION 10.3 Successor Owner Trustee. Any successor Owner Trustee
appointed pursuant to Section 10.2 shall execute, acknowledge and deliver to the
Seller, 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 monies held by it
under this Agreement; and the Seller 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 Seller shall mail notice of the successor of such Owner
Trustee to all Certificateholders, the Indenture Trustee, the Owners of the
Notes, the Note Insurer and the Rating Agencies. If the Seller 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 Seller.
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, and without the
execution or filing of any instrument or any further act on the part of any of
the parties hereto; provided, however, that the Owner Trustee shall mail notice
of such merger or consolidation to the Note Insurer and each of the Rating
Agencies.
SECTION 10.5 Appointment of Co-Trustee or Separate Trustee.
(a) Notwithstanding any other provisions of this Agreement, at
any time, for the purpose of meeting any legal requirement of any jurisdiction
in which any part of the Owner Trust Estate or any Property may at the time be
located, the Owner Trustee (with the consent of the Note Insurer) shall have the
power and shall execute and deliver all instruments to appoint one or more
Persons approved by the Owner Trustee and the Note Insurer to act as co-trustee,
jointly with the Owner Trustee, or as separate trustee or trustees, of all or
any part of the assets of the Trust, 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
33
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.
(b) Each separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions 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.
(c) Any notice, request or other writing given to the Owner
Trustee shall be deemed to have been given to each of the then separate trustees
and co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article. Each separate trustee and co-trustee, upon its
acceptance of the trusts conferred, shall be vested with the estates or property
specified in its instrument of appointment, either jointly with the Owner
Trustee or separately, as may be provided therein, subject to all the provisions
of this Agreement, specifically including every provision of this Agreement
relating to the conduct of, affecting the liability of, or affording protection
to, the Owner Trustee. Each such instrument shall be filed with the Owner
Trustee and a copy thereof given to the Note Insurer.
(d) Any separate trustee or co-trustee may at any time appoint
the Owner Trustee as its agent or attorney-in-fact with full power and
authority, to the extent not prohibited by law, to do any lawful act under or in
respect of this Agreement on its behalf and in its name. If any separate trustee
or co-trustee shall die, become incapable of acting, resign or be removed, all
of its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Owner Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
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ARTICLE XI
MISCELLANEOUS
SECTION 11.1 Amendments Without Consent of Certificateholders or Owners
of the Notes. This Agreement may be amended by the Seller and the Owner Trustee
without the consent of any of the Certificateholders (but with the prior written
consent of the Note Insurer), to (i) cure any ambiguity, (ii) correct or
supplement any provision in this Agreement that may be defective or inconsistent
with any other provision in this Agreement, (iii) add or supplement any credit
enhancement for the benefit of the Owners of the Notes or the
Certificateholders, (iv) add to the covenants, restrictions or obligations of
the Seller or the Owner Trustee and (v) add, change or eliminate any other
provision of this Agreement in any manner that shall not, adversely affect in
any material respect the interests of the Owners of the Notes or the
Certificateholders. An amendment described above shall be deemed not to
adversely affect in any material respect the interests of any Certificateholder
or Owner of a Note if (i) an opinion of counsel is obtained to such effect or
(ii) the party requesting the amendment satisfies the Rating Agency Condition
with respect to such amendment.
SECTION 11.2 Amendments With Consent of Certificateholders. This
Agreement may be amended from time to time by the Seller and the Owner Trustee
with the consent of the Note Insurer and more than a majority in Percentage
Interests of the Certificates 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 Certificateholders; provided,
however, that no such amendment shall (a) increase or reduce in any manner the
amount of, or accelerate or delay the timing of, collections of payments on
Mortgage Loans or distributions that shall be made for the benefit of the
Certificateholders or (b) reduce the aforesaid percentage required to consent to
any such amendment, without the consent of the Holders of all of the
Certificates then outstanding.
SECTION 11.3 Form of Amendments.
(a) Promptly after the execution of any amendment, supplement
or consent pursuant to Section 11.1 or 11.2, 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 Rating
Agency.
(b) It shall not be necessary for the consent of the
Certificateholders, pursuant to Section 11.2 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 Operative 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.
(c) 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.
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(d) 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 and that all conditions precedent to
the execution and delivery of such amendment have been satisfied. 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.
(e) The Owner Trustee shall, upon execution thereof, provide
each Certificateholder, the Seller, the Note Insurer and the Rating Agencies
with notice of the form and substance of any amendment to this Agreement.
SECTION 11.4 No Legal Title to Owner Trust Estate. The
Certificateholders shall not have legal title to any part of the assets of the
Owner Trust Estate solely by virtue of their status as Certificateholders. 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, and
interest of the Certificateholders to and in their ownership interest in the
assets of the Trust 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 assets of the Trust.
SECTION 11.5 Limitations on Rights of Others. Except for Section 2.7,
the provisions of this Agreement are solely for the benefit of the Note Insurer,
the Owner Trustee, the Seller, the Certificateholders and, to the extent
expressly provided herein, the Indenture Trustee and the Owners of the Notes,
and nothing in this Agreement (other than Section 2.7), whether express or
implied, shall be construed to give to any other Person any legal or equitable
right, remedy or claim in the assets of the Trust or under or in respect of this
Agreement or any covenants, conditions or provisions contained herein.
SECTION 11.6 Notices.
(a) All demands, notices and communications hereunder shall be
in writing and shall be deemed to have been duly given if personally delivered
at or mailed by overnight mail, certified mail or registered mail, postage
prepaid, to (i) in the case of the Servicer, First Alliance Mortgage Company,
17305 Von Karman Avenue, Irvine, California 92614-6203, Attention: Manager,
Investor Reporting, or such other addresses as may hereafter be furnished to the
Certificateholders in writing by the Servicer, (ii) in the case of the Seller,
First Alliance Mortgage Company, 17305 Von Karman Avenue, Irvine, California
92614-6203, Attention: Director, Secondary Marketing, or such other addresses as
may hereafter be furnished to the Certificateholders in writing by the Seller,
(iii) in the case of the Owner Trustee, Wilmington Trust Company, Rodney Square
North, 1100 North Market Street, Wilmington, Delaware 19890, Attention: First
Alliance Mortgage Loan Trust 1998-2, (iv) in the case of the Certificateholders,
as set forth in the Certificate Register, (v) in the case of the Indenture
Trustee, The Chase Manhattan Bank, 450 West 33rd Street, New York, New York
10006, Attention: First Alliance Mortgage Loan Trust 1998-2, (vi) in the case of
Moody's, 99 Church Street, New York, New York 10007, Attention: Home Equity
Monitoring Group, (vii) in the case of Standard & Poor's, 25 Broadway, New York,
New York 10004, Attention: Residential Mortgage Group, and (viii) in the case of
the Note Insurer, Financial Security Assurance
36
Inc., 350 Park Avenue, New York, New York 10022, Attention: First Alliance
Mortgage Loan Trust 1998-2. Any such notices shall be deemed to be effective
with respect to any party hereto upon the receipt of such notice by such party,
except that notices to the Certificateholders shall be effective upon mailing or
personal delivery.
(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 Holder as shown in the Certificate Register. Any notice so
mailed within the time prescribed in this Agreement shall be conclusively
presumed to have been duly given, whether or not the Certificateholder receives
such notice.
SECTION 11.7 Severability. If any one or more of the covenants,
agreements, provisions or terms of this Agreement shall be for any reason
whatsoever held invalid, then such covenants, agreements, provisions or terms
shall be deemed severable from the remaining covenants, agreements, provisions
or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Certificates
or the rights of the Holders thereof.
SECTION 11.8 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 one and the same instrument.
SECTION 11.9 Successors and Assigns. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, the Seller,
the Owner Trustee, the Note Insurer and each Certificateholder and their
respective successors and permitted assigns, all as herein provided. Any
request, notice, direction, consent, waiver or other instrument or action by a
Certificateholder shall bind the successors and assigns of such
Certificateholder.
SECTION 11.10 No Petition Covenant. Notwithstanding any prior
termination of this Agreement, the Trust (or the Owner Trustee on behalf of the
Trust), the Seller, each Certificateholder and the Indenture Trustee shall not
acquiesce, petition or otherwise invoke or cause the Trust to invoke the process
of any court or governmental authority for the purpose of commencing or
sustaining a case against the Trust under any federal or state bankruptcy,
insolvency or similar law or appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of the Trust or any
substantial part of its property, or ordering the winding up or liquidation of
the affairs of the Trust.
SECTION 11.11 No Recourse. Each Certificateholder by accepting a
Certificate acknowledges that such Certificateholder's Certificates represent
beneficial interests in the Trust only and do not represent interests in or
obligations of the Seller, the Servicer, the Owner Trustee, the Indenture
Trustee or any affiliate thereof and no recourse may be had against such parties
or their assets, except as may be expressly set forth or contemplated in this
Agreement, the Certificates or the Operative Documents.
SECTION 11.12 Headings. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
37
SECTION 11.13 Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 11.14 Integration. This Agreement constitutes the entire
agreement among the parties hereto pertaining to the subject matter hereof and
supersedes all prior agreements and understandings pertaining thereto.
SECTION 11.15 Third-Party Beneficiary. The parties hereto acknowledge
that the Note Insurer is an express third party beneficiary hereof entitled to
enforce the provisions hereunder as if it were actually a party hereto. Nothing
in this section, however, shall be construed to mitigate in any way, the
fiduciary responsibilities of the Owner Trustee to the Certificateholders nor to
create a fiduciary responsibility of the Owner Trustee to the Note Insurer.
SECTION 11.16 Suspension and Termination of Note Insurer's Rights.
During the continuation of a Note Insurer Default, rights granted or reserved to
the Note Insurer hereunder shall vest instead in the Certificateholders;
provided that the Note Insurer shall be entitled to any distributions in
reimbursement of the Reimbursement Amount, and the Note Insurer shall retain
those rights under Section 11.1 to consent to any amendment of this Agreement.
At such time as either (i) both the Adjustable Rate Note
Principal Balance and the Fixed Rate Note Principal Balance have been reduced to
zero and (ii) the Note Insurance Policies have been terminated and in either
case of (i) or (ii) the Note Insurer has been reimbursed for all Insured
Payments and any other amounts owed under the Note Insurance Policies and the
Insurance Agreement (and the Note Insurer no longer has any obligation under the
Note Insurance Policies, 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.
38
IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement
to be duly executed by their respective officers hereunto duly authorized, as of
the day and year first above written.
WILMINGTON TRUST COMPANY,
as Owner Trustee
By: /s/ Debra Eberly
------------------------------
Name: Debra Eberly
Title: Administrative Account Manager
FIRST ALLIANCE MORTGAGE COMPANY,
as Seller
By: /s/ Brian Chisick
---------------------------------
Name: Brian Chisick
Title: President/Chief Executive Officer
Acknowledged and Accepted:
FIRST ALLIANCE MORTGAGE COMPANY,
as Servicer
By: /s/ Brian Chisick
---------------------------------
Name: Brian Chisick
Title: President/Chief Executive Officer
THE CHASE MANHATTAN BANK,
as Trust Paying Agent and Certificate
Registrar
By: /s/ Diane E. Wallace
--------------------
Name: Diane E. Wallace
Title: Trust Officer
EXHIBIT A
CERTIFICATE OF TRUST OF
FIRST ALLIANCE MORTGAGE LOAN TRUST 1998-2
THIS Certificate of Trust of First Alliance Mortgage Loan Trust 1998-2
(the "Trust") dated as of June 1, 1998, is being duly executed and filed by
Wilmington Trust Company, a Delaware banking corporation, as trustee, to form a
business trust under the Delaware Business Trust Act (12 Del. Code, ss.3801 et
seq.).
1. Name. The name of the business trust formed hereby is First Alliance
Mortgage Loan Trust 1998-2.
2. Delaware Trustee. The name and business address of the trustee of the
Trust in the State of Delaware is Wilmington Trust Company, Rodney Square North,
1100 North Market Street, Wilmington, Delaware 19890, Attention: Corporate Trust
Administration.
3. This Certificate of Trust shall be effective as of its filing. IN
WITNESS WHEREOF, the undersigned, being the sole trustee of the Trust, has
executed this Certificate of Trust as of the date first above written.
WILMINGTON TRUST COMPANY,
not in its individual capacity
but solely as Owner Trustee
By: _______________________________
Name: ________________________
Title: ________________________
EXHIBIT B
TO THE TRUST AGREEMENT
(FORM OF CERTIFICATE)
THE EQUITY INTEREST IN THE TRUST REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN
AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR ANY STATE SECURITIES LAWS. THIS CERTIFICATE MAY BE DIRECTLY OR
INDIRECTLY OFFERED OR SOLD OR OTHERWISE DISPOSED OR (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 OR RULE 3A-7 OF THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED
(INCLUDING BUT NOT LIMITED TO, FIRST ALLIANCE MORTGAGE COMPANY AND FIRST
ALLIANCE RESIDUAL HOLDING COMPANY) IN A TRANSACTION THAT IS REGISTERED UNDER THE
ACT AND APPLICABLE STATE SECURITIES LAWS OR THAT IS EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF THE ACT AND SUCH LAWS. NO PERSON IS OBLIGATED TO REGISTER THIS
EQUITY INTEREST UNDER THE ACT OR ANY STATE SECURITIES LAWS.
NO TRANSFER OF THIS CERTIFICATE OR ANY BENEFICIAL INTEREST THEREIN SHALL BE MADE
TO ANY PERSON UNLESS THE OWNER TRUSTEE HAS RECEIVED A CERTIFICATE FROM THE
TRANSFEREE TO THE EFFECT THAT SUCH TRANSFEREE IS NOT AN "EMPLOYEE BENEFIT PLAN"
WITHIN THE MEANING OF SECTION 3(3) OF THE EMPLOYEE RETIREMENT INCOME SECURITY
ACT OF 1974, AS AMENDED ("ERISA"), OR A "PLAN" WITHIN THE MEANING OF SECTION
4975(e)(1) OF THE CODE (ANY SUCH PLAN OR EMPLOYEE BENEFIT PLAN, A "PLAN") AND IS
NOT DIRECTLY OR INDIRECTLY PURCHASING SUCH CERTIFICATE ON BEHALF OF, AS
INVESTMENT MANAGER OF, AS NAMED FIDUCIARY OF, AS TRUSTEE OF, OR WITH ASSETS OF A
PLAN.
THIS CERTIFICATE MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF UNLESS,
PRIOR TO SUCH DISPOSITION, THE PROPOSED TRANSFEREE DELIVERS TO THE OWNER TRUSTEE
AND THE CERTIFICATE REGISTRAR A CERTIFICATE STATING THAT SUCH TRANSFEREE (A)
AGREES TO BE BOUND BY AND TO ABIDE BY THE TRANSFER RESTRICTIONS APPLICABLE TO
THIS CERTIFICATE; (B) IS NOT AN ENTITY THAT WILL HOLD THIS CERTIFICATE AS
NOMINEE TO FACILITATE THE CLEARANCE AND SETTLEMENT OF SUCH SECURITY THROUGH THIS
CERTIFICATE MAY NOT BE PURCHASED BY OR TRANSFERRED TO ANY PERSON THAT IS A
NON-U.S. PERSON. THE TERM "NON-U.S. PERSON" MEANS A PERSON WHO IS NOT ONE OF
THE FOLLOWING: A CITIZEN OR RESIDENT OF THE UNITED STATES, A CORPORATION,
PARTNERSHIP OR OTHER ENTITY CREATED OR ORGANIZED IN OR UNDER THE LAWS OF THE
UNITED STATES OR ANY POLITICAL SUBDIVISION THEREOF, AN ESTATE THAT IS SUBJECT TO
U.S. FEDERAL INCOME TAX REGARDLESS OF THE SOURCE OF ITS INCOME OR A TRUST IF (I)
A COURT IN THE UNITED STATES IS ABLE TO EXERCISE PRIMARY SUPERVISION OVER THE
ADMINISTRATION OF THE TRUST AND (II) ONE OR MORE UNITED STATES FIDUCIARIES HAVE
THE AUTHORITY TO CONTROL ALL SUBSTANTIAL DECISIONS OF THE TRUST.
B-2
FIRST ALLIANCE MORTGAGE LOAN TRUST 1998-2
CERTIFICATE
No. 0001
THIS CERTIFIES THAT First Alliance Portfolio Services, Inc. (the "Owner")
is the registered owner of a 100% Percentage Interest in First Alliance Mortgage
Loan Trust 1998-2 (the "Trust") existing under the laws of the State of Delaware
and created pursuant to the Trust Agreement, dated as of June 1, 1998 (the
"Trust Agreement"), between First Alliance Mortgage Company, as Seller, and
Wilmington Trust Company, in its individual capacity and in its fiduciary
capacity as owner trustee under the Trust Agreement (the "Owner Trustee").
Capitalized terms used but not otherwise defined herein have the meanings
assigned to such terms in the Trust Agreement. The Owner Trustee, on behalf of
the Issuer and not in its individual capacity, has executed this Certificate by
one of its duly authorized signatories as set forth below. This Certificate is
one of the Certificates referred to in the Trust Agreement and is issued under
and is subject to the terms, provisions and conditions of the Trust Agreement to
which the holder of this Certificate by virtue of the acceptance hereof agrees
and by which the holder hereof is bound. Reference is hereby made to the Trust
Agreement for the rights of the holder of this Certificate, as well as for the
terms and conditions of the Trust created by the Trust Agreement.
The holder, by its acceptance hereof, agrees not to transfer this
Certificate except in accordance with terms and provisions of the Agreement.
THIS CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Trust and not in
its individual capacity, has caused this Certificate to be duly executed.
FIRST ALLIANCE MORTGAGE LOAN
TRUST 1998-2
By: WILMINGTON TRUST COMPANY
not in its individual capacity but solely
as Owner Trustee under the Trust
Agreement
By: _________________________________________
Authorized Signatory
Dated: June 26, 1998
B-3
CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within-mentioned
Agreement.
WILMINGTON TRUST COMPANY,
as Owner Trustee
By: ___________________________
Authorized Signatory
B-4
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
- - ------------------------------------------------------------------------------
(Please print or type name and address, including postal zip code, of assignee)
- - ------------------------------------------------------------------------------
the within Instrument, and all rights thereunder, hereby irrevocably
constituting and appointing
_____________________________________________________________ Attorney to
transfer said Instrument on the books of the Certificate Registrar, with full
power of substitution in the premises.
Dated: _____________________
_________________________________________ */
Signature Guaranteed:
_________________________________________ */
NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Instrument in every particular,
without alteration, enlargement or any change whatever. Such signature
must be guaranteed by a member firm of the New York Stock Exchange or a
commercial bank or trust company.
B-5