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EXHIBIT 4.2
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TRUST AGREEMENT
among
FIRSTPLUS INVESTMENT CORPORATION,
as Depositor,
FIRSTPLUS RESIDUAL HOLDINGS, INC.,
as the Company,
WILMINGTON TRUST COMPANY,
as Owner Trustee
and
FIRST BANK NATIONAL ASSOCIATION,
as Co-Owner Trustee
Dated as of September 1, 1996
FIRSTPLUS HOME LOAN OWNER TRUST 1996-3
Asset Backed Securities, Series 1996-3
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TABLE OF CONTENTS
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ARTICLE I
Definitions
SECTION 1.1 Capitalized Terms . . . . . . . . . . . . . . . . . . . 1
SECTION 1.2 Other Definitional Provisions . . . . . . . . . . . . . 6
ARTICLE II
Organization
SECTION 2.1 Name . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.2 Office . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.3 Purposes and Powers . . . . . . . . . . . . . . . . . . 7
SECTION 2.4 Appointment of Owner Trustee . . . . . . . . . . . . . 8
SECTION 2.5 Initial Capital Contribution of Owner Trust Estate . . 8
SECTION 2.6 Declaration of Trust . . . . . . . . . . . . . . . . . 8
SECTION 2.7 Liability of the Owners . . . . . . . . . . . . . . . . 8
SECTION 2.8 Title to Trust Property . . . . . . . . . . . . . . . . 9
SECTION 2.9 Situs of Trust . . . . . . . . . . . . . . . . . . . . 9
SECTION 2.10 Representations and Warranties of the Depositor and the
Company; Covenant of the Company . . . . . . . . . . . 10
SECTION 2.11 Maintenance of the Demand Note . . . . . . . . . . . . 12
SECTION 2.12 Federal Income Tax Allocations . . . . . . . . . . . . 12
ARTICLE III
Trust Certificates and Transfer of Interests
SECTION 3.1 Initial Ownership . . . . . . . . . . . . . . . . . . . 13
SECTION 3.2 The Trust Certificates . . . . . . . . . . . . . . . . 13
SECTION 3.3 Execution, Authentication and Delivery of Trust
Certificates . . . . . . . . . . . . . . . . . . . . . 14
SECTION 3.4 Registration of Transfer and Exchange of Trust
Certificates . . . . . . . . . . . . . . . . . . . . . 14
SECTION 3.5 Mutilated, Destroyed, Lost or Stolen Trust Certificates 15
SECTION 3.6 Persons Deemed Owners . . . . . . . . . . . . . . . . . 15
SECTION 3.7 Access to List of Owners' Names and Addresses . . . . . 15
SECTION 3.8 Maintenance of Office or Agency . . . . . . . . . . . . 16
SECTION 3.9 Appointment of Paying Agent . . . . . . . . . . . . . . 16
SECTION 3.10 Ownership by Company of the FRH Certificates . . . . . 16
SECTION 3.11 Book-Entry Certificates . . . . . . . . . . . . . . . . 17
SECTION 3.12 Notices to Clearing Agency . . . . . . . . . . . . . . 18
SECTION 3.13 Definitive Certificates . . . . . . . . . . . . . . . . 18
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TABLE OF CONTENTS
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SECTION 3.14 Restrictions on Transfer of Residual Interest
Instruments . . . . . . . . . . . . . . . . . . 18
ARTICLE IV
Actions by Owner Trustee
SECTION 4.1 Prior Notice to Owners with Respect to Certain Matters 21
SECTION 4.2 Action by Owners with Respect to Certain Matters . . . 23
SECTION 4.3 Action by Owners with Respect to Bankruptcy . . . . . . 23
SECTION 4.4 Restrictions on Owners' Power . . . . . . . . . . . . . 23
SECTION 4.5 Majority Control . . . . . . . . . . . . . . . . . . . 23
ARTICLE V
Application of Trust Funds; Certain Duties
SECTION 5.1 Establishment of Trust Account . . . . . . . . . . . . 24
SECTION 5.2 Application Of Trust Funds . . . . . . . . . . . . . . 24
SECTION 5.3 Method of Payment . . . . . . . . . . . . . . . . . . . 25
SECTION 5.4 Segregation of Moneys; No Interest . . . . . . . . . . 25
SECTION 5.5 Accounting and Reports to the Certificateholder, Owners,
the Internal Revenue Service and Others . . . . . 25
SECTION 5.6 Signature on Returns; Tax Matters Partner . . . . . . . 26
ARTICLE VI
Authority and Duties of Owner Trustee
SECTION 6.1 General Authority . . . . . . . . . . . . . . . . . . . 26
SECTION 6.2 General Duties . . . . . . . . . . . . . . . . . . . . 26
SECTION 6.3 Action upon Instruction . . . . . . . . . . . . . . . . 27
SECTION 6.4 No Duties Except as Specified in this Agreement,
the Basic Documents or in Instructions . . . . . 28
SECTION 6.5 No Action Except Under Specified Documents
or Instruction . . . . . . . . . . . . . . . . . 28
SECTION 6.6 Restrictions . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE VII
Concerning the Owner Trustee
SECTION 7.1 Acceptance of Trusts and Duties . . . . . . . . . . . . 29
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SECTION 7.2 Furnishing of Documents . . . . . . . . . . . . . . . . 30
SECTION 7.3 Representations and Warranties . . . . . . . . . . . . 30
SECTION 7.4 Reliance; Advice of Counsel . . . . . . . . . . . . . . 31
SECTION 7.5 Not Acting in Individual Capacity. . . . . . . . . . . 32
SECTION 7.6 Owner Trustee Not Liable for Trust Certificates or Home
Loans . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 7.7 Owner Trustee May Own Trust Certificates and Notes . . 32
SECTION 7.8 Licenses . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE VIII
Compensation of Owner Trustee
SECTION 8.1 Owner Trustee's Fees and Expenses . . . . . . . . . . . 33
SECTION 8.2 Indemnification . . . . . . . . . . . . . . . . . . . . 33
SECTION 8.3 Payments to the Owner Trustee . . . . . . . . . . . . . 33
ARTICLE IX
Termination of Trust Agreement
SECTION 9.2 Dissolution Upon Bankruptcy of the Company . . . . . . 35
ARTICLE X
Successor Owner Trustees and Additional Owner Trustees
SECTION 10.1 Eligibility Requirements for Owner Trustee . . . . . . 36
SECTION 10.2 Resignation or Removal of Owner Trustee . . . . . . . . 37
SECTION 10.3 Successor Owner Trustee . . . . . . . . . . . . . . . . 37
SECTION 10.4 Merger or Consolidation of Owner Trustee . . . . . . . 38
SECTION 10.5 Appointment of Co-Trustee or Separate Trustee . . . . . 38
ARTICLE XI
Miscellaneous
SECTION 11.1 Supplements and Amendments . . . . . . . . . . . . . . 40
SECTION 11.2 No Legal Title to Owner Trust Estate in Owners . . . . 41
SECTION 11.3 Limitations on Rights of Others . . . . . . . . . . . . 41
SECTION 11.4 Notices . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 11.5 Severability . . . . . . . . . . . . . . . . . . . . . 42
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SECTION 11.6 Separate Counterparts . . . . . . . . . . . . . . . . . 42
SECTION 11.7 Successors and Assigns . . . . . . . . . . . . . . . . 42
SECTION 11.8 Covenants of the Company . . . . . . . . . . . . . . . 42
SECTION 11.9 No Petition . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 11.10 No Recourse . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 11.11 Headings . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 11.12 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . 43
SECTION 11.13 Certificate and Residual Interest Transfer
Restrictions . . . . . . . . . . . . . . . . . . 43
SECTION 11.15 Third-Party Beneficiary . . . . . . . . . . . . . . . . 44
EXHIBIT A Form of Certificate
EXHIBIT A-2 Form of Certificate issued to the Company
EXHIBIT B Form of Residual Interest
EXHIBIT B-2 Form of Residual Interest issued to
the Company
EXHIBIT C Form of Certificate of Trust
EXHIBIT D Form of Demand Note
EXHIBIT E Form of Certificate Depository
Agreement
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TRUST AGREEMENT, dated as of September 1, 1996, among FIRSTPLUS
INVESTMENT CORPORATION, a Nevada corporation, as Depositor (the "Depositor"),
FIRSTPLUS RESIDUAL HOLDINGS, INC. (the "Company"), a Nevada corporation,
WILMINGTON TRUST COMPANY, a Delaware banking corporation, as Owner Trustee (the
"Owner Trustee") and First Bank National Association, as Co-Owner Trustee (the
"Co-Owner Trustee").
ARTICLE I
Definitions
SECTION 1.1 Capitalized Terms. For all purposes of this
Agreement, the following terms shall have the meanings set forth below:
"Agreement" shall mean this Trust Agreement, as the same may be
amended and supplemented from time to time.
"Administration Agreement" shall mean the Administration Agreement,
dated as of September 1, 1996 among the Issuer, FFI, and First Bank National
Association, as Administrator.
"Administrator" shall mean First Bank National Association, or any
successor in interest thereto, in its capacity as Administrator under the
Administration Agreement.
"Basic Documents" shall mean this Agreement, the Sale and Servicing
Agreement, the Indenture, the Administration Agreement, the Insurance
Agreement, the Custodial Agreement, the Note Depository Agreement, the
Certificate Depository Agreement and the other documents and certificates
delivered in connection therewith.
"Benefit Plan" shall have the meaning assigned to such term in Section
11.13.
"Book-Entry-Certificate" shall mean a beneficial interest in the
Certificates, ownership and transfers of which shall be made through book
entries by a Clearing Agency as described in Section 3.11.
"Business Trust Statute" shall mean Chapter 38 of Title 12 of I the
Delaware Code, 12 Del. Code Section 3801 et seq., as the same may be amended
from time to time.
"Certificate" shall mean a certificate (other than a Residual Interest
Instrument) evidencing the beneficial interest of an Owner in the Trust,
substantially in the form attached hereto as Exhibit A.
"Certificate Depository Agreement" shall mean the agreement among the
Trust and the DTC, dated as of the Closing Date, substantially in the form
attached hereto as Exhibit E, relating to the Certificates, as the same may be
amended and supplemented from time to time.
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"Certificate Distribution Account" shall have the meaning assigned to
such term in Section 5.1.
"Certificate of Trust" shall mean the Certificate of Trust in the form
of Exhibit C to be filed for the Trust pursuant to Section 3810(a) of the
Business Trust Statute.
"Certificate Owner" shall mean, with respect to a Book-Entry
Certificate, the Person who is the beneficial owner of such Book-Entry
Certificate, as reflected on the books of the Clearing Agency, or on the books
of a Person maintaining an account with such Clearing Agency (directly as a
Clearing Agency Participant or as an indirect participant, in each case in
accordance with the rules of such Clearing Agency).
"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.
"Clearing Agency" shall mean an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act.
"Clearing Agency Participant" shall mean a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with
the Clearing Agency.
"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 North Market Street, Wilmington, DE 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 Company, or the principal corporate
trust office of any successor Owner Trustee (the address (which shall be in the
State of Delaware) of which the successor owner trustee will notify the Owners
and the Company).
"Demand Note" means the Demand Note dated September 27, 1996, in the
amount of $2,500,000.00 from RAC to the Company in substantially the form
attached hereto as Exhibit D.
"Definitive Certificates" means a certificated form of security that
represents a Certificate pursuant to Section 3.13 or a Residual Interest
Instrument.
"DTC" shall mean the Depository Trust Company, as the initial Clearing
Agency.
"ERISA" shall have the meaning assigned thereto in Section 11.13.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
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"Expenses" shall have the meaning assigned to such term in Section
8.2.
"FFI" shall mean FIRSTPLUS FINANCIAL, INC., a Texas corporation.
"FRH Certificates" shall mean (i) the Definitive Certificate in
substantially the form attached hereto as Exhibit A-2 representing 1%
Percentage Interest of the Initial Certificate Principal Balance of the
Certificates that the Company is receiving pursuant to Section 3.10 and (ii)
the Definitive Certificate in substantially the form attached hereto as Exhibit
B-2 representing a 1% Percentage Interest in the Residual Interest that the
Company is receiving pursuant to Section 3.10.
"Indenture" shall mean the Indenture, dated as of September 1, 1996,
by and between the Issuer and the Indenture Trustee.
"Indenture Trustee" means First Bank National Association, as
Indenture Trustee under the Indenture.
"Initial Certificate Principal Balance" shall mean $11,250,000.
"Insolvency Event" shall have occurred with respect to the Company if:
(i) a decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt,
marshaling of assets and liabilities or similar proceedings, or for
the winding-up or liquidation of its affairs, shall have been entered
against the Company and such decree or order shall have remained in
force, undischarged or unstayed for a period of 60 days; or
(ii) the Company shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment
of debt, marshaling of assets and liabilities or similar proceedings
of or relating to the Company or of or relating to all or
substantially all of the Company's property;
(iii) the board of the directors of the Company shall
voluntarily dissolve the Company; or
(iv) the Company shall admit in writing its inability to
pay its debts as they become due, file a petition to take advantage of
any applicable insolvency or reorganization statute, make an
assignment for the benefit of its creditors, or voluntarily suspend
payment of its obligations.
PROVIDED HOWEVER, that the substantive consolidation of the Company with an
entity in respect of which the events described in (i) - (iv) above have
occurred shall not constitute an Insolvency Event with respect to the Company.
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"Insurance Agreement" shall mean the Insurance Agreement, dated as of
September 27, 1996, among the Transferor, the Seller, the Issuer, RAC Financial
Group, Inc., the Company, the Indenture Trustee and the Securities Insurer.
"Issuer" shall mean FIRSTPLUS HOME LOAN OWNER TRUST 1996-3, the
Delaware business trust created pursuant to this Agreement.
"Non-permitted Foreign Holder" shall have the meaning set forth in
Section 3.14.
"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.
"Owner" shall mean each Holder of a Certificate and each holder of a
Residual Interest Investment, as applicable.
"Owner Trust Estate" shall mean all right, title and interest of the
Trust in and to the property and rights assigned to the Trust pursuant to
Section 2.5 hereof and Article II of the Sale and Servicing Agreement
(including the Trust Estate), all funds on deposit from time to time in the
Trust Accounts (including the Certificate Distribution Account) and all other
property of the Trust from time to time, including any rights of the Owner
Trustee and the Trust pursuant to the Sale and Servicing Agreement and the
Administration Agreement.
"Owner Trustee" shall mean Wilmington Trust Company, a Delaware
banking corporation, not in its individual capacity but solely as owner trustee
under this Agreement, and any successor owner trustee hereunder.
"Paying Agent" shall mean the Co-Owner Trustee or any successor in
interest thereto or any other paying agent or co-paying agent appointed
pursuant to Section 3.9 and 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.
"Percentage Interest" shall mean with respect to any Certificate, the
portion of the Certificates as a whole evidenced by such single Certificate,
expressed as a percentage rounded to five decimal places, equivalent to a
fraction, the numerator of which is the denomination represented by such single
Certificate and the denominator of which is the Initial Certificate Principal
Balance. With respect to each Residual Interest Instrument, the percentage
portion of all of the Residual Interest evidenced thereby as stated on the face
of such Residual Interest Instrument.
"Prospective Owner" shall have the meaning set forth in Section
3.14(a).
"RAC" shall mean RAC Financial Corporation, a Nevada corporation.
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"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 Securities 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 Notes and Certificates.
"Record Date" shall mean as to each Distribution Date the last
Business Day of the month immediately preceding the month in which such
Distribution Date occurs.
"Residual Interest" shall mean the right to receive distributions of
Excess Spread, if any, and certain other funds, if any, on each Distribution
Date, pursuant to Section 5.06 of the Sale and Servicing Agreement.
"Residual Interest Instrument" shall mean an instrument substantially
in the form attached as Exhibit B hereto and evidencing the Residual Interest.
"Residual Interestholders" shall mean, initially, FFI, as holder of
99% Percentage Interest of the Residual Interest, and the Company, as holder of
1% Percentage Interest of the Residual Interest.
"Sale and Servicing Agreement" shall mean the Sale and Servicing
Agreement dated as of the date hereof, among the Trust as Issuer, the
Depositor, as Seller, the Indenture Trustee as Indenture Trustee and Co-Owner
Trustee and FFI, as Transferor and Servicer.
"Secretary of State" shall mean the Secretary of State of the State of
Delaware.
"Securities Insurer shall mean MBIA Insurance Corporation.
"Securities Insurer Default": The failure of the Securities Insurer to
make payments under the Guaranty Policy, if such failure has not been remedied
with ten (10) days of notice thereof, or the entry of an order or decree with
respect to the Securities Insurer in any insolvency or bankruptcy proceedings
which remain unstayed or undischarged for 90 days.
"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 Certificates" shall mean the Certificates and the Residual
Interest Instruments, collectively.
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"Underwriters" shall mean those underwriters named in and parties to
the Underwriting Agreement dated as of September 24, 1996 pursuant to which
the Certificates will be offered publicly.
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
Indenture.
(b) All terms defined in this Agreement shall have the
defined meanings when used in any certificate or
other document made or delivered pursuant hereto
unless otherwise defined therein.
(c) As used in this Agreement and in any certificate or
other document made or delivered pursuant hereto or
thereto, accounting terms not defined in this
Agreement or in any such certificate or other
document, and accounting terms partly defined in
this Agreement or in any such certificate or other
document to the extent not defined, shall have the
respective meanings given to them under generally
accepted accounting principles. To the extent that
the definitions of accounting terms in this
Agreement or in any such certificate or other
document are inconsistent with the meanings of such
terms under generally accepted accounting
principles, the definitions contained in this
Agreement or in any such certificate or other
document shall control.
(d) The words "hereof", "herein", "hereunder" and words
of similar import when used in this Agreement shall
refer to this Agreement as a whole and not to any
particular provision of this Agreement; Section and
Exhibit references contained in this Agreement are
references to Sections and Exhibits in or to this
Agreement unless otherwise specified; and the term
"including" shall mean "including without
limitation".
(e) The definitions contained in this Agreement are
applicable to the singular as well as the plural
forms of such terms and to the masculine as well as
to the feminine and neuter genders of such terms.
(f) Any agreement, instrument or statute defined or
referred to herein or in any instrument or
certificate delivered in connection herewith means
such agreement, instrument or statute as from time
to time amended, modified or supplemented and
includes (in the case of agreements or instruments)
references to all attachments thereto and
instruments incorporated therein; references to a
Person are also to its permitted successors and
assigns.
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ARTICLE II
Organization
SECTION 2.1 Name. The Trust created hereby shall be known as
"FIRSTPLUS HOME LOAN OWNER TRUST 1996-3", in which name the Owner Trustee may
conduct the business of the Trust, make and execute contracts and other
instruments on behalf of the Trust and sue and be sued.
SECTION 2.2 Office. The office of the Trust shall be in care
of the Owner Trustee at the Corporate Trust Office or at such other address in
Delaware as the Owner Trustee may designate by written notice to the Owners,
the Securities Insurer, and the Company.
SECTION 2.3 Purposes and Powers. (a) The purpose of the
Trust is to engage in the following activities:
(i) to issue the Notes pursuant to the Indenture
and the Certificates pursuant to this
Agreement and to sell such Notes and such
Certificates;
(ii) with the proceeds of the sale of the Notes
and the Certificates, to fund the Pre-Funding
Account, the Capitalized Interest Account and
the Reserve Account and to pay the
organizational, start-up and transactional
expenses of the Trust and to pay the balance
to the Depositor and the Company, as their
interests may appear pursuant to the Sale and
Servicing Agreement;
(iii) to assign, grant, transfer, pledge, mortgage
and convey the Trust Estate pursuant to the
Indenture and to hold, manage and distribute
to the Owners pursuant to the terms of the
Sale and Servicing Agreement any portion of
the Trust Estate released from the lien of,
and remitted to the Trust pursuant to, the
Indenture;
(iv) to enter into and perform its obligations
under the Basic Documents to which it is 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 Basic
Documents, to engage in such other activities
as may be required in connection with
conservation of the Owner Trust Estate and
the making of distributions to the Owners and
the Noteholders.
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(vii) to issue the FRH Certificates and the
Residual Interest Instrument pursuant to this
Agreement.
The Trust is hereby authorized to engage in the foregoing activities. The
Trust shall not engage in any activity other than in connection with the
foregoing or other than as required or authorized by the terms of this
Agreement or the Basic Documents.
SECTION 2.4 Appointment of Owner Trustee. The Depositor hereby
appoints the Owner Trustee as trustee of the Trust effective as of the date
hereof, to have all the rights, powers and duties set forth herein.
SECTION 2.5 Initial Capital Contribution of Owner Trust Estate.
The Depositor hereby sells, assigns, transfers, conveys and sets over to the
Owner Trustee, as of the date hereof, the sum of $1. The Owner Trustee hereby
acknowledges receipt in trust from the Depositor, as of the date hereof, of the
foregoing contribution, which shall constitute the initial Owner Trust Estate
and shall be deposited in the Certificate Distribution Account. The Depositor
or the Company shall pay organizational expenses of the Trust as they may arise
or shall, upon the request of the Owner Trustee, promptly reimburse the Owner
Trustee for any such expenses paid by the Owner Trustee.
SECTION 2.6 Declaration of Trust. The Owner Trustee hereby
declares that it will hold the Owner Trust Estate in trust upon and subject to
the conditions set forth herein for the use and benefit of the Owners, subject
to the obligations of the Trust under the Basic Documents. It is the intention
of the parties hereto that the Trust constitute a business trust under the
Business Trust Statute and that this Agreement constitute the governing
instrument of such business trust. It is the intention of the parties hereto
that, solely for income and franchise tax purposes, the Trust shall be treated
as a partnership, with the assets of the partnership being the Home Loans and
other assets held by the Trust, the partners of the partnership being the
holders of the Trust Certificates and the Notes being non-recourse debt of the
partnership. The parties agree that, unless otherwise required by appropriate
tax authorities, the Trust will file or cause to be filed annual or other
necessary returns, reports and other forms consistent with the characterization
of the Trust as a partnership for such tax purposes. Effective as of the date
hereof, the Owner Trustee shall have all rights, powers and duties set forth
herein and in the Business Trust Statute with respect to accomplishing the
purposes of the Trust.
SECTION 2.7 Liability of the Owners.
(a) The Company, as holder of the FRH Certificates,
shall be liable directly to and will indemnify the
injured party for all losses, claims, damages,
liabilities and expenses of the Trust (including
Expenses, to the extent not paid out of the Owner
Trust Estate) to the extent that the Company would
be liable if the Trust were a partnership under the
Delaware Revised Uniform Limited Partnership Act in
which the Company were a general partner; provided,
however, that the Company shall not be liable for
any losses incurred by an Owner in the capacity of
an investor in the Trust Certificates or a
Noteholder in the capacity of an investor in the
Notes. In addition, any third party creditors of
the Trust (other than in connection
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with the obligations described in the preceding
sentence for which the Company shall not be liable)
shall be deemed third party beneficiaries of this
paragraph and paragraph (c) below. The obligations
of the Company under this paragraph and paragraph
(c) below shall be evidenced by the FRH
Certificates the Company is receiving pursuant to
Section 3.10.
(b) No Owner, other than to the extent set forth in
paragraphs (a) and (c), shall have any personal
liability for any liability or obligation of the
Trust.
(c) The Company agrees to be liable directly to and will
indemnify the injured party for all losses, claim
damages, liabilities and expenses (other than those
incurred by an Owner in the capacity of an investor
in the Trust Certificates or a Noteholder in the
capacity of an investor in the Notes) arising out of
or based on the arrangements pursuant to which the
amounts distributed to the Residual Interestholders
are held by the Company and the FFI, respectively,
as Residual Interestholders, as though such
arrangements were partnerships under the Delaware
Revised Uniform Limited Partnership Act in which the
Company were a general partner.
SECTION 2.8 Title to Trust Property.
(a) Subject to the Indenture, legal title to all 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, the
Co-Owner Trustee and/or a separate trustee, as the
case may be.
(b) The Owners 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 Owners shall
operate to terminate this Agreement or the trusts
hereunder or entitle any transferee to an accounting
or to the transfer to it of any part of the Owner
Trust Estate.
SECTION 2.9 Situs of Trust. The Trust will be located and
administered in the state of Delaware. All 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 except with respect to the Co-Owner Trustee. 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 will 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 except with respect to the Co-Owner Trustee. The only office of
the Trust will be at the Corporate Trust Office in Delaware.
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SECTION 2.10 Representations and Warranties of the Depositor and
the Company; Covenant of the Company.
(a) The Depositor hereby represents and warrants to the
Owner Trustee and the Securities Insurer that:
(i) The Depositor is duly organized and
validly existing as a corporation in good
standing under the laws of the State of
Nevada, with power and authority to own its
properties and to conduct its business as
such properties are currently owned and
such business is presently conducted.
(ii) The Depositor 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 shall
require such qualifications.
(iii) The Depositor has the power and authority
to execute and deliver this Agreement and
to carry out its terms; the Depositor has
full power and authority to sell and assign
the property to be sold and assigned to and
deposited with the Trust and the Depositor
has duly authorized such sale and
assignment and deposit to the Trust by all
necessary corporate action; and the
execution, delivery and performance of this
Agreement has been duly authorized by the
Depositor by all necessary corporate
action.
(iv) The consummation of the transactions
contemplated by this Agreement and the
fulfillment of the terms hereof do not
conflict with, result in any breach of any
of the terms and provisions of, or
constitute (with or without notice or lapse
of time) a default under, the articles of
incorporation or by-laws of the Depositor,
or any indenture, agreement or other
instrument to which the Depositor is a
party or by which it is bound; nor result
in the creation or imposition of any lien
upon any of its properties pursuant to the
terms of any such indenture, agreement or
other instrument (other than pursuant to
the Basic Documents); nor violate any law
or, to the best of the Depositor's
knowledge, any order, rule or regulation
applicable to the Depositor of any court or
of any Federal or state regulatory body,
administrative agency or other governmental
instrumentality having jurisdiction over
the Depositor or its properties.
(v) There are no proceedings or investigations
pending or notice of which has been
received in writing before any court,
regulatory body, administrative agency or
other governmental instrumentality having
jurisdiction over the Depositor or its
properties: (i) asserting the
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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
ruling that might materially and adversely
affect the performance by the Depositor of
its obligations under, or the validity or
enforceability of, this Agreement.
(vi) The representations and warranties of the
Depositor in Section 3.01 of the Sale and
Servicing Agreement are true and correct.
(b) The Company hereby represents and warrants to
the Owner Trustee and the Securities Insurer
that:
(i) The Company is duly organized and validly
existing as a corporation in good standing
under the laws of the State of Nevada, with
power and authority to own its properties
and to conduct its business as such
properties are currently owned and such
business is presently conducted.
(ii) The Company 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 shall
require such qualifications.
(iii) The Company has the power and authority
to execute and deliver this Agreement and
to carry out its terms; and the execution,
delivery and performance of this Agreement
has been duly authorized by the Company by
all necessary corporate action.
(iv) The consummation of the transactions
contemplated by this Agreement and the
fulfillment of the terms hereof do not
conflict with, result in any breach of any
of the terms and provisions of, or
constitute (with or without notice or lapse
of time) a default under, the articles of
incorporation or by-laws of the Company, or
any indenture, agreement or other
instrument to which the Company is a party
or by which it is bound; nor result in the
creation or imposition of any lien upon any
of its properties pursuant to the terms of
any such indenture, agreement or other
instrument (other than pursuant to the
Basic Documents); nor violate any law or,
to the best of the Company's knowledge, any
order, rule or regulation applicable to the
Company of any court or of any Federal or
state regulatory body, administrative
agency or other governmental
instrumentality having jurisdiction over
the Company or its properties.
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(v) There are no proceedings or
investigations pending or, to the
Company's best knowledge,
threatened, before any court,
regulatory body, administrative
agency or other governmental
instrumentality having jurisdiction
over the Company 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 ruling that might
materially and adversely affect the
performance by the Company of its
obligations under, or the validity
or enforceability of, this
Agreement.
(vi) From the date of its incorporation
until the date of this Agreement,
except with respect to obtaining an
Investing Lender Approval from the
Department of Housing and Urban
Development, the Company has not
conducted any business or trade, has
not entered into any contracts,
written or oral, has not had any
employees, has no liabilities or
creditors, and no liens or
encumbrances have existed or exist
with respect to the Company or its
assets.
(c) The Company covenants with the Owner Trustee and
the Securities Insurer that during the continuance
of this Agreement it will comply in all respects
with the provisions of its Articles of
Incorporation in effect from time to time.
SECTION 2.11 Maintenance of the Demand Note. To the
fullest extent permitted by applicable law, the Company agrees that it shall
not sell, convey, pledge, transfer or otherwise dispose of the Demand Note.
Upon maturity of the Demand Note, the Company shall take such action as is
necessary to renew the Demand Note and to maintain the Demand Note in effect
until the expiration of this Agreement.
SECTION 2.12 Federal Income Tax Allocations. Net income
of the Trust for any month, as determined tor Federal income tax purposes (and
each item of income, gain, loss and deduction entering into the computation
thereof), shall be allocated:
(a) among the Certificates as of the first Record Date
following the end of such month, in proportion to
their ownership of principal amount of Trust
Certificates on such date, an amount of net income
up to the sum of (i) the amount distributed in
respect of interest to the Certificateholders
pursuant to Section 5.06(c) of the Sale and
Servicing Agreement for such month, and (ii) the
portion of the market discount on the Home Loans
accrued during such month that is allocable to the
excess, if any, of the initial aggregate principal
amount of the Certificates over their initial
aggregate issue price; and
(b) to the Residual Interestholders, pro rata, to the
extent of any remaining net income.
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If the net income of the Trust for any month is insufficient for the
allocations described in clause (a) above, subsequent net income shall first be
allocated to make up such shortfall before being allocated as provided in the
preceding sentence. Net losses of the Trust, if any, 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
Residual Interestholders to the extent the Residual Interestholders are
reasonably expected to bear the economic burden of such net losses, and any
remaining net losses shall be allocated among the Certificates as of the first
Record Date following the end of such month in proportion to their ownership of
principal amount of Trust certificates on such Record Date. Any indebtedness
allocated pursuant to Treasury Regulation Section 1.752 - 3(a)(3) shall be
allocated to the Residual Interest.
ARTICLE III
Trust Certificates and Transfer of Interests
SECTION 3.1 Initial Ownership. Upon the formation of the Trust
by the contribution by the Depositor pursuant to Section 2.5 and until the
issuance of the Trust Certificates, the Depositor shall be the sole Owner of
the Trust.
SECTION 3.2 The Trust Certificates. The Certificates (other
than the Residual Interest) shall be issued in minimum denominations of
$100,000 and in integral multiples of $1,000 in excess thereof; provided,
however, the FRH Certificates issued to the Company pursuant to Section 3.10
may be issued in a lesser denomination. Upon the issuance of the Trust
Certificates, the Company will be issued the FRH Certificates. The Residual
Interest shall not be issued with a principal amount. The Trust Certificates
shall be executed on behalf of the Trust by manual or facsimile signature of a
Trust Officer of the Owner Trustee. Trust 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 and binding obligations of the Trust, notwithstanding that such
individuals or any of them shall have ceased to be so authorized prior to the
authentication and delivery of such Trust Certificates or did not hold such
offices at the date of authentication and delivery of such Trust Certificates.
A transferee of a Trust Certificate shall become an Owner, and
shall be entitled to the rights and subject to the obligations of an Owner
hereunder and under the Sale and Servicing Agreement, upon such transferee's
acceptance of a Trust Certificate duly registered in such transferee's name
pursuant to Section 3.4.
SECTION 3.3 Execution, Authentication and Delivery of Trust
Certificates. Concurrently with the initial sale of the Home Loans to the
Trust pursuant to the Sale and Servicing Agreement, the Owner Trustee shall
cause the Certificates, in an aggregate principal amount equal to the Initial
Certificate Principal Balance, and the Residual Interest Instruments
representing 100% of the Percentage Interests of the Residual Interest to be
executed on behalf of the Trust, authenticated and delivered to or upon the
written order of the Depositor, signed by its chairman of the board, its
president or any vice president, without further corporate action by the
Depositor, in authorized
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denominations. No Trust Certificate shall entitle its holder to any benefit
under this Agreement, or shall be valid for any purpose, unless there shall
appear on such Trust Certificate a certificate of authentication substantially
in the form set forth in Exhibit A and B, executed by the Owner Trustee or the
Administrator, as the Owner Trustee's authenticating agent, by manual or
facsimile signature; such authentication shall constitute conclusive evidence
that such Trust Certificate shall have been duly authenticated and delivered
hereunder. All Trust Certificates shall be dated the date of their
authentication.
SECTION 3.4 Registration of Transfer and Exchange of Trust
Certificates. The Certificate Registrar shall keep or cause to be kept, at the
office or agency maintained pursuant to Section 3.8, a Certificate Register in
which, subject to such reasonable regulations as it may prescribe, the Owner
Trustee shall provide for the registration of Trust Certificates and of
transfers and exchanges of Trust Certificates as herein provided. The
Administrator shall be the initial Certificate Registrar.
Upon surrender for registration of transfer of any Trust
Certificate at the office or agency maintained pursuant to Section 3.8, the
Owner Trustee shall execute, authenticate and deliver (or shall cause the
Administrator as its authenticating agent to authenticate and deliver), in the
name of the designated transferee or transferees, one or more new Trust
Certificates in authorized denominations of a like aggregate amount dated the
date of authentication by the Owner Trustee or any authenticating agent. At the
option of an Owner, Trust Certificates may be exchanged for other Trust
Certificates of authorized denominations of a like aggregate amount upon
surrender of the Trust Certificates to be exchanged at the office or agency
maintained pursuant to Section 3.8.
Every Trust Certificate presented or surrendered for registration
of transfer or exchange shall be accompanied by a written instrument of transfer
in form satisfactory to the Owner Trustee and the Certificate Registrar duly
executed by the Owner or his attorney duly authorized in writing. In addition,
each Residual Interest Interest presented or surrendered for registration of
transfer and exchange must be accompanied by a letter from the Prospective Owner
certifying as to the representations set forth in Section 3.14(a) and (b). Each
Trust Certificate surrendered for registration of transfer or exchange shall be
canceled disposed of by the Owner Trustee in accordance with its customary
practice.
No service charge shall be made for any registration of transfer or
exchange of Trust Certificates, but the Owner Trustee or the Certificate
Registrar may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer or
exchange of Trust Certificates.
The preceding provisions of this Section notwithstanding, the Owner
Trustee shall not make and the Certificate Registrar shall not register
transfer or exchanges of Trust Certificates for a period of 15 days preceding
the due date for any payment with respect to the Trust Certificates.
SECTION 3.5 Mutilated, Destroyed, Lost or Stolen Trust
Certificates. If (a) any mutilated Trust Certificate shall be surrendered to
the Certificate Registrar, or if the Certificate Registrar shall receive
evidence to its satisfaction of the destruction, loss or theft of any Trust
Certificate and (b) there shall be delivered to the Certificate Registrar and
the Owner Trustee such security or indemnity as may be required by them to save
each of them harmless, then in the absence of notice that such
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Trust Certificate shall have been acquired by a bona fide purchaser, the Owner
Trustee on behalf of the Trust shall execute and the Owner Trustee, or the
Administrator as the Owner Trustee's authenticating agent, shall authenticate
and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost
or stolen Trust Certificate, a new Trust Certificate of like tenor and
denomination. In connection with the issuance of any new Trust Certificate
under this Section, the Owner Trustee or the Certificate Registrar may require
the payment of a sum sufficient to cover any tax or other governmental charge
that may be imposed in connection therewith. Any duplicate Trust Certificate
issued pursuant to this Section shall constitute conclusive evidence of
ownership in the Trust, as if originally issued, whether or not the lost,
stolen or destroyed Trust Certificate shall be found at any time.
SECTION 3.6 Persons Deemed Owners. Prior to due presentation
of a Trust Certificate for registration of transfer, the Owner Trustee or the
Certificate Registrar may treat the Person in whose name any Trust Certificate
shall be registered in the Certificate Register as the owner of such Trust
Certificate for the purpose of receiving distributions pursuant to Section 5.2
and for all other purposes whatsoever, and neither the owner Trustee nor the
Certificate Registrar shall be bound by any notice to the contrary.
SECTION 3.7 Access to List of Owners' Names and Addresses. The
Owner Trustee shall furnish or cause to be furnished to the Servicer and the
Depositor, within 15 days after receipt by the Owner Trustee of a request
therefor from the Servicer, the Depositor or the Indenture Trustee in writing,
a list, in such form as the Servicer, the Depositor or the Indenture Trustee
may reasonably require, of the names and addresses of the Owners as of the most
recent Record Date. If three or more Certificateholders or one or more Holders
of Certificates together evidencing not less than 25% of the Certificate
Principal Balance 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 Owner, by receiving and holding a Trust Certificate, shall be deemed to
have agreed not to hold any of the Depositor, the Company, the Certificate
Registrar or the Owner Trustee accountable by reason of the disclosure of its
name and address, regardless of the source from which such information was
derived.
SECTION 3.8 Maintenance of Office or Agency. The Owner Trustee
shall maintain in the Borough of Manhattan, The City of New York, an office or
offices or agency or agencies where Trust 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 Trust Certificates and the Basic Documents
may be served. The Owner Trustee initially designates the Administrator's
office in New York as its principal corporate trust office for such purposes.
The Owner Trustee shall give prompt written notice to the Company and to the
Certificateholders of any change in the location of the Certificate Register or
any such office or agency.
SECTION 3.9 Appointment of Paying Agent. The Owner Trustee
hereby appoints the Co-Owner Trustee as Paying Agent under this Agreement. The
Paying Agent shall make distributions to Certificateholders from the
Certificate Distribution Account pursuant to Section 5.2 hereof and
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Section 5.06 of the Sale and Servicing Agreement and shall report the amounts
of such distributions to the Owner Trustee. The Paying Agent shall have the
revocable power to withdraw funds from the Certificate Distribution Account for
the purpose of making the distributions referred to above. In the event that
the Co-Owner Trustee shall no longer be the Paying Agent hereunder, the Owner
Trustee shall appoint a successor to act as Paying Agent (which shall be a bank
or trust company) acceptable to the Securities Insurer. The Owner Trustee
shall cause such successor Paying Agent or any additional Paying Agent
appointed by the Owner Trustee to execute and deliver to the Owner Trustee an
instrument in which such successor Paying Agent or additional Paying Agent
shall agree with the Owner Trustee that as Paying Agent, such successor Paying
Agent or additional Paying Agent will hold all sums, if any, held by it for
payment to the Owners in trust for the benefit of the Certificateholders
entitled thereto until such sums shall be paid to such Owners. The Paying
Agent shall return all unclaimed funds to the Owner Trustee, and upon removal
of a Paying Agent, such Paying Agent shall also return all funds in its
possession to the Owner Trustee. The provisions of Sections 7.1, 7.3, 7.4 and
8.1 shall apply to the Co-Owner Trustee also in its role as Paying Agent, for
so long as the Co-Owner Trustee shall act as Paying Agent and, to the extent
applicable, to any other paying agent appointed hereunder. Any reference in
this Agreement to the Paying Agent shall include any co-paying agent unless the
context requires otherwise. Notwithstanding anything herein to the contrary,
the Co-Owner Trustee and the Paying Agent shall be the same entity as the
Indenture Trustee under the Indenture and the Sale and Servicing Agreement,
unless a Securities Insurer Default has occurred and is continuing. In such
event, the Co-Owner Trustee and the Paying Agent shall resign and the Owner
Trustee shall assume the duties and obligations of the Co-Owner Trustee and the
Paying Agent hereunder and under the Sale and Servicing Agreement. In
addition, in such event, the Indenture Trustee shall agree to continue to make
claims under the Guaranty Policy on behalf of the Owner Trustee for the benefit
of the Certificateholders pursuant to the Sale and Servicing Agreement.
SECTION 3.10 Ownership by Company of the FRH Certificates. On
the Closing Date, the Company shall receive from the Trust and thereafter shall
retain beneficial and record ownership of the FRH Certificates representing at
least a 1% Percentage Interest of the Initial Certificate Principal Balance and
at least a 1% Percentage Interest of the Residual Interest. The FRH
Certificates shall be non-transferable. Any attempted transfer of any FRH
Certificates shall be null and void. The Owner Trustee shall cause any FRH
Certificate issued to the Company to contain a legend substantially to such
effect.
SECTION 3.11 Book-Entry Certificates. The Certificates, upon
original issuance, will be issued in the form of a typewritten Certificate or
Certificates representing Book-Entry Certificates, to be delivered to The
Depository Trust Company, the initial Clearing Agency, by, or on behalf of, the
Trust; provided, however, that one Definitive Certificate (the Residual
Interest Instrument constituting one of the FRH Certificates) may be issued to
the Company pursuant to Section 3.10. Such Certificate or Certificates shall
initially be registered on the Certificate Register in the name of Cede & Co.,
the nominee of the initial Clearing Agency, and no Certificate Owner will
receive a definitive Certificate representing such Certificate Owners' interest
in such Certificate, except as provided in this Section 3.11 and in Section
3.13. Unless and until Definitive Certificates, fully registered, have been
issued to Certificate Owners pursuant Section 3.13:
(i) the provisions of this Section shall be in
full force and effect;
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(ii) the Certificate Registrar and the
Owner Trustee shall be entitled to
deal with the Clearing Agency for
all purposes of this Agreement
(including the payment of principal
of and interest on the Certificates
and the giving of instructions or
directions hereunder) as the sole
Holder of the Certificates and shall
have no obligation to the
Certificate Owners;
(iii) to the extent that the provisions of
this Section conflict with any other
provisions of this Agreement, the
provisions of this Section shall
control;
(iv) the rights of Certificate Owners
shall be exercised only through the
Clearing Agency and shall be limited
to those established by law and
agreements between such Certificate
Owners and the Clearing Agency
and/or the Clearing Agency
Participants. Pursuant to the
Certificate Depository Agreement,
unless and until Definitive
Certificates are issued pursuant to
Section 3.13, the initial Clearing
Agency will make book-entry
transfers among the Clearing Agency
Participants and receive and
transmit payments of principal of
and interest on the Certificates to
such Clearing Agency Participants;
and
(v) whenever this Agreement requires or
permits actions to be taken based
upon instructions or directions of
Holders of Certificates evidencing a
specified percentage of the
Certificate Principal Balance, the
Clearing Agency shall be deemed to
represent such percentage only to
the extent that it has received
instructions to such effect from
Certificate Owners and/or Clearing
Agency Participants owning or
representing, respectively, such
required percentage of the
beneficial interest in the
Certificates and has delivered such
instructions to the Owner Trustee.
SECTION 3.12 Notices to Clearing Agency. Whenever a
notice or other communication to the Certificateholders is required under this
Agreement, unless and until Definitive Certificates shall have been issued to
Certificate Owners pursuant to Section 3.13, the Owner Trustee shall give all
such notices and communications specified herein to be given to
Certificateholders to the Clearing Agency, and shall have no obligations to the
Certificate Owners.
SECTION 3.13 Definitive Certificates. If (i) the Administrator
advises the Owner Trustee in writing that the Clearing Agency is no longer
willing or able to properly discharge its responsibilities with respect to the
Certificates, and the Administrator is unable to locate a qualified successor,
(ii) the Administrator at its option advises the Owner Trustee in writing that
it elects to terminate the book-entry system through the Clearing Agency or
(iii) after the occurrence of an Event of Default, Certificate Owners
representing beneficial interests aggregating at least 50% of the Certificate
Principal Balance advise the Clearing Agency in writing that the continuation
of a book-entry system through the Clearing Agency is no longer in the best
interest of the Certificate
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Owners, then the Clearing Agency shall notify all Certificate Owners, the
Securities Insurer and the Owner Trustee of the occurrence of any such event
and of the availability of the Definitive Certificates to Certificate Owners
requesting the same. Upon surrender to the Owner Trustee of the typewritten
Certificate or Certificates representing the Book-Entry Certificates by the
Clearing Agency, accompanied by registration instructions the Owner Trustee
shall execute and authenticate the Definitive Certificates in accordance with
the instructions of the Clearing Agency. Neither the Certificate Registrar nor
the Owner Trustee shall be liable for any delay in delivery of such
instructions and may conclusively rely on, and shall be protected in relying
on, such instructions. Upon the issuance of Definitive Certificates, the Owner
Trustee shall recognize the Holders of the Definitive Certificates as
Certificateholders. The Definitive Certificates shall be printed, lithographed
or engraved or may be produced in any other manner as is reasonably acceptable
to the Owner Trustee, as evidenced by its execution thereof.
SECTION 3.14 Restrictions on Transfer of Residual Interest
Instruments.
(a) Each prospective purchaser and any subsequent
transferee of a Residual Interest Instrument (each, a "Prospective
Owner"), other than FFI or the Company, shall represent and warrant,
in writing, to the Owner Trustee and the Certificate Registrar and any
of their respective successors that:
(i) Such Person is (A) a "qualified institutional
buyer" as defined in Rule 144A under the Securities Act of
1933, as amended (the "Securities Act"), and is aware that the
seller of the Residual Interest Instrument may be relying on
the exemption from the registration requirements of the
Securities Act provided by Rule 144A and is acquiring such
Residual Interest Instrument for its own account or for the
account of one or more qualified institutional buyers for whom
it is authorized to act, or (B) a Person involved in the
organization or operation of the Trust or an affiliate of such
Person within the meaning of Rule 3a-7 of the Investment
Company Act of 1940, as amended (including, but not limited
to, the Transferor or the Company).
(ii) Such Person understands that the Residual
Interest Instruments have not been and will not be registered
under the Securities Act and may be offered, sold, pledged or
otherwise transferred only to a person whom the seller
reasonably believes is (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.
(iii) Such Person understands that the Residual
Interest Instruments bear a legend to the following effect:
"THE RESIDUAL INTEREST IN THE TRUST REPRESENTED BY
THIS RESIDUAL INTEREST INSTRUMENT HAS NOT BEEN AND
WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF
1933, AS
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AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS.
THIS RESIDUAL INTEREST MAY BE DIRECTLY OR
INDIRECTLY OFFERED OR SOLD OR OTHERWISE DISPOSED OF
(INCLUDING PLEDGED) BY THE HOLDER HEREOF ONLY TO
(I) A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN
RULE 144A UNDER THE ACT, IN A TRANSACTION THAT IS
REGISTERED UNDER THE ACT AND APPLICABLE STATE
SECURITIES LAWS OR THAT IS EXEMPT FROM THE
REGISTRATION REQUIREMENTS OF THE ACT PURSUANT TO
RULE 144A OR (II) A PERSON INVOLVED IN THE
ORGANIZATION OR OPERATION OF THE TRUST OR AN
AFFILIATE OF SUCH A PERSON WITHIN THE MEANING OF
RULE 3a-7 OF THE INVESTMENT COMPANY ACT OF 1940, AS
AMENDED (INCLUDING, BUT NOT LIMITED TO, FIRSTPLUS
RESIDUAL HOLDINGS, INC. AND FIRSTPLUS FINANCIAL,
INC. ) 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 RESIDUAL INTEREST UNDER THE ACT OR
ANY STATE SECURITIES LAWS. "
(iv) Such Person shall comply with the provisions
of Section 3.14(b), as applicable, relating to the ERISA
restrictions with respect to the acceptance or acquisition of
such Residual Interest Instrument.
(b) Each Prospective Owner, other than FFI or the
Company, shall either:
(i) represent and warrant, in writing, to the
Owner Trustee and the Certificate Registrar and any of their
respective successors that (1) the Prospective Owner 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 Residual Interest Instrument on behalf of, as investment
manager of, as named fiduciary of, as trustee of, or with
assets of a Plan, or (2) either (I) the Prospective Owner is
acquiring such Residual Interest Instrument for its own
account and no part of the assets used to acquire such
Residual Interest Instrument constitute assets of a Plan, or
(II) the source of funds to be used to acquire such Residual
Interest Instrument is an "insurance company general account,"
within the meaning of Prohibited Transaction Class Exemption
95-60,60 Fed. Reg. 35925 (July 12, 1995) (the "Exemption"),
and there is no Plan with respect to which the amount of such
general account's reserves for the contract(s) held by or on
behalf of such Plan (determined under Section 807(d) of the
Code), together with the amount of the
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reserves of the contract(s) held by or on behalf of any other
Plans (determined under Section 807(d) of the Code) maintained
by the same employer (or an affiliate thereof as defined in
Section V(a)(1) of the Exemption) or by the same employee
organization, exceed 10% of the total of all liabilities of
such general account; or
(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 (A) the
proposed issuance or transfer of the Residual Interest
Instrument to such Prospective Owner will not cause any assets
of the Trust to be deemed assets of a Plan, or (B) the
proposed issuance or transfer of the Residual Interest
Instrument will not cause the Owner Trustee or the Certificate
Registrar or any of their respective successors to be a
fiduciary of a Plan within the meaning of Section 3(21) of
ERISA and will not give rise to a transaction described in
Section 406 of ERISA or Section 4975(c)(1) of the Code for
which a statutory or administrative exemption is unavailable.
(c) By its acceptance of a Residual Interest Instrument, each
Prospective Owner agrees and acknowledges that no legal or beneficial interest
in all or any portion of any Residual Interest Instrument 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) Subject to paragraph (f) below, the Trustee shall not execute,
and shall not countersign and deliver, a Residual Interest Instrument in
connection with any transfer thereof unless the transferor shall have provided
to the Trustee a certificate, substantially in the form attached as Exhibit F1
to this Agreement, signed by the transferee, 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 Residual Interest
Instruments to Book-Entry Nominees or Non-permitted Foreign Holders, and an
agreement by the transferee that it will not transfer a Residual Interest
Instrument without providing to the Trustee a certificate substantially in the
from attached as Exhibit F1 to this Agreement.
(e) The Residual Interest Instruments shall bear an additional
legend referring to the restrictions contained in paragraphs (b) and (c)
above.
(f) Notwithstanding paragraph (d) above, in the event that
FIRSTPLUS FINANCIAL, INC. pledges, mortgages, assigns or otherwise grants any
security interest in the Residual Interest to any person (each, a "Pledgee"),
the Trustee may execute, countersign and deliver a Residual Interest Instrument
to such Pledgee, provided that such Pledgee shall have delivered to the Trustee
a Certificate signed on behalf of the Pledgee substantially in the form
attached as Exhibit F2 to this Agreement.
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ARTICLE IV
Actions by Owner Trustee
SECTION 4.1 Prior Notice to Owners with Respect to Certain
Matters. With respect to the following matters, the Owner Trustee shall not
take action, and the Owners shall not direct the Owner Trustee to take any
action, unless at least 30 days before the taking of such action, the Owner
Trustee shall have notified the Owners and the Securities Insurer in writing of
the proposed action and the Owners and/or the Securities Insurer shall not have
notified the Owner Trustee in writing prior to the 30th day after such notice is
given that such Owners and/or the Securities Insurer have withheld consent or
the Owners have provided alternative direction (any direction by the Owners
shall require the prior consent of the Securities Insurer):
(a) the initiation of any claim or lawsuit by the
Trust (except claims or lawsuits brought in
connection with the collection of the Home Loans)
and the compromise of any action, claim or lawsuit
brought by or against the Trust (except with respect
to the aforementioned claims or lawsuits for
collection of the Home Loans);
(b) the election by the Trust to file an
amendment to the Certificate of Trust (unless
such amendment is required to be filed under
the Business Trust Statute);
(c) the amendment or other change to this
Agreement or any Basic Document in
circumstances where the consent of any
Noteholder or the Securities Insurer is
required;
(d) the amendment or other change to this
Agreement or any Basic Document in
circumstances where the consent of any
Noteholder or the Securities Insurer is not
required and such amendment materially
adversely affects the interest of the Owners;
(e) the appointment pursuant to the Indenture of
a successor Note Registrar, Paying Agent or
Indenture Trustee or pursuant to this
Agreement of a successor Certificate
Registrar, or the consent to the assignment
by the Note Registrar, Paying Agent or
Indenture Trustee or Certificate Registrar of
its obligations under the Indenture or this
Agreement, as applicable.
(f) the consent to the calling or waiver of any
default of any Basic Document;
(g) the consent to the assignment by the
Indenture Trustee or Servicer of their
respective obligations under any Basic
Document;
(h) except as provided in Article IX hereof,
dissolve, terminate or liquidate the Trust in
whole or in part;
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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
Basic Document;
(l) do any act which would make it impossible to
carry on the ordinary business of the Trust
as described in Section 2.13 hereof;
(m) confess a judgment against the Trust;
(n) possess Trust assets, or assign the Trust's
right to property, for other than a Trust
purpose;
(o) cause the Trust to lend any funds to any
entity; or
(p) change the Trust's purpose and powers from
those set forth in this Trust Agreement.
In addition the Trust shall not commingle its assets with those of any
other entity. The Trust shall maintain its financial and accounting books and
records separate from those of any other entity. Except as expressly set forth
herein, the Trust shall pay its indebtedness, operating expenses from its own
funds, and the Trust shall not pay the indebtedness, operating expenses and
liabilities of any other entity. The Trust shall maintain appropriate minutes
or other records of all appropriate actions and shall maintain its office
separate from the offices of the Company, the Depositor, FFI and RAC.
The Owner Trustee shall not have the power, except upon the direction
of the Owners with the consent of the Securities Insurer, and to the extent
otherwise consistent with the Transaction Documents, to (i) remove or replace
the Servicer or the Indenture Trustee, (ii) institute proceedings to have the
Trust declared or adjudicated a bankruptcy or insolvent, (iii) consent to the
institution of bankruptcy or insolvency proceedings against the Trust, (iv)
file a petition or consent to a petition seeking reorganization or relief on
behalf of the Trust under any applicable federal or state law relating to
bankruptcy, (v) consent to the appointment of a receiver, liquidator, assignee,
trustee, sequestrator (or any similar official) of the Trust or a substantial
portion of the property of the Trust, (vi) make any assignment for the benefit
of the Trust's creditors, (vii) cause the Trust to admit in writing its
inability to pay its debts generally as they become due, (viii) take any
action, or cause the Trust to take any action, in furtherance of any of the
foregoing (any of the above, a "Bankruptcy Action"). So long as the Indenture
and the Insurance Agreement remain in effect and no Securities Insurer Default
exists, no Certificateholder shall have the power to take, and shall not take,
any Bankruptcy Action with respect to the Trust or the Company or direct the
Owner Trustee to take any Bankruptcy Action with respect to the Trust or the
Company.
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SECTION 4.2 Action by Owners with Respect to Certain
Matters. The Owner Trustee shall not have the power, except upon the direction
of the Owners and the consent of the Securities Insurer, to (a) remove the
Administrator under the Administration Agreement pursuant to Section 8 thereof,
(b) appoint a successor Administrator pursuant to Section 8 of the
Administration Agreement, (c) remove the Servicer under the Sale and Servicing
Agreement pursuant to Section 10.01 thereof or (d) sell the Home Loans after
the termination of the Indenture. The Owner Trustee shall take the actions
referred to in the preceding sentence only upon written instructions signed by
the Owners and only after obtaining the consent of the Securities Insurer.
SECTION 4.3 Action by Owners with Respect to Bankruptcy. The
Owner Trustee shall not have the power to commence a voluntary proceeding in
bankruptcy relating to the Trust without the consent and approval of the
Securities Insurer, the unanimous prior approval of all Owners and the
Securities Insurer and the delivery to the Owner Trustee by each such Owner of
a certificate certifying that such Owner reasonably believes that the Trust is
insolvent.
SECTION 4.4 Restrictions on Owners' Power. The Owners shall
not direct the Owner Trustee to take or refrain from taking any action if such
action or inaction would be contrary to any obligation of the Trust or the
Owner Trustee under this Agreement or any of the Basic Documents or would be
contrary to Section 2.3 nor shall the Owner Trustee be obligated to follow any
such direction, if given.
SECTION 4.5 Majority Control. Except as expressly provided
herein, any action that may be taken by the Owners under this Agreement may be
taken by the Holders of Certificates evidencing more than 50% of the
Certificate Principal Balance and holders of Residual Interest evidencing more
than 50% of the Percentage Interest in the Residual Interest. Except as
expressly provided herein, any written notice of the Owners delivered pursuant
to this Agreement shall be effective if signed by Holders of Certificates
evidencing more than 50% of the Certificate Balance and holders of Residual
Interest evidencing more than 50% of the Percentage Interest in the Residual
Interest at the time of the delivery of such notice.
ARTICLE V
Application of Trust Funds; Certain Duties
SECTION 5.1 Establishment of Trust Account. The Owner Trustee
shall cause the Servicer, for the benefit of the Owners, to establish and
maintain with First Bank National Association for the benefit of the Owner
Trustee or Co-Owner Trustee one or more Eligible Accounts which while the Co-
Owner Trustee holds such Trust Account shall be entitled "CERTIFICATE
DISTRIBUTION ACCOUNT, FIRST BANK NATIONAL ASSOCIATION, AS CO-OWNER TRUSTEE, IN
TRUST FOR THE FIRSTPLUS ASSET BACKED SECURITIES, SERIES 1996-3". Funds shall
be deposited in the Certificate Distribution Account as required by the Sale
and Servicing Agreement.
All of the right, title and interest of the Co-Owner Trustee or
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 Owners, the Securities Insurer, and such other persons entitled to
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distributions therefrom. 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 or Co-Owner Trustee
for the benefit of the Owners, the Securities Insurer and the Servicer.
In addition to the foregoing, the Certificate Distribution
Account is a Trust Account under the Sale and Servicing Agreement and
constitutes part of the Trust Estate pledged by the Trust to the Indenture
Trustee under the Indenture. The Certificate Distribution Account shall be
subject to and established and maintained in accordance with the applicable
provisions of the Sale and Servicing Agreement and the Indenture, including,
without limitation, the provisions of Section 5.06(c) of the Sale and Servicing
Agreement regarding distributions from the Certificate Distribution Account.
The Company by virtue of its acceptance of the FRH Certificates,
agrees to direct and shall have the sole authority to direct the Owner Trustee
or Co-Owner Trustee, or their successor in interest, as to the Permitted
Investments in which the funds on deposit in the Trust Accounts (as such term
is defined in the Sale and Servicing Agreement) may be invested.
SECTION 5.2 Application Of Trust Funds.
(a) On each Distribution Date, the Owner Trustee or the
Co-Owner Trustee shall direct the Paying Agent to
distribute to the Certificateholders, the Securities
Insurer, the Servicer and the Residual
Certificateholders from amounts on deposit in the
Certificate Distribution Account the distributions
as provided in Section 5.06 of the Sale and
Servicing Agreement with respect to such
Distribution Date.
(b) On each Distribution Date, the Owner Trustee shall
cause the Paying Agent to send to the DTC and each
Residual Interestholder the statement provided to
the Owner Trustee by the Servicer pursuant to
Section 6.01 of the Sale and Servicing Agreement
with respect to such Distribution Date.
(c) In the event that any withholding tax is imposed
on the Trust's payment (or allocations of income) to
an owner, such tax shall reduce the amount otherwise
distributable to the Owner in accordance with this
Section. The Owner Trustee is hereby authorized and
directed to retain from amounts otherwise
distributable to the Owners sufficient funds for the
payment of any tax that is legally owed by the Trust
(but such authorization shall not prevent the Owner
Trustee from contesting any such tax in appropriate
proceedings, and withholding payment of such tax, if
permitted by law, pending the outcome of such
proceedings). The amount of any withholding tax
imposed with respect to an Owner shall be treated as
cash distributed to such Owner at the time it is
withheld by the Trust 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. Owner), the Owner Trustee may in its
sole discretion withhold such
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amounts in accordance with this paragraph (c). In
the event that an Owner wishes to apply for a refund
of any such withholding tax, the Owner Trustee shall
reasonably cooperate with such owner in making such
claim so long as such Owner agrees to reimburse the
Owner Trustee for any out-of-pocket expenses
incurred.
SECTION 5.3 Method of Payment. Subject to Section 3.11,
distributions required to be made to Owners on any Distribution Date shall be
made to each Owner of record on the preceding Record Date either by wire
transfer, in immediately available funds, to the account of such Holder at a
bank or other entity having appropriate facilities therefor, if such Owner
shall have provided to the Certificate Registrar appropriate written
instructions at least five Business Days prior to such Distribution Date and
such Holder's Certificates in the aggregate evidence a denomination of not less
than $1,000,000, or, if not, by check mailed to such Owner at the address of
such holder appearing in the Certificate Register.
SECTION 5.4 Segregation of Moneys; No Interest. Subject to
Sections 4.1 and 5.2, moneys received by the Owner Trustee hereunder and
deposited into the Certificate Distribution Account will be segregated except
to the extent required otherwise by law or the Sale and Servicing Agreement and
shall be invested in Permitted Investments at the direction of the Company.
The Owner Trustee shall not be liable for payment of any interest in respect of
such moneys.
SECTION 5.5 Accounting and Reports to the Certificateholder,
Owners, the Internal Revenue Service and Others. The Owner Trustee shall (a)
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
separate from those of any other entity and reflect the separate interest of
the Trust, (b) deliver to each Owner, as may be required by the Code and
applicable Treasury Regulations, such information as may be required (including
Schedule K-1) to enable each Owner to prepare its federal and state income tax
returns, (c) file such tax 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, (d) cause such tax returns to
be signed in the manner required by law and (e) collect or cause to be
collected any withholding tax as described in and in accordance with Section
5.2(c) with respect to income or distributions to Owners. The Owner Trustee
shall elect under Section 1278 of the Code to include in income currently any
market discount that accrues with respect to the Home Loans. The Owner Trustee
shall not make the election provided under Section 754 of the Code.
SECTION 5.6 Signature on Returns; Tax Matters Partner.
(a) The Owner Trustee shall sign on behalf of the
Trust the tax returns of the Trust, unless
applicable law requires an Owner to sign such
documents, in which case such documents shall be
signed by the Company.
(b) The Company shall be designated the "tax matters
partner" of the Trust pursuant to Section
6231(a)(7)(A) of the Code and applicable Treasury
Regulations.
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ARTICLE VI
Authority and Duties of Owner Trustee
SECTION 6.1 General Authority. The Owner Trustee is authorized
and directed to execute and deliver or cause to be executed and delivered the
Notes, the Trust Certificates and the Basic Documents to which the Trust is to
be a party and each certificate or other document attached as an exhibit to or
contemplated by the Basic Documents to which the Trust is to be a party and any
amendment or other agreement or instrument described in Article III, in each
case, in such form as the Company 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 Class A-1 Notes in the
aggregate principal amount of $65,000,000, Class A-2 Notes in the aggregate
principal amount of $49,000,000, Class A-3 Notes in the aggregate principal
amount of $22,000,000, Class A-4 Notes in the aggregate principal amount of
$32,000,000, Class A-5 Notes in the aggregate principal amount of $20,000,000,
Class A-6 Notes in the aggregate principal amount of $47,000,000, Class A-7
Notes in the aggregate principal amount of $29,000,000, Class A-8 Notes in the
aggregate principal amount of $24,750,000 and Certificates in the aggregate
principal amount of $11,250,000. In addition to the foregoing, the Owner
Trustee is authorized, but shall not be obligated, to take all actions required
of the Trust, pursuant to the Basic Documents.
SECTION 6.2 General Duties. It shall be the duty of the Owner
Trustee:
(a) to discharge (or cause to be discharged) all of its
responsibilities pursuant to the terms of this
Agreement and the Basic Documents to which the Trust
is a party and to administer the Trust in the
interest of the Owners, subject to the Basic
Documents and in accordance with the provisions of
this Agreement. Notwithstanding the foregoing, the
Owner Trustee shall be deemed to have discharged its
duties and responsibilities hereunder and under the
Basic Documents to the extent the Administrator or
the Co-Owner Trustee has agreed in the
Administration Agreement or this Agreement,
respectively, to perform any act or to discharge any
duty of the Owner Trustee or the Trust hereunder or
under any Basic Document, and the Owner Trustee
shall not be held liable for the default or failure
of the Administrator or the Co-Owner Trustee to
carry out its obligations under the Administration
Agreement or this Agreement, respectively; and
(b) to obtain and preserve, the Issuer's qualification
to do business in each jurisdiction in which such
qualification is or shall be necessary to protect
the validity and enforceability of the Indenture,
the Notes, the Collateral and each other instrument
and agreement included in the Trust Estate.
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SECTION 6.3 Action upon Instruction.
(a) Subject to Article IV and in accordance with the
terms of the Basic Documents, the Owners may by
written instruction direct the Owner Trustee in the
management of the Trust but only to the extent
consistent with the limited purpose of the Trust.
Such direction may be exercised at any-time by
written instruction of the Owners pursuant to
Article IV.
(b) The Owner Trustee shall not be required to take any
action hereunder or under any Basic Document if the
Owner Trustee shall have reasonably determined, or
shall have been advised by counsel, that such
action is likely to result in liability on the part
of the Owner Trustee or is contrary to the terms
hereof or of any Basic Document or is otherwise
contrary to law.
(c) Whenever the Owner Trustee is unable to decide
between alternative courses of action permitted or
required by the terms of this Agreement or under
any Basic Document, the Owner Trustee shall
promptly give notice (in such form as shall be
appropriate under the circumstances) to the Owners
and the Securities Insurer requesting instruction
from the Owners as to the course of action to be
adopted, and to the extent the Owner Trustee acts
in good faith in accordance with any written
instruction of the Owners received, the Owner
Trustee shall not be liable on account of such
action to any Person. If the Owner Trustee shall
not have received appropriate instruction within 10
days of such notice (or within such shorter period
of time as reasonably may be specified in such
notice or may be necessary under the circumstances)
it may, but shall be under no duty to, take or
refrain from taking such action, not inconsistent
with this Agreement or the Basic Documents, as it
shall deem to be in the best interests of the
Owners, and shall have no liability to any Person
for such action or inaction.
(d) In the event that the Owner Trustee is unsure as to
the application of any provision of this Agreement
or any Basic Document or any such provision is
ambiguous as to its application, or is, or appears
to be, in conflict with any other applicable
provision, or in the event that this Agreement
permits any determination by the Owner Trustee or
is silent or is incomplete as to the course of
action that the Owner Trustee is required to take
with respect to a particular set of facts, the
Owner Trustee may give notice (in such form as
shall be appropriate under the circumstances) to
the Owners 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
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Basic Documents, as it shall deem to be in the best
interests of the Owners, and shall have no
liability to any Person for such action or
inaction.
SECTION 6.4 No Duties Except as Specified in this Agreement,
the Basic Documents or 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 Basic Document or in
any document or written instruction received by the Owner Trustee pursuant to
Section 6.3; and no implied duties or obligations shall be read into this
Agreement or any Basic Document against the Owner Trustee. The Owner Trustee
shall have no responsibility for filing any financing or continuation statement
in any public office at any time or to otherwise perfect or maintain the
perfection of any security interest or lien granted to it hereunder or to
prepare or file any Securities and Exchange Commission filing for the Trust or
to record this Agreement or any Basic Document. The Owner Trustee nevertheless
agrees that it will, at its own cost and expense, promptly take all action as
may be necessary to discharge any liens on any part of the Owner Trust Estate
that result from actions by, or claims against, the Owner Trustee that are not
related to the ownership or the administration of the Owner Trust Estate.
SECTION 6.5 No Action Except Under Specified Documents or
Instructions. The Owner Trustee shall not manage, control, use, sell, dispose
of or otherwise deal with any part of the Owner Trust Estate except (i) in
accordance with the powers granted to and the authority conferred upon the
Owner Trustee pursuant to this Agreement, (ii) in accordance with the Basic
Documents and (iii) in accordance with any document or instruction delivered to
the owner Trustee pursuant to Section 6.3.
SECTION 6.6 Restrictions. The Owner Trustee shall not take any
action (a) that is inconsistent with the purposes of the Trust set forth in
Section 2.3 or (b) that, to the actual knowledge of the Owner Trustee, would
result in the Trust's becoming taxable as a corporation for Federal income tax
purposes. The Owners shall not direct the Owner Trustee to take action that
would violate the provisions of this Section.
ARTICLE VII
Concerning the Owner Trustee
SECTION 7.1 Acceptance of Trusts and Duties. The Owner Trustee
accepts the trusts hereby created and agrees to perform its duties hereunder
with respect to such trusts but only upon the terms of this Agreement and the
Basic Documents. The Owner Trustee also agrees to disburse all moneys actually
received by it constituting part of the Owner Trust Estate upon the terms of
the Basic Documents and this Agreement. The Owner Trustee shall not be
answerable or accountable hereunder or under any Basic Document under any
circumstances, except (i) for its own willful misconduct or gross negligence or
(ii) in the case of the inaccuracy of any representation or warranty contained
in Section 7.3 expressly made by the Owner Trustee. In particular, but not by
way of limitation (and subject to the exceptions set forth in the preceding
sentence):
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(a) the Owner Trustee shall not be liable for any error
of judgment made by a responsible officer of the
Owner Trustee;
(b) the Owner Trustee shall not be liable with respect
to any action taken or omitted to be taken by it in
accordance with the instructions of the
Administrator or the Owners;
(c) no provision of this Agreement or any Basic
Document shall require the Owner Trustee to expend
or risk funds or otherwise incur any financial
liability in the performance of any of its rights
or powers hereunder or under any Basic Document if
the Owner Trustee shall have reasonable grounds for
believing that repayment of such funds or adequate
indemnity against such risk or liability is not
reasonably assured or provided to it;
(d) under no circumstances shall the Owner Trustee be
liable for indebtedness evidenced by or arising
under any of the Basic Documents, including the
principal of and interest on the Notes;
(e) the Owner Trustee shall not be responsible for or
in respect of the validity or sufficiency of this
Agreement or for the due execution hereof by the
Depositor or the Company or for the form,
character, genuineness, sufficiency, value or
validity of any of the Owner Trust Estate or for or
in respect of the validity or sufficiency of the
Basic Documents, other than the certificate of
authentication on the Trust Certificates, and the
Owner Trustee shall in no event assume or incur any
liability, duty, or obligation to any Noteholder or
to any Owner, other than as expressly provided for
herein and in the Basic Documents;
(f) the Owner Trustee shall not be liable for the
default or misconduct of the Administrator, the
Seller, the Company, the Indenture Trustee or the
Servicer under any of the Basic Documents or
otherwise and the Owner Trustee shall have no
obligation or liability to perform the obligations
of the Trust under this Agreement or the Basic
Documents that are required to be performed by the
Administrator under the Administration Agreement,
the Indenture Trustee under the Indenture or the
Servicer under the Sale and Servicing Agreement;
and
(g) the Owner Trustee shall be under no obligation to
exercise any of the rights or powers vested in it
by this Agreement, or to institute, conduct or
defend any litigation under this Agreement or
otherwise or in relation to this Agreement or any
Basic Document, at the request, order or direction
of any of the Owners, unless such Owners 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
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in this Agreement or in any Basic Document shall
not be construed as a duty, and the Owner Trustee
shall not be answerable for other than its gross
negligence or willful misconduct in the performance
of any such act provided, that the Owner Trustee
shall be liable for its negligence or willful
misconduct in the event that it assumes the duties
and obligations of the Co-Owner Trustee under the
Sale and Servicing Agreement pursuant to Section
10.5 hereof.
SECTION 7.2 Furnishing of Documents. The Owner Trustee shall
furnish (a) to the Owners promptly upon receipt of a written request therefor,
duplicates or copies of all reports, notices, requests, demands, certificates,
financial statements and any other instruments furnished to the Owner Trustee
under the Basic Documents and (b) to Noteholders promptly upon written request
therefor, copies of the Sale and Servicing Agreement, the Administration
Agreement and the Trust Agreement.
SECTION 7.3 Representations and Warranties.
(a) The Owner Trustee hereby represents and warrants to
the Depositor and the Company, for the benefit of
the Owners, that:
(i) It is a banking corporation duly organized
and validly existing in good standing under
the laws of the State of Delaware. It has
all requisite corporate power and authority
to execute, deliver and perform its
obligations under this Agreement.
(ii) It has taken all corporate action necessary
to authorize the execution and delivery by it
of this Agreement, and this Agreement will be
executed and delivered by one of its officers
who is duly authorized to execute and deliver
this Agreement on its behalf.
(iii) Neither the execution nor the delivery by it
of this Agreement nor the consummation by it
of the transactions contemplated hereby nor
compliance by it with any of the terms or
provisions hereof will contravene any Federal
or Delaware law, governmental rule or
regulation governing the banking or trust
powers of the owner Trustee or any judgment
or order binding on it, or constitute any
default under its charter documents or
by-laws or any indenture, mortgage, contract,
agreement or instrument to which it is a
party or by which any of its properties may
be bound.
(b) The Co-Owner Trustee hereby represents and warrants
to the Depositor and the Company and the Securities
Insurer, for the benefit of the Owners, that:
(i) It is a banking corporation duly organized
and validly existing in good standing under
the laws of the State of Minnesota. It has
all
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requisite corporate power and authority to
execute, deliver and perform its obligations
under this Agreement.
(ii) It has taken all corporate action necessary
to authorize the execution and delivery by it
of this Agreement, and this Agreement will be
executed and delivered by one of its officers
who is duly authorized to execute and deliver
this Agreement on its behalf.
(iii) Neither the execution nor the delivery by it
of this Agreement nor the consummation by it
of the transactions contemplated hereby nor
compliance by it with any of the terms or
provisions hereof will contravene any Federal
or Minnesota law, governmental rule or
regulation governing the banking or trust
powers of the owner Trustee or any judgment
or order binding on it, or constitute any
default under its charter documents or
by-laws or any indenture, mortgage, contract,
agreement or instrument to which it is a
party or by which any of its properties may
be bound.
SECTION 7.4 Reliance; Advice of Counsel.
(a) The Owner Trustee shall incur no liability to
anyone in acting upon any signature, instrument,
notice, resolution, request, consent, order,
certificate, report, opinion, bond, or other
document or paper believed by it to be genuine and
believed by it to be signed by the proper party or
parties. The Owner Trustee may accept a certified
copy of a resolution of the board of directors or
other governing body of any corporate party as
conclusive evidence that such resolution has been
duly adopted by such body and that the same is in
full force and effect. As to any fact or matter
the method of the determination of which is not
specifically prescribed herein, the Owner Trustee
may for all purposes hereof rely on a certificate,
signed by the president or any vice president or by
the treasurer or other authorized officers of the
relevant party, as to such fact or matter and such
certificate shall constitute full protection to the
Owner Trustee for any action taken or omitted to be
taken by it in good faith in reliance thereon.
(b) In the exercise or administration of the trusts
hereunder and in the performance of its duties and
obligations under this Agreement or the Basic
Documents, the Owner Trustee (i) may act directly
or through its agents or attorneys pursuant to
agreements entered into with any of them, and the
Owner Trustee shall not be liable for the conduct
or misconduct of such agents or attorneys if such
agents or attorneys shall have been selected by the
Owner Trustee with reasonable care, and (ii) may
consult with counsel, accountants and other skilled
persons to be selected with reasonable care and
employed by it. The Owner Trustee shall not be
liable for anything done, suffered or omitted in
good faith by it in accordance with the written
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opinion or advice of any such counsel, accountants
or other such persons and not contrary to this
Agreement or any Basic Document.
SECTION 7.5 Not Acting in Individual Capacity. Except as
provided in this Article VII, in accepting the trusts hereby created Wilmington
Trust Company acts solely as Owner Trustee hereunder and not in its individual
capacity and all Persons having any claim against the Owner Trustee by reason
of the transactions contemplated by this Agreement or any Basic Document shall
look only to the Owner Trust Estate for payment or satisfaction thereof.
SECTION 7.6 Owner Trustee Not Liable for Trust Certificates or
Home Loans. The recitals contained herein and in the Trust Certificates (other
than the signature and countersignature of the Owner Trustee on the Trust
Certificates) shall be taken as the statements of the Depositor and the
Company, and the Owner Trustee assumes no responsibility for the correctness
thereof. The Owner Trustee makes no representations as to the validity or
sufficiency of this Agreement, of any Basic Document or of the Trust
Certificates (other than the signature and countersignature of the Owner
Trustee on the Trust Certificates and as specified in Section 7.3) or the
Notes, or of any Home Loans or related documents. The Owner Trustee shall at
no time have any responsibility or liability for or with respect to the
legality, validity and enforceability of any Home Loan, or the perfection and
priority of any security interest created by any Home Loan or the maintenance
of any such perfection and priority, or for or with respect to the sufficiency
of the Owner Trust Estate or its ability to generate the payments to be
distributed to Owners under this Agreement or the Noteholders under the
Indenture, including, without limitation: the existence, condition and
ownership of any Mortgaged Property; the existence and enforceability of any
insurance thereon; the existence and contents of any Home Loan on any computer
or other record thereof; the validity of the assignment of any Home Loan to the
Trust or of any intervening assignment; the completeness of any Home Loan; the
performance or enforcement of any Home Loan; the compliance by the Depositor,
the Company or the Servicer with any warranty or representation made under any
Basic Document or in any related document or the accuracy of any such warranty
or representation or any action of the Administrator, the Indenture Trustee or
the Servicer or any subservicer taken in the name of the Owner Trustee.
SECTION 7.7 Owner Trustee May Own Trust Certificates and Notes.
The Owner Trustee in its individual or any other capacity may become the owner
or pledgee of Trust Certificates or Notes and may deal with the Depositor, the
Company, the Administrator, the Indenture Trustee and the Servicer in banking
transactions with the same rights as it would have if it were not Owner
Trustee.
SECTION 7.8 Licenses. The Owner Trustee shall cause the Trust
to use its best efforts to obtain and maintain the effectiveness of any
licenses required in connection with this Agreement and the Basic Documents and
the transactions contemplated hereby and thereby until such time as the Trust
shall terminate in accordance with the terms hereof.
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ARTICLE VIII
Compensation of Owner Trustee
SECTION 8.1 Owner Trustee's Fees and Expenses. The Owner
Trustee shall receive as compensation for its services hereunder such fees as
have been separately agreed upon before the date hereof between the Company and
the Owner Trustee, and the Owner Trustee shall be entitled to be reimbursed by
the Company for its other reasonable expenses hereunder, including the
reasonable compensation, expenses and disbursements of such agents,
representatives, experts and counsel as the Owner Trustee may employ in
connection with the exercise and performance of its rights and its duties
hereunder.
SECTION 8.2 Indemnification. The Depositor shall be liable as
primary obligor, and the Servicer as secondary obligor pursuant to the
Administration 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
Basic Documents, the Owner Trust Estate, the administration of the Owner Trust
Estate or the action or inaction of the Owner Trustee hereunder, except only
that the Depositor shall not be liable for or required to indemnify an
Indemnified Party from and against Expenses arising or resulting from any of
the matters described in the third sentence of Section 7.01. The indemnities
contained in this Section shall survive the resignation or termination of the
Owner Trustee or the termination of this Agreement. In any event of any claim,
action or proceeding for which indemnity will be sought pursuant to this
Section, the Owner Trustee's choice of legal counsel shall be subject to the
approval of the Depositor, which approval shall not be unreasonably withheld.
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.
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 satisfaction and
discharge of the Indenture pursuant to Section 4.1
of the Indenture and the termination of the Sale and
Servicing Agreement; (ii) at the time provided in
Section 9.2.; and (iii) the expiration of 21 years
from the death of the last survivor of the
descendants of Joseph P. Kennedy (The late
ambassador of
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the United States to the Court of St. James's). The
bankruptcy, liquidation, dissolution, death or
incapacity of any Owner, other than the Company as
described in Section 9.2, shall not (x) operate to
terminate this Agreement or the Trust, nor (y)
entitle such Owner's legal representatives or heirs
to claim an accounting or to take any action or
proceeding in any court for a partition or winding
up of all or any part of the Trust or Owner Trust
Estate nor (z) otherwise affect the rights,
obligations and liabilities of the parties hereto.
(b) The Certificates shall be subject to an early
redemption or termination at the option of the
Company, and in certain instances the Securities
Insurer, in the manner and subject to the
provisions of Section 11.02 of the Sale and
Servicing Agreement.
(c) Except as provided in Sections 9.1(a) and (b)
above, none of the Depositor, the Company, the
Securities Insurer nor any Owner shall be entitled
to revoke or terminate the Trust.
(d) Notice of any termination of the Trust, specifying
the Distribution Date upon which the
Certificateholders shall surrender their
Certificates to the Paying Agent for payment of the
final distributions and cancellation, shall be
given by the Owner Trustee to the
Certificateholders, the Securities Insurer and the
Rating Agencies mailed within five Business Days of
receipt by the Owner Trustee of notice of such
termination pursuant to Section 9.1(a) or (b)
above, which notice given by the Owner Trustee
shall state (i) the Distribution 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 Paying Agent
therein designated, (ii) the amount of any such
final payment and (iii) that the Record Date
otherwise applicable to such Distribution Date is
not applicable, payments being made only upon
presentation and surrender of the Trust
Certificates at the office of the Paying Agent
therein specified. The Owner Trustee shall give
such notice to the Certificate Registrar (if other
than the Owner Trustee) and the Paying Agent at the
time such notice is given to Certificateholders.
Upon presentation and surrender of the
Certificates, the Paying Agent shall cause to be
distributed to Certificateholders amounts
distributable on such Distribution Date pursuant to
Section 5.06 of the Sale and Servicing Agreement.
In the event that all of the Certificateholders
shall not surrender their Trust Certificates for
cancellation within six months after the date
specified in the above mentioned written notice,
the Owner Trustee shall give a second written
notice to the remaining Certificateholders to
surrender their Trust Certificates for cancellation
and receive the final distribution with respect
thereto. If within one year after the second
notice all the Trust Certificates shall not have
been surrendered for cancellation, the Owner
Trustee may
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take appropriate steps, or may appoint an agent to
take appropriate steps, to contact the remaining
Certificateholders concerning surrender of their
Trust Certificates, and the cost thereof shall be
paid out of the funds and other assets that shall
remain subject to this Agreement. Any funds
remaining in the Trust after exhaustion of such
remedies shall be distributed by the Owner Trustee
to the Residual Interestholders on a pro rata
basis.
(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
3820 of the Business Trust Statute.
SECTION 9.2 Dissolution Upon Bankruptcy of the Company. (i) In
the event that an Insolvency Event shall occur with respect to the Company when
there is a Securities Insurer Default subsisting, this Agreement shall be
terminated in accordance with Section 9.1 90 days after the date of such
Insolvency Event, unless, before the end of such 90-day period, the Owner
Trustee shall have received written instructions from (a) each of the Owners
(other than the Company) representing more than 50% of the Certificate
Principal Balance and more than 50% of the Percentage Interest of the Residual
Interest (not including the Certificate Principal Balance of the Certificates
held by the Company), and (b) an Opinion of Counsel described in Section
9.2(ii). Promptly after the occurrence of any Insolvency Event with respect to
the Company, (A) the Company shall give the Indenture Trustee and the Owner
Trustee written notice of such Insolvency Event, (B) the Owner Trustee shall,
upon the receipt of such written notice from the Company, give prompt written
notice to the Owners (other than the Company) and the Indenture Trustee, of the
occurrence of such event, and (C) the Indenture Trustee shall, upon receipt of
written notice of such Insolvency Event from the Owner Trustee or the Company,
give prompt written notice to the Noteholders and Securities Insurer of the
occurrence of such event; provided, however, that any failure to give a notice
required by this sentence shall not prevent or delay, in any manner, a
termination of the Trust pursuant to the first sentence of this Section 9.2.
Upon a termination pursuant to this Section, the Owner Trustee shall direct the
Indenture Trustee promptly to sell the assets of the Trust (other than the
Trust Accounts and the Certificate Distribution Account) in a commercially
reasonable manner and on commercially reasonable terms. The proceeds of such a
sale of the assets of the Trust shall be treated as collections under the Sale
and Servicing Agreement.
(ii) If an Insolvency Event occurs when the Insurance Agreement
shall be in effect and there is no Securities Insurer Default existing, then
the Owner Trustee shall retain for the benefit of the Certificateholders and
the Securities Insurer, all remedies available at law or under this Agreement
and none of the liens or security interests granted by the Trust shall be
extinguished, released, terminated or impaired by such Insolvency Event; but
rather, such liens and security interests shall continue to encumber the Owner
Trust Estate until all principal and interest on the Certificates is paid in
full and any other amounts required to be distributed by the Trust under this
Agreement have been so distributed.] In any case however, subject to the
following, upon the occurrence of an Insolvency Event, the Owner Trust Estate
held under this Agreement shall be sold within 90 days of the occurrence of
such event and the proceeds of such sale distributed in accordance with the
provisions of Article 5 of this Agreement. Notwithstanding anything in this
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Agreement to the contrary, this Agreement shall not terminate and the assets
shall not be sold upon the occurrence of an Insolvency Event, if within ninety
(90) days of such Insolvency Event the holders of a majority in Percentage
Interest of the Certificates and a majority in Percentage Interest of the
Residual Interest (in each case exclusive of the FRH Certificates) and the
Securities Insurer agree that this Agreement shall not so terminate and the
Owner Trustee and the Securities Insurer shall receive an opinion of counsel to
the Trust from counsel acceptable to the Securities Insurer, to the effect that
the entity created or reconstituted under this Agreement, if any, would not be
characterized as an association taxable as a corporation for federal and state
income tax purposes. If authorization to continue this Agreement is not
received and the Insurance Agreement is still in effect, and provided that the
Owner Trustee and the Securities Insurer shall have received an opinion of
counsel to the Trust from counsel acceptable to the Securities Insurer to the
effect that the actions described in this sentence, if consummated, shall not
cause the Trust to be characterized as an association taxable as a corporation
for federal and state income tax purposes, the assets shall not be sold, but
the Owner Trustee shall adopt a plan of dissolution, acceptable to the
Securities Insurer, to make collections on the Owner Trust Estate for
distribution in accordance with the terms and priority of payment which would
apply under the provisions of the Basic Documents. Any party hereto who has
actual knowledge of the occurrence of an Insolvency Event shall immediately
notify the Securities Insurer of such occurrence.
ARTICLE X
Successor Owner Trustees and Additional Owner Trustees
SECTION 10.1 Eligibility Requirements for Owner Trustee. The
Owner Trustee shall at all times be a corporation satisfying the provisions of
Section 3807(a) of the Business Trust Statute; authorized to exercise
corporate powers; having a combined capital and surplus of at least $50,000,000
and subject to supervision or examination by Federal or state authorities; and
having (or having a parent which has) a rating of at least Baa3 by Moody's and
A-1 by Standard & Poor's and being acceptable to the Securities Insurer. If
such corporation shall publish reports of condition at least annually, pursuant
to law or to the requirements of the aforesaid supervising or examining
authority, then for the purpose of this Section, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In
case at any time the Owner Trustee shall cease to be eligible in accordance
with the provisions of this Section, the Owner Trustee shall resign immediately
in the manner and with the effect specified in Section 10.2.
SECTION 10.2 Resignation or Removal of Owner Trustee. The Owner
Trustee may at any time resign and be discharged from the trusts hereby created
by giving written notice thereof to the Administrator, the Indenture Trustee
and the Securities Insurer. Upon receiving such notice of resignation, the
Administrator shall promptly appoint a successor Owner Trustee (acceptable to
the Securities 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 Securities
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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 Administrator, 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 Securities Insurer, or the Administrator
with the consent of the Securities Insurer, may remove the Owner Trustee. If
the Administrator or the Securities Insurer shall remove the Owner Trustee
under the authority of the immediately preceding sentence, the Securities
Insurer, or the Administrator with the consent of the Securities 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 Securities
Insurer and payment of all fees and expenses owed to the outgoing owner Trustee.
The Administrator shall provide notice of such resignation or removal of the
Owner Trustee to each of the Rating Agencies and the Securities Insurer.
SECTION 10.3 Successor Owner Trustee. Any successor Owner
Trustee appointed pursuant to Section 10.2 shall execute, acknowledge and
deliver to the Administrator, the Securities 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
Securities 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 Administrator
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 Administrator shall mail notice of the successor
of such Owner Trustee to all Owners, the Indenture Trustee, the Noteholders, the
Securities Insurer and the Rating Agencies. If the Administrator 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 Administrator.
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SECTION 10.4 Merger or Consolidation of Owner Trustee. Any
corporation into which the Owner Trustee may be merged or converted or with
which it may be consolidated or any corporation resulting from any merger,
conversion or consolidation to which the Owner Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Owner Trustee, shall be the successor of the Owner Trustee
hereunder, provided such corporation shall be eligible pursuant to Section
10.1, without the execution or filing of any instrument or any further act on
the part of any of the parties hereto, anything herein to the contrary
notwithstanding; provided further that the Owner Trustee shall mail notice of
such merger or consolidation to the Rating Agencies.
SECTION 10.5 Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Owner Trust Estate or any Mortgaged Property may at the time be located,
and for the purpose of performing certain duties and obligations of the Owner
Trustee with respect to the Trust and the Certificates under the Sale and
Servicing Agreement, the Administrator and the Owner Trustee acting jointly
shall have the power and shall execute and deliver all instruments to appoint
one or more Persons approved by the Owner Trustee and acceptable to the
Securities Insurer to act as co-trustee, jointly with the Owner Trustee, or
separate trustee or separate trustees, of all or any part of the Owner Trust
Estate, and to vest in such Person, in such capacity, such title to the Trust,
or any part thereof, and, subject to the other provisions of this Section, such
powers, duties, obligations, rights and trusts as the Administrator, the
Securities Insurer and the Owner Trustee may consider necessary or desirable.
If the Administrator shall not have joined in such appointment within 25 days
after the receipt by it of a request so to do, the Owner Trustee (with the
consent of the Securities Insurer) shall have the power to make such
appointment. No co-trustee or separate trustee under this Agreement shall be
required to meet the terms of eligibility as a successor trustee pursuant to
Section 10.1 and no notice of the appointment of any co-trustee or separate
trustee shall be required pursuant to Section 10.3.
The Owner Trustee hereby appoints the Indenture Trustee as Co-Owner
Trustee for the purpose of establishing and maintaining the Certificate
Distribution Account and making distributions therefrom to the Persons entitled
thereto pursuant to Section 5.06 of the Sale and Servicing Agreement. The
Owner Trustee and the Co-Owner Trustee each agree that upon the occurrence and
continuation of a Securities Insurer Default, the Co-Owner Trustee shall resign
and the Owner Trustee shall assume the duties and obligations of the Co-Owner
Trustee under the Sale and Servicing Agreement and this Agreement, including
without limitation, the obligations of the Co-Owner Trustee as Paying Agent
pursuant to Section 3.9 hereof.
Each separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provision and
conditions:
(i) all rights, powers, duties and obligations
conferred or imposed upon the Owner Trustee
shall be conferred upon and exercised or
performed by the Owner Trustee and such
separate trustee or co-trustee jointly (it
being understood that such separate trustee
or co-trustee is not authorized to act
separately without the Owner Trustee
joining in such act), except to the extent
that under any law of any
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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; provided that
Co-Owner Trustee, in performing its duties
and obligations under the Sale and
Servicing Agreement, may act separately in
its capacity as Co-Owner Trustee without
the Owner Trustee joining in such Acts.
(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 Administrator and the Owner Trustee
acting jointly may at any time accept the
resignation of or remove any separate
trustee or co- trustee.
Any notice, request or other writing given to the Owner Trustee
shall be deemed to have been given to the separate trustees and co-trustees, as
if given to each of them. Every instrument appointing any separate trustee or
co- trustee, other than this Agreement, shall refer to this Agreement and to the
conditions of this Article. Each separate trustee and co-trustee, upon its
acceptance of appointment, shall be vested with the estates specified in its
instrument of appointment, either jointly with the Owner Trustee or separately,
as may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Owner Trustee.
Each such instrument shall be filed with the Owner Trustee and a copy thereof
given to the Administrator.
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.
The Co-Owner Trustee, in its capacity as Co-Owner Trustee, shall
not have any rights, duties or obligations except as expressly provided in this
Agreement and the Sale and Servicing Agreement.
ARTICLE XI
Miscellaneous
SECTION 11.1 Supplements and Amendments. This Agreement may be
amended by the Depositor, the Company and the Owner Trustee, with the prior
consent of the Securities Insurer, and with prior written notice to the Rating
Agencies and the Securities Insurer, but without the consent
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of any of the Noteholders or the Owners or the Indenture Trustee, to cure any
ambiguity, to correct or supplement any provisions in this Agreement or for the
purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions in this Agreement or of modifying in any manner the
rights of the Noteholders or the Owners provided, however, that such action
shall not adversely affect in any material respect the interests of any
Noteholder or Owner or the rights of the Securities Insurer. An amendment
described above shall be deemed not to adversely affect in any material respect
the interests of any Noteholder or Owner if (i) an opinion of counsel is
obtained to such effect, and (ii) the party requesting the amendment satisfies
the Rating Agency Condition with respect to such amendment.
This Agreement may also be amended from time to time by the
Depositor, the Company and the Owner Trustee, with the prior written consent of
the Rating Agencies and with the prior written consent of the Indenture Trustee,
the Securities Insurer, the Holders (as defined in the Indenture) of Notes
evidencing more than 50% of the Outstanding Amount of the Notes, the Holders of
Certificates evidencing more than 50% of the Certificate Principal Balance and
holders of Residual Interest Instruments evidencing more than 50% of the
Percentage Interests of the Residual Interest, for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement or of modifying in any manner the rights of the Noteholders or
the Owners; 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 the Home Loans or distributions that shall be
required to be made for the benefit of the Noteholders or the Certificateholders
or the Securities Insurer (b) reduce the aforesaid percentage of the Outstanding
Amount of the Notes and the Certificate Principal Balance or the Percentage
Interests required to consent to any such amendment, in either case of clause
(a) or (b) without the consent of the holders of all the outstanding Notes and
Certificates and the Securities Insurer, and in the case of clause (b) without
the consent of the holders of all the outstanding Residual Interest Instruments.
Promptly after the execution of any such amendment or consent, the
Owner Trustee shall furnish written notification of the substance of such
amendment or consent to each Certificateholder, the Indenture Trustee, the
Securities Insurer and each of the Rating Agencies.
It shall not be necessary for the consent of Owners, the
Noteholders or the Indenture Trustee pursuant to this Section to approve the
particular form of any proposed amendment or consent, but it shall be sufficient
if such consent shall approve the substance thereof. The manner of obtaining
such consents (and any other consents of Owners provided for in this Agreement
or in any other Basic Document) and of evidencing the authorization of the
execution thereof by Certificateholders shall be subject to such reasonable
requirements as the Owner Trustee may prescribe.
Promptly after the execution of any amendment to the Certificate of
Trust, the Owner Trustee shall cause the filing of such amendment with the
Secretary of State.
Prior to the execution of any amendment to this Agreement or the
Certificate of Trust, the Owner Trustee shall be entitled to receive and rely
upon an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Agreement. The Owner Trustee may, but shall
not be obligated to, enter into any such amendment which affects the Owner
Trustee's own rights, duties or immunities under this Agreement or otherwise.
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SECTION 11.2 No Legal Title to Owner Trust Estate in Owners.
The Owners shall not have legal title to any part of the Owner Trust Estate.
The Owners shall be entitled to receive distributions with respect to their
undivided ownership interest therein only in accordance with Articles V and IX.
No transfer, by operation of law or otherwise, of any right, title, or interest
of the Owners to and in their ownership interest in the Owner Trust Estate
shall operate to terminate this Agreement or the trusts hereunder or entitle
any transferee to an accounting or to the transfer to it of legal title to any
part of the Owner Trust Estate.
SECTION 11.3 Limitations on Rights of Others. Except for
Section 2.7, the provisions of this Agreement are solely for the benefit of the
Owner Trustee, the Depositor, the Company, the Owners, the Administrator, the
Securities Insurer and, to the extent expressly provided herein, the Indenture
Trustee and the Noteholders, and nothing in this Agreement (other than Section
2.7), whether express or implied, shall be construed to give to any other
Person any legal or equitable right, remedy or claim in the Owner Trust Estate
or under or in respect of this Agreement or any covenants, conditions or
provisions contained herein.
SECTION 11.4 Notices. (a) Unless otherwise expressly specified
or permitted by the terms hereof, all notices shall be in writing and shall be
deemed given upon receipt by the intended recipient or three Business Days
after mailing if mailed by certified mail, postage prepaid (except that notice
to the Owner Trustee shall be deemed given only upon actual receipt by the
Owner Trustee), at the following addresses: (i) if to the Owner Trustee, its
Corporate Trust Office; (ii) if to the Depositor, FIRSTPLUS INVESTMENT
CORPORATION, 3773 Howard Hughes Parkway, Suite 300N, Las Vegas, Nevada 89109,
Attention: James P. Lawler; (iii) if to the Company, FIRSTPLUS RESIDUAL
HOLDINGS, INC., 3773 Howard Hughes Parkway, Suite 300N, Las Vegas, Nevada
89109, Attention: James P. Lawler; (iv) if to the Securities Insurer, MBIA
Insurance Corporation, 113 King Street, Armonk, New York 10504, Attention:
IPM-SF FIRSTPLUS 1996-3, telephone: 914-765-3810, confirmation: 914-765-3781;
(v) if to the Co-Owner Trustee, First Bank National Association, 180 East Fifth
Street, St. Paul, Minnesota 55101, Attention: Corporate Trust Department; or,
as to each such party, at such other address as shall be designated by such
party in a written notice to each other party.
(b) Any notice required or permitted to be given to an Owner shall
be given by first-class mail, postage prepaid, at the address of such Owner 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 Owner receives such notice.
SECTION 11.5 Severability. Any provision of this Agreement that
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
SECTION 11.6 Separate Counterparts. This Agreement may be
executed by the parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts shall
together constitute but one and the same instrument.
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SECTION 11.7 Successors and Assigns. All covenants and
agreements contained herein shall be binding upon, and inure to the benefit of,
the Depositor, the Company, the Securities Insurer, the Owner Trustee and its
successors and each owner and its successors and permitted assigns, all as
herein provided. Any request, notice, direction, consent, waiver or other
instrument or action by an Owner shall bind the successors and assigns of such
Owner.
SECTION 11.8 Covenants of the Company. In the event that (a)
the Certificate Principal Balance shall be reduced by Realized Losses and (b)
any litigation with claims in excess of $1,000,000 to which the Company is a
party which shall be reasonably likely to result in a material judgment against
the Company that the Company will not be able to satisfy shall be commenced by
an Owner, during the period beginning nine months following the commencement of
such litigation and continuing until such litigation is dismissed or otherwise
terminated (and, if such litigation has resulted in a final judgment against
the Company, such judgment has been satisfied), the Company shall not pay any
dividend to RAC, or make any distribution on or in respect of its capital stock
to RAC, or repay the principal amount of any indebtedness of the Company held
by RAC, unless (i) after giving effect to such payment, distribution or
repayment, the Company's liquid assets shall not be less than the amount of
actual damages claimed in such litigation or (ii) the Rating Agency Condition
shall have been satisfied with respect to any such payment, distribution or
repayment and the Securities Insurer consents to such payment. The Company
will not at any time institute against the Trust any bankruptcy proceedings
under any United States Federal or state bankruptcy or similar law in
connection with any obligations relating to the Trust Certificates, the Notes,
the Trust Agreement or any of the Basic Documents.
SECTION 11.9 No Petition. The Owner Trustee, by entering into
this Agreement, each Owner, by accepting a Trust Certificate, and the Indenture
Trustee and each Noteholder by accepting the benefits of this Agreement, hereby
covenant and agree that they will not at any time institute against the
Company, the Depositor or the Trust, or join in any institution against the
Company or the Trust of, any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings, or other proceedings under any United
States Federal or state bankruptcy or law in connection with any obligations
relating to the Trust Certificates, the Notes, this Agreement or any of the
Basic Documents.
SECTION 11.10 No Recourse. Each Owner by accepting a Trust
Certificate acknowledges that such Owner's Trust Certificate represents a
beneficial interest in the Trust only and does not represent an interest in or
an obligation of the Seller, the Servicer, the Company, the Administrator, the
Owner Trustee, the Co-Owner Trustee or any Affiliate thereof and no recourse
may be had against such parties or their assets, except as may be expressly set
forth or contemplated in this Agreement, the Trust Certificates or the Basic
Documents.
SECTION 11.11 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.
-42-
48
SECTION 11.12 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 11.13 Certificate and Residual Interest Transfer
Restrictions. Neither the Certificates nor the Residual Interest may be
acquired, by or for the account of (i) an employee benefit plan (as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) that is subject to the provisions of Title I of ERISA, (ii) a plan
described in Section 4975(e)(1) of the Internal Revenue Code of 1986, as
amended, or (iii) any entity, including an insurance company separate account
or general account, whose underlying assets include plan assets by reason of a
plan's investment in the entity (each, a "Benefit Plan"). By accepting and
holding a Trust Certificate, the Owner thereof shall be deemed to have
represented and warranted that it is not a Benefit Plan.
SECTION 11.14 Grant of Certificateholder and Residual Interest
Holder Rights to Securities Insurer.
(a) In consideration for the guarantee of the
Certificates by the Securities Insurer pursuant to
the Guaranty Policy, the Certificateholders hereby
grant to the Securities Insurer the right to act as
the Holder of 100% of the outstanding Certificates
for the purpose of exercising the rights of the
Certificateholders under this Agreement without the
consent of the Certificateholders, including the
voting rights of such holders hereunder, but
excluding those rights requiring the consent of all
such Holders under Section 11.1 and any rights of
such Holders to distributions under Section 5.06 of
the Sale and Servicing Agreement; provided that the
preceding grant of rights to the Securities Insurer
by the Certificateholders shall be subject to
Section 11.16.
(b) In consideration for the issuance of the Residual
Interest and for the guarantee of the
Certificates by the Securities Insurer pursuant
to the Guaranty Policy, the holders of the
Residual Interest hereby grant to the Securities
Insurer the right to act as the holder of 100% of
the Residual Interest for the purpose of
exercising the rights of the holders of the
Residual Interest under this Agreement, including
the voting rights of such holders hereunder, but
excluding those rights requiring the consent of
all such holders under Section 11.1 and any
rights of such holders to Distributions under
Section 5.06 of the Sale and Servicing Agreement;
provided that the preceding grant of rights to
the Securities Insurer by the holders of the
Residual Interest shall be subject to Section
11.16.
(c) The rights of the Securities Insurer to direct
certain actions and consent to certain actions of
the Certificateholders hereunder will terminate
at such time as the Certificate Principal Balance
of the Certificates has been
-43-
49
reduced to zero and the Securities Insurer has
been reimbursed for all Guaranteed Payments and
any other amounts owed under the Guaranty Policy
and the Insurance Agreement and the Securities
Insurer has no further obligation under the
Guaranty Policy.
SECTION 11.15 Third-Party Beneficiary. The parties hereto
acknowledge that the Securities Insurer is an express third party beneficiary
hereof entitled to enforce any rights reserved to it hereunder as if it were
actually a party hereto.
SECTION 11.16 Suspension and Termination of Securities
Insurer's Rights.
(a) During the continuation of a Securities Insurer
Default, rights granted or reserved to the
Securities Insurer hereunder shall vest instead in
the Owners; provided that the Securities Insurer
shall be entitled to any distributions in
reimbursement of the Securities Insurer
Reimbursement Amount, and the Securities Insurer
shall retain those rights under Section 11.1 to
consent to any amendment of this Agreement..
(b) At such time as either (i) the Certificate
Principal Balance has been reduced to zero or
(ii) the Guaranty Policy has been terminated, and
in either case of (i) or (ii) the Securities
Insurer has been reimbursed for all Guaranteed
Payments and any other amounts owed under the
Guaranty Policy and the Insurance Agreement (and
the Securities Insurer no longer has any
obligation under the Guaranty Policy, except for
breach thereof by the Securities Insurer), then
the rights and benefits granted or reserved to
the Securities Insurer hereunder (including the
rights to direct certain actions and receive
certain notices) shall terminate and the Owner
shall be entitled to the exercise of such rights
and to receive such benefits of the Securities
Insurer following such termination to the extent
that such rights and benefits are applicable to
the Owners.
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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.
FIRSTPLUS INVESTMENT CORPORATION,
Depositor
By:
-------------------------------------
Name: Christopher J. Gramlich
Title: Senior Vice President
FIRSTPLUS RESIDUAL HOLDINGS, INC
By:
-------------------------------------
Name: Christopher J. Gramlich
Title: Senior Vice President
WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as
Owner Trustee
By:
------------------------------------
Name: Emmett R. Harmon Title:
Vice President
FIRST BANK NATIONAL ASSOCIATION, not in
its individual capacity but solely
as Co-Owner Trustee and Paying Agent
By:
------------------------------------
Name: Sheri Christopherson
Title: Vice President
51
EXHIBIT A
TO THE TRUST AGREEMENT
(FORM OF CERTIFICATE)
-46-
52
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO. HAS AN INTEREST HEREIN.
THIS CERTIFICATE DOES NOT REPRESENT AN INTEREST IN OR OBLIGATION OF FIRSTPLUS
INVESTMENT CORPORATION, FIRSTPLUS FINANCIAL, INC. OR ANY OF THEIR RESPECTIVE
AFFILIATES, EXCEPT TO THE EXTENT DESCRIBED BELOW.
FIRSTPLUS HOME LOAN OWNER TRUST 1996-3
8.30% ASSET BACKED CERTIFICATE
evidencing a fractional undivided interest in the Trust, as defined below, the
property of which includes a pool of Home Loans sold to the Trust by FIRSTPLUS
INVESTMENT CORPORATION.
NUMBER:______ FRACTIONAL UNDIVIDED INTEREST: __________/11,250,00th CUSIP
NO. 337928 AH 8
(See Reverse Pages for certain definitions)
THIS CERTIFIES THAT___________ is the registered owner of a
_________/11,250,000th nonassessable, fully-paid, fractional undivided interest
in FIRSTPLUS HOME LOAN OWNER TRUST 1996-3 (the "Trust") formed by FIRSTPLUS
INVESTMENT CORPORATION, a Nevada corporation (the "Seller").
The Trust was created pursuant to a Trust Agreement dated as of
September 1, 1996 (as amended and supplemented from time to time, the "Trust
Agreement"), among the Seller, FIRSTPLUS RESIDUAL HOLDINGS, INC a Nevada
corporation (the "Company"), Wilmington Trust Company, as owner trustee (the
"Owner Trustee") and First Bank National Association, as Co-Owner Trustee (the
"Co-Owner Trustee"), a summary of certain of the pertinent provisions of which
is set forth below. To the extent not otherwise defined herein, the
capitalized terms used herein have the meanings assigned to them in the Trust
Agreement or the Sale and Servicing Agreement dated as of September 1, 1996 (as
amended and supplemented from time to time, the "Sale and Servicing
Agreement"), among the Trust, the Seller, FIRSTPLUS INVESTMENT CORPORATION, as
servicer (the "Servicer") and the Co-Owner Trustee, as applicable.
-1-
53
This Certificate is one of the duly authorized Certificates designated
as "FIRSTPLUS Asset Backed Certificates, Series 1996-3" (herein called the
"Certificates") issued under the Trust Agreement. Also issued under an
Indenture dated as of September 1, 1996, between the Trust and First Bank
National Association, as Indenture Trustee, are the eight classes of Notes
designated as "FIRSTPLUS Asset Backed Notes, Series 1996-3, Class A-1, Class A-
2, Class A-3, Class A-4, Class A-5, Class A-6, Class A-7 and Class A-8
(collectively, the "Notes"). This Certificate is issued under and is subject
to the terms, provisions and conditions of the Trust Agreement to which Trust
Agreement the holder of this Certificate by virtue of the acceptance hereof
assents and by which such holder is bound. Payments of principal and interest
on this Certificate shall be made by First Bank National Association, in its
capacity as Co-Owner Trustee under the Sale and Servicing Agreement. The
property of the Trust includes a pool of Initial Home Loans and Subsequent Home
Loans (collectively, the "Home Loans"), all monies due thereunder on or after
the respective Cut-off Dates thereof, certain bank accounts and the proceeds
thereof, proceeds from claims on certain insurance policies and certain other
rights under the Trust Agreement and the Sale and Servicing Agreement and all
proceeds of the foregoing. The rights of the holders of the Certificates are
subordinated to the rights of the holders of the Notes, as set forth in the
Sale and Servicing Agreement and the Indenture.
Under the Trust Agreement, there will be distributed on the 20th day
of each month or, if such 20th day is not a Business Day, the next Business
Day, (each, a "Distribution Date"), commencing in October, 1996, to the person
in whose name this Certificate is registered at the close of business on the
last Business Day of the month immediately preceding the month in which each
Distribution Date occurs (the "Record Date") such Certificateholder's
fractional undivided interest in the Certificateholder Distributable Amount to
Certificateholders on such Distribution Date pursuant to Section 5.06 of the
Sale and Servicing Agreement; provided however, that no principal will be
distributed to the Certificateholders until on or after the Distribution Date
on which the Class A-8 Notes have been paid in full.
The holder of this Certificate acknowledges and agrees that its rights
to receive distributions in respect of this Certificate are subordinated to the
rights of the Noteholders as described in the Sale and Servicing Agreement and
the Indenture.
It is the intent of the Seller, the Company, the Servicer and the
Certificateholders that, for purposes of Federal Income, state and local income
and single business tax and any other income taxes, the Trust will be treated
as a partnership and the Certificateholders (including the Company) will be
treated as partners in that partnership. The Company and the other
Certificateholders by acceptance of a Certificate, agree to treat, and to take
no action inconsistent with the treatment of, the Certificates for such tax
purposes as partnership interests in the Trust.
Each Certificateholder or Certificate Owner, by its acceptance of a
Certificate or, in the case of a Certificate Owner, a beneficial interest in a
Certificate, covenants and agrees that such Certificateholder or Certificate
Owner, as the case may be, will not at any time institute against the Company,
or join in any institution against the Company of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
proceedings under any United States Federal or state bankruptcy or similar law
in connection with any obligations relating to the Certificates, the Notes, the
Trust Agreement or any of the Basic Documents.
-2-
54
Distributions on this Certificate will be made as provided in the
Trust Agreement, and the Indenture by the Indenture Trustee by wire transfer or
check mailed to the Certificateholder of record in the Certificate Register
without the presentation or surrender of this Certificate or the making of any
notation hereon, except that with respect to Certificates registered on the
Record Date in the name of the nominee of the Clearing Agency (initially, such
nominee to be Cede & Co.), payments will be made by wire transfer in
immediately available funds to the account designated by such nominee. Except
as otherwise provided in the Trust Agreement and notwithstanding the above, the
final distribution on this Certificate will be made after due notice by the
Co-Owner Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency
maintained for the purpose by the Co-Owner Trustee in the Borough of Manhattan,
The City of New York.
Reference is hereby made to the further provisions of this Certificate
set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
[Remainder of page intentionally left blank]
-3-
55
Unless the certificate of authentication hereon shall have been
executed by an authorized officer of the Owner Trustee, by manual or facsimile
signature, this Certificate shall not entitle the holder hereof to any benefit
under the Trust Agreement or the Sale and Servicing Agreement or be valid for
any purpose.
THIS TRUST 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.
FIRSTPLUS HOME LOAN OWNER TRUST 1996-3
By: Wilmington Trust Company, not in its
individual capacity but solely as
Owner Trustee under the Trust
Agreement
By:
----------------------------
Authorized Signatory
DATED:
-------------------
CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within-mentioned
Trust Agreement.
FIRST BANK NATIONAL ASSOCIATION,
as Authenticating Agent
By:
----------------------------------
Authorized Signatory
-4-
56
(REVERSE OF TRUST CERTIFICATE)
The Certificates do not represent an obligation of, or an interest in,
the Seller, the Servicer, the Company, the Owner Trustee, the Co-Owner Trustee
or any affiliates of any of them and no recourse may be had against such
parties or their assets, except as may be expressly set forth or contemplated
herein or in the Trust Agreement or the Basic Documents. In addition, this
Certificate is not guaranteed by any governmental agency or instrumentality and
to limited in right of payment to certain collections with respect to the Home
Loans (and certain other amounts), all as more specifically set forth herein
and in the Sale and Servicing Agreement. The Certificates are limited in right
of payment to certain collections and recoveries respecting the Home Loans, all
as more specifically set forth in the Sale and Servicing Agreement and the
Indenture. A copy of each of the Sale and Servicing Agreement, the Indenture
and the Trust Agreement may be examined during normal business hours at the
principal office of the Seller, and at such other places, if any, designated by
the Seller, by any Certificateholder upon written request.
MBIA Insurance Corporation, as the Securities Insurer, has issued a
Guaranty Policy in the name of the Indenture Trustee for the benefit of the
Certificateholders, which policy guarantees payments on each Distribution Date
to the Indenture Trustee for the benefit of the Certificateholders of the
related Certificateholders' Interest Distributable Amount and the portion of
the Regular Principal Distribution Amount then payable on the Certificates.
Unless a Securities Insurer Default shall be continuing, the Securities Insurer
shall be deemed to be the Holder of 100% of the outstanding Certificates for
the purpose of exercising the rights, including voting rights, of the
Certificateholders under the Trust Agreement and the Sale and Servicing
Agreement. In addition, on each Distribution Date, after the
Certificateholders have been paid all amounts to which they are entitled, the
Securities Insurer will be entitled to be reimbursed for any unreimbursed
Guaranteed Payments and any other amounts owed under the Guaranty Policy.
The Trust Agreement permits, with certain exceptions therein provided,
the amendment thereof and the modification of the rights and obligations of the
Seller and the Company and the rights of the Certificateholders under the Trust
Agreement at any time by the Seller, the Company and the Owner Trustee with the
consent of the holders of the Notes and the Certificates each voting as a class
evidencing not less than a majority of the outstanding Notes and the
Certificate Principal Balance. Any such consent by the holder of this
Certificate shall be conclusive and binding on such holder and on all future
holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate. The Trust Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
holders of any of the Certificates.
As provided in the Trust Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registerable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies of the Certificate Registrar maintained by
the Co-Owner Trustee in the Borough of Manhattan, The City of New York,
accompanied by a written instrument of transfer in form satisfactory to the Co-
Owner Trustee and the Certificate Registrar duly executed by the holder hereof
or such holder's attorney duly authorized in writing, and thereupon one or more
new Certificates of authorized denominations evidencing the same aggregate
interest
-5-
57
in the Trust will be issued to the designated transferee. The initial
Certificate Registrar appointed under the Trust Agreement is the Co-Owner
Trustee.
The Certificates are issuable only as registered Certificates without
coupons in denominations of $100,000 and in integral multiples of $1,000 in
excess thereof. As provided in the Trust Agreement and subject to certain
limitations therein set forth, Certificates are exchangeable for new
Certificates of authorized denominations evidencing the same aggregate
denomination, as requested by the holder surrendering the same. No service
charge will be made for any such registration of transfer or exchange, but the
Co-Owner Trustee or the Certificate Registrar may require payment of a sum
sufficient to cover any tax or governmental charge payable in connection
therewith.
The Owner Trustee, the Co-Owner Trustee, the Certificate Registrar and
any agent of the Owner Trustee, the Co-Owner Trustee or the Certificate
Registrar may treat the person in whose name this Certificate is registered as
the owner hereof for all purposes and none of the Owner Trustee, the Co-Owner
Trustee, the Certificate Registrar or any such agent shall be affected by any
notice to the contrary.
The obligations and responsibilities created by the Trust Agreement
and the Trust created thereby and the Servicing Agreement shall terminate
eighteen months after the payment to Certificateholders of all amounts required
to be paid to them pursuant to the Trust Agreement and the Sale and Servicing
Agreement and the disposition of all property held as part of the Trust. The
Company may at its option purchase the corpus of the Trust at a price specified
in the Sale and Servicing Agreement, and such purchase of the Home Loans and
other property of the Trust will effect early retirement of the Certificates;
however, such right of purchase is exercisable only on a Distribution Date on
which the Pool Principal Balance is less than or equal to 15% of the Pool
Principal Balance of the Initial Home Loans and the Subsequent Home Loans
conveyed to the Trust as of the respective Cut-off Dates.
The Certificates may not be acquired by (a) an employee benefit plan
(as defined in Section 3(3) of ERISA) that is subject to the provisions of
Title I of ERISA, (b) a plan described in Section 4975(e)(1) of the Code or (c)
any entity, including an insurance company separate account, whose underlying
assets include plan assets by reason of a plan's investment in the entity
(each, a "Benefit Plan"). By accepting and holding this Certificate, the
Holder hereof shall be deemed to have represented and warranted that it is not
a Benefit Plan.
-6-
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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 Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
- --------------------------------------------------------------------------------
Attorney to transfer said Certificate 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 Certificate in every particular,
without alteration, enlargement or any change whatever. Such signature must be
guaranteed by a member firm of the Now York Stock Exchange or a commercial bank
or trust company.
-7-
59
EXHIBIT A-2
TO THE TRUST AGREEMENT
(FORM OF CERTIFICATE ISSUED TO THE COMPANY)
-1-
60
EXHIBIT B
TO THE TRUST AGREEMENT
(FORM OF RESIDUAL INTEREST INSTRUMENT]
THE RESIDUAL INTEREST IN THE TRUST REPRESENTED BY THIS RESIDUAL INTEREST
INSTRUMENT HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS. THIS RESIDUAL
INTEREST MAY BE DIRECTLY OR INDIRECTLY OFFERED OR SOLD OR OTHERWISE DISPOSED OF
(INCLUDING PLEDGED) BY THE HOLDER HEREOF ONLY TO (I) A "QUALIFIED INSTITUTIONAL
BUYER" AS DEFINED IN RULE 144A UNDER THE ACT, IN A TRANSACTION THAT IS
REGISTERED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS OR THAT IS EXEMPT
FROM THE REGISTRATION REQUIREMENTS OF THE ACT PURSUANT TO RULE 144A OR (II) A
PERSON INVOLVED IN THE ORGANIZATION OR OPERATION OF THE TRUST OR AN AFFILIATE
OF SUCH A PERSON WITHIN THE MEANING OF RULE 3A-7 OF THE INVESTMENT COMPANY ACT
OF 1940, AS AMENDED (INCLUDING, BUT NOT LIMITED TO, FIRSTPLUS RESIDUAL
HOLDINGS, INC. AND FIRSTPLUS FINANCIAL, INC. ) 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 RESIDUAL INTEREST UNDER THE ACT OR ANY STATE
SECURITIES LAWS.
NO TRANSFER OF THIS RESIDUAL INTEREST INSTRUMENT OR ANY BENEFICIAL INTEREST
THEREIN SHALL BE MADE TO ANY PERSON UNLESS THE OWNER TRUSTEE HAS RECEIVED A
CERTIFICATE FROM THE TRANSFEREE TO THE EFFECT THAT SUCH TRANSFEREE (I) IS NOT A
PERSON WHICH IS AN EMPLOYEE BENEFIT PLAN, TRUST OR ACCOUNT SUBJECT TO TITLE I
OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA") OR
SECTION 4975 OF THE CODE OR A GOVERNMENTAL PLAN, DEFINED IN SECTION 3(32) OF
ERISA SUBJECT TO ANY FEDERAL, STATE OR LOCAL LAW WHICH IS, TO A MATERIAL
EXTENT, SIMILAR TO THE FOREGOING PROVISIONS OF ERISA OR THE CODE (ANY SUCH
PERSON BEING A "PLAN") AND (II) IS NOT AN ENTITY, INCLUDING AN INSURANCE
COMPANY SEPARATE ACCOUNT OR GENERAL ACCOUNT, WHOSE UNDERLYING ASSETS INCLUDE
PLAN ASSETS BY REASON OF A PLAN'S INVESTMENT IN THE ENTITY.
[THIS AGREEMENT IS NONTRANSFERABLE. NOTWITHSTANDING ANYTHING HEREIN OR IN THE
TRUST AGREEMENT TO THE CONTRARY, ANY ATTEMPTED TRANSFER OF THIS RESIDUAL
INTEREST INSTRUMENT SHALL BE NULL AND VOID FOR ALL PURPOSES.]
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61
FIRSTPLUS HOME LOAN OWNER TRUST 1996-3
RESIDUAL INTEREST CERTIFICATE
No. _____
THIS CERTIFIES THAT __________________________________ (the "Owner")
is the registered owner of a _____% residual interest in FIRSTPLUS HOME LOAN
OWNER TRUST 1996-3 (the "Trust") existing under the laws of the State of
Delaware and created pursuant to the Trust Agreement dated as of September 1,
1996 (the "Trust Agreement") between FIRSTPLUS INVESTMENT CORPORATION, as
Depositor, FIRSTPLUS RESIDUAL HOLDINGS, INC., as the Company, WILMINGTON TRUST
COMPANY, not in its individual capacity but solely in its fiduciary capacity as
owner trustee under the Trust Agreement (the "Owner Trustee") and First Bank
National Association, as Co-Owner Trustee (the "Co-Owner Trustee"). Initially
capitalized terms used but not defined herein have the meanings assigned to
them in the Trust Agreement. The Owner Trustee, on behalf of the Issuer and
not in its individual capacity, has executed this Residual Interest Instrument
by one of its duly authorized signatories as set forth below. This Residual
Interest Instrument is one of the Residual Interest Instruments 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 Residual
Interest Instrument by virtue of the acceptance hereof agrees and by which the
holder hereof is bound. Reference is hereby made to the Trust Agreement and
the Sale and Servicing Agreement for the rights of the holder of this Residual
Interest Instrument, 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
Residual Interest Instrument [except in accordance with terms and provisions of
the Agreement].
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62
THIS RESIDUAL INTEREST INSTRUMENT 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 Residual Interest Instrument to be
duly executed.
FIRSTPLUS HOME LOAN OWNER TRUST 1996-3
By: Wilmington Trust Company, not in its
individual capacity but solely as
Owner Trustee under the Trust
Agreement
By:
---------------------------------
DATED: September 27, 1996 Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Residual Interest referred to in the within-
mentioned Agreement.
FIRST BANK NATIONAL ASSOCIATION,
as Authenticating Agent
By:
-----------------------------------------
Authorized Signatory
-3-
63
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 Certificate in every particular,
without alteration, enlargement or any change whatever. Such signature must be
guaranteed by a member firm of the Now York Stock Exchange or a commercial bank
or trust company.
-4-
64
EXHIBIT B-2
TO THE TRUST AGREEMENT
(FORM OF RESIDUAL INTEREST ISSUED TO THE COMPANY)
-1-
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EXHIBIT C
TO THE TRUST AGREEMENT
CERTIFICATE OF TRUST OF
FIRSTPLUS HOME LOAN OWNER TRUST 1996-3
THIS Certificate of Trust of FIRSTPLUS HOME LOAN OWNER TRUST 1996-3
(the "Trust"), dated as of September __, 1996, 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,
Section 3801 et seq.).
1. Name. The name of the business trust formed hereby is
FIRSTPLUS HOME LOAN OWNER TRUST 1996-3.
2. Delaware Trustee. The name and business address of the
trustee of the Trust in the State of Delaware is Wilmington Trust Company of
Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890.
Attention: .
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IN WITNESS WHEREOF, the undersigned, being the sole trustee of the
Trust, has executed this Certificate of Trust as of the date first above
written.
Wilmington Trust Company not in its individual
capacity but solely as Owner Trustee
under a Trust Agreement dated as of
September 1 1996.
By:
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Name:
Title:
-1-
66
EXHIBIT D TO
THE TRUST AGREEMENT
(Form of Demand Note)
-2-
67
EXHIBIT E
TO THE TRUST AGREEMENT
(Form of Certificate Depository Agreement)
SEE TAB NUMBER 9
-3-