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EXHIBIT 4.2
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 February 1, 1997
FIRSTPLUS HOME LOAN OWNER TRUST 1997-1
Asset Backed Securities, Series 1997-1
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TABLE OF CONTENTS
Page
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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....................................................9
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..................................................................12
SECTION 3.2 The Trust Certificates.............................................................12
SECTION 3.3 Execution, Authentication and Delivery of Trust Certificates.......................13
SECTION 3.4 Registration of Transfer and Exchange of Trust Certificates........................13
SECTION 3.5 Mutilated, Destroyed, Lost or Stolen Trust Certificates............................14
SECTION 3.6 Persons Deemed Owners..............................................................14
SECTION 3.7 Access to List of Owners' Names and Addresses......................................15
SECTION 3.8 Maintenance of Office or Agency....................................................15
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SECTION 3.9 Appointment of Paying Agent........................................................15
SECTION 3.10 Ownership by Company of the FRH Certificates.......................................16
SECTION 3.11 Book-Entry Certificates............................................................16
SECTION 3.12 Notices to Clearing Agency.........................................................17
SECTION 3.13 Definitive Certificates............................................................17
SECTION 3.14 Restrictions on Transfer of Residual Interest Instruments..........................17
ARTICLE IV
ACTIONS BY OWNER TRUSTEE
SECTION 4.1 Prior Notice to Owners with Respect to Certain Matters.............................20
SECTION 4.2 Action by Owners with Respect to Certain Matters...................................22
SECTION 4.3 Action by Owners with Respect to Bankruptcy........................................22
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.....................................................23
SECTION 5.2 Application Of Trust Funds.........................................................24
SECTION 5.3 Method of Payment..................................................................24
SECTION 5.4 Segregation of Moneys; No Interest.................................................24
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..........................................25
ARTICLE VI
AUTHORITY AND DUTIES OF OWNER TRUSTEE
SECTION 6.1 General Authority..................................................................25
SECTION 6.2 General Duties.....................................................................26
SECTION 6.3 Action upon Instruction............................................................26
SECTION 6.4 No Duties Except as Specified in this Agreement, the Basic
Documents or in Instructions.......................................................27
SECTION 6.5 No Action Except Under Specified Documents or Instructions.........................27
SECTION 6.6 Restrictions.......................................................................27
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ARTICLE VII
CONCERNING THE OWNER TRUSTEE
SECTION 7.1 Acceptance of Trusts and Duties....................................................28
SECTION 7.2 Furnishing of Documents............................................................29
SECTION 7.3 Representations and Warranties.....................................................29
SECTION 7.4 Reliance; Advice of Counsel........................................................30
SECTION 7.5 Not Acting in Individual Capacity.................................................31
SECTION 7.6 Owner Trustee Not Liable for Trust Certificates or Home Loans......................31
SECTION 7.7 Owner Trustee May Own Trust Certificates and Notes.................................31
SECTION 7.8 Licenses...........................................................................31
ARTICLE VIII
COMPENSATION OF OWNER TRUSTEE
SECTION 8.1 Owner Trustee's Fees and Expenses..................................................32
SECTION 8.2 Indemnification....................................................................32
SECTION 8.3 Payments to the Owner Trustee......................................................32
ARTICLE IX
TERMINATION OF TRUST AGREEMENT
SECTION 9.2 Dissolution Upon Bankruptcy of the Company.........................................34
ARTICLE X
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
SECTION 10.1 Eligibility Requirements for Owner Trustee.........................................35
SECTION 10.2 Resignation or Removal of Owner Trustee............................................35
SECTION 10.3 Successor Owner Trustee............................................................36
SECTION 10.4 Merger or Consolidation of Owner Trustee...........................................36
SECTION 10.5 Appointment of Co-Trustee or Separate Trustee......................................37
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 Supplements and Amendments.........................................................38
SECTION 11.2 No Legal Title to Owner Trust Estate in Owners.....................................40
SECTION 11.3 Limitations on Rights of Others....................................................40
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SECTION 11.4 Notices............................................................................40
SECTION 11.5 Severability.......................................................................40
SECTION 11.6 Separate Counterparts..............................................................41
SECTION 11.7 Successors and Assigns.............................................................41
SECTION 11.8 Covenants of the Company...........................................................41
SECTION 11.9 No Petition........................................................................41
SECTION 11.10 No Recourse........................................................................41
SECTION 11.11 Headings...........................................................................41
SECTION 11.12 GOVERNING LAW......................................................................42
SECTION 11.13 Certificate and Residual Interest Transfer Restrictions............................42
SECTION 11.14 Grant of Certificateholder and Residual Interest Holder Rights to
Securities Insurer.................................................................42
SECTION 11.15 Third-Party Beneficiary............................................................43
SECTION 11.16 Suspension and Termination of Securities Insurer's Rights..........................43
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
EXHIBIT F1 Form of Investment Letter
EXHIBIT F2 Form of Investment Letter
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TRUST AGREEMENT, dated as of February 1, 1997, among FIRSTPLUS
INVESTMENT CORPORATION, a Nevada corporation, as Depositor (the "Depositor"),
FIRSTPLUS RESIDUAL HOLDINGS, INC., a Nevada corporation (the "Company"),
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 February 1, 1997 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
Xxxxxx Square North, 0000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx, XX 00000-0000; 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 February 27, 1997, in the
amount of $5,327,000.00 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.
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"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Expenses" shall have the meaning assigned to such term in Section 8.2.
"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 February 1, 1997, 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 $39,250,000.00.
"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.
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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.
"Insurance Agreement" shall mean the Insurance Agreement, dated as of
February 26, 1997, 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 1997-1, 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 Instrument, as applicable.
"Owner Trust Estate" shall mean the Collateral (as defined in the
Indenture), including the contribution of $1 referred to in Section 2.5 hereof.
"Owner Trustee" shall mean Wilmington Trust Company, a Delaware
banking corporation, not in its individual capacity but solely as owner trustee
under this Agreement, and any successor owner trustee hereunder.
"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" shall mean 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 Terms Agreement dated February 21, 1997 supplemental 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 1997-1", in which name the Owner Trustee may
conduct the business of the Trust, make and execute contracts and other
instruments on behalf of the Trust and xxx and be sued.
SECTION 2.2 Office. The office of the Trust shall be in care of the
Owner Trustee at the Corporate Trust Office or at such other address in
Delaware as the Owner Trustee may designate by written notice to the 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 Owner 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 Owner Trust Estate
released from the lien of, and remitted to the Trust pursuant to, the
Indenture;
(iv) to enter into and perform its obligations
under the Basic Documents to which it is 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.
(vii) to issue the FRH Certificates and the Residual
Interest Instrument pursuant to this Agreement.
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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 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
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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.
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
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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 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
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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.
(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, except with respect
to this Trust Agreement and any similar trust agreement that relates
to a prior issuance of "FIRST PLUS Asset Backed Securities" insured by
the Securities Insurer.
(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.
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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 for 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.
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 ss. 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 $500 in excess
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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
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
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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 Instrument 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 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.
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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 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
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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 to Section 3.13:
(i) the provisions of this Section shall be in
full force and effect;
(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
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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 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
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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 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
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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 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
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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.
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):
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(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;
(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;
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(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.
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.
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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 1997-1". 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
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.
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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 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 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
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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.
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 $139,980,000, Class A-2 Notes in the aggregate
principal amount of $64,680,000, Class A-3 Notes in the aggregate principal
amount of $65,160,000, Class A-4 Notes in the aggregate principal amount of
$49,750,000, Class A-5 Notes in the aggregate principal amount of $49,170,000,
Class A-6 Notes in the aggregate principal amount of $93,110,000,
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Class A-7 Notes in the aggregate principal amount of $61,330,000, Class A-8
Notes in the aggregate principal amount of $37,570,000 and Certificates in the
aggregate principal amount of $39,250,000. 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.
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
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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
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
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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):
(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;
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(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 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-
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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 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 opinion
or
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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 Xxxxxx X. Xxxxxxx (the late
ambassador of the United States to the
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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 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.
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(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
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
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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 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
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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.
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
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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 the 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 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
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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 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
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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, 0000 Xxxxxx Xxxxxx Xxxxxxx, Xxxxx 000X, Xxx Xxxxx, Xxxxxx 00000,
Attention: Xxxxx X. Xxxxxx; (iii) if to the Company, FIRSTPLUS RESIDUAL
HOLDINGS, INC., 0000 Xxxxxx Xxxxxx Xxxxxxx, Xxxxx 000X, Xxx Xxxxx, Xxxxxx
00000, Attention: Xxxxx X. Xxxxxx; (iv) if to the Securities Insurer, MBIA
Insurance Corporation, 000 Xxxx Xxxxxx, Xxxxxx, Xxx Xxxx 00000, Attention:
IPM-SF FIRSTPLUS 1997-1, telephone: 000-000-0000, confirmation: 000-000-0000;
(v) if to the Co-Owner Trustee, First Bank National Association, 000 Xxxx Xxxxx
Xxxxxx, Xx. Xxxx, Xxxxxxxxx 00000, 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.
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SECTION 11.6 Separate Counterparts. This Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 11.7 Successors and Assigns. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, the
Depositor, the 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.
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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 reduced to zero and the Securities Insurer has been reimbursed for all
Guaranteed Payments and any other amounts owed under the Guaranty Policy and
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48
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.
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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49
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: Xxxxxxxxxxx X. Xxxxxxxx
Title: Senior Vice President
FIRSTPLUS RESIDUAL HOLDINGS, INC.
By:
------------------------------------------
Name: Xxxxxxxxxxx X. Xxxxxxxx
Title: Senior Vice President
WILMINGTON TRUST COMPANY, in its
individual capacity and as Owner Trustee
By:
------------------------------------------
Name:
Title:
FIRST BANK NATIONAL ASSOCIATION, not in its
individual capacity but solely as Co-Owner
Trustee and Paying Agent
By:
------------------------------------------
Name: Xxxxx Xxxxxxxxxxxxxx
Title: Vice President
50
EXHIBIT A-1
TO THE TRUST AGREEMENT
(FORM OF CERTIFICATE)
51
EXHIBIT A-2
TO THE TRUST AGREEMENT
(FORM OF CERTIFICATE ISSUED TO THE COMPANY)
52
EXHIBIT B-1
TO THE TRUST AGREEMENT
(FORM OF RESIDUAL INTEREST INSTRUMENT]
53
EXHIBIT B-2
TO THE TRUST AGREEMENT
(FORM OF RESIDUAL INTEREST ISSUED TO THE COMPANY)
54
EXHIBIT C
TO THE TRUST AGREEMENT
CERTIFICATE OF TRUST OF
FIRSTPLUS HOME LOAN OWNER TRUST 1997-1
THIS Certificate of Trust of FIRSTPLUS HOME LOAN OWNER TRUST 1997-1
(the "Trust"), dated as of February __, 1997, is being duly executed and filed
by Wilmington Trust Company, a Delaware banking corporation, as trustee, to
form a business trust under the Delaware Business Trust Act (12 Del. Code,
Section 3801 et seq.).
1. Name. The name of the business trust formed hereby is
FIRSTPLUS HOME LOAN OWNER TRUST 1997-1.
2. Delaware Trustee. The name and business address of the
trustee of the Trust in the State of Delaware is Wilmington Trust Company of
Xxxxxx Square North, 0000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000.
Attention:___________.
IN WITNESS WHEREOF, the undersigned, being the sole trustee of the
Trust, has executed this Certificate of Trust as of the date first above
written.
Wilmington Trust Company not in
its individual capacity but
solely as Owner Trustee under a
Trust Agreement dated as of
February 1, 1997.
By:
--------------------------------
Name:
Title:
55
EXHIBIT D
TO THE TRUST AGREEMENT
(Form of Demand Note)
56
EXHIBIT E
TO THE TRUST AGREEMENT
(Form of Certificate Depository Agreement)
SEE TAB NUMBER 9
57
EXHIBIT F-1
FORM OF INVESTMENT LETTER
58
EXHIBIT F-2
FORM OF INVESTMENT LETTER
