<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 9, 1996
REGISTRATION NO. 333-10451
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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FIRSTPLUS HOME IMPROVEMENT LOAN TRUSTS
(Issuer with respect to the Securities)
FIRSTPLUS INVESTMENT CORPORATION
(Originator of the Trusts described herein)
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C>
NEVADA 75-2596063
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
-----------------
3773 HOWARD HUGHES PARKWAY, MICHAEL ORENDORF
SUITE 300N C/O FIRSTPLUS INVESTMENT CORPORATION
LAS VEGAS, NEVADA 89109 3773 HOWARD HUGHES PARKWAY, SUITE 300N
(702) 892-3772 LAS VEGAS, NEVADA 89109
(Address, including zip code, and telephone (702) 892-3772
number, including area code, of Originator's (Name, address, including zip code, and telephone
principal executive offices) number, including area code, of agent for service
with respect to the Registrant)
-----------------
COPIES TO:
RONALD M. MANKOFF, ESQ. MICHAEL B. THIMMIG, ESQ.
1250 MOCKINGBIRD LANE ANDREWS & KURTH L.L.P.
DALLAS, TEXAS 75247-4902 4400 THANKSGIVING TOWER
(214) 630-6006 DALLAS, TEXAS 75201
(214) 979-4400
</TABLE>
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From
time to time after the effective date of this Registration Statement as
determined by market conditions and pursuant to Rule 415.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box.[x]
If this form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration number of the earlier effective registration
statement for the same offering. [ ]
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
========================================================================================================================
Proposed Maximum Proposed Amount of
Proposed Title of Amount to Be Offering Price Per Maximum Aggregate Registration
Securities to be Registered Registered Unit(1) Offering Price (1) Fee(2)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Asset Backed Securities $1,241,625,000 100% $1,241,625,000 $427,801.72
========================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee on
the basis of the proposed maximum offering price per unit.
(2) Excludes $344.83 that was previously paid to register $1,000,000 of Asset
Backed Securities on August 19, 1996.
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THIS REGISTRATION STATEMENT SHALL HEREAFTER BECOME EFFECTIVE IN
ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933, AS AMENDED.
PURSUANT TO RULE 429 OF THE GENERAL RULES AND REGULATIONS UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, THE PROSPECTUS WHICH IS PART OF THIS
REGISTRATION STATEMENT IS A COMBINED PROSPECTUS RELATING ALSO TO $758,375,000
OF SECURITIES REGISTERED UNDER REGISTRATION STATEMENT NO. 33-73748 AND
REMAINING UNISSUED AS OF THE DATE HEREOF. THE REGISTRATION FEE FOR THE
SECURITIES REGISTERED UNDER REGISTRATION STATEMENT NO. 33-73748 WAS PAID UPON
THE FILING WITH THE COMMISSION OF SAID REGISTRATION STATEMENT.
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<PAGE> 2
PART II
INFORMATION NOT REQUIRED TO BE IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Estimated expenses in connection with the issuance and distribution of
the securities, other than underwriting discounts and commissions*, are as
follows:
<TABLE>
<S> <C>
Registration Fee -- Securities and Exchange Commission . . . . . . . . . . . . . . . . . . . . . . . . . . $ 428,146.55
Printing and Engraving Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 600,000.00
Accounting Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,000.00
Legal Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 400,000.00
Trustee Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000.00
Blue Sky Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000.00
Rating Agency Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 900,000.00
Miscellaneous Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41,835.45
-------------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,500,000.00
=============
</TABLE>
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* To be provided for each Series of Securities on the cover page of the
related Prospectus Supplement.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The forms of Underwriting Agreement filed as Exhibits 1.1 and 1.2
hereto provide for indemnification of FIRSTPLUS INVESTMENT CORPORATION (the
"Company"), each of its officers who signs this Registration Statement, and
each person who controls the Company within the meaning of the Securities Act
of 1933 (the "Securities Act") or the Securities and Exchange Act of 1934 (the
"Exchange Act") against any and all losses, claims, damages or liabilities,
joint or several, to which they or any of them may become subject under the
Securities Act, the Exchange Act, or other Federal or state statutory law or
regulation, at common law or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
(a) written information furnished to the Company by or on behalf of the
Underwriter specifically for use in the preparation of the Registration
Statement related to the offered securities of the applicable series as it
became effective or in a any amendment or supplement thereof, or in such
Registration Statement, in the related Preliminary Prospectus or the related
Final Prospectus or in any amendment thereof, or in the Form 8-K referred to in
such Final Prospectus or (b) any Computational Materials or ABS Term Sheets (or
amendments or supplements thereof) delivered to prospective investors by such
Underwriter, including any Computational Materials or ABS Term Sheets that are
furnished to the Company by such Underwriter pursuant to the Underwriting
Agreement and incorporated by reference in the Registration Statement, the
related Preliminary Prospectus or the related Final Prospectus or any amendment
or supplement thereof (except that no such indemnity shall be available for any
losses, claims, damages or liabilities, or actions in respect thereof,
resulting from any Mortgage Pool Error, other than a Corrected Mortgage Pool
Error, as such terms are defined in the Underwriting Agreement).
The Articles of Incorporation and By-Laws of the Company (Exhibit 3.1
and 3.2, respectively) provide that the Company shall indemnify its officers
and directors and may, in the discretion of the Board of Directors, indemnify
its other employees and agents to the fullest extent permitted by Nevada
statutory and decisional law if any such person was or is a party, or is
threatened to be made a party, to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative, arbitrative or
investigative, by reason of the fact that such person is or was a director,
officer, employee or agent of the Company, or is or was serving at the request
of the Company as a director, officer, partner, venturer, proprietor, trustee,
employee or agent of another company, partnership, joint venture, trust,
limited liability company or other enterprise, against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or proceeding.
<PAGE> 3
ITEM 16. EXHIBITS
Exhibit
Number
-------
1.1 Form of Underwriting Agreement (Pass-Through Certificates)(6)
1.2 Form of Underwriting Agreement (Notes and Certificates)*
3.1 Amended and Restated Articles of Incorporation of FIRSTPLUS
INVESTMENT CORPORATION, as amended (1)
3.2 By-Laws (2)
4.1 Form of Pooling and Servicing Agreement (2)
4.2 Form of Indenture *
4.3 Form of Trust Agreement *
5.1 Opinion of Andrews & Kurth L.L.P. regarding the legality of the
Pass-Through Certificates (3)
5.2 Opinion of Andrews & Kurth L.L.P. regarding the legality of the
Notes *
5.3 Opinion of Andrews & Kurth L.L.P. regarding the legality of the
Certificates*
8.1 Opinion of Andrews & Kurth L.L.P. regarding tax matters (3)
8.2 Opinion of Andrews & Kurth L.L.P. regarding tax matters (Notes and
Certificates)*
10.1 Representative Form of Mortgage Note (3)
10.2 Representative Form of Mortgage (3)
10.3 Representative Form of Retail Installment Contract, Note and
Disclosure Statement (3)
10.4 Specimen of Certificate Insurance Policy (2)
10.5 Form of Subservicing Agreement (2)
10.6 Form of Loan Sale Agreement (2)
10.7 Form of Sale and Servicing Agreement *
10.8 Form of Administration Agreement *
10.9 Form of Agreement with Clearing Agency (2)
23.1 Consent of Andrews & Kurth L.L.P. (included as part of Exhibits
5.1, 5.2 and 8.1)
24.1 Power of Attorney (4)
99.1 Form of Prospectus Supplement for Asset-Backed Certificates (filed
with the related Prospectus) (5)
99.2 Form of Prospectus Supplement for Asset-Backed Securities (filed
with the related Prospectus) (5)
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* Filed herewith.
(1) Previously filed with the Commission as an exhibit to the Registrant's
Amendment No. 2 to Form S-3 Registration Statement (File No. 33-65373)
on May 10, 1996 and incorporated by reference herein.
(2) Previously filed with the Commission as an exhibit to the Registrant's
Form S-3 Registration Statement (File No. 33-65373) on December 22,
1995 and incorporated by reference herein.
II-2
<PAGE> 4
(3) Previously filed with the Commission as an exhibit to the Registrant's
Amendment No. 1 to Form S-3 Registration Statement (File No. 33-65373)
on April 23, 1996 and incorporated by reference herein.
(4) Previously filed with the Commission on page II-5 on the Registrant's
Form S-3 Registration Statement (File No. 333-10451) on August 19,
1996 and incorporated by reference herein.
(5) Previously filed with the Commission as an exhibit to the Registrant's
Form S-3 Registration Statement (File No. 333-10451 on August 19, 1996
and incorporated by reference herein.
(6) Previously filed with the Commission as Exhibit 1.1 to the
Registrant's Current Report on Form 8-K dated as of July 9, 1996 and
incorporated by reference herein.
ITEM 17. UNDERTAKINGS
(a) The Company hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this registration
statement: (i) to include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933 (the "Securities Act"); (ii) to reflect
in the prospectus any facts or events arising after the effective date
of this Registration Statement (or the most recent post-effective
amendment hereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in this Registration
Statement; (iii) to include any material information with respect to
the plan of distribution not previously disclosed in this Registration
Statement or any material change to such information in this
Registration Statement; provided, however, that no such post-effective
amendment shall be required in the information which would be required
by clauses (i) and (ii) is contained in periodic reports filed by the
Company pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934 (the "Exchange Act") that are incorporated by
reference in this Registration Statement.
(2) That for the purpose of determining any liability
under the 1933 Act, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being registered which
remain unsold at the termination of the offering.
(b) The Company hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Company's annual report pursuant to section 13(a) or section 15(d) of the
Exchange Act that is incorporated by reference in the registration statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Company pursuant to the foregoing provisions, or otherwise, the Company
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Company will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of competent jurisdiction the question whether
such indemnification by it is against public policy as expressed int he 1933
Act and will be governed by the final adjudication of such issue.
II-3
<PAGE> 5
SIGNATURES
Pursuant to the requirements of the 1933 Act, the Company certifies
that it has reasonable grounds to believe that it meets all of the requirements
for filing on Form S-3 and has duly caused this Amendment No. 1 to Registration
Statement No. 333-10451 to be signed on its behalf by the undersigned,
thereunto duly authorized in the City of Dallas, State of Texas, on the 9th day
of September, 1996.
FIRSTPLUS INVESTMENT CORPORATION
By: /s/ Christopher J. Gramlich
----------------------------------------------
Christopher J. Gramlich, Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
Kirk R. Phillips* Director and President September 9, 1996
----------------------------------------------------- (Principal Executive Officer)
Kirk R. Phillips
Mark J. Landry* Director, Treasurer and Chief September 9, 1996
----------------------------------------------------- Financial Officer (Principal
Mark J. Landry Financial Officer and Principal
Accounting Officer)
Larry G. Studinski* Director September 9, 1996
-----------------------------------------------------
Larry G. Studinski
Steven A. Rubin* Director September 9, 1996
-----------------------------------------------------
Steven A. Rubin
*By: /s/ Christopher J. Gramlich
-----------------------------------------------
Christopher J. Gramlich
Attorney-in-Fact
</TABLE>
II-4
<PAGE> 6
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
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<S> <C>
1.1 Form of Underwriting Agreement (Pass Through Certificates)(6)
1.2 Form of Underwriting Agreement (Notes and Certificates)*
3.1 Amended and Restated Articles of Incorporation of FIRSTPLUS INVESTMENT CORPORATION, as amended (1)
3.2 By-Laws (2)
4.1 Form of Pooling and Servicing Agreement (2)
4.2 Form of Indenture *
4.3 Form of Trust Agreement *
5.1 Opinion of Andrews & Kurth L.L.P. regarding the legality of the Pass-Through Certificates (3)
5.2 Opinion of Andrews & Kurth L.L.P. regarding the legality of the Notes *
5.3 Opinion of Andrews & Kurth L.L.P. regarding the legality of the Certificates*
8.1 Opinion of Andrews & Kurth L.L.P. regarding tax matters (3)
8.2 Opinion of Andrews & Kurth L.L.P. regarding tax matters (Notes and Certificates)*
10.1 Representative Form of Mortgage Note (3)
10.2 Representative Form of Mortgage (3)
10.3 Representative Form of Retail Installment Contract, Note and Disclosure Statement (3)
10.4 Specimen of Certificate Insurance Policy (2)
10.5 Form of Subservicing Agreement (2)
10.6 Form of Loan Sale Agreement (2)
10.7 Form of Sale and Servicing Agreement *
10.8 Form of Administration Agreement *
10.9 Form of Agreement with Clearing Agency (2)
23.1 Consent of Andrews & Kurth L.L.P. (included as part of Exhibits 5.1, 5.2 and 8.1)
24.1 Power of Attorney (4)
99.1 Form of Prospectus Supplement for Asset-Backed Certificates (filed with the related Prospectus) (5)
99.2 Form of Prospectus Supplement for Asset-Backed Securities (filed with the related Prospectus) (5)
</TABLE>
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* Filed herewith.
(1) Previously filed with the Commission as an exhibit to the Registrant's
Amendment No. 2 to Form S-3 Registration Statement (File No. 33-65373)
on May 10, 1996 and incorporated by reference herein.
(2) Previously filed with the Commission as an exhibit to the Registrant's
Form S-3 Registration Statement (File No. 33-65373) on December 22,
1995 and incorporated by reference herein.
<PAGE> 7
(3) Previously filed with the Commission as an exhibit to the Registrant's
Amendment No. 1 to Form S-3 Registration Statement (File No. 33-65373)
on April 23, 1996 and incorporated by reference herein.
(4) Previously filed with the Commission on page II-5 on the Registrant's
Form S-3 Registration Statement (File No. 333-10451) on August 19,
1996 and incorporated by reference herein.
(5) Previously filed with the Commission as an exhibit to the Registrant's
Form S-3 Registration Statement (File No. 333-10451 on August 19, 1996
and incorporated by reference herein.
(6) Previously filed with the Commission as Exhibit 1.1 to the
Registrant's Current Report on Form 8-K dated as of July 9, 1996 and
incorporated herein by reference.
<PAGE> 1
EXHIBIT 1.2
FIRSTPLUS HOME LOAN OWNER TRUSTS
ASSET-BACKED SECURITIES
(Issuable in Series)
UNDERWRITING AGREEMENT
[NAME AND ADDRESS [DATE]
OF UNDERWRITER(S)]
Ladies and Gentlemen:
FIRSTPLUS INVESTMENT CORPORATION, a corporation organized and
existing under the laws of the State of Nevada (the "Company"), proposes to
cause FIRSTPLUS Home Loan Owner Trusts (each, a "Trust") to offer for sale from
time to time its Asset-Backed Securities evidencing interests in pools of
certain contracts and mortgage loans (the "Securities"). The Securities may be
issued in various series, and within each series, in one or more classes, in
one or more offerings on terms determined at the time of sale (each such
series, a "Series" and each such class, a "Class"). Each Trust may issue one
or more classes of Asset-Backed Notes (the "Notes") pursuant to an Indenture to
be dated as of the respective cut-off date (each, a "Cut-off Date") as
supplemented by one or more supplements to such Indenture (such Indenture, as
supplemented, the "Indenture") between the owner trustee named therein (the
"Owner Trustee") and the indenture trustee named therein (the "Indenture
Trustee"). Simultaneously with the issuance of the Notes, the Trust may issue
Asset-Backed Certificates (the "Certificates"), each representing a fractional
undivided ownership interest in the related Trust, pursuant to a separate Trust
Agreement (each, a "Trust Agreement") to be dated as of the respective Cut-off
Date among the Trust, the Company or one of its affiliates, as FHA Insurance
holder, if applicable, (the "FHA Insurance Holder"), FIRSTPLUS FINANCIAL, INC.,
("FFI") as transferor and servicer (the "Transferor" or "Servicer"), and the
Owner Trustee.
The assets of each Trust will consist primarily of a pool of
fixed- or adjustable-rate, fully-amortizing property improvement and/or debt
consolidation loans, and the related notes and mortgages (collectively, the
"Home Loans") having the original terms to maturity and interest rate types
specified in the related Terms Agreement referred to hereinbelow. Certain of
the Home Loans may be partially insured by the Federal Housing Administration
(the "FHA") of the United States Department of Housing and Urban Development
("HUD") pursuant to Title I of the National Housing Act of 1934, as amended
("Title I Mortgage Loans"). Unless otherwise specified in the
<PAGE> 2
related Prospectus Supplement and the related Sale and Servicing Agreement (as
defined below), the FHA Insurance Holder, will enter into an FHA claims
administration agreement (each, an "FHA Claims Agreement") with the Servicer
pursuant to which the Servicer will administer, process and submit claims (the
Servicer in such capacity, the "FHA Claims Administrator") to the FHA in
respect of Title I Mortgage Loans.
Capitalized terms used and not otherwise defined herein shall have the
meanings assigned thereto in the related sale and servicing agreement to be
dated as of the applicable Cut-off Date (the "Sale and Servicing Agreement"),
between the Company as depositor (the "Depositor") and the Servicer, or, if not
defined therein, in the respective Indenture or Trust Agreement.
If and to the extent specified in the related Sale and Servicing
Agreement, in addition to the Home Loans conveyed to the Trust on the Closing
Date (such Home Loans so conveyed to the Trust at such time, the "Initial Home
Loans"), the Depositor shall be obligated to convey to the Trust, from time to
time during the period commencing after the Closing Date and ending at the
expiration of the period specified in such Sale and Servicing Agreement (each,
a "Pre-Funding Period")(the date of any such conveyance, a "Subsequent Transfer
Date"), additional Home Loans (any such additional Home Loans so conveyed to
the Trust through the Pre-Funding Period, the "Subsequent Home Loans").
The Securities may have the benefit of one or more insurance policies
(each, a "Policy") issued by the insurer named therein (the "Insurer") pursuant
to an indemnity and insurance agreement among the Depositor, the Owner Trustee,
the Indenture Trustee, the Servicer and the Insurer (the "Insurance
Agreement").
Underwritten offerings of Securities may be made through you or
through an underwriting syndicate managed by you. The Company proposes to sell
one or more Series of the Securities to you and to each of the other several
underwriters, if any, participating in an underwriting syndicate managed by
you.
Whenever the Company determines to make an offering of Securities
(each, an "Offering") pursuant to this Agreement through you, it will enter
into an agreement (the "Terms Agreement") providing for the sale of specified
Classes of Offered Securities (as defined below) to, and the purchase and
public offering thereof by, you and such other underwriters, if any, selected
by you as have authorized you to enter into such Terms Agreement on their
behalf (the underwriters designated in any such Terms Agreement being referred
to herein as "Underwriters," which term shall include you whether acting alone
in the sale of any Offered Securities of any series or as a member of an
underwriting syndicate). Each such Certificate Offering which the Company
elects to make pursuant to this Agreement shall be governed by this Agreement,
as supplemented by the related Terms Agreement, and this Agreement and such
Terms Agreement shall inure to the benefit of and be binding upon each
underwriter participating in the offering of such Offered Securities. Each
Terms Agreement, which shall be substantially in the form of Exhibit A hereto,
shall specify, among other things, the Classes of Securities to be purchased by
the Underwriters (the "Offered Securities"),
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<PAGE> 3
whether such Offered Securities constitute Notes or Certificates, the principal
balance or balances of the Offered Securities, each subject to any stated
variance, the names of the Underwriters participating in such offering (subject
to substitution as provided in Section 13 hereof) and the price or prices at
which such Offered Securities are to be purchased by the Underwriters from the
Company.
1. Representations and Warranties. (a) The Company and
FFI represent and warrant to and agree with the Underwriters, as of the date of
the related Terms Agreement, that:
(i) The registration statement specified in the related
Terms Agreement, on Form S-3, including a prospectus, has been filed
with the Securities and Exchange Commission (the "Commission") for the
registration under the Securities Act of 1933, as amended (the "Act"),
of asset-backed securities issuable in series, which registration
statement has been declared effective by the Commission. Such
registration statement, as amended to the date of the related Terms
Agreement, including any documents incorporated by reference therein
pursuant to Item 12 of Form S-3 under the Act which were filed under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
on or before the effective date of the Registration Statement, is
hereinafter called the "Registration Statement," and such prospectus,
as such prospectus is supplemented by a prospectus supplement relating
to the Offered Securities of the related Series, each in the form
first filed via EDGAR by a financial printer or another person
designated by the Company (the "Financial Printer") after the date of
the related Terms Agreement pursuant to Rule 424(b) under the Act,
including any documents incorporated by reference therein pursuant to
Item 12 of Form S-3 under the Act which were filed under the Exchange
Act on or before the date of such Prospectus Supplement (other than
any such incorporated documents that relate to Collateral Term Sheets
(as defined herein)) (such prospectus supplement, including such
incorporated documents (other than those that relate to Collateral
Term Sheets), in the form first filed after the date of the related
Terms Agreement pursuant to Rule 424(b) is hereinafter called the
"Prospectus Supplement"), is hereinafter called the "Final
Prospectus". Any preliminary prospectus, including any preliminary
prospectus supplement which, as completed, is proposed to be used in
connection with the sale of a Series of Offered Securities and any
prospectus filed with the Commission pursuant to Rule 424(a) of the
Act is hereinafter referred to as a "Preliminary Prospectus." Any
reference herein to the terms "amend," "amendment" or "supplement"
with respect to the Registration Statement, the Preliminary
Prospectus, the Final Prospectus or the Prospectus Supplement shall be
deemed to refer to and include the filing of any document under the
Exchange Act after the effective date of the Registration Statement or
the issue date of the Preliminary Prospectus, the Final Prospectus or
Prospectus Supplement, as the case may be, deemed to be incorporated
therein by reference pursuant to Item 12 of Form S-3 under the Act.
(ii) The related Registration Statement, at the time it
became effective, and the prospectus contained therein, and any
amendments thereof and supplements thereto filed prior to the date of
the related Terms Agreement, conformed in all material respects to the
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<PAGE> 4
requirements of the Act and the rules and regulations of the
Commission thereunder; on the date of the related Terms Agreement and
on each Closing Date (as defined in Section 3 below), the related
Registration Statement and the related Final Prospectus, and any
amendments thereof and supplements thereto, will conform in all
material respects to the requirements of the Act and the rules and
regulations of the Commission thereunder; such Registration Statement,
at the time it became effective, did not contain any untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading; such Final Prospectus, on the date of any filing pursuant
to Rule 424(b) and on each Closing Date, will not include any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the
circumstances under which they are made, not misleading; and the Form
8-K relating to any Subsequent Home Loans, on the date of any filing
thereof, will not include any untrue statement of a material fact or
omit to state any information which such Final Prospectus states will
be included in such Form 8-K; provided, however, that the Company
makes no representations or warranties as to the information contained
in or omitted from (A) such Registration Statement or such Final
Prospectus (or any supplement thereto) in reliance upon and in
conformity with written information furnished to the Company by or on
behalf of the Underwriters specifically for use in the preparation
thereof or (B) any Current Report (as defined in Section 5(b) below),
or in any amendment thereof or supplement thereto, incorporated by
reference in such Registration Statement or such Final Prospectus (or
any amendment thereof or supplement thereto).
(iii) The Securities of the related Series will conform to
the description thereof contained in the related Final Prospectus; and
will each on the related Closing Date be duly and validly authorized,
and, when validly executed, countersigned, issued and delivered in
accordance with the related Indenture or Trust Agreement, as
applicable, and sold to you as provided herein and in the related
Terms Agreement, will each be validly issued and outstanding and
entitled to the benefits of such Indenture or Trust Agreement, as
applicable, and, if applicable, the related Policy.
(iv) Neither the issuance nor sale of the Securities of
the related Series nor the consummation of any other of the
transactions herein contemplated, nor the fulfillment of the terms
hereof or of the related Terms Agreement, will conflict with any
statute, order or regulation applicable to the Company of any court,
regulatory body, administrative agency or governmental body having
jurisdiction over the Company or with any organizational document of
the Company or any instrument or any agreement under which the Company
is bound or to which it is a party.
(v) This Agreement and the related Terms Agreement have
been duly authorized, executed and delivered by the Company.
(vi) At or prior to the related Closing Date, the Trust
will have entered into the related Indenture, Trust Agreement and any
Insurance Agreement and, assuming the due
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<PAGE> 5
authorization, execution and delivery thereof by the other parties
thereto, such Indenture, such Trust Agreement and such Insurance
Agreement (on such Closing Date) will constitute the valid and binding
agreement of the Trust enforceable in accordance with its terms,
subject as to enforceability, to bankruptcy, insolvency,
reorganization or other similar laws affecting creditors' rights and
to general principles of equity (regardless of whether the
enforceability of such Indenture, such Trust Agreement or such
Insurance Agreement is considered in a proceeding in equity or at
law).
(vii) At or prior to the related Closing Date, the Company
will have entered into the related Sale and Servicing Agreement and
any related FHA Claims Agreement and, assuming the due authorization,
execution and delivery thereof by the other parties thereto, such Sale
and Servicing Agreement and such FHA Claims Agreement (on such Closing
Date) will constitute the valid and binding agreement of the Company
enforceable in accordance with its terms, subject as to
enforceability, to bankruptcy, insolvency, reorganization or other
similar laws affecting creditors' rights and to general principles of
equity (regardless of whether the enforceability of such Sale and
Servicing Agreement and such FHA Claims Agreement is considered in a
proceeding in equity or at law).
(viii) The FHA Insurance Holder and the Transferor are each
approved by the FHA as a lender under the Title I program and each
holds a valid contract of insurance or approval for insurance under
the Title I program; the FHA Insurance Holder, will have received
prior to each Closing Date or Subsequent Transfer Date, as the case
may be, all material consents, authorizations, orders and approvals
from governmental authorities, agencies or bodies and all other
material actions will have been taken prior to such Closing Date or
Subsequent Transfer Date, which are necessary to permit the FHA
Insurance Holder to obtain the benefit of the FHA Insurance in respect
of the related Title I Mortgage Loan as described in the related Final
Prospectus and will have completed prior to each Closing Date or
Subsequent Transfer Date, as the case may be, all material actions of
the Transferor and the FHA Insurance Holder that are necessary to duly
and validly effect the transfer of the FHA Insurance applicable to the
Title I Mortgage Loans into the FHA contract of insurance coverage
reserve account of the FHA Insurance Holder.
(ix) If applicable, the related Policy, when delivered,
will constitute the legal, valid and bind obligation of the Insurer,
enforceable in accordance with its terms.
(x) Any funds or accounts established from time to time
with respect to a Series of Securities in accordance with the related
Indenture, Trust Agreement or Sale and Servicing Agreement will have
been properly funded at the Closing Date by the deposit by the
Depositor of the requisite cash therein, in the manner specified by
such Indenture, Trust Agreement or Sale and Servicing Agreement.
(xi) The related Trust will have a valid and perfected
first priority security interest in, on the Closing Date, and on any
Subsequent Transfer Date, the Home Loans and any
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<PAGE> 6
funds or accounts to be deposited or established with the Indenture
Trustee for the benefit and security of the holders of the related
Notes (and in any cash deposited therein), subject to no prior lien,
mortgage, pledge, charge, security interest, adverse claim or other
encumbrance.
(xii) Neither the Depositor, the Transferor, the Trust nor
any funds or accounts established thereunder is an "investment
company" (as defined in the Investment Company Act of 1940, as amended
(the "1940 Act")) or is under the "control" (as such term is defined
in the 1940 Act) of an "investment company" that is registered or
required to be registered under, or is otherwise subject to the
provisions of, the 1940 Act.
2. Purchase and Sale. Subject to the execution of the Terms
Agreement for a particular Offering and subject to the terms and conditions and
in reliance upon the representations and warranties set forth in this Agreement
and such Terms Agreement, the Company agrees to sell to each Underwriter,
severally and not jointly, and each Underwriter, severally and not jointly,
agrees to purchase from the Company, the respective original principal amounts
of the related Offered Securities set forth in the related Terms Agreement
opposite the name of such Underwriter, plus any additional original principal
amount of Offered Securities which such Underwriter may be obligated to
purchase pursuant to Section 13 hereof, at the purchase price therefor set
forth in such Terms Agreement (the "Purchase Price").
The parties hereto agree that settlement for all securities sold
pursuant to this Agreement shall take place on the terms set forth herein and
not as set forth in Rule 15c6-1(a) under the Exchange Act.
3. Delivery and Payment. Delivery of and payment for the Offered
Securities of a Series shall be made at the specified offices of Andrews &
Kurth L.L.P., at 10:00 a.m. New York City time, on the Closing Date specified
in the related Terms Agreement, which date and time may be postponed by
agreement between the Underwriters and the Company (such date and time being
herein called the "Closing Date"). Delivery of such Offered Securities shall
be made to the Underwriters against payment by the Underwriters of the Purchase
Price thereof to or upon the order of the Company by wire transfer in federal
or other immediately available funds. Unless delivery is made through the
facilities of The Depository Trust Company, the Offered Securities shall be
registered in such names and in such authorized denominations as the
Underwriters may request not less than two full business days in advance of
each Closing Date.
The Company agrees to notify the Underwriters at least two business
days before each Closing Date of the exact principal balance evidenced by the
Offered Securities and to have such Offered Securities available for
inspection, checking and packaging in New York, New York, no later than 12:00
noon on the business day prior to such Closing Date.
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<PAGE> 7
4. Offering by the Underwriters. It is understood that the
Underwriters propose to offer the Offered Securities of the related Series for
sale to the public as set forth in the related Final Prospectus.
5. Agreements. The Company and FFI agree with the Underwriters
that:
(a) The Company will cause the each of the Preliminary
Prospectus and the Final Prospectus as supplemented by a Prospectus
Supplement relating to the Offered Securities to be filed pursuant to
Rule 424 under the Act and will promptly advise the Underwriters when
such Preliminary Prospectus and such Final Prospectus as so
supplemented has been so filed, and prior to the termination of the
Certificate Offering to which such Preliminary Prospectus and Final
Prospectus relates also will promptly advise the Underwriters (i) when
any amendment to the related Registration Statement specifically
relating to such Offered Securities shall have become effective or any
further supplement to such Preliminary Prospectus or such Final
Prospectus has been filed, (ii) of any request by the Commission for
any amendment of such Registration Statement, Preliminary Prospectus
or Final Prospectus or for any additional information, (iii) of the
issuance by the Commission of any stop order suspending the
effectiveness of such Registration Statement or the institution or
threatening of any proceeding for that purpose and (iv) of the receipt
by the Company of any written notification with respect to the
suspension of the qualification of such Offered Securities for sale in
any jurisdiction or the initiation or threatening of any proceeding
for such purpose. The Company will not file any amendment of the
related Registration Statement or supplement to the related
Preliminary Prospectus or Final Prospectus (other than any amendment
or supplement specifically relating to one or more Series of
asset-backed securities other than the Series that includes the
related Offered Securities) unless (i) the Company has given
reasonable notice of its intention to file any such amendment or
supplement, (ii) the Company has furnished the Underwriters with a
copy for their review within a reasonable time prior to filing, and
(iii) the Underwriters do not reasonably object to the filing of such
amendment or supplement. The Company will use its best efforts to
prevent the issuance of any such stop order and, if issued, to obtain
as soon as possible the withdrawal thereof.
(b) The Company will cause any Computational Materials
and any Structural Term Sheets (each as defined in Section 8 below)
with respect to the Offered Securities of a Series that are delivered
by an Underwriter to the Company pursuant to Section 8 to be filed
with the Commission on a Current Report on Form 8-K (a "Current
Report") pursuant to Rule 13a-11 under the Exchange Act in accordance
with Section 10 on the business day immediately following the date on
which the related Terms Agreement is executed and delivered. The
Company will cause any Collateral Term Sheet (as defined in Section 9
below) with respect to the Offered Securities of a Series that is
delivered by the Underwriters to the Company in accordance with the
provisions of Section 9 to be filed with the Commission on a Current
Report pursuant to Rule 13a-11 under the Exchange Act in accordance
with Section 10 on the business day immediately following the day on
which
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<PAGE> 8
such Collateral Term Sheet is delivered to counsel for the Company by
the Underwriters prior to 10:30 a.m. In addition, if at any time
prior to the availability of the related Prospectus Supplement, the
Underwriters have delivered to any prospective investor a subsequent
Collateral Term Sheet that reflects, in the reasonable judgment of the
Underwriters and the Company, a material change in the characteristics
of the Home Loans for the related Series from those on which a
Collateral Term Sheet with respect to the related Series previously
filed with the Commission was based, the Company will cause any such
Collateral Term Sheet that is delivered by the Underwriters to the
Company in accordance with the provisions of Section 9 hereof to be
filed with the Commission on a Current Report in accordance with
Section 10. Each such Current Report shall be incorporated by
reference in the related Final Prospectus and the related Registration
Statement.
(c) If, at any time when a prospectus relating to the
Offered Securities of a Series is required to be delivered under the
Act, any event occurs as a result of which the related Final
Prospectus as then amended or supplemented would include any untrue
statement of a material fact or omit to state any material fact
necessary to make the statements therein in light of the circumstances
under which they were made not misleading, or if it shall be necessary
at any time to amend or supplement the related Final Prospectus to
comply with the Act or the rules thereunder, the Company promptly will
prepare and file with the Commission, subject to paragraph (a) of this
Section 5, an amendment or supplement which will correct such
statement or omission or an amendment which will effect such
compliance; provided, however, that the Company will not be required
to file any such amendment or supplement with respect to any
Computational Materials, Structural Term Sheets or Collateral Term
Sheets incorporated by reference in the Final Prospectus other than
any amendments or supplements of such Computational Materials or
Structural Term Sheets that are furnished to the Company by the
Underwriters pursuant to Section 8(e) hereof or any amendments or
supplements of such Collateral Term Sheets that are furnished to the
Company by the Underwriters pursuant to Section 9(d) hereof which are
required to be filed in accordance therewith.
(d) The Company will furnish to the Underwriters and
counsel for the Underwriters, without charge, and, so long as delivery
of a prospectus by the Underwriters or a dealer may be required by the
Act, as many copies of the related Preliminary Prospectus and the
related Final Prospectus and any supplements thereto (other than
exhibits to the related Current Report) as the Underwriters may
reasonably request.
(e) The Company will furnish such information, execute
such instruments and take such actions as may be reasonably requested
by the Underwriters to qualify the Offered Securities of a Series for
sale under the laws of such jurisdictions as the Underwriters may
designate, to maintain such qualifications in effect so long as
required for the distribution of such Offered Securities and to
determine the legality of such Offered Securities for purchase by
investors; provided, however, that the Company shall not be required
to qualify to do business in any jurisdiction where it is not
qualified on the date of the related Terms
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<PAGE> 9
Agreement or to take any action which would subject it to general or
unlimited service of process or corporate or franchise taxation as a
foreign corporation in any jurisdiction in which it is not, on the
date of the related Terms Agreement, subject to such service of
process.
(f) So long as the Offered Securities of a Series are
outstanding, the Company will furnish to the Underwriters copies of
the annual independent public accountants' servicing report furnished
to the Indenture Trustee pursuant to the related Sale and Servicing
Agreement.
(g) Whether or not the transactions contemplated hereby
and by the related Terms Agreement shall be consummated, the Company
shall be responsible for the payment of any costs and expenses for
which details are submitted, in connection with the performance of its
obligations under this Agreement and the related Terms Agreement,
including, without limitation, (a) the cost and expenses of printing
or otherwise reproducing the related Registration Statement, the
related Preliminary Prospectus, the related Final Prospectus, this
Agreement, the related Terms Agreement, the related Sale and Servicing
Agreement, the related Trust Agreement, the related Indenture and the
Offered Securities, and (b) the cost of delivering the related Offered
Securities to the office of the Underwriters, insured to the
satisfaction of the Underwriters, (c) the fees and disbursements of
the Depositor's and the Servicer's counsel and accountants, (d) the
qualification of the Securities under state securities or blue sky
laws, including filing fees and the fees and disbursements of counsel
for you in connection therewith and in connection with the preparation
of any blue sky survey and legal investment survey, (e) the printing,
word processing and duplicating expenses and supervision related to
preparation of and delivery to the Underwriter of copies of any
document contemplated hereunder and any blue sky survey and legal
investment survey, (f) the fees of rating agencies, (g) the fees and
expenses, if any, incurred in connection with the listing of the
Offered Securities on any national securities exchange, (h) the fees,
if any, of the National Association of Securities Dealers, Inc., and
the fees and expenses of counsel for you in connection with any
required written submission to or appearance before such entity, (i)
the fees and expenses of the Indenture Trustee, the Owner Trustee, any
custodian, the backup servicer and the Insurer, and their respective
counsel, (j) the fees and expenses of your counsel up to $25,000 per
Certificate Offering, and (k) any such other related expenses not
specified above.
6. Conditions to the Obligations of the Underwriters. The
obligations of the Underwriters to purchase the Offered Securities of any
Series shall be subject to the accuracy in all material respects of the
representations and warranties on the part of the Company contained in this
Agreement, as supplemented by the related Terms Agreement, as of the respective
dates thereof and the related Closing Date, to the accuracy of the statements
of the Company made in any applicable officers' certificates pursuant to the
provisions hereof, to the performance by the Company of its obligations under
this Agreement and such Terms Agreement and to the following additional
conditions applicable to the related Offering:
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<PAGE> 10
(a) No stop order suspending the effectiveness of the
related Registration Statement shall have been issued and no
proceedings for that purpose shall have been instituted or threatened.
(b) Andrews & Kurth, counsel for the Company, shall have
furnished to the Underwriters an opinion, dated the related Closing
Date, to the effect that:
(i) this Agreement and the related Terms
Agreement have been duly executed and delivered by the
Company;
(ii) each of the related Sale and Servicing
Agreement and any FHA Claims Agreement have been duly executed
and delivered by the Company and is a legal, valid and binding
agreement of the Company enforceable against the Company in
accordance with its terms;
(iii) each of the related Indenture, Trust
Agreement and any Insurance Agreement have been duly executed
and delivered by the Trust and is a legal, valid and binding
agreement of the Trust enforceable against the Trust in
accordance with its terms;
(iv) the Notes, when duly executed and delivered
by the Owner Trustee and when authenticated by the Indenture
Trustee in accordance with the related Indenture, will be
validly issued and outstanding and entitled to the benefits of
such Indenture;
(v) the Certificates, when duly executed and
delivered by the Owner Trustee in accordance with the related
Trust Agreement, will be validly issued and outstanding and
entitled to the benefits of such Trust Agreement;
(vi) the related Trust Agreement is not required
to be qualified under the Trust Indenture Act of 1939, as
amended, (the "Trust Indenture Act") and the Trust created
thereunder is not required to be registered under the 1940
Act;
(vii) the Indenture has been duly qualified under
the Trust Indenture Act;
(viii) the related Indenture constitutes a grant by
the Trust to the Indenture Trustee of a valid and perfected
security interest in, or the Closing Date, and on any
subsequent Transfer Date, the Home Loans and any funds or
accounts to be deposited or established with such Indenture
Trustee for the benefit and security of the holders of the
related Notes (and any cash deposited therein), subject to no
prior lien, mortgage, pledge, charge, security interest,
adverse claim or other encumbrance.
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<PAGE> 11
(ix) such counsel confirms that the related
Registration Statement is effective under the Act and, to the
best of such counsel's knowledge, no stop order with respect
thereto has been issued, and no proceeding for that purpose
has been instituted or threatened by the Commission under the
Act; such Registration Statement (except the financial
statements and schedules and other financial and statistical
data included therein and the documents incorporated by
reference therein), at the time it became effective and the
related Final Prospectus (except the financial statements and
schedules and the other financial and statistical data
included therein, the documents incorporated by reference
therein and the information included in the first sentence of
the last paragraph on the cover page, the information under
the heading "Underwriting" therein insofar as such information
relates to the offer and sale of the Securities by the
Underwriters, as of the date of the Prospectus Supplement,
conformed in all material respects to the requirements of the
Act and the rules and regulations thereunder; and no
information has come to the attention of such counsel that
causes it to believe that (A) such Registration Statement
(except the financial statements and schedules and the other
financial and statistical data included therein and the
documents incorporated by reference therein) at the time it
became effective, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not
misleading or (B) such Final Prospectus or any amendment or
supplement thereto (except the financial statements and
schedules and the other financial and statistical data
included therein, the documents incorporated by reference
therein and the information included in the first sentence of
the last paragraph on the cover page, the information under
the heading "Underwriting" therein insofar as such information
relates to the offer and sale of the Securities by the
Underwriters), as of the date of the Prospectus Supplement or
at the related Closing Date, contained or contains an untrue
statement of a material fact or omitted or omits to state a
material fact necessary in order to make the statements
therein, in the light of the circumstances under which they
were made, not misleading;
(x) the statements set forth under the headings
"Description of the Transfer and Servicing Agreements" and
"Description of the Offered Securities" in the related Final
Prospectus, insofar as such statements purport to summarize
certain provisions of the related Trust Agreement, the related
Indenture, the related Sale and Servicing Agreement" and the
related Offered Securities, provide a fair summary of such
provisions;
(xi) the statements set forth in the related Final
Prospectus under the headings "Certain Legal Aspects of the
Loan Assets", "Certain Federal Income Tax Consequences"
(insofar as they relate specifically to the purchase,
ownership and disposition of the related Offered Securities)
and "ERISA Considerations" (insofar as they relate
specifically to the purchase, ownership and disposition of
such Offered
- 11 -
<PAGE> 12
Securities), to the extent that they constitute matters of law
or legal conclusions, provide a fair summary of such law or
conclusions;
(xii) such HUD/FHA regulatory matters as reasonably
required by the Underwriters; and
(xiii) the statements set forth in the related Final
Prospectus under the heading "Certain Federal Income Tax
Consequences" and in the related Prospectus Supplement under
the heading "Summary of Terms -- Tax Status", to the extent
such statements relate to federal income tax consequences,
accurately describe the material federal income tax
consequences to holders of the Securities.
Such opinion may express its reliance as to factual matters on the
representations and warranties made by, and on certificates or other
documents furnished by, officers of the parties to this Agreement, the
related Terms Agreement, the related Sale and Servicing Agreement, the
related Indenture, the related Trust Agreement or any related
Insurance Agreement. Such opinion may assume the due authorization,
execution and delivery of the instruments and documents referred to
therein by the parties thereto other than the Company. Such opinion
may be qualified, insofar as it concerns the enforceability of the
documents referred to therein, to the extent that such enforceability
may be limited by bankruptcy, insolvency, reorganization or other
similar laws affecting the enforcement of creditors' rights in general
and by general equity principles (regardless of whether such
enforcement is considered in a proceeding in equity or at law). Such
opinion may be further qualified as expressing no opinion as to (x)
the statements in the related Final Prospectus under the heading
"Certain Legal Aspects of the Loan Assets" except insofar as such
statements relate to the laws of the State of Texas and the laws of
the United States, and (y) the statements in such Final Prospectus
under the headings "ERISA Considerations" and "Certain Federal Income
Tax Consequences" except insofar as such statements relate to the laws
of the United States.
(c) Ronald M. Mankoff, as General Counsel for the Company
and FFI, shall have furnished to the Underwriters an opinion, dated
the related Closing Date, to the effect that:
(i) Each of the Company and FFI have been duly
incorporated and each is validly existing as a corporation in
good standing in the jurisdiction of its organization with
corporate power to own its properties, to conduct its business
as described in the related Final Prospectus and to enter into
and perform its obligations under this Agreement, the related
Terms Agreement, the related Sale and Servicing Agreement, the
related Indenture, the related Trust Agreement, the related
Insurance Agreement and the Securities of the related Series,
as applicable;
(ii) The Company has full power and authority to
deposit the related Home Loans as contemplated herein and in
the related Trust Agreement and FFI has
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<PAGE> 13
full power and authority to transfer and service the related
Home Loans as contemplated in the related Sale and Servicing
Agreement;
(iii) No consent, approval, authorization or order
of any court or governmental agency or body is required for
the consummation by (a) the Company of the transactions
contemplated herein and in the related Sale and Servicing
Agreement, Trust Agreement and Indenture (b) by FFI of the
transactions contemplated in the related Sale and Servicing
Agreement, except such as may be required under the blue sky
laws of any jurisdiction and such other approvals as have been
obtained;
(iv) Neither the issuance of the Securities of the
related Series nor delivery of the related Offered Securities,
nor the consummation of any other of the transactions
contemplated in this Agreement, the related Terms Agreement,
the related Sale and Servicing Agreement, the related Trust
Agreement, the related Indenture or the related Insurance
Agreement, nor the fulfillment of the terms of the related
Securities, the related Sale and Servicing Agreement, the
related Indenture, the related Trust Agreement, this
Agreement, the related Terms Agreement or the related
Insurance Agreement, as applicable, will conflict with or
violate any term or provision of the articles of incorporation
or by-laws of the Company or FFI, as applicable or any
statute, order or regulation applicable to the Company of any
court, regulatory body, administrative agency or governmental
body having jurisdiction over the Company or FFI and will not
conflict with, result in a breach or violation or the
acceleration of or constitute a default under the terms of any
indenture or other agreement or instrument known to such
counsel to which the Company or FFI is a party or by which it
is bound; and
(v) There are no actions, proceedings or
investigations pending or, to the best knowledge of such
counsel, threatened before any court, administrative agency or
other tribunal (i) asserting the invalidity of this Agreement,
the related Terms Agreement, the related Sale and Servicing
Agreement, the related Trust Agreement, the related Indenture,
the related Insurance Agreement or the related Securities,
(ii) seeking to prevent the issuance of the Securities of the
related Series or the consummation by the Company or FFI, as
applicable, of any of the transactions contemplated by this
Agreement, such Terms Agreement, such Sale and Servicing
Agreement, such Indenture, such Trust Agreement or such
Insurance Agreement, or (iii) which might materially and
adversely affect the performance by the Company or FFI, as
applicable, of its obligations under, or the validity or
enforceability of, this Agreement, such Terms Agreement, such
Sale and Servicing Agreement, such Indenture, such Trust
Agreement, such Insurance Agreement or the related Securities.
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<PAGE> 14
In rendering his opinion such counsel may rely as to matters of fact,
to the extent deemed proper and as stated therein, on certificates of
responsible officers of the Company, FFI or public officials.
(d) The Underwriters shall have received from Brown &
Wood, counsel for the Underwriters, such opinion or opinions, dated
the related Closing Date, with respect to the issuance and sale of the
Securities of the related Series, the related Registration Statement,
the related Final Prospectus and such other related matters in form
and substance that is customary and reasonably acceptable to the
Underwriters, and the Company shall have furnished to such counsel
such documents as the Underwriters may reasonably request for the
purpose of enabling them to pass upon such matters.
(e) The Company shall have furnished to the Underwriters
a certificate of the Company, signed by the President or any Vice
President dated the related Closing Date, to the effect that the
signers of such certificate have carefully examined the related
Registration Statement (excluding any Current Reports and any other
documents incorporated by reference therein), the related Final
Prospectus, the Form 8-K relating to the Subsequent Home Loans, this
Agreement and the related Terms Agreement and that:
(i) the representations and warranties of the
Company in this Agreement are true and correct in all material
respects on and as of the related Closing Date with the same
effect as if made on such Closing Date, and the Company has
complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied at or
prior to such Closing Date;
(ii) no stop order suspending the effectiveness of
such Registration Statement has been issued and no proceedings
for that purpose have been instituted or, to their knowledge,
threatened; and
(iii) nothing has come to their attention that
would lead them to believe that such Registration Statement
(excluding any Current Report) contains any untrue statement
of a material fact or omits to state any material fact
required to be stated therein or necessary to make the
statements therein not misleading, that the related Final
Prospectus (excluding the related Current Report) contains any
untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances
under which they were made, not misleading, or that the Form
8-K relating to the Subsequent Home Loans includes any untrue
statement of a material fact or omits to state any information
which the Final Prospectus states will be included in such
Form 8-K.
(f) Counsel for the Indenture Trustee shall have
furnished to the Underwriters an opinion, dated the related Closing
Date, in form and substance that is customary and
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<PAGE> 15
reasonably acceptable to the Underwriters regarding certain matters
relating to the Indenture Trustee.
(g) Counsel for the Owner Trustee shall have furnished to
the Underwriters an opinion, dated the related Closing Date, in form
and substance that is customary and reasonably acceptable to the
Underwriters regarding certain matters relating to the Owner Trustee.
In addition, such counsel shall furnish to the Underwriters
such opinions as to the treatment of the Trust Fund for purposes of
state tax law where the Owner Trustee maintains possession of the
assets of the Trust Fund as are customary and reasonably satisfactory
to the Underwriters.
(h) Ernst & Young LLP shall have furnished to the
Underwriters one or more letters in form and substance that is
customary and reasonably satisfactory to the Underwriters, to the
effect that they have performed certain specified procedures requested
by the Underwriters with respect to certain information relating to
the Offered Securities and certain matters relating to the Company and
the Servicer.
(i) The Policy relating to the Offered Securities of the
related Series, if any, shall have been duly executed and issued prior
to the Closing Date, in form and substance that is customary and
reasonably satisfactory to the Underwriters, and shall conform in all
respects to the description thereof in the Prospectus.
(j) If applicable, counsel for the Insurer shall have
furnished to the Underwriters an opinion, dated the related Closing
Date, in form and substance that is customary and reasonably
acceptable to the Underwriters regarding to certain matters relating
to the Insurer.
In rendering his opinion such counsel may rely as to matters
of fact, to the extent deemed proper and as stated therein, on
certificates of responsible officers of the Insurer or public
officials.
(k) The Owner Trustee shall have received from the
Depositor all funds required to be delivered by the Depositor to be
deposited in any account required to be established in accordance with
the related Trust Agreement.
(l) If applicable, the Servicer, as FHA Claims
Administrator, and the Depositor, as FHA Insurance Holder, shall have
executed and delivered the FHA Claims Agreement in form and substance
reasonably acceptable to the Underwriters.
(m) The Offered Securities of the related Series shall
have received the ratings specified in the related Terms Agreement
(the "Required Ratings").
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<PAGE> 16
(n) On or prior to the Closing Date, there has been no
downgrading, nor has any notice been given of (i) any intended or
possible downgrading or (ii) any review or possible changes in rating
the direction of which has not been indicated, in the rating accorded
and originally requested by the Company relating to any previously
issued asset-backed securities of the Company by any "nationally
recognized statistical rating organization" (as such terms is defined
for purposes of the Exchange Act).
(o) On or prior to the Closing Date, there has been no
downgrading, not has any notice been given of (i) any intended or
possible downgrading or (ii) any review or possible changes in rating
the direction of which has not been indicated, in the rating accorded
the Insurer's claims paying ability by any "nationally recognized
statistical rating organization" (as such terms is defined for
purposes of the Exchange Act).
(p) Subsequent to the date of the related Terms
Agreement, there shall not have been any change, or any development
involving a prospective change, in or affecting the business or
properties of (i) the Company, its parent company or any of its
subsidiaries, (ii) the Transferor or (iii) the Insurer which the
Underwriters conclude in their reasonable judgment, after consultation
with the Company, materially impairs the investment quality of the
Offered Securities of the related Series so as to make it impractical
or inadvisable to proceed with the public offering or the delivery of
such Offered Securities as contemplated by the related Final
Prospectus.
(q) Prior to the related Closing Date, the Company shall
have furnished to the Underwriters such further information,
certificates and documents as the Underwriters may reasonably request.
If any of the conditions specified in this Section 6 shall not have
been fulfilled in all material respects with respect to the particular Offered
Securities of a Series when and as provided in this Agreement and the related
Terms Agreement, or if any of the opinions and certificates mentioned above or
elsewhere in this Agreement and the related Terms Agreement shall not be in all
material respects reasonably satisfactory in form and substance to the
Underwriters and their counsel, this Agreement (with respect to the related
Offered Securities) and the related Terms Agreement and all obligations of the
Underwriters hereunder (with respect to the related Offered Securities) and
thereunder may be canceled at, or at any time prior to, the related Closing
Date by the Underwriters. Notice of such cancellation shall be given to the
Company in writing, or by telephone or telegraph confirmed in writing.
7. Indemnification and Contribution. (a) The Company and FFI
jointly and severally, agree to indemnify and hold harmless each Underwriter
and each person who controls any Underwriter within the meaning of the Act or
the Exchange Act against any and all losses, claims, damages or liabilities,
joint or several, to which they or any of them may become subject under the
Act, the Exchange Act, or other Federal or state statutory law or regulation,
at common law or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise
- 16 -
<PAGE> 17
out of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement relating to the Offered
Securities of the applicable Series as it became effective or in any amendment
or supplement thereof, or in such Registration Statement, in the related
Preliminary Prospectus or the related Final Prospectus, or in any amendment
thereof, or in the Form 8-K referred to in such Final Prospectus or arise out
of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and agrees to reimburse each such indemnified party for
any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the Company and FFI will not be liable in any such case
to the extent that any such loss, claim, damage or liability arises out of or
is based upon any such untrue statement or alleged untrue statement or omission
or alleged omission made therein (A) in reliance upon and in conformity with
written information furnished to the Company as herein stated by or on behalf
of any Underwriter through you specifically for use in connection with the
preparation thereof or (B) in any Computational Materials or ABS Term Sheets
furnished to prospective investors by the Underwriters or any Current Report or
any amendment or supplement thereof, except to the extent that any untrue
statement or alleged untrue statement therein or omission therefrom results
directly from an error (a "Mortgage Pool Error") in the information concerning
the characteristics of the Home Loans furnished by the Company to any
Underwriter in writing or by electronic transmission that was used in the
preparation of either (x) any Computational Materials or ABS Term Sheets (or
amendments or supplements thereof) included in such Current Report (or
amendment or supplement thereof) or (y) any written or electronic materials
furnished to prospective investors on which the Computational Materials (or
amendments or supplements) were based.
(b) Each Underwriter agrees, severally, and not jointly, to
indemnify and hold harmless the Company, each of its directors, each of its
officers who signs the Registration Statement relating to the Offered
Securities of the applicable Series, and each person who controls the Company
within the meaning of the Act or the Exchange Act to the same extent as the
foregoing indemnities from the Company to each Underwriter, but only with
reference to (A) written information furnished to the Company by or on behalf
of such Underwriter through you specifically for use in the preparation of the
documents referred to in the foregoing indemnity with respect to the related
Series, or (B) any Computational Materials or ABS Term Sheets (or amendments or
supplements thereof) delivered to prospective investors by such Underwriter,
including any Computational Materials or ABS Term Sheets that are furnished to
the Company by such Underwriter pursuant to Section 8 and incorporated by
reference in such Registration Statement, the related Preliminary Prospectus or
the related Final Prospectus or any amendment or supplement thereof (except
that no such indemnity shall be available for any losses, claims, damages or
liabilities, or actions in respect thereof, resulting from any Mortgage Pool
Error, other than a Corrected Mortgage Pool Error).
(c) Promptly after receipt by an indemnified party under Section 7
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against an indemnifying party under this
Section 7, notify such indemnifying party in writing of the commencement
thereof; but the omission so to notify such indemnifying party will not relieve
it
- 17 -
<PAGE> 18
from any liability which it may have to any indemnified party otherwise than
under this Section 7. In case any such action is brought against any
indemnified party, and it notifies the indemnifying party or parties of the
commencement thereof, the indemnifying party or parties will be entitled to
participate therein, and to the extent that they may elect by written notice
delivered to an indemnified party promptly after receiving the aforesaid notice
from such indemnified party, to assume the defense thereof, with counsel
satisfactory to such indemnified party; provided, however, that if the
defendants in any such action include both an indemnified party and an
indemnifying party and such indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to an
indemnifying party, such indemnified party or parties shall have the right to
select separate counsel to assert such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party
or parties. Upon receipt of notice from an indemnifying party or parties to
such indemnified party of their election so to assume the defense of such
action and approval by such indemnified party of counsel, such indemnifying
party or parties will not be liable to such indemnified party under this
Section 7 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof unless (i) such
indemnified party shall have employed separate counsel in connection with the
assertion of legal defenses in accordance with the proviso to the next
preceding sentence (it being understood, however, that the indemnifying party
or parties shall not be liable for the expenses of more than one separate
counsel approved by the indemnified party or parties in the case of
subparagraph (a) or (b), representing the indemnified parties under
subparagraph (a) or (b), who are parties to such action), (ii) the indemnifying
party or parties shall not have employed counsel satisfactory to the
indemnified party or parties to represent such indemnified party or parties
within a reasonable time after notice of commencement of the action or (iii)
the indemnifying party or parties have authorized the employment of counsel for
an indemnified party at the expense of the indemnifying parties; and except
that, if clause (i) or (iii) is applicable, such liability shall be only in
respect of the counsel referred to in such clause (i) or (iii).
(d) If the indemnification provided for in paragraph (a) or (b) of
this Section 7 is due in accordance with its terms but is for any reason held
by a court to be unavailable from the Company, FFI or any Underwriter, on
grounds of policy or otherwise, or if an indemnified party failed to give
notice under paragraph (c) of this Section 7 in respect of a claim otherwise
subject to indemnification in accordance with paragraph (a) or (b) of this
Section 7, the Company, FFI and each Underwriter shall contribute to the
aggregate losses, claims, damages and liabilities (including legal and other
expenses reasonably incurred in connection with investigating or defending
same) to which the Company, FFI and such Underwriter may be subject in such
proportion so that such Underwriter is responsible for that portion represented
by the difference between the portion of the proceeds to the Company in respect
of the Offered Securities underwritten by such Underwriter for the related
Series and the portion of the total proceeds received by such Underwriter from
the sale of such Offered Securities (the "Underwriting Discount"), and the
Company and FFI are responsible for the balance; provided, however, that in no
case shall any such Underwriter be responsible under this subparagraph for any
amount in excess of such Underwriting Discount applicable to the Offered
Securities purchased by such Underwriter pursuant to this Agreement and the
related Terms Agreement. Notwithstanding anything to the contrary in this
Section 7(d), no person guilty of
- 18 -
<PAGE> 19
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 7, each person who
controls any Underwriter within the meaning of either the Act or the Exchange
Act shall have the same rights to contribution as such Underwriter, and each
person who controls the Company within the meaning of either the Act or the
Exchange Act, each officer of the Company who shall have signed the
Registration Statement and each director of the Company shall have the same
rights to contribution as the Company, subject in each case to the immediately
preceding sentence of this paragraph (d).
8. Computational Materials and Structural Term Sheets. (a) In
accordance with Section 10, the Underwriters shall deliver to the Company one
complete copy of all materials provided by the Underwriters to prospective
investors in such Offered Securities which constitute (i) "Computational
Materials" within the meaning of the no-action letter dated May 20, 1994 issued
by the Division of Corporation Finance of the Commission to Kidder, Peabody
Acceptance Corporation I, Kidder, Peabody & Co. Incorporated, and Kidder
Structured Asset Corporation and the no-action letter dated May 27, 1994 issued
by the Division of Corporation Finance of the Commission to the Public
Securities Association (together, the "Kidder Letters") and the filing of such
material is a condition of the relief granted in such letter (such materials
being the "Computational Materials"), and (ii) "Structural Term Sheets" within
the meaning of the no-action letter dated February 17, 1995 issued by the
Division of Corporation Finance of the Commission to the Public Securities
Association (the "PSA Letter") and the filing of such material is a condition
of the relief granted in such letter (such materials being the "Structural Term
Sheets"). Each delivery of Computational Materials and Structural Term Sheets
to the Company pursuant to this paragraph (a) shall be effected in accordance
with Section 10.
(b) Each Underwriter represents and warrants to and agrees with
the Company, as of the date of the related Terms Agreement and as of the
Closing Date, that:
(i) the Computational Materials furnished to the Company
by such Underwriter pursuant to Section 8(a) constitute (either in
original, aggregated or consolidated form) all of the materials
furnished to prospective investors by such Underwriter prior to the
time of delivery thereof to the Company that are required to be filed
with the Commission with respect to the related Offered Securities in
accordance with the Kidder Letters, and such Computational Materials
comply with the requirements of the Kidder Letters;
(ii) the Structural Term Sheets furnished to the Company
by such Underwriter pursuant to Section 8(a) constitute all of the
materials furnished to prospective investors by such Underwriter prior
to the time of delivery thereof to the Company that are required to be
filed with the Commission as "Structural Term Sheets" with respect to
the related Offered Securities in accordance with the PSA Letter, and
such Structural Term Sheets comply with the requirements of the PSA
Letter; and
- 19 -
<PAGE> 20
(iii) on the date any such Computational Materials or
Structural Term Sheets with respect to such Offered Securities (or any
written or electronic materials furnished to prospective investors on
which the Computational Materials are based) were last furnished to
each prospective investor by such Underwriter and on the date of
delivery thereof to the Company pursuant to Section 8(a) and on the
related Closing Date, such Computational Materials (or such other
materials) or Structural Term Sheets did not and will not include any
untrue statement of a material fact or, when read in conjunction with
the Final Prospectus and Prospectus Supplement, omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading.
Notwithstanding the foregoing, each Underwriter makes no representation or
warranty as to whether any Computational Materials or Structural Term Sheets
(or any written or electronic materials on which the Computational Materials
are based) included or will include any untrue statement resulting directly
from any Mortgage Pool Error.
(c) If, at any time when a prospectus relating to the Offered
Securities of a Series is required to be delivered under the Act, it shall be
necessary to amend or supplement the related Final Prospectus as a result of an
untrue statement of a material fact contained in any Computational Materials or
Structural Term Sheets provided by any Underwriter pursuant to this Section 8
or the omission to state therein a material fact required, when considered in
conjunction with the related Final Prospectus and Prospectus Supplement, to be
stated therein or necessary to make the statements therein, when read in
conjunction with the related Final Prospectus and Prospectus Supplement, not
misleading, or if it shall be necessary to amend or supplement any Current
Report relating to any Computational Materials or Structural Term Sheets to
comply with the Act or the rules thereunder, such Underwriter promptly will
prepare and furnish to the Company for filing with the Commission an amendment
or supplement which will correct such statement or omission or an amendment
which will effect such compliance. Each Underwriter represents and warrants to
the Company, as of the date of delivery by it of such amendment or supplement
to the Company, that such amendment or supplement will not include any untrue
statement of a material fact or, when read in conjunction with the related
Final Prospectus and Prospectus Supplement, omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading; provided, however, each such Underwriter makes no representation or
warranty as to whether any such amendment or supplement will include any untrue
statement resulting directly from any Mortgage Pool Error.
9. Collateral Term Sheets. (a) Prior to the delivery of any
"Collateral Term Sheet" within the meaning of the PSA Letter, the filing of
which material is a condition of the relief granted in such letter (such
material being the "Collateral Term Sheets"), to a prospective investor in the
Offered Securities, the Underwriters shall notify the Company and its counsel
by telephone of their intention to deliver such materials and the approximate
date on which the first such delivery of such materials is expected to occur.
Not later than 10:30 a.m., New York time, on the business day immediately
following the date on which any Collateral Term Sheet was first delivered to a
prospective investor in the Offered Securities, the Underwriters shall deliver
to the Company one
- 20 -
<PAGE> 21
complete copy of all materials provided by the Underwriters to prospective
investors in such Offered Securities which constitute "Collateral Term Sheets."
Each delivery of a Collateral Term Sheet to the Company pursuant to this
paragraph (a) shall be effected in accordance with Section 10. (Collateral Term
Sheets and Structural Term Sheets are, together, referred to herein as "ABS Term
Sheets.") At the time of each such delivery, the Underwriter making such
delivery shall indicate in writing that the materials being delivered constitute
Collateral Term Sheets, and, if there has been any prior such delivery with
respect to the related Series, shall indicate whether such materials differ in
any material respect from any Collateral Term Sheets previously delivered to the
Company with respect to such Series pursuant to this Section 9(a) as a result of
the occurrence of a material change in the characteristics of the related Home
Loans.
(b) Each Underwriter represents and warrants to and agrees with
the Company as of the date of the related Terms Agreement and as of the Closing
Date, that:
(i) The Collateral Term Sheets furnished to the Company
by such Underwriter pursuant to Section 9(a) constitute all of the
materials furnished to prospective investors by such Underwriter prior
to time of delivery thereof to the Company that are required to be
filed with the Commission as "Collateral Term Sheets" with respect to
the related Offered Securities in accordance with the PSA Letter, and
such Collateral Term Sheets comply with the requirements of the PSA
Letter; and
(ii) On the date any such Collateral Term Sheets with
respect to such Offered Securities were last furnished to each
prospective investor by such Underwriter and on the date of delivery
thereof to the Company pursuant to Section 9(a) and on the related
Closing Date, such Collateral Term Sheets did not and will not include
any untrue statement of a material fact or, when read in conjunction
with the Final Prospectus and Prospectus Supplement, omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading.
Notwithstanding the foregoing, each Underwriter makes no representation or
warranty as to whether any Collateral Term Sheet included or will include any
untrue statement or material omission resulting directly from any Mortgage Pool
Error.
(c) If, at any time when a prospectus relating to the Offered
Securities of a Series is required to be delivered under the Act, it shall be
necessary to amend or supplement the related Final Prospectus as a result of an
untrue statement of a material fact contained in any Collateral Term Sheets
provided by any Underwriter pursuant to this Section 9 or the omission to state
therein a material fact required, when considered in conjunction with the
related Final Prospectus and Prospectus Supplement, to be stated therein or
necessary to make the statements therein, when read in conjunction with the
related Final Prospectus and Prospectus Supplement, not misleading, or if it
shall be necessary to amend or supplement any Current Report relating to any
Collateral Term Sheets to comply with the Act or the rules thereunder, such
Underwriter promptly will prepare and furnish to the Company for filing with
the Commission an amendment or supplement which will
- 21 -
<PAGE> 22
correct such statement or omission or an amendment which will effect such
compliance. Each Underwriter represents and warrants to the Company, as of the
date of delivery of such amendment or supplement to the Company, that such
amendment or supplement will not include any untrue statement of a material
fact or, when read in conjunction with the related Final Prospectus and
Prospectus Supplement, omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading; provided,
however, each such Underwriter makes no representation or warranty as to
whether any such amendment or supplement will include any untrue statement
resulting directly from any Mortgage Pool Error.
10. Delivery and Filing of Current Reports, Collateral Term
Sheets, Structural Term Sheets.
(a) Any Current Report, Collateral Term Sheet or
Structural Term Sheet that is required to be delivered by the
Underwriter to the Company hereunder shall be effected by the delivery
of four copies to counsel for the Company and one copy in computer
readable format to the Financial Printer on or prior to 10:30 a.m. on
the date so specified herein.
(b) The Company shall cause the Financial Printer to file
with the Commission any such Current Report, Collateral Term Sheet or
Structural Term Sheet within one business day immediately following
the delivery thereof pursuant to the preceding subsection. The
Company shall use its best efforts to cause any such Current Report,
Collateral Term Sheet or Structural Term Sheet to be so filed prior to
2:00 p.m., New York time, on such business day and will promptly
advise the Underwriters of such filing.
11. Termination. This Agreement (with respect to a particular
Certificate Offering) and the related Terms Agreement shall be subject to
termination in the absolute discretion of the Underwriters, by notice given to
the Company prior to delivery of and payment for the related Offered
Securities, if prior to the related Closing Date (i) trading in securities
generally on the New York Stock Exchange shall have been suspended or
materially limited, (ii) a general moratorium on commercial banking activities
in New York shall have been declared by either federal or New York State
authorities, or (iii) there shall have occurred any outbreak or material
escalation of hostilities or other calamity or crisis the effect of which on
the financial markets of the United States is such as to make it, in the
reasonable judgment of the Underwriters, impracticable to market such Offered
Securities.
12. Representations and Indemnities to Survive Delivery. The
agreements, representations, warranties, indemnities and other statements of
the Company or its officers and of the Underwriters set forth in or made
pursuant to this Agreement and the related Terms Agreement will remain in full
force and effect, regardless of any investigation made by or on behalf of the
Underwriters or the Company or any of the officers, directors of controlling
persons referred to in Section 7 hereof, and will survive delivery of and
payment for the related Offered Securities. The provisions of Section 7 hereof
shall survive the termination or cancellation of this Agreement and the related
Terms Agreement.
- 22 -
<PAGE> 23
13. Default by One or More of the Underwriters. If one or more of
the Underwriters shall fail on the Closing Date to purchase the Offered
Securities which it or they are obligated to purchase hereunder and under the
applicable Terms Agreement (the "Defaulted Securities"), you shall have the
right, within 24 hours thereafter, to make arrangements for one or more of the
non-defaulting Underwriters, or any other underwriters, to purchase all, but
not less than all, of the Defaulted Securities in such amounts as may be agreed
upon and upon the terms herein set forth and under the applicable Terms
Agreement. If, however, you have not completed such arrangements within such
24-hour period, then:
(a) if the aggregate original Certificate Principal
Balance of Defaulted Securities does not exceed 10% of the aggregate
original Certificate Principal Balance of the Offered Securities to be
purchased pursuant to such Terms Agreement, the non-defaulting
Underwriters named in such Terms Agreement shall be obligated to
purchase the full amount thereof in the proportions that their
respective underwriting obligations thereunder bear to the
underwriting obligations of all non-defaulting Underwriters; and
(b) if the aggregate original Certificate Principal
Balance of Defaulted Securities exceeds 10% of the aggregate original
Certificate Principal Balance of the Offered Securities to be
purchased pursuant to such Terms Agreement, the applicable Terms
Agreement shall terminate without any liability on the part of any
non-defaulting Underwriter.
No action taken pursuant to this Section 13 and nothing in this
Agreement shall relieve any defaulting Underwriter from liability in respect of
its default.
In the event of any such default which does not result in a
termination of this Agreement or such applicable Terms Agreement, either you or
the Company shall have the right to postpone the Closing Date for a period of
time not exceeding seven days in order to effect any required changes in the
Registration Statement or in any other documents or arrangements.
14. Guarantor. RAC Financial Group, Inc., the parent of the
Company and FFI, ("RAC") shall guarantee any obligation or liability of the
Company or FFI pursuant to Section 7 hereof. RAC's acceptance of its guarantee
obligation is acknowledged by the execution of the signature page of this
Agreement by an authorized signatory of RAC.
15. Successors. This Agreement and the related Terms Agreement
will inure to the benefit of and be binding upon the parties hereto and thereto
and their respective successors and the officers, directors and controlling
persons referred to in Section 7 hereof, and their successors and assigns, and
no other person will have any right or obligation hereunder or thereunder. No
purchaser of any Offered Certificate from the Underwriters shall be deemed a
successor or assign by reason of such purchase.
16. APPLICABLE LAW. THIS AGREEMENT AND THE RELATED TERMS
AGREEMENT WILL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
- 23 -
<PAGE> 24
THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE
PERFORMED THEREIN.
17. Miscellaneous. This Agreement, as supplemented by the related
Terms Agreement, supersedes all prior and contemporaneous agreements and
understandings relating to the subject matter hereof. This Agreement and the
related Terms Agreement or any term of each may not be changed, waived,
discharged or terminated except by an affirmative written agreement made by the
party against whom enforcement of the change, waiver, discharge or termination
is sought. The headings in this Agreement and the related Terms Agreement are
for purposes of reference only and shall not limit or otherwise affect the
meaning hereof or thereof.
18. Notices. All communications by one party hereunder to all
other parties hereunder will be in writing and effective only on receipt by
such other parties, and will be delivered as follows: (A) to the Underwriters
at the addresses first above written; (B) to the Company at 3773 Howard Hughes
Parkway, Suite 300N, Las Vegas, Nevada 89109, Attention: Michael Orendorf; and
(C) to FFI at FIRSTPLUS FINANCIAL, INC., 1250 Mockingbird Lane, Dallas, Texas
75247- 4902, Attention: Mr. Chris Gramlich.
- 24 -
<PAGE> 25
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the undersigned a counterpart hereof,
whereupon this letter and your acceptance shall represent a binding agreement
between the Company and the Underwriters.
Very truly yours,
FIRSTPLUS INVESTMENT CORPORATION
By:
-------------------------
Christopher J. Gramlich
Senior Vice President
FIRSTPLUS FINANCIAL INC.
By:
-------------------------
Christopher J. Gramlich
Senior Vice President
ACKNOWLEDGED BY:
RAC FINANCIAL GROUP, INC.
By:
-------------------------
Christopher J. Gramlich
Senior Vice President
The foregoing Agreement is
hereby confirmed and accepted
as of the date first above written.
[NAME OF UNDERWRITER(S)]
By:
-------------------------
Name:
-----------------------
Title:
----------------------
<PAGE> 26
EXHIBIT A
FIRSTPLUS HOME LOAN OWNER TRUST ___-__
ASSET-BACKED SECURITIES
TERMS AGREEMENT
(to Underwriting Agreement,
dated ______________, 199__
among the Company, FFI and the Underwriters)
FIRSTPLUS INVESTMENT CORPORATION [DATE]
3773 Howard Hughes Parkway
Suite 300N
Las Vegas, Nevada 89109
Attention: Mr. Michael Orendorf
FIRSTPLUS FINANCIAL INC.
1250 Mockingbird Lane
Dallas, Texas 75247-4902
Attention: Mr. Chris Gramlich
Each of ________________ ("______________") and
__________________ ("_____________," each an "Underwriter" and collectively the
"Underwriters") agrees, severally and not jointly, subject to the terms and
provisions herein and of the captioned Underwriting Agreement (the
"Underwriting Agreement"), to purchase such Classes of Series ____-__
Securities specified opposite its name in Section 2(a) hereof (the "Offered
Securities"). This letter supplements and modifies the Underwriting Agreement
solely as it relates to the purchase and sale of the Offered Securities
described below. The Series ____-__ Securities are registered with the
Securities and Exchange Commission by means of an effective Registration
Statement (No. _____). Capitalized terms used and not defined herein have the
meanings given them in the Underwriting Agreement.
Section 1. The Mortgage Pool: The Series _____-__
Securities shall evidence the entire beneficial ownership interest in a pool
(the "Home Loan Pool") of loans (the "Home Loans") having the characteristics
described in the Prospectus Supplement dated the date hereof.
Section 2. The Securities: The Offered Securities shall
be issued as follows:
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<PAGE> 27
(a) Classes: The Offered Securities shall be issued with the
following Class designations, interest rates and principal balances,
subject in the aggregate to the variance referred to in the Final
Prospectus:
<TABLE>
<CAPTION>
Principal Interest Class Purchase
Class Balance Rate Price Percentage
----- ------- ---- ----------------
<S> <C> <C> <C>
</TABLE>
Each of the Underwriters agrees, severally and not jointly, subject to
the terms and provisions herein and of the captioned Underwriting Agreement, to
purchase the principal balances of the Classes of Series ____-__ Securities
specified opposite its name below.
<TABLE>
<CAPTION>
Class UNDERWRITER #1 UNDERWRITER #2
----- -------------- --------------
<S> <C> <C>
</TABLE>
(b) The Offered Securities shall have such other
characteristics as described in the related Final Prospectus.
Section 3. Purchase Price: The Purchase Price for each
Class of the Offered Securities shall be the Class Purchase Price Percentage
therefor (as set forth in Section 2(a) above) of the initial Class Principal
Balance thereof plus accrued interest at the applicable interest rate per annum
of each such Class from and including the Cut-off Date up to, but not
including, _____________ (the "Closing Date").
Section 4. Required Ratings: The Offered Securities
shall have received Required Ratings of at least [ ] from [ ].
Section 5. Insurer:
Section 6. Location of Closing:
- 27 -
<PAGE> 28
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to the undersigned a counterpart hereof,
whereupon this letter and your acceptance shall represent a binding agreement
between the Underwriters and the Company.
Very truly yours,
[UNDERWRITER]
as Representative of the several
Underwriters
By:
-------------------------
Name:
Title:
The foregoing Agreement is
hereby confirmed and accepted
as of the date first above written.
FIRSTPLUS INVESTMENT CORPORATION
By:
-------------------------
Name:
Title:
FIRSTPLUS FINANCIAL INC.
By:
-------------------------
Name:
Title:
- 28 -
<PAGE> 29
ACKNOWLEDGED BY:
RAC FINANCIAL GROUP, INC.
By:
-------------------------
Name:
Title:
- 29 -
<PAGE> 1
EXHIBIT 4.2
FORM OF INDENTURE
between
FIRSTPLUS HOME LOAN OWNER TRUST 199_-__,
as Issuer
and
(--------------------),
as Indenture Trustee
Dated as of __________, 199__
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I - Definitions and Incorporation by Reference............................................................2
SECTION 1.1 Definitions........................................................................2
SECTION 1.2 Incorporation by Reference of Trust Indenture Act..................................9
SECTION 1.3 Rules of Construction..............................................................9
ARTICLE II - The Notes...........................................................................................10
SECTION 2.1 Form..............................................................................10
SECTION 2.2 Execution, Authentication and Delivery............................................10
SECTION 2.3 Temporary Notes...................................................................11
SECTION 2.4 Limitations on Transfer of the Class A-1 Notes....................................11
SECTION 2.5 Registration; Registration of Transfer and Exchange...............................12
SECTION 2.6 Mutilated, Destroyed, Lost or Stolen Notes........................................13
SECTION 2.7 Persons Deemed Owner..............................................................14
SECTION 2.8 Payment of Principal and Interest; Defaulted Interest.............................14
SECTION 2.9 Cancellation......................................................................15
SECTION 2.10 Release of Collateral............................................................16
SECTION 2.11 Book-Entry Notes.................................................................16
SECTION 2.12 Notices to Clearing Agency.......................................................17
SECTION 2.13 Definitive Notes.................................................................17
SECTION 2.14 Tax Treatment....................................................................17
ARTICLE III - Covenants..........................................................................................18
SECTION 3.1 Payment of Principal and Interest.................................................18
SECTION 3.2 Maintenance of Office or Agency...................................................18
SECTION 3.3 Money for Payments To Be Held in Trust............................................18
SECTION 3.4 Existence.........................................................................20
SECTION 3.5 Protection of Trust Estate........................................................20
SECTION 3.6 Opinions as to Trust Estate.......................................................20
SECTION 3.7 Performance of Obligations; Servicing of Receivables..............................21
SECTION 3.8 Negative Covenants...............................................................23
SECTION 3.9 Annual Statement as to Compliance.................................................23
SECTION 3.10 Issuer May Consolidate, etc., Only on Certain Terms..............................24
SECTION 3.11 Successor or Transferee..........................................................25
SECTION 3.12 No Other Business................................................................26
SECTION 3.13 No Borrowing.....................................................................26
SECTION 3.14 Servicer's Obligations...........................................................26
SECTION 3.15 Guarantees, Loans, Advances and Other Liabilities................................26
SECTION 3.16 Capital Expenditures.............................................................26
SECTION 3.17 Removal of Administrator.........................................................26
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SECTION 3.18 Restricted Payments..............................................................26
SECTION 3.19 Notice of Events of Default......................................................27
SECTION 3.20 Further Instruments and Acts.....................................................27
ARTICLE IV - Satisfaction and Discharge..........................................................................27
SECTION 4.1 Satisfaction and Discharge of Indenture...........................................27
SECTION 4.2 Application of Trust Money........................................................28
SECTION 4.3 Repayment of Moneys Held by Paying Agent..........................................28
ARTICLE V - Remedies.............................................................................................29
SECTION 5.1 Events of Default.................................................................29
SECTION 5.2 Acceleration of Maturity; Rescission and Annulment................................30
SECTION 5.3 Collection of Indebtedness and Suits for
Enforcement by Indenture Trustee.....................................30
SECTION 5.4 Remedies; Priorities..............................................................32
SECTION 5.5 Optional Preservation of the Receivables..........................................34
SECTION 5.6 Limitation of Suits...............................................................34
SECTION 5.7 Unconditional Rights of Noteholders To
Receive Principal and Interest.......................................35
SECTION 5.8 Restoration of Rights and Remedies................................................35
SECTION 5.9 Rights and Remedies Cumulative....................................................35
SECTION 5.10 Delay or Omission Not a Waiver...................................................35
SECTION 5.11 Control by Noteholders...........................................................36
SECTION 5.12 Waiver of Past Defaults..........................................................36
SECTION 5.13 Undertaking for Costs............................................................37
SECTION 5.14 Waiver of Stay or Extension Laws.................................................37
SECTION 5.15 Action on Notes..................................................................37
SECTION 5.16 Performance and Enforcement of Certain Obligations...............................37
ARTICLE VI - The Indenture Trustee...............................................................................38
SECTION 6.1 Duties of Indenture Trustee.......................................................38
SECTION 6.2 Rights of Indenture Trustee.......................................................39
SECTION 6.3 Individual Rights of Indenture Trustee............................................40
SECTION 6.4 Indenture Trustee's Disclaimer....................................................40
SECTION 6.5 Notice of Defaults................................................................40
SECTION 6.6 Reports by Indenture Trustee to Holders...........................................40
SECTION 6.7 Compensation and Indemnity........................................................40
SECTION 6.8 Replacement of Indenture Trustee..................................................41
SECTION 6.9 Successor Indenture Trustee by Merger.............................................42
SECTION 6.10 Appointment of Co-Indenture Trustee or Separate Indenture Trustee................42
SECTION 6.11 Eligibility; Disqualification....................................................43
SECTION 6.12 Preferential Collection of Claims Against Issuer.................................44
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ARTICLE VII - Noteholders' Lists and Reports............................................................44
SECTION 7.1 Issuer To Furnish Indenture Trustee Names and
Addresses of Noteholders.............................................44
SECTION 7.2 Preservation of Information; Communications
to Noteholders.......................................................44
SECTION 7.3 Reports by Issuer.................................................................45
ARTICLE VIII - Accounts, Disbursements and Releases..............................................................45
SECTION 8.1 Collection of Money...............................................................45
SECTION 8.2 Trust Accounts....................................................................46
SECTION 8.3 General Provisions Regarding Accounts.............................................47
SECTION 8.4 Release of Trust Estate...........................................................48
SECTION 8.5 Opinion of Counsel................................................................48
ARTICLE IX - Supplemental Indentures.............................................................................49
SECTION 9.1 Supplemental Indentures Without Consent of Noteholders............................49
SECTION 9.2 Supplemental Indentures with Consent of Noteholders...............................50
SECTION 9.3 Execution of Supplemental Indentures..............................................51
SECTION 9.4 Effect of Supplemental Indenture.................................................52
SECTION 9.5 Conformity with Trust Indenture Act...............................................52
SECTION 9.6 Reference in Notes to Supplemental Indentures.....................................52
ARTICLE X - Redemption of Notes.................................................................................52
SECTION 10.1 Redemption.......................................................................52
SECTION 10.2 Form of Redemption Notice........................................................53
SECTION 10.3 Notes Payable on Redemption Date.................................................54
ARTICLE XI - Miscellaneous.......................................................................................54
SECTION 11.1 Compliance Certificates and Opinions, etc........................................54
SECTION 11.2 Form of Documents Delivered to Indenture Trustee.................................56
SECTION 11.3 Acts of Noteholders..............................................................57
SECTION 11.4 Notices, etc., to Indenture Trustee, Issuer and
Rating Agencies......................................................57
SECTION 11.5 Notices to Noteholders; Waiver...................................................58
SECTION 11.6 Alternate Payment and Notice Provisions..........................................58
SECTION 11.7 Conflict with Trust Indenture Act................................................59
SECTION 11.8 Effect of Headings and Table of Contents.........................................59
SECTION 11.9 Successors and Assigns...........................................................59
SECTION 11.10 Separability....................................................................59
SECTION 11.11 Benefits of Indenture...........................................................59
SECTION 11.12 Legal Holidays..................................................................59
SECTION 11.13 GOVERNING LAW...................................................................59
SECTION 11.14 Counterparts....................................................................60
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SECTION 11.15 Recording of Indenture..........................................................60
SECTION 11.16 Trust Obligation................................................................60
SECTION 11.17 No Petition.....................................................................60
SECTION 11.18 Inspection......................................................................60
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SCHEDULE A - Schedule of Receivables
EXHIBIT A-1 - Form of Class A-1 Note
EXHIBIT A-2 - Form of Class A-2 Note
EXHIBIT A-3 - Form of Class A-3 Note
EXHIBIT A-4 - Form of Class A-4 Note
EXHIBIT A-5 - Form of Class A-5 Note
(EXHIBIT B - Form of Transferor Certificate)
EXHIBIT C - Form of Investment Letter
EXHIBIT D - Form of Rule 144A Letter
</TABLE>
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INDENTURE dated as of _________, 199_-__, between FIRSTPLUS HOME LOAN
OWNER TRUST 199_-__, a Delaware business trust (the "Issuer"), and
________________, a banking corporation, as trustee and not in its individual
capacity (the "Indenture Trustee").
Each party agrees as follows for the benefit of the other party and for
the equal and ratable benefit of the holders of the Issuer's Class A-1 _____%
Asset Backed Notes (the "Class A-1 Notes"), Class A-2 _____% Asset Backed Notes
(the "Class A-2 Notes"), Class A-3 _____% Asset Backed Notes (the "Class A-3
Notes"), Class A-4 _____% Asset Backed Notes (the "Class A-4 Notes"), and Class
A-5 _____% Asset Backed Notes (the "Class A-5 Notes" and, together with the
Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes and the Class A-4
Notes, the "Notes"):
GRANTING CLAUSE
The Issuer hereby Grants to the Indenture Trustee at the Closing Date,
as Indenture Trustee for the benefit of the holders of the Notes, all of the
Issuer's right, title and interest in and to: (i) the Initial Home Loans and any
Subsequent Home Loans conveyed to the Issuer during the Funding Period, together
with the Servicer's Home Loan Files and the Issuer's Home Loan Files relating
thereto and all proceeds thereof, (ii) such assets as from time to time are
identified as Foreclosure Property, (iii) such assets and funds as are from time
to time deposited in the Collection Account, the Note Distribution Account, the
Pre-Funding Account, the Capitalized Interest Account, and the Reserve Account,
including amounts on deposit in such accounts which are invested in Permitted
Investments, (iv) the Issuer's rights under all insurance policies with respect
to the Home Loans and any Insurance Proceeds, (v) the Guaranty Policy applicable
to the Securities, (vi) Net Liquidation Proceeds, Guaranty Policy Proceeds and
Released Mortgaged Property Proceeds, (vii) all right, title and interest of the
Transferor in and to the obligations of any seller pursuant to a Loan Sale
Agreement, (viii) all right, title and interest of the Issuer in and to the
obligations of the Transferor under that certain Loan Sale Agreement dated as of
_________, 199__, between the Transferor, as seller, and the Issuer, as
purchaser, (ix) all right, title and interest of the Issuer, as purchaser, on
behalf of the Trust, under each Subsequent Transfer Agreement, (x) all right,
title and interest of the Servicer and the Transferor in and to the rights and
obligations of any Subservicer, pursuant to any Subservicing Agreement; (xi) all
right, title and interest of the Issuer in the the Sale and Servicing Agreement
(including the Issuer's right to cause the Seller to repurchase Home Loans from
the Issuer under certain circumstances described therein); and (xii) all present
and future claims, demands, causes of action and chooses in action in respect of
any or all of the foregoing and all payments on or under and all proceeds of
every kind and nature whatsoever in respect of any or all of the foregoing,
including all proceeds of the conversion thereof, voluntary or involuntary, into
cash or other liquid property, all cash proceeds, accounts, accounts receivable,
notes, drafts, acceptances, chattel paper, checks, deposit accounts, insurance
proceeds, condemnation awards, rights to payment of any and every kind and other
forms of obligations and receivables, instruments and other property which at
any time constitute all or part of or are included in the proceeds of any of the
foregoing (collectively, the "Collateral").
<PAGE> 7
The foregoing Grant is made in trust to secure the payment of principal
of and interest on, and any other amounts owing in respect of, the Notes,
equally and ratably without prejudice, priority or distinction, and to secure
compliance with the provisions of this Indenture, all as provided in this
Indenture.
The Indenture Trustee, as Indenture Trustee on behalf of the holders of
the Notes, acknowledges such Grant, accepts the trusts under this Indenture in
accordance with the provisions of this Indenture and agrees to perform its
duties required in this Indenture to the best of its ability to the end that the
interests of the holders of the Notes may be adequately and effectively
protected.
ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.1 (a) Definitions. Except as otherwise specified herein or as
the context may otherwise require, the following terms have the respective
meanings set forth below for all purposes of this Indenture.
"Act" has the meaning specified in Section 11.3(a).
"Administration Agreement" means the Administration Agreement dated as
of _________, 199__, among the Administrator, the Issuer and the Indenture
Trustee.
"Administrator" means FIRSTPLUS FINANCIAL, INC., a Texas corporation,
or any successor Administrator under the Administration Agreement.
"Affiliate" means, with respect to any specified Person, any other
Person controlling or controlled by or under common control with such specified
Person. For the purposes of this definition, "control" when used with respect to
any Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Authorized Officer" means, with respect to the Issuer, any officer of
the Owner Trustee who is authorized to act for the Owner Trustee in matters
relating to the Issuer and who is identified on the list of Authorized Officers
delivered by the Owner Trustee to the Indenture Trustee on the Closing Date (as
such list may be modified or supplemented from time to time thereafter) and, so
long as the Administration Agreement is in effect, any Vice President or more
senior officer of the Administrator who is authorized to act for the
Administrator in matters relating to the Issuer and to be acted upon by the
Administrator pursuant to the Administration Agreement and who is identified on
the list of Authorized Officers delivered by the Administrator to the Indenture
Trustee on the Closing Date (as such list may be modified or supplemented from
time to time thereafter).
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"Basic Documents" means the Certificate of Trust, the Trust Agreement,
the Sale and Servicing Agreement, the Loan Purchase Agreement, the
Administration Agreement, the Note Depository Agreement, the Certificate
Depository Agreement and other documents and certificates delivered in
connection therewith.
"Book-Entry Notes" means a beneficial interest in the Class A-1 Notes,
the Class A-2 Notes, the Class A-3 Notes, the Class A-4 Notes and the Class A-5
Notes, ownership and transfers of which shall be made through book entries by a
Clearing Agency as described in Section 2.11.
"Business Day" means any day other than a Saturday, a Sunday or a day
on which banking institutions or trust companies in ____________________ are
authorized or obligated by law, regulation or executive order to remain closed.
"Certificate Depository Agreement" has the meaning specified in Section
1.01 of the Trust Agreement.
"Certificate of Trust" means the certificate of trust of the Issuer
substantially in the form of Exhibit B to the Trust Agreement.
"Class A-1 Interest Rate" means ____% per annum (computed on the basis
of a 360-day year consisting of twelve 30-day months).
"Class A-1 Notes" means the Class A-1 ____% Asset Backed Notes,
substantially in the form of Exhibit A-1.
"Class A-2 Interest Rate" means ____% per annum (computed on the basis
of a 360-day year consisting of twelve 30-day months).
"Class A-2 Notes" means the Class A-2 ____% Asset Backed Notes,
substantially in the form of Exhibit A-2.
"Class A-3 Interest Rate" means ____% per annum (computed on the basis
of a 360 day year consisting of twelve 30-day months).
"Class A-3 Notes" means the Class A-3 ____% Asset Backed Notes,
substantially in the form of Exhibit A-3.
"Class A-4 Interest Rate" means ____% per annum (computed on the basis
of a 360 day year consisting of twelve 30-day months).
"Class A-4 Notes" means the Class A-4 ____% Asset Backed Notes,
substantially in the form of Exhibit A-4.
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"Class A-5 Interest Rate" means ____% per annum (computed on the basis
of a 360 day year consisting of twelve 30-day months).
"Class A-5 Notes" means the Class A-5 ____% Asset Backed Notes,
substantially in the form of Exhibit A-5.
"Clearing Agency" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act.
"Clearing Agency Participant" means 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.
"Closing Date" means __________, 199__.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and Treasury Regulations promulgated thereunder.
"Collateral" has the meaning specified in the Granting Clause of this
Indenture.
"Company" means ______________.
"Corporate Trust Office" means the principal office of the Indenture
Trustee at which at any particular time its corporate trust business shall be
administered, which office at date of execution of this Agreement is located at
____________________; Attention: __________, or at such other address as the
Indenture Trustee may designate from time to time by notice to the Noteholders
and the Issuer, or the principal corporate trust office of any successor
Indenture Trustee at the address designated by such successor Indenture Trustee
by notice to the Noteholders and the Issuer.
"Default" means any occurrence that is, or with notice or the lapse of
time or both would become, an Event of Default.
"Definitive Notes" has the meaning specified in Section 2.13.
"Due Period" means, with respect to any Distribution Date and any class
of Notes, the calendar month immediately preceding the month of such
Distribution Date.
"Event of Default" has the meaning specified in Section 5.1.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Executive Officer" means, with respect to any corporation, the Chief
Executive Officer, Chief Operating Officer, Chief Financial Officer, President,
Executive Vice President, any Vice
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President, the Secretary or the Treasurer of such corporation; and with respect
to any partnership, any general partner thereof.
"Grant" means mortgage, pledge, bargain, sell, warrant, alienate,
remise, release, convey, assign, transfer, create, and grant a lien upon and a
security interest in and right of set-off against, deposit, set over and confirm
pursuant to this Indenture. A Grant of the Collateral or of any other agreement
or instrument shall include all rights, powers and options (but none of the
obligations) of the granting party thereunder, including the immediate and
continuing right to claim for, collect, receive and give receipt for principal
and interest payments in respect of the Collateral and all other moneys payable
thereunder, to give and receive notices and other communications, to make
waivers or other agreements, to exercise all rights and options, to bring
Proceedings in the name of the granting party or otherwise, and generally to do
and receive anything that the granting party is or may be entitled to do or
receive thereunder or with respect thereto.
"Holder" or "Noteholder" means the Person in whose name a Note is
registered on the Note Register.
"Indenture Trustee" means _______________, a __________ banking
corporation, as Indenture Trustee under this Indenture, or any successor
Indenture Trustee under this Indenture.
"Independent" means, when used with respect to any specified Person,
that the Person (a) is in fact independent of the Issuer, any other obligor on
the Notes, the Seller and any Affiliate of any of the foregoing Persons, (b)
does not have any direct financial interest or any material indirect financial
interest in the Issuer, any such other obligor, the Seller or any Affiliate of
any of the foregoing Persons and (c) is not connected with the Issuer, any such
other obligor, the Seller or any Affiliate of any of the foregoing Persons as an
officer, employee, promoter, underwriter, trustee, partner, director or person
performing similar functions.
"Independent Certificate" means a certificate or opinion to be
delivered to the Indenture Trustee under the circumstances described in, and
otherwise complying with, the applicable requirements of Section 11.1, made by
an Independent appraiser or other expert appointed by an Issuer Order and
approved by the Indenture Trustee in the exercise of reasonable care, and such
opinion or certificate shall state that the signer has read the definition of
"Independent" in this Indenture and that the signer is Independent within the
meaning thereof.
"Interest Rate" means the Class A-1 Interest Rate, the Class A-2
Interest Rate, the Class A-3 Interest Rate, the Class A-4 Interest Rate or the
Class A-5 Interest Rate.
"Issuer" means FIRSTPLUS Home Loan Owner Trust 199_-_ until a successor
replaces it and, thereafter, means the successor and, for purposes of any
provision contained herein and required by the TIA, each other obligor on the
Notes.
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"Issuer Order" and "Issuer Request" mean a written order or request
signed in the name of the Issuer by any one of its Authorized Officers and
delivered to the Indenture Trustee.
"Note" means a Class A-1 Note, a Class A-2 Note, a Class A-3 Note, a
Class A-4 Note or a Class A-5 Note.
"Note Depository Agreement" means the agreement dated __________,
199__, among the Issuer, the Administrator, the Indenture Trustee and The
Depository Trust Company, as the initial Clearing Agency, relating to the Book
Entry Notes.
"Note Owner" means, with respect to a Book-Entry Note, the Person who
is the beneficial owner of such Book-Entry Note, 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).
"Note Register" and "Note Registrar" have the respective meanings
specified in Section 2.05.
"Officer's Certificate" means a certificate signed by any Authorized
Officer of the Issuer, under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 11.1, and delivered to
the Indenture Trustee. Unless otherwise specified, any reference in this
Indenture to an Officer's Certificate shall be to an Officer's Certificate of
any Authorized Officer of the Issuer.
"Opinion of Counsel" means one or more written opinions of counsel who
may, except as otherwise expressly provided in this Indenture, be employees of
or counsel to the Issuer and who shall be satisfactory to the Indenture Trustee,
and which opinion or opinions shall be addressed to the Indenture Trustee as
Indenture Trustee, shall comply with any applicable requirements of Section 11.1
and shall be in form and substance satisfactory to the Indenture Trustee.
"Outstanding" means, as of the date of determination, all Notes
theretofore authenticated and delivered under this Indenture except:
(i) Notes theretofore canceled by the Note Registrar or
delivered to the Note Registrar for cancellation;
(ii) Notes or portions thereof the payment for which money
in the necessary amount has been theretofore deposited with the
Indenture Trustee or any Paying Agent in trust for the Holders of such
Notes (provided, however, that if such Notes are to be redeemed, notice
of such redemption has been duly given pursuant to this Indenture or
provision for such notice has been made, satisfactory to the Indenture
Trustee); and
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(iii) Notes in exchange for or in lieu of which other Notes
have been authenticated and delivered pursuant to this Indenture unless
proof satisfactory to the Indenture Trustee is presented that any such
Notes are held by a bona fide purchaser; provided, that in determining
whether the Holders of the requisite Outstanding Amount of the Notes
have given any request, demand, authorization, direction, notice,
consent, or waiver hereunder or under any Basic Document, Notes owned
by the Issuer, any other obligor upon the Notes, the Seller or any
Affiliate of any of the foregoing Persons shall be disregarded and
deemed not to be Outstanding, except that, in determining whether the
Indenture Trustee shall be protected in relying upon any such request,
demand, authorization, direction, notice, consent, or waiver, only
Notes that the Indenture Trustee knows to be so owned shall be so
disregarded. Notes so owned that have been pledged in good faith may be
regarded as Outstanding if the pledgee establishes to the satisfaction
of the Indenture Trustee the pledgee's right so to act with respect to
such Notes and that the pledgee is not the Issuer, any other obligor
upon the Notes, the Seller or any Affiliate of any of the foregoing
Persons.
"Outstanding Amount" means the aggregate principal amount of all Notes,
or Class of Notes, as applicable, Outstanding at the date of determination.
"Owner Trustee" means _______________, not in its individual capacity
but solely as Owner Trustee under the Trust Agreement, or any successor Owner
Trustee under the Trust Agreement.
"Paying Agent" means the Indenture Trustee or any other Person that
meets the eligibility standards for the Indenture Trustee specified in Section
6.11 and is authorized by the Issuer to make payments to and distributions from
the Collection Account and the Note Distribution Account, including payment of
principal of or interest on the Notes on behalf of the Issuer.
"Payment Date" means a Distribution Date.
"Person" means any individual, corporation, estate, partnership, joint
venture, association, joint stock company, trust (including any beneficiary
thereof), unincorporated organization, or government or any agency or political
subdivision thereof.
"Predecessor Note" means, with respect to any particular Note, every
previous Note evidencing all or a portion of the same debt as that evidenced by
such particular Note; and, for the purpose of this definition, any Note
authenticated and delivered under Section 2.6 in lieu of a mutilated, lost,
destroyed or stolen Note shall be deemed to evidence the same debt as the
mutilated, lost, destroyed or stolen Note.
"Proceeding" means any suit in equity, action at law or other judicial
or administrative proceeding.
"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
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as is acceptable to each Rating Agency) prior notice thereof and that each of
the Rating Agencies shall have notified the Seller, the Servicer and the Issuer
in writing that such action will not result in a reduction or withdrawal of the
then current rating of the Notes.
"Rating Agency" means ___________ and ______________. If no such
organization or successor is any longer in existence, "Rating Agency" shall be a
nationally recognized statistical rating organization or other comparable Person
designated by the Issuer, notice of which designation shall be given to the
Indenture Trustee, the Owner Trustee and the Servicer.
"Record Date" means, with respect to a Distribution Date or Redemption
Date, the close of business on the first day of the calendar month in which such
Distribution Date or Redemption Date occurs or, if Definitive Notes have been
issued pursuant to Section 2.13, the 15th day of the preceding month.
"Redemption Date" means (a) in the case of a redemption of the Notes
pursuant to Section 10.1(a) or a payment to Noteholders pursuant to Section
10.1(c), the Distribution Date specified by the Servicer or the Issuer pursuant
to Section 10.1(a) or (c), as applicable, or (b) in the case of a redemption of
Notes pursuant to Section 10.1(b), the Distribution Date specified in Section
5.8(b) of the Sale and Servicing Agreement on which the Indenture Trustee shall
withdraw any amount remaining in the Pre-Funding Account and deposit the
applicable amount thereof payable to any Class of Notes from the Distribution
Account.
"Redemption Price" means (a) in the case of a redemption of the Notes
pursuant to Section 10.1(a) or (b), an amount equal to the unpaid principal
amount of the Notes redeemed plus accrued and unpaid interest thereon at the
weighted average of the Interest Rates for each Class of Notes being so redeemed
to but excluding the Redemption Date, or (b) in the case of a payment made to
Noteholders pursuant to Section 10.1(c), the amount on deposit in the
Distribution Account, but not in excess of the amount specified in clause (a)
above.
"Registered Holder" means the Person in whose name a Note is registered
on the Note Register on the applicable Record Date.
"Responsible Officer" means, with respect to the Indenture Trustee, any
officer within the Corporate Trust Office of the Indenture Trustee, including
any Vice President, Assistant Vice President, Assistant Treasurer, Assistant
Secretary or any other officer of the Indenture Trustee customarily performing
functions similar to those performed by any of the above designated officers and
also, with respect to a particular matter, any other officer to whom such matter
is referred because of such officer's knowledge of and familiarity with the
particular subject.
"Sale and Servicing Agreement" means the Sale and Servicing Agreement
dated as of __________, 199__, among the Issuer, FIRSTPLUS INVESTMENT
CORPORATION, as Seller, and, FIRSTPLUS FINANCIAL, INC., as Servicer.
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"Schedule of Home Loans" means the listing of the Home Loans set forth
in Schedule A, as supplemented as of each Subsequent Transfer Date.
"Securities Act" means the Securities Act of 1933, as amended.
"Seller" shall mean FIRSTPLUS INVESTMENT CORPORATION, in its capacity
as seller under the Sale and Servicing Agreement, and its successor in interest.
"Servicer" shall mean FIRSTPLUS FINANCIAL, INC. in its capacity as
servicer under the Sale and Servicing Agreement, and any Successor Servicer
thereunder.
"State" means any one of the 50 States of the United States of America
or the District of Columbia.
"Successor Servicer" has the meaning specified in Section 3.7(e).
"Trust Estate" means all money, instruments, rights and other property
that are subject or intended to be subject to the lien and security interest of
this Indenture for the benefit of the Noteholders (including, without
limitation, all property and interests Granted to the Indenture Trustee pursuant
to the Granting Clause), including all proceeds thereof.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939 as
in force on the date hereof, unless otherwise specifically provided.
"UCC" means, unless the context otherwise requires, the Uniform
Commercial Code, as in effect in the relevant jurisdiction, as amended from time
to time.
(b) Except as otherwise specified herein or as the
context may otherwise require, capitalized terms used but not otherwise
defined herein have the respective meanings set forth in the Sale and
Servicing Agreement for all purposes of this Indenture.
SECTION 1.2 Incorporation by Reference of Trust Indenture Act. Whenever
this Indenture refers to a provision of the TIA, the provision is incorporated
by reference in and made a part of this Indenture. The following TIA terms used
in this Indenture have the following meanings:
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Notes.
"indenture security holder" means a Noteholder.
"indenture to be qualified" means this Indenture.
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"indenture trustee" or "institutional trustee" means the Indenture
Trustee.
"obligor" on the indenture securities means the Issuer and any other
obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined in the TIA,
defined by TIA reference to another statute or defined by Commission rule have
the meaning assigned to them by such definitions.
SECTION 1.3 Rules of Construction. Unless the context otherwise
requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the
meaning assigned to it in accordance with generally accepted accounting
principles as in effect from time to time;
(iii) "or" is not exclusive;
(iv) "including" means including without limitation;
(v) words in the singular include the plural and words in
the plural include the singular; and
(vi) any agreement, instrument or statute defined or
referred to herein or in any instrument or certificate delivered in
connection herewith means such agreement, instrument or statute as from
time to time amended, modified or supplemented and includes (in the
case of agreements or instruments) references to all attachments
thereto and instruments incorporated therein; references to a Person
are also to its permitted successors and assigns.
ARTICLE II
The Notes
SECTION 2.1 Form. The Class A-1 Notes, the Class A-2 Notes, the Class
A-3 Notes, the Class A-4 Notes and the Class A-5 Notes, in each case together
with the Indenture Trustee's certificate of authentication, shall be in
substantially the form set forth in Exhibit A-1, Exhibit A-2, Exhibit A-3,
Exhibit A-4 and Exhibit A-5, respectively, with such appropriate insertions,
omissions, substitutions and other variations as are required or permitted by
this Indenture, and may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon as may,
consistently herewith, be determined by the officers executing such Notes, as
evidenced by their execution thereof. Any portion of the text of any Note may be
set forth on the reverse thereof, with an appropriate reference thereto on the
face of the Note.
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The Definitive Notes shall be typewritten, printed, lithographed or
engraved or produced by any combination of these methods, all as determined by
the officers executing such Notes, as evidenced by their execution of such
Notes.
Each Note shall be dated the date of its authentication. The terms of
the Notes set forth in Exhibit A-1, Exhibit A-2, Exhibit A-3, Exhibit A-4 and
Exhibit A-5 are part of the terms of this Indenture.
SECTION 2.2 Execution, Authentication and Delivery. The Notes shall be
executed on behalf of the Issuer by any of its Authorized Officers. The
signature of any such Authorized Officer on the Notes may be manual or
facsimile.
Notes bearing the manual or facsimile signature of individuals who were
at any time Authorized Officers of the Issuer shall bind the Issuer,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not hold
such offices at the date of such Notes.
The Indenture Trustee shall upon Issuer Order authenticate and deliver
Class A-1 Notes for original issue in an aggregate principal amount of
$__________, Class A-2 Notes for original issue in an aggregate principal amount
of $__________, Class A-3 Notes for original issue in an aggregate principal
amount of $__________, Class A-4 Notes for original issue in an aggregate
principal amount of $__________, and Class A-5 Notes for original issue in an
aggregate principal amount of $__________. The aggregate principal amount of
Class A-1 Notes, Class A-2 Notes, Class A-3 Notes, Class A-4 Notes and Class A-5
Notes outstanding at any time may not exceed such respective amounts except as
provided in Section 2.6.
Each Note shall be dated the date of its authentication. The Notes
shall be issuable as registered Notes in the minimum denomination $1,000.
No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Note a
certificate of authentication substantially in the form provided for herein
executed by the Indenture Trustee by the manual signature of one of its
authorized signatories, and such certificate upon any Note shall be conclusive
evidence, and the only evidence, that such Note has been duly authenticated and
delivered hereunder.
SECTION 2.3 Temporary Notes. Pending the preparation of definitive
Notes, the Issuer may execute, and upon receipt of an Issuer Order the Indenture
Trustee shall authenticate and deliver, temporary Notes that are printed,
lithographed, typewritten, mimeographed or otherwise produced, of the tenor of
the definitive Notes in lieu of which they are issued and with such variations
not inconsistent with the terms of this Indenture as the officers executing such
Notes may determine, as evidenced by their execution of such Notes.
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If temporary Notes are issued, the Issuer will cause definitive Notes
to be prepared without unreasonable delay. After the preparation of definitive
Notes, the temporary Notes shall be exchangeable for definitive Notes upon
surrender of the temporary Notes at the office or agency of the Issuer to be
maintained as provided in Section 3.2, without charge to the Holder. Upon
surrender for cancellation of any one or more temporary Notes, the Issuer shall
execute, and the Indenture Trustee shall authenticate and deliver in exchange
therefor, a like principal amount of definitive Notes of authorized
denominations. Until so exchanged, the temporary Notes shall in all respects be
entitled to the same benefits under this Indenture as definitive Notes.
SECTION 2.4 [Limitations on Transfer of the Class A- Notes. The Class
A-__ Notes have not been and will not be registered under the Securities Act and
will not be listed on any exchange. No transfer of a Class A-__ Note shall be
made unless such transfer is made pursuant to an effective registration
statement under the Securities Act and any applicable state securities laws or
is exempt from the registration requirements under said Act and such state
securities laws. In the event that a transfer is to be made in reliance upon an
exemption from the Securities Act and state securities laws, in order to assure
compliance with the Securities Act and such laws, the Holder desiring to effect
such transfer and such Holder's prospective transferee shall each certify to the
Indenture Trustee and the Issuer in writing the facts surrounding the transfer
in substantially the forms set forth in Exhibit B (the "Transferor Letter") and
either Exhibit C (the "Investment Letter") or Exhibit D (the "Rule 144A
Letter"). Except in the case of a transfer as to which the proposed transferee
has provided a Rule 144A Letter, there shall also be delivered to the Indenture
Trustee an opinion of counsel that such transfer may be made pursuant to an
exemption from the Securities Act and state securities laws, which opinion of
counsel shall not be an expense of the Trust, the Owner Trustee or the Indenture
Trustee; provided that such opinion of counsel in respect of the applicable
state securities laws may be a memorandum of law rather than an opinion if such
counsel is not licensed in the applicable jurisdiction. The Seller shall provide
to any Holder of a Class A-__ Note and any prospective transferee designated by
any such Holder, information regarding the Class A-__ Notes and the Receivables
and such other information as shall be necessary to satisfy the condition to
eligibility set forth in Rule 144A(d)(4) for transfer of any such Class A-__
Note without registration thereof under the Securities Act pursuant to the
registration exemption provided by Rule 144A. Each Holder of a Class A-1 Note
desiring to effect such a transfer shall, and does hereby agree to, indemnify
the Issuer, the Owner Trustee, the Indenture Trustee and the Seller against any
liability that may result if the transfer is not so exempt or is not made in
accordance with federal and state securities laws.
The Owner Trustee shall cause each Class A-__ Note to contain a legend
stating that transfer of the Class A-__ Notes is subject to certain restrictions
and referring prospective purchasers of the Class A-__ Notes to this Section 2.4
with respect to such restrictions.]
SECTION 2.5 Registration; Registration of Transfer and Exchange. The
Issuer shall cause to be kept a register (the "Note Register") in which, subject
to such reasonable regulations as it may prescribe [and the restrictions on
transfers of the Class A-__ Notes set forth herein], the Issuer shall provide
for the registration of Notes and the registration of transfers of Notes. The
Indenture Trustee
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initially shall be the "Note Registrar" for the purpose of registering Notes and
transfers of Notes as herein provided. Upon any resignation of any Note
Registrar, the Issuer shall promptly appoint a successor or, if it elects not to
make such an appointment, assume the duties of Note Registrar.
If a Person other than the Indenture Trustee is appointed by the Issuer
as Note Registrar, the Issuer will give the Indenture Trustee prompt written
notice of the appointment of such Note Registrar and of the location, and any
change in the location, of the Note Register, and the Indenture Trustee shall
have the right to inspect the Note Register at all reasonable times and to
obtain copies thereof, and the Indenture Trustee shall have the right to rely
upon a certificate executed on behalf of the Note Registrar by an Executive
Officer thereof as to the names and addresses of the Holders of the Notes and
the principal amounts and number of such Notes.
Upon surrender for registration of transfer of any Note at the office
or agency of the Issuer to be maintained as provided in Section 3.2, if the
requirements of Section 8-401(1) of the UCC are met the Issuer shall execute,
and the Indenture Trustee shall authenticate and the Noteholder shall obtain
from the Indenture Trustee, in the name of the designated transferee or
transferees, one or more new Notes of the same Class in any authorized
denominations, of a like aggregate principal amount.
At the option of the Holder, Notes may be exchanged for other Notes of
the same Class in any authorized denominations, of a like aggregate principal
amount, upon surrender of the Notes to be exchanged at such office or agency.
Whenever any Notes are so surrendered for exchange, if the requirements of
Section 8-401(1) of the UCC are met the Issuer shall execute, and the Indenture
Trustee shall authenticate and the Noteholder shall obtain from the Indenture
Trustee, the Notes which the Noteholder making the exchange is entitled to
receive.
All Notes issued upon any registration of transfer or exchange of Notes
shall be the valid obligations of the Issuer, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of transfer or
exchange shall be duly endorsed by, or be accompanied by a written instrument of
transfer in form satisfactory to the Indenture Trustee duly executed by, the
Holder thereof or such Holder's attorney duly authorized in writing, with such
signature guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar, which requirements include membership or
participation in the Securities Transfer Agent's Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Note
Registrar in addition to, or in substitution for, STAMP, all in accordance with
the Exchange Act.
No service charge shall be made to a Holder for any registration of
transfer or exchange of Notes, but the Issuer may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Notes, other than
exchanges pursuant to Section 2.3 or Section 9.6 not involving any transfer.
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The preceding provisions of this Section notwithstanding, the Issuer
shall not be required to make and the Note Registrar need not register transfers
or exchanges of Notes selected for redemption or of any Note for a period of 15
days preceding the due date for any payment with respect to such Note.
SECTION 2.6 Mutilated, Destroyed, Lost or Stolen Notes. If (i) any
mutilated Note is surrendered to the Indenture Trustee, or the Indenture Trustee
receives evidence to its satisfaction of the destruction, loss or theft of any
Note, and (ii) there is delivered to the Indenture Trustee such security or
indemnity as may be required by it to hold the Issuer and the Indenture Trustee
harmless, then, in the absence of notice to the Issuer, the Note Registrar or
the Indenture Trustee that such Note has been acquired by a bona fide purchaser,
and provided that the requirements of Section 8-405 of the UCC are met, the
Issuer shall execute, and upon its request the Indenture Trustee shall
authenticate and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Note, a replacement Note of the same Class; provided,
however, that if any such destroyed, lost or stolen Note, but not a mutilated
Note, shall have become or within seven days shall be due and payable, or shall
have been called for redemption, instead of issuing a replacement Note, the
Issuer may pay such destroyed, lost or stolen Note when so due or payable or
upon the Redemption Date without surrender thereof. If, after the delivery of
such replacement Note or payment of a destroyed, lost or stolen Note pursuant to
the proviso to the preceding sentence, a bona fide purchaser of the original
Note in lieu of which such replacement Note was issued presents for payment such
original Note, the Issuer and the Indenture Trustee shall be entitled to recover
such replacement Note (or such payment) from the Person to whom it was delivered
or any Person taking such replacement Note from such Person to whom such
replacement Note was delivered or any assignee of such Person, except a bona
fide purchaser, and shall be entitled to recover upon the security or indemnity
provided therefor to the extent of any loss, damage, cost or expense incurred by
the Issuer or the Indenture Trustee in connection therewith.
Upon the issuance of any replacement Note under this Section, the
Issuer may require the payment by the Holder of such Note of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other reasonable expenses (including the fees and expenses of
the Indenture Trustee) connected therewith.
Every replacement Note issued pursuant to this Section in replacement
of any mutilated, destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Issuer, whether or not the mutilated,
destroyed, lost or stolen Note shall be at any time enforceable by anyone, and
shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Notes duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Notes.
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SECTION 2.7 Persons Deemed Owner. Prior to due presentment for
registration of transfer of any Note, the Issuer, the Indenture Trustee and any
agent of the Issuer or the Indenture Trustee may treat the Person in whose name
any Note is registered (as of the day of determination) as the owner of such
Note for the purpose of receiving payments of principal of and interest, if any,
on such Note and for all other purposes whatsoever, whether or not such Note be
overdue, and none of the Issuer, the Indenture Trustee or any agent of the
Issuer or the Indenture Trustee shall be affected by notice to the contrary.
SECTION 2.8 Payment of Principal and Interest; Defaulted Interest.
(a) The Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes,
the Class A-4 Notes and the Class A-5 Notes shall accrue interest at the Class
A-1 Interest Rate, the Class A-2 Interest Rate, the Class A-3 Interest Rate, the
Class A-4 Interest Rate and the Class A-5 Interest Rate, respectively, as set
forth in Exhibits A-1, A-2, A-3, A-4 and A-5, respectively, and such interest
shall be payable on each Distribution Date as specified therein, subject to
Section 3.01. Any installment of interest or principal, if any, payable on any
Note that is punctually paid or duly provided for by the Issuer on the
applicable Distribution Date shall be paid to the Person in whose name such Note
(or one or more Predecessor Notes) is registered on the Record Date by check
mailed first-class postage prepaid to such Person's address as it appears on the
Note Register on such Record Date, except that, unless Definitive Notes have
been issued pursuant to Section 2.13, with respect to Notes registered on the
Record Date in the name of the nominee of the Clearing Agency (initially, such
nominee to be Cede & Co.), payment will be made by wire transfer in immediately
available funds to the account designated by such nominee and except for the
final installment of principal payable with respect to such Note on a
Distribution Date or on the applicable Final Scheduled Distribution Date (and
except for the Redemption Price for any Note called for redemption pursuant to
Section 10.01(a)), which shall be payable as provided below. The funds
represented by any such checks returned undelivered shall be held in accordance
with Section 3.03.
(b) The principal of each Note shall be payable in installments on
each Distribution Date as provided in the forms of the Notes set forth in
Exhibit A-1, Exhibit A-2, Exhibit A-3, Exhibit A-4 and Exhibit A-5.
Notwithstanding the foregoing, the entire unpaid principal amount of the Notes
shall be due and payable, if not previously paid, on the date on which an Event
of Default shall have occurred and be continuing, if the Indenture Trustee or
the Holders of Notes representing not less than a majority of the Outstanding
Amount of the Notes have declared the Notes to be immediately due and payable in
the manner provided in Section 5.2. All principal payments on each Class of
Notes shall be made pro rata to the Noteholders of such Class entitled thereto.
The Indenture Trustee shall notify the Person in whose name a Note is registered
at the close of business on the Record Date preceding the Distribution Date on
which the Issuer expects that the final installment of principal of and interest
on such Note will be paid. Such notice shall be mailed or transmitted by
facsimile prior to such final Distribution Date and shall specify that such
final installment will be payable only upon presentation and surrender of such
Note and shall specify the place where such Note may be presented and
surrendered for payment of such installment. Notices in connection with
redemptions of Notes shall be mailed to Noteholders as provided in Section 10.2.
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(c) If the Issuer defaults in a payment of interest on the Notes,
the Issuer shall pay defaulted interest (plus interest on such defaulted
interest to the extent lawful) at the applicable Interest Rate in any lawful
manner. The Issuer may pay such defaulted interest to the persons who are
Noteholders on a subsequent special record date, which date shall be at least
five Business Days prior to the payment date. The Issuer shall fix or cause to
be fixed any such special record date and payment date, and, at least 15 days
before any such special record date, the Issuer shall mail to each Noteholder a
notice that states the special record date, the payment date and the amount of
defaulted interest to be paid.
SECTION 2.9 Cancellation. All Notes surrendered for payment,
registration of transfer, exchange or redemption shall, if surrendered to any
Person other than the Indenture Trustee, be delivered to the Indenture Trustee
and shall be promptly canceled by the Indenture Trustee. The Issuer may at any
time deliver to the Indenture Trustee for cancellation any Notes previously
authenticated and delivered hereunder which the Issuer may have acquired in any
manner whatsoever, and all Notes so delivered shall be promptly canceled by the
Indenture Trustee. No Notes shall be authenticated in lieu of or in exchange for
any Notes canceled as provided in this Section, except as expressly permitted by
this Indenture. All canceled Notes may be held or disposed of by the Indenture
Trustee in accordance with its standard retention or disposal policy as in
effect at the time unless the Issuer shall direct by an Issuer Order that they
be destroyed or returned to it; provided, that such Issuer Order is timely and
the Notes have not been previously disposed of by the Indenture Trustee.
SECTION 2.10 Release of Collateral. Subject to Section 11.1 and the
terms of the Basic Documents, the Indenture Trustee shall release property from
the lien of this Indenture only upon receipt of an Issuer Request accompanied by
an Officer's Certificate, an Opinion of Counsel and Independent Certificates in
accordance with TIA Sections 314(c) and 314(d)(l) or an Opinion of Counsel in
lieu of such Independent Certificates to the effect that the TIA does not
require any such Independent Certificates.
SECTION 2.11 Book-Entry Notes. The Notes [(other than the Class A-__
Notes)], upon original issuance, will be issued in the form of typewritten Notes
representing the Book-Entry Notes, to be delivered to The Depository Trust
Company, the initial Clearing Agency, by, or on behalf of, the Issuer. [The
Class A-__ Notes will be issued on the Closing Date in the form of a single
typewritten Definitive Note, which will be purchased by and registered in the
name of the Seller.] The Book-Entry Notes shall be registered initially on the
Note Register in the name of Cede & Co., the nominee of the initial Clearing
Agency, and no Owner thereof will receive a definitive Note representing such
Note Owner's interest in such Note, except as provided in Section 2.13. Unless
and until definitive, fully registered Notes (the "Definitive Notes") have been
issued to such Note Owners pursuant to Section 2.13:
(i) the provisions of this Section shall be in full force
and effect;
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(ii) the Note Registrar and the Indenture Trustee shall be
entitled to deal with the Clearing Agency for all purposes of this
Indenture (including the payment of principal of and interest on the
Notes and the giving of instructions or directions hereunder) as the
sole holder of the Notes, and shall have no obligation to the Note
Owners;
(iii) to the extent that the provisions of this Section
conflict with any other provisions of this Indenture, the provisions of
this Section shall control;
(iv) the rights of Note Owners shall be exercised only
through the Clearing Agency and shall be limited to those established
by law and agreements between such Note Owners and the Clearing Agency
and/or the Clearing Agency Participants pursuant to the Note Depository
Agreement. Unless and until Definitive Notes are issued pursuant to
Section 2.13, 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 Notes to such
Clearing Agency Participants; and
(v) whenever this Indenture requires or permits actions
to be taken based upon instructions or directions of Holders of Notes
evidencing a specified percentage of the Outstanding Amount of the
Notes, the Clearing Agency shall be deemed to represent such percentage
only to the extent that it has received instructions to such effect
from Note Owners and/or Clearing Agency Participants owning or
representing, respectively, such required percentage of the beneficial
interest in the Notes and has delivered such instructions to the
Indenture Trustee.
SECTION 2.12 Notices to Clearing Agency. Whenever a notice or other
communication to the Noteholders [(other than Holders of the Class A-__ Notes)]
is required under this Indenture, unless and until Definitive Notes shall have
been issued to such Note Owners pursuant to Section 2.13, the Indenture Trustee
shall give all such notices and communications specified herein to be given to
Holders of the Notes to the Clearing Agency, and shall have no obligation to
such Note Owners.
SECTION 2.13 Definitive Notes. If (i) the Administrator advises the
Indenture Trustee in writing that the Clearing Agency is no longer willing or
able to properly discharge its responsibilities with respect to the Book-Entry
Notes and the Administrator is unable to locate a qualified successor, (ii) the
Administrator at its option advises the Indenture 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 or a Servicer Default, Owners of the
Book-Entry Notes representing beneficial interests aggregating at least a
majority of the Outstanding Amount of such Notes advise the Clearing Agency in
writing that the continuation of a book-entry system through the Clearing Agency
is no longer in the best interests of such Note Owners, then the Clearing Agency
shall notify all Note Owners and the Indenture Trustee of the occurrence of such
event and of the availability of Definitive Notes to Note Owners requesting the
same. Upon surrender to the Indenture Trustee of the typewritten Notes
representing the Book-Entry Notes by the Clearing Agency, accompanied by
registration
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instructions, the Issuer shall execute and the Indenture Trustee shall
authenticate the Definitive Notes in accordance with the instructions of the
Clearing Agency. None of the Issuer, the Note Registrar or the Indenture 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 Notes, the Indenture Trustee shall recognize the
Holders of the Definitive Notes as Noteholders.
SECTION 2.14 Tax Treatment. The Issuer has entered into this Indenture,
and the Notes will be issued, with the intention that, for federal, state and
local income, single business and franchise tax purposes, the Notes will qualify
as indebtedness of the Issuer secured by the Trust Estate. The Issuer, by
entering into this Indenture, and each Noteholder, by its acceptance of a Note
(and each Note Owner by its acceptance of an interest in the applicable
Book-Entry Note), agree to treat the Notes for federal, state and local income,
single business and franchise tax purposes as indebtedness of the Issuer.
ARTICLE III
Covenants
SECTION 3.1 Payment of Principal and Interest. The Issuer will duly and
punctually pay (or will cause to be duly and punctually paid) the principal of
and interest, if any, on the Notes in accordance with the terms of the Notes and
this Indenture. Without limiting the foregoing, subject to Section 8.2(c), the
Issuer will cause to be distributed all amounts on deposit in the Note
Distribution Account on a Distribution Date deposited therein pursuant to the
Sale and Servicing Agreement (i) for the benefit of the Class A-1 Notes, to the
Class A-1 Noteholders, (ii) for the benefit of the Class A-2 Notes, to the Class
A-2 Noteholders, (iii) for the benefit of the Class A-3 Notes, to the Class A-3
Noteholders, (iv) for the benefit of the Class A-4 Notes, to the Class A-4
Noteholders and (v) for the benefit of the Class A-5 Notes, to the Class A-5
Noteholders. Amounts properly withheld under the Code by any Person from a
payment to any Noteholder of interest and/or principal shall be considered as
having been paid by the Issuer to such Noteholder for all purposes of this
Indenture.
SECTION 3.2 Maintenance of Office or Agency. The Issuer will maintain
in the Borough of Manhattan, The City of New York, an office or agency where
Notes may be surrendered for registration of transfer or exchange, and where
notices and demands to or upon the Issuer in respect of the Notes and this
Indenture may be served. The Issuer hereby initially appoints the Indenture
Trustee to serve as its agent for the foregoing purposes. The Issuer will give
prompt written notice to the Indenture Trustee of the location, and of any
change in the location, of any such office or agency. If at any time the Issuer
shall fail to maintain any such office or agency or shall fail to furnish the
Indenture Trustee with the address thereof, such surrenders, notices and demands
may be made or served at the Corporate Trust Office, and the Issuer hereby
appoints the Indenture Trustee as its agent to receive all such surrenders,
notices and demands.
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SECTION 3.3 Money for Payments To Be Held in Trust. As provided in
Section 8.2(a ) and (b), all payments of amounts due and payable with respect to
any Notes that are to be made from amounts withdrawn from the Collection Account
and the Note Distribution Account pursuant to Section 8.2(c) shall be made on
behalf of the Issuer by the Indenture Trustee or by another Paying Agent, and no
amounts so withdrawn from the Collection Account and the Note Distribution
Account for payments of Notes shall be paid over to the Issuer except as
provided in this Section.
On or before the Business Day preceding each Distribution Date and
Redemption Date, the Issuer shall deposit or cause to be deposited in the Note
Distribution Account an aggregate sum sufficient to pay the amounts then
becoming due under the Notes, such sum to be held in trust for the benefit of
the Persons entitled thereto, and (unless the Paying Agent is the Indenture
Trustee) shall promptly notify the Indenture Trustee of its action or failure so
to act.
The Issuer will cause each Paying Agent other than the Indenture
Trustee to execute and deliver to the Indenture Trustee an instrument in which
such Paying Agent shall agree with the Indenture Trustee (and if the Indenture
Trustee acts as Paying Agent, it hereby so agrees), subject to the provisions of
this Section, that such Paying Agent will:
(i) hold all sums held by it for the payment of amounts
due with respect to the Notes in trust for the benefit of the Persons
entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided and pay such sums to such
Persons as herein provided;
(ii) give the Indenture Trustee notice of any default by
the Issuer (or any other obligor upon the Notes) of which it has actual
knowledge in the making of any payment required to be made with respect
to the Notes;
(iii) at any time during the continuance of any such
default, upon the written request of the Indenture Trustee, forthwith
pay to the Indenture Trustee all sums so held in trust by such Paying
Agent;
(iv) immediately resign as a Paying Agent and forthwith
pay to the Indenture Trustee all sums held by it in trust for the
payment of Notes if at any time it ceases to meet the standards
required to be met by a Paying Agent at the time of its appointment;
and
(v) comply with all requirements of the Code with respect
to the withholding from any payments made by it on any Notes of any
applicable withholding taxes imposed thereon and with respect to any
applicable reporting requirements in connection therewith.
The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, by Issuer
Order direct any Paying Agent to pay to the Indenture Trustee all sums held in
trust by such Paying Agent, such sums to be held by the Indenture Trustee upon
the same trusts as those upon which the sums were held by such Paying Agent; and
upon such
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payment by any Paying Agent to the Indenture Trustee, such Paying Agent shall be
released from all further liability with respect to such money.
Subject to applicable laws with respect to escheat of funds, any money
held by the Indenture Trustee or any Paying Agent in trust for the payment of
any amount due with respect to any Note and remaining unclaimed for two years
after such amount has become due and payable shall be discharged from such trust
and be paid to the Issuer on Issuer Request; and the Holder of such Note shall
thereafter, as an unsecured general creditor, look only to the Issuer for
payment thereof (but only to the extent of the amounts so paid to the Issuer),
and all liability of the Indenture Trustee or such Paying Agent with respect to
such trust money shall thereupon cease; provided, however, that the Indenture
Trustee or such Paying Agent, before being required to make any such repayment,
shall at the expense and direction of the Issuer cause to be published once, in
a newspaper published in the English language, customarily published on each
Business Day and of general circulation in The City of New York, notice that
such money remains unclaimed and that, after a date specified therein, which
shall not be less than 30 days from the date of such publication, any unclaimed
balance of such money then remaining will be repaid to the Issuer. The Indenture
Trustee shall also adopt and employ, at the expense and direction of the Issuer,
any other reasonable means of notification of such repayment (including, but not
limited to, mailing notice of such repayment to Holders whose Notes have been
called but have not been surrendered for redemption or whose right to or
interest in moneys due and payable but not claimed is determinable from the
records of the Indenture Trustee or of any Paying Agent, at the last address of
record for each such Holder).
SECTION 3.4 Existence. The Issuer will keep in full effect its
existence, rights and franchises as a business trust under the laws of the State
of Delaware (unless it becomes, or any successor Issuer hereunder is or becomes,
organized under the laws of any other State or of the United States of America,
in which case the Issuer will keep in full effect its existence, rights and
franchises under the laws of such other jurisdiction) and will obtain and
preserve its qualification to do business in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Indenture, the Notes, the Collateral and each other
instrument or agreement included in the Trust Estate.
SECTION 3.5 Protection of Trust Estate. The Issuer will from time to
time execute and deliver all such supplements and amendments hereto and all such
financing statements, continuation statements, instruments of further assurance
and other instruments, and will take such other action necessary or advisable
to:
(i) maintain or preserve the lien and security interest
(and the priority thereof) of this Indenture or carry out more
effectively the purposes hereof;
(ii) perfect, publish notice of or protect the validity of
any Grant made or to be made by this Indenture;
(iii) enforce any of the Collateral; or
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(iv) preserve and defend title to the Trust Estate and the
rights of the Indenture Trustee and the Noteholders in such Trust
Estate against the claims of all persons and parties.
The Issuer hereby designates the Indenture Trustee its agent and
attorney-in-fact to execute any financing statement, continuation statement or
other instrument required to be executed pursuant to this Section 3.5.
SECTION 3.6 Opinions as to Trust Estate.
(a) On the Closing Date, the Issuer shall furnish to the Indenture
Trustee an Opinion of Counsel either stating that, in the opinion of such
counsel, such action has been taken with respect to the recording and filing of
this Indenture, any indentures supplemental hereto, and any other requisite
documents, and with respect to the execution and filing of any financing
statements and continuation statements, as are necessary to perfect and make
effective the lien and security interest of this Indenture and reciting the
details of such action, or stating that, in the opinion of such counsel, no such
action is necessary to make such lien and security interest effective.
(b) On or before __________ in each calendar year, beginning in
199__, the Issuer shall furnish to the Indenture Trustee an Opinion of Counsel
either stating that, in the opinion of such counsel, such action has been taken
with respect to the recording, filing, re-recording and refiling of this
Indenture, any indentures supplemental hereto and any other requisite documents
and with respect to the execution and filing of any financing statements and
continuation statements as is necessary to maintain the lien and security
interest created by this Indenture and reciting the details of such action or
stating that in the opinion of such counsel no such action is necessary to
maintain such lien and security interest. Such Opinion of Counsel shall also
describe the recording, filing, re-recording and refiling of this Indenture, any
indentures supplemental hereto and any other requisite documents and the
execution and filing of any financing statements and continuation statements
that will, in the opinion of such counsel, be required to maintain the lien and
security interest of this Indenture until in the following calendar year.
SECTION 3.7 Performance of Obligations; Servicing of Receivables.
(a) The Issuer will not take any action and will use its best
efforts not to permit any action to be taken by others that would release any
Person from any of such Person's material covenants or obligations under any
instrument or agreement included in the Trust Estate or that would result in the
amendment, hypothecation, subordination, termination or discharge of, or impair
the validity or effectiveness of, any such instrument or agreement, except as
expressly provided in this Indenture, the Sale and Servicing Agreement or such
other instrument or agreement.
(b) The Issuer may contract with other Persons to assist it in
performing its duties under this Indenture, and any performance of such duties
by a Person identified to the Indenture Trustee in an Officer's Certificate of
the Issuer shall be deemed to be action taken by the Issuer. Initially,
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the Issuer has contracted with the Servicer and the Administrator to assist the
Issuer in performing its duties under this Indenture.
(c) The Issuer will punctually perform and observe all of its
obligations and agreements contained in this Indenture, the Basic Documents and
in the instruments and agreements included in the Trust Estate, including but
not limited to filing or causing to be filed all UCC financing statements and
continuation statements required to be filed by the terms of this Indenture and
the Sale and Servicing Agreement in accordance with and within the time periods
provided for herein and therein. Except as otherwise expressly provided therein,
the Issuer shall not waive, amend, modify, supplement or terminate any Basic
Document or any provision thereof without the consent of the Indenture Trustee
or the Holders of at least a majority of the Outstanding Amount of the Notes.
(d) If the Issuer shall have knowledge of the occurrence of a
Servicer Default under the Sale and Servicing Agreement, the Issuer shall
promptly notify the Indenture Trustee and the Rating Agencies thereof, and shall
specify in such notice the action, if any, the Issuer is taking with respect of
such default. If a Servicer Default shall arise from the failure of the Servicer
to perform any of its duties or obligations under the Sale and Servicing
Agreement with respect to the Receivables, the Issuer shall take all reasonable
steps available to it to remedy such failure.
(e) As promptly as possible after the giving of notice of
termination to the Servicer of the Servicer's rights and powers pursuant to
Section _____ of the Sale and Servicing Agreement, the Issuer shall appoint a
successor servicer (the "Successor Servicer"), and such Successor Servicer shall
accept its appointment by a written assumption in a form acceptable to the
Indenture Trustee. In the event that a Successor Servicer has not been appointed
and accepted its appointment at the time when the Servicer ceases to act as
Servicer, the Indenture Trustee without further action shall automatically be
appointed the Successor Servicer. The Indenture Trustee may resign as the
Servicer by giving written notice of such resignation to the Issuer and in such
event will be released from such duties and obligations, such release not to be
effective until the date a new servicer enters into a servicing agreement with
the Issuer as provided below. Upon delivery of any such notice to the Issuer,
the Issuer shall obtain a new servicer as the Successor Servicer under the Sale
and Servicing Agreement. Any Successor Servicer other than the Indenture Trustee
shall (i) be an established financial institution having a net worth of not less
than $50,000,000 and whose regular business includes the servicing of loans of
the same or similar type as the Home Loans and (ii) enter into a servicing
agreement with the Issuer having substantially the same provisions as the
provisions of the Sale and Servicing Agreement applicable to the Servicer. If
within 30 days after the delivery of the notice referred to above, the Issuer
shall not have obtained such a new servicer, the Indenture Trustee may appoint,
or may petition a court of competent jurisdiction to appoint, a Successor
Servicer. In connection with any such appointment, the Indenture Trustee may
make such arrangements for the compensation of such successor as it and such
successor shall agree, subject to the limitations set forth below and in the
Sale and Servicing Agreement, and in accordance with Section _____ of the Sale
and Servicing Agreement, the Issuer shall enter into an agreement with such
successor for the servicing of the Home Loans (such agreement to be in form and
substance satisfactory to the
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Indenture Trustee). If the Indenture Trustee shall succeed to the Servicer's
duties as servicer of the Receivables as provided herein, it shall do so in its
individual capacity and not in its capacity as Indenture Trustee and,
accordingly, the provisions of Article VI hereof shall be inapplicable to the
Indenture Trustee in its duties as the successor to the Servicer and the
servicing of the Receivables. In case the Indenture Trustee shall become
successor to the Servicer under the Sale and Servicing Agreement, the Indenture
Trustee shall be entitled to appoint as Servicer any one of its affiliates,
provided that it shall be fully liable for the actions and omissions of such
affiliate in such capacity as Successor Servicer.
(f) Upon any termination of the Servicer's rights and powers
pursuant to the Sale and Servicing Agreement, the Issuer shall promptly notify
the Indenture Trustee. As soon as a Successor Servicer is appointed, the Issuer
shall notify the Indenture Trustee of such appointment, specifying in such
notice the name and address of such Successor Servicer.
(g) Without derogating from the absolute nature of the assignment
granted to the Indenture Trustee under this Indenture or the rights of the
Indenture Trustee hereunder, the Issuer agrees (i) that it will not, without the
prior written consent of the Indenture Trustee or the Holders of at least a
majority in Outstanding Amount of the Notes, amend, modify, waive, supplement,
terminate or surrender, or agree to any amendment, modification, supplement,
termination, waiver or surrender of, the terms of any Collateral (except to the
extent otherwise provided in the Sale and Servicing Agreement) or the Basic
Documents, or waive timely performance or observance by the Servicer or the
Seller under the Sale and Servicing Agreement; and (ii) that any such amendment
shall not (A) increase or reduce in any manner the amount of, or accelerate or
delay the timing of, distributions that are required to be made for the benefit
of the Noteholders or (B) reduce the aforesaid percentage of the Notes that is
required to consent to any such amendment, without the consent of the Holders of
all the outstanding Notes. If any such amendment, modification, supplement or
waiver shall be so consented to by the Indenture Trustee or such Holders, the
Issuer agrees, promptly following a request by the Indenture Trustee to do so,
to execute and deliver, in its own name and at its own expense, such agreements,
instruments, consents and other documents as the Indenture Trustee may deem
necessary or appropriate in the circumstances.
SECTION 3.8 Negative Covenants. So long as any Notes are Outstanding,
the Issuer shall not:
(i) except as expressly permitted by this Indenture, the
Loan Purchase Agreement or the Sale and Servicing Agreement, sell,
transfer, exchange or otherwise dispose of any of the properties or
assets of the Issuer, including those included in the Trust Estate,
unless directed to do so by the Indenture Trustee;
(ii) claim any credit on, or make any deduction from the
principal or interest payable in respect of, the Notes (other than
amounts properly withheld from such payments under the Code) or assert
any claim against any present or former Noteholder by reason of the
payment of the taxes levied or assessed upon any part of the Trust
Estate; or
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(iii) (A) permit the validity or effectiveness of this
Indenture to be impaired, or permit the lien of this Indenture to be
amended, hypothecated, subordinated, terminated or discharged, or
permit any Person to be released from any covenants or obligations with
respect to the Notes under this Indenture except as may be expressly
permitted hereby, (B) permit any lien, charge, excise, claim, security
interest, mortgage or other encumbrance (other than the lien of this
Indenture) to be created on or extend to or otherwise arise upon or
burden the Trust Estate or any part thereof or any interest therein or
the proceeds thereof (other than tax liens, mechanics' liens and other
liens that arise by operation of law, in each case on any of the
Mortgage Properties and arising solely as a result of an action or
omission of the related Obligor) or (C) permit the lien of this
Indenture not to constitute a valid first priority (other than with
respect to any such tax, mechanics' or other lien) security interest in
the Trust Estate.
SECTION 3.9 Annual Statement as to Compliance. The Issuer will deliver
to the Indenture Trustee, within 120 days after the end of each fiscal year of
the Issuer (commencing with the fiscal year 199__), an Officer's Certificate
stating, as to the Authorized Officer signing such Officer's Certificate, that:
(i) a review of the activities of the Issuer during such
year and of its performance under this Indenture has been made under
such Authorized Officer's supervision; and
(ii) to the best of such Authorized Officer's knowledge,
based on such review, the Issuer has complied with all conditions and
covenants under this Indenture throughout such year, or, if there has
been a default in its compliance with any such condition or covenant,
specifying each such default known to such Authorized Officer and the
nature and status thereof.
SECTION 3.10 Issuer May Consolidate, etc., Only on Certain Terms.
(a) The Issuer shall not consolidate or merge with or into any
other Person, unless:
(i) the Person (if other than the Issuer) formed by or
surviving such consolidation or merger shall be a Person organized and
existing under the laws of the United States of America or any State
and shall expressly assume, by an indenture supplemental hereto,
executed and delivered to the Indenture Trustee, in form satisfactory
to the Indenture Trustee, the due and punctual payment of the principal
of and interest on all Notes and the performance or observance of every
agreement and covenant of this Indenture on the part of the Issuer to
be performed or observed, all as provided herein;
(ii) immediately after giving effect to such transaction,
no Default or Event of Default shall have occurred and be continuing;
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(iii) the Rating Agency Condition shall have been satisfied
with respect to such transaction;
(iv) the Issuer shall have received an Opinion of Counsel
(and shall have delivered copies thereof to the Indenture Trustee) to
the effect that such transaction will not have any material adverse tax
consequence to the Issuer, any Noteholder or any Certificateholder;
(b) any action that is necessary to maintain the lien and security
interest created by this Indenture shall have been taken; and
(c) The Issuer shall have delivered to the Indenture Trustee an
Officer's Certificate and an Opinion of Counsel each stating that such
consolidation or merger and such supplemental indenture comply with this Article
III and that all conditions precedent herein provided for relating to such
transaction have been complied with (including any filing required by the
Exchange Act).
(d) The Issuer shall not convey or transfer any of its properties
or assets, including those included in the Trust Estate, to any Person, unless:
(i) the Person that acquires by conveyance or transfer
the properties and assets of the Issuer the conveyance or transfer of
which is hereby restricted shall (A) be a United States citizen or a
Person organized and existing under the laws of the United States of
America or any State, (B) expressly assumes, by an indenture
supplemental hereto, executed and delivered to the Indenture Trustee,
in form satisfactory to the Indenture Trustee, the due and punctual
payment of the principal of and interest on all Notes and the
performance or observance of every agreement and covenant of this
Indenture on the part of the Issuer to be performed or observed, all as
provided herein, (C) expressly agrees by means of such supplemental
indenture that all right, title and interest so conveyed or transferred
shall be subject and subordinate to the rights of Holders of the Notes,
(D) unless otherwise provided in such supplemental indenture, expressly
agrees to indemnify, defend and hold harmless the Issuer against and
from any loss, liability or expense arising under or related to this
Indenture and the Notes, and (E) expressly agrees by means of such
supplemental indenture that such Person (or if a group of Persons, then
one specified Person) shall make all filings with the Commission (and
any other appropriate Person) required by the Exchange Act in
connection with the Notes;
(ii) immediately after giving effect to such transaction,
no Default or Event of Default shall have occurred and be continuing;
(iii) the Rating Agency Condition shall have been satisfied
with respect to such transaction;
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(iv) the Issuer shall have received an Opinion of Counsel
(and shall have delivered copies thereof to the Indenture Trustee) to
the effect that such transaction will not have any material adverse tax
consequence to the Issuer, any Noteholder or any Certificateholder;
(v) any action that is necessary to maintain the lien and
security interest created by this Indenture shall have been taken; and
(vi) the Issuer shall have delivered to the Indenture
Trustee an Officer's Certificate and an Opinion of Counsel each stating
that such conveyance or transfer and such supplemental indenture comply
with this Article III and that all conditions precedent herein provided
for relating to such transaction have been complied with (including any
filing required by the Exchange Act).
SECTION 3.11 Successor or Transferee.
(a) Upon any consolidation or merger of the Issuer in accordance
with Section 3.10(a), the Person formed by or surviving such consolidation or
merger (if other than the Issuer) shall succeed to, and be substituted for, and
may exercise every right and power of, the Issuer under this Indenture with the
same effect as if such Person had been named as the Issuer herein.
(b) Upon a conveyance or transfer of all the assets and properties
of the Issuer pursuant to Section 3.10(b), FIRSTPLUS Home Loan Owner Trust
199_-_ will be released from every covenant and agreement of this Indenture to
be observed or performed on the part of the Issuer with respect to the Notes
immediately upon the delivery of written notice to the Indenture Trustee stating
that FIRSTPLUS Home Loan Owner Trust 199_-_ is to be so released.
SECTION 3.12 No Other Business. The Issuer shall not engage in any
business other than financing, purchasing, owning, selling and managing the Home
Loans in the manner contemplated by this Indenture and the Basic Documents and
activities incidental thereto. After the Funding Period, the Issuer shall not
fund the purchase of any new home loans.
SECTION 3.13 No Borrowing. The Issuer shall not issue, incur, assume,
guarantee or otherwise become liable, directly or indirectly, for any
indebtedness except for the Notes as provided in Section 2.4 of the Sale and
Servicing Agreement.
SECTION 3.14 Servicer's Obligations. The Issuer shall cause the
Servicer to comply with Sections 6.01, 7.07 and Article IX of the Sale and
Servicing Agreement.
SECTION 3.15 Guarantees, Loans, Advances and Other Liabilities. Except
as contemplated by the Sale and Servicing Agreement or this Indenture, the
Issuer shall not make any loan or advance or credit to, or guarantee (directly
or indirectly or by an instrument having the effect of assuring another's
payment or performance on any obligation or capability of so doing or
otherwise), endorse or otherwise become contingently liable, directly or
indirectly, in connection with the obligations,
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stocks or dividends of, or own, purchase, repurchase or acquire (or agree
contingently to do so) any stock, obligations, assets or securities of, or any
other interest in, or make any capital contribution to, any other Person.
SECTION 3.16 Capital Expenditures. The Issuer shall not make any
expenditure (by long-term or operating lease or otherwise) for capital assets
(either realty or personalty).
SECTION 3.17 Removal of Administrator. So long as any Notes are
Outstanding, the Issuer shall not remove the Administrator without cause unless
the Rating Agency Condition shall have been satisfied in connection with such
removal.
SECTION 3.18 Restricted Payments. The Issuer shall not, directly or
indirectly, (i) pay any dividend or make any distribution (by reduction of
capital or otherwise), whether in cash, property, securities or a combination
thereof, to the Owner Trustee or any owner of a beneficial interest in the
Issuer or otherwise with respect to any ownership or equity interest or security
in or of the Issuer or to the Servicer, (ii) redeem, purchase, retire or
otherwise acquire for value any such ownership or equity interest or security or
(iii) set aside or otherwise segregate any amounts for any such purpose;
provided, however, that the Issuer may make, or cause to be made, (x)
distributions to the Servicer, the Indenture Trustee, the Owner Trustee, the
Securityholders and the holder of the Residual Interest as contemplated by, and
to the extent funds are available for such purpose under, the Sale and Servicing
Agreement or the Trust Agreement and (y) payments to the Indenture Trustee
pursuant to Section 1(a)(ii) of the Administration Agreement. The Issuer will
not, directly or indirectly, make or cause to be made payments to or
distributions from the Collection Account except in accordance with this
Indenture and the Basic Documents.
SECTION 3.19 Notice of Events of Default. The Issuer shall give the
Indenture Trustee and the Rating Agencies prompt written notice of each Event of
Default hereunder, each default on the part of the Servicer or the Seller of its
obligations under the Sale and Servicing Agreement and each default on the part
of the Company or the Seller of its obligations under the Loan Purchase
Agreement.
SECTION 3.20 Further Instruments and Acts. Upon request of the
Indenture Trustee, the Issuer will execute and deliver such further instruments
and do such further acts as may be reasonably necessary or proper to carry out
more effectively the purpose of this Indenture.
ARTICLE IV
Satisfaction and Discharge
SECTION 4.1 Satisfaction and Discharge of Indenture. This Indenture
shall cease to be of further effect with respect to the Notes except as to (i)
rights of registration of transfer and exchange, (ii) substitution of mutilated,
destroyed, lost or stolen Notes, (iii) rights of Noteholders to receive payments
of principal thereof and interest thereon, (iv) Sections 3.3, 3.4, 3.5, 3.8,
3.10, 3.12 and 3.13
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hereof, (v) the rights, obligations and immunities of the Indenture Trustee
hereunder (including the rights of the Indenture Trustee under Section 6.7 and
the obligations of the Indenture Trustee under Section 4.2), and (vi) the rights
of Noteholders as beneficiaries hereof with respect to the property so deposited
with the Indenture Trustee payable to all or any of them, and the Indenture
Trustee, on demand of and at the expense of the Issuer, shall execute proper
instruments acknowledging satisfaction and discharge of this Indenture with
respect to the Notes, when:
(A) either
(1) all Notes theretofore authenticated and delivered (other than
(i) Notes that have been destroyed, lost or stolen and that
have been replaced or paid as provided in Section 2.6 and (ii)
Notes for whose payment money has theretofore been deposited
in trust or segregated and held in trust by the Issuer and
thereafter repaid to the Issuer or discharged from such trust,
as provided in Section 3.3) have been delivered to the
Indenture Trustee for cancellation; or
(2) all Notes not theretofore delivered to the Indenture Trustee
for cancellation
a. have become due and payable,
b. will become due and payable at the Class A-3 Final
Scheduled Distribution Date within one year, or
c. are to be called for redemption within one year under
arrangements satisfactory to the Indenture Trustee
for the giving of notice of redemption by the
Indenture Trustee in the name, and at the expense, of
the Issuer, and the Issuer, in the case of a., b. or
c. above, has irrevocably deposited or caused to be
irrevocably deposited with the Indenture Trustee cash
or direct obligations of or obligations guaranteed by
the United States of America (which will mature prior
to the date such amounts are payable), in trust for
such purpose, in an amount sufficient to pay and
discharge the entire indebtedness on such Notes not
theretofore delivered to the Indenture Trustee for
cancellation when due to the applicable Final
Scheduled Distribution Date or Redemption Date (if
Notes shall have been called for redemption pursuant
to Section 10.1(a)), as the case may be;
(B) the Issuer has paid or caused to be paid all other sums
payable hereunder by the Issuer; and
(C) the Issuer has delivered to the Indenture Trustee an Officer's
Certificate, an Opinion of Counsel and (if required by the TIA
or the Indenture Trustee) an Independent Certificate from a
firm of certified public accountants, each meeting the
applicable requirements of Section 11.1(a) and,
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subject to Section 11.2, each stating that all conditions precedent herein
provided for relating to the satisfaction and discharge of this Indenture have
been complied with.
SECTION 4.2 Application of Trust Money. All moneys deposited with the
Indenture Trustee pursuant to Section 4.1 hereof shall be held in trust and
applied by it, in accordance with the provisions of the Notes and this
Indenture, to the payment, either directly or through any Paying Agent, as the
Indenture Trustee may determine, to the Holders of the particular Notes for the
payment or redemption of which such moneys have been deposited with the
Indenture Trustee, of all sums due and to become due thereon for principal and
interest; but such moneys need not be segregated from other funds except to the
extent required herein or in the Sale and Servicing Agreement or required by
law.
SECTION 4.3 Repayment of Moneys Held by Paying Agent. In connection
with the satisfaction and discharge of this Indenture with respect to the Notes,
all moneys then held by any Paying Agent other than the Indenture Trustee under
the provisions of this Indenture with respect to such Notes shall, upon demand
of the Issuer, be paid to the Indenture Trustee to be held and applied according
to Section 3.3 and thereupon such Paying Agent shall be released from all
further liability with respect to such moneys.
ARTICLE V
Remedies
SECTION 5.1 Events of Default. "Event of Default," wherever used
herein, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(i) default in the payment of any interest on any Note
when the same becomes due and payable, and such default shall continue
for a period of five days; or
(ii) default in the payment of the principal of or any
installment of the principal of any Note when the same becomes due and
payable; or
(iii) default in the observance or performance of any
covenant or agreement of the Issuer made in this Indenture (other than
a covenant or agreement, a default in the observance or performance of
which is elsewhere in this Section specifically dealt with), or any
representation or warranty of the Issuer made in this Indenture or in
any certificate or other writing delivered pursuant hereto or in
connection herewith proving to have been incorrect in any material
respect as of the time when the same shall have been made, and such
default shall continue or not be cured, or the circumstance or
condition in respect of which such misrepresentation or warranty was
incorrect shall not have been eliminated or otherwise cured, for a
period of 30 days after there shall have been given, by registered or
certified
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mail, to the Issuer by the Indenture Trustee or to the Issuer and the
Indenture Trustee by the Holders of at least 25% of the Outstanding
Amount of the Notes, a written notice specifying such default or
incorrect representation or warranty and requiring it to be remedied
and stating that such notice is a notice of Default hereunder; or
(iv) the filing of a decree or order for relief by a court
having jurisdiction in the premises in respect of the Issuer or any
substantial part of the Trust Estate in an involuntary case under any
applicable federal or state bankruptcy, insolvency or other similar law
now or hereafter in effect, or appointing a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar official of the
Issuer or for any substantial part of the Trust Estate, or ordering the
winding-up or liquidation of the Issuer's affairs, and such decree or
order shall remain unstayed and in effect for a period of 60
consecutive days; or
(v) the commencement by the Issuer of a voluntary case
under any applicable federal or state bankruptcy, insolvency or other
similar law now or hereafter in effect, or the consent by the Issuer to
the entry of an order for relief in an involuntary case under any such
law, or the consent by the Issuer to the appointment or taking
possession by a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of the Issuer or for any substantial
part of the Trust Estate, or the making by the Issuer of any general
assignment for the benefit of creditors, or the failure by the Issuer
generally to pay its debts as such debts become due, or the taking of
any action by the Issuer in furtherance of any of the foregoing.
The Issuer shall deliver to the Indenture Trustee, within five days
after the occurrence thereof, written notice in the form of an Officer's
Certificate of any event which with the giving of notice and the lapse of time
would become an Event of Default under clause (iii), its status and what action
the Issuer is taking or proposes to take with respect thereto.
SECTION 5.2 Acceleration of Maturity; Rescission and Annulment. If an
Event of Default should occur and be continuing, then and in every such case the
Indenture Trustee or the Holders of Notes representing not less than a majority
of the Outstanding Amount of the Notes may declare all the Notes to be
immediately due and payable, by a notice in writing to the Issuer (and to the
Indenture Trustee if given by Noteholders), and upon any such declaration the
unpaid principal amount of such Notes, together with accrued and unpaid interest
thereon through the date of acceleration, shall become immediately due and
payable.
At any time after such declaration of acceleration of maturity has been
made and before a judgment or decree for payment of the money due has been
obtained by the Indenture Trustee as hereinafter in this Article V provided, the
Holders of Notes representing a majority of the Outstanding Amount of the Notes,
by written notice to the Issuer and the Indenture Trustee, may rescind and annul
such declaration and its consequences if:
(i) the Issuer has paid or deposited with the Indenture
Trustee a sum sufficient to pay:
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(A) all payments of principal of and interest on
all Notes and all other amounts that would then be due
hereunder or upon such Notes if the Event of Default giving
rise to such acceleration had not occurred; and
(B) all sums paid or advanced by the Indenture
Trustee hereunder and the reasonable compensation, expenses,
disbursements and advances of the Indenture Trustee and its
agents and counsel; and
(ii) all Events of Default, other than the nonpayment of
the principal of the Notes that has become due solely by such
acceleration, have been cured or waived as provided in Section 5.12.
No such rescission shall affect any subsequent default or impair any
right consequent thereto.
SECTION 5.3 Collection of Indebtedness and Suits for Enforcement by
Indenture Trustee.
(a) The Issuer covenants that if (i) default is made in the
payment of any interest on any Note when the same becomes due and payable, and
such default continues for a period of five days, or (ii) default is made in the
payment of the principal of or any installment of the principal of any Note when
the same becomes due and payable, the Issuer will, upon demand of the Indenture
Trustee, pay to the Indenture Trustee, for the benefit of the Holders of the
Notes, the whole amount then due and payable on such Notes for principal and
interest, with interest upon the overdue principal and, to the extent payment at
such rate of interest shall be legally enforceable, upon overdue installments of
interest at the rate borne by the Notes and in addition thereto such further
amount as shall be sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements and advances of
the Indenture Trustee and its agents and counsel.
(b) In case the Issuer shall fail forthwith to pay such amounts
upon such demand, the Indenture Trustee, in its own name and as trustee of an
express trust, may institute a Proceeding for the collection of the sums so due
and unpaid, and may prosecute such Proceeding to judgment or final decree, and
may enforce the same against the Issuer or other obligor upon such Notes and
collect in the manner provided by law out of the property of the Issuer or other
obligor upon such Notes, wherever situated, the moneys adjudged or decreed to be
payable.
(c) If an Event of Default occurs and is continuing, the Indenture
Trustee may, as more particularly provided in Section 5.4, in its discretion,
proceed to protect and enforce its rights and the rights of the Noteholders, by
such appropriate Proceedings as the Indenture Trustee shall deem most effective
to protect and enforce any such rights, whether for the specific enforcement of
any covenant or agreement in this Indenture or in aid of the exercise of any
power granted herein, or to
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enforce any other proper remedy or legal or equitable right vested in the
Indenture Trustee by this Indenture or by law.
(d) In case there shall be pending, relative to the Issuer or any
other obligor upon the Notes or any Person having or claiming an ownership
interest in the Trust Estate, Proceedings under Title 11 of the United States
Code or any other applicable federal or state bankruptcy, insolvency or other
similar law, or in case a receiver, assignee or trustee in bankruptcy or
reorganization, liquidator, sequestrator or similar official shall have been
appointed for or taken possession of the Issuer or its property or such other
obligor or Person, or in case of any other comparable judicial Proceedings
relative to the Issuer or other obligor upon the Notes, or to the creditors or
property of the Issuer or such other obligor, the Indenture Trustee,
irrespective of whether the principal of any Notes shall then be due and payable
as therein expressed or by declaration or otherwise and irrespective of whether
the Indenture Trustee shall have made any demand pursuant to the provisions of
this Section, shall be entitled and empowered, by intervention in such
Proceedings or otherwise:
(i) to file and prove a claim or claims for the whole
amount of principal and interest owing and unpaid in respect of the
Notes and to file such other papers or documents as may be necessary or
advisable in order to have the claims of the Indenture Trustee
(including any claim for reasonable compensation to the Indenture
Trustee and each predecessor Indenture Trustee, and their respective
agents, attorneys and counsel, and for reimbursement of all expenses
and liabilities incurred, and all advances made, by the Indenture
Trustee and each predecessor Indenture Trustee, except as a result of
negligence or bad faith) and of the Noteholders allowed in such
Proceedings;
(ii) unless prohibited by applicable law and regulations,
to vote on behalf of the Holders of Notes in any election of a trustee,
a standby trustee or Person performing similar functions in any such
Proceedings;
(iii) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute all amounts
received with respect to the claims of the Noteholders and of the
Indenture Trustee on their behalf; and
(iv) to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims
of the Indenture Trustee or the Holders of Notes allowed in any
judicial proceedings relative to the Issuer, its creditors and its
property; and any trustee, receiver, liquidator, custodian or other
similar official in any such Proceeding is hereby authorized by each of
such Noteholders to make payments to the Indenture Trustee and, in the
event that the Indenture Trustee shall consent to the making of
payments directly to such Noteholders, to pay to the Indenture Trustee
such amounts as shall be sufficient to cover reasonable compensation to
the Indenture Trustee, each predecessor Indenture Trustee and their
respective agents, attorneys and counsel, and all other expenses and
liabilities incurred, and all advances made, by the Indenture Trustee
and each predecessor Indenture Trustee except as a result of negligence
or bad faith.
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(e) Nothing herein contained shall be deemed to authorize the
Indenture Trustee to authorize or consent to or vote for or accept or adopt on
behalf of any Noteholder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder thereof or to
authorize the Indenture Trustee to vote in respect of the claim of any
Noteholder in any such proceeding except, as aforesaid, to vote for the election
of a trustee in bankruptcy or similar Person.
(f) All rights of action and of asserting claims under this
Indenture, or under any of the Notes, may be enforced by the Indenture Trustee
without the possession of any of the Notes or the production thereof in any
trial or other Proceedings relative thereto, and any such action or Proceedings
instituted by the Indenture Trustee shall be brought in its own name as trustee
of an express trust, and any recovery of judgment, subject to the payment of the
expenses, disbursements and compensation of the Indenture Trustee, each
predecessor Indenture Trustee and their respective agents and attorneys, shall
be for the ratable benefit of the Holders of the Notes.
(g) In any Proceedings brought by the Indenture Trustee (and also
any Proceedings involving the interpretation of any provision of this Indenture
to which the Indenture Trustee shall be a party), the Indenture Trustee shall be
held to represent all the Noteholders, and it shall not be necessary to make any
Noteholder a party to any such Proceedings.
SECTION 5.4 Remedies; Priorities.
(a) If an Event of Default shall have occurred and be continuing,
the Indenture Trustee may do one or more of the following (subject to Section
5.5):
(i) institute Proceedings in its own name and as trustee
of an express trust for the collection of all amounts then payable on
the Notes or under this Indenture with respect thereto, whether by
declaration or otherwise, enforce any judgment obtained, and collect
from the Issuer and any other obligor upon such Notes moneys adjudged
due;
(ii) institute Proceedings from time to time for the
complete or partial foreclosure of this Indenture with respect to the
Trust Estate;
(iii) exercise any remedies of a secured party under the
UCC and take any other appropriate action to protect and enforce the
rights and remedies of the Indenture Trustee and the Noteholders; and
(iv) sell the Trust Estate or any portion thereof or
rights or interest therein, at one or more public or private sales
called and conducted in any manner permitted by law; provided, however,
that the Indenture Trustee may not sell or otherwise liquidate the
Trust Estate following an Event of Default, other than an Event of
Default described in Section 5.01(i) or (ii), unless (A) the Holders of
100% of the Outstanding Amount of the Notes
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consent thereto, (B) the proceeds of such sale or liquidation
distributable to the Noteholders are sufficient to discharge in full
all amounts then due and unpaid upon such Notes for principal and
interest or (C) the Indenture Trustee determines that the Trust Estate
will not continue to provide sufficient funds for the payment of
principal of and interest on the Notes as they would have become due if
the Notes had not been declared due and payable, and the Indenture
Trustee obtains the consent of Holders of 66-2/3% of the Outstanding
Amount of the Notes. In determining such sufficiency or insufficiency
with respect to clause (B) and (C), the Indenture Trustee may, but need
not, obtain and rely upon an opinion of an Independent investment
banking or accounting firm of national reputation as to the feasibility
of such proposed action and as to the sufficiency of the Trust Estate
for such purpose.
(b) If the Indenture Trustee collects any money or property
pursuant to this Article V, it shall pay out the money or property in the
following order:
FIRST: to the Indenture Trustee for amounts due under Section
6.7;
SECOND: to Noteholders for amounts due and unpaid on the Notes
for interest (including any premium), ratably, without preference or
priority of any kind, according to the amounts due and payable on the
Notes for interest (including any premium);
THIRD: to Holders of the Class A-1 Notes for amounts due and
unpaid on the Class A-1 Notes for principal, ratably, without
preference or priority of any kind, according to the amounts due and
payable on the Class A-1 Notes for principal, until the Outstanding
Amount of the Class A-1 Notes is reduced to zero;
FOURTH: to Holders of the Class A-2 Notes for amounts due and
unpaid on the Class A-2 Notes for principal, ratably, without
preference or priority of any kind, according to the amounts due and
payable on the Class A-2 Notes for principal, until the Outstanding
Amount of the Class A-2 Notes is reduced to zero;
FIFTH: to Holders of the Class A-3 Notes for amounts due and
unpaid on the Class A-3 Notes for principal, ratably, without
preference or priority of any kind, according to the amounts due and
payable on the Class A-3 Notes for principal, until the Outstanding
Amount of the Class A-3 Notes is reduced to zero;
SIXTH: to Holders of the Class A-4 Notes for amounts due and
unpaid on the Class A-4 Notes for principal, ratably, without
preference or priority of any kind, according to the amounts due and
payable on the Class A-4 Notes for principal, until the Outstanding
Amount of the Class A-4 Notes is reduced to zero;
FIFTH: to Holders of the Class A-5 Notes for amounts due and
unpaid on the Class A-5 Notes for principal, ratably, without
preference or priority of any kind, according to the
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amounts due and payable on the Class A-5 Notes for principal, until the
Outstanding Amount of the Class A-5 Notes is reduced to zero; and
SIXTH: to the Issuer for amounts required to be distributed to
the Certificateholders pursuant to the Trust Agreement.
The Indenture Trustee may fix a record date and payment date for any
payment to Noteholders pursuant to this Section. At least 15 days before such
record date, the Issuer shall mail to each Noteholder and the Indenture Trustee
a notice that states the record date, the payment date and the amount to be
paid.
SECTION 5.5 Optional Preservation of the Receivables. If the Notes have
been declared to be due and payable under Section 5.2 following an Event of
Default and such declaration and its consequences have not been rescinded and
annulled, the Indenture Trustee may, but need not, elect to maintain possession
of the Trust Estate. It is the desire of the parties hereto and the Noteholders
that there be at all times sufficient funds for the payment of principal of and
interest on the Notes, and the Indenture Trustee shall take such desire into
account when determining whether or not to maintain possession of the Trust
Estate. In determining whether to maintain possession of the Trust Estate, the
Indenture Trustee may, but need not, obtain and rely upon an opinion of an
Independent investment banking or accounting firm of national reputation as to
the feasibility of such proposed action and as to the sufficiency of the Trust
Estate for such purpose.
SECTION 5.6 Limitation of Suits. No Holder of any Note shall have any
right to institute any Proceeding, judicial or otherwise, with respect to this
Indenture or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless:
(i) such Holder has previously given written notice to
the Indenture Trustee of a continuing Event of Default;
(ii) the Holders of not less than 25% of the Outstanding
Amount of the Notes have made written request to the Indenture Trustee
to institute such Proceeding in respect of such Event of Default in its
own name as Indenture Trustee hereunder;
(iii) such Holder or Holders have offered to the Indenture
Trustee reasonable indemnity against the costs, expenses and
liabilities to be incurred in complying with such request;
(iv) the Indenture Trustee for 60 days after its receipt
of such notice, request and offer of indemnity has failed to institute
such Proceedings; and
(v) no direction inconsistent with such written request
has been given to the Indenture Trustee during such 60-day period by
the Holders of a majority of the Outstanding Amount of the Notes.
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It is understood and intended that no one or more Holders of Notes
shall have any right in any manner whatever by virtue of, or by availing of, any
provision of this Indenture to affect, disturb or prejudice the rights of any
other Holders of Notes or to obtain or to seek to obtain priority or preference
over any other Holders or to enforce any right under this Indenture, except in
the manner herein provided.
In the event the Indenture Trustee shall receive conflicting or
inconsistent requests and indemnity from two or more groups of Holders of Notes,
each representing less than a majority of the Outstanding Amount of the Notes,
the Indenture Trustee in its sole discretion may determine what action, if any,
shall be taken, notwithstanding any other provisions of this Indenture.
SECTION 5.7 Unconditional Rights of Noteholders To Receive Principal
and Interest. Notwithstanding any other provisions in this Indenture, the Holder
of any Note shall have the right, which is absolute and unconditional, to
receive payment of the principal of and interest, if any, on such Note on or
after the respective due dates thereof expressed in such Note or in this
Indenture (or, in the case of redemption, on or after the Redemption Date) and
to institute suit for the enforcement of any such payment, and such right shall
not be impaired without the consent of such Holder.
SECTION 5.8 Restoration of Rights and Remedies. If the Indenture
Trustee or any Noteholder has instituted any Proceeding to enforce any right or
remedy under this Indenture and such Proceeding has been discontinued or
abandoned for any reason or has been determined adversely to the Indenture
Trustee or to such Noteholder, then and in every such case the Issuer, the
Indenture Trustee and the Noteholders shall, subject to any determination in
such Proceeding, be restored severally and respectively to their former
positions hereunder, and thereafter all rights and remedies of the Indenture
Trustee and the Noteholders shall continue as though no such Proceeding had been
instituted.
SECTION 5.9 Rights and Remedies Cumulative. No right or remedy herein
conferred upon or reserved to the Indenture Trustee or to the Noteholders is
intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
SECTION 5.10 Delay or Omission Not a Waiver. No delay or omission of
the Indenture Trustee or any Holder of any Note to exercise any right or remedy
accruing upon any Default or Event of Default shall impair any such right or
remedy or constitute a waiver of any such Default or Event of Default or an
acquiescence therein. Every right and remedy given by this Article V or by law
to the Indenture Trustee or to the Noteholders may be exercised from time to
time, and as often as may be deemed expedient, by the Indenture Trustee or by
the Noteholders, as the case may be.
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SECTION 5.11 Control by Noteholders. The Holders of a majority of the
Outstanding Amount of the Notes shall have the right to direct the time, method
and place of conducting any Proceeding for any remedy available to the Indenture
Trustee with respect to the Notes or exercising any trust or power conferred on
the Indenture Trustee; provided that:
(i) such direction shall not be in conflict with any rule
of law or with this Indenture;
(ii) subject to the express terms of Section 5.4, any
direction to the Indenture Trustee to sell or liquidate the Trust
Estate shall be by Holders of Notes representing not less than 100% of
the Outstanding Amount of the Notes;
(iii) if the conditions set forth in Section 5.5 have been
satisfied and the Indenture Trustee elects to retain the Trust Estate
pursuant to such Section, then any direction to the Indenture Trustee
by Holders of Notes representing less than 100% of the Outstanding
Amount of the Notes to sell or liquidate the Trust Estate shall be of
no force and effect; and
(iv) the Indenture Trustee may take any other action
deemed proper by the Indenture Trustee that is not inconsistent with
such direction.
Notwithstanding the rights of Noteholders set forth in this Section,
subject to Section 6.1, the Indenture Trustee need not take any action that it
determines might involve it in liability or might materially adversely affect
the rights of any Noteholders not consenting to such action.
SECTION 5.12 Waiver of Past Defaults. Prior to the declaration of the
acceleration of the maturity of the Notes as provided in Section 5.2, the
Holders of Notes representing not less than a majority of the Outstanding Amount
of the Notes may waive any past Default or Event of Default and its consequences
except a Default (a) in the payment of principal of or interest on any of the
Notes or (b) in respect of a covenant or provision hereof that cannot be
modified or amended without the consent of the Holder of each Note. In the case
of any such waiver, the Issuer, the Indenture Trustee and the Holders of the
Notes shall be restored to their former positions and rights hereunder,
respectively; but no such waiver shall extend to any subsequent or other Default
or impair any right consequent thereto.
Upon any such waiver, such Default shall cease to exist and be deemed
to have been cured and not to have occurred, and any Event of Default arising
therefrom shall be deemed to have been cured and not to have occurred, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or Event of Default or impair any right consequent thereto.
SECTION 5.13 Undertaking for Costs. All parties to this Indenture
agree, and each Holder of any Note by such Holder's acceptance thereof shall be
deemed to have agreed, that any court may in its discretion require, in any suit
for the enforcement of any right or remedy under this Indenture, or in any suit
against the Indenture Trustee for any action taken, suffered or omitted by it as
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Indenture Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to (a) any suit instituted by the
Indenture Trustee, (b) any suit instituted by any Noteholder, or group of
Noteholders, in each case holding in the aggregate more than 10% of the
Outstanding Amount of the Notes or (c) any suit instituted by any Noteholder for
the enforcement of the payment of principal of or interest on any Note on or
after the respective due dates expressed in such Note and in this Indenture (or,
in the case of redemption, on or after the Redemption Date).
SECTION 5.14 Waiver of Stay or Extension Laws. The Issuer covenants (to
the extent that it may lawfully do so) that it will not at any time insist upon,
or plead or in any manner whatsoever, claim or take the benefit or advantage of,
any stay or extension law wherever enacted, now or at any time hereafter in
force, that may affect the covenants or the performance of this Indenture; and
the Issuer (to the extent that it may lawfully do so) hereby expressly waives
all benefit or advantage of any such law, and covenants that it will not hinder,
delay or impede the execution of any power herein granted to the Indenture
Trustee, but will suffer and permit the execution of every such power as though
no such law had been enacted.
SECTION 5.15 Action on Notes. The Indenture Trustee's right to seek and
recover judgment on the Notes or under this Indenture shall not be affected by
the seeking, obtaining or application of any other relief under or with respect
to this Indenture. Neither the lien of this Indenture nor any rights or remedies
of the Indenture Trustee or the Noteholders shall be impaired by the recovery of
any judgment by the Indenture Trustee against the Issuer or by the levy of any
execution under such judgment upon any portion of the Trust Estate or upon any
of the assets of the Issuer. Any money or property collected by the Indenture
Trustee shall be applied in accordance with Section 5.4(b).
SECTION 5.16 Performance and Enforcement of Certain Obligations.
(a) Promptly following a request from the Indenture Trustee to do
so and at the Administrator's expense, the Issuer shall take all such lawful
action as the Indenture Trustee may request to compel or secure the performance
and observance by the Seller and the Servicer, as applicable, of each of their
obligations to the Issuer under or in connection with the Sale and Servicing
Agreement or by the Seller [or the Company, as applicable,] of [its] [each of
their] obligations under or in connection with the Loan Purchase Agreement, and
to exercise any and all rights, remedies, powers and privileges lawfully
available to the Issuer under or in connection with the Sale and Servicing
Agreement to the extent and in the manner directed by the Indenture Trustee,
including the transmission of notices of default on the part of the Seller or
the Servicer thereunder and the institution of legal or administrative actions
or proceedings to compel or secure performance by the Seller or the Servicer of
each of their obligations under the Sale and Servicing Agreement.
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(b) If an Event of Default has occurred and is continuing, the
Indenture Trustee may, and at the direction (which direction shall be in writing
or by telephone, confirmed in writing promptly thereafter) of the Holders of
66-2/3% of the Outstanding Amount of the Notes shall, exercise all rights,
remedies, powers, privileges and claims of the Issuer against the Seller or the
Servicer under or in connection with the Sale and Servicing Agreement, or
against [the Company or] the Seller under or in connection with the Purchase
Agreement, including the right or power to take any action to compel or secure
performance or observance by the Seller or the Servicer[, or the Company as the
case may be], of each of their obligations to the Issuer thereunder and to give
any consent, request, notice, direction, approval, extension, or waiver under
the Sale and Servicing Agreement or the Purchase Agreement, as the case may be,
and any right of the Issuer to take such action shall be suspended.
ARTICLE VI
The Indenture Trustee
SECTION 6.1 Duties of Indenture Trustee.
(a) If an Event of Default has occurred and is continuing, the
Indenture Trustee shall exercise the rights and powers vested in it by this
Indenture and use the same degree of care and skill in their exercise as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs.
(b) Except during the continuance of an Event of Default:
(i) the Indenture Trustee undertakes to perform such
duties and only such duties as are specifically set forth in this
Indenture and no implied covenants or obligations shall be read into
this Indenture against the Indenture Trustee; and
(ii) in the absence of bad faith on its part, the
Indenture Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Indenture Trustee and
conforming to the requirements of this Indenture; however, the
Indenture Trustee shall examine the certificates and opinions to
determine whether or not they conform to the requirements of this
Indenture.
(c) The Indenture Trustee may not be relieved from liability for
its own negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph
(b) of this Section;
(ii) the Indenture Trustee shall not be liable for any
error of judgment made in good faith by a Responsible Officer unless it
is proved that the Indenture Trustee was negligent in ascertaining the
pertinent facts; and
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(iii) the Indenture Trustee shall not be liable with
respect to any action it takes or omits to take in good faith in
accordance with a direction received by it pursuant to Section 5.11.
(d) Every provision of this Indenture that in any way relates to
the Indenture Trustee is subject to paragraphs (a), (b), (c) and (g) of this
Section.
(e) The Indenture Trustee shall not be liable for interest on any
money received by it except as the Indenture Trustee may agree in writing with
the Issuer.
(f) Money held in trust by the Indenture Trustee need not be
segregated from other funds except to the extent required by law or the terms of
this Indenture or the Sale and Servicing Agreement.
(g) No provision of this Indenture shall require the Indenture
Trustee to expend or risk its own funds or otherwise incur financial liability
in the performance of any of its duties hereunder or in the exercise of any of
its rights or powers, if it shall have reasonable grounds to believe that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
(h) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Indenture Trustee
shall be subject to the provisions of this Section and to the provisions of the
TIA.
SECTION 6.2 Rights of Indenture Trustee.
(a) The Indenture Trustee may rely on any document believed by it
to be genuine and to have been signed or presented by the proper person. The
Indenture Trustee need not investigate any fact or matter stated in the
document.
(b) Before the Indenture Trustee acts or refrains from acting, it
may require an Officer's Certificate or an Opinion of Counsel. The Indenture
Trustee shall not be liable for any action it takes or omits to take in good
faith in reliance on an Officer's Certificate or Opinion of Counsel.
(c) The Indenture Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys or a custodian or nominee, and the Indenture Trustee shall
not be responsible for any misconduct or negligence on the part of, or for the
supervision of, any such agent, attorney, custodian or nominee appointed with
due care by it hereunder.
(d) The Indenture Trustee shall not be liable for any action it
takes or omits to take in good faith which it believes to be authorized or
within its rights or powers; provided, however, that
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such action or omission by the Indenture Trustee does not constitute willful
misconduct, negligence or bad faith.
(e) The Indenture Trustee may consult with counsel, and the advice
or opinion of counsel with respect to legal matters relating to this Indenture
and the Notes shall be full and complete authorization and protection from
liability in respect to any action taken, omitted or suffered by it hereunder in
good faith and in accordance with the advice or opinion of such counsel.
SECTION 6.3 Individual Rights of Indenture Trustee. The Indenture
Trustee in its individual or any other capacity may become the owner or pledgee
of Notes and may otherwise deal with the Issuer or its Affiliates with the same
rights it would have if it were not Indenture Trustee. Any Paying Agent, Note
Registrar, co-registrar or co-paying agent may do the same with like rights.
However, the Indenture Trustee must comply with Sections 6.11 and 6.12.
SECTION 6.4 Indenture Trustee's Disclaimer. The Indenture Trustee shall
not be responsible for and makes no representation as to the validity or
adequacy of this Indenture or the Notes, shall not be accountable for the
Issuer's use of the proceeds from the Notes, or responsible for any statement of
the Issuer in the Indenture or in any document issued in connection with the
sale of the Notes or in the Notes other than the Indenture Trustee's certificate
of authentication.
SECTION 6.5 Notice of Defaults. If a Default occurs and is continuing
and if it is known to a Responsible Officer of the Indenture Trustee, the
Indenture Trustee shall mail to each Noteholder notice of the Default within 90
days after it occurs. Except in the case of a Default in payment of principal of
or interest on any Note (including payments pursuant to the mandatory redemption
provisions of such Note), the Indenture Trustee may withhold the notice if and
so long as a committee of its Responsible Officers in good faith determines that
withholding the notice is in the interests of Noteholders.
SECTION 6.6 Reports by Indenture Trustee to Holders. The Indenture
Trustee shall deliver to each Noteholder such information as may be required to
enable such holder to prepare its federal and state income tax returns.
SECTION 6.7 Compensation and Indemnity. The Issuer shall or shall cause
the Administrator to pay to the Indenture Trustee from time to time reasonable
compensation for its services. The Indenture Trustee's compensation shall not be
limited by any law on compensation of a trustee of an express trust. The Issuer
shall or shall cause the Administrator to reimburse the Indenture Trustee for
all reasonable out-of-pocket expenses incurred or made by it, including costs of
collection, in addition to the compensation for its services. Such expenses
shall include the reasonable compensation and expenses, disbursements and
advances of the Indenture Trustee's agents, counsel, accountants and experts.
The Issuer shall or shall cause the Administrator to indemnify the Indenture
Trustee against any and all loss, liability or expense (including attorneys'
fees) incurred by it in connection with the administration of this trust and the
performance of its duties hereunder. The Indenture Trustee shall notify the
Issuer and the Administrator promptly of
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any claim for which it may seek indemnity. Failure by the Indenture Trustee to
so notify the Issuer and the Administrator shall not relieve the Issuer or the
Administrator of its obligations hereunder. The Issuer shall or shall cause the
Administrator to defend any such claim, and the Indenture Trustee may have
separate counsel and the Issuer shall or shall cause the Administrator to pay
the fees and expenses of such counsel. Neither the Issuer nor the Administrator
need reimburse any expense or indemnify against any loss, liability or expense
incurred by the Indenture Trustee through the Indenture Trustee's own willful
misconduct, negligence or bad faith.
The Issuer's payment obligations to the Indenture Trustee pursuant to
this Section shall survive the discharge of this Indenture. When the Indenture
Trustee incurs expenses after the occurrence of a Default specified in Section
5.1(iv) or (v) with respect to the Issuer, the expenses are intended to
constitute expenses of administration under Title 11 of the United States Code
or any other applicable federal or state bankruptcy, insolvency or similar law.
SECTION 6.8 Replacement of Indenture Trustee. No resignation or removal
of the Indenture Trustee and no appointment of a successor Indenture Trustee
shall become effective until the acceptance of appointment by the successor
Indenture Trustee pursuant to this Section 6.8. The Indenture Trustee may resign
at any time by so notifying the Issuer. The Holders of a majority in Outstanding
Amount of the Notes may remove the Indenture Trustee by so notifying the
Indenture Trustee and may appoint a successor Indenture Trustee. The Issuer
shall remove the Indenture Trustee if:
(i) the Indenture Trustee fails to comply with Section
6.11;
(ii) the Indenture Trustee is adjudged a bankrupt or
insolvent;
(iii) a receiver or other public officer takes charge of
the Indenture Trustee or its property; or
(iv) the Indenture Trustee otherwise becomes incapable of
acting.
If the Indenture Trustee resigns or is removed or if a vacancy exists
in the office of Indenture Trustee for any reason (the Indenture Trustee in such
event being referred to herein as the retiring Indenture Trustee), the Issuer
shall promptly appoint a successor Indenture Trustee.
A successor Indenture Trustee shall deliver a written acceptance of its
appointment to the retiring Indenture Trustee and to the Issuer. Thereupon the
resignation or removal of the retiring Indenture Trustee shall become effective,
and the successor Indenture Trustee shall have all the rights, powers and duties
of the Indenture Trustee under this Indenture. The successor Indenture Trustee
shall mail a notice of its succession to Noteholders. The retiring Indenture
Trustee shall promptly transfer all property held by it as Indenture Trustee to
the successor Indenture Trustee.
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If a successor Indenture Trustee does not take office within 60 days
after the retiring Indenture Trustee resigns or is removed, the retiring
Indenture Trustee, the Issuer or the Holders of a majority in Outstanding Amount
of the Notes may petition any court of competent jurisdiction for the
appointment of a successor Indenture Trustee.
If the Indenture Trustee fails to comply with Section 6.11, any
Noteholder may petition any court of competent jurisdiction for the removal of
the Indenture Trustee and the appointment of a successor Indenture Trustee.
Notwithstanding the replacement of the Indenture Trustee pursuant to
this Section, the Issuer's and the Administrator's obligations under Section 6.7
shall continue for the benefit of the retiring Indenture Trustee.
SECTION 6.9 Successor Indenture Trustee by Merger. If the Indenture
Trustee consolidates with, merges or converts into, or transfers all or
substantially all its corporate trust business or assets to, another corporation
or banking association, the resulting, surviving or transferee corporation
without any further act shall be the successor Indenture Trustee; provided, that
such corporation or banking association shall be otherwise qualified and
eligible under Section 6.11. The Indenture Trustee shall provide the Rating
Agencies prior written notice of any such transaction.
In case at the time such successor or successors by merger, conversion
or consolidation to the Indenture Trustee shall succeed to the trusts created by
this Indenture any of the Notes shall have been authenticated but not delivered,
any such successor to the Indenture Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Notes so
authenticated; and in case at that time any of the Notes shall not have been
authenticated, any successor to the Indenture Trustee may authenticate such
Notes either in the name of any predecessor hereunder or in the name of the
successor to the Indenture Trustee; and in all such cases such certificates
shall have the full force which it is anywhere in the Notes or in this Indenture
provided that the certificate of the Indenture Trustee shall have.
SECTION 6.10 Appointment of Co-Indenture Trustee or Separate Indenture
Trustee.
(a) Notwithstanding any other provisions of this Indenture, at any
time, for the purpose of meeting any legal requirement of any jurisdiction in
which any part of the Trust Estate may at the time be located, the Indenture
Trustee shall have the power and may execute and deliver all instruments to
appoint one or more Persons to act as a co-trustee or co-trustees, or separate
trustee or separate trustees, of all or any part of the Trust, and to vest in
such Person or Persons, in such capacity and for the benefit of the Noteholders,
such title to the Trust Estate, or any part hereof, and, subject to the other
provisions of this Section, such powers, duties, obligations, rights and trusts
as the Indenture Trustee may consider necessary or desirable. No co-trustee or
separate trustee hereunder shall be required to meet the terms of eligibility as
a successor trustee under Section 6.11 and no notice to Noteholders of the
appointment of any co-trustee or separate trustee shall be required under
Section 6.8 hereof.
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(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations conferred
or imposed upon the Indenture Trustee shall be conferred or imposed
upon and exercised or performed by the Indenture 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 Indenture 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 Indenture 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 Estate or any portion thereof in any such
jurisdiction) shall be exercised and performed singly by such separate
trustee or co-trustee, but solely at the direction of the Indenture
Trustee;
(ii) no trustee hereunder shall be personally liable by
reason of any act or omission of any other trustee hereunder; and
(iii) the Indenture Trustee may at any time accept the
resignation of or remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Indenture
Trustee shall be deemed to have been given to each of the then separate trustees
and co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article VI. Each separate trustee and co-trustee, upon
its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Indenture Trustee or separately, as may be provided therein, subject to all the
provisions of this Indenture, specifically including every provision of this
Indenture relating to the conduct of, affecting the liability of, or affording
protection to, the Indenture Trustee. Every such instrument shall be filed with
the Indenture Trustee.
(d) Any separate trustee or co-trustee may at any time constitute
the Indenture Trustee 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 Indenture Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
SECTION 6.11 Eligibility; Disqualification. The Indenture Trustee shall
at all times satisfy the requirements of TIA Section 310(a). The Indenture
Trustee shall have a combined capital and surplus of at least $50,000,000 as set
forth in its most recent published annual report of condition and it or its
parent shall have a long-term debt rating of [Baa3] or better by Moody's or
shall otherwise be acceptable to Moody's. The Indenture Trustee shall comply
with TIA Section 310(b),
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including the optional provision permitted by the second sentence of TIA Section
310(b)(9); provided, however, that there shall be excluded from the operation of
TIA Section 310(b)(1) any indenture or indentures under which other securities
of the Issuer are outstanding if the requirements for such exclusion set forth
in TIA Section 310(b)(1) are met.
SECTION 6.12 Preferential Collection of Claims Against Issuer. The
Indenture Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). An Indenture Trustee who has resigned
or been removed shall be subject to TIA Section 311(a) to the extent indicated.
ARTICLE VII
Noteholders' Lists and Reports
SECTION 7.1 Issuer To Furnish Indenture Trustee Names and Addresses of
Noteholders. The Issuer will furnish or cause to be furnished to the Indenture
Trustee (a) not more than five days after the earlier of (i) each Record Date
and (ii) three months after the last Record Date, a list, in such form as the
Indenture Trustee may reasonably require, of the names and addresses of the
Holders of Notes as of such Record Date, (b) at such other times as the
Indenture Trustee may request in writing, within 30 days after receipt by the
Issuer of any such request, a list of similar form and content as of a date not
more than 10 days prior to the time such list is furnished; provided, however,
that so long as the Indenture Trustee is the Note Registrar, no such list shall
be required to be furnished.
SECTION 7.2 Preservation of Information; Communications to Noteholders.
(a) The Indenture Trustee shall preserve, in as current a form as
is reasonably practicable, the names and addresses of the Holders of Notes
contained in the most recent list furnished to the Indenture Trustee as provided
in Section 7.1 and the names and addresses of Holders of Notes received by the
Indenture Trustee in its capacity as Note Registrar. The Indenture Trustee may
destroy any list furnished to it as provided in such Section 7.1 upon receipt of
a new list so furnished.
(b) Noteholders may communicate pursuant to TIA Section 312(b)
with other Noteholders with respect to their rights under this Indenture or
under the Notes.
(c) The Issuer, the Indenture Trustee and the Note Registrar shall
have the protection of TIA Section 312(c).
SECTION 7.3 Reports by Issuer.
(a) The Issuer shall:
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(i) file with the Indenture Trustee, within 15 days after
the Issuer is required to file the same with the Commission, copies of
the annual reports and of the information, documents and other reports
(or copies of such portions of any of the foregoing as the Commission
may from time to time by rules and regulations prescribe) that the
Issuer may be required to file with the Commission pursuant to Section
13 or 15(d) of the Exchange Act;
(ii) file with the Indenture Trustee and the Commission in
accordance with the rules and regulations prescribed from time to time
by the Commission such additional information, documents and reports
with respect to compliance by the Issuer with the conditions and
covenants of this Indenture as may be required from time to time by
such rules and regulations; and
(iii) supply to the Indenture Trustee (and the Indenture
Trustee shall transmit by mail to all Noteholders described in TIA
Section 313(c)) such summaries of any information, documents and
reports required to be filed by the Issuer pursuant to clauses (i) and
(ii) of this Section 7.3(a) and by rules and regulations prescribed
from time to time by the Commission.
(b) Unless the Issuer otherwise determines, the fiscal year of the
Issuer shall end on December 31 of each year.
SECTION 7.4 Reports by Indenture Trustee. If required by TIA Section
313(a), within 60 days after each February 1 beginning with February 1, 199__,
the Indenture Trustee shall mail to each Noteholder as required by TIA Section
313(c) a brief report dated as of such date that complies with TIA Section
313(a). The Indenture Trustee also shall comply with TIA Section 313(b).
A copy of each report at the time of its mailing to Noteholders shall
be filed by the Indenture Trustee with the Commission and each stock exchange,
if any, on which the Notes are listed. The Issuer shall notify the Indenture
Trustee if and when the Notes are listed on any stock exchange.
ARTICLE VIII
Accounts, Disbursements and Releases
SECTION 8.1 Collection of Money. Except as otherwise expressly provided
herein, the Indenture Trustee may demand payment or delivery of, and shall
receive and collect, directly and without intervention or assistance of any
fiscal agent or other intermediary, all money and other property payable to or
receivable by the Indenture Trustee pursuant to this Indenture. The Indenture
Trustee shall apply all such money received by it as provided in this Indenture.
Except as otherwise expressly provided in this Indenture, if any default occurs
in the making of any payment or performance under any agreement or instrument
that is part of the Trust Estate, the Indenture Trustee may take such action as
may be appropriate to enforce such payment or performance, including the
institution and prosecution of appropriate Proceedings. Any such action shall be
without prejudice
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to any right to claim a Default or Event of Default under this Indenture and any
right to proceed thereafter as provided in Article V.
SECTION 8.2 Trust Accounts.
(a) On or prior to the Closing Date, the Issuer shall cause the
Servicer to establish and maintain, in the name of the Indenture Trustee, for
the benefit of the Noteholders and the Certificateholders, the Trust Accounts as
provided in ARTICLE V of the Sale and Servicing Agreement.
(b) On or before each Distribution Date, the Required Distribution
Amount with respect to the preceding Collection Period will be deposited in the
Collection Account as provided in Section 5.1(a) of the Sale and Servicing
Agreement. On or before each Distribution Date, all amounts required to be
deposited in the Note Distribution Account with respect to the preceding
Collection Period pursuant to Sections 5.1(c) of the Sale and Servicing
Agreement will be transferred from the Collection Account and/or the Reserve
Account to the Note Distribution Account.
(c) On each Distribution Date and Redemption Date, the Indenture
Trustee shall distribute all amounts on deposit in the Note Distribution Account
to Noteholders in respect of the Notes to the extent of amounts due and unpaid
on the Notes for principal and interest (including any premium) in the amounts
and in the following order of priority (except as otherwise provided in Section
5.4(b)):
(i) accrued and unpaid interest on the Notes; provided,
that if there are not sufficient funds in the Note Distribution Account
to pay the entire amount of accrued and unpaid interest then due on the
Notes, the amount in the Note Distribution Account shall be applied to
the payment of such interest on the Notes pro rata on the basis of the
total such interest due on the Notes;
(ii) only to the extent of funds withdrawn from the
Pre-Funding Account and deposited in the Note Distribution Account by
the Indenture Trustee pursuant to Section 5.3(c) of the Sale and
Servicing Agreement, pro rata, to the Holders of the Class A-1 Notes,
the Holders of the Class A-2 Notes, the Holders of the Class A-3 Notes,
the Holders of the Class A-4 Notes and the Holders of the Class A-5
Notes based on the Class Principal Balance of each such Class, in each
case to reduce the Class Principal Balance of each such Class;
(iii) to the Holders of the Class A-1 Notes on account of
principal until the Outstanding Amount of the Class A-1 Notes is
reduced to zero;
(iv) to the Holders of the Class A-2 Notes on account of
principal until the Outstanding Amount of the Class A-2 Notes is
reduced to zero;
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(v) to the Holders of the Class A-3 Notes on account of
principal until the Outstanding Amount of the Class A-3 Notes is
reduced to zero;
(vi) to the Holders of the Class A-4 Notes on account of
principal until the Outstanding Amount of the Class A-4 Notes is
reduced to zero; and
(vii) to the Holders of the Class A-5 Notes on account of
principal until the Outstanding Amount of the Class A-5 Notes is
reduced to zero.
SECTION 8.3 General Provisions Regarding Accounts.
(a) So long as no Default or Event of Default shall have occurred
and be continuing, all or a portion of the funds in the Trust Accounts shall be
invested in Eligible Investments and reinvested by the Indenture Trustee upon
Issuer Order, subject to the provisions of ARTICLE V of the Sale and Servicing
Agreement. All income or other gain from investments of moneys deposited in the
Trust Accounts shall be deposited by the Indenture Trustee in the Collection
Account, and any loss resulting from such investments shall be charged to such
account. The Issuer will not direct the Indenture Trustee to make any investment
of any funds or to sell any investment held in any of the Trust Accounts unless
the security interest Granted and perfected in such account will continue to be
perfected in such investment or the proceeds of such sale, in either case
without any further action by any Person, and, in connection with any direction
to the Indenture Trustee to make any such investment or sale, if requested by
the Indenture Trustee, the Issuer shall deliver to the Indenture Trustee an
Opinion of Counsel, acceptable to the Indenture Trustee, to such effect.
(b) Subject to Section 6.1(c), the Indenture Trustee shall not in
any way be held liable by reason of any insufficiency in any of the Trust
Accounts resulting from any loss on any Eligible Investment included therein
except for losses attributable to the Indenture Trustee's failure to make
payments on such Eligible Investments issued by the Indenture Trustee, in its
commercial capacity as principal obligor and not as trustee, in accordance with
their terms.
(c) If (i) the Issuer shall have failed to give investment
directions for any funds on deposit in the Trust Accounts to the Indenture
Trustee by 11:00 a.m. Eastern Time (or such other time as may be agreed by the
Issuer and Indenture Trustee) on any Business Day or (ii) a Default or Event of
Default shall have occurred and be continuing with respect to the Notes but the
Notes shall not have been declared due and payable pursuant to Section 5.2 or
(iii) if such Notes shall have been declared due and payable following an Event
of Default, amounts collected or receivable from the Trust Estate are being
applied in accordance with Section 5.5 as if there had not been such a
declaration, then the Indenture Trustee shall, to the fullest extent
practicable, invest and reinvest funds in the Trust Accounts in one or more
Eligible Investments.
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SECTION 8.4 Release of Trust Estate.
(a) Subject to the payment of its fees and expenses pursuant to
Section 6.7, the Indenture Trustee may, and when required by the provisions of
this Indenture shall, execute instruments to release property from the lien of
this Indenture, or convey the Indenture Trustee's interest in the same, in a
manner and under circumstances that are not inconsistent with the provisions of
this Indenture. No party relying upon an instrument executed by the Indenture
Trustee as provided in this Article VIII shall be bound to ascertain the
Indenture Trustee's authority, inquire into the satisfaction of any conditions
precedent or see to the application of any moneys.
(b) The Indenture Trustee shall, at such time as there are no
Notes Outstanding and all sums due the Indenture Trustee pursuant to Section 6.7
have been paid, release any remaining portion of the Trust Estate that secured
the Notes from the lien of this Indenture and release to the Issuer or any other
Person entitled thereto any funds then on deposit in the Trust Accounts. The
Indenture Trustee shall release property from the lien of this Indenture
pursuant to this Section 8.4(b) only upon receipt of an Issuer Request
accompanied by an Officer's Certificate, an Opinion of Counsel and (if required
by the TIA) Independent Certificates in accordance with TIA Sections 314(c) and
314(d)(1) meeting the applicable requirements of Section 11.1.
(c) Each Noteholder, by the acceptance of a Note, acknowledges
that promptly following the Closing Date and each Subsequent Transfer Date the
Indenture Trustee shall release the lien of this Indenture on each Fixed Value
Payment assigned by the Issuer to the Company, and consents to such release.
SECTION 8.5 Opinion of Counsel. The Indenture Trustee shall receive at
least seven days notice when requested by the Issuer to take any action pursuant
to Section 8.4(a), accompanied by copies of any instruments involved, and the
Indenture Trustee shall also require, except in connection with any action
contemplated by Section 8.4(c), as a condition to such action, an Opinion of
Counsel, in form and substance satisfactory to the Indenture Trustee, stating
the legal effect of any such action, outlining the steps required to complete
the same, and concluding that all conditions precedent to the taking of such
action have been complied with and such action will not materially and adversely
impair the security for the Notes or the rights of the Noteholders in
contravention of the provisions of this Indenture; provided, however, that such
Opinion of Counsel shall not be required to express an opinion as to the fair
value of the Trust Estate. Counsel rendering any such opinion may rely, without
independent investigation, on the accuracy and validity of any certificate or
other instrument delivered to the Indenture Trustee in connection with any such
action.
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ARTICLE IX
Supplemental Indentures
SECTION 9.1 Supplemental Indentures Without Consent of Noteholders.
(a) Without the consent of the Holders of any Notes but with prior
notice to the Rating Agencies, the Issuer and the Indenture Trustee, when
authorized by an Issuer Order, at any time and from time to time, may enter into
one or more indentures supplemental hereto (which shall conform to the
provisions of the Trust Indenture Act as in force at the date of the execution
thereof), in form satisfactory to the Indenture Trustee, for any of the
following purposes:
(i) to correct or amplify the description of any property at
any time subject to the lien of this Indenture, or better to assure,
convey and confirm unto the Indenture Trustee any property subject or
required to be subjected to the lien of this Indenture, or to subject
to the lien of this Indenture additional property;
(ii) to evidence the succession, in compliance with the
applicable provisions hereof, of another person to the Issuer, and the
assumption by any such successor of the covenants of the Issuer herein
and in the Notes contained;
(iii) to add to the covenants of the Issuer, for the benefit
of the Holders of the Notes, or to surrender any right or power herein
conferred upon the Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any
property to or with the Indenture Trustee;
(v) to cure any ambiguity, to correct or supplement any
provision herein or in any supplemental indenture that may be
inconsistent with any other provision herein or in any supplemental
indenture or to make any other provisions with respect to matters or
questions arising under this Indenture or in any supplemental
indenture; provided, that such action shall not adversely affect the
interests of the Holders of the Notes;
(vi) to evidence and provide for the acceptance of the
appointment hereunder by a successor trustee with respect to the Notes
and to add to or change any of the provisions of this Indenture as
shall be necessary to facilitate the administration of the trusts
hereunder by more than one trustee, pursuant to the requirements of
Article VI; or
(vii) to modify, eliminate or add to the provisions of this
Indenture to such extent as shall be necessary to effect the
qualification of this Indenture under the TIA or under any similar
federal statute hereafter enacted and to add to this Indenture such
other provisions as may be expressly required by the TIA.
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The Indenture Trustee is hereby authorized to join in the execution of
any such supplemental indenture and to make any further appropriate agreements
and stipulations that may be therein contained.
(b) The Issuer and the Indenture Trustee, when authorized by an Issuer
Order, may, also without the consent of any of the Holders of the Notes but with
prior notice to the Rating Agencies, enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to, or changing in
any manner or eliminating any of the provisions of, this Indenture or of
modifying in any manner the rights of the Holders of the Notes under this
Indenture; provided, however, that such action shall not, as evidenced by an
Opinion of Counsel, adversely affect in any material respect the interests of
any Noteholder.
SECTION 9.2 Supplemental Indentures with Consent of Noteholders. The
Issuer and the Indenture Trustee, when authorized by an Issuer Order, also may,
with prior notice to the Rating Agencies and with the consent of the Holders of
not less than a majority of the Outstanding Amount of the Notes, by Act of such
Holders delivered to the Issuer and the Indenture Trustee, enter into an
indenture or indentures supplemental hereto for the purpose of adding any
provisions to, or changing in any manner or eliminating any of the provisions
of, this Indenture or of modifying in any manner the rights of the Holders of
the Notes under this Indenture; provided, however, that no such supplemental
indenture shall, without the consent of the Holder of each Outstanding Note
affected thereby:
(i) change the date of payment of any installment of principal
of or interest on any Note, or reduce the principal amount thereof, the
interest rate thereon or the Redemption Price with respect thereto,
change the provisions of this Indenture relating to the application of
collections on, or the proceeds of the sale of, the Trust Estate to
payment of principal of or interest on the Notes, or change any place
of payment where, or the coin or currency in which, any Note or the
interest thereon is payable, or impair the right to institute suit for
the enforcement of the provisions of this Indenture requiring the
application of funds available therefor, as provided in Article V, to
the payment of any such amount due on the Notes on or after the
respective due dates thereof (or, in the case of redemption, on or
after the Redemption Date);
(ii) reduce the percentage of the Outstanding Amount of the
Notes, the consent of the Holders of which is required for any such
supplemental indenture, or the consent of the Holders of which is
required for any waiver of compliance with certain provisions of this
Indenture or certain defaults hereunder and their consequences provided
for in this Indenture;
(iii) modify or alter the provisions of the proviso to the
definition of the term "Outstanding";
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(iv) reduce the percentage of the Outstanding Amount of the
Notes required to direct the Indenture Trustee to direct the Issuer to
sell or liquidate the Trust Estate pursuant to Section 5.04;
(v) modify any provision of this Section except to increase
any percentage specified herein or to provide that certain additional
provisions of this Indenture or the Basic Documents cannot be modified
or waived without the consent of the Holder of each Outstanding Note
affected thereby;
(vi) modify any of the provisions of this Indenture in such
manner as to affect the calculation of the amount of any payment of
interest or principal due on any Note on any Distribution Date
(including the calculation of any of the individual components of such
calculation) or to affect the rights of the Holders of Notes to the
benefit of any provisions for the mandatory redemption of the Notes
contained herein; or
(vii) permit the creation of any lien ranking prior to or on a
parity with the lien of this Indenture with respect to any part of the
Trust Estate or, except as otherwise permitted or contemplated herein,
terminate the lien of this Indenture on any property at any time
subject hereto or deprive the Holder of any Note of the security
provided by the lien of this Indenture.
The Indenture Trustee may in its discretion determine whether or not
any Notes would be affected by any supplemental indenture and any such
determination shall be conclusive upon the Holders of all Notes, whether
theretofore or thereafter authenticated and delivered hereunder. The Indenture
Trustee shall not be liable for any such determination made in good faith.
It shall not be necessary for any Act of Noteholders under this Section
to approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such Act shall approve the substance thereof.
Promptly after the execution by the Issuer and the Indenture Trustee of
any supplemental indenture pursuant to this Section, the Indenture Trustee shall
mail to the Holders of the Notes to which such amendment or supplemental
indenture relates a notice setting forth in general terms the substance of such
supplemental indenture. Any failure of the Indenture Trustee to mail such
notice, or any defect therein, shall not, however, in any way impair or affect
the validity of any such supplemental indenture.
SECTION 9.3 Execution of Supplemental Indentures. In executing, or
permitting the additional trusts created by, any supplemental indenture
permitted by this Article IX or the modification thereby of the trusts created
by this Indenture, the Indenture Trustee shall be entitled to receive, and
subject to Sections 6.1 and 6.2, shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Indenture Trustee may, but shall
not be obligated to, enter into any such
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supplemental indenture that affects the Indenture Trustee's own rights, duties,
liabilities or immunities under this Indenture or otherwise.
SECTION 9.4 Effect of Supplemental Indenture. Upon the execution of any
supplemental indenture pursuant to the provisions hereof, this Indenture shall
be and shall be deemed to be modified and amended in accordance therewith with
respect to the Notes affected thereby, and the respective rights, limitations of
rights, obligations, duties, liabilities and immunities under this Indenture of
the Indenture Trustee, the Issuer and the Holders of the Notes shall thereafter
be determined, exercised and enforced hereunder subject in all respects to such
modifications and amendments, and all the terms and conditions of any such
supplemental indenture shall be and be deemed to be part of the terms and
conditions of this Indenture for any and all purposes.
SECTION 9.5 Conformity with Trust Indenture Act. Every amendment of
this Indenture and every supplemental indenture executed pursuant to this
Article IX shall conform to the requirements of the Trust Indenture Act as then
in effect so long as this Indenture shall then be qualified under the Trust
Indenture Act.
SECTION 9.6 Reference in Notes to Supplemental Indentures. Notes
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article IX may, and if required by the Indenture Trustee shall,
bear a notation in form approved by the Indenture Trustee as to any matter
provided for in such supplemental indenture. If the Issuer or the Indenture
Trustee shall so determine, new Notes so modified as to conform, in the opinion
of the Indenture Trustee and the Issuer, to any such supplemental indenture may
be prepared and executed by the Issuer and authenticated and delivered by the
Indenture Trustee in exchange for Outstanding Notes.
ARTICLE X
Redemption of Notes
SECTION 10.1 Redemption.
(a) The Notes are subject to redemption in whole, but not in part, at
the direction of the Servicer pursuant to Section 11.1(a) of the Sale and
Servicing Agreement, on any Distribution Date on which the Servicer exercises
its option to purchase the Trust Estate pursuant to said Section 11.1(a), for a
purchase price equal to the Redemption Price; provided, that the Issuer has
available funds sufficient to pay the Redemption Price. The Servicer or the
Issuer shall furnish the Rating Agencies notice of such redemption. If the Notes
are to be redeemed pursuant to this Section 10.1(a), the Servicer or the Issuer
shall furnish notice of such election to the Indenture Trustee not later than 20
days prior to the Redemption Date and the Issuer shall deposit by 10:00 A.M. New
York City time on the Redemption Date with the Indenture Trustee in the Note
Distribution Account the Redemption Price of the Notes to be redeemed, whereupon
all such Notes shall be due and payable on the Redemption Date upon the
furnishing of a notice complying with Section 10.2 to each Holder of the Notes.
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(b) If (x) the Pre-Funded Amount has not been reduced to zero on the
Distribution Date on which the Funding Period ends (or, if the Funding Period
does not end on a Distribution Date, on the first Distribution Date following
the end of the Funding Period), after giving effect to any reductions in the
Pre-Funded Amount on such Distribution Date pursuant to Section 5.3(c) of the
Sale and Servicing Agreement, one or more classes of Notes then Outstanding will
be redeemed, in whole or in part, as described in Section 8.02(c)(ii) in a
principal amount described therein.
(c) In the event that the assets of the Trust are sold pursuant to
Section 9.2 of the Trust Agreement, all amounts on deposit in the Note
Distribution Account shall be paid to the Noteholders up to the Outstanding
Amount of the Notes and all accrued and unpaid interest thereon. If amounts are
to be paid to Noteholders pursuant to this Section 10.1(c), the Servicer or the
Issuer shall, to the extent practicable, furnish notice of such event to the
Indenture Trustee not later than 20 days prior to the Redemption Date, whereupon
all such amounts shall be payable on the Redemption Date.
SECTION 10.2 Form of Redemption Notice.
(a) Notice of redemption under Section 10.1(a) shall be given by the
Indenture Trustee by first-class mail, postage prepaid, or by facsimile mailed
or transmitted not later than 10 days prior to the applicable Redemption Date to
each Holder of Notes, as of the close of business on the Record Date preceding
the applicable Redemption Date, at such Holder's address or facsimile number
appearing in the Note Register.
All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price; and
(iii) the place where such Notes are to be surrendered for
payment of the Redemption Price (which shall be the office or agency of
the Issuer to be maintained as provided in Section 3.2).
Notice of redemption of the Notes shall be given by the Indenture
Trustee in the name and at the expense of the Issuer. Failure to give notice of
redemption, or any defect therein, to any Holder of any Note shall not impair or
affect the validity of the redemption of any other Note.
(b) Prior notice of redemption under Sections 10.1(b) and 10.1(c) is
not required to be given to Noteholders.
SECTION 10.3 Notes Payable on Redemption Date. The Notes or portions
thereof to be redeemed shall, following notice of redemption as required by
Section 10.2 (in the case of redemption pursuant to Section 10.1(a)), on the
Redemption Date become due and payable at the
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Redemption Price and (unless the Issuer shall default in the payment of the
Redemption Price) no interest shall accrue on the Redemption Price for any
period after the date to which accrued interest is calculated for purposes of
calculating the Redemption Price.
ARTICLE XI
Miscellaneous
SECTION 11.1 Compliance Certificates and Opinions, etc.
(a) Upon any application or request by the Issuer to the Indenture
Trustee to take any action under any provision of this Indenture, the Issuer
shall furnish to the Indenture Trustee (i) an Officer's Certificate stating that
all conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with, (ii) an Opinion of Counsel stating that
in the opinion of such counsel all such conditions precedent, if any, have been
complied with and (iii) (if required by the TIA) an Independent Certificate from
a firm of certified public accountants meeting the applicable requirements of
this Section, except that, in the case of any such application or request as to
which the furnishing of such documents is specifically required by any provision
of this Indenture, no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(1) a statement that each signatory of such certificate or opinion
has read or has caused to be read such covenant or condition
and the definitions herein relating thereto;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or
opinions contained in such certificate or opinion are based;
(3) a statement that, in the opinion of each such signatory, such
signatory has made such examination or investigation as is
necessary to enable such signatory to express an informed
opinion as to whether or not such covenant or condition has
been complied with; and
(4) a statement as to whether, in the opinion of each such
signatory, such condition or covenant has been complied with.
(b) (i) Prior to the deposit of any Collateral or other property
or securities with the Indenture Trustee that is to be made the basis for the
release of any property or securities subject to the lien of this Indenture, the
Issuer shall, in addition to any obligation imposed in Section 11.01(a) or
elsewhere in this Indenture, furnish to the Indenture Trustee an Officer's
Certificate certifying or stating the opinion of each person signing such
certificate as to the fair value (within 90 days of such deposit) to the Issuer
of the Collateral or other property or securities to be so deposited.
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(ii) Whenever the Issuer is required to furnish to the Indenture
Trustee an Officer's Certificate certifying or stating the opinion of any signer
thereof as to the matters described in clause (i) above, the Issuer shall also
deliver to the Indenture Trustee an Independent Certificate as to the same
matters, if the fair value to the Issuer of the securities to be so deposited
and of all other such securities made the basis of any such withdrawal or
release since the commencement of the then-current fiscal year of the Issuer, as
set forth in the certificates delivered pursuant to clause (i) above and this
clause (ii), is 10% or more of the Outstanding Amount of the Notes, but such a
certificate need not be furnished with respect to any securities so deposited,
if the fair value thereof to the Issuer as set forth in the related Officer's
Certificate is less than $25,000 or less than one percent of the Outstanding
Amount of the Notes.
(iii) Whenever any property or securities are to be released from the
lien of this Indenture, the Issuer shall also furnish to the Indenture Trustee
an Officer's Certificate certifying or stating the opinion of each person
signing such certificate as to the fair value (within 90 days of such release)
of the property or securities proposed to be released and stating that in the
opinion of such person the proposed release will not impair the security under
this Indenture in contravention of the provisions hereof.
(iv) Whenever the Issuer is required to furnish to the Indenture
Trustee an Officer's Certificate certifying or stating the opinion of any signer
thereof as to the matters described in clause (iii) above, the Issuer shall also
furnish to the Indenture Trustee an Independent Certificate as to the same
matters if the fair value of the property or securities and of all other
property, other than property as contemplated by clause (v) below or securities
released from the lien of this Indenture since the commencement of the
then-current calendar year, as set forth in the certificates required by clause
(iii) above and this clause (iv), equals 10% or more of the Outstanding Amount
of the Notes, but such certificate need not be furnished in the case of any
release of property or securities if the fair value thereof as set forth in the
related Officer's Certificate is less than $25,000 or less than one percent of
the then Outstanding Amount of the Notes.
(v) Notwithstanding Section 2.10 or any other provision of this
Section, the Issuer may, without compliance with the requirements of the other
provisions of this Section, (A) collect, liquidate, sell or otherwise dispose of
Home Loans and related Foreclosure Propety as and to the extent permitted or
required by the Basic Documents, and (B) make cash payments out of the Trust
Accounts as and to the extent permitted or required by the Basic Documents, so
long as the Issuer shall deliver to the Indenture Trustee every six months,
commencing December 15, 199__, an Officer's Certificate of the Issuer stating
that all the dispositions of Collateral described in clauses (A) or (B) above
that occurred during the preceding six calendar months were in the ordinary
course of the Issuer's business and that the proceeds thereof were applied in
accordance with the Basic Documents.
SECTION 11.2 Form of Documents Delivered to Indenture Trustee. In any
case where several matters are required to be certified by, or covered by an
opinion of, any specified Person, it
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is not necessary that all such matters be certified by, or covered by the
opinion of, only one such Person, or that they be so certified or covered by
only one document, but one such Person may certify or give an opinion with
respect to some matters and one or more other such Persons as to other matters,
and any such Person may certify or give an opinion as to such matters in one or
several documents.
Any certificate or opinion of an Authorized Officer of the Issuer may
be based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by, counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which such officer's
certificate or opinion is based are erroneous. Any such certificate of an
Authorized Officer or Opinion of Counsel may be based, insofar as it relates to
factual matters, upon a certificate or opinion of, or representations by, an
officer or officers of the Servicer, the Seller, the Issuer or the
Administrator, stating that the information with respect to such factual matters
is in the possession of the Servicer, the Seller, the Issuer or the
Administrator, unless such counsel knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect to
such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Whenever in this Indenture, in connection with any application or
certificate or report to the Indenture Trustee, it is provided that the Issuer
shall deliver any document as a condition of the granting of such application,
or as evidence of the Issuer's compliance with any term hereof, it is intended
that the truth and accuracy, at the time of the granting of such application or
at the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Issuer to have such application granted or to the
sufficiency of such certificate or report. The foregoing shall not, however, be
construed to affect the Indenture Trustee's right to rely upon the truth and
accuracy of any statement or opinion contained in any such document as provided
in Article VI.
SECTION 11.3 Acts of Noteholders.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Noteholders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Noteholders in person or by agents
duly appointed in writing; and except as herein otherwise expressly provided
such action shall become effective when such instrument or instruments are
delivered to the Indenture Trustee, and, where it is hereby expressly required,
to the Issuer. Such instrument or instruments (and the action embodied therein
and evidenced thereby) are herein sometimes referred to as the "Act" of the
Noteholders signing such instrument or instruments. Proof of execution of any
such instrument or of a writing appointing any such agent shall be sufficient
for any purpose of this Indenture and
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(subject to Section 6.01) conclusive in favor of the Indenture Trustee and the
Issuer, if made in the manner provided in this Section.
(b) The fact and date of the execution by any person of any such
instrument or writing may be proved in any manner that the Indenture Trustee
deems sufficient.
(c) The ownership of Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Notes shall bind the Holder of every
Note issued upon the registration thereof or in exchange therefor or in lieu
thereof, in respect of anything done, omitted or suffered to be done by the
Indenture Trustee or the Issuer in reliance thereon, whether or not notation of
such action is made upon such Note.
SECTION 11.4 Notices, etc., to Indenture Trustee, Issuer and Rating
Agencies. Any request, demand, authorization, direction, notice, consent, waiver
or Act of Noteholders or other documents provided or permitted by this Indenture
shall be in writing and if such request, demand, authorization, direction,
notice, consent, waiver or act of Noteholders is to be made upon, given or
furnished to or filed with:
(i) the Indenture Trustee by any Noteholder or by the Issuer
shall be sufficient for every purpose hereunder if made, given,
furnished or filed in writing to or with the Indenture Trustee at its
Corporate Trust Office, or
(ii) the Issuer by the Indenture Trustee or by any Noteholder
shall be sufficient for every purpose hereunder if in writing and
mailed first-class, postage prepaid to the Issuer addressed to:
FIRSTPLUS Home Loan Owner Trust 199__, in care of _______________,
Attention of __________, or at any other address previously furnished
in writing to the Indenture Trustee by the Issuer or the Administrator.
The Issuer shall promptly transmit any notice received by it from the
Noteholders to the Indenture Trustee.
Notices required to be given to the Rating Agencies by the Issuer, the
Indenture Trustee or the Owner Trustee shall be in writing, personally delivered
or mailed by certified mail, return receipt requested, to (i) in the case of
Moody's, at the following address: Moody's Investors Service, Inc., ABS
Monitoring Department, 99 Church Street, New York, New York 10007, and (ii) in
the case of Standard & Poor's, at the following address: Standard & Poor's
Ratings Group, 26 Broadway (15th Floor), New York, New York 10004, Attention of
Asset Backed Surveillance Department; or as to each of the foregoing, at such
other address as shall be designated by written notice to the other parties.
SECTION 11.5 Notices to Noteholders; Waiver. Where this Indenture
provides for notice to Noteholders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class, postage prepaid to each Noteholder affected
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by such event, at his address as it appears on the Note Register, not later than
the latest date, and not earlier than the earliest date, prescribed for the
giving of such notice. In any case where notice to Noteholders is given by mail,
neither the failure to mail such notice nor any defect in any notice so mailed
to any particular Noteholder shall affect the sufficiency of such notice with
respect to other Noteholders, and any notice that is mailed in the manner herein
provided shall conclusively be presumed to have been duly given.
Where this Indenture provides for notice in any manner, such notice may
be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Noteholders shall be filed with the Indenture
Trustee but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service as a
result of a strike, work stoppage or similar activity, it shall be impractical
to mail notice of any event to Noteholders when such notice is required to be
given pursuant to any provision of this Indenture, then any manner of giving
such notice as shall be satisfactory to the Indenture Trustee shall be deemed to
be a sufficient giving of such notice.
Where this Indenture provides for notice to the Rating Agencies,
failure to give such notice shall not affect any other rights or obligations
created hereunder, and shall not under any circumstance constitute a Default or
Event of Default.
SECTION 11.6 Alternate Payment and Notice Provisions. Notwithstanding
any provision of this Indenture or any of the Notes to the contrary, the Issuer
may enter into any agreement with any Holder of a Note providing for a method of
payment, or notice by the Indenture Trustee or any Paying Agent to such Holder,
that is different from the methods provided for in this Indenture for such
payments or notices. The Issuer will furnish to the Indenture Trustee a copy of
each such agreement and the Indenture Trustee will cause payments to be made and
notices to be given in accordance with such agreements.
SECTION 11.7 Conflict with Trust Indenture Act. If any provision hereof
limits, qualifies or conflicts with another provision hereof that is required to
be included in this Indenture by any of the provisions of the Trust Indenture
Act, such required provision shall control.
The provisions of TIA Sections 310 through 317 that impose duties on
any person (including the provisions automatically deemed included herein unless
expressly excluded by this Indenture) are a part of and govern this Indenture,
whether or not physically contained herein.
SECTION 11.8 Effect of Headings and Table of Contents. The Article and
Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.
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SECTION 11.9 Successors and Assigns. All covenants and agreements in
this Indenture and the Notes by the Issuer shall bind its successors and
assigns, whether so expressed or not. All agreements of the Indenture Trustee in
this Indenture shall bind its successors, co-trustees and agents.
SECTION 11.10 Separability. In case any provision in this Indenture or
in the Notes shall be invalid, illegal or unenforceable, the validity, legality,
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
SECTION 11.11 Benefits of Indenture. Nothing in this Indenture or in
the Notes, express or implied, shall give to any Person, other than the parties
hereto and their successors hereunder, and the Noteholders, and any other party
secured hereunder, and any other Person with an ownership interest in any part
of the Trust Estate, any benefit or any legal or equitable right, remedy or
claim under this Indenture.
SECTION 11.12 Legal Holidays. In any case where the date on which any
payment is due shall not be a Business Day, then (notwithstanding any other
provision of the Notes or this Indenture) payment need not be made on such date,
but may be made on the next succeeding Business Day with the same force and
effect as if made on the date on which nominally due, and no interest shall
accrue for the period from and after any such nominal date.
SECTION 11.13 GOVERNING LAW. THIS INDENTURE SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 11.14 Counterparts. This Indenture may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
SECTION 11.15 Recording of Indenture. If this Indenture is subject to
recording in any appropriate public recording offices, such recording is to be
effected by the Issuer and at its expense accompanied by an Opinion of Counsel
(which may be counsel to the Indenture Trustee or any other counsel reasonably
acceptable to the Indenture Trustee) to the effect that such recording is
necessary either for the protection of the Noteholders or any other Person
secured hereunder or for the enforcement of any right or remedy granted to the
Indenture Trustee under this Indenture.
SECTION 11.16 Trust Obligation. No recourse may be taken, directly or
indirectly, with respect to the obligations of the Issuer, the Owner Trustee or
the Indenture Trustee on the Notes or under this Indenture or any certificate or
other writing delivered in connection herewith or therewith, against (i) the
Indenture Trustee or the Owner Trustee in its individual capacity, (ii) any
owner of a beneficial interest in the Issuer or (iii) any partner, owner,
beneficiary, agent, officer, director,
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employee or agent of the Indenture Trustee or the Owner Trustee in its
individual capacity, any holder of a beneficial interest in the Issuer, the
Owner Trustee or the Indenture Trustee or of any successor or assign of the
Indenture Trustee or the Owner Trustee in its individual capacity, except as any
such Person may have expressly agreed (it being understood that the Indenture
Trustee and the Owner Trustee have no such obligations in their individual
capacity) and except that any such partner, owner or beneficiary shall be fully
liable, to the extent provided by applicable law, for any unpaid consideration
for stock, unpaid capital contribution or failure to pay any installment or call
owing to such entity. For all purposes of this Indenture, in the performance of
any duties or obligations of the Issuer hereunder, the Owner Trustee shall be
subject to, and entitled to the benefits of, the terms and provisions of Article
VI, VII and VIII of the Trust Agreement.
SECTION 11.17 No Petition. The Indenture Trustee, by entering into this
Indenture, and each Noteholder, by accepting a Note, hereby covenant and agree
that they will not at any time institute against the Seller, the Servicer or the
Issuer, or join in any institution against the Seller, the Servicer or the
Issuer of, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, or other proceedings under any United States federal or
state bankruptcy or similar law in connection with any obligations relating to
the Notes, this Indenture or any of the Basic Documents.
SECTION 11.18 Inspection. The Issuer agrees that, on reasonable prior
notice, it will permit any representative of the Indenture Trustee, during the
Issuer's normal business hours, to examine all the books of account, records,
reports and other papers of the Issuer, to make copies and extracts therefrom,
to cause such books to be audited by Independent certified public accountants,
and to discuss the Issuer's affairs, finances and accounts with the Issuer's
officers, employees, and Independent certified public accountants, all at such
reasonable times and as often as may be reasonably requested. The Indenture
Trustee shall and shall cause its representatives to hold in confidence all such
information except to the extent disclosure may be required by law (and all
reasonable applications for confidential treatment are unavailing) and except to
the extent that the Indenture Trustee may reasonably determine that such
disclosure is consistent with its obligations hereunder.
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IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have caused
this Indenture to be duly executed by their respective officers, thereunto duly
authorized and duly attested, all as of the day and year first above written.
FIRSTPLUS HOME LOAN OWNER TRUST 199_-_
By:________________________________________
not in its individual capacity but
solely as Owner Trustee
By:_______________________________
Name:_____________________________
Title:____________________________
By:________________________________________
not in its individual capacity but
solely as Indenture Trustee
By:_______________________________
Name:_____________________________
Title:____________________________
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STATE OF NEW YORK
COUNTY OF NEW YORK
BEFORE ME, the undersigned authority, a Notary Public in and for said
county and state, on this day personally appeared , known to me to be the person
and officer whose name is subscribed to the foregoing instrument and
acknowledged to me that the same was the act of the said FIRSTPLUS HOME LOAN
OWNER TRUST 199_-_, a Delaware business trust, and that such person executed the
same as the act of said business trust for the purpose and consideration therein
expressed, and in the capacities therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this ____ day of __________,
199__.
______________________________________________
Notary Public in and for the State of New York
(Seal)
My commission expires:
_____________________
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STATE OF NEW YORK
COUNTY OF NEW YORK
BEFORE ME, the undersigned authority, a Notary Public in and for said
county and state, on this day personally appeared __________, known to me to be
the person and officer whose name is subscribed to the foregoing instrument and
acknowledged to me that the same was the act of __________, a banking
corporation, and that such person executed the same as the act of said
corporation for the purpose and consideration therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this ____ day of __________,
199__.
______________________________________________
Notary Public in and for the State of New York
(Seal)
My commission expires:
______________________
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<PAGE> 70
SCHEDULE A
(To be Provided at the Closing and Supplemented on each Subsequent
Transfer Date on which Subsequent Home Loans are transferred to the Trust)
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<PAGE> 71
EXHIBIT A-1
(FORM OF CLASS A-1 NOTE)
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
No._____ $__________
FIRSTPLUS HOME LOAN OWNER TRUST 199_-__
CLASS A1 ____% ASSET BACKED NOTES
FIRSTPLUS Home Loan Owner Trust 199_-__, a business trust organized and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to CEDE & CO., or
registered assigns, the principal sum of ___________________________ DOLLARS and
NO/100 CENTS ($__________) payable on each Distribution Date in an amount equal
to the result obtained by multiplying (i) a fraction the numerator of which is
$[INSERT INITIAL PRINCIPAL AMOUNT OF NOTE] and the denominator of which is
$__________ by (ii) the aggregate amount, if any, payable from the Distribution
Account in respect of principal on the Class A1 Notes pursuant to [Section 3.1]
of the Indenture dated as of __________, 199__, between the Issuer and
________________, a banking corporation, as Indenture Trustee (the "Indenture
Trustee"); provided, however, that the entire unpaid principal amount of this
Note shall be due and payable on the earlier of the Distribution Date (the
"Class A1 Final Scheduled Distribution Date") and the Redemption Date, if any,
pursuant to Section 10.1(a) of the Indenture. Capitalized terms used but not
defined herein are defined in Article I of the Indenture, which also contains
rules as to construction that shall be applicable herein.
A-1-1
<PAGE> 72
The Issuer will pay interest on this Note at the rate per annum shown
above on each Distribution Date until the principal of this Note is paid or made
available for payment, on the principal amount of this Note outstanding on the
preceding Distribution Date (after giving effect to all payments of principal
made on the preceding Distribution Date), subject to certain limitations
contained in Section 3.1 of the Indenture. Interest on this Note will accrue for
each Distribution Date from the second day of the month preceding the month of
such Distribution Date (in the case of the first Distribution Date, from the
Closing Date) to and including the first day of the month of such Distribution
Date. Interest will be computed on the basis of a 360-day year of twelve 30-day
months. Such principal of and interest on this Note shall be paid in the manner
specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
on the face of this Note.
Unless the certificate of authentication hereon has been executed by
the Indenture Trustee whose name appears below by manual signature, this Note
shall not be entitled to any benefit under the Indenture referred to on the
reverse hereof, or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer, as of the date set forth
below.
Date:____________
FIRSTPLUS HOME LOAN OWNER TRUST 199_-_
By:___________________________________________
not in its individual capacity but
solely as Owner Trustee under the
Trust Agreement,
By:___________________________________________
Authorized Signatory
A-1-2
<PAGE> 73
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
Date:___________
(______________________________________________),
not in its individual capacity but
solely as Indenture Trustee,
By:____________________________________________
Authorized Signatory
A-1-3
<PAGE> 74
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its Class A-1 ____% Asset Backed Notes (herein called the "Class
A-1 Notes"), all issued under the Indenture, to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights and obligations thereunder of the Issuer, the Indenture
Trustee and the Holders of the Notes. The Class A-1 Notes are subject to all
terms of the Indenture.
The Class A-1 Notes, the Class A-2 Notes, Class A-3 Notes, Class A-4
Notes and the Class A-5 Notes (collectively, the "Notes") are and will be
equally and ratably secured by the collateral pledged as security therefor as
provided in the Indenture.
Principal of the Class A-1 Notes will be payable on each Distribution
Date in an amount described on the face hereof. "Distribution Date" means the
second day of each month, or, if any such date is not a Business Day, the next
succeeding Business Day, commencing __________, 199__.
As described above, the entire unpaid principal amount of this Note
shall be due and payable on the earlier of the Class A-1 Final Scheduled
Distribution Date and the Redemption Date, if any, pursuant to Section 10.1(a)
of the Indenture. Notwithstanding the foregoing, the entire unpaid principal
amount of the Notes shall be due and payable on the date on which an Event of
Default shall have occurred and be continuing and the Indenture Trustee or the
Holders of the Notes representing not less than a majority of the Outstanding
Amount of the Notes have declared the Notes to be immediately due and payable in
the manner provided in Section 5.2 of the Indenture. All principal payments on
the Class A-1 Notes shall be made pro rata to the Class A-1 Noteholders entitled
thereto.
Payments of interest on this Note due and payable on each Distribution
Date, together with the installment of principal, if any, to the extent not in
full payment of this Note, shall be made by check mailed to the Person whose
name appears as the Registered Holder of this Note (or one or more Predecessor
Notes) on the Note Register as of the close of business on each Record Date,
except that with respect to Notes registered on the Record Date in the name of
the nominee of the Clearing Agency (initially, such nominee to be Cede & Co.),
payments will be made by wire transfer in immediately available funds to the
account designated by such nominee. Such checks shall be mailed to the Person
entitled thereto at the address of such Person as it appears on the Note
Register as of the applicable Record Date without requiring that this Note be
submitted for notation of payment. Any reduction in the principal amount of this
Note (or any one or more Predecessor Notes) effected by any payments made on any
Distribution Date shall be binding upon all future Holders of this Note and of
any Note issued upon the registration of transfer hereof or in exchange hereof
or in lieu hereof, whether or not noted hereon. If funds are expected to be
available, as provided in the Indenture, for payment in full of the then
remaining unpaid principal amount of this Note on a Distribution Date, then the
Indenture Trustee, in the name of and on behalf of the Issuer, will notify the
Person who was the Registered Holder hereof as of the Record Date preceding such
Distribution Date by notice mailed or transmitted by facsimile prior to such
Distribution Date, and the amount then due and payable shall be payable only
upon presentation and surrender of this Note
A-1-4
<PAGE> 75
at the Indenture Trustee's principal Corporate Trust Office or at the office of
the Indenture Trustee's agent appointed for such purposes located in The City of
New York.
The Issuer shall pay interest on overdue installments of interest at
the Class A-1 Interest Rate to the extent lawful.
As provided in the Indenture, the Class A-1 Notes may be redeemed, in
whole or in part, on the Distribution Date on which the Funding Period ends (or
on the Distribution Date immediately following the last day of the Funding
Period, if the Funding Period does not end on a Distribution Date), in the
manner and to the extent described in the Indenture and the Sale and Servicing
Agreement, in the event that any amount remains on deposit in the Pre-Funding
Account after giving effect to the purchase of all Subsequent Home Loans,
including any such purchase on such Redemption Date.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered on the Note Register
upon surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Indenture Trustee duly executed by, the Holder hereof or such Holder's attorney
duly authorized in writing, with such signature guaranteed by an "eligible
guarantor institution" meeting the requirements of the Note Registrar, which
requirements include membership or participation in the Securities Transfer
Agent's Medallion Program ("STAMP") or such other "signature guarantee program"
as may be determined by the Note Registrar in addition to, or in substitution
for, STAMP, all in accordance with the Securities Exchange Act of 1934, as
amended, and thereupon one or more new Notes of authorized denominations and in
the same aggregate principal amount will be issued to the designated transferee
or transferees. No service charge will be charged for any registration of
transfer or exchange of this Note, but the transferor may be required to pay a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection with any such registration of transfer or exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note, covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of the Issuer, the Owner Trustee or the Indenture Trustee on the Notes or under
the Indenture or any certificate or other writing delivered in connection
therewith, against (i) the Indenture Trustee or the Owner Trustee in its
individual capacity, (ii) any owner of a beneficial interest in the Issuer or
(iii) any partner, owner, beneficiary, agent, officer, director or employee of
the Indenture Trustee or the Owner Trustee in its individual capacity, any
holder of a beneficial interest in the Issuer, the Owner Trustee or the
Indenture Trustee or of any successor or assign of the Indenture Trustee or the
Owner Trustee in its individual capacity, except as any such Person may have
expressly agreed and except that any such partner, owner or beneficiary shall be
fully liable, to the extent provided by applicable law, for any unpaid
consideration for stock, unpaid capital contribution or failure to pay any
installment or call owing to such entity.
A-1-5
<PAGE> 76
Each Noteholder or Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note, covenants and agrees by
accepting the benefits of the Indenture that such Noteholder or Note Owner will
not at any time institute against the Seller or the Issuer, or join in any
institution against the Seller or the Issuer of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings under any United States
federal or state bankruptcy or similar law in connection with any obligations
relating to the Notes, the Indenture or the Basic Documents.
The Issuer has entered into the Indenture and this Note is issued with
the intention that, for federal, state and local income, single business and
franchise tax purposes, the Notes will qualify as indebtedness of the Issuer
secured by the Trust Estate. Each Noteholder, by acceptance of a Note (and each
Note Owner by acceptance of a beneficial interest in a Note), agrees to treat
the Notes for federal, state and local income, single business and franchise tax
purposes as indebtedness of the Issuer.
Prior to the due presentment for registration of transfer of this Note,
the Issuer, the Indenture Trustee and any agent of the Issuer or the Indenture
Trustee may treat the Person in whose name this Note (as of the day of
determination or as of such other date as may be specified in the Indenture) is
registered as the owner hereof for all purposes, whether or not this Note be
overdue, and none of the Issuer, the Indenture Trustee or any such agent shall
be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Holders of Notes representing a
majority of the Outstanding Amount of all Notes at the time Outstanding. The
Indenture also contains provisions permitting the Holders of Notes representing
specified percentages of the Outstanding Amount of the Notes, on behalf of the
Holders of all the Notes, to waive compliance by the Issuer with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder of this Note (or
any one or more Predecessor Notes) shall be conclusive and binding upon such
Holder and upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Note. The Indenture
also permits the Indenture Trustee to amend or waive certain terms and
conditions set forth in the Indenture without the consent of Holders of the
Notes issued thereunder.
The term "Issuer" as used in this Note includes any successor to the
Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain circumstances,
to merge or consolidate, subject to the rights of the Indenture Trustee and the
Holders of Notes under the Indenture.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
A-1-6
<PAGE> 77
This Note and the Indenture shall be construed in accordance with the
laws of the State of New York, without reference to its conflict of law
provisions, and the obligations, rights and remedies of the parties hereunder
and thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place and rate, and in the coin or currency herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Basic Documents, none of in its individual capacity, in its
individual capacity, any owner of a beneficial interest in the Issuer, or any of
their respective partners, beneficiaries, agents, officers, directors, employees
or successors or assigns shall be personally liable for, nor shall recourse be
had to any of them for, the payment of principal of or interest on this Note or
performance of, or omission to perform, any of the covenants, obligations or
indemnifications contained in the Indenture. The Holder of this Note by its
acceptance hereof agrees that, except as expressly provided in the Basic
Documents, in the case of an Event of Default under the Indenture, the Holder
shall have no claim against any of the foregoing for any deficiency, loss or
claim therefrom; provided, however, that nothing contained herein shall be taken
to prevent recourse to, and enforcement against, the assets of the Issuer for
any and all liabilities, obligations and undertakings contained in the Indenture
or in this Note.
A-1-7
<PAGE> 78
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee:______
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto:
________________________________________________________________________________
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints , attorney, to transfer said Note on the books kept for
registration thereof, with full power of substitution in the premises.
Dated: ___________________ */
Signature Guaranteed:
__________________________ */
*/ NOTICE: The signature to this assignment must correspond with the
name of the registered owner as it appears on the face of the within Note in
every particular, without alteration, enlargement or any change whatever. Such
signature must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar, which requirements include membership or
participation in STAMP or such other "signature guarantee program" as may be
determined by the Note Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.
A-1-8
<PAGE> 79
EXHIBIT A-2
(FORM OF CLASS A-2 NOTE)
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
$____________
No._____ CUSIP NO._______
FIRSTPLUS HOME LOAN OWNER TRUST 199_-_
CLASS A-2 ____% ASSET BACKED NOTES
FIRSTPLUS Home Loan Owner Trust 199_-_, a business trust organized and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to CEDE & CO., or
registered assigns, the principal sum of _______________ DOLLARS and NO/100
CENTS ($__________) payable on each Distribution Date in an amount equal to the
result obtained by multiplying (i) a fraction the numerator of which is $
[INSERT INITIAL PRINCIPAL AMOUNT OF NOTE] and the denominator of which is
$__________ by (ii) the aggregate amount, if any, payable from the Note
Distribution Account in respect of principal on the Class A-2 Notes pursuant to
Section 3.1 of the Indenture dated as of __________, 199__, between the Issuer
and __________, a banking corporation, as Indenture Trustee (the "Indenture
Trustee"); provided, however, that the entire unpaid principal amount of this
Note shall be due and payable on the earlier of the Distribution Date (the
"Class A-2 Final Scheduled Distribution Date") and the Redemption Date, if any,
pursuant to Section 10.1(a) of the Indenture. No payments of principal on the
Class A-2 Notes shall be made until the Class A-1 Notes have been paid in full.
Capitalized terms used but not defined herein are defined in Article I of the
Indenture, which also contains rules as to construction that shall be applicable
herein.
A-2-1
<PAGE> 80
The Issuer will pay interest on this Note at the rate per annum shown
above on each Distribution Date until the principal of this Note is paid or made
available for payment, on the principal amount of this Note outstanding on the
preceding Distribution Date (after giving effect to all payments of principal
made on the preceding Distribution Date), subject to certain limitations
contained in Section 3.1 of the Indenture. Interest on this Note will accrue for
each Distribution Date from the second day of the month preceding the month of
such Distribution Date (in the case of the first Distribution Date, from the
Closing Date) to and including the first day of the month of such Distribution
Date. Interest will be computed on the basis of a 360-day year of twelve 30-day
months. Such principal of and interest on this Note shall be paid in the manner
specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
on the face of this Note.
Unless the certificate of authentication hereon has been executed by
the Indenture Trustee whose name appears below by manual signature, this Note
shall not be entitled to any benefit under the Indenture referred to on the
reverse hereof, or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer, as of the date set forth
below.
Date: ____________________
FIRSTPLUS HOME LOAN OWNER TRUST 199_-_
By:___________________________________________
not in its individual capacity but
solely as Owner Trustee under the
Trust Agreement,
By:__________________________________
Authorized Signatory
A-2-2
<PAGE> 81
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
Date:___________
By:_________________________________________
not in its individual capacity but
solely as Indenture Trustee,
By:_________________________________________
Authorized Signatory
A-2-3
<PAGE> 82
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its Class A-2 ____% Asset Backed Notes (herein called the "Class
A-2 Notes"), all issued under the Indenture, to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights and obligations thereunder of the Issuer, the Indenture
Trustee and the Holders of the Notes. The Class A-2 Notes are subject to all
terms of the Indenture.
The Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes, the
Class A-4 Notes and the Class A-5 Notes (collectively, the "Notes") are and will
be equally and ratably secured by the collateral pledged as security therefor as
provided in the Indenture.
Principal of the Class A-2 Notes will be payable on each Distribution
Date in an amount described on the face hereof. "Distribution Date" means the
second day of each month, or, if any such date is not a Business Day, the next
succeeding Business Day, commencing __________, 199__.
As described above, the entire unpaid principal amount of this Note
shall be due and payable on the earlier of the Class A-2 Final Scheduled
Distribution Date and the Redemption Date, if any, pursuant to Section 10.1(a)
of the Indenture. Notwithstanding the foregoing, the entire unpaid principal
amount of the Notes shall be due and payable on the date on which an Event of
Default shall have occurred and be continuing and the Indenture Trustee or the
Holders of the Notes representing not less than a majority of the Outstanding
Amount of the Notes have declared the Notes to be immediately due and payable in
the manner provided in Section 5.2 of the Indenture. All principal payments on
the Class A-2 Notes shall be made pro rata to the Class A-2 Noteholders entitled
thereto.
Payments of interest on this Note due and payable on each Distribution
Date, together with the installment of principal, if any, to the extent not in
full payment of this Note, shall be made by check mailed to the Person whose
name appears as the Registered Holder of this Note (or one or more Predecessor
Notes) on the Note Register as of the close of business on each Record Date,
except that with respect to Notes registered on the Record Date in the name of
the nominee of the Clearing Agency (initially, such nominee to be Cede & Co.),
payments will be made by wire transfer in immediately available funds to the
account designated by such nominee. Such checks shall be mailed to the Person
entitled thereto at the address of such Person as it appears on the Note
Register as of the applicable Record Date without requiring that this Note be
submitted for notation of payment. Any reduction in the principal amount of this
Note (or any one or more Predecessor Notes) effected by any payments made on any
Distribution Date shall be binding upon all future Holders of this Note and of
any Note issued upon the registration of transfer hereof or in exchange hereof
or in lieu hereof, whether or not noted hereon. If funds are expected to be
available, as provided in the Indenture, for payment in full of the then
remaining unpaid principal amount of this Note on a Distribution Date, then the
Indenture Trustee, in the name of and on behalf of the Issuer, will notify the
Person who was the Registered Holder hereof as of the Record Date preceding such
Distribution Date by notice mailed or transmitted by facsimile prior to such
Distribution Date, and the amount then due and payable shall be payable only
upon presentation and surrender of this Note
A-2-4
<PAGE> 83
at the Indenture Trustee's principal Corporate Trust Office or at the office of
the Indenture Trustee's agent appointed for such purposes located in The City of
New York.
The Issuer shall pay interest on overdue installments of interest at
the Class A-2 Interest Rate to the extent lawful.
As provided in the Indenture, the Class A-2 Notes may be redeemed in
part on the Distribution Date on which the Funding Period ends (or on the
Distribution Date immediately following the last day of the Funding Period, if
the Funding Period does not end on a Distribution Date), in the manner and to
the extent described in the Indenture and the Sale and Servicing Agreement, in
the event that any amount remains on deposit in the Pre-Funding Account after
giving effect to the purchase of all Subsequent Home Loans, including any such
purchase on such Redemption Date.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered on the Note Register
upon surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Indenture Trustee duly executed by, the Holder hereof or such Holder's attorney
duly authorized in writing, with such signature guaranteed by an "eligible
guarantor institution" meeting the requirements of the Note Registrar, which
requirements include membership or participation in the Securities Transfer
Agent's Medallion Program ("STAMP") or such other "signature guarantee program"
as may be determined by the Note Registrar in addition to, or in substitution
for, STAMP, all in accordance with the Securities Exchange Act of 1934, as
amended, and thereupon one or more new Notes of authorized denominations and in
the same aggregate principal amount will be issued to the designated transferee
or transferees. No service charge will be charged for any registration of
transfer or exchange of this Note, but the transferor may be required to pay a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection with any such registration of transfer or exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note, covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of the Issuer, the Owner Trustee or the Indenture Trustee on the Notes or under
the Indenture or any certificate or other writing delivered in connection
therewith, against (i) the Indenture Trustee or the Owner Trustee in its
individual capacity, (ii) any owner of a beneficial interest in the Issuer or
(iii) any partner, owner, beneficiary, agent, officer, director or employee of
the Indenture Trustee or the Owner Trustee in its individual capacity, any
holder of a beneficial interest in the Issuer, the Owner Trustee or the
Indenture Trustee or of any successor or assign of the Indenture Trustee or the
Owner Trustee in its individual capacity, except as any such Person may have
expressly agreed and except that any such partner, owner or beneficiary shall be
fully liable, to the extent provided by applicable law, for any unpaid
consideration for stock, unpaid capital contribution or failure to pay any
installment or call owing to such entity.
A-2-5
<PAGE> 84
Each Noteholder or Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note, covenants and agrees by
accepting the benefits of the Indenture that such Noteholder or Note Owner will
not at any time institute against the Seller or the Issuer, or join in any
institution against the Seller or the Issuer of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings under any United States
federal or state bankruptcy or similar law in connection with any obligations
relating to the Notes, the Indenture or the Basic Documents.
The Issuer has entered into the Indenture and this Note is issued with
the intention that, for federal, state and local income, single business and
franchise tax purposes, the Notes will qualify as indebtedness of the Issuer
secured by the Trust Estate. Each Noteholder, by acceptance of a Note (and each
Note Owner by acceptance of a beneficial interest in a Note), agrees to treat
the Notes for federal, state and local income, single business and franchise tax
purposes as indebtedness of the Issuer.
Prior to the due presentment for registration of transfer of this Note,
the Issuer, the Indenture Trustee and any agent of the Issuer or the Indenture
Trustee may treat the Person in whose name this Note (as of the day of
determination or as of such other date as may be specified in the Indenture) is
registered as the owner hereof for all purposes, whether or not this Note be
overdue, and none of the Issuer, the Indenture Trustee or any such agent shall
be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Holders of Notes representing a
majority of the Outstanding Amount of all Notes at the time Outstanding. The
Indenture also contains provisions permitting the Holders of Notes representing
specified percentages of the Outstanding Amount of the Notes, on behalf of the
Holders of all the Notes, to waive compliance by the Issuer with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder of this Note (or
any one or more Predecessor Notes) shall be conclusive and binding upon such
Holder and upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Note. The Indenture
also permits the Indenture Trustee to amend or waive certain terms and
conditions set forth in the Indenture without the consent of Holders of the
Notes issued thereunder.
The term "Issuer" as used in this Note includes any successor to the
Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain circumstances,
to merge or consolidate, subject to the rights of the Indenture Trustee and the
Holders of Notes under the Indenture.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
A-2-6
<PAGE> 85
This Note and the Indenture shall be construed in accordance with the
laws of the State of New York, without reference to its conflict of law
provisions, and the obligations, rights and remedies of the parties hereunder
and thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place and rate, and in the coin or currency herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Basic Documents, none of in its individual capacity, in its
individual capacity, any owner of a beneficial interest in the Issuer, or any of
their respective partners, beneficiaries, agents, officers, directors, employees
or successors or assigns shall be personally liable for, nor shall recourse be
had to any of them for, the payment of principal of or interest on this Note or
performance of, or omission to perform, any of the covenants, obligations or
indemnifications contained in the Indenture. The Holder of this Note by its
acceptance hereof agrees that, except as expressly provided in the Basic
Documents, in the case of an Event of Default under the Indenture, the Holder
shall have no claim against any of the foregoing for any deficiency, loss or
claim therefrom; provided, however, that nothing contained herein shall be taken
to prevent recourse to, and enforcement against, the assets of the Issuer for
any and all liabilities, obligations and undertakings contained in the Indenture
or in this Note.
A-2-7
<PAGE> 86
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee:_______
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto:
________________________________________________________________________________
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints , attorney, to transfer said Note on the books kept for
registration thereof, with full power of substitution in the premises.
Dated:________________
*/Signature Guaranteed:
______________________
*/ NOTICE: The signature to this assignment must correspond with the
name of the registered owner as it appears on the face of the within Note in
every particular, without alteration, enlargement or any change whatever. Such
signature must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar, which requirements include membership or
participation in STAMP or such other "signature guarantee program" as may be
determined by the Note Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.
A-2-8
<PAGE> 87
EXHIBIT A-3
(FORM OF CLASS A-3 NOTE)
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
$__________
No._______ CUSIP NO.________
FIRSTPLUS HOME LOAN OWNER TRUST 199_-_
CLASS A-3 ____% ASSET BACKED NOTES
FIRSTPLUS Home Loan Owner Trust 199_-_, a business trust organized and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to CEDE & CO., or
registered assigns, the principal sum of _______________ DOLLARS and NO/100
CENTS ($__________) payable on each Distribution Date in an amount equal to the
result obtained by multiplying (i) a fraction the numerator of which is $
[INSERT INITIAL PRINCIPAL AMOUNT OF NOTE] and the denominator of which is
$__________ by (ii) the aggregate amount, if any, payable from the Note
Distribution Account in respect of principal on the Class A-3 Notes pursuant to
Section 3.1 of the Indenture dated as of , 199 , between the Issuer and
_______________, a banking corporation, as Indenture Trustee (the "Indenture
Trustee"); provided, however, that the entire unpaid principal amount of this
Note shall be due and payable on the earlier of the Distribution Date (the
"Class A 3 Final Scheduled Distribution Date") and the Redemption Date, if any,
pursuant to Section 10.1(a) of the Indenture. No payments of principal of the
Class A-3 Notes shall be made until the Class A-1 Notes and the Class A-2 Notes
have been paid in full. Capitalized terms used but not defined herein are
defined in Article I of the Indenture, which also contains rules as to
construction that shall be applicable herein.
A-3-1
<PAGE> 88
The Issuer will pay interest on this Note at the rate per annum shown
above on each Distribution Date until the principal of this Note is paid or made
available for payment, on the principal amount of this Note outstanding on the
preceding Distribution Date (after giving effect to all payments of principal
made on the preceding Distribution Date), subject to certain limitations
contained in Section 3.1 of the Indenture. Interest on this Note will accrue for
each Distribution Date from the second day of the month preceding the month of
such Distribution Date (in the case of the first Distribution Date, from the
Closing Date) to and including the first day of the month of such Distribution
Date. Interest will be computed on the basis of a 360-day year of twelve 30-day
months. Such principal of and interest on this Note shall be paid in the manner
specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
on the face of this Note.
Unless the certificate of authentication hereon has been executed by
the Indenture Trustee whose name appears below by manual signature, this Note
shall not be entitled to any benefit under the Indenture referred to on the
reverse hereof, or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer, as of the date set forth
below.
Date:______________
FIRSTPLUS HOME LOAN OWNER TRUST 199_-_
By:____________________________________________
not in its individual capacity but
solely as Owner Trustee under the
Trust Agreement,
By:____________________________________________
Authorized Signatory
A-3-2
<PAGE> 89
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
Date:____________
______________________________________________
not in its individual capacity
but solely as Indenture Trustee,
By: __________________________________________
Authorized Signatory
A-3-3
<PAGE> 90
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its Class A-3 ___% Asset Backed Notes (herein called the "Class
A-3 Notes"), all issued under the Indenture, to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights and obligations thereunder of the Issuer, the Indenture
Trustee and the Holders of the Notes. The Class A-3 Notes are subject to all
terms of the Indenture.
The Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes, the
Class A-4 Notes and the Class A-5 Notes (collectively, the "Notes") are and will
be equally and ratably secured by the collateral pledged as security therefor as
provided in the Indenture.
Principal of the Class A-3 Notes will be payable on each Distribution
Date in an amount described on the face hereof. "Distribution Date" means the
second day of each month, or, if any such date is not a Business Day, the next
succeeding Business Day, commencing __________, 199__.
As described above, the entire unpaid principal amount of this Note
shall be due and payable on the earlier of the Class A-3 Final Scheduled
Distribution Date and the Redemption Date, if any, pursuant to Section 10.1(a)
of the Indenture. Notwithstanding the foregoing, the entire unpaid principal
amount of the Notes shall be due and payable on the date on which an Event of
Default shall have occurred and be continuing and the Indenture Trustee or the
Holders of the Notes representing not less than a majority of the Outstanding
Amount of the Notes have declared the Notes to be immediately due and payable in
the manner provided in Section 5.2 of the Indenture. All principal payments on
the Class A-3 Notes shall be made pro rata to the Class A-3 Noteholders entitled
thereto.
Payments of interest on this Note due and payable on each Distribution
Date, together with the installment of principal, if any, to the extent not in
full payment of this Note, shall be made by check mailed to the Person whose
name appears as the Registered Holder of this Note (or one or more Predecessor
Notes) on the Note Register as of the close of business on each Record Date,
except that with respect to Notes registered on the Record Date in the name of
the nominee of the Clearing Agency (initially, such nominee to be Cede & Co.),
payments will be made by wire transfer in immediately available funds to the
account designated by such nominee. Such checks shall be mailed to the Person
entitled thereto at the address of such Person as it appears on the Note
Register as of the applicable Record Date without requiring that this Note be
submitted for notation of payment. Any reduction in the principal amount of this
Note (or any one or more Predecessor Notes) effected by any payments made on any
Distribution Date shall be binding upon all future Holders of this Note and of
any Note issued upon the registration of transfer hereof or in exchange hereof
or in lieu hereof, whether or not noted hereon. If funds are expected to be
available, as provided in the Indenture, for payment in full of the then
remaining unpaid principal amount of this Note on a Distribution Date, then the
Indenture Trustee, in the name of and on behalf of the Issuer, will notify the
Person who was the Registered Holder hereof as of the Record Date preceding such
Distribution Date by notice mailed or transmitted by facsimile prior to such
Distribution Date, and the amount then due and payable shall be payable only
upon presentation and surrender of this Note
A-3-4
<PAGE> 91
at the Indenture Trustee's principal Corporate Trust Office or at the office of
the Indenture Trustee's agent appointed for such purposes located in The City of
New York.
The Issuer shall pay interest on overdue installments of interest at
the Class A-3 Interest Rate to the extent lawful.
As provided in the Indenture, the Class A-3 Notes may be redeemed (a)
in whole, but not in part, at the option of the Servicer, on any Distribution
Date on and after the date on which the Pool Balance is less than or equal to
10% of the Original Pool Balance and (b) in part on the Distribution Date on
which the Funding Period ends (or on the Distribution Date immediately following
the last day of the Funding Period, if the Funding Period does not end on a
Distribution Date), in the manner and to the extent described in the Indenture
and the Sale and Servicing Agreement, in the event that an amount in excess of
$_________ remains on deposit in the Pre-Funding Account after giving effect to
the purchase of all Subsequent Home Loans, including any such purchase on such
Redemption Date.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered on the Note Register
upon surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Indenture Trustee duly executed by, the Holder hereof or such Holder's attorney
duly authorized in writing, with such signature guaranteed by an "eligible
guarantor institution" meeting the requirements of the Note Registrar, which
requirements include membership or participation in the Securities Transfer
Agent's Medallion Program ("STAMP") or such other "signature guarantee program"
as may be determined by the Note Registrar in addition to, or in substitution
for, STAMP, all in accordance with the Securities Exchange Act of 1934, as
amended, and thereupon one or more new Notes of authorized denominations and in
the same aggregate principal amount will be issued to the designated transferee
or transferees. No service charge will be charged for any registration of
transfer or exchange of this Note, but the transferor may be required to pay a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection with any such registration of transfer or exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note, covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of the Issuer, the Owner Trustee or the Indenture Trustee on the Notes or under
the Indenture or any certificate or other writing delivered in connection
therewith, against (i) the Indenture Trustee or the Owner Trustee in its
individual capacity, (ii) any owner of a beneficial interest in the Issuer or
(iii) any partner, owner, beneficiary, agent, officer, director or employee of
the Indenture Trustee or the Owner Trustee in its individual capacity, any
holder of a beneficial interest in the Issuer, the Owner Trustee or the
Indenture Trustee or of any successor or assign of the Indenture Trustee or the
Owner Trustee in its individual capacity, except as any such Person may have
expressly agreed and except that any such partner, owner or beneficiary
A-3-5
<PAGE> 92
shall be fully liable, to the extent provided by applicable law, for any unpaid
consideration for stock, unpaid capital contribution or failure to pay any
installment or call owing to such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note, covenants and agrees by
accepting the benefits of the Indenture that such Noteholder or Note Owner will
not at any time institute against the Seller or the Issuer, or join in any
institution against the Seller or the Issuer of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings under any United States
federal or state bankruptcy or similar law in connection with any obligations
relating to the Notes, the Indenture or the Basic Documents.
The Issuer has entered into the Indenture and this Note is issued with
the intention that, for federal, state and local income, single business and
franchise tax purposes, the Notes will qualify as indebtedness of the Issuer
secured by the Trust Estate. Each Noteholder, by acceptance of a Note (and each
Note Owner by acceptance of a beneficial interest in a Note), agrees to treat
the Notes for federal, state and local income, single business and franchise tax
purposes as indebtedness of the Issuer.
Prior to the due presentment for registration of transfer of this Note,
the Issuer, the Indenture Trustee and any agent of the Issuer or the Indenture
Trustee may treat the Person in whose name this Note (as of the day of
determination or as of such other date as may be specified in the Indenture) is
registered as the owner hereof for all purposes, whether or not this Note be
overdue, and none of the Issuer, the Indenture Trustee or any such agent shall
be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Holders of Notes representing a
majority of the Outstanding Amount of all Notes at the time Outstanding. The
Indenture also contains provisions permitting the Holders of Notes representing
specified percentages of the Outstanding Amount of the Notes, on behalf of the
Holders of all the Notes, to waive compliance by the Issuer with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder of this Note (or
any one or more Predecessor Notes) shall be conclusive and binding upon such
Holder and upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Note. The Indenture
also permits the Indenture Trustee to amend or waive certain terms and
conditions set forth in the Indenture without the consent of Holders of the
Notes issued thereunder.
The term "Issuer" as used in this Note includes any successor to the
Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain circumstances,
to merge or consolidate, subject to the rights of the Indenture Trustee and the
Holders of Notes under the Indenture.
A-3-6
<PAGE> 93
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the
laws of the State of New York, without reference to its conflict of law
provisions, and the obligations, rights and remedies of the parties hereunder
and thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place and rate, and in the coin or currency herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Basic Documents, none of in its individual capacity, in its
individual capacity, any owner of a beneficial interest in the Issuer, or any of
their respective partners, beneficiaries, agents, officers, directors, employees
or successors or assigns shall be personally liable for, nor shall recourse be
had to any of them for, the payment of principal of or interest on this Note or
performance of, or omission to perform, any of the covenants, obligations or
indemnifications contained in the Indenture. The Holder of this Note by its
acceptance hereof agrees that, except as expressly provided in the Basic
Documents, in the case of an Event of Default under the Indenture, the Holder
shall have no claim against any of the foregoing for any deficiency, loss or
claim therefrom; provided, however, that nothing contained herein shall be taken
to prevent recourse to, and enforcement against, the assets of the Issuer for
any and all liabilities, obligations and undertakings contained in the Indenture
or in this Note.
A-3-7
<PAGE> 94
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee:______
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto:
________________________________________________________________________________
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints _______________, attorney, to transfer said Note on the books kept
for registration thereof, with full power of substitution in the premises.
Dated:________________
*/Signature Guaranteed:
______________________
*/ NOTICE: The signature to this assignment must correspond with the
name of the registered owner as it appears on the face of the within Note in
every particular, without alteration, enlargement or any change whatever. Such
signature must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar, which requirements include membership or
participation in STAMP or such other "signature guarantee program" as may be
determined by the Note Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.
A-3-8
<PAGE> 95
EXHIBIT A-4
(FORM OF CLASS A-4 NOTE)
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
$__________
No._______ CUSIP NO.________
FIRSTPLUS HOME LOAN OWNER TRUST 199_-_
CLASS A-4 ____% ASSET BACKED NOTES
FIRSTPLUS Home Loan Owner Trust 199_-_, a business trust organized and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to CEDE & CO., or
registered assigns, the principal sum of _______________ DOLLARS and NO/100
CENTS ($__________) payable on each Distribution Date in an amount equal to the
result obtained by multiplying (i) a fraction the numerator of which is $
[INSERT INITIAL PRINCIPAL AMOUNT OF NOTE] and the denominator of which is
$__________ by (ii) the aggregate amount, if any, payable from the Note
Distribution Account in respect of principal on the Class A-4 Notes pursuant to
Section 3.1 of the Indenture dated as of , 199 , between the Issuer and
_______________, a banking corporation, as Indenture Trustee (the "Indenture
Trustee"); provided, however, that the entire unpaid principal amount of this
Note shall be due and payable on the earlier of the Distribution Date (the
"Class A 3 Final Scheduled Distribution Date") and the Redemption Date, if any,
pursuant to Section 10.1(a) of the Indenture. No payments of principal of the
Class A-4 Notes shall be made until the Class A-1 Notes, the Class A-2 Notes and
the Class A-3 Notes have been paid in full. Capitalized terms used but not
defined herein are defined in Article I of the Indenture, which also contains
rules as to construction that shall be applicable herein.
A-4-1
<PAGE> 96
The Issuer will pay interest on this Note at the rate per annum shown
above on each Distribution Date until the principal of this Note is paid or made
available for payment, on the principal amount of this Note outstanding on the
preceding Distribution Date (after giving effect to all payments of principal
made on the preceding Distribution Date), subject to certain limitations
contained in Section 3.1 of the Indenture. Interest on this Note will accrue for
each Distribution Date from the second day of the month preceding the month of
such Distribution Date (in the case of the first Distribution Date, from the
Closing Date) to and including the first day of the month of such Distribution
Date. Interest will be computed on the basis of a 360-day year of twelve 30-day
months. Such principal of and interest on this Note shall be paid in the manner
specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
on the face of this Note.
Unless the certificate of authentication hereon has been executed by
the Indenture Trustee whose name appears below by manual signature, this Note
shall not be entitled to any benefit under the Indenture referred to on the
reverse hereof, or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer, as of the date set forth
below.
Date:____________
FIRSTPLUS HOME LOAN OWNER TRUST 199_-_
By:__________________________________________
not in its individual capacity but
solely as Owner Trustee under the
Trust Agreement,
By:__________________________________________
Authorized Signatory
A-4-2
<PAGE> 97
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
Date:__________
______________________________________________
not in its individual capacity
but solely as Indenture Trustee,
By:___________________________________________
Authorized Signatory
A-4-3
<PAGE> 98
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its Class A-4 ___% Asset Backed Notes (herein called the "Class
A-4 Notes"), all issued under the Indenture, to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights and obligations thereunder of the Issuer, the Indenture
Trustee and the Holders of the Notes. The Class A-4 Notes are subject to all
terms of the Indenture.
The Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes, the
Class A-4 Notes and the Class A-5 Notes (collectively, the "Notes") are and will
be equally and ratably secured by the collateral pledged as security therefor as
provided in the Indenture.
Principal of the Class A-4 Notes will be payable on each Distribution
Date in an amount described on the face hereof. "Distribution Date" means the
second day of each month, or, if any such date is not a Business Day, the next
succeeding Business Day, commencing __________, 199__.
As described above, the entire unpaid principal amount of this Note
shall be due and payable on the earlier of the Class A-4 Final Scheduled
Distribution Date and the Redemption Date, if any, pursuant to Section 10.1(a)
of the Indenture. Notwithstanding the foregoing, the entire unpaid principal
amount of the Notes shall be due and payable on the date on which an Event of
Default shall have occurred and be continuing and the Indenture Trustee or the
Holders of the Notes representing not less than a majority of the Outstanding
Amount of the Notes have declared the Notes to be immediately due and payable in
the manner provided in Section 5.2 of the Indenture. All principal payments on
the Class A-4 Notes shall be made pro rata to the Class A-4 Noteholders entitled
thereto.
Payments of interest on this Note due and payable on each Distribution
Date, together with the installment of principal, if any, to the extent not in
full payment of this Note, shall be made by check mailed to the Person whose
name appears as the Registered Holder of this Note (or one or more Predecessor
Notes) on the Note Register as of the close of business on each Record Date,
except that with respect to Notes registered on the Record Date in the name of
the nominee of the Clearing Agency (initially, such nominee to be Cede & Co.),
payments will be made by wire transfer in immediately available funds to the
account designated by such nominee. Such checks shall be mailed to the Person
entitled thereto at the address of such Person as it appears on the Note
Register as of the applicable Record Date without requiring that this Note be
submitted for notation of payment. Any reduction in the principal amount of this
Note (or any one or more Predecessor Notes) effected by any payments made on any
Distribution Date shall be binding upon all future Holders of this Note and of
any Note issued upon the registration of transfer hereof or in exchange hereof
or in lieu hereof, whether or not noted hereon. If funds are expected to be
available, as provided in the Indenture, for payment in full of the then
remaining unpaid principal amount of this Note on a Distribution Date, then the
Indenture Trustee, in the name of and on behalf of the Issuer, will notify the
Person who was the Registered Holder hereof as of the Record Date preceding such
Distribution Date by notice mailed or transmitted by facsimile prior to such
Distribution Date, and the amount then due and payable shall be payable only
upon presentation and surrender of this Note
A-4-4
<PAGE> 99
at the Indenture Trustee's principal Corporate Trust Office or at the office of
the Indenture Trustee's agent appointed for such purposes located in The City of
New York.
The Issuer shall pay interest on overdue installments of interest at
the Class A-4 Interest Rate to the extent lawful.
As provided in the Indenture, the Class A-4 Notes may be redeemed (a)
in whole, but not in part, at the option of the Servicer, on any Distribution
Date on and after the date on which the Pool Balance is less than or equal to
10% of the Original Pool Balance and (b) in part on the Distribution Date on
which the Funding Period ends (or on the Distribution Date immediately following
the last day of the Funding Period, if the Funding Period does not end on a
Distribution Date), in the manner and to the extent described in the Indenture
and the Sale and Servicing Agreement, in the event that an amount in excess of
$_________ remains on deposit in the Pre-Funding Account after giving effect to
the purchase of all Subsequent Home Loans, including any such purchase on such
Redemption Date.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered on the Note Register
upon surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Indenture Trustee duly executed by, the Holder hereof or such Holder's attorney
duly authorized in writing, with such signature guaranteed by an "eligible
guarantor institution" meeting the requirements of the Note Registrar, which
requirements include membership or participation in the Securities Transfer
Agent's Medallion Program ("STAMP") or such other "signature guarantee program"
as may be determined by the Note Registrar in addition to, or in substitution
for, STAMP, all in accordance with the Securities Exchange Act of 1934, as
amended, and thereupon one or more new Notes of authorized denominations and in
the same aggregate principal amount will be issued to the designated transferee
or transferees. No service charge will be charged for any registration of
transfer or exchange of this Note, but the transferor may be required to pay a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection with any such registration of transfer or exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note, covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of the Issuer, the Owner Trustee or the Indenture Trustee on the Notes or under
the Indenture or any certificate or other writing delivered in connection
therewith, against (i) the Indenture Trustee or the Owner Trustee in its
individual capacity, (ii) any owner of a beneficial interest in the Issuer or
(iii) any partner, owner, beneficiary, agent, officer, director or employee of
the Indenture Trustee or the Owner Trustee in its individual capacity, any
holder of a beneficial interest in the Issuer, the Owner Trustee or the
Indenture Trustee or of any successor or assign of the Indenture Trustee or the
Owner Trustee in its individual capacity, except as any such Person may have
expressly agreed and except that any such partner, owner or beneficiary
A-4-5
<PAGE> 100
shall be fully liable, to the extent provided by applicable law, for any unpaid
consideration for stock, unpaid capital contribution or failure to pay any
installment or call owing to such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note, covenants and agrees by
accepting the benefits of the Indenture that such Noteholder or Note Owner will
not at any time institute against the Seller or the Issuer, or join in any
institution against the Seller or the Issuer of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings under any United States
federal or state bankruptcy or similar law in connection with any obligations
relating to the Notes, the Indenture or the Basic Documents.
The Issuer has entered into the Indenture and this Note is issued with
the intention that, for federal, state and local income, single business and
franchise tax purposes, the Notes will qualify as indebtedness of the Issuer
secured by the Trust Estate. Each Noteholder, by acceptance of a Note (and each
Note Owner by acceptance of a beneficial interest in a Note), agrees to treat
the Notes for federal, state and local income, single business and franchise tax
purposes as indebtedness of the Issuer.
Prior to the due presentment for registration of transfer of this Note,
the Issuer, the Indenture Trustee and any agent of the Issuer or the Indenture
Trustee may treat the Person in whose name this Note (as of the day of
determination or as of such other date as may be specified in the Indenture) is
registered as the owner hereof for all purposes, whether or not this Note be
overdue, and none of the Issuer, the Indenture Trustee or any such agent shall
be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Holders of Notes representing a
majority of the Outstanding Amount of all Notes at the time Outstanding. The
Indenture also contains provisions permitting the Holders of Notes representing
specified percentages of the Outstanding Amount of the Notes, on behalf of the
Holders of all the Notes, to waive compliance by the Issuer with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder of this Note (or
any one or more Predecessor Notes) shall be conclusive and binding upon such
Holder and upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Note. The Indenture
also permits the Indenture Trustee to amend or waive certain terms and
conditions set forth in the Indenture without the consent of Holders of the
Notes issued thereunder.
The term "Issuer" as used in this Note includes any successor to the
Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain circumstances,
to merge or consolidate, subject to the rights of the Indenture Trustee and the
Holders of Notes under the Indenture.
A-4-6
<PAGE> 101
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the
laws of the State of New York, without reference to its conflict of law
provisions, and the obligations, rights and remedies of the parties hereunder
and thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place and rate, and in the coin or currency herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Basic Documents, none of in its individual capacity, in its
individual capacity, any owner of a beneficial interest in the Issuer, or any of
their respective partners, beneficiaries, agents, officers, directors, employees
or successors or assigns shall be personally liable for, nor shall recourse be
had to any of them for, the payment of principal of or interest on this Note or
performance of, or omission to perform, any of the covenants, obligations or
indemnifications contained in the Indenture. The Holder of this Note by its
acceptance hereof agrees that, except as expressly provided in the Basic
Documents, in the case of an Event of Default under the Indenture, the Holder
shall have no claim against any of the foregoing for any deficiency, loss or
claim therefrom; provided, however, that nothing contained herein shall be taken
to prevent recourse to, and enforcement against, the assets of the Issuer for
any and all liabilities, obligations and undertakings contained in the Indenture
or in this Note.
A-4-7
<PAGE> 102
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee:______
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto:
________________________________________________________________________________
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints _______________, attorney, to transfer said Note on the books kept
for registration thereof, with full power of substitution in the premises.
Dated:________________
*/Signature Guaranteed:
______________________
*/ NOTICE: The signature to this assignment must correspond with the
name of the registered owner as it appears on the face of the within Note in
every particular, without alteration, enlargement or any change whatever. Such
signature must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar, which requirements include membership or
participation in STAMP or such other "signature guarantee program" as may be
determined by the Note Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.
A-4-8
<PAGE> 103
EXHIBIT A-5
(FORM OF CLASS A-5 NOTE)
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
$__________
No._______ CUSIP NO.________
FIRSTPLUS HOME LOAN OWNER TRUST 199_-_
CLASS A-5 ____% ASSET BACKED NOTES
FIRSTPLUS Home Loan Owner Trust 199_-_, a business trust organized and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to CEDE & CO., or
registered assigns, the principal sum of _______________ DOLLARS and NO/100
CENTS ($__________) payable on each Distribution Date in an amount equal to the
result obtained by multiplying (i) a fraction the numerator of which is $
[INSERT INITIAL PRINCIPAL AMOUNT OF NOTE] and the denominator of which is
$__________ by (ii) the aggregate amount, if any, payable from the Note
Distribution Account in respect of principal on the Class A-5 Notes pursuant to
Section 3.1 of the Indenture dated as of , 199 , between the Issuer and
_______________, a banking corporation, as Indenture Trustee (the "Indenture
Trustee"); provided, however, that the entire unpaid principal amount of this
Note shall be due and payable on the earlier of the Distribution Date (the
"Class A-5 Final Scheduled Distribution Date") and the Redemption Date, if any,
pursuant to Section 10.1(a) of the Indenture. No payments of principal of the
Class A-5 Notes shall be made until the Class A-1 Notes, the Class A-2 Notes,
the Class A-3 Notes and the Class A-4 Notes have been paid in full. Capitalized
terms used but not defined herein are defined in Article I of the Indenture,
which also contains rules as to construction that shall be applicable herein.
A-5-1
<PAGE> 104
The Issuer will pay interest on this Note at the rate per annum shown
above on each Distribution Date until the principal of this Note is paid or made
available for payment, on the principal amount of this Note outstanding on the
preceding Distribution Date (after giving effect to all payments of principal
made on the preceding Distribution Date), subject to certain limitations
contained in Section 3.1 of the Indenture. Interest on this Note will accrue for
each Distribution Date from the second day of the month preceding the month of
such Distribution Date (in the case of the first Distribution Date, from the
Closing Date) to and including the first day of the month of such Distribution
Date. Interest will be computed on the basis of a 360-day year of twelve 30-day
months. Such principal of and interest on this Note shall be paid in the manner
specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
on the face of this Note.
Unless the certificate of authentication hereon has been executed by
the Indenture Trustee whose name appears below by manual signature, this Note
shall not be entitled to any benefit under the Indenture referred to on the
reverse hereof, or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer, as of the date set forth
below.
Date:____________
FIRSTPLUS HOME LOAN OWNER TRUST 199_-_
By:_________________________________________
not in its individual capacity but
solely as Owner Trustee under the
Trust Agreement,
By:_________________________________________
Authorized Signatory
A-5-2
<PAGE> 105
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
Date:___________
______________________________________________
not in its individual capacity
but solely as Indenture Trustee,
By:___________________________________________
Authorized Signatory
A-5-3
<PAGE> 106
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its Class A-5 ___% Asset Backed Notes (herein called the "Class
A-5 Notes"), all issued under the Indenture, to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights and obligations thereunder of the Issuer, the Indenture
Trustee and the Holders of the Notes. The Class A-5 Notes are subject to all
terms of the Indenture.
The Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes, the
Class A-4 Notes and the Class A-5 Notes (collectively, the "Notes") are and will
be equally and ratably secured by the collateral pledged as security therefor as
provided in the Indenture.
Principal of the Class A-5 Notes will be payable on each Distribution
Date in an amount described on the face hereof. "Distribution Date" means the
second day of each month, or, if any such date is not a Business Day, the next
succeeding Business Day, commencing __________, 199__.
As described above, the entire unpaid principal amount of this Note
shall be due and payable on the earlier of the Class A-5 Final Scheduled
Distribution Date and the Redemption Date, if any, pursuant to Section 10.1(a)
of the Indenture. Notwithstanding the foregoing, the entire unpaid principal
amount of the Notes shall be due and payable on the date on which an Event of
Default shall have occurred and be continuing and the Indenture Trustee or the
Holders of the Notes representing not less than a majority of the Outstanding
Amount of the Notes have declared the Notes to be immediately due and payable in
the manner provided in Section 5.2 of the Indenture. All principal payments on
the Class A-5 Notes shall be made pro rata to the Class A-5 Noteholders entitled
thereto.
Payments of interest on this Note due and payable on each Distribution
Date, together with the installment of principal, if any, to the extent not in
full payment of this Note, shall be made by check mailed to the Person whose
name appears as the Registered Holder of this Note (or one or more Predecessor
Notes) on the Note Register as of the close of business on each Record Date,
except that with respect to Notes registered on the Record Date in the name of
the nominee of the Clearing Agency (initially, such nominee to be Cede & Co.),
payments will be made by wire transfer in immediately available funds to the
account designated by such nominee. Such checks shall be mailed to the Person
entitled thereto at the address of such Person as it appears on the Note
Register as of the applicable Record Date without requiring that this Note be
submitted for notation of payment. Any reduction in the principal amount of this
Note (or any one or more Predecessor Notes) effected by any payments made on any
Distribution Date shall be binding upon all future Holders of this Note and of
any Note issued upon the registration of transfer hereof or in exchange hereof
or in lieu hereof, whether or not noted hereon. If funds are expected to be
available, as provided in the Indenture, for payment in full of the then
remaining unpaid principal amount of this Note on a Distribution Date, then the
Indenture Trustee, in the name of and on behalf of the Issuer, will notify the
Person who was the Registered Holder hereof as of the Record Date preceding such
Distribution Date by notice mailed or transmitted by facsimile prior to such
Distribution Date, and the amount then due and payable shall be payable only
upon presentation and surrender of this Note
A-5-4
<PAGE> 107
at the Indenture Trustee's principal Corporate Trust Office or at the office of
the Indenture Trustee's agent appointed for such purposes located in The City of
New York.
The Issuer shall pay interest on overdue installments of interest at
the Class A-5 Interest Rate to the extent lawful.
As provided in the Indenture, the Class A-5 Notes may be redeemed (a)
in whole, but not in part, at the option of the Servicer, on any Distribution
Date on and after the date on which the Pool Balance is less than or equal to
10% of the Original Pool Balance and (b) in part on the Distribution Date on
which the Funding Period ends (or on the Distribution Date immediately following
the last day of the Funding Period, if the Funding Period does not end on a
Distribution Date), in the manner and to the extent described in the Indenture
and the Sale and Servicing Agreement, in the event that an amount in excess of
$_________ remains on deposit in the Pre-Funding Account after giving effect to
the purchase of all Subsequent Home Loans, including any such purchase on such
Redemption Date.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered on the Note Register
upon surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Indenture Trustee duly executed by, the Holder hereof or such Holder's attorney
duly authorized in writing, with such signature guaranteed by an "eligible
guarantor institution" meeting the requirements of the Note Registrar, which
requirements include membership or participation in the Securities Transfer
Agent's Medallion Program ("STAMP") or such other "signature guarantee program"
as may be determined by the Note Registrar in addition to, or in substitution
for, STAMP, all in accordance with the Securities Exchange Act of 1934, as
amended, and thereupon one or more new Notes of authorized denominations and in
the same aggregate principal amount will be issued to the designated transferee
or transferees. No service charge will be charged for any registration of
transfer or exchange of this Note, but the transferor may be required to pay a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection with any such registration of transfer or exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note, covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of the Issuer, the Owner Trustee or the Indenture Trustee on the Notes or under
the Indenture or any certificate or other writing delivered in connection
therewith, against (i) the Indenture Trustee or the Owner Trustee in its
individual capacity, (ii) any owner of a beneficial interest in the Issuer or
(iii) any partner, owner, beneficiary, agent, officer, director or employee of
the Indenture Trustee or the Owner Trustee in its individual capacity, any
holder of a beneficial interest in the Issuer, the Owner Trustee or the
Indenture Trustee or of any successor or assign of the Indenture Trustee or the
Owner Trustee in its individual capacity, except as any such Person may have
expressly agreed and except that any such partner, owner or beneficiary
A-5-5
<PAGE> 108
shall be fully liable, to the extent provided by applicable law, for any unpaid
consideration for stock, unpaid capital contribution or failure to pay any
installment or call owing to such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note, covenants and agrees by
accepting the benefits of the Indenture that such Noteholder or Note Owner will
not at any time institute against the Seller or the Issuer, or join in any
institution against the Seller or the Issuer of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings under any United States
federal or state bankruptcy or similar law in connection with any obligations
relating to the Notes, the Indenture or the Basic Documents.
The Issuer has entered into the Indenture and this Note is issued with
the intention that, for federal, state and local income, single business and
franchise tax purposes, the Notes will qualify as indebtedness of the Issuer
secured by the Trust Estate. Each Noteholder, by acceptance of a Note (and each
Note Owner by acceptance of a beneficial interest in a Note), agrees to treat
the Notes for federal, state and local income, single business and franchise tax
purposes as indebtedness of the Issuer.
Prior to the due presentment for registration of transfer of this Note,
the Issuer, the Indenture Trustee and any agent of the Issuer or the Indenture
Trustee may treat the Person in whose name this Note (as of the day of
determination or as of such other date as may be specified in the Indenture) is
registered as the owner hereof for all purposes, whether or not this Note be
overdue, and none of the Issuer, the Indenture Trustee or any such agent shall
be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Holders of Notes representing a
majority of the Outstanding Amount of all Notes at the time Outstanding. The
Indenture also contains provisions permitting the Holders of Notes representing
specified percentages of the Outstanding Amount of the Notes, on behalf of the
Holders of all the Notes, to waive compliance by the Issuer with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder of this Note (or
any one or more Predecessor Notes) shall be conclusive and binding upon such
Holder and upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Note. The Indenture
also permits the Indenture Trustee to amend or waive certain terms and
conditions set forth in the Indenture without the consent of Holders of the
Notes issued thereunder.
The term "Issuer" as used in this Note includes any successor to the
Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain circumstances,
to merge or consolidate, subject to the rights of the Indenture Trustee and the
Holders of Notes under the Indenture.
A-5-6
<PAGE> 109
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the
laws of the State of New York, without reference to its conflict of law
provisions, and the obligations, rights and remedies of the parties hereunder
and thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place and rate, and in the coin or currency herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Basic Documents, none of in its individual capacity, in its
individual capacity, any owner of a beneficial interest in the Issuer, or any of
their respective partners, beneficiaries, agents, officers, directors, employees
or successors or assigns shall be personally liable for, nor shall recourse be
had to any of them for, the payment of principal of or interest on this Note or
performance of, or omission to perform, any of the covenants, obligations or
indemnifications contained in the Indenture. The Holder of this Note by its
acceptance hereof agrees that, except as expressly provided in the Basic
Documents, in the case of an Event of Default under the Indenture, the Holder
shall have no claim against any of the foregoing for any deficiency, loss or
claim therefrom; provided, however, that nothing contained herein shall be taken
to prevent recourse to, and enforcement against, the assets of the Issuer for
any and all liabilities, obligations and undertakings contained in the Indenture
or in this Note.
A-5-7
<PAGE> 110
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee:______
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto:
________________________________________________________________________________
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints _______________, attorney, to transfer said Note on the books kept
for registration thereof, with full power of substitution in the premises.
Dated:________________
*/Signature Guaranteed:
______________________
*/ NOTICE: The signature to this assignment must correspond with the
name of the registered owner as it appears on the face of the within Note in
every particular, without alteration, enlargement or any change whatever. Such
signature must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar, which requirements include membership or
participation in STAMP or such other "signature guarantee program" as may be
determined by the Note Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.
A-5-8
<PAGE> 111
EXHIBIT B
FORM OF TRANSFEROR CERTIFICATE
(DATE)
(Seller)
(Seller Address)
(Owner Trustee)
(Owner Trustee Address)
(Indenture Trustee)
(Indenture Trustee Address)
Re: FIRSTPLUS Home Loan Owner Trust 199_-__
____% Class A-__ Asset Backed Notes
Ladies and Gentlemen:
In connection with our disposition of the above-referenced _____% Class
A-__ Asset Backed Notes (the "Notes") we certify that (a) we understand that the
Notes have not been registered under the Securities Act of 1933, as amended (the
"Act"), and are being transferred by us in a transaction that is exempt from the
registration requirements of the Act and (b) we have not offered or sold any
Notes to, or solicited offers to buy any Notes from, any person, or otherwise
approached or negotiated with any person with respect thereto, in a manner that
would be deemed, or taken any other action which would result in, a violation of
Section 5 of the Act.
Very truly yours,
(NAME OF TRANSFEROR)
By:___________________________________
Authorized Officer
B-1
<PAGE> 112
EXHIBIT C
FORM OF INVESTMENT LETTER
(DATE)
(Seller)
(Seller Address)
(Owner Trustee)
(Owner Trustee Address)
(Indenture Trustee)
(Indenture Trustee Address)
Re: FIRSTPLUS Home Loan Owner Trust 199_-__
____% Class A-_ Asset Backed Notes
Ladies and Gentlemen:
In connection with our acquisition of the above-referenced _____% Class
A-__ Asset Backed Notes (the "Notes) we certify that (a) we understand that the
Notes are not being registered under the Securities Act of 1933, as amended (the
"Act"), or any state securities laws and are being transferred to us in a
transaction that is exempt from the registration requirements of the Act and any
such laws, (b) we are an "accredited investor,"as defined in Regulation D under
the Act, and have such knowledge and experience in financial and business
matters that we are capable of evaluating the merits and risks of investments in
the Notes, (c) we have had the opportunity to ask questions of and receive
answers from the seller concerning the purchase of the Notes and all matters
relating thereto or any additional information deemed necessary to our decision
to purchase the Notes, (d) we are acquiring the Notes for investment for our own
account and not with a view to any distribution of such Notes (but without
prejudice to our right at all times to sell or otherwise dispose of the Notes in
accordance with clause (f) below), (e) we have not offered or sold any Notes to,
or solicited offers to buy any Notes from, any person, or otherwise approached
or negotiated with any person with respect thereto, or taken any other action
that would result in a violation of Section 5 of the Act or any state securities
laws and (f) we will not sell, transfer or otherwise dispose of any Notes unless
(1) such sale, transfer or other disposition is made pursuant to an effective
registration statement under the Act and in compliance with any relevant state
securities laws or is exempt from such registration requirements and, if
requested, we will at our expense provide an opinion of counsel satisfactory to
the addressees of this certificate that such sale, transfer or other disposition
may be made pursuant to an exemption from the Act, (2) the purchaser or
transferee of such Note has executed and delivered to you a certificate to
substantially the same effect as this certificate and (3) the purchaser or
transferee has otherwise complied with any conditions for transfer set forth in
the Indenture dated as of __________, 199__ between FIRSTPLUS Home Loan Owner
Trust 199_- __and _______________ as Indenture Trustee.
Very truly yours,
(NAME OF TRANSFEREE)
By:__________________________________
Authorized Officer
C-1
<PAGE> 113
EXHIBIT D
FORM OF RULE 144A LETTER
(DATE)
(Seller)
(Seller Address)
(Owner Trustee)
(Owner Trustee Address)
(Indenture Trustee)
(Indenture Trustee Address)
Re: FIRSTPLUS Home Loan Owner Trust 199_-_
____% Class A-__ Asset Backed Notes
Ladies and Gentlemen:
In connection with our acquisition of the above-referenced _____% Class
A-__ Asset Backed Notes (the "Notes) we certify that (a) we understand that the
Notes are not being registered under the Securities Act of 1933, as amended (the
"Act"), or any state securities laws and are being transferred to us in a
transaction that is exempt from the registration requirements of the Act and any
such laws, (b) we have such knowledge and experience in financial and business
matters that we are capable of evaluating the merits and risks of investments in
the Notes, (c) we have had the opportunity to ask questions of and receive
answers from the seller concerning the purchase of the Notes and all matters
relating thereto or any additional information deemed necessary to our decision
to purchase the Notes, (d) we have not, nor has anyone acting on our behalf,
offered, transferred, pledged, sold or otherwise disposed of the Notes, any
interest in the Notes or any other similar security to, or solicited any offer
to buy or accept a transfer, pledge or other disposition of the Notes, any
interest in the Notes or any other similar security from or otherwise approached
or negotiated with respect to the Notes, any interest in the Notes or any other
similar security with, any person in any manner, or made any general
solicitation by means of general advertising or in any other manner, or taken
any other action that would constitute a distribution of the Notes under the Act
or that would render the disposition of the Notes a violation of Section 5 of
the Act or any state securities laws or require registration pursuant thereto,
and we will not act, or authorize any person to act, in such manner with respect
to the Notes, (e) we are a "qualified institutional buyer" as that term is
defined in Rule 144A under the Act. We are aware that the sale to us is being
made in reliance on Rule 144A. We are acquiring the Notes for our own account or
for resale pursuant to Rule 144A and understand that such Notes may be resold,
pledged or transferred only (i) to a person reasonably believed to be a
qualified institutional buyer that purchases for its own account or for the
account of a qualified institutional buyer to whom notice is given that the
resale, pledge or transfer is being made in reliance on Rule 144A or (ii)
pursuant to another exemption from registration under the Act.
Very truly yours,
(NAME OF TRANSFEREE)
By:______________________________
Chief Financial Officer
D-1
<PAGE> 114
Andrews & Kurth
L.L.P.
4400 THANKSGIVING TOWER
DALLAS, TEXAS 75201
MEMORANDUM
TO:
James Scriven (for Jeffrey Hoberman, Andres Ocampo,
Alejandro Radzyminski, Alfredo Vitolo, Sebastian Soler,
and Santiago Carregal)
John R. Shrewsberry
John Cole
Andrew Donovan
Helen Chin
Henry Hayssen
Diane Audino
Diane Mondino
Gabriel Rubinstein*
FROM: Thomas R. Popplewell
DATE: September 6, 1996
SUBJECT: Banco Hipotecario Nacional, Series 1996-1
Enclosed is the final Trust Agreement, except we are still working on the
following sections: 5.5(c), 7.1(a)(xviii), 7.1(a)(xxix), 8.12 and 12.12(a).
cc: David Barbour (w/enclosure)
Paul Seve (w/enclosure)
* Also enclosed only to Gabriel is a copy of the Master Servicing Agreement
previously furnished to other addressess.
<PAGE> 1
EXHIBIT 4.3
FORM OF TRUST AGREEMENT
among
FIRSTPLUS INVESTMENT CORPORATION,
as Depositor,
[___________________],
as the Company
and
[____________________],
as Owner Trustee
Dated as of ___________, 199__
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I - Definitions..................................................................................1
SECTION 1.1 Capitalized Terms..................................................................1
SECTION 1.2 Other Definitional Provisions......................................................4
ARTICLE II - Organization.........................................................................................4
SECTION 2.1 Name...............................................................................5
SECTION 2.2 Office.............................................................................5
SECTION 2.3 Purposes and Powers................................................................5
SECTION 2.4 Appointment of Owner Trustee.......................................................6
SECTION 2.5 Initial Capital Contribution of Owner Trust Estate.................................6
SECTION 2.6 Declaration of Trust...............................................................6
SECTION 2.7 Liability of the Owners............................................................6
SECTION 2.8 Title to Trust Property............................................................7
SECTION 2.9 Situs of Trust.....................................................................7
SECTION 2.10 Representations and Warranties of the Depositor
and the Company............................................................7
SECTION 2.11 Maintenance of the Demand Note....................................................9
SECTION 2.12 Federal Income Tax Allocations....................................................9
ARTICLE III - Trust Certificates and Transfer of Interests.......................................................10
SECTION 3.1 Initial Ownership.................................................................10
SECTION 3.2 The Trust Certificates............................................................10
SECTION 3.3 Authentication of Trust Certificates..............................................11
SECTION 3.4 Registration of Transfer and Exchange of Trust Certificates.......................11
SECTION 3.5 Mutilated, Destroyed, Lost or Stolen Trust Certificates...........................12
SECTION 3.6 Persons Deemed Owners.............................................................12
SECTION 3.7 Access to List of Certificateholders' Names and Addresses.........................12
SECTION 3.8 Maintenance of Office or Agency...................................................13
SECTION 3.9 Appointment of Paying Agent.......................................................13
SECTION 3.10 Ownership by Company of Trust Certificates.......................................13
SECTION 3.11 Fixed Value Securities...........................................................14
SECTION 3.12 Book-Entry Trust Certificates....................................................15
SECTION 3.13 Notices to Clearing Agency.......................................................16
SECTION 3.14 Definitive Trust Certificates....................................................16
ARTICLE IV - Actions by Owner Trustee............................................................................16
SECTION 4.1 Prior Notice to Owners with Respect to Certain Matters............................16
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
SECTION 4.2 Action by Owners with Respect to Certain Matters..................................17
SECTION 4.3 Action by Owners with Respect to Bankruptcy.......................................17
SECTION 4.4 Restrictions on Owners' Power.....................................................17
SECTION 4.5 Majority Control..................................................................18
ARTICLE V - Application of Trust Funds; Certain Duties...........................................................18
SECTION 5.1 Establishment of Trust Account....................................................18
SECTION 5.2 Application Of Trust Funds........................................................18
SECTION 5.3 Method of Payment.................................................................19
SECTION 5.4 No Segregation of Moneys; No Interest.............................................19
SECTION 5.5 Accounting and Reports to the Noteholders, Owners,
the Internal Revenue Service and Others..............................19
SECTION 5.6 Signature on Returns; Tax Matter Partner..........................................19
ARTICLE VI - Authority and Duties of Owner Trustee...............................................................20
SECTION 6.1 General Authority.................................................................20
SECTION 6.2 General Duties....................................................................20
SECTION 6.3 Action upon Instruction...........................................................20
SECTION 6.4 No Duties Except as Specified in this Agreement or
in Instructions......................................................21
SECTION 6.5 No Action Except Under Specified Documents
or Instructions......................................................22
SECTION 6.6 Restrictions......................................................................22
ARTICLE VII - Concerning the Owner Trustee.......................................................................22
SECTION 7.1 Acceptance of Trusts and Duties...................................................22
SECTION 7.2 Furnishing of Documents...........................................................23
SECTION 7.3 Representations and Warranties....................................................23
SECTION 7.4 Reliance; Advice of Counsel.......................................................24
SECTION 7.5 Not Acting in Individual Capacity................................................24
SECTION 7.6 Owner Trustee Not Liable for Trust Certificates
or Receivables.......................................................24
SECTION 7.7 Owner Trustee May Own Trust Certificates and Notes................................25
ARTICLE VIII - Compensation of Owner Trustee.....................................................................25
SECTION 8.1 Owner Trustee's Fees and Expenses.................................................25
SECTION 8.2 Indemnification...................................................................26
SECTION 8.3 Payments to the Owner Trustee.....................................................26
ARTICLE IX - Termination of Trust Agreement......................................................................26
SECTION 9.1 Termination of Trust Agreement....................................................26
SECTION 9.2 Dissolution upon Bankruptcy of the Company........................................27
</TABLE>
<PAGE> 4
<TABLE>
<S> <C>
ARTICLE X - Successor Owner Trustees and Additional Owner Trustees...............................................28
SECTION 10.1 Eligibility Requirements for Owner Trustee.......................................28
SECTION 10.2 Resignation or Removal of Owner Trustee..........................................28
SECTION 10.3 Successor Owner Trustee..........................................................29
SECTION 10.4 Merger or Consolidation of Owner Trustee.........................................29
SECTION 10.5 Appointment of Co-Trustee or Separate Trustee....................................30
ARTICLE XI - Miscellaneous.......................................................................................31
SECTION 11.1 Supplements and Amendments.......................................................31
SECTION 11.2 No Legal Title to Owner Trust Estate in Owners...................................32
SECTION 11.3 Limitations on Rights of Others..................................................32
SECTION 11.4 Notices..........................................................................32
SECTION 11.5 Severability.....................................................................33
SECTION 11.6 Separate Counterparts............................................................33
SECTION 11.7 Successors and Assigns...........................................................33
SECTION 11.8 Covenants of the Company.........................................................33
SECTION 11.9 No Petition......................................................................33
SECTION 11.10 No Recourse.....................................................................34
SECTION 11.11 Headings........................................................................34
SECTION 11.12 GOVERNING LAW...................................................................34
SECTION 11.13 Trust Certificate Transfer Restrictions.........................................34
SECTION 11.14 Company Payment Obligation......................................................34
EXHIBIT A Form of Trust Certificate
EXHIBIT B Form of Certificate of Trust
EXHIBIT C Form of Certificate Depository Agreement
</TABLE>
<PAGE> 5
TRUST AGREEMENT, dated as of __________, 199__, among FIRSTPLUS
INVESTMENT CORPORATION, a Nevada corporation, as Depositor, ___________________
(the "Company"), a ____________ corporation, and _______________________, a
Delaware banking corporation, as Owner Trustee.
WHEREAS the Depositor and the Company have entered into a Loan Purchase
Agreement dated as of ______________, 199__, pursuant to which the Depositor
will assign to the Company any any all of the Depositor's rights and interests
with respect to the receipt of amounts from the Reserve Account (each as defined
in the Loan Purchase Agreement); and
WHEREAS, in connection therewith, the Company is willing to assume
certain obligations pursuant hereto.
NOW, THEREFORE, the Depositor, the Company and the Owner Trustee hereby
agree as follows:
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.
"Basic Documents" shall mean the Purchase Agreement, the Sale and
Servicing Agreement, the Indenture, the Administration 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-Trust Certificate" shall mean a beneficial interest in the
Trust Certificates, ownership and transfers of which shall be made through book
entries by a Clearing Agency as described in Section 3.12.
"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 Depository Agreement" shall mean the agreement among the
Trust, the Owner Trustee, the Administrator and The Depository Trust Company, as
the initial Clearing Agency, dated as of the Closing Date, substantially in the
form attached hereto as Exhibit C, relating to the Trust 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 5.01.
"Certificate of Trust" shall mean the Certificate of Trust in the form
of Exhibit B to be filed for the Trust to Section 3810(a) of the Business Trust
Statute.
"Certificate Owner" shall mean, with respect to a Book-Entry Trust
Certificate, the Person who is the beneficial owner of such Book-Entry Trust
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
Trust 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
__________________________________; or at such other address 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 of which the
successor owner trustee will notify the Owners and the Company).
"Demand Note" means the Demand Note dated ________, 199__, from RAC to
the Company.
"Definitive Trust Certificates" shall have the meaning set forth in
Section 3.12.
"Depositor" shall mean the Seller in its capacity as Depositor
hereunder.
"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.
"Initial Certificate Balance" shall mean $_____________.
"Owner" shall mean each Holder of a Trust Certificate.
"Owner Trust Estate" shall mean all right, title and interest of the
Trust in and to the property and rights assigned to the Trust pursuant to
Article II of the Sale and servicing Agreement, all funds on deposit from time
to time in the Trust Accounts (including the Distribution Account) and all other
property of the Trust from time to time, including any rights of the Owner
Trustee and the Trust pursuant to the Sale and Servicing Agreement and the
Administration Agreement.
"Owner Trustee" shall mean ______________, a ________ 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 any paying agent or co-paying agent appointed
pursuant to Section 3.9 and shall initially be _______________.
"RAC" shall mean RAC Financial Corporation, a _______ corporation.
"Record Date" shall mean, with respect to any Distribution Date, the
close of business on the fourteenth day of the calendar month in which such
Distribution Date occurs.
"Sale and Servicing Agreement" shall mean the Sale and Servicing
Agreement dated as of the date hereof, among the Trust, the Depositor, as
seller, and FFI, as servicer.
"Secretary of State" shall mean the Secretary of State of the State of
_________.
"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 Certificate" shall mean a certificate evidencing the beneficial
interest of an Owner in the Trust, substantially in the form attached hereto as
Exhibit A.
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<PAGE> 8
"Underwriters" shall mean those underwriters named in and parties to
the Underwriting Agreement dated as of ________ pursuant to which the Trust
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.
ARTICLE II
Organization
SECTION 2.1 Name. The Trust created hereby shall be known as "FIRSTPLUS
Home Loan Owner Trust 199_-__", in which name the Owner Trustee may conduct the
business of the Trust, make and execute contracts and other instruments on
behalf of the Trust and sue and be sued.
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<PAGE> 9
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 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 Trust Certificates pursuant to this
Agreement and to sell the Notes and the
Trust Certificates;
(ii) with the proceeds of the sale of the Notes
and the Trust 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 pursuant to
the Sale and Servicing Agreement;
(iii) to assign, grant, transfer, pledge, mortgage
and convey the Trust Estate pursuant to the
Indenture and to hold, manage and distribute
to the owners pursuant to the terms of the
Sale and Servicing Agreement any portion of
the Trust Estate released from the Lien of,
and remitted to the Trust pursuant to, the
Indenture;
(iv) to enter into and perform its obligations
under the Basic Documents to which it is to
be a party;
(v) to engage in those activities, including
entering into agreements, that are
necessary, suitable or convenient to
accomplish the foregoing or are incidental
thereto or connected therewith; and
(vi) subject to compliance with the Basic
Documents, to engage in such other
activities as may be required in connection
with conservation of the Owner Trust Estate
and the making of distributions to the
Owners and the Noteholders.
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.
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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
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 Certificateholders
(including the Company (as assignee of the Depositor pursuant to the Loan
Purchase Agreement) in its capacity as recipient of distributions from the
Reserve Account), and the Notes being 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 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 a Certificateholder 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 paragraph and paragraph (c) below shall be evidenced by the Trust
Certificates described in Section 3.10, which for purposes of the Business Trust
Statute shall be deemed to be a separate class of Trust Certificates from all
other Trust Certificates issued by the Trust; provided that the rights and
obligations evidenced by all Trust Certificates, regardless of class, shall,
except as provided in this Section, be identical.
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<PAGE> 11
(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 a Certificateholder 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
released from the Reserve Fund] are held by the Company and the Trust,
respectively, 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. 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, a co-trustee and/or a
separate trustee, as the case may be.
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. The Trust shall not have any employees in any state other than
Delaware; 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. 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.
(a) The Depositor hereby represents and warrants to the Owner Trustee
that:
(i) The Depositor is duly organized and validly
existing as a corporation in good standing
under the laws of the State of Nevada, with
power and authority to own its properties
and to conduct its business as such
properties are currently owned and such
business is presently conducted.
(ii) The Depositor is duly qualified to do
business as a foreign corporation in good
standing, and has obtained all necessary
licenses and approvals in all jurisdictions
in which the ownership or lease of property
or the conduct of its business shall require
such qualifications.
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<PAGE> 12
(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) To the Depositor's best knowledge, there are
no proceedings or investigations pending or
threatened 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
Company and the Depositor in Sections 3.1
and 3.2 of the Loan Purchase Agreement are
true and correct.
(b) The Company hereby represents and warrants to the Owner
Trustee that:
(i) The Company is duly organized and validly
existing as a corporation in good standing
under the laws of the State of _________,
with
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<PAGE> 13
power and authority to own its properties
and to conduct its business as such
properties are currently owned and such
business is presently conducted.
(ii) The Company is duly qualified to do business
as a foreign corporation in good standing,
and has obtained all necessary licenses and
approvals in all jurisdictions in which the
ownership or lease of property or the
conduct of its business shall require such
qualifications.
(iii) The Company has the power and authority to
execute and deliver this Agreement and to
carry out its terms; the Company has full
power and authority to sell and assign the
property to be sold and assigned to and
deposited with the Trust and the Company 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 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
consunration 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
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<PAGE> 14
its obligations under, or the validity or
enforceability of, this Agreement.
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.
SECTION 2.12 Federal Income Tax Allocations. Net income of the Trust
for any month, as determined tor Federal income tax purposes (and each item of
income, gain, loss and deduction entering into the computation thereof), shall
be allocated:
(a) among the Certificate Owners 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 5.01(c) of the Sale and Servicing Agreement for such month, (ii)
interest on the excess, if any, of the amount distributed in respect of interest
to the Certificateholders pursuant to Section 5.01(c) of the Sale and Servicing
Agreement for the preceding Distribution Date over the amount in respect of
interest that is actually deposited in the Distribution Account on such
preceding Distribution Date, to the extent permitted by law, at the Pass-Through
Rate from such preceding Distribution Date through the current Distribution
Date, (iii) 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 Trust Certificates over their initial aggregate issue
price, and (iv) any amount expected to be distributed to the Certificateholders
pursuant to Section [5.6(e)] of the Sale and Servicing Agreement (to the extent
not previously allocated pursuant to this clause); and
(b) to the Company, 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 Company to the
extent the Company is reasonably expected to bear the economic burden of such
net losses, and any remaining net losses shall be allocated among the
Certificate Owners 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. The Company is authorized to modify the allocations in this
paragraph if necessary or appropriate, in its sole discretion, for the
allocations to fairly reflect the economic income, gain or loss to the Company
or to the Certificate Owners, or as otherwise required by the Code.
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<PAGE> 15
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 Trust Certificates shall be
issued in minimum denominations of $10,000 and in integral multiples of $1,000
in excess thereof; provided, however, the Trust Certificates issued to the
Company pursuant to Section 3.10 may be issued in such denomination as to
include any residual 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 a Certificateholder,
and shall be entitled to the rights and subject to the obligations of a
Certificateholder 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 Authentication of Trust Certificates. Concurrently with the
initial sale of the Receivables to the Trust pursuant to the Sale and Servicing
Agreement, the Owner Trustee shall cause the Trust Certificates in an aggregate
principal amount equal to the Initial Certificate Balance to be executed on
behalf of theTrust, 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, executed by the Owner Trustee or
_____________, as the Owner Trustee's authenticating agent, by manual 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. ______________
shall be the initial Certificate Registrar.
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<PAGE> 16
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 _____________ 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 a Holder, Trust
Certificates may be exchanged for other Trust Certificates of authorized
denominations of a like aggregate amount upon surrender of the Trust
Certificates to be exchanged at the office or agency maintained pursuant to
Section 3.8.
Every Trust Certificate presented or surrendered for registration of
transfer or exchange shall be accompanied by a written instrument of transfer in
form satisfactory to the Owner Trustee and the Certificate Registrar duly
executed by the Holder or his attorney duly authorized in writing. Each Trust
Certificate surrendered for registration of transfer or exchange shall be
cancelled 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 Chemical Bankf 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
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<PAGE> 17
name any Trust Certificate shall be registered in the Certificate Register as
the owner of such Trust Certif icate for the purpose of receiving distributions
pursuant to Section 5.2 and for all other purposes whatsoever, and neither the
owner Trustee nor the Certificate Registrar shall be bound by any notice to the
contrary.
SECTION 3.7 Access to List of Certificateholders' 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 or the Depositor in writing, a list, in such form as
the Servicer or the Depositor may reasonably require, of the names and addresses
of the Certificateholders as of the most recent Record Date. If three or more
Certificateholders or one or more Holders of Trust Certificates evidencing not
less than 25% of the certificate 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 Trust 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 Holder, 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
_____________________________ 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 Paying Agent shall make
distributions to Certificateholders from the Certificate Distribution Account
pursuant to Section 5.2 and shall report the amounts of such distributions to
the Owner Trustee. Any Paying Agent shall have the revocable power to withdraw
funds from the Certificate Distribution Account for the purpose of making the
distributions referred to above. The Owner Trustee may revoke such power and
remove the Paying Agent if the owner Trustee determines in its sole discretion
that the Paying Agent shall have failed to perform its obligations under this
Agreement in any material respect. The Paying Agent shall initially be
_____________, and any co-paying agent chosen by ______________, and acceptable
to the Owner Trustee. _____________ shall be permitted to resign as Paying Agent
upon 30 days' written notice to the owner Trustee. In the event that ___________
shall no longer be the Paying Agent, the Owner Trustee shall appoint a successor
to act as Paying Agent (which shall be a bank or trust company). 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
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<PAGE> 18
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 additional Paying Agent will hold all sums, if any, held by it for
payment to the Cartificateholders in trust for the benefit of the
Certificateholders entitled thereto until such sums shall be paid to such
Certificateholders. 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 Owner Trustee also in its role
as Paying Agent, for so long as the owner Trustee shall act as Paying Agent and,
to the extent applicable, to any other paying agent appointed hereunder. Any
reference in this Agreement to the Paying Agent shall include any co-paying
agent unless the context requires otherwise.
SECTION 3.10 Ownership by Company of Trust Certificates. The Company
shall on the Closing Date purchase from the Underwriters, and shall thereafter
retain beneficial and record ownership of, Trust Certificates representing at
least 1% of the Certificate Balance. Any attempted transfer of any Trust
Certificate that would reduce such interest of the Company below 1% of the
Certificate Balance shall be void. The Owner Trustee shall cause any Trust
Certificate issued to the Company to contain a legend stating "THIS CERTIFICATE
IS NON-TRANSFERABLE".
SECTION 3.11 Book-Entry Trust Certificates. The Trust Certificates,
upon original issuance, will be issued in the form of a typewritten Trust
Certificate or Trust Certificates representing Book-Entry Trust 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 Trust
Certificate may be issued to the Company pursuant to Section 3.10. Such Trust
Certificate or Trust 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 Trust
Certificate representing such Certificate Owners interest in such Trust
Certificate, except as provided in Section 3.14. Unless and until definitive,
fully registered Trust Certificates (the Definitive Trust Certificates") have
been issued to Certificate Owners pursuant Section 3.14:
(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 Trust
Certificates and the giving of instructions
or directions hereunder) as the sole Holder
of the Trust 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;
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<PAGE> 19
(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 Trust Certificates are
issued pursuant to Section 3.14, 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
Trust 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 Trust
Certificates evidencing a specified
percentage of the Certificate 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 Trust
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 Trust Certificates shall have been issued to Certificate
owners pursuant to Section 3.14, the Owner Trustee shall give all such notices
and communizations specified herein to be given to Certificateholders to the
Clearing Agency, and shall have no obligations to the Certificate Owners.
SECTION 3.13 Definitive Trust 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
Trust 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 or a Servicer
Default, Certificate Owners representing beneficial interests aggregating at
least a majority of the Certificate 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 and the Owner Trustee of the
occurrence of any such event and of the availability of the Definitive Trust
Certificates to Certificate owners requesting the same. Upon surrender to the
Owner Trustee of the typewritten Trust Certificate or Trust Certificates
representing the Book-Entry Trust Certificates by the clearing Agency,
accompanied by registration instructions the Owner Trustee shall execute and
authenticate the Definitive Trust 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.
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<PAGE> 20
Upon the issuance of Definitive Trust Certificates, the owner Trustee shall
recognize the Holders of the Definitive Trust Certificates as
Certificateholders. The Definitive Trust 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.
ARTICLE IV
Actions bv 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
unless at least 30 days before the taking of such action, the Owner Trustee
shall have notified the Certificateholders in writing of the proposed action and
the Owners shall not have notified the Owner Trustee in writing prior to the
30th day after such notice is given that such Owners have withheld consent or
provided alternative direction:
(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 of the Indenture by a supplemental indenture in
circumstances where the consent of any Noteholder is required;
(d) the amendment of the Indenture by a supplemental indenture in
circumstances where the consent of any Noteholder is not required and such
amendment materially adversely affects the interest of the Owners;
(e) the amendment, change or modification of the Administration
Agreement, except to cure any ambiguity or to amend or supplement any provision
in a manner or add any provision that would not materially adversely affect the
interests of the Owners; or
(f) 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.
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, to
(a) remove the Administrator under the Administration Agreement pursuant to
Section 8 thereof, (b) appoint a successor Administrator
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<PAGE> 21
pursuant to Section 8 of the Administration Agreement, (c) remove the Servicer
under the Sale and Servicing Agreement pursuant to Section 8.1 thereof or (d)
except as expressly provided in the Basic Documents, sell the Receivables 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.
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 unanimous prior approval of all
owners and the delivery to the Owner Trustee by each such owner of a certificate
certifying that such Owner reasonably believes that the Trust is insolvent.
SECTION 4.4 Restrictions on Owners' Power. The owners shall not direct
the Owner Trustee to take or refrain from taking any action if such action or
inaction would be contrary to any obligation of the Trust or the owner Trustee
under this Agreement or any of the Basic Documents or would be contrary to
Section 2.3 nor shall the Owner Trustee be obligated to follow any such
direction, if given.
SECTION 4.5 Majority Control. Except as expressly provided herein, any
action that may be taken by the owners under this Agreement may be taken by the
Holders of Trust Certificates evidencing not less than a majority of the
Certificate Balance. Except as expressly provided herein, any written notice of
the Owners delivered pursuant to this Agreement shall be effective if signed by
Holders of Trust Certificates evidencing not less than a majority of the
Certificate Balance at the time of the delivery of such notice.
ARTICLE V
Application of Trust Funds; Certain Duties
SECTION 5.1 Establishment of Trust Account. Owner Trustee, for the
benefit of the Certificateholders, shall establish and maintain in the name of
the Trust an Eligible Deposit Account (the "Certificate Distribution Account"),
bearing a designation clearly indicating that the funds deposited therein are
held for the benefit of the Certificateholders.
The Owner Trustee shall possess all right, title and interest in all
funds on deposit from time to time in the Certificate Distribution Account and
in all proceeds thereof. Except as otherwise expressly provided herein, the
Certificate Distribution Account shall be under the sole dominion and control of
the Owner Trustee for the benefit of the Certificateholders. If, at any time,
the Certificate Distribution Account ceases to be an Eligible Deposit Account,
the Owner Trustee (or the Depositor on behalf of the Owner Trustee, if the
Certificate Distribution Account is not then held by the owner Trustee or an
affiliate thereof) shall within 10 Business Days (or such longer period, not to
exceed 30 calendar days, as to which each Rating Agency may consent) establish a
new Certificate
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<PAGE> 22
Distribution Account as an Eligible Deposit Account and shall transfer any cash
and/or any investments to such new Certificate Distribution Account.
SECTION 5.2 Application Of Trust Funds.
(a) On each Distribution Date, the owner Trustee will distribute to
Certificateholders, on a pro rata basis, amounts deposited in the Certificate
Distribution Account pursuant to Sections 5.01(c), 5.03 and 5.06 of the Sale and
Servicing Agreement with respect to such Distribution Date.
(b) On each Distribution Date, the Owner Trustee shall send to each
Certificateholder 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 9.1(c), distributions
required to be made to Certificateholders on any Distribution Date shall be made
to each Certificateholder of record on the preceding Record Date either by wire
transfer, in immediately available funds, to the account of such Holder at a
bank or other entity having appropriate facilities therefor, if such
Certificateholder shall have provided to the Certificate Registrar appropriate
written instructions at least five Business Days prior to such Distribution Date
and such Holder's Trust Certificates in the aggregate evidence a denomination of
not less than $1,000,000, or, if not, by check mailed to such Certificateholder
at the address of such holder appearing in the Certificate Register.
SECTION 5.4 No Segregation of Moneys; No Interest. Subject to Sections
5.1 and 5.2, moneys received by the Owner Trustee hereunder need not be
segregated in any manner except to the extent required by law or the Sale and
Servicing Agreement and may be deposited under such general conditions as may be
prescribed by law, and the Owner Trustee shall not be liable for any interest
thereon.
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<PAGE> 23
SECTION 5.5 Accounting and Reports to the Noteholders, 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, (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) f ile 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
Receivables. The owner Trustee shall not make the election provided under
Section 754 of the Code.
SECTION 5.6 Signature on Returns; Tax Matter 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 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 Section 3.11, 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 $___________, Class A-2 Notes in the aggregate
principal amount of $___________, Class A-3 Notes in the aggregate principal
amount of $___________, Class A-4 Notes in the aggregate principal amount of
$___________, and Class A-5 Notes in the aggregate principal amount of
$________. 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. The Owner Trustee is further authorized from time to time
to take such action as the Administrator recommends with respect to the Basic
Documents.
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<PAGE> 24
SECTION 6.2 General Duties. It shall be the duty of the Owner Trustee
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 has agreed in the Administration
Agreement to perform any act or to discharge any duty of the owner Trustee
hereunder or under any Basic Document, and the Owner Trustee shall not be held
liable for the default or failure of the Administrator to carry out its
obligations under the Administration Agreement.
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 ofthe 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 requesting
instruction as to the course of action to be adopted, and to the extent the
owner Trustee acts in good faith in accordance with any written instruction of
the Owners received, the owner Trustee shall not be liable on account of such
action to any Person. If the Owner Trustee shall not have received appropriate
instruction within 10 days of such notice (or within such shorter period of time
as reasonably may be specified in such notice or may be necessary under the
circumstances) it may, but shall be under no duty to, take or refrain from
taking such action, not inconsistent with this Agreement or the Basic Documents,
as it shall deem to be in the best interests of the Owners, and shall have no
liability to any Person for such action or inaction.
(d) In the event that the Owner Trustee is unsure as to the application
of any provision of this Agreement or any Basic Document or any such provision
is ambiguous as to its application, or is, or appears to be, in conflict with
any other applicable provision, or in the event that this Agreement permits any
determination by the Owner Trustee or is silent or is incomplete as to the
course of action that the Owner Trustee is required to take with respect to a
particular set of facts, the Owner Trustee may give notice (in such form as
shall be appropriate under the circumstances) to the owners requesting
instruction and, to the extent that the Owner Trustee acts or refrains from
acting in good faith in accordance with any such instruction received, the Owner
Trustee shall not be liable, on account of such action or inaction, to any
Person. If the owner Trustee shall not have
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<PAGE> 25
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 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 or in any document or written instruction received by the
Owner Trustee pursuant to section 6.03; 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 off ice 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 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 6.03.
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
2.03 or (b) that, to the actual knowledge of the Owner Trustee, would result in
the Trust's becoming taxable as a corporation for Federal income tax purposes.
The owners shall not direct the Owner Trustee to take action that would violate
the provisions of this Section.
ARTICLE VII
Concerning the Owner Trustee
SECTION 7.1 Acceptance of Trusts and Duties. The Owner Trustee accepts
the trusts hereby created and agrees to perform its duties hereunder with
respect to such trusts but only upon the terms of this Agreement. 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
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Agreement. The Owner Trustee shall not be answerable or accountable hereunder or
under any Basic Document under any circumstances, except (i) for its own willful
misconduct or negligence or (ii) in the case of the inaccuracy of any
representation or warranty contained in Section 7.03 expressly made by the Owner
Trustee. In particular, but not by way of limitations (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 any owner;
(c) no provision of this Agreement or any Basic Document shall require
the owner Trustee to expend or risk funds or otherwise incur any financial
liability in the performance of any of its rights or powers hereunder or under
any Basic Document if the owner Trustee shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against such risk
or liability is not reasonably assured or provided to it;
(d) under no circumstances shall the Owner Trustee be liable for
indebtedness evidenced by or arising under any of the Basic Documents, including
the principal of and interest on the Notes;
(e) the Owner Trustee shall not be responsible for or in respect of the
validity or sufficiency of this Agreement or for the due execution hereof by the
Depositor or the Company or for the form, character, genuineness, sufficiency,
value or validity of any of the Owner Trust Estate or for or in respect of the
validity or sufficiency of the Basic Documents, other than the certificate of
authentication on the Trust Certificates, and the Owner Trustee shall in no
event assume or incur any liability, duty, or obligation to any Noteholder or to
any Owner, other than as expressly provided for herein and in the Basic
Documents;
(f) the Owner Trustee shall not be liable for the default or misconduct
of the Administrator, the Seller, the Company, the Indenture Trustee or the
Servicer under any of the Basic Documents or otherwise and the Owner Trustee
shall have no obligation or liability to perform the obligations of the Trust
under this Agreement or the Basic Documents that are required to be performed by
the Administrator under the Administration Agreement, the Indenture Trustee
under the Indenture or the Servicer under the Sale and Servicing Agreement; and
(g) the owner Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Agreement, or to institute, conduct or
defend any litigation under this Agreement or otherwise or in relation to this
Agreement or any Basic Document, at the request, order or direction of any of
the Owners, unless such Owners have offered to the Owner Trustee security or
indemnity satisfactory to it against the costs, expenses and liabilities that
may be incurred by the Owner Trustee therein or thereby. The right of the Owner
Trustee to perform any discretionary act enumerated in this Agreement or in any
Basic Document shall not be construed as a duty, and the
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<PAGE> 27
Owner Trustee shall not be answerable for other than its negligence or willful
misconduct in the performance of any such act.
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. The Owner Trustee hereby
represents and warrants to the Company, for the benefit of the Owners, that:
(a) 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.
(b) 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.
(c) Neither the execution nor the delivery by it of this Agreement nor
the consummation by it of the transactions contemplated hereby nor compliance by
it with any of the terms or provisions hereof will contravene any Federal or
Delaware law, governmental rule or regulation governing the banking or trust
powers of the owner Trustee or any judgment or order binding on it, or
constitute any default under its charter documents or by-laws or any indenture,
mortgage, contract, agreement or instrument to which it is a party or by which
any of its properties may be bound.
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.
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<PAGE> 28
(b) In the exercise or administration of the trusts hereunder and in
the performance of its duties and obligations under this Agreement or the Basic
Documents, the owner Trustee (i) may act directly or through its agents or
attorneys pursuant to agreements entered into with any of them, and the owner
Trustee shall not be liable for the conduct or misconduct of such agents or
attorneys if such agents or attorneys shall have been selected by the Owner
Trustee with reasonable care, and (ii) may consult with counsel, accountants and
other skilled persons to be selected with reasonable care and employed by it.
The Owner Trustee shall not be liable for anything done, suffered or omitted in
good faith by it in accordance with the written opinion or advice of any such
counsel, accountants or other such persons and not contrary to this Agrement 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 Chemical Bank Delaware
acts solely as owner Trustee hereunder and not in its individual capacity 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
Receivables. The recitals contained herein and in the 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)
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 Certificateholders under this Agreement or the Noteholders under the
Indenture, including, without limitation: the existence, condition and ownership
of any Mortgaged Property; the existence and enforceability of any insurance
thereon; the existence and contents of any Home Loan on any computer or other
record thereof; the validity of the assignment of any Home Loan to the Trust or
of any intervening assignment; the completeness of any Home Loan; the
performance or enforcement of any Home Loan; the compliance by the Depositor,
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.
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ARTICLE VIII
Comnensation 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 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 Trusteels 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: (i) upon the final distribution
by the Owner Trustee of all moneys or other property or proceeds of the Owner
Trust Estate in accordance with the terms of the Indenture, the Sale and
Servicing Agreement and Article V or (ii) at the time provided in Section 9.2.
The bankruptcy, liquidation, dissolution, death or incapacity of any Owner,
other than the Company as
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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 W
otherwise affect the rights, obligations and liabilities of the parties hereto.
(b) Except as provided in Section 9.1(a), none of the Depositor, the
Company nor any Owner shall be entitled to revoke or terminate the Trust.
(c) Notice of any termination of the Trust, specifying the Distribution
Date upon which the Certificateholders shall surrender their Trust Certificates
to the Paying Agent for payment of the final distributions and cancellation,
shall be given by the Owner Trustee by to Certificateholders mailed within five
Business Days of receipt of notice of such termination from the Servicer given
pursuant to Section 9.1 (c) of the Sale and Servicing Agreement, stating (i) the
Distribution Date upon or with respect to which final payment of the Trust
Certificates shall be made upon presentation and surrender of the Trust
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 Trust Certificates, the Paying Agent shall cause to be
distributed to Certificateholders amounts distributable on such Distribution
Date pursuant to Section 5.2.
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 Company.
(d) Upon the winding up of the Trust and its termination, the owner
Trustee shall cause the Certificate of Trust to be cancelled 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. In the event
that an Insolvency shall occur with respect to the Company, 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
Certificateholders (other than the Company) representing more than 50% of the
Certificate
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Balance (not including the Certificate Balance of the Trust Certificates held by
the Company), and (b) each of the (i) Holders (as defined in the Indenture) of
Class A-1 Notes representing more than 50% of the Outstanding Amount of the
Class A-1 Notes, (ii) Holders of Class A-2 Notes representing more than 50% of
the Outstanding Amount of the Class A-2 Notes, (iii) Holders of Class A-3 Notes
representing more than 50% of the Outstanding Amount of the Class A-3 Notes,
(iv) Holders of Class A-4 Notes representing more than 50% of the Outstanding
Amount of the Class A-4 Notes, (v) Holders of Class A-5 Notes representing more
than 50% of the Outstanding Amount of the Class A-5 Notes. 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 Certificateholders
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 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.
ARTICLE X
Successor Owner Trustees and Additional Owner Trustees
SECTION 10.1 Eligibility Reguirements 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. 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. Upon receiving such notice
of resignation, the Administrator shall promptly appoint a successor Owner
Trustee 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
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days after the giving of such notice of resignation, the resigning Owner Trustee
may petition any court of competent jurisdiction for the appointment of a
successor Owner Trustee.
If at any time the Owner Trustee shall cease to be eligible in
accordance with the provisions of Section 10.1 and shall fail to resign after
written request therefor by the Administrator, or if at any time the Owner
Trustee shall be legally unable to act, or shall be adjudged bankrupt or
insolvent, or a receiver of the Owner Trustee or of its property shall be
appointed, or any public officer shall take charge or control of the Owner
Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, then the Administrator may remove the Owner
Trustee. If the Administrator shall remove the Owner Trustee under the authority
of the immediately preceding sentence, the Administrator 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 10.03 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.
SECTION 10.3 Successor Owner Trustee. Any successor Owner Trustee
appointed pursuant to Section 10.02 shall execute, acknowledge and deliver to
the Administrator 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, 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 Certificateholders, the Indenture Trustee, the Noteholders and
the Rating Agencies. If the Administrator fail to mail such notice within 10
days after acceptance of appointment by the successor Owner Trustee, the
successor Owner Trustee shall cause such notice to be mailed at the expense of
the Administrator.
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SECTION 10.4 Merger or Consolidation of Owner Trustee. Any corporation
into which the Owner Trustee may be merged or converted or with which it may be
consolidated or any corporation resulting from any merger, conversion or
consolidation to which the Owner Trustee shall be a party, or any corporation
succeeding to all or substantially all of the corporate trust business of the
owner Trustee, shall be the successor of the Owner Trustee hereunder, provided
such corporation shall be eligible pursuant to Section 10.1, without the
execution or filing of any instrument or any further act on the part of any of
the parties hereto, anything herein to the contrary notwithstanding; provided
further that the Owner Trustee shall mail notice of such merger or consolidation
to the Rating Agencies.
SECTION 10.5 Appointment of Co-Trustee or SeparateTrustee.
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 Financed Vehicle may at the time be located,
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 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 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 alone 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.
Each separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provision and conditions:
(i) all rights, powers, duties and obligations
conferred or imposed upon the Owner Trustee
shall be conferred upon and exercised or
performed by the Owner Trustee and such
separate trustee or co- trustee jointly (it
being understood that such separate trustee
or co- trustee is not authorized to act
separately without the Owner Trustee joining
in such act), except to the extent that
under any law of any jurisdiction in which
any particular act or acts are to be
performed, the owner Trustee shall be
incompetent or unqualified to perform such
act or acts, in which event such rights,
powers, duties, and obligations (including
the holding of title to the Trust or any
portion thereof in any such jurisdiction)
shall be exercised and performed singly by
such separate trustee or co-trustee, but
solely at the direction of the Owner
Trustee;
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<PAGE> 34
(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 aivan to Panh mf the then separate trustees and
co-trustees, as as if given to each of them. Every instrument any separate
trustee or co-trustee shall refer Agreement and the conditions of this Article.
trustee and co-trustee, upon its acceptance of conferred, shall be vested with
the estates or 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 trus tee or co trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Owner Trustee, to the extent permitted by law, without the appointment of a new
or successor trustee.
ARTICLE XI
Miscellaneous
SECTION 11.1 Supplements and Amendments. This Agreement may be amended
by the Depositor, the Company and the Owner Trustee, with prior written notice
to the Rating Agencies, without the consent of any of the Noteholders or the
Certificateholders, 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
Certificateholders provided, however, that such action shall not, as evidenced
by an Opinion of Counsel, adversely affect in any material respect the interests
of any Noteholder or Certificateholder.
This Agreement may also be amended from time to time by the Depositor,
the Company and the Owner Trustee, with prior written notice to the Rating
Agencies. with the consent of the Holders (as defined in the Indenture) of Notes
evidencing not less than a majority of the Outstanding Amount of the Notes and
the consent of the Holders of Certificates evidencing not less than a majority
of the Certificate Balance, 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
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Noteholders or the Certificateholders; provided, however, that no such amendment
shall (a) increase or reduce in any manner the amount of, or accelerate or delay
the timing of, collections of payments on Receivables or distributions that
shall be required to be made for the benefit of the Noteholders or the
Certificateholders or (b) reduce the aforesaid percentage of the outstanding
Amount of the Notes and the Certificate Balance required to consent to any such
amendment, without the consent of the holders of all the outstanding Notes and
Certificates.
Promptly after the execution of any such amendment or consent, the
Owner Trustee shall furnish written notification of the substance of such
amendment or consent to each Certificateholder, the Indenture Trustee and each
of the Rating Agencies.
It shall not be necessary for the consent of Certificateholders, the
Noteholders or the Indenture Trustee pursuant to this Section to approve the
particular form of any proposed amendment or consent, but it shall be sufficient
if such consent shall approve the substance thereof. The manner of obtaining
such consents (and any other consents of Certificateholders provided for in this
Agreement or in any other Basic Document) and of evidencing the authorization of
the execution thereof by Certificateholders shall be subject to such reasonable
requirements as the owner Trustee may prescribe.
Promptly after the execution of any amendment to the Certificate of
Trust, the Owner Trustee shall cause the filing of such amendment with the
Secretary of State.
Prior to the execution of any amendment to this Agreement or the
Certificate of Trust, the Owner Trustee shall be entitled to receive and rely
upon an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Agreement. The Owner Trustee may, but shall not
be obligated to, enter into any such amendment which affects the Owner Trustee's
own rights, duties or immunities under this Agreement or otherwise.
SECTION 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 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.
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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), if to the Owner Trustee, addressed to the Corporate Trust Office; if
to the Depositor, addressed to FIRSTPLUS INVESTMENT CORPORATION, 3773 Howard
Hughes Parkway, Suite 300N, Las Vegas, Nevada 89109, Attention:_____________;
if, to the Company, addressed to _____________________, 3773 Howard Hughes
Parkway, Suite 300N, Las Vegas, Nevada 89109, Attention:_____________; or, as to
each 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 a Certificateholder
shall be given by first-class mail, postage prepaid, at the address of such
Holder as shown in the Certificate Register. Any notice so mailed within the
time prescribed in this Agreement shall be conclusively presumed to have been
duly given, whether or not the Certificateholder receives such notice.
SECTION 11.5 Severability. Any provision of this Agreement that Is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 11.6 Separate Counterparts. This Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 11.7 Sucessors and Assigns. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, the
Depositor, the Company, 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 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
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<PAGE> 37
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. 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 (not in its individual
capacity but solely as Owner Trustee), by entering into this Agreement, each
Certificateholder, 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 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 Certificateholder by accepting a Trust
Certificate acknowledges that such Certificateholder's Trust Certificates
represent beneficial interests in the Trust only and do not represent interests
in or obligations of the Seller, the Servicer, the Administrator, the Owner
Trustee, the Indenture Trustee or any Affiliate thereof and no recourse may be
had against such parties or their assets, except as may be expressly set forth
or contemplated in this Agreement, the 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.
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 Trust Certificate Transfer Restrictions. The Trust
Certificates may not 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 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 Holder
thereof shall be deemed to have represented and warranted that it is not a
Benefit Plan.
SECTION 11.14 Company Payment Obligation. The Company shall be
responsible for payment of the Administrator's fees under the Administration
Agreement and shall reimburse the Administrator for all expenses and liabilities
of the Administrator incurred thereunder.
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IN WITNESS WHEREOF, the parties hereto have caused this Amended and
Restated 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:_____________________
Title:____________________
[COMPANY]
By:________________________________
Name:_____________________
Title:____________________
[____________________________],
not in its individual capacity but
solely as Owner Trustee
By:________________________________
Name:_____________________
Title:____________________
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<PAGE> 39
EXHIBIT A
TO THE TRUST AGREEMENT
(FORM OF TRUST CERTI FICATE]
NUMBER $____________
R-_____ CUSIP NO. _________
SEE REVERSE FOR CERTAIN DEFINITIONS
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCKANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAY14ENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE CO.v HAS AN INTEREST HEREIN.
FIRSTPLUS HOME LOAN OWNER TRUST 199_-__
____% ASSET BACKED CERTIFICATE
evidencing a fractional undivided interest in the Trust, as defined below, the
property of which includes a pool of Home Loans sold to the Trust by FIRSTPLUS
INVESTMENT CORPORATION.
(This Trust Certificate does not represent an interest in or obligation of
FIRSTPLUS INVESTMENT CORPORATION, FIRSTPLUS FINANCIAL, INC. or any of their
respective affiliates, except to the extent described below.)
THIS CERTIFIES THAT ________________________________________ is the
registered owner of _________________________ DOLLARS nonassessable, fully-paid,
fractional undivided interest in FIRSTPLUS Home Loan Owner Trust 199_-__ (the
"Trust") formed by FIRSTPLUS INVESTMENT CORPORATION, a Nevada corporation (the
"Seller").
The Trust was created pursuant to a Trust Agreement dated as of
__________, 199__ (as amended and supplemented from time to time, the "Trust
Agreement"), among the Seller,
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<PAGE> 40
___________________, a Delaware corporation (the "Company"), and
_____________________, as owner trustee (the "Owner Trustee"), a summary of
certain of the pertinent provisions of which is set forth below. To the extent
not otherwise defined herein, the capitalized terms used herein have the
meanings assigned to them in the Trust Agreement or the Sale and Servicing
Agreement dated as of _____________, 199__ (as amended and supplemented from
time to time, the "Sale and Servicing Agreement"), among the Trust, the Seller
and FIRSTPLUS INVESTMENT CORPORATION, as servicer (the "Servicer"), as
applicable.
This Certificate is one of the duly authorized Certificates designated
as "____% Asset Backed Certificates" (herein called the "Trust Certificates").
Also issued under the Indenture dated as of __________, 199_, between the Trust
and ______________________, as indenture trustee, are the five classes of Notes
designated an "Class A-1 ____% Asset Backed Notes", "Class A-2 ___% Asset Backed
Notes", "Class A-3 ___% Asset Backed Notes","Class A-4 ___% Asset Backed Notes",
and "Class A-5 ___% Asset Backed Notes" (collectively, the "Notes"). This Trust
Certificate is issued under and is subject to the terms, provisions and
conditions of the Trust Agreement to which Trust Agreement the holder of this
Trust Certificate by virtue of the acceptance hereof assents and by which such
holder is bound. The property of the Trust includes a pool of home loans (the
"Home Loans"), all monies due thereunder on or after ______, 199__, certain bank
accounts and the proceeds thereof, proceeds from claims on certain insurance
policies and certain other rights under the Trust Agreement and the Sale and
Servicing Agreement and all proceeds of the foregoing. The rights of the holders
of the Trust Certificates are subordinated to the rights of the holders of the
Notes, as set forth in the Sale and Servicing Agreement.
Under the Trust Agreement, there will be distributed on the 20th day of
each month or, if such 20th day is not a Business Day, the next Business Day,
(each, a "Distribution Date"), commencing on ________, 199__, to the person in
whose name this Trust Certificate is registered at the close of business on the
fourteenth day, of the current calendar month (the "Record Date") such
Certificateholder's fractional undivided interest in the amount to be
distributed to Certificateholders on such Distribution Date; provided however,
that principal will be distributed to the Certificateholders on each
Distribution Date on (to the extent of funds remaining after the Class A-5 Notes
have been paid in full) and after the date on which the Class A-5 Notes have
been paid in full (but in no event prior to the ____________, 199__Distribution
Date).
The holder of this Trust Certificate acknowledges and agrees that its
rights to receive distributions in respect of this Trust Certificate are
subordinated to the rights of the Noteholders as described in the Sale and
Servicing Agreement and the Indenture.
It is the intent of the Seller, the Company, the Servicer and the
Certificateholders that, for purposes of Federal Income, state and local income
and single business tax and any other income taxes, the Trust will be treated as
a partnership and the Certificateholders (including the Company) will be treated
as partners in that partnership. The Company and the other Certificateholders by
acceptance of a Trust Certificate, agree to treat, and to take no action
inconsistent with the treatment of, the Trust Certificates for such tax purposes
as partnership interests in the Trust.
-2-
<PAGE> 41
Each Certificateholder or Certificate Owner, by its acceptance of a
Trust Certificate or, in the case of a Certificate Owner, a beneficial interest
in a Trust Certificate, covenants and agrees that such Certificateholder or
Certificate Owner, as the case may be, will not at any time institute against
the Company, or join in any institution against the Company of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
proceedings under any United States Federal or state bankruptcy or similar law
in connection with any obligations relating to the Trust Certificates, the
Notes, the Trust Agreement or any of the Basic Documents.
Distributions on this Trust Certificate will be made as provided in the
Trust Agreement by the Owner Trustee by wire transfer or check mailed to the
Certificateholder of record in the Certificate Register without the presentation
or surrender of this Trust Certificate or the making.of any notation hereon,
except that with respect to Trust Certificates registered on the Record Date in
the name of the nominee of the Clearing Agency (initially, such nominee to be
Cede a Co.), payments will be made by wire transfer in immediately available
funds to the account designated by such nominee. Except as otherwise provided in
the Trust Agreement and notwithstanding the above, the final distribution on
this Trust Certificate will be made after due notice by the Owner Trustee of the
pendency of such distribution and only upon presentation and surrender of this
Trust Certificate at the office or agency maintained for the purpose by the
Owner Trustee in the Borough of Manhattan, The City of New York.
Reference is hereby made to the further provisions of this Trust
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon shall have been
executed by an authorized officer of the Owner Trustee, by manual. signature,
this Trust Certificate shall not entitle the holder hereof to any benefit under
the Trust Agreement or the Sale and Servicing Agreement or be valid for any
purpose.
-3-
<PAGE> 42
THIS TRUST CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS,
AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.
IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Trust and not
in its individual capacity, has caused this Trust Certificate to be duly
executed.
FIRSTPLUS HOME LOAN OWNER TRUST 199_-__
By: ___________________, not in its
individual capacity but solely an Owner
Trustee
By:________________________________
Authorized Signatory
DATED:_________________
OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Trust Certificates referred to in the within-mentioned Trust
Agreement.
[________________________________________]
as Authenticating Agent
By:______________________________________
Authorized Signatory
-4-
<PAGE> 43
(REVERSE OF TRUST CERTIFICATE)
The Trust Certificates do not represent an obligation of, or an
interest in, the Seller, the Servicer, the Company, the Owner Trustee or any
affiliates of any of them and no recourse may be had against such parties or
their assets, except as may be expressly set forth or contemplated herein or in
the Trust Agreement or the Basic Documents. In addition, this Trust Certificate
is not guaranteed by any governmental agency or instrumentality and to limited
in right of payment to certain collections with respect to the Receivables (and
certain other amounts), all as more specifically set forth herein and in the
Sale and Servicing Agreement. The Trust Certificates are limited in right of
payment to certain collections and recoveries respecting the Receivables, all as
more specifically set forth in the Sale and Servicing Agreement. A copy of each
of the Sale and Servicing Agreement and the Trust Agreement may be examined
during normal business hours at the principal office of the Seller, and at such
other places, if any, designated by the Seller, by any Certificateholder upon
written request.
The Trust Agreement permits, with certain exceptions therein provided,
the amendment thereof and the modification of the rights and obligations of the
Seller and the Company and the rights of the Certificateholders under the Trust
Agreement at any time by the Seller, the Company and the Owner Trustee with the
consent of the holders of the Notes and the Trust Certificates each voting as a
class evidencing not less than a majority of the outstanding Notes and the
Certificate Balance. Any such consent by the holder of this Trust Certificate
shall be conclusive and binding on such holder and on all future holders of this
Trust Certificate and of any Trust Certificate issued upon the transfer hereof
or in exchange herefor or in lieu hereof whether or not notation of such consent
is made upon this Trust Certificate. The Trust Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
holders of any of the Trust Certificates.
As provided in the Trust Agreement and subject to certain limitations
therein set forth, the transfer of this Trust Certificate is registerable in the
Certificate Register upon surrender of this Trust Certificate for registration
of transfer at the offices or agencies of the Certificate Registrar maintained
by the Owner Trustee in the Borough of Manhattan, The City of New York,
accompanied by a written instrument of transfer in form satisfactory to the
Owner Trustee and the Certificate Registrar duly executed by the holder hereof
or such holder's attorney duly authorized in writing, and thereupon one or more
new Trust Certificates of authorized denominations evidencing the same aggregate
interest in the Trust will be issued to the designated transferee. The initial
Certificate Registrar appointed under the Trust Agreement is Chemical Bank, New
York, Now York.
The Trust Certificates are issuable only as registered Trust
Certificates without coupons in denominations of $20,000 and in integral
multiples of $1,000 in excess thereof. As provided in the Trust Agreement and
subject to certain limitations therein set forth, Trust Certificates are
exchangeable for new Trust Certificates of authorized denominations evidencing
the same aggregate denomination, as requested by the holder surrendering the
same. No service charge will be made for any such registration of transfer or
exchange, but the owner Trustee or the Certificate Registrar
-5-
<PAGE> 44
may require payment of a sum sufficient to cover any tax or governmental charge
payable in connection therewith.
The Owner Trustee, the Certificate Registrar and any agent of the Owner
Trustee or the Certificate Registrar may treat the person in whose name this
Certificate is registered as the owner hereof for all purposes and none of the
Owner Trustee, the Certificate Registrar or any such agent shall be affected by
any notice to the contrary.
The obligations and responsibilities created by the Trust Agreement and
the Trust created thereby shall terminate upon the payment to Certificateholders
of all amounts required to be paid to them pursuant to the Trust Agreement and
the Sale and Servicing Agreement and the disposition of all property held as
part of the Trust. The Servicer of the Receivables may at its option purchase
the corpus of the Trust at a price specified in the Sale and Servicing
Agreement, and such purchase of the Receivables and other property of the Trust
will effect early retirement of the Trust Certificates; however, such right of
purchase is exercisable only as of the last day of any Collection Period as of
which the Pool Balance is less than or equal to 10% of the Original Pool
Balance.
The Trust Certificates may not be acquired by (a) an employee benefit
plan (as defined in Section 3(3) of ERISA) that is subject to the provisions of
Title I of ERISA, (b) a plan described in Section 4975(e)(1) of the Code or (c)
any entity whose underlying assets include plan assets by reason of a plan's
investment in the entity (each, a "Benefit Plan"). By accepting and holding this
Trust Certificate, the Holder hereof shall be deemed to have represented and
warranted that it is not a Benefit Plan.
-6-
<PAGE> 45
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
________________________________________________________________________________
(Please print or type name and address, including postal zip code, of assignee)
________________________________________________________________________________
the within Trust Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
____________________________________________________________________ Attorney to
transfer said Trust Certificate on the books of the Certificate Registrar, with
full power of substitution in the premises.
Dated:_____________
________________________*/
Signature Guaranteed:
________________________*/
- ----------
*/ NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Trust Certificate in every particular,
without alteration, enlargement or any change whatever. Such signature must be
guaranteed by a member firm of the Now York Stock Exchange or a commercial bank
or trust company.
-7-
<PAGE> 46
EXHIBIT B
TO THE TRUST AGREEMENT
CERTIFICATE OF TRUST OF
FIRSTPLUS HOME LOAN OWNER TRUST 199 -
THIS Certificate of Trust of FIRSTPLUS HOME LOAN OWNER TRUST 199_-___
(the "Trust"), dated as of _______, 199__, is being duly executed and filed by
___________________, 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 199_-___.
2. Delaware Trustee. The name and business address of the trustee of
the Trust in the State of Delaware is
_____________________________________________________________,
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.
_______________________________,
not in its individual capacity but solely as
owner trustee under a Trust Agreement dated
as of ____________, 199__
By:_____________________________________
Name:
Title:
<PAGE> 47
EXHIBIT C
TO THE TRUST AGREEMENT
(Form of Certificate Depository Agreement]
<PAGE> 1
Exhibit 5.2
September 9, 1996
FIRSTPLUS INVESTMENT CORPORATION
3773 Howard Hughes Parkway
Suite 300N
Las Vegas, Nevada 89109
Re: FIRSTPLUS INVESTMENT CORPORATION
Registration Statement on Form S-3
Registration No. 333-10451
Ladies and Gentlemen:
We have acted as special counsel for FIRSTPLUS INVESTMENT CORPORATION,
a corporation organized under the laws of the State of Nevada (the "Company"),
and certain trusts, all of the beneficial ownership of which will be initially
owned by the Company (each, an "Issuer"), in connection with the proposed
issuance by each Issuer of Asset Backed Notes (the "Notes"). The Notes of a
series are to be issued and secured pursuant to an Indenture for such series,
each between the applicable Issuer and the Indenture Trustee (as defined
therein). The Indenture, in the form filed with the Securities and Exchange
Commission as an exhibit to Amendment No. 1 to the Company's Registration
Statement (as amended, the "Registration Statement") on Form S-3 (File No.
333-10451) under the Securities Act of 1933, as amended (the "1933 Act"), is
herein referred to as the "Indenture."
We have examined originals or copies, certified or otherwise identified
to our satisfaction, of the Issuer's form of organizational documents, the form
of Indenture and the form of Notes included therein and such other documents,
records, certificates of the Issuer and public officials and other instruments
as we have deemed necessary for the purposes of rendering this opinion. In
addition, we have assumed that the Indenture as completed for each series will
be duly executed and delivered by each of the parties thereto; that the Notes as
completed for each series will be duly executed and delivered substantially in
the forms contemplated by the Indenture; and that the Notes for each series will
be sold as described in the Registration Statement.
Based upon the foregoing and subject to the limitations and
qualifications set forth below, we are of the opinion that the Notes are in due
and proper form and, assuming the due authorization, execution and delivery of
the Indenture of each series by the applicable Issuer and the Indenture
<PAGE> 2
FIRSTPLUS INVESTMENT CORPORATION
September 9, 1996
Page 2
Trustee and the due authorization of the Notes for each series by all necessary
action on the part of the applicable Issuer, when the Notes for each series have
been validly executed, authenticated and issued in accordance with the
applicable Indenture and delivered against payment therefor, the Notes for each
series will be valid and binding obligations of the applicable Issuer,
enforceable against the applicable Issuer in accordance with their terms, except
that the enforceability thereof may be subject to (a) bankruptcy, insolvency,
reorganization, arrangement, moratorium, fraudulent or preferential conveyance
or other similar laws now or hereinafter in effect relating to creditors' rights
generally and (b) general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
The opinion expressed above is subject to the qualification that we do
not purport to be experts as to the laws of any jurisdiction other than the
federal laws of the United States of America and the laws of the States of Texas
and New York, and we express no opinion herein as to the effect that the laws
and decisions of courts of any such other jurisdiction may have upon such
opinions.
We consent to the use and filing of this opinion as Exhibit 5.2 to the
Registration Statement and to the reference to our firm under the caption "Legal
Matters" in the Prospectus Supplement and the Prospectus contained therein. In
giving such consent we do not imply or admit that we are an expert with respect
to any part of the Registration Statement, including this exhibit, within the
meaning of the term "expert" as used in the 1933 Act or the rules and
regulations of the Securities and Exchange Commission thereunder.
Very truly yours,
/s/ ANDREWS & KURTH L.L.P.
<PAGE> 1
Exhibit 5.3
September 9, 1996
FIRSTPLUS INVESTMENT CORPORATION
3773 Howard Hughes Parkway
Suite 300N
Las Vegas, Nevada 89109
Re: FIRSTPLUS INVESTMENT CORPORATION
Registration Statement on Form S-3
Registration No. 333-10451
Ladies and Gentlemen:
We have acted as special counsel for FIRSTPLUS INVESTMENT CORPORATION,
a corporation organized under the laws of the State of Nevada (the "Company"),
and certain trusts, all of the beneficial ownership of which will be initially
owned by the Company (each, an "Issuer"), in connection with the proposed
issuance by each Issuer of Asset Backed Certificates (the "Certificates"). The
Certificates of a series are to be issued pursuant to a Trust Agreement for such
series, each between the applicable Issuer, a special purpose entity to be
specified therein (the "SPV"), and an owner trustee to be specified therein (the
"Owner Trustee"). The Trust Agreement, in the form filed with the Securities and
Exchange Commission as an exhibit to Amendment No. 1 to the Company's
registration statement (as amended, the "Registration Statement") on Form S-3
(File No. 333-10451) under the Securities Act of 1933, as amended (the "1933
Act"), is herein referred to as the "Trust Agreement."
We have examined originals or copies, certified or otherwise identified
to our satisfaction, of the Issuer's form of organizational documents, the form
of Trust Agreement and the form of Certificates included therein and such other
documents, records, certificates of the Issuer and public officials and other
instruments as we have deemed necessary for the purposes of rendering this
opinion. In addition, we have assumed that the Trust Agreement as completed for
each series will be duly executed and delivered by each of the parties thereto;
that the Certificates as completed for each series will be duly executed and
delivered substantially in the forms contemplated by the Trust Agreement; and
that the Certificates for each series will be sold as described in the
Registration Statement.
<PAGE> 2
FIRSTPLUS INVESTMENT CORPORATION
September 9, 1996
Page 2
Based upon the foregoing and subject to the limitations and
qualifications set forth below, we are of the opinion that the Certificates are
in due and proper form and, assuming the due authorization, execution and
delivery of the Trust Agreement of each series by the applicable Issuer, the SPV
and the Owner Trustee and the due authorization of the Certificates for each
series by all necessary action on the part of the applicable Issuer, when the
Certificates for each series have been validly executed, authenticated and
issued in accordance with the applicable Trust Agreement and delivered against
payment therefor, the Certificates for each series will be validly issued and
outstanding, fully paid and non-assessable, and entitled to the benefits of the
related Trust Agreement in accordance with their terms, except that the
enforceability thereof may be subject to (a) bankruptcy, insolvency,
reorganization, arrangement, moratorium, fraudulent or preferential conveyance
or other similar laws now or hereinafter in effect relating to creditors' rights
generally, and (b) general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
The opinion expressed above is subject to the qualification that we do
not purport to be experts as to the laws of any jurisdiction other than the
federal laws of the United States of America and the laws of the States of Texas
and New York, and we express no opinion herein as to the effect that the laws
and decisions of courts of any such other jurisdiction may have upon such
opinions.
We consent to the use and filing of this opinion as Exhibit 5.3 to the
Registration Statement and to the reference to our firm under the caption "Legal
Matters" in the Prospectus Supplement and Prospectus contained therein. In
giving such consent we do not imply or admit that we are an expert with respect
to any part of the Registration Statement, including this exhibit, within the
meaning of the term "expert" as used in the 1933 Act or the rules and
regulations of the Securities and Exchange Commission thereunder.
Very truly yours,
/s/ ANDREWS & KURTH L.L.P.
-------------------------------------
<PAGE> 1
Exhibit 8.2
September 9, 1996
FIRSTPLUS INVESTMENT CORPORATION
3773 Howard Hughes Parkway, Suite 300N
Las Vegas, Nevada 89109
Re: FIRSTPLUS INVESTMENT CORPORATION
Registration Statement on Form S-3
Registration No. 333-10451
Ladies and Gentlemen:
We have acted as counsel for FIRSTPLUS INVESTMENT CORPORATION, a
corporation organized under the laws of the State of Nevada (the "Company"), and
certain trusts, all of the beneficial ownership of which will be initially owned
by the Company (each, an "Issuer"), in connection with the proposed issuance by
each Issuer of Asset Backed Certificates (the "Certificates") or Asset Backed
Notes (the "Notes"). The Certificates of a series are to be issued pursuant to a
Trust Agreement, each between the Issuer, a special purpose entity to be
specified therein (the "SPV"), and an owner trustee to be specified therein (the
"Owner Trustee"). The Trust Agreement, in the form filed with the Securities and
Exchange Commission as an exhibit to Amendment No. 1 to the Company's
registration statement (as amended, the "Registration Statement") on Form S-3
(File No. 333-10451) under the Securities Act of 1933, as amended (the "1933
Act"), is herein referred to as the "Trust Agreement". The Notes of a series are
to be issued pursuant to an Indenture for such series, each between the
applicable Issuer and the Indenture Trustee (as defined therein). The Indenture,
in the form filed with the Securities and Exchange Commission as an exhibit to
the Registration Statement, is herein referred to as the "Indenture."
We have examined originals or copies, certified or otherwise identified
to our satisfaction, of the Issuer's form of organizational documents, the form
of Trust Agreement and the form of Certificates included therein, the form of
Indenture and the form of Notes included therein and such other documents,
records, certificates of the Issuer and public officials and other instruments
as we have deemed necessary for the purposes of rendering this opinion. In
addition, we have assumed that the Trust Agreement as completed for each series
will be duly executed and delivered by each of the parties thereto; that the
Certificates as completed for each series will be duly executed and delivered
substantially in the forms contemplated by the Trust Agreement; and that the
Certificates for each series will be sold as described in the Registration
Statement. We have also assumed that the Indenture as completed for each series
will be duly executed and delivered by each of the parties thereto; that the
Notes as completed for each series will be duly executed and delivered
substantially
<PAGE> 2
FIRSTPLUS INVESTMENT CORPORATION
September 9, 1996
Page 2
in the forms contemplated by the Indenture; and that the Notes for each series
will be sold as described in the Registration Statement.
On the basis of the foregoing and subject to the limitations and
qualifications set forth below, we are of the opinion that the description of
federal income tax consequences appearing under the heading "Certain Federal
Income Tax Consequences" in the form of prospectus contained in the Registration
Statement relating to Asset Backed Notes and Asset Backed Certificates
accurately describes the material federal income tax consequences to holders of
Certificates or Notes, as applicable, under existing law and subject to the
qualifications and assumptions stated therein.
The opinion herein is based upon our interpretations of current law,
including court authority and existing Final and Temporary Regulations, which
are subject to change both prospectively and retroactively, and upon the facts
and assumptions discussed herein. This opinion letter is limited to the matters
set forth herein, and no opinions are intended to be implied or may be inferred
beyond those expressly stated herein. Our opinion is rendered as of the date
hereof and we assume no obligation to update or supplement this opinion or any
matter related to this opinion to reflect any change of fact, circumstances, or
law after the date hereof. In addition, our opinion is based on the assumption
that the matter will be properly presented to the applicable court. Furthermore,
our opinion is not binding on the Internal Revenue Service or a court. In
addition, we must note that our opinion represents merely our best legal
judgment on the matters presented and that others may disagree with our
conclusion. There can be no assurance that the Internal Revenue Service will not
take a contrary position or that a court would agree with our opinion if
litigated.
We consent to the use and filing of this opinion as Exhibit 8.2 to the
Registration Statement and to the reference to our firm under the caption "Legal
Matters" in the Prospectus Supplement and Prospectus contained therein. In
giving such consent we do not imply or admit that we are an expert with respect
to any part of the Registration Statement, including this exhibit, within the
meaning of the term "expert" as used in the 1933 Act or the rules and
regulations of the Securities and Exchange Commission thereunder.
Very truly yours,
/s/ ANDREWS & KURTH L.L.P.
<PAGE> 1
EXHIBIT 10.7
FORM OF SALE AND SERVICING AGREEMENT
Dated as of , 19
by and between
FIRSTPLUS HOME LOAN OWNER TRUST 19 -
(Issuer)
FIRSTPLUS INVESTMENT CORPORATION
(Seller)
and
FIRSTPLUS FINANCIAL, INC.
(Transferor and Servicer)
FIRSTPLUS HOME LOAN OWNER TRUST 19 __-__
ASSET-BACKED NOTES AND CERTIFICATES
SERIES 19 __-__
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
ARTICLE I
DEFINITIONS
<S> <C>
Section 1.01 Definitions.........................................................................................1
Addition Notice..........................................................................................1
Agreement................................................................................................1
Assignment of Mortgage...................................................................................1
Assumed Pool Principal Balance...........................................................................1
Available Collection Amount..............................................................................1
Business Day.............................................................................................2
Capitalized Interest Account.............................................................................2
Capitalized Interest Account Deposit.....................................................................2
Capitalized Interest Account Requirement.................................................................2
Capitalized Interest Amount..............................................................................2
Capitalized Interest Excess..............................................................................2
Certificate(s)...........................................................................................2
Certificateholder........................................................................................2
Certificateholders' Distributable Amount.................................................................2
Certificateholders' Interest Carry-Forward Amount........................................................3
Certificateholders' Interest Distributable Amount........................................................3
Certificateholders' Monthly Interest Distributable Amount................................................3
Certificateholders' Monthly Principal Distributable Amount...............................................3
Certificateholders' Principal Distributable Amount.......................................................3
Certificateholders' Principal Carry-Forward Amount.......................................................3
Certificate Principal Balance............................................................................4
Class ................................................................................................4
Class A-1 Note...........................................................................................4
Class A-2 Note...........................................................................................4
Class A-3 Note...........................................................................................4
Class A-4 Note...........................................................................................4
Class A-5 Note...........................................................................................4
Class Pool Factor........................................................................................4
Class Principal Balance..................................................................................4
Closing Date.............................................................................................4
Code ................................................................................................4
Collection Account.......................................................................................4
Completion Certificate...................................................................................4
Combination Loan.........................................................................................4
Credit Support Reduction Date............................................................................4
Custodial Agreement......................................................................................5
Custodian................................................................................................5
Custodian Fee............................................................................................5
Cut-Off Date.............................................................................................5
Debt Consolidation Loan..................................................................................5
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C>
Defaulted Home Loan......................................................................................5
Defective Home Loan......................................................................................5
Deficiency Amount........................................................................................5
Deleted Home Loan........................................................................................7
Determination Date.......................................................................................7
Distribution Date........................................................................................7
DTC ................................................................................................7
Due Date ................................................................................................7
Due Period...............................................................................................7
Eligible Account.........................................................................................7
Eligible Servicer........................................................................................7
Event of Default.........................................................................................7
Excess Overcollateralization Amount......................................................................7
Excess Reserve Account Amount............................................................................7
Excess Servicing Fee.....................................................................................7
Excess Spread............................................................................................8
Expected Loan Losses.....................................................................................8
FDIC ................................................................................................8
FHLMC ................................................................................................8
Fidelity Note............................................................................................8
FNMA ................................................................................................8
Foreclosure Property.....................................................................................8
Funding Period...........................................................................................8
Guaranteed Payment.......................................................................................8
Guaranty Insurance Premium...............................................................................8
Guaranty Policy..........................................................................................8
Guaranty Policy Proceeds.................................................................................8
HUD ................................................................................................8
Home Improvement Loan....................................................................................9
Home Loan................................................................................................9
Home Loan Interest Rate..................................................................................9
Home Loan Pool...........................................................................................9
Home Loan Schedule.......................................................................................9
Indenture................................................................................................9
Indenture Trustee........................................................................................9
Indenture Trustee Fee....................................................................................9
Initial Overcollateralization Level......................................................................9
Initial Home Loan........................................................................................9
Initial Pool Principal Balance...........................................................................9
Insurance Agreement.....................................................................................10
Insurance Proceeds......................................................................................10
Insured Securities......................................................................................10
Interest Distribution Amount............................................................................10
Interest Shortfall......................................................................................10
Interest Shortfall Rate.................................................................................10
Issuer's Home Loan File.................................................................................10
Liquidated Home Loan....................................................................................10
Liquidation Proceeds....................................................................................11
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<S> <C>
Loan Sale Agreement.....................................................................................11
Majority Securityholders................................................................................11
Modified Home Loan......................................................................................11
Monthly Payment.........................................................................................11
Mortgage ...............................................................................................11
Mortgaged Property......................................................................................11
Mortgaged Property States...............................................................................11
Net Liquidation Proceeds................................................................................11
Net Loan Losses.........................................................................................12
Net Principal Loan Losses...............................................................................12
Non-United States Person................................................................................12
Note(s) ...............................................................................................12
Note Distribution Account...............................................................................12
Noteholder..............................................................................................12
Noteholders' Distributable Amount.......................................................................12
Noteholders' Interest Carry-Forward Amount..............................................................12
Noteholders' Interest Distributable Amount..............................................................13
Noteholders' Monthly Interest Distributable Amount......................................................13
Noteholders' Monthly Principal Distributable Amount.....................................................13
Noteholders' Principal Distributable Amount.............................................................13
Noteholders' Principal Carry-Forward Amount.............................................................13
Note Interest Rate......................................................................................13
Obligor ...............................................................................................14
Officer's Certificate...................................................................................14
Original Certificate Principal Balance..................................................................14
Original Class Principal Balance........................................................................14
Overcollateralization Level.............................................................................14
Overcollateralization Reduction Amount..................................................................14
Overcollateralization Stepdown Date.....................................................................14
Ownership Interest......................................................................................14
Owner Trustee...........................................................................................14
Owner Trustee Fee.......................................................................................14
Pass-Through Rate.......................................................................................15
Permitted Investments...................................................................................15
Person ...............................................................................................16
Pool Principal Balance..................................................................................16
Post Liquidation Proceeds...............................................................................16
Preference Amount.......................................................................................16
Pre-Funded Amount.......................................................................................16
Pre-Funding Account.....................................................................................16
Pre-Funding Account Deposit.............................................................................17
Pre-Funding Account Weighted Average Balance............................................................17
Pre-Funding Termination Distribution Date...............................................................17
Principal Balance.......................................................................................17
Principal Prepayment....................................................................................17
Projected Interest Shortfall............................................................................17
Prospectus..............................................................................................17
Purchase Price..........................................................................................17
</TABLE>
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<TABLE>
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Qualified Substitute Home Loan..........................................................................18
Rating Agency or Rating Agencies........................................................................18
Ratings ...............................................................................................18
Realized Losses.........................................................................................18
Record Date.............................................................................................18
Regular Principal Distribution Amount...................................................................18
Released Mortgaged Property Proceeds....................................................................19
Required Credit Support Multiple........................................................................19
Reserve Account.........................................................................................20
Reserve Account Initial Deposit.........................................................................20
Required Overcollateralization Level....................................................................21
Reserve Account Requirement.............................................................................21
Residual Interest:......................................................................................21
Responsible Officer.....................................................................................21
Securities..............................................................................................21
Securities Insurer......................................................................................21
Securities Insurer Commitment...........................................................................21
Securities Insurer Default..............................................................................22
Securities Insurer Reimbursement Amount.................................................................22
Securityholder..........................................................................................22
Seller ...............................................................................................22
Series or Series 1996-3.................................................................................22
Servicer ...............................................................................................22
Servicer's Fiscal Year..................................................................................22
Servicer's Monthly Remittance Report....................................................................22
Servicer's Monthly Statement............................................................................22
Servicer's Home Loan File...............................................................................22
Servicing Advances......................................................................................22
Servicing Compensation..................................................................................22
Servicing Fee...........................................................................................23
Servicing Officer.......................................................................................23
Subsequent Home Loan....................................................................................23
Subsequent Purchase Price...............................................................................23
Subsequent Transfer Agreement...........................................................................23
Subsequent Transfer Date................................................................................23
Subservicer.............................................................................................23
Subservicing Account....................................................................................23
Subservicing Agreement..................................................................................23
Substitution Adjustment.................................................................................24
Superior Lien...........................................................................................24
Termination Price.......................................................................................24
Transferor..............................................................................................24
Trust ...............................................................................................24
Trust Account Property..................................................................................24
Trust Accounts..........................................................................................24
Trust Agreement.........................................................................................24
Trust Fees and Expenses.................................................................................24
Underwriters............................................................................................24
</TABLE>
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<TABLE>
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Weighted Average Interest Rate..........................................................................24
Section 1.02 Other Definitional Provisions......................................................................25
ARTICLE II
CONVEYANCE OF THE HOME LOANS
Section 2.01 Conveyance of the Initial Home Loans...............................................................26
Section 2.02 Conveyance of the Subsequent Home Loans............................................................26
Section 2.03 Ownership and Possession of Home Loan Files........................................................29
Section 2.04 Books and Records..................................................................................29
Section 2.05 Delivery of Home Loan Documents....................................................................29
Section 2.06 Acceptance by Issuer of the Home Loans; Certain Substitutions;
Certification by Issuer........................................................................32
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01 Representations and Warranties of the Seller.......................................................34
Section 3.02 Representations, Warranties and Covenants of the Servicer
and Transferor.................................................................................35
Section 3.03 Individual Home Loans..............................................................................37
Section 3.04 Subsequent Home Loans..............................................................................41
Section 3.05 Purchase and Substitution..........................................................................42
ARTICLE IV
ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS
Section 4.01 Duties of the Servicer.............................................................................44
Section 4.02 Liquidation of Home Loans..........................................................................46
Section 4.03 Fidelity Bond; Errors and Omission Insurance.......................................................47
Section 4.04 Title, Management and Disposition of Foreclosure Property..........................................47
Section 4.05 Access to Certain Documentation and Information Regarding the Home Loans...........................48
Section 4.06 Superior Liens.....................................................................................48
Section 4.07 Subservicing.......................................................................................48
Section 4.08 Successor Servicers................................................................................50
Section 4.09 Title, Management and Disposition of Foreclosure Property..........................................50
</TABLE>
ARTICLE V
ESTABLISHMENT OF TRUST ACCOUNTS
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Section 5.01 Establishment of Collection Accounts; Deposits in Collection Accounts;
Withdrawals from the Collection Account.................................................................51
Section 5.02 Initial Collection Account; Transfer of Collection Account.........................................53
Section 5.03 Pre-Funding Account................................................................................53
Section 5.04 Capitalized Interest Account.......................................................................54
Section 5.05 Establishment of Note Distribution Account; Investment of Funds Held in Note
Distribution Account...........................................................................55
Section 5.06 Reserve Account....................................................................................56
Section 5.07 Trust Account Property.............................................................................58
ARTICLE VI
STATEMENTS AND REPORTS; SPECIFICATION OF TAX MATTERS
Section 6.01 Statements..........................................................................................59
Section 6.02 Reports of Foreclosure and Abandonment of Mortgaged Property.......................................62
Section 6.03 Specification of Certain Tax Matters...............................................................62
ARTICLE VII
GENERAL SERVICING PROCEDURE
Section 7.01 Assumption Agreements..............................................................................63
Section 7.02 Satisfaction of Mortgages and Release of Home Loan Files...........................................63
Section 7.03 Servicing Compensation.............................................................................65
Section 7.04 Quarterly Statements as to Compliance..............................................................65
Section 7.05 Annual Independent Public Accountants' Servicing Report............................................65
Section 7.06 Right to Examine Servicer Records..................................................................66
Section 7.07 Reports to the Indenture Trustee; Collection Account Statements....................................66
ARTICLE VIII
REPORTS TO BE PROVIDED BY SERVICER
Section 8.01 Financial Statements...............................................................................66
ARTICLE IX
THE SERVICER
Section 9.01 Indemnification; Third Party Claims................................................................67
Section 9.02 Merger or Consolidation of the Servicer............................................................68
Section 9.03 Limitation on Liability of the Servicer and Others.................................................69
Section 9.04 Servicer Not to Resign; Assignment.................................................................69
Section 9.05 Relationship of Servicer to Owner Trustee and the Indenture Trustee................................69
</TABLE>
ARTICLE X
DEFAULT
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Section 10.01 Events of Default.................................................................................70
Section 10.02 Indenture Trustee to Act; Appointment of Successor................................................72
Section 10.03 Waiver of Defaults................................................................................73
Section 10.04 Accounting Upon Termination of Servicer...........................................................73
ARTICLE XI
TERMINATION
Section 11.01 Termination.......................................................................................74
Section 11.02 Optional Termination by Holder of Residual Interest or the Securities Insurer.....................74
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01 Acts of Securityholders...........................................................................75
Section 12.02 Amendment.........................................................................................75
Section 12.03 Recordation of Agreement..........................................................................76
Section 12.04 Duration of Agreement.............................................................................76
Section 12.05 Governing Law.....................................................................................76
Section 12.06 Notices...........................................................................................77
Section 12.07 Severability of Provisions........................................................................77
Section 12.08 No Partnership....................................................................................77
Section 12.09 Counterparts......................................................................................77
Section 12.10 Successors and Assigns............................................................................78
Section 12.11 Headings..........................................................................................78
Section 12.12 Actions of Securityholders........................................................................78
Section 12.13 Reports to Rating Agencies........................................................................78
Section 12.14 Securities Insurer Deemed Owner...................................................................79
Section 12.15 Third Party Beneficiary...........................................................................79
Section 12.16 Suspension and Termination of Securities Insurer's Rights.........................................79
EXHIBITS
EXHIBIT A Home Loan Schedule
EXHIBIT B Form of Servicer's Monthly Remittance Report to Trustee
EXHIBIT C Contents of Home Loan File
EXHIBIT D Form of Subsequent Transfer Agreement
</TABLE>
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This Sale and Servicing Agreement is entered into effective as of , 19
, among FIRSTPLUS Home Loan Trust 19 - , a Delaware business trust (the "Issuer"
or the "Trust"), FIRSTPLUS INVESTMENT CORPORATION, a Nevada corporation, as
Seller (the "Seller"), and FIRSTPLUS FINANCIAL, INC., a Texas corporation
("FFI"), as Transferor (in such capacity, the "Transferor") and Servicer (in
such capacity, the "Servicer").
PRELIMINARY STATEMENT
WHEREAS, the Issuer desires to purchase a pool of Home Loans which were
originated or purchased by the Transferor and sold to the Seller in the ordinary
course of business of the Transferor;
WHEREAS, the Seller is willing to sell such Home Loans to the Issuer;
and
WHEREAS, the Servicer is willing to service such Home Loans in
accordance with the terms of this agreement;
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Definitions. Whenever used in this Agreement, the
following words and phrases, unless the context otherwise requires, shall have
the meanings specified in this Article.
Addition Notice: With respect to the transfer of Subsequent Home Loans
to the Trust pursuant to Section 2.02 of this Agreement, notice of the Seller's
designation of Subsequent Home Loans to be sold to the Issuer and the aggregate
Principal Balance of such Subsequent Home Loans as of the related Cut-Off Date,
which shall be given to the Indenture Trustee and to the Securities Insurer not
later than three Business Days prior to the related Subsequent Transfer Date.
Agreement: This Sale and Servicing Agreement and all amendments hereof
and supplements hereto.
Assignment of Mortgage: With respect to each Home Loan secured by a
Mortgage, an assignment, notice of transfer or equivalent instrument sufficient
under the laws of the jurisdiction wherein the related Mortgaged Property is
located to reflect of record the sale of the related Home Loan to the Issuer for
the benefit of the Securityholders and the Securities Insurer.
Assumed Pool Principal Balance: On the Closing Date, the amount equal
to the sum of the Initial Pool Principal Balance, plus the Pre-Funding Account
Deposit, which amount is $____________.
Available Collection Amount: An amount equal to the sum of (i) all
amounts received on the Home Loans or required to be paid by the Servicer, the
Transferor or the Seller (exclusive of amounts not required to be deposited in
the Collection Account and amounts permitted to be
SALE AND SERVICING AGREEMENT (Series 19 - ) - Page 1
<PAGE> 10
withdrawn by the Servicer from the Collection Account pursuant to the Sale and
Servicing Agreement, including without limitation the Servicing Fee) during the
related Due Period (or, in the case of amounts paid by the Transferor in
connection with the purchase or substitution of a Defective Home Loan) as
reduced by any portion thereof that may not be withdrawn therefrom pursuant to
an order of a United States bankruptcy court of competent jurisdiction imposing
a stay pursuant to Section 362 of the United States Bankruptcy Code, (ii) in the
case of a Distribution Date relating to a Due Period that occurs prior to the
end of the Funding Period, an amount from the Capitalized Interest Account
sufficient to fund any shortfall in the Interest Remittance Amount attributable
to the amounts in the Pre-Funding Account, (iii) in the case of the Distribution
Date following the Due Period in which the Funding Period ends, amounts, if any,
remaining in the Pre-Funding Account at the end of the Funding Period (net of
reinvestment income which must be transferred to the Capitalized Interest
Account), (iv) with respect to the final Distribution Date, an early retirement
of the Offered Securities by the Servicer or the Securities Insurer, the
Termination Price, and (v) any and all income or gain from investments in the
Collection Account.
Business Day: Any day other than (i) a Saturday or Sunday, or (ii) a
day on which banking institutions in New York City or in the city in which the
corporate trust office of the Indenture Trustee is located are authorized or
obligated by law or executive order to be closed.
Capitalized Interest Account: The account established pursuant to
Section 5.04, which account shall contain the Capitalized Interest Amount.
Capitalized Interest Account Deposit: An amount equal to
$______________.
Capitalized Interest Account Requirement: On the Closing Date, the
Capitalized Interest Account Requirement will equal the Capitalized Interest
Account Deposit. Thereafter, as determined by the Servicer pursuant to Section
5.04 on any Business Day prior to , 19 , the Capitalized
Interest Account Requirement will equal the Projected Interest Shortfall.
Capitalized Interest Amount: The amount on deposit in the Capitalized
Interest Account as of any date of determination, after giving effect to (i)
amounts to be transferred to the Distribution Account on the next Distribution
Date pursuant to Section 5.04(a), (ii) amounts released to the Seller pursuant
to Section 5.04(d), (iii) any amounts available under any letter of credit
deposited with the Indenture Trustee pursuant to Section 5.04(c) and (iv) any
income and gain, if any, on funds held in the Capitalized Interest Account and
any income and gain, if any, transferred to the Capitalized Interest Account
from funds held in the Pre-Funding Account pursuant to Section 5.03(b).
Capitalized Interest Excess: As determined by the Servicer pursuant to
Section 5.04, the amount of excess funds on deposit in the Capitalized Interest
Account; on any Business Day occurring prior to , 19 , the
Capitalized Interest Excess shall equal the greater of (i) zero and (ii) the
Capitalized Interest Amount less the Capitalized Interest Account Requirement.
Certificate(s): Any one or more certificate(s) issued pursuant to the
Trust Agreement.
Certificateholder: A holder of any Certificate.
SALE AND SERVICING AGREEMENT (Series 19 - ) - Page 2
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Certificateholders' Distributable Amount: With respect to any
Distribution Date, the sum of the Certificateholders' Principal Distributable
Amount and the Certificateholders' Interest Distributable Amount.
Certificateholders' Interest Carry-Forward Amount: With respect to any
Distribution Date, the excess of the Certificateholders' Monthly Interest
Distributable Amount for the preceding Distribution Date and any outstanding
Certificateholders' Interest Carry-Forward Amount on such preceding Distribution
Date, over the amount in respect of interest that is actually deposited in the
Certificate Distribution Account on such preceding Distribution Date, plus
interest on such excess, to the extent permitted by law, at the Pass Through
Rate for the related Interest Period.
Certificateholders' Interest Distributable Amount: With respect to any
Distribution Date, the sum of the Certificateholders' Monthly Interest
Distributable Amount for such Distribution Date and the Certificateholders'
Interest Carry-Forward Amount for such Distribution Date.
Certificateholders' Monthly Interest Distributable Amount: With respect
to any Distribution Date, 30 days of interest (or, in the case of the first
Distribution Date, interest accrued from and including the Closing Date to but
excluding such Distribution Date) at the Pass Through Rate on the Certificate
Balance on the immediately preceding Distribution Date, after giving effect to
all payments allocable to the reduction of the Certificate Balance made on or
prior to such Distribution Date (or, in the case of the first Distribution Date,
on the Closing Date).
Certificateholders' Monthly Principal Distributable Amount: With
respect to any Distribution Date prior to the Distribution Date on which the
Notes are paid in full, zero; and with respect to any Distribution Date
commencing on the Distribution Date on which the Notes are paid in full, the sum
of (i) the Regular Principal Distribution Amount (less, on the Distribution Date
on which the Notes are paid in full, the portion thereof payable on the Notes),
plus (ii) until the Overcollateralization Amount equals the Required
Overcollateralization Amount, the Excess Spread, if any.
Certificateholders' Principal Distributable Amount: With respect to any
Distribution Date, the sum of the Certificateholders' Monthly Principal
Distributable Amount for such Distribution Date and the Certificateholders'
Principal Carry-Forward Amount as of the close of the preceding Distribution
Date; provided, however, that the Certificateholders' Principal Distributable
Amount shall not exceed the Certificate Balance. In addition, on the Final
Scheduled Distribution Date, the principal required to be distributed to
Certificateholders will include the lesser of (a) any scheduled payments of
principal due and remaining unpaid on each Home Loan in the Trust as of the
Final Scheduled Maturity Date or (b) the portion of the amount required to be
advanced under clause (a) above that is necessary (after giving effect to the
other amounts to be deposited in the Certificate Distribution Account on such
Distribution Date and allocable to principal) to reduce the Certificate Balance
to zero, and, in the case of clauses (a) and (b), remaining after any required
distribution in respect of the Notes.
Certificateholders' Principal Carry-Forward Amount: As of the close of
any Distribution Date, the excess of the Certificateholders' Monthly Principal
Distributable Amount and any outstanding Certificateholders' Principal
Carry-Forward Amount from the preceding Distribution Date, over the amount in
respect of principal that is actually deposited in the Certificate Distribution
Account.
SALE AND SERVICING AGREEMENT (Series 19 - ) - Page 3
<PAGE> 12
Certificate Principal Balance: As of any date of determination, the
Original Certificate Principal Balance of the Certificates reduced by all
amounts previously distributed to the Certificateholders in reduction of the
principal balance of the Certificates on all previous Distribution Dates
pursuant Section of the Trust Agreement.
Class: With respect to the Notes, all Notes bearing the same class
designation.
Class A-1 Note: Any Class A-1 Note in the form attached to the
Indenture as Exhibit ___.
Class A-2 Note: Any Class A-2 Note in the form attached to the
Indenture as Exhibit ___.
Class A-3 Note: Any Class A-3 Note in the form attached to the
Indenture as Exhibit ___.
Class A-4 Note: Any Class A-4 Note in the form attached to the
Indenture as Exhibit ___.
Class A-5 Note: Any Class A-5 Note in the form attached to the
Indenture as Exhibit ___.
Class Pool Factor: With respect to each Class of Notes and as of any
date of determination, the then applicable Class Principal Balance of the
respective Class of Notes divided by the Original Class Principal Balance of
such Class. With respect to the Certificates and as of any date of
determination, the then applicable Certificate Principal Balance of the
respective Certificates divided by the Original Certificate Principal Balance of
the Certificates.
Class Principal Balance: With respect to each Class of Notes and as of
any date of determination, the Original Class Principal Balance of each such
Class reduced by all amounts previously distributed to Noteholders of such Class
in reduction of the principal balance of such Class on all previous Distribution
Dates pursuant to Section __, of the Indenture.
Closing Date: ____________________, 19__.
Code: The Internal Revenue Code of 1986, as amended.
Collection Account: The account established and maintained by the
Servicer in accordance with Section 5.01.
Completion Certificate: With respect to a Home Improvement Loan, a
certificate executed by the related Obligor wherein such Obligor states the
related contractor or seller of the property improvement has completed to such
Obligor's satisfaction the improvements for which the related Home Loan was
obtained.
Combination Loan: A Home Loan, the proceeds of which were used by the
Obligor in combination to finance property improvements and for debt
consolidation or other purposes, and which are marketed to by the Transferor
under the name "Buster(TM) Loans."
Credit Support Reduction Date: The Distribution Date occurring on the
later of: (i) the _______ (___) Distribution Date; or (ii) the Distribution Date
on which the Pool Principal Balance is equal to or less than ___ percent
(___%) of the aggregate Principal Balances as of the applicable Cut-Off Dates
of all the Home Loans.
SALE AND SERVICING AGREEMENT (Series 19 - ) - Page 4
<PAGE> 13
Custodial Agreement: The custodial agreement dated , 19
by and between the Seller, FFI, as the Transferor and the Servicer, the Issuer,
and Bank One, Texas, National Association, as the Custodian, and any subsequent
custodial agreement, in similar form and substance, providing for the retention
of the Home Loan Files by the Custodian on behalf of the Owner Trustee.
Custodian: Any custodian acceptable to the Securities Insurer and
appointed by the Issuer pursuant to the Custodial Agreement, which shall not be
affiliated with the Servicer, the Transferor, any Subservicer, or the Seller.
, shall be the initial Custodian pursuant to the terms of
the Custodial Agreement.
Custodian Fee: If applicable, the annual fee payable to the Custodian,
calculated and payable monthly on each Distribution Date equal to the per annum
percentage (as set forth in the Custodian Fee Agreement) of the Pool Principal
Balance as of the immediately preceding Determination Date, except with respect
to the first Distribution Date, when such monthly fee shall be pro rated based
on four (4) days for the first Due Period.
Cut-Off Date: With respect to the Initial Home Loans, the close of
business on , 19 and with respect to each Subsequent Home Loan,
the close of business on the date specified as such in the applicable
Subsequent Transfer Agreement.
Debt Consolidation Loan: A Home Loan, the proceeds of which were
primarily used by the related Obligor for debt consolidation purposes or
purposes other than to finance property improvements.
Debt Instrument: The note or other evidence of indebtedness evidencing
the indebtedness of an Obligor under a Home Loan.
Defaulted Home Loan: With respect to the calculation of the Required
Credit Support Multiple, during a Due Period, any Home Loan, including without
limitation any Liquidated Home Loan, with respect to which any of the following
occurs: (a) foreclosure proceedings have been commenced; (b) any portion of a
Monthly Payment becomes days past due; or (c) the Servicer or any
Subservicer has determined in good faith and in accordance with customary
servicing practices that such Home Loan is uncollectible.
Defective Home Loan: As defined in Section 3.05 hereof.
Deficiency Amount: As of any Distribution Date, the amount by which the
sum of the Required Distribution Amount exceeds the Available Collection Amount
for distribution in respect of the Securities for such Distribution Date.
Delivery: When used with respect to Trust Account Property means: (a)
with respect to bankers' acceptances, commercial paper, negotiable certificates
of deposit and other obligations that constitute "instruments" within the
meaning of Section 9-105(1)(i) of the UCC and are susceptible of physical
delivery, transfer thereof to the Indenture Trustee or its nominee or custodian
by physical delivery to the Indenture Trustee or its nominee or custodian
endorsed to, or registered in the name of, the Indenture Trustee or its nominee
or custodian or endorsed in blank, and, with respect to a certificated security
(as defined in Section 8-102 of the UCC) transfer thereof (i) by delivery of
such
SALE AND SERVICING AGREEMENT (Series 19 - ) - Page 5
<PAGE> 14
certificated security endorsed to, or registered in the name of, the Indenture
Trustee or its nominee or custodian or endorsed in blank to a financial
intermediary (as defined in Section 8-313 of the UCC) and the making by such
financial intermediary of entries on its books and records identifying such
certificated securities as belonging to the Indenture Trustee or its nominee or
custodian and the sending by such financial intermediary of a confirmation of
the purchase of such certificated security by the Indenture Trustee or its
nominee or custodian, or (ii) by delivery thereof to a "clearing corporation"
(as defined in Section 8-102(3) of the UCC) and the making by such clearing
corporation of appropriate entries on its books reducing the appropriate
securities account of the transferor and increasing the appropriate securities
account of a financial intermediary by the amount of such certificated security,
the identification by the clearing corporation of the certificated securities
for the sole and exclusive account of the financial intermediary, the
maintenance of such certificated securities by such clearing corporation or a
"custodian bank" (as defined in Section 8-102(4) of the UCC) or the nominee of
either subject to the clearing corporation's exclusive control, the sending of a
confirmation by the financial intermediary of the purchase by the Indenture
Trustee or its nominee or custodian of such securities and the making by such
financial intermediary of entries on its books and records identifying such
certificated securities as belonging to the Indenture Trustee or its nominee or
custodian (all of the foregoing, "Physical Property"), and, in any event, any
such Physical Property in registered form shall be in the name of the Indenture
Trustee or its nominee or custodian; and such additional or alternative
procedures as may hereafter become appropriate to effect the complete transfer
of ownership of any such Trust Account Property (as defined herein) to the
Indenture Trustee or its nominee or custodian, consistent with changes in
applicable law or regulations or the interpretation thereof;
(b) with respect to any securities issued by the U.S. Treasury, the
Federal Home Loan Mortgage Corporation or by the Federal National Mortgage
Association that is a book-entry security held through the Federal Reserve
System pursuant to federal book-entry regulations, the following procedures, all
in accordance with applicable law, including applicable federal regulations and
Articles 8 and 9 of the UCC: book-entry registration of such Trust Account
Property to an appropriate book-entry account maintained with a Federal Reserve
Bank by a financial intermediary that is also a "depository" pursuant to
applicable federal regulations and issuance by such financial intermediary of a
deposit advice or other written confirmation of such book-entry registration to
the Indenture Trustee or its nominee or custodian of the purchase by the
Indenture Trustee or its nominee or custodian of such book-entry securities; the
making by such financial intermediary of entries in its books and records
identifying such book-entry security held through the Federal Reserve System
pursuant to federal book-entry regulations as belonging to the Indenture Trustee
or its nominee or custodian and indicating that such custodian holds such Trust
Account Property solely as agent for the Indenture Trustee or its nominee or
custodian; and such additional or alternative procedures as may hereafter become
appropriate to effect complete transfer of ownership of any such Trust Account
Property to the Indenture Trustee or its nominee or custodian, consistent with
changes in applicable law or regulations or the interpretation thereof; and
(c) with respect to any item of Trust Account Property that is an
uncertificated security under Article 8 of the UCC and that is not governed by
clause (b) above, registration on the books and records of the issuer thereof in
the name of the financial intermediary, the sending of a confirmation by the
financial intermediary of the purchase by the Indenture Trustee or its nominee
or custodian of such uncertificated security, the making by such financial
intermediary of entries on its books and records identifying such uncertificated
certificates as belonging to the Indenture Trustee or its nominee or custodian.
SALE AND SERVICING AGREEMENT (Series 19 - ) - Page 6
<PAGE> 15
Deleted Home Loan: A Home Loan replaced by or to be replaced by a
Qualified Substitute Home Loan pursuant to Section 3.05 hereof.
Determination Date: The day of each month which is five (5) Business
Days prior to the related Distribution Date.
Distribution Date: The 20th day of any month or if such 20th day is not
a Business Day, the first Business Day immediately following such day,
commencing on ______________, 19__.
DTC: The Depository Trust Company.
Due Date: The day of the month on which the Monthly Payment is due from
the Obligor on a Home Loan.
Due Period: With respect to each Distribution Date, the calendar month
preceding the month in which such Distribution Date occurs.
Eligible Account: At any time, an account which is any of the
following: (i) an account maintained with a depository institution (A) the
long-term debt obligations of which are at such time rated by each Rating Agency
in one of their two highest long-term rating categories, or (B) the short-term
debt obligations of which are then rated by each Rating Agency in their highest
short-term rating category; (ii) an account or accounts the deposits in which
are fully insured by either the Bank Insurance Fund or the Savings Association
Insurance Fund of the FDIC; (iii) a trust account (which shall be a "segregated
trust account") maintained with the corporate trust department of a federal or
state chartered depository institution or trust company with trust powers and
acting in its fiduciary capacity for the benefit of the Indenture Trustee and
the Owner Trustee, which depository institution or trust company shall have
capital and surplus of not less than $ _________; or (iv) an account that will
not cause any Rating Agency to downgrade or withdraw its then-current rating(s)
assigned to the Notes or the Certificates, as evidenced in writing by such
Rating Agency. (Each reference in this definition of "Eligible Account" to the
Rating Agency shall be construed as a reference to ___________________________.)
Eligible Servicer: A Person who is qualified to act as Servicer of the
Home Loans under applicable federal and state laws and regulations.
Event of Default: As described in Section 10.01 hereof.
Excess Overcollateralization Amount: As calculated on any Determination
Date, the excess of, if any, (x) the Overcollateralization Level on such
Distribution Date over (y) the Required Overcollateralization Level on such
Distribution Date.
Excess Reserve Account Amount: As defined in Section 5.06(c).
Excess Servicing Fee: With respect to each Distribution Date on which
the Excess Overcollateralization Amount equals or exceeds zero, then as to each
Home Loan (including any Home Loan as to which the related Mortgaged Property
has become a Foreclosure Property, but excluding any Liquidated Home Loan), the
excess servicing fee payable monthly to the Servicer on
SALE AND SERVICING AGREEMENT (Series 19 - ) - Page 7
<PAGE> 16
each Distribution Date, which shall be the product of ___% (___ basis points)
and the Principal Balance of such Home Loan as of the beginning of the
immediately preceding Due Period, divided by 12.
Excess Spread: With respect to any Distribution Date, an amount equal
to the portion, if any, of the Total Distribution Amount for the related Due
Period that remains after payment of (a) the Trust Fees and Expenses; (b) the
Noteholders' Interest Distributable Amount; (c) the Regular Principal
Distribution Amount; and (d) the Certificateholders' Interest Distributable
Amount.
Expected Loan Losses: As defined in Section 10.01(a)(vii).
FDIC: The Federal Deposit Insurance Corporation and any successor
thereto.
FHLMC: The Federal Home Loan Mortgage Corporation and any successor
thereto.
Fidelity Note: As described in Section 4.03 hereof.
FNMA: The Federal National Mortgage Association and any successor
thereto.
Foreclosure Property: Any real property or personal property securing a
Home Loan that has been acquired by the Servicer through foreclosure, deed in
lieu of foreclosure or similar proceedings in respect of the related Home Loan.
Funding Period: The period beginning on the Closing Date and ending on
the earlier of (a) the date on which the amount on deposit in the Pre-Funding
Account is reduced below $__________ and the Transferor directs that the Funding
Period end, (b) the close of business on _________________, 19__ ; provided,
however, that the Funding Period shall end on such earlier date as determined
pursuant to Section 5.04(c), or (c) an Event of Default occurs.
Guaranteed Payment: With respect to the Guaranty Policy and as of any
Distribution Date, the sum of (i) any Deficiency Amount and (ii) any unpaid
Preference Amount.
Guaranty Insurance Premium: The premium, payable monthly, that is
specified in the Commitment Letter issued by the Securities Insurer with respect
to the Notes.
Guaranty Policy: That certain guaranty insurance policy for the Insured
Securities, number ______, dated _________, 19__ and issued by the Securities
Insurer to the Indenture Trustee guaranteeing payment on each Distribution Date
of the Required Distribution Amount and any unpaid Preference Amounts in
connection with the Insured Securities.
Guaranty Policy Proceeds: With respect to the Insured Securities, the
proceeds, if any, received by the Indenture Trustee from the Securities Insurer
pursuant to the Guaranty Policy. Such Guaranty Policy Proceeds shall be applied
solely to the Insured Securities pursuant to Section 6.01(b) in the event of a
shortfall with respect to the payment of any Required Distribution Amount in
respect of the Insured Securities on any Distribution Date.
HUD: The United States Department of Housing and Urban Development and
any successor thereto.
SALE AND SERVICING AGREEMENT (Series 19 - ) - Page 8
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Home Improvement Loan: A Home Loan, the proceeds of which were used by
the Obligor to finance property improvements.
Home Loan: A Home Improvement Loan, Debt Consolidation Loan or
Combination Loan that is included in the Home Loan Pool. As applicable, Home
Loan shall be deemed to refer to the related Debt Instrument, Mortgage, and any
related Foreclosure Property.
Home Loan Interest Rate: The fixed annual rate of interest borne by a
Debt Instrument, as shown on the related Home Loan Schedule.
Home Loan Pool: The pool of Initial Home Loans and Subsequent Home
Loans.
Home Loan Schedule: The schedule of Initial Home Loans attached hereto
as Exhibit A, as amended or supplemented from time to time, including any
schedules of Subsequent Home Loans attached as exhibits to any Subsequent
Transfer Agreement, such schedules identifying each Home Loan by address of the
related Mortgaged Property, if any, and the name(s) of each Obligor and setting
forth as to each Home Loan the following information: (i) the Principal Balance
as of the applicable Cut-Off Date, (ii) the account number, (iii) the original
principal amount, (iv) the Due Date, (v) the Home Loan Interest Rate, (vi) the
first date on which a Monthly Payment is due under the related Note, (vii) the
Monthly Payment, (viii) the maturity date of the related Debt Instrument, and
(ix) the remaining number of months to maturity as of the applicable Cut-Off
Date.
Indenture: The Indenture, dated as of __________, 19__ , between the
Issuer and the Indenture Trustee.
Indenture Trustee: The Person acting as indenture trustee under the
Indenture, its successors in interest and any successor indenture trustee under
the Indenture.
Indenture Trustee Fee: The annual fee payable to the Indenture Trustee,
calculated and payable monthly on each Distribution Date, equal to the per annum
percentage (as set forth in the Indenture Trustee Fee Agreement) the Pool
Principal Balance as of the immediately preceding Determination Date, except
with respect to the first Distribution Date such monthly amount shall be pro
rated based on ____(__) days for the first Due Period.
Initial Overcollateralization Level: On the Closing Date, the amount
equal to the excess of the Assumed Pool Principal Balance over the Original
Class Principal Balance of the Notes, which excess shall initially equal the
Original Class Principal Balance of the Certificates.
Initial Home Loan: An individual Home Loan that is conveyed to the
Issuer pursuant to this Agreement on the Closing Date, together with the rights
and obligations of a holder thereof and payments thereon and proceeds therefrom,
the Initial Home Loans subject to this Agreement being identified on the Home
Loan Schedule annexed hereto as Exhibit A.
Initial Pool Principal Balance: $_____________, which is the Pool
Principal Balance as of the ___________________, 19__ Cut-Off Date.
SALE AND SERVICING AGREEMENT (Series 19 - ) - Page 9
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Insurance Agreement: The Insurance and Indemnification Agreement, dated
as of _______, 19 __, between the Seller, the Indenture Trustee, the Transferor,
the Servicer, RAC Financial Group, Inc. and the Securities Insurer.
Insurance Proceeds: With respect to any Home Loan, the proceeds paid to
the Servicer by any insurer pursuant to any insurance policy covering a Home
Loan, Mortgaged Property or Foreclosure Property or any other insurance policy
that relates to a Home Loan, net of any expenses which are incurred by the
Servicer in connection with the collection of such proceeds and not otherwise
reimbursed to the Servicer, other than Guaranty Policy Proceeds and proceeds of
any insurance policy that are to be applied to the restoration or repair of the
Mortgaged Property or released to the Obligor in accordance with customary
mortgage loan servicing procedures applicable to the respective loan type,
including Home Improvement Loans, Debt Consolidation Loans and Combination
Loans.
Insured Securities: Each of the Class A-1 Notes, the Class A-2 Notes,
the Class A-3 Notes, the Class A-4 Notes, the Class A-5 Notes and the
Certificates.
Interest Distribution Amount: On any Distribution Date and for the
Notes will be calculated on the basis of a 360 day year consisting of twelve 30
day months at the respective Interest Rate for such Class on the outstanding
Class Principal Balance of such Class immediately prior to such Distribution
Date. The Interest Distribution Amount on any Distribution Date and for the
Certificates will be calculated on the basis of a 360 day year consisting of
twelve 30 day months at the Pass Through Rate on the outstanding Certificate
Principal Balance of the Certificates immediately prior to such Distribution
Date.
Interest Shortfall: As to any Distribution Date prior to the end of the
Pre-Funding Period, the amount of the shortfall in interest on the Securities
arising as a result of the utilization of the Pre- Funding Account for the
purchase by the Issuer of Subsequent Home Loans after the Closing Date. With
respect to the ______________Distribution Date, the Interest Shortfall is equal
to four (4) days' interest on the Pre-Funding Account Deposit computed at a per
annum rate equal to the Weighted Average Interest Rate, based on the respective
Class Principal Balances of each Class of Securities on the Closing Date. With
respect to the ____________Distribution Date and the ______________Distribution
Date, the Interest Shortfall will be equal to 30 days' interest on the average
daily balance in the Pre-Funding Account (net of interest and investment
earnings) during the related Due Period, computed at a per annum rate equal to
the Weighted Average Interest Rate as of the immediately preceding Distribution
Date (after taking into account the distributions made on such Distribution
Date).
Interest Shortfall Rate: The per annum rate equal to ____%, such rate
having been derived as follows: (a) the [Class A-5 Note Interest Rate] minus (b)
____%.
Issuer's Home Loan File: The documents delivered to the Owner Trustee
or the Custodian as its designated agent pursuant to Section 2.05.
Liquidated Home Loan: Any Home Loan or Foreclosure Property in respect
of a Home Loan on which a Monthly Payment is in excess of 30 days past due and
as to which the Servicer has determined that all amounts which it reasonably and
in good faith expects to collect have been recovered from or on account of such
defaulted Home Loan or the related Foreclosure Property;
SALE AND SERVICING AGREEMENT (Series 19 - ) - Page 10
<PAGE> 19
provided that, in any event, such defaulted Home Loan or the related Foreclosure
Property shall be deemed uncollectible and therefore deemed a Liquidated Home
Loan upon the earlier of: (a) the liquidation of the related Foreclosure
Property, (b) the determination by the Servicer in accordance with customary
servicing practices that no further amounts are collectible from the Home Loan
and any related Mortgaged Property, or (c) the date on which any portion of a
Monthly Payment on any Home Loan is in excess of 300 days past due.
Liquidation Proceeds: With respect to a Liquidated Home Loan, any cash
amounts received in connection with the liquidation of such Liquidated Home
Loan, whether through trustee's sale, foreclosure sale or other disposition, and
any other amounts required to be deposited in the Collection Account pursuant to
Section 4.09, in each case other than Insurance Proceeds and Released Mortgaged
Property Proceeds.
Loan Sale Agreement: Each loan sale agreement entered into by the
Transferor, as purchaser, pursuant to which the Transferor has acquired any of
the Home Loans and which shall include all of the rights and benefits of the
Transferor thereunder, subject to any limitations thereunder regarding
assignment by the Transferor.
Majority Securityholders: (i) Until such time as the sum of the Class
Principal Balances of all Classes of Notes have been reduced to zero, the holder
or holders of in excess of ___% of the Class Principal Balance of all Classes of
Notes (accordingly, the holders of the Certificates shall be excluded from any
rights or actions of the Majority Securityholders during such period); and (ii)
thereafter, the holder or holders of in excess of ___% of the Certificate
Principal Balance of the Certificates.
Modified Home Loan: A Home Loan with respect to which the Servicer has
deferred delinquent interest and has modified the terms thereof to increase the
principal amount of such Home Loan, both pursuant to Section 4.01(c).
Monthly Payment: The scheduled monthly payment of principal and/or
interest required to be made by an Obligor on the related Home Loan, as set
forth in the related Debt Instrument.
Mortgage: The mortgage, deed of trust or other security instrument
creating a lien in accordance with applicable law on a Mortgaged Property to
secure the Debt Instrument which evidences a Home Loan.
Mortgaged Property: The property (real, personal or mixed) encumbered
by the Mortgage which secures the Debt Instrument evidencing a secured Home
Loan.
Mortgaged Property States: Each state in which any Mortgaged Property
securing an Initial Home Loan is located as set forth in the Home Loan Schedule,
and any other state wherein a Mortgaged Property securing any Subsequent Home
Loan may be located as set forth in the applicable Home Loan Schedule.
Net Liquidation Proceeds: Liquidation Proceeds net of any
reimbursements to the Servicer made therefrom for any unreimbursed Servicing
Advances made and any other fees and expenses paid in connection with the
foreclosure, conservation and liquidation of the related Home Loan or
Foreclosure Property pursuant to Sections 4.02 and 4.09 hereof.
SALE AND SERVICING AGREEMENT (Series 19 - ) - Page 11
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Net Loan Losses: On each Distribution Date, with respect to the
Liquidated Home Loans occurring or becoming such during the immediately
preceding Due Period, an amount (but not less than zero) determined as of the
related Determination Date equal to the sum of (i) the Net Principal Loan
Losses, plus (ii) any accrued and unpaid interest on such Liquidated Home Loan,
minus the amount of any recoveries with respect to such Liquidated Home Loans
attributable to interest from whatever source received during any Due Period,
including any subsequent Due Period
Net Principal Loan Losses: On each Distribution Date, with respect to
the Liquidated Home Loans occurring or becoming such during the immediately
preceding Due Period, an amount (but not less than zero) determined as of the
related Determination Date equal to:
(i) the aggregate uncollected Principal Balances of such
Liquidated Home Loans immediately prior to the date of
liquidation and without the application of any amounts
included in clause (ii) below, minus
(ii) the aggregate amount of any recoveries attributable to
principal from whatever source received during any Due Period,
with respect to such Liquidated Home Loans, including any
subsequent Due Period, and including any Net Liquidation
Proceeds, any Insurance Proceeds, any Released Mortgaged
Property Proceeds, any payments from the related Obligor and
any payments made pursuant to Section 3.05;
provided, however, that for purposes of determining the Required Credit Support
Multiple, all of the preceding references to "Liquidated Home Loans" shall be
replaced with "Defaulted Home Loans".
Non-United States Person: Any Person other than a United States Person.
Note(s): One or more of the Class A-1 Notes, the Class A-2 Notes, the
Class A-3 Notes, the Class A-4 Notes or the Class A-5 Notes.
Note Distribution Account: The account established and maintained by
the Servicer with the Indenture Trustee pursuant to Section 5.05.
Noteholder: A holder of a Note.
Noteholders' Distributable Amount: With respect to any Distribution
Date, the sum of the Noteholders' Principal Distributable Amount and the
Noteholders' Interest Distributable Amount.
Noteholders' Interest Carry-Forward Amount: With respect to any
Distribution Date, the excess of the Noteholders' Monthly Interest Distributable
Amount for the preceding Distribution Date and any outstanding Noteholders'
Interest Carry-Forward Amount on such preceding Distribution Date, over the
amount in respect of interest that is actually deposited in the Note
Distribution Account on such preceding Distribution Date, plus interest on the
amount of interest due but not paid to Noteholders on the preceding Distribution
Date, to the extent permitted by law, at the respective Interest Rates borne by
each class of the Notes for the related Due Period.
Noteholders' Interest Distributable Amount: With respect to any
Distribution Date, the sum of the Noteholders' Monthly Interest Distributable
Amount for such Distribution Date and the Noteholders' Interest Carry-Forward
Amount for such Distribution Date.
SALE AND SERVICING AGREEMENT (Series 19 - ) - Page 12
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Noteholders' Monthly Interest Distributable Amount: With respect to any
Distribution Date, interest accrued for the related Due Period on each Class of
Notes at the respective Interest Rate for such Class on the outstanding
principal balance of the Notes of such Class on the immediately preceding
Distribution Date after giving effect to all payments of principal to the
Noteholders of such class on or prior to such Distribution Date (or, in the case
of the first Distribution Date, on the Closing Date).
Noteholders' Monthly Principal Distributable Amount: With respect to
each Distribution Date, the sum of (i) the Regular Principal Distribution
Amount, plus (ii) until the Overcollateralization Amount equals the Required
Overcollateralization Amount, the Excess Spread, if any.
Noteholders' Principal Distributable Amount: With respect to any
Distribution Date, the sum of the Noteholders' Monthly Principal Distributable
Amount for such Distribution Date and the Noteholders' Principal Carry-Forward
Amount as of the close of the preceding Distribution Date; provided, however,
that the Noteholders' Principal Distributable Amount shall not exceed the
outstanding principal balance of the Notes; and provided, further, that (i) the
Noteholders' Principal Distributable Amount on the Class A-1 Final Scheduled
Distribution Date shall not be less than the Amount that is necessary (after
giving effect to other amounts to be deposited in the Note Distribution Account
on such Distribution Date and allocable to principal) to reduce the outstanding
principal balance of the Class A-1 Notes to zero; (ii) the Noteholders'
Principal Distributable Amount on the Class A-2 Final Scheduled Distribution
Date shall not be less than the amount that is necessary (after giving effect to
other amounts to be deposited in the Note Distribution Account on such
Distribution Date and allocable to principal) to reduce the outstanding
principal balance of the Class A-2 Notes to zero; (iii) the Noteholders'
Principal Distributable Amount on the Class A-3 Final Scheduled Distribution
Date shall not be less than the amount that is necessary (after giving effect to
other amounts to be deposited in the Note Distribution Account on such
Distribution Date and allocable to principal) to reduce the outstanding
principal balance of the Class A-3 Notes to zero; (iv) the Noteholders'
Principal Distributable Amount on the Class A-4 Final Scheduled Distribution
Date shall not be less than the amount that is necessary (after giving effect to
other amounts to be deposited in the Note Distribution Account on such
Distribution Date and allocable to principal) to reduce the outstanding
principal balance of the Class A-4 Notes to zero; and (v) the Noteholders'
Principal Distributable Amount on the Class A-5 Final Scheduled Distribution
Date shall not be less than the amount that is necessary (after giving effect to
other amounts to be deposited in the Note Distribution Account on such
Distribution Date and allocable to principal) to reduce the outstanding
principal balance of the Class A-5 Notes to zero.
Noteholders' Principal Carry-Forward Amount: As of the close of any
Distribution Date, the excess of the Noteholders' Monthly Principal
Distributable Amount and any outstanding Noteholders' Principal Carry-Forward
Amount from the preceding Distribution Date over the amount in respect of
principal that is actually deposited in the Note Distribution Account.
Note Interest Rate: With respect to each Class of Notes, the per annum
rate of interest payable to the holders of such Class of Notes. The Note
Interest Rate with respect to the Class A-1 Notes is equal to ____%; the Note
Interest Rate with respect to the Class A-2 Notes is equal to _____%; the Note
Interest Rate with respect to the Class A-3 Notes is equal to ____%; the Note
Interest Rate with respect to the Class A-4 Notes is equal to ____%; and the
Note Interest Rate with respect to the Class A-5 Notes is equal to ____%.
SALE AND SERVICING AGREEMENT (Series 19 - ) - Page 13
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Obligor: Each obligor on a Debt Instrument.
Officer's Certificate: A certificate delivered to the Indenture Trustee
or the Owner Trustee signed by the President or a Vice President or an Assistant
Vice President of the Seller or the Servicer, in each case, as required by this
Agreement.
Original Certificate Principal Balance: $______________.
Original Class Principal Balance: In the case of the Class A-1 Notes,
$__________; in the case of the Class A-2 Notes, $__________; in the case of the
Class A-3 Notes, $___________; in the case of the Class A-4 Notes, $__________;
and in the case of the Class A-5 Notes, $______________.
Overcollateralization Level: As to any Determination Date, the amount
(exclusive of any distributions of Overcollateralization Reduction Amounts)
equal to the excess of (A) the sum of (i) the Pool Principal Balance and (ii)
the amount on deposit in the Pre-Funding Account, if any, over (B) the sum of
the Class Principal Balances of the Notes and the Certificate Principal Balance
of the Certificates.
Overcollateralization Reduction Amount: With respect to any
Distribution Date prior to an Overcollateralization Stepdown Date, zero; with
respect to any Distribution Date on an Overcollateralization Stepdown Date, the
lesser of (x) the Excess Overcollateralization Amount on such Distribution Date
and (y) the sum of the Regular Principal Distribution Amount, the Noteholders'
Principal Carry-Forward Amount and the Certificateholders' Principal
Carry-Forward Amount on such Distribution Date.
Overcollateralization Stepdown Date: Any Distribution Date with respect
to which the Required Overcollateralization Level is reduced as a result of a
reduction in the Required Credit Support Multiple.
Ownership Interest: As to any Security, any ownership or security
interest in such Security, including any interest in such Security as the holder
thereof and any other interest therein, whether direct or indirect, legal or
beneficial, as owner or as pledgee.
Owner Trustee: The Person acting as owner trustee under the Trust
Agreement, its successors in interest and any successor owner trustee under the
Trust Agreement.
Owner Trustee Fee: The annual fee payable to the Owner Trustee,
calculated and payable monthly on each Distribution Date, equal to the per annum
percentage (as set forth in the Owner Trustee Fee Agreement) the Pool Principal
Balance as of the immediately preceding Determination Date, except with respect
to the first Distribution Date such monthly amount shall be pro rated based on
four (4) days for the first Due Period.
Pass-Through Rate: With respect to the Certificates, the per annum rate
of interest with respect to the Certificates.
SALE AND SERVICING AGREEMENT (Series 19 - ) - Page 14
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Permitted Investments: Each of the following:
(i) obligations of, or guaranteed as to principal and interest
by, the United States or any agency or instrumentality thereof when
such obligations are backed by the full faith and credit of the United
States;
(ii) a repurchase agreement that satisfies the following
criteria and is acceptable to the Securities Insurer: (1) must be
between the Indenture Trustee and either (a) primary dealers on the
Federal Reserve reporting dealer list which are rated in one of the two
highest categories for long-term unsecured debt obligations by each
Rating Agency, or (b) banks rated in one of the two highest categories
for long-term unsecured debt obligations by each Rating Agency; and (2)
the written repurchase agreement must include the following: (a)
securities which are acceptable for the transfer and are either (I)
direct U.S. governments obligations, or (II) obligations of a Federal
agency that are backed by the full faith and credit of the U.S.
government, or FNMA or FHLMC; (b) a term no greater than 60 days for
any repurchase transaction; (c) the collateral must be delivered to the
Indenture Trustee or a third party custodian acting as agent for the
Indenture Trustee by appropriate book entries and confirmation
statements, with a copy to the Securities Insurer, and must have been
delivered before or simultaneous with payment (i.e., perfection by
possession of certificated securities); and (d) the securities sold
thereunder must be valued weekly, marked-to-market at current market
price plus accrued interest and the value of the collateral must be
equal to at least % of the amount of cash transferred by the Indenture
Trustee under the repurchase agreement and if the value of the
securities held as collateral declines to an amount below % of the cash
transferred by the Indenture Trustee plus accrued interest (i.e. a
margin call), then additional cash and/or acceptable securities must be
transferred to the Indenture Trustee to satisfy such margin call;
provided, however, that if the securities used as collateral are
obligations of FNMA or FHLMC, then the value of the securities held as
collateral must equal at least 105% of the cash transferred by the
Indenture Trustee under such repurchase agreement;
(iii) certificates of deposit, time deposits and bankers
acceptances of any United States depository institution or trust
company incorporated under the laws of the United States or any state,
including the Indenture Trustee; provided that the debt obligations of
such depository institution or trust company at the date of the
acquisition thereof have been rated by each Rating Agency in one of its
two highest long-term rating categories;
(iv) deposits, including deposits with the Indenture Trustee,
which are fully insured by the Bank Insurance Fund or the Savings
Association Insurance Fund of the FDIC, as the case may be;
(v) commercial paper of any corporation incorporated under the
laws of the United States or any state thereof, including corporate
affiliates of the Indenture Trustee, which at the date of acquisition
is rated by each Rating Agency in its highest short-term rating
category and which has an original maturity of not more than 365 days;
SALE AND SERVICING AGREEMENT (Series 19 - ) - Page 15
<PAGE> 24
(vi) debt obligations rated by each Rating Agency at the time
at which the investment is made in its highest long-term rating
category (or those investments specified in (iii) above with depository
institutions which have debt obligations rated by each Rating Agency in
one of its two highest long-term rating categories);
(vii) money market funds which are rated by each Rating Agency
at the time at which the investment is made in its highest long-term
rating category, any such money market funds which provide for demand
withdrawals being conclusively deemed to satisfy any maturity
requirements for Permitted Investments set forth in this Agreement; or
(viii) any other demand, money market or time deposit
obligation, security or investment as may be acceptable to each Rating
Agency and the Securities Insurer at the time at which the investment
is made;
provided that no instrument described in the foregoing subparagraphs shall
evidence either the right to receive (a) only interest with respect to the
obligations underlying such instrument or (b) both principal and interest
payments derived from obligations underlying such instrument where the interest
and principal payments with respect to such instrument provide a yield to
maturity at par greater than % of the yield to maturity at par of the underlying
obligations; and provided, further, that no instrument described in the
foregoing subparagraphs may be purchased at a price greater than par if such
instrument may be prepaid or called at a price less than its purchase price
prior to stated maturity.
Each reference in this definition of "Permitted Investments" to the
Rating Agency shall be construed, in the case of each subparagraph above
referring to each Rating Agency, as a reference to .
Person: Any individual, corporation, partnership, joint venture,
limited liability company, association, joint-stock company, trust, national
banking association, unincorporated organization or government or any agency or
political subdivision thereof.
Physical Property: As defined in the definition of "Delivery" above.
Pool Principal Balance: The aggregate Principal Balances of the Home
Loans as of any Determination Date.
Post Liquidation Proceeds: As defined in Section 4.02(b).
Preference Amount: Any amount previously distributed to the holder of
an Insured Security that is recoverable and sought to be recovered as a voidable
preference by a trustee in bankruptcy pursuant to the United States Bankruptcy
Code, in accordance with a final, non-appealable order of a court having
competent jurisdiction.
Pre-Funded Amount: With respect to any Distribution Date, the amount
then on deposit in the Pre-Funding Account.
Pre-Funding Account: The account established and maintained by the
Trustee pursuant to Section 5.03.
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<PAGE> 25
Pre-Funding Account Deposit: An amount equal to $______________.
Pre-Funding Account Weighted Average Balance: For purposes of computing
the Projected Interest Shortfall, on any date of determination, with respect to
the calculation of the weighted average balance of the amount on deposit on a
daily basis in the Pre-Funding Account for the Due Period in which such date of
determination occurs, (x) the total of (A) the sum of the actual amount on
deposit in the Pre-Funding Account on each day in such Due Period prior to such
date of determination plus (B) the product of (i) the amount on deposit in the
Pre-Funding Account on such date of determination and (ii) the number of days
remaining in such Due Period including the date of determination (but assuming a
30 day month), divided by (y) thirty (30) days or, with respect to the first Due
Period, four (4) days.
Pre-Funding Termination Distribution Date: The first Distribution Date
following the Due Period in which the Funding Period ends.
Principal Balance: With respect to any Home Loan or related Foreclosure
Property, (i) at the applicable Cut-Off Date, the outstanding principal balance
of the Home Loan as of such Cut-Off Date and (ii) with respect to any Due Period
after such Cut-Off Date, the outstanding principal balance of the Home Loan as
of the first day of such Due Period (after giving effect to all payments
received thereon and the reclassification of any Home Loan as a Liquidated Home
Loan during the immediately preceding Due Period), without giving effect to
amounts received in respect of such Home Loan or related Foreclosure Property
after such day. Any Liquidated Home Loan shall have a Principal Balance of zero.
Principal Prepayment: With respect to any Home Loan and with respect to
any Due Period, any principal amount received on a Home Loan in excess of the
scheduled principal amount included in the Monthly Payment due on the Due Date
in such Due Period.
Projected Interest Shortfall: In connection with the calculation of the
Capitalized Interest Account Requirement pursuant to Section 5.04 as determined
by the Servicer on any Business Day prior to __________, 19__, the Projected
Interest Shortfall shall be the amount equal to the sum of (A) with respect to
the Due Period in which such date of determination occurs the Interest Shortfall
Rate, multiplied by the Pre-Funding Account Weighted Average Balance, multiplied
by the number of days in such Due Period (except for the first Due Period,
multiplied by ____ (__) days), and divided by 360 days, plus (B) with respect to
any Due Period thereafter ending on or before __________, 19__, the Interest
Shortfall Rate, multiplied by the balance in the Pre-Funding Account as of such
date of determination, multiplied by the number of days in such Due Period
thereafter ending on or before __________, 19__, and divided by 360 days;
assuming in the case of each Due Period other than the first Due Period, a
360-day year consisting of twelve 30-day months.
Prospectus: The final Prospectus, dated as of __________, 19__, as
supplemented by the related Prospectus Supplement, dated as of __________, 19__,
prepared by the Transferor and the Seller in connection with the issuance and
sale of the Securities.
Purchase Price: As defined in Section 3.05 herein.
SALE AND SERVICING AGREEMENT (Series 19 - ) - Page 17
<PAGE> 26
Qualified Substitute Home Loan: A home loan or home loans substituted
for a Deleted Home Loan pursuant to Section 2.06 or 3.05, which (i) has or have
an interest rate or rates of not less than (and not more than two percentage
points more than) the Home Loan Interest Rate for the Deleted Home Loan, (ii)
matures or mature not more than one year later than and not more than one year
earlier than the Deleted Home Loan, (iii) has or have a principal balance or
principal balances (after application of all payments received on or prior to
the date of substitution) equal to or less than the Principal Balance of the
Deleted Home Loan as of such date, (iv) has or have a lien priority no lower
than the Deleted Home Loan, and (v) complies or comply as of the date of
substitution with each representation and warranty set forth in Section 3.03.
For purposes of determining whether multiple mortgage loans proposed to be
substituted for one or more Deleted Home Loans pursuant to Section 2.06 or 3.05
are in fact "Qualified Substitute Home Loans" as provided above, the criteria
specified in clauses (i), (ii) and (iii) above may be considered on an aggregate
or weighted average basis, rather than on a loan-by-loan basis (e.g., so long as
the weighted average Home Loan Interest Rate of any loans proposed to be
substituted is not less than (and not more than two percentage points more than)
the Home Loan Interest Rate for the designated Deleted Home Loan or Home Loans,
the requirements of clause (i) above would be deemed satisfied).
Rating Agency or Rating Agencies: Either or both of _________ provided
that when the terms Rating Agency or Rating Agencies are used in reference to
the Insured Securities, such terms shall mean one or both of _______________.
Ratings: The ratings initially assigned to the Notes and the
Certificates by the Rating Agencies, as evidenced by letters from the Rating
Agencies.
Realized Losses: The excess of the principal balance of any Liquidated
Home Loans over the related Liquidation Proceeds to the extent attributable to
principal.
Record Date: The close of business on the last Business Day of the
month immediately preceding the month in which a Distribution Date occurs.
Regular Principal Distribution Amount: On each Distribution Date, an
amount equal to the lesser of (A) the sum of the aggregate Class Principal
Balance of the Notes and the Certificate Principal Balance of the Certificates
immediately prior to such Distribution Date and (B) the greater of (1) the sum
of (i) each scheduled payment of principal collected by the Servicer in the
related Due Period, (ii) all partial and full principal prepayments applied by
the Servicer during such related Due Period, (iii) the principal portion of all
Net Liquidation Proceeds, Insurance Proceeds and Released Mortgaged Property
Proceeds received during the related Due Period, (iv) (a) that portion of the
purchase price of any repurchased Home Loan which represents principal and (b)
the principal portion of any Substitution Adjustments required to be deposited
in the Collection Account as of the related Determination Date, and (v) upon the
reduction of the Reserve Fund and the Overcollateralization Amount to zero, the
principal portion of any Net Loan Losses for the preceding Due Period; and (2)
the amount by which (i) the aggregate principal balance of the Offered
Securities as of the preceding Distribution Date (after giving effect to all
payments of principal on such preceding Distribution Date) exceeds (ii) the Pool
Principal Balance plus funds on deposit in the Pre-Funding Account, each as of
the immediately preceding Determination Date. Notwithstanding clauses (B)(1)(v)
or (B)(2) of the definition of Regular Principal Distribution Amount, if on the
final Distribution Date the funds available for distribution are not sufficient
to provide for the distribution of the Regular Principal Distribution Amount and
the applicable Noteholders' Principal
SALE AND SERVICING AGREEMENT (Series 19 - ) - Page 18
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Carry-Forward Amount or Certificateholders' Principal Carry-Forward Amount, in
full, then the holders of the Notes or the Certificates, as applicable, will not
be distributed such portion of the Regular Principal Distribution Amount and
Noteholders' Principal Carry-Forward Amount or Certificateholders' Principal
Carryforward Amount attributable to such insufficiency, in which event the
amount of such insufficiency will be written-off and the Class Principal Balance
of all Classes of the Notes and the Certificate Principal Balance of the
Certificates will be reduced to zero without the distribution of funds to fully
pay the Notes and the Certificates. If prior to the final Distribution Date, the
Reserve Fund and the Overcollateralization Amount are reduced to zero, the
principal portion of any Net Loan Losses will be included within the Regular
Principal Distribution Amount for the related Distribution Date. However, no
corresponding proceeds of principal from the Home Loans will be included in the
Regular Principal Distribution Amount to provide funds for the distribution of
the portion of the Regular Principal Distribution Amount attributable to such
Net Loan Losses, and the distribution of this portion of the Regular Principal
Distribution Amount to the holders of the Offered Securities will be dependent
upon the receipt of funds from, first, the Excess Spread, if any, and, second,
if such Excess Spread does not provide sufficient funds, then from the
withdrawal of any available funds from the Reserve Account up to the Reserve
Account Requirement and, third, if such Excess Spread and withdrawal from the
Reserve Account do not provide sufficient funds, from any Guaranteed Payment
received by the Indenture Trustee or the Owner Trustee, as applicable. If
sufficient funds for the distribution of this portion of the Regular Principal
Distribution Amount are not provided from the Excess Spread, the Reserve Account
and/or the Guaranteed Payment on the applicable Distribution Date, then the
amount of such insufficiency would become a Noteholders' Principal Carry-Forward
Amount or Certificateholders' Principal Carry-Forward Amount, as applicable,
which would ultimately be subject to the write-off on the final Distribution
Date to the extent that sufficient funds are not available for distribution on
such final Distribution Date, including funds distributable to pay such
Noteholders' Principal Carry-Forward Amount or Certificateholders' Principal
Carry-Forward Amount from the receipt of Excess Spread and/or Guaranteed
Payments on or before such final Distribution Date.
Released Mortgaged Property Proceeds: With respect to any Home Loan,
proceeds received by the Servicer in connection with (i) a taking of an entire
Mortgaged Property by exercise of the power of eminent domain or condemnation or
(ii) any release of part of the Mortgaged Property from the lien of the related
Mortgage, whether by partial condemnation, sale or otherwise; which in either
case are not released to the Obligor in accordance with applicable law,
customary second mortgage servicing procedures and this Agreement.
Required Credit Support Multiple: On each Distribution Date, as of the
related Determination Date the amount calculated as follows: (i) if less than
____% (by Principal Balance) of the Home Loans are more than 30 days delinquent,
and if less than ___% (by Principal Balance) of the Home Loans are more than 60
days delinquent, and if less than ___% (by Principal Balance) of the Home Loans
have become Defaulted Home Loans, then such amount will be 1.0; (ii) if less
than ___% (by Principal Balance) of the Home Loans are more than 30 days
delinquent, and if less than ___% (by Principal Balance) of the Home Loans are
more than 60 days delinquent, and if less than ___% (by Principal Balance) of
the Home Loans have become Defaulted Home Loans, then such amount will be 1.25;
(iii) if less than ____% (by Principal Balance) of the Home Loans are more than
30 days delinquent, and if less than ___% (by Principal Balance) of the Home
Loans are more than 60 days delinquent, and if less than ___% (by Principal
Balance) of the Home Loans have become Defaulted Home Loan, then such amount
will be 1.5; (iv) if ____% or more (by Principal Balance) of the Home Loans are
more than 30 days delinquent, or if ____% or more (by Principal Balance) of the
SALE AND SERVICING AGREEMENT (Series 19 - ) - Page 19
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Home Loans are more than 60 days delinquent, or if ___% or more (by Principal
Balance) of the Home Loans have become Defaulted Home Loans then such amount
will be 2.5; or (v) if ___% or more (based on Net Principal Loan Losses) of the
Home Loans have become Defaulted Home Loans on a cumulative basis on or prior to
the first anniversary of the , 19 Cut-Off Date, or if ____% or more (based on
Net Principal Loan Losses) of the Home Loans have become Defaulted Home Loans on
a cumulative basis on or prior to the second anniversary of the __________, 19__
Cut-Off Date, or if ___% or more (based on Net Principal Loan Losses) of the
Home Loans have become Defaulted Home Loans on a cumulative basis on or prior to
the third anniversary of the __________, 19__ Cut-Off Date, or if ____% or more
(based on Net Principal Loan Losses) of the Home Loans have become Defaulted
Home Loans on a cumulative basis on or prior to the fourth anniversary of the ,
19 Cut-Off Date and thereafter, then such amount will be 2.5; provided, however,
that such 2.5 multiple in clause (v) shall be reduced to an amount equal to
1.25, if the Home Loans (based on Net Principal Loan Losses) that have become
Defaulted Home Loans on a cumulative basis are determined to be less than the
foregoing percentages of ___%, ___%, ___% and ___% during the relevant time
periods in such clause (v) and if the rolling three month delinquency and
default multiple in clauses (i) through (iv) results in an amount of either 1.0
or 1.25. Except with respect to the calculations on a cumulative basis in clause
(v) and the proviso clause of the preceding sentence, the above delinquency
percentages for clauses (i) through (iv) will be calculated as the average of
the ratios for the immediately preceding three Due Periods based on the
outstanding aggregate Principal Balances for all Home Loans which are 30 or 60
days or more delinquent, respectively, over the outstanding aggregate Principal
Balance for all Home Loans, and such default percentages will be calculated on
an annualized basis as the average of the ratios for the immediately preceding
three Due Periods where such ratio equals the quotient of (A) 12 times the
aggregate Net Principal Loan Losses for such Home Loans that became Defaulted
Home Loans, over (B) the aggregate outstanding Principal Balance of such Home
Loans as of the beginning of the related Due Period. The cumulative default
percentages for clause (v) and the proviso clause above shall be calculated
after giving effect to any recovery of proceeds received by the Servicer with
respect to such Defaulted Home Loans in accordance with the definition of Net
Principal Loan Losses. Notwithstanding the preceding, in the event that the
Subsequent Home Loans violate or fail to conform or comply in all material
respects with the conditions and requirements for delivery thereof as set forth
herein and in the Securities Insurer Commitment, then, upon written notice to
each of the other parties hereto and the Rating Agencies, the Securities
Insurer, in its sole discretion, may modify the preceding definition, without
the requirement of an amendment of this Agreement, for a sixty (60) day period
after the last day of the Due Period in which the Funding Period ends.
Reserve Account: The account established and maintained by the Servicer
with the Indenture Trustee pursuant to Section 5.06 hereof.
Reserve Account Initial Deposit: With respect to the Closing Date, an
amount equal to the Specified Reserve Account Balance on the Closing Date (which
is equal to $_________) and, with respect to each Subsequent Transfer Date after
the Closing Date, an amount equal to % of the Principal Balance of the
Subsequent Home Loans transferred to the Issuer on such Subsequent Transfer
Date.
Required Distribution Amount: As of any Distribution Date, the sum of
the Interest Distribution Amount and the Regular Principal Distribution Amount.
SALE AND SERVICING AGREEMENT (Series 19 - ) - Page 20
<PAGE> 29
Required Overcollateralization Level: On each Distribution Date, as of
the related Determination Date the amount equal to the greater of (1) ____% of
the sum of the aggregate Principal Balances as of the applicable Cut-Off Dates
of the Home Loans (the "Required OC Floor"), and (2) the product of (x) the
Required Credit Support Multiple and (y) _____% of the aggregate Principal
Balances as of the applicable Cut-Off Dates of the Home Loans; provided,
however, that on each Distribution Date on or after the Credit Support Reduction
Date on which the rolling three month delinquency and default multiple set forth
in clause (i) of the definition of the Required Credit Support Multiple is equal
to 1.0, as of the related Determination Date, the amount equal to the greater of
(1) the Required OC Floor, and (2) the product of (x) the Required Credit
Support Multiple and (y) the lesser of (A) ____% of the aggregate Principal
Balances as of the applicable Cut-Off Dates of the Home Loans and (B) ____% of
the aggregate outstanding Principal Balances of the Home Loans; provided
further, however, that the Required OC Level shall not be reduced pursuant to
the preceding proviso clause if the rolling three month delinquency and default
multiple in clauses (i) through (iv) of the definition of Required Credit
Support Multiple results in an amount greater than 1.0 and the cumulative
default multiple in clause (v) and the proviso of such definition results in an
amount greater than 1.25. Notwithstanding the preceding, in the event that the
Subsequent Home Loans violate or fail to conform or comply in all material
respects with the conditions and requirements for delivery thereof as set forth
herein and in the Securities Insurer Commitment, then, upon written notice to
each of the other parties hereto and the Rating Agencies, the Securities
Insurer, in its sole discretion, may modify the preceding definition, without
the requirement of an amendment of this Agreement, for a sixty (60) day period
after the last day of the Due Period in which the Funding Period ends.
Reserve Account Requirement: An amount initially equal to ___________.
The Reserve Account Requirement is subject to reduction as described in Section
5.06.
Residual Interest: The interest which represents the right to receive
the remaining assets in the Trust after all required distributions have been
made on the Notes and the Certificates on each Distribution Date.
Responsible Officer: When used with respect to the Indenture Trustee,
any officer within the Corporate Trust Office of the Indenture Trustee,
including any Vice President, Assistant Vice President, Secretary, Assistant
Secretary or any other officer of the Indenture Trustee customarily performing
functions similar to those performed by any of the above designated officers and
also, with respect to a particular matter, any other officer to whom such matter
is referred because of such officer's knowledge of and familiarity with the
particular subject. When used with respect to the Owner Trustee, any officer in
the Corporate Trust Administration Department of the Owner Trustee with direct
responsibility for the administration of the Trust Agreement and this Agreement
on behalf of the Owner Trustee. When used with respect to the Seller, the
Transferor, the Servicer, or the Custodian, the President or any Vice President,
Assistant Vice President, or any Secretary or Assistant Secretary.
Securities: The Notes and/or the Certificates, as applicable.
Securities Insurer: MBIA Insurance Corporation, as issuer of the
Guaranty Policy, and its successors and assigns.
Securities Insurer Commitment: As defined in Section 3.04(a) hereof.
SALE AND SERVICING AGREEMENT (Series 19 - ) - Page 21
<PAGE> 30
Securities Insurer Default: The failure of the Securities Insurer to
make payments under the Guaranty Policy, if such failure has not been remedied
with ten (10) days of notice thereof, or the entry of an order or decree with
respect to the Securities Insurer in any insolvency or bankruptcy proceedings
which remain unstayed or undischarged for 90 days.
Securities Insurer Reimbursement Amount: At any time, an amount owed to
the Securities Insurer as reimbursement for any Guaranteed Payments made under
the Guaranty Policy, together with interest thereon at the rate specified in the
Insurance Agreement and any other amounts then owing to the Securities Insurer
under the Insurance Agreement, which have not previously been reimbursed.
Securityholder: A holder of a Note or Certificate, as applicable.
Seller: FIRSTPLUS INVESTMENT CORPORATION, a Nevada corporation, and any
successor thereto.
Series or Series 19 - : FIRSTPLUS Asset-Backed Certificates, Series
19___ .___
Servicer: FFI, in its capacity as the servicer hereunder, or any
successor appointed as herein provided.
Servicer's Fiscal Year:____________________________ through
__________________________ of each year.
Servicer's Monthly Remittance Report: A report prepared and computed by
the Servicer in substantially the form of Exhibit B attached hereto.
Servicer's Monthly Statement: As defined in Section 6.02.
Servicer's Home Loan File: As described in Exhibit C.
Servicing Advances: Subject to Section 4.01(b), all reasonable and
customary "out of pocket" costs and expenses advanced or paid by the Servicer
with respect to the Home Loans in accordance with the performance by the
Servicer of its servicing obligations hereunder, including, but not limited to,
the costs and expenses for (i) the preservation, restoration and protection of
the Mortgaged Property, including without limitation advances in respect of real
estate taxes and assessments, (ii) any collection, enforcement or judicial
proceedings, including without limitation foreclosures, collections and
liquidations pursuant to Section 4.02, (iii) the conservation, management and
sale or other disposition of an Foreclosure Property pursuant to Section 4.09,
(iv) the preservation of the security for a Home Loan if a Superior Lien has
accelerated or intends to accelerate its obligations pursuant to Section 4.06;
provided that such Servicing Advances are reimbursable to the Servicer to the
extent provided in the applicable clause of Section 6.01(b) or deducted or
retained in calculating Net Liquidation Proceeds hereunder.
Servicing Compensation: The Servicing Fee and other amounts to which
the Servicer is entitled pursuant to Sections 7.01 and 7.03 and under the
circumstances set forth herein, the Excess Servicing Fee.
SALE AND SERVICING AGREEMENT (Series 19 - ) - Page 22
<PAGE> 31
Servicing Fee: As to each Home Loan (including any Home Loan that has
been foreclosed and has become a Foreclosure Property, but excluding any
Liquidated Home Loan), the fee payable monthly to the Servicer on each
Distribution Date, which shall be the product of % ( basis points) times the
Principal Balance of such Home Loan as of the beginning of the immediately
preceding Due Period, divided by 12; provided that with respect to the first
Distribution Date, such monthly fee attributable to the performance of its
servicing functions commencing on the Closing Date shall be pro rated based on
four (4) days for the first Due Period. The Servicing Fee includes any servicing
fees owed or payable to any Subservicer which fees shall be paid from the
Servicing Fee.
Servicing Officer: Any officer of the Servicer or Subservicer involved
in, or responsible for, the administration and servicing of the Home Loans whose
name and specimen signature appears on a list of servicing officers annexed to
an Officer's Certificate furnished by the Servicer or the Subservicer,
respectively, to the Owner Trustee and the Indenture Trustee, on behalf of the
Securityholders and the Securities Insurer, as such list may from time to time
be amended.
Subsequent Home Loan: An individual Home Improvement Loan, Debt
Consolidation Loan or Combination Loan that is conveyed to the Issuer on a
Subsequent Transfer Date, pursuant to a Subsequent Transfer Agreement, together
with the rights and obligations of a holder thereof and payments thereon and
proceeds therefrom, the Subsequent Home Loans subject to this Agreement will be
identified on a schedule attached as an exhibit to the related Subsequent
Transfer Agreement.
Subsequent Purchase Price: The Principal Balance of any Subsequent Home
Loans as of the applicable Cut-Off Date.
Subsequent Transfer Agreement: With respect to any Subsequent Home
Loan, the agreement pursuant to which Subsequent Home Loans are transferred to
the Trust by the Seller, substantially in the form of Exhibit D hereto.
Subsequent Transfer Date: The date specified in each Subsequent
Transfer Agreement, but no later than ________, 19__.
Subservicer: Any Person with whom the Servicer has entered into a
Subservicing Agreement and who is an Eligible Servicer and who satisfies any
requirements set forth in Section 4.07(a) in respect of the qualifications of a
Subservicer.
Subservicing Account: An account established by a Subservicer pursuant
to a Subservicing Agreement, which account must be an Eligible Account.
Subservicing Agreement: Any agreement between the Servicer and any
Subservicer relating to subservicing and/or administration of any or all Home
Loans as provided in Section 4.07(a), copies of which shall be made available,
along with any modifications thereto, to the Owner Trustee, the Indenture
Trustee and to the Securities Insurer.
Substitution Adjustment: As to any date on which a substitution occurs
pursuant to Sections 2.06 or 3.05, the amount, if any, by which (a) the sum of
the aggregate principal balance (after application of principal payments
received on or before the date of substitution) of any Qualified Substitute Home
Loans as of the date of substitution plus any accrued interest thereon that is
SALE AND SERVICING AGREEMENT (Series 19 - ) - Page 23
<PAGE> 32
scheduled to be paid during the Due Period in which such substitution occurs, is
less than (b) the sum of the aggregate of the Principal Balances, together with
accrued and unpaid interest thereon to the date of substitution, of the related
Deleted Home Loans.
Superior Lien: With respect to any Home Loan which is secured by other
than a first priority lien, the home loan(s) relating to the corresponding
Mortgaged Property having a superior priority lien.
Termination Price: With respect to the Notes, as of any date of
determination, an amount equal to the sum of (i) the aggregate Class Principal
Balance of the Notes as of such date, and (ii) the sum of any outstanding
Noteholders' Interest Carry-Forward Amount and 30 days' interest on the
aggregate Class Principal Balance of the Notes as of such date, computed at the
weighted average Home Loan Interest Rate of the Home Loans (including
Foreclosure Properties) then outstanding. With respect to the Certificates, as
of any date of determination, an amount equal to the sum of (i) the Certificate
Principal Balance of the Certificates as of such date, and (ii) the sum of any
outstanding Certificateholders' Interest Carry-Forward Amount and 30 days'
interest on the Certificate Principal Balance of the Certificates as of such
date, computed at the weighted average Home Loan Interest Rate of the Home Loans
(including Foreclosure Properties) then outstanding.
Transferor: FFI, in its capacity as the transferor hereunder.
Trust: The Issuer.
Trust Account Property: The Trust Accounts, all amounts and investments
held from time to time in any Trust Account and all proceeds of the foregoing.
Trust Accounts: The Note Distribution Account, the Collection Account,
the Reserve Account, the Pre-Funding Account or the Capitalized Interest
Account.
Trust Agreement: The Trust Agreement dated as of _________________ ,
19____, among the Seller, and the Owner Trustee.
Trust Fees and Expenses: As of each Distribution Date, an amount equal
to the Guaranty Insurance Premium, the Indenture Trustee Fee, the Owner Trustee
Fee and the Custodian Fee.
Underwriters: ___________________________ pursuant to an Underwriting
Agreement dated as of ___________, 19__ with the Transferor and the Seller.
Weighted Average Interest Rate: As of any particular date of
determination, the sum of:
(i) the product of (A) the Class Principal Balance of the
Class A-1 Notes divided by the sum of (x) the aggregate Class Principal
Balances of the Notes plus (y) the Certificate Principal Balance of the
Certificates, and (B) the Note Interest Rate for such Class A-1 Notes;
(ii) the product of (A) the Class Principal Balance of the
Class A-2 Notes divided by the sum of (x) the aggregate Class Principal
Balances of the Notes plus (y) the Certificate
SALE AND SERVICING AGREEMENT (Series 19 - ) - Page 24
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Principal Balance of the Certificates, and (B) the Note Interest Rate
for such Class A-2 Notes;
(iii) the product of (A) the Class Principal Balance of the
Class A-3 Notes divided by the sum of (x) the aggregate Class Principal
Balances of the Notes plus (y) the Certificate Principal Balance of the
Certificates, and (B) the Note Interest Rate for such Class A-3 Notes;
(iv) the product of (A) the Class Principal Balance of the
Class A-4 Notes divided by the sum of (x) the aggregate Class Principal
Balances of the Notes plus (y) the Certificate Principal Balance of the
Certificates, and (B) the Note Interest Rate for such Class A-4 Notes;
(v) the product of (A) the Class Principal Balance of the
Class A-5 Notes divided by the sum of (x) the aggregate Class Principal
Balances of the Notes plus (y) the Certificate Principal Balance of the
Certificates, and (B) the Note Interest Rate for such Class A-5 Notes;
(vi) the product of (A) the Certificate Principal Balance of
the Certificates divided by the sum of (x) the aggregate Class
Principal Balances of the Notes and (y) the Certificate Principal
Balance of the Certificates, and (B) the Pass-Through Rate for the
Certificates.
Section 1.02 Other Definitional Provisions.
(a) Capitalized terms used herein and not otherwise defined herein have
the meanings assigned to them 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; Article, Section, Schedule
and Exhibit references contained in this Agreement are references to Articles,
Sections, Schedules 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.
SALE AND SERVICING AGREEMENT (Series 19 - ) - Page 25
<PAGE> 34
(f) Any agreement, instrument or statute defined or referred to herein
or in any instrument or certificate delivered in connection herewith means such
agreement, instrument or statute as from time to time amended, modified or
supplemented and includes (in the case of agreements or instruments) references
to all attachments thereto and instruments incorporated therein; references to a
Person are also to its permitted successors and assigns.
ARTICLE II
CONVEYANCE OF THE HOME LOANS
Section 2.01 Conveyance of the Initial Home Loans.
(a) In consideration of the Issuer's delivery to or upon the order of
the Seller of $_______________, less the Reserve Account Initial Deposit as of
the Closing Date (other than any portion thereof attributable to the conveyance
of Subsequent Home Loans on the Closing Date), the Seller, as of the Closing
Date and concurrently with the execution and delivery hereof, does hereby sell,
transfer, assign, set over and otherwise convey to the Issuer, without recourse,
but subject to the other terms and provisions of this Agreement, all of the
right, title and interest of the Seller in and to the Initial Home Loans
(including all interest and principal thereon received after the related CutOff
Date), the Pre-Funding Account Deposit, the Capitalized Interest Account
Deposit, the Reserve Account Initial Deposit and the proceeds of any and all of
the foregoing. The foregoing sale, transfer, assignment, set over and conveyance
does not and is not intended to result in a creation or an assumption by the
Issuer of any obligation of the Seller, the Transferor or any other person in
connection with the Home Loans or under any agreement or instrument relating
thereto except as specifically set forth herein.
(b) The Issuer acknowledges the conveyance to it of the Initial Home
Loans, the Pre- Funding Account Deposit, the Capitalized Interest Account
Deposit and the Reserve Account Initial Deposit, receipt of which is hereby
acknowledged. Concurrently with such delivery and in exchange therefor, the
Issuer has pledged the Initial Home Loans and the Trust Account Property to the
Indenture Trustee and the Indenture Trustee, pursuant to the written request of
the Seller, has executed and caused to be authenticated and delivered to or upon
the order of the Seller, the Notes. In addition, concurrently with such delivery
and in exchange therefor, the Owner Trustee, pursuant to the written request of
the Seller, has executed (not in its individual capacity, but solely as Owner
Trustee on behalf of the Issuer) and caused to be authenticated and delivered to
or upon the order of the Seller, the Certificates and the Residual Interest.
Section 2.02 Conveyance of the Subsequent Home Loans.
(a) On or before the last day of the Funding Period, the Seller shall
convey to the Issuer, and the Issuer shall purchase pursuant to this Section
2.02 the lesser of: (i) all Home Loans then in its possession that satisfy the
requirements of this Section 2.02 or (ii) the maximum principal balance of Home
Loans that satisfies the requirements of this Section 2.02, with respect to
which the aggregate Subsequent Purchase Price does not exceed the Pre-Funding
Account Deposit. Subject to the conditions set forth in this Section 2.02, in
consideration of the Issuer's delivery on the related Subsequent Transfer Dates
to or upon the order of the Seller of the Subsequent Purchase Price of the
related Subsequent Home Loans from amounts on deposit in the Pre-Funding
Account, the Seller shall, from time to time, on any Subsequent Transfer Date
sell, transfer, assign, set over and
SALE AND SERVICING AGREEMENT (Series 19 - ) - Page 26
<PAGE> 35
otherwise convey to the Issuer, without recourse, but subject to the other terms
and provisions of this Agreement, all of the right, title and interest of the
Seller in and to each Subsequent Home Loan (including all interest and principal
thereon received after the related Cut-Off Date) identified on the Home Loan
Schedule attached to the related Subsequent Transfer Agreement and delivered by
the Seller on such Subsequent Transfer Date and all items in the related Owner
Trustee's Home Loan File. The sale, transfer, assignment, set over, conveyance
and grant by the Seller of the Subsequent Home Loans to the Issuer does not and
is not intended to result in a creation or an assumption by the Issuer of any
obligation of the Seller, the Transferor or any other person in connection with
the Subsequent Home Loans or under any agreement or instrument relating thereto
except as specifically set forth herein.
(b) The amount released from the Pre-Funding Account on any Subsequent
Transfer Date in connection with any conveyance of Subsequent Home Loans shall
be equal to the aggregate of the Subsequent Purchase Prices for such Subsequent
Home Loans, which amount shall not exceed the amount then on deposit in the
Pre-Funding Account. If the Subsequent Purchase Price for such Subsequent Home
Loans is less than the amount required to obtain the release of the interest of
any third party (including any lienholder therein), then the Transferor or the
Seller shall cause the delivery of immediately available funds equal to such
insufficiency to the Issuer in escrow (which funds shall not be property of the
Trust) and the Issuer, in turn, shall remit such immediately available funds,
together with funds from the Pre-Funding Account equal to the Subsequent
Purchase Price, to the third party designated by the Transferor or the Seller
that is releasing its interest in such Subsequent Home Loans.
On the related Subsequent Transfer Date, the Seller shall transfer to
the Issuer the Subsequent Home Loans and the other property and rights related
thereto described in (a) above only upon the satisfaction of each of the
following conditions on or prior to the related Subsequent Transfer Date:
(i) the Subsequent Home Loans to be conveyed on a given
Subsequent Transfer Date must have an aggregate Principal Balance as of
the related Cut-Off Date of not less than $__________ except in the
case of the final Subsequent Transfer Date when no minimum Principal
Balance requirement shall be applicable;
(ii) the Transferor and/or Seller shall provide the Owner
Trustee, the Indenture Trustee and the Securities Insurer with an
Addition Notice and shall provide any information reasonably requested
by the Owner Trustee, the Indenture Trustee or the Securities Insurer
with respect to the Subsequent Home Loans;
(iii) the Seller shall deliver to the Owner Trustee, the
Indenture Trustee and the Securities Insurer a duly executed Subsequent
Transfer Agreement, including all exhibits listed therein;
(iv) the Transferor shall deposit in the Collection Account
all collections in respect of the Subsequent Home Loans received on or
after the related Cut-Off Date;
(v) the Transferor and the Seller shall certify to the
Securities Insurer, the Indenture Trustee and the Owner Trustee that,
as of the Subsequent Transfer Date, the Transferor and the Seller,
respectively, was not insolvent nor was made insolvent by such transfer
nor is aware of any pending insolvency;
SALE AND SERVICING AGREEMENT (Series 19 - ) - Page 27
<PAGE> 36
(vi) the Transferor and the Seller shall certify that such
addition of Subsequent Home Loans will not result in a material adverse
tax consequence to the Issuer or the Securityholders;
(vii) the Funding Period shall not have terminated; and
(viii) the Transferor shall make the representations and
warranties set forth in Section 3.02 and Section 3.04(a) hereof and
shall reconfirm the accuracy of the representations and warranties set
forth in Section 3.03 hereof.
(c) In addition, the Transferor and/or Seller will provide the
Securities Insurer, the Indenture Trustee and the Owner Trustee with data
regarding all Subsequent Home Loans transferred to the Issuer on the related
Subsequent Transfer Date, which data shall be delivered at least three Business
Days prior to such Subsequent Transfer Date. No later than the end of the
Funding Period, the following conditions shall have been satisfied with respect
to all Subsequent Home Loans transferred to the Issuer on any Subsequent
Transfer Date:
(i) the Transferor and Seller shall have delivered to the
Owner Trustee, the Indenture Trustee and the Securities Insurer an
Officer's Certificate confirming the satisfaction of each condition
precedent specified in this Section 2.02 and in the related Subsequent
Transfer Agreements;
(ii) the Transferor and/or Seller shall have delivered to the
Securities Insurer, the Indenture Trustee and the Owner Trustee
opinions of counsel with respect to the transfer of all of the
Subsequent Home Loans to the Issuer on any Subsequent Transfer Date
substantially in the form of the opinions of counsel delivered to the
Owner Trustee, the Indenture Trustee and the Securities Insurer on the
Closing Date (as to certain bankruptcy, corporate, securities and tax
law matters);
(iii) the Owner Trustee shall deliver to the Securities
Insurer and the Seller an opinion of counsel with respect to each of
the Subsequent Transfer Agreements substantially in the form of the
opinion of counsel delivered to the Seller and the Securities Insurer
on the Closing Date;
(iv) the Transferor and Seller shall make the representations
and warranties set forth in Section 3.04(b) hereof; and
(v) the Securities Insurer shall deliver to the Seller, the
Indenture Trustee and the Owner Trustee a written notice confirming the
Securities Insurer's consent and approval to the addition of all
Subsequent Home Loans purchased by the Issuer on any Subsequent
Transfer Date.
(d) On or prior to the Closing Date, the Seller and the Transferor
shall provide to the Owner Trustee, the Indenture Trustee and the Securities
Insurer a schedule of the home loans (the "Subsequent Home Loan Schedule") that
are expected to be Subsequent Home Loans, and Subsequent Home Loans transferred
to the Issuer shall only be taken from such Subsequent Home Loan Schedule;
provided, however, if any such identified home loans do not satisfy the
requirements of Subsequent Home Loans as set forth in this Section 2.02 or if
any such home loans are rejected
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as Subsequent Home Loans by the Securities Insurer, home loans acceptable to the
Securities Insurer may be substituted for such defective or rejected home loans
only from a secondary schedule of home loans (the "Secondary Subsequent Home
Loan Schedule") that is identified as such, and delivered to, the Owner Trustee,
the Indenture Trustee and Securities Insurer on the Closing Date. The Transferor
and Seller shall certify that the Subsequent Home Loans will be transferred to
the Issuer in accordance with the foregoing and that all home loans identified
in both the Subsequent Home Loan Schedule and the Secondary Subsequent Home Loan
Schedule satisfy the requirements of Subsequent Home Loans as set forth in this
Section 2.02 as of the Closing Date.
Section 2.03 Ownership and Possession of Home Loan Files. Upon the
issuance of the Securities, with respect to the Initial Home Loans, and upon
payment of the related Subsequent Purchase Price, with respect to the Subsequent
Home Loans, the ownership of each Debt Instrument, the related Mortgage and the
contents of the related Servicer's Home Loan File and the Issuer's Home Loan
File shall be vested in the Issuer for the benefit of the Securityholders and
the Securities Insurer, although possession of the Servicer's Home Loan Files
(other than items required to be maintained in the Issuer's Home Loan Files)
shall remain with the Servicer, or Custodian, if applicable, as contemplated in
Section 3.02.
Section 2.04 Books and Records.
The sale of each Home Loan shall be reflected on the Seller's balance
sheets and other financial statements as a sale of assets by the Seller. The
Servicer shall be responsible for maintaining, and shall maintain, a complete
set of books and records for each Home Loan which shall be clearly marked to
reflect the ownership of each Home Loan by the Issuer for the benefit of the
Securityholders and the Securities Insurer.
Section 2.05 Delivery of Home Loan Documents.
(a) With respect to each Initial Home Loan, on the Closing Date the
Transferor and the Seller have delivered or caused to be delivered, and with
respect to each Subsequent Home Loan, on the related Subsequent Transfer Dates,
the Transferor and the Seller will deliver or will cause to be delivered, to the
Custodian each of the following documents:
(i) The original Debt Instrument, endorsed "PAY TO THE ORDER
OF ___________________, AS OWNER TRUSTEE, FOR THE FIRSTPLUS HOME LOAN
OWNER TRUST 19__-__, WITHOUT RECOURSE" and signed, by facsimile or
manual signature, in the name of the Seller by a Responsible Officer
thereof, together with all intervening endorsements that evidence a
complete chain of title from the originator thereof to the Transferor;
provided that any of the foregoing endorsements may be contained on an
allonge which shall be firmly affixed to such Debt Instrument;
(ii) With respect to each Debt Instrument, either: (A) the
original Mortgage, with evidence of recording thereon, (B) a copy of
the Mortgage certified as a true copy by a Responsible Officer of the
Transferor or by the closing attorney, if the original has been
transmitted for recording but has not, at the time of delivery of this
Agreement, been returned or (C) a copy of the Mortgage certified by the
public recording office in those instances where the original recorded
Mortgage has been lost or has been retained by the public recording
office;
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(iii) With respect to each Debt Instrument, either (A) the
original Assignment of Mortgage assigned to "__________________, AS
OWNER TRUSTEE FOR THE FIRSTPLUS HOME LOAN OWNER TRUST 19__-__" and
signed in the name of the Transferor by a Responsible Officer with
evidence of recording thereon, (B) a copy of the Assignment of
Mortgage, certified as a true copy by a Responsible Officer of the
Transferor where the original has been transmitted for recording but
has not, at the time of delivery of this Agreement, been returned or
(C) a copy of the Assignment of Mortgage certified by the public
recording office in those instances where the original recorded
Assignment of Mortgage has been lost or has been retained by the public
recording office (provided, however, that where the original Assignment
of Mortgage is not being delivered to the Custodian, such Responsible
Officer may complete one or more blanket certificates attaching copies
of one or more Assignments of Mortgage relating thereto); provided that
any such Assignments of Mortgage may be made by blanket assignments for
Home Loans secured by Mortgaged Properties located in the same county,
if permitted by applicable law; provided, however, that the recordation
of such Assignment of Mortgage shall not be required in the States (i)
in which a legal opinion is delivered to the Owner Trustee and the
Securities Insurer in accordance with subsection (c) below and (ii)
that are approved by the Rating Agencies.
(iv) With respect to each Debt Instrument, either: (A)
originals of all intervening assignments of the Mortgage, with evidence
of recording thereon, (B) if the original intervening assignments have
not yet been returned from the recording office, a copy of the
originals of such intervening assignments together with a certificate
of a Responsible Officer of the Transferor or the closing attorney
certifying that the copy is a true copy of the original of such
intervening assignments or (C) a copy of the intervening assignment
certified by the public recording office in those instances where the
original recorded intervening assignment has been lost or has been
retained by the public recording office; provided that the chain of
intervening recorded assignments shall not be required to match the
chain of intervening endorsements of the Debt Instrument, so long as
the chain of intervening recorded assignments, if applicable, evidences
one or more assignments of the Mortgage from the original mortgage
ultimately to the person who has executed the Assignment of Mortgage
referred to in clause (iii) above; and
(v) Originals of all assumption and modification agreements,
if any, or a copy certified as a true copy by a Responsible Officer of
the Transferor if the original has been transmitted for recording until
such time as the original is returned by the public recording office.
(b) The Seller agrees to deliver or cause to be delivered on or before
the applicable Subsequent Transfer Date to the Custodian each of the documents
identified in paragraphs (i) through (v) of subsection (a) above with respect to
any Subsequent Home Loans.
(c) The Transferor shall, within five Business Days after the receipt
thereof, and in any event, within nine (9) months of the Closing Date (in the
case of the Initial Home Loans) or the related Subsequent Transfer Date (in the
case of the Subsequent Home Loans), deliver or cause to be delivered to the
Custodian: (i) the original recorded Mortgage in those instances where a copy
thereof certified by the Transferor was delivered to the Custodian; (ii) the
original recorded Assignment of Mortgage, except in the States in which a legal
opinion is delivered to the Owner
SALE AND SERVICING AGREEMENT (Series 19 - ) - Page 30
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Trustee, the Indenture Trustee and Securities Insurer as provided below and that
are approved by the Rating Agencies; (iii) any original recorded intervening
assignments of Mortgage in those instances where copies thereof certified by the
Transferor were delivered to the Custodian; and (iv) the original recorded
assumption and modification agreement in those instances in which a copy was
delivered. Notwithstanding anything to the contrary contained in this Section
2.05, in those instances where the public recording office retains the original
Mortgage or, if applicable, the Assignment of Mortgage, the intervening
assignments of the Mortgage or the original recorded assumption and modification
agreement after it has been recorded, or where any such original has been lost
or destroyed, the Seller and Transferor shall be deemed to have satisfied their
respective obligations hereunder upon delivery to the Custodian of a copy, as
certified by the public recording office to be a true copy of the recorded
original of such Mortgage or, if applicable, the Assignment of Mortgage,
intervening assignments of Mortgage or assumption and modification agreement,
respectively. With respect to the States of Arizona, California, Colorado,
Florida, Georgia, Nevada, Texas, Utah and Washington the Transferor and the
Seller shall have the right to deliver to the Owner Trustee, the Indenture
Trustee and the Securities Insurer a legal opinion for each State providing that
the recordation of the Assignment of Mortgage in such State is not necessary to
transfer the related Home Loans secured by Mortgaged Properties in such State,
provided such legal opinion is in a form that is reasonably acceptable to the
Owner Trustee and the Securities Insurer and such legal opinion is delivered on
or before , 19 . Upon the delivery and acceptance by the Owner Trustee
and Securities Insurer of the foregoing legal opinion for each such State and
the approval of the Rating Agencies, the Transferor and the Seller shall not be
required to record Assignment of Mortgages for the related Home Loans secured by
Mortgaged Properties located in such State and the delivery of the Assignments
of Mortgages for such State to the Custodian in recordable form on the Closing
Date or Subsequent Transfer Date, as applicable, shall constitute full
compliance with subsection (a)(iii) above. If the foregoing legal opinion is not
delivered and accepted by the Owner Trustee, the Indenture Trustee and
Securities Insurer for any of the foregoing States, then the Assignments of
Mortgage relating to any such State shall be recorded in accordance with the
first sentence of this subsection (c). Notwithstanding the preceding provisions
allowing for the non- recordation of Assignments of Mortgage in certain States,
if a an Event of Default occurs pursuant to clause (vii) of Section 10.01 or the
Transferor, as the Servicer, is terminated hereunder, then the Transferor, in
its capacity as the Servicer or predecessor Servicer, shall be required to
record all Assignments of Mortgage in those States in which the Transferor had
previously been allowed not to record such Assignments of Mortgage.
(d) All Home Loan documents held by the Custodian on behalf of the
Issuer are referred to herein as the "Issuer's Home Loan File." All recordings
required pursuant to this Section 2.05 shall be accomplished by and at the
expense of the Transferor.
Section 2.06 Acceptance by Issuer of the Home Loans; Certain
Substitutions; Certification by Issuer.
(a) The Owner Trustee agrees to cause the Custodian to execute and
deliver on the Closing Date an acknowledgment of receipt of the Issuer's Home
Loan File for each Initial Home Loan, and the Owner Trustee agrees to cause the
Custodian to execute and deliver on any Subsequent Transfer Date an
acknowledgment of receipt of the Issuer's Home Loan File for each Subsequent
Home Loan. The Owner Trustee declares that it will cause the Custodian to hold
such documents and any amendments, replacements or supplements thereto, as well
as any other assets included in the Trust and delivered to the Custodian in
trust, upon and subject to the conditions set
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forth herein for the benefit of the Securityholders and the Securities Insurer.
The Owner Trustee agrees, for the benefit of the Securityholders and the
Securities Insurer, to cause the Custodian to review each Issuer's Home Loan
File within 45 days after the Closing Date (or, with respect to any Qualified
Substitute Home Loan or Subsequent Home Loan, within 45 days after the receipt
by the Custodian thereof) and to cause the Custodian to deliver to the
Transferor, the Seller, the Indenture Trustee, the Owner Trustee, the Securities
Insurer and the Servicer a certification to the effect that, as to each Home
Loan listed in the Home Loan Schedule and as to each Subsequent Home Loan Listed
in a Subsequent Home Loan Schedule (other than any Home Loan paid in full or any
Home Loan specifically identified in such certification as not covered by such
certification), (i) all documents required to be delivered to the Issuer
pursuant to this Agreement are in its possession or in the possession of the
Custodian on its behalf (other than as expressly permitted by Section
2.05(a)(ii) or 2.05(c)), (ii) all documents delivered by the Seller and the
Transferor to the Custodian pursuant to Section 2.05 have been reviewed by the
Custodian and have not been mutilated or damaged and appear regular on their
face (handwritten additions, changes or corrections shall not constitute
irregularities if initialed by the Obligor) and relate to such Home Loan, (iii)
based on the examination of the Custodian on behalf of the Issuer, and only as
to the foregoing documents, the information set forth on the Home Loan Schedule
accurately reflects the information set forth in the Issuer's Home Loan File and
(iv) each Debt Instrument has been endorsed as provided in Section 2.05. Neither
the Owner Trustee nor the Custodian shall be under any duty or obligation (i) to
inspect, review or examine any such documents, instruments, certificates or
other papers to determine that they are genuine, enforceable, or appropriate for
the represented purpose or that they are other than what they purport to be on
their face or (ii) to determine whether any Issuer's Home Loan File should
include any of the documents specified in Section 2.05(a)(v).
(b) If the Custodian, during the process of reviewing the Issuer's Home
Loan Files, finds any document constituting a part of a Issuer's Home Loan File
which is not executed, has not been received, is unrelated to any Home Loan
identified in the Home Loan Schedule, does not conform to the requirements of
Section 2.05 or does not conform, in all material respects, to the description
thereof as set forth in the Home Loan Schedule, then the Custodian shall
promptly so notify the Transferor, the Servicer, the Indenture Trustee, the
Owner Trustee, the Securities Insurer and the Seller. In performing any such
review, the Custodian may conclusively rely on the Seller and the Transferor as
to the purported genuineness of any such document and any signature thereon. It
is understood that the scope of the Custodian's review of the Issuer's Home Loan
Files is limited solely to confirming that the documents listed in Section 2.05
have been received and further confirming that any and all documents delivered
pursuant to Section 2.05 have been executed and relate to the Home Loans
identified in the Home Loan Schedule and to the Subsequent Home Loans listed in
the Subsequent Home Loan Schedule. Neither the Owner Trustee nor the Custodian
shall have any responsibility for determining whether any document is valid and
binding, whether the text of any assignment or endorsement is in proper or
recordable form, whether any document has been recorded in accordance with the
requirements of any applicable jurisdiction, or whether a blanket assignment is
permitted in any applicable jurisdiction. If a material defect in a document
constituting part of a Issuer's Home Loan File is discovered, then the Seller
and Transferor shall comply with the cure, substitution and repurchase
provisions of Section 3.05 hereof.
(c) Within the three month period beginning on the Closing Date and
ending on _______, 19__, each of the Seller and the Transferor shall
have the option, exercisable in its sole
discretion, to remove a Home Loan from the Trust and substitute therefor a
Qualified Substitute Home Loan in the manner and subject to the conditions set
forth in Section 3.05 applicable to
SALE AND SERVICING AGREEMENT (Series 19 - ) - Page 32
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substitutions made by the Transferor and subject to the further conditions that
(i) the Seller and/or the Transferor may only effect substitutions under this
Section 2.06(c) which, in the aggregate, amount to (A) not more than ___% of the
aggregate Cut-Off Date Principal Balances of the Home Loans (as measured by the
aggregate Principal Balance of the Deleted Home Loans) on the Determination Date
immediately preceding the substitution date, without Securities Insurer approval
and (B) not more than ___% of the aggregate Cut-Off Date Principal Balances of
the Home Loans (as measured by the aggregate Principal Balance of the Deleted
Home Loans) on the Determination Date immediately preceding the substitution
date, with Securities Insurer approval, and (ii) no such substitution shall be
undertaken unless and until (A) the Owner Trustee and the Indenture Trustee
shall have received written assurances from each Rating Agency that such
substitution once effected would not result in the ratings assigned to any Class
of the Securities being downgraded and an Officer's Certificate from the
Transferor or the Seller, as applicable, stating that the substitution is not
being effected for the primary purpose of recognizing gains or decreasing losses
resulting from market value changes in the Deleted Home Loans and Qualified
Substitute Home Loans included in such substitution, and (B) the Owner Trustee,
the Indenture Trustee and the Securities Insurer shall have received an opinion
of counsel, which opinion of counsel shall be acceptable to the Owner Trustee,
that such substitution once effected would not cause the Trust to become an
"investment company" as defined under the Investment Company Act of 1940.
(d) Upon receipt by the Owner Trustee of a certification of a Servicing
Officer to the effect that such substitution has occurred and that the
Substitution Adjustment has been credited to the Collection Account pursuant to
Section 3.05 and remitted to the Indenture Trustee for deposit into the
Distribution Account, the Owner Trustee shall (i) release (or cause the
Custodian to release) to the Servicer for release to the Seller or the
Transferor, as the case may be, the related Issuer's Home Loan File for each
Deleted Home Loan and (ii) execute, without recourse, representation or
warranty, and deliver such instruments of transfer presented to it by the
Servicer as shall be necessary to transfer such Deleted Home Loan to the Seller
or the Transferor, as the case may be.
(e) On the Distribution Date in ______________of each year commencing
in 19__, the Owner Trustee shall deliver (or cause the Custodian to deliver) to
the Seller, the Securities Insurer, the Indenture Trustee and the Servicer a
certification listing all Issuer's Home Loan Files held by the Custodian on
behalf of the Issuer on such Distribution Date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01 Representations and Warranties of the Seller.
The Seller hereby represents, warrants and covenants with and to the
Owner Trustee, the Indenture Trustee, the Servicer, the Securities Insurer and
the Securityholders as of the Closing Date:
(a) The Seller is a corporation duly organized, validly existing, and
in good standing under the laws of the State of Nevada and has all licenses
necessary to carry on its business as now being conducted and is licensed,
qualified and in good standing in each Mortgaged Property State if the laws of
such state require licensing or qualification in order to conduct business of
the type conducted by the Seller and perform its obligations as Seller
hereunder; the Seller has the power and authority to execute and deliver this
Agreement and to perform in accordance herewith; the
SALE AND SERVICING AGREEMENT (Series 19 - ) - Page 33
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execution, delivery and performance of this Agreement (including all instruments
of transfer to be delivered pursuant to this Agreement) by the Seller and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by all necessary action of the Seller; this Agreement evidences the
valid, binding and enforceable obligation of the Seller; and all requisite
action has been taken by the Seller to make this Agreement valid, binding and
enforceable upon the Seller in accordance with its terms, subject to the effect
of bankruptcy, insolvency, reorganization, moratorium and other, similar laws
relating to or affecting creditors' rights generally or the application of
equitable principles in any proceeding, whether at law or in equity;
(b) All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required to be
taken, given or obtained, as the case may be, by or from any federal, state or
other governmental authority or agency (other than any such actions, approvals,
etc. under any state securities laws, real estate syndication or "Blue Sky"
statutes, as to which the Seller makes no such representation or warranty) that
are necessary in connection with the purchase and sale of the Securities and the
execution and delivery by the Seller of this Agreement and the other related
documents to which it is a party, have been duly taken, given or obtained, as
the case may be, are in full force and effect, are not subject to any pending
proceedings or appeals (administrative, judicial or otherwise) and either the
time within which any appeal therefrom may be taken or review thereof may be
obtained has expired or no review thereof may be obtained or appeal therefrom
taken, and are adequate to authorize the consummation of the transactions
contemplated by this Agreement and such other documents on the part of the
Seller and the performance by the Seller of its obligations as Seller under this
Agreement and such other documents to which it is a party;
(c) The consummation of the transactions contemplated by this Agreement
will not result in (i) the breach of any terms or provisions of the Articles of
Incorporation or Bylaws of the Seller, (ii) the breach of any term or provision
of, or conflict with or constitute a default under or result in the acceleration
of any obligation under, any material agreement, indenture or loan or credit
agreement or other material instrument to which the Seller, or its property is
subject, or (iii) the violation of any law, rule, regulation, order, judgment or
decree to which the Seller or its respective property is subject;
(d) Neither this Agreement nor the Prospectus nor any statement, report
or other document prepared by the Seller and furnished or to be furnished
pursuant to this Agreement or in connection with the transactions contemplated
hereby contains any untrue statement of material fact or omits to state a
material fact necessary to make the statements contained herein or therein not
misleading;
(e) There is no action, suit, proceeding or investigation pending or,
to the best of the Seller's knowledge, threatened against the Seller which,
either in any one instance or in the aggregate, may result in any material
adverse change in the business, operations, financial condition, properties or
assets of the Seller or in any material impairment of the right or ability of
the Seller to carry on its business substantially as now conducted, or in any
material liability on the part of the Seller or which would draw into question
the validity of this Agreement or the Home Loans or of any action taken or to be
taken in connection with the obligations of the Seller contemplated herein, or
which would be likely to impair materially the ability of the Seller to perform
under the terms of this Agreement;
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(f) The Seller is not in default with respect to any order or decree of
any court or any order, regulation or demand of any federal, state, municipal or
other governmental agency, which default might have consequences that would
materially and adversely affect the condition (financial or otherwise) or
operations of the Seller or its properties or might have consequences that would
materially and adversely affect its performance hereunder;
(g) As of the Closing Date, the Issuer will have good and marketable
title to each Initial Home Loan and such other items comprising the corpus of
the Trust free and clear of any lien, mortgage, pledge, charge, security
interest or other encumbrance;
(h) As of any Subsequent Transfer Date, the Issuer will have good and
marketable title to each Subsequent Home Loan transferred on such date and such
other items comprising the corpus of the Trust free and clear of any lien,
mortgage, pledge, charge, security interest or other encumbrance; and
(i) The transfer, assignment and conveyance of the Home Loans, the Debt
Instruments and the Mortgages by the Seller pursuant to this Agreement or any
Subsequent Transfer Agreement are not subject to the bulk transfer laws or any
similar statutory provisions in effect in any applicable jurisdiction.
(j) The Seller shall provide each Rating Agency and the Securities
Insurer with notice and a copy of any amendment to the Articles of Incorporation
of the Seller promptly after the filing thereof.
Section 3.02 Representations, Warranties and Covenants of the Servicer
and Transferor.
The Servicer as such and in its capacity as the Transferor hereby
represents, warrants and covenants with and to the Seller, the Owner Trustee,
the Indenture Trustee, the Securities Insurer and the Securityholders as of the
Closing Date:
(a) The Servicer is a corporation duly organized, validly existing, and
in good standing under the laws of the State of Texas and has all licenses
necessary to carry on its business as now being conducted and is licensed,
qualified and in good standing in each Mortgaged Property State if the laws of
such state require licensing or qualification in order to conduct business of
the type conducted by the Servicer and perform its obligations as Servicer
hereunder; the Servicer has the power and authority to execute and deliver this
Agreement and to perform in accordance herewith; the execution, delivery and
performance of this Agreement (including all instruments of transfer to be
delivered pursuant to this Agreement) by the Servicer and the consummation of
the transactions contemplated hereby have been duly and validly authorized by
all necessary action of the Servicer; this Agreement evidences the valid,
binding and enforceable obligation of the Servicer; and all requisite action has
been taken by the Servicer to make this Agreement valid, binding and enforceable
upon the Servicer in accordance with its terms, subject to the effect of
bankruptcy, insolvency, reorganization, moratorium and other, similar laws
relating to or affecting creditors' rights generally or the application of
equitable principles in any proceeding, whether at law or in equity;
(b) All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required to be
taken, given or obtained, as the case may
SALE AND SERVICING AGREEMENT (Series 19 - ) - Page 35
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be, by or from any federal, state or other governmental authority or agency
(other than any such actions, approvals, etc. under any state securities laws,
real estate syndication or "Blue Sky" statutes, as to which the Servicer makes
no such representation or warranty) that are necessary in connection with the
execution and delivery by the Servicer of this Agreement and the other related
documents to which it is a party, have been duly taken, given or obtained, as
the case may be, are in full force and effect, are not subject to any pending
proceedings or appeals (administrative, judicial or otherwise) and either the
time within which any appeal therefrom may be taken or review thereof may be
obtained has expired or no review thereof may be obtained or appeal therefrom
taken, and are adequate to authorize the consummation of the transactions
contemplated by this Agreement and such other documents on the part of the
Servicer and the performance by the Servicer of its obligations as Servicer
under this Agreement and such other documents to which it is a party;
(c) The consummation of the transactions contemplated by this Agreement
will not result in (i) the breach of any terms or provisions of the charter or
by-laws of the Servicer, (ii) the breach of any term or provision of, or
conflict with or constitute a default under or result in the acceleration of any
obligation under, any material agreement, indenture or loan or credit agreement
or other material instrument to which the Servicer or its property is subject,
or (iii) the violation of any law, rule, regulation, order, judgment or decree
to which the Servicer or its property is subject;
(d) Neither this Agreement nor the Prospectus nor any statement, report
or other document prepared by the Servicer and furnished or to be furnished
pursuant to this Agreement or in connection with the transactions contemplated
hereby contains any untrue statement of material fact or omits to state a
material fact necessary to make the statements contained herein or therein not
misleading;
(e) There is no action, suit, proceeding or investigation pending or,
to the best of the Servicer's knowledge, threatened against the Servicer which,
either in any one instance or in the aggregate, may result in any material
adverse change in the business, operations, financial condition, properties or
assets of the Servicer or in any material impairment of the right or ability of
the Servicer to carry on its business substantially as now conducted, or in any
material liability on the part of the Servicer or which would draw into question
the validity of this Agreement or the Home Loans or of any action taken or to be
taken in connection with the obligations of the Servicer contemplated herein, or
which would be likely to impair materially the ability of the Servicer to
perform under the terms of this Agreement;
(f) The Servicer is not in default with respect to any order or decree
of any court or any order, regulation or demand of any federal, state, municipal
or other governmental agency, which default might have consequences that would
materially and adversely affect the condition (financial or otherwise) or
operations of the Servicer or its properties or might have consequences that
would materially and adversely affect its performance hereunder;
(g) So long as FFI is the Servicer of the Home Loans hereunder, the
Servicer's Home Loan Files will be maintained at 1250 Mockingbird Lane, Dallas,
Texas 75247-4902, or, if FFI is no longer the Servicer hereunder or if FFI
changes the location of the Servicer's Home Loan Files, the Servicer's Home Loan
Files shall be maintained at such address as may be indicated on an Officer's
Certificate executed by a Servicing Officer and delivered to the Owner Trustee,
the Indenture Trustee, the Securities Insurer and the Seller;
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(h) The Servicer shall not solicit any refinancing of any of the Home
Loans; provided, that this covenant shall not prevent or restrict the Servicer
from making general solicitations, by mail, advertisement or otherwise of the
general public or persons on a targeted list, so long as the list was not
generated from the Home Loan Schedule; and
(i) The Servicer shall not sell, transfer, assign or otherwise dispose
of a customer or similar list comprised of the names of the Obligors under the
Home Loans to any third party.
Section 3.03 Individual Home Loans.
The Transferor hereby represents and warrants to the Seller, the Owner
Trustee, the Indenture Trustee, the Securities Insurer and the Securityholders,
with respect to each Initial Home Loan, as of the Closing Date and, with respect
to each Subsequent Home Loan, as of the related Subsequent Transfer Date:
(a) Home Loan Information. The information with respect to each Home
Loan set forth in the Home Loan Schedule is true and correct in all material
respects as of the applicable Cut-Off Date.
(b) Delivery of Home Loan Documents. All of the original or certified
documentation required to be delivered to the Owner Trustee or to the Custodian
on or prior to the Closing Date or the Subsequent Transfer Date, as applicable,
or as otherwise provided in this Agreement has or will be so delivered.
(c) Payments Current. As of the applicable Cut-off Date, no more than
___% (by aggregate Cut-off Date Principal Balance) of the Home Loans are more
than 30 days but not more than 60 days delinquent, based on the terms under
which the related Mortgages and Debt Instruments have been made and none of the
Home Loans are more than 60 days delinquent. The Transferor has not advanced
funds, or induced, solicited or knowingly received any advance of funds from a
party other than the related Obligor, directly or indirectly, for the payment of
any amount required by any Home Loan.
(d) No Waiver or Modification. The terms of each Debt Instrument and
Mortgage have not been impaired, waived, altered or modified in any respect,
except by written instruments reflected in the Issuer's Home Loan File and no
provision of any Mortgage or Debt Instrument has been "whited out" or erased
unless such modification has been initialed by each of the parties to the
related Home Loan. No instrument of waiver, alteration, modification or
assumption has been executed except for the instruments that are part of the
Issuer's Home Loan File and the terms of which are reflected in the Issuer's
Home Loan File.
(e) No Defenses. No Debt Instrument or Mortgage is subject to any
set-off, counterclaim or defense, including the defense of usury, nor will the
operation of any of the terms of any Debt Instrument or Mortgage, or the
exercise of any right thereunder, render such Debt Instrument or Mortgage
unenforceable, in whole or in part, or subject to any right of rescission,
set-off, counterclaim or defense, including the defense of usury, and no such
right of rescission, set-off, counterclaim or defense has been asserted in any
proceeding or was asserted in any state or federal bankruptcy or insolvency
proceeding at the time the related Home Loan was originated.
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(f) Compliance with Laws. Any and all requirements of any federal,
state or local law applicable to each Home Loan have been complied with
including, without limitation, all consumer, usury, truth-in-lending, consumer
credit protection, equal credit opportunity or disclosure laws applicable to
each Home Loan; each Home Loan was originated in compliance with all applicable
laws and no fraud or misrepresentation was committed by any Person in connection
therewith.
(g) No Satisfaction or Release of Lien. No Mortgage has been satisfied,
canceled, subordinated or rescinded, in whole or in part. No Mortgaged Property
has been released from the lien of the related Mortgage, in whole or in part,
nor has any instrument been executed that would effect any such release,
cancellation, subordination or rescission, other than the subordination of the
lien of a Mortgage securing a Home Loan with respect to which a related Superior
Lien was released in connection with the refinancing of the mortgage loan
relating to such Superior Lien.
(h) Valid Lien. With respect to each Debt Instrument that is secured by
a Mortgage, such Mortgage is or creates a valid, subsisting and enforceable lien
on the related Mortgaged Property, including, in the case of a Mortgage securing
a Home Improvement Loan, the land and all buildings on the related Mortgaged
Property.
(i) Validity of Home Loan Documents. Each Debt Instrument and each
Mortgage is genuine and each is the legal, valid and binding obligation of the
Obligor thereof, enforceable in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency, reorganization
or other similar laws affecting creditors' rights in general and by general
principles of equity. All parties to each Debt Instrument and each Mortgage had
legal capacity at the time to enter into the related Home Loan and to execute
and deliver such Debt Instrument and Mortgage, and such Debt Instrument and
Mortgage have been duly and properly executed by such parties.
(j) Full Disbursement of Proceeds. As of the applicable Cut-Off Date,
the proceeds of each Home Loan have been fully disbursed and there is no
requirement for future advances thereunder, all costs, fees and expenses
incurred in making or closing each Home Loan and the recording of the Mortgage
were disbursed, the Obligor is not entitled to any refund of any amounts paid or
due under the Debt Instrument or any related Mortgage and any and all
requirements set forth in the related Home Loan documents have been complied
with.
(k) Ownership. Immediately prior to the conveyance thereof to the
Seller, the Transferor had good and marketable title to each Home Loan, Debt
Instrument and Mortgage, was the sole owner thereof and had full right to sell
each Home Loan, Debt Instrument and Mortgage to the Seller and upon the
conveyance thereof by the Transferor to the Seller, the Seller became the sole
owner of each Home Loan, Debt Instrument and Mortgage free and clear of any
encumbrance, equity, lien, pledge, charge, claim or security interest.
(l) Ownership of Mortgaged Property. With respect to each Home Loan
that is secured by a Mortgaged Property, the related Servicer's Home Loan File
contains a title document reflecting that title to such Mortgaged Property is
held at least ____% by the Obligor under such Home Loan.
(m) No Defaults. Except with respect to any delinquent scheduled
payment set forth in subsection (c) above, there is no default, breach,
violation or event of acceleration existing under any Mortgage or any Debt
Instrument and, to the best of the Transferor's knowledge, there is no event
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which, with the passage of time or with notice and/or the expiration of any
grace or cure period, would constitute such a default, breach, violation or
event of acceleration and neither the Transferor nor its predecessors have
waived any such default, breach, violation or event of acceleration, except as
set forth in an instrument of waiver, alteration, modification or assumption
that is included in the Issuer's Home Loan File.
(n) No Condemnation or Damage. To the best of the Transferor's
knowledge, the physical condition of each Mortgaged Property has not
deteriorated since the date of origination of the related Home Loan (normal wear
and tear excepted) and there is no proceeding pending for the total or partial
condemnation of any Mortgaged Property.
(o) Mortgage Remedies Adequate. Each Mortgage contains customary and
enforceable provisions such as to render the rights and remedies of the holder
thereof adequate for the realization against the related Mortgaged Property of
the benefits of the security provided thereby, including, (i) in the case of a
Mortgage designated as a deed of trust, by trustee's sale, and (ii) otherwise,
by judicial foreclosure.
(p) Underwriting of Home Loans. Each Home Loan has been underwritten by
the originator thereof in accordance with such originator's then current
underwriting guidelines.
(q) Terms of Home Loans. Each Home Loan is a fixed rate loan; each Debt
Instrument has an original term to maturity of not less than 24 months nor more
than 20 years and 32 days from the date of origination; each Debt Instrument is
payable in monthly installments of principal and interest, with interest payable
in arrears, and requires a monthly payment which is sufficient to amortize the
original principal balance over the original term and to pay interest at the
related Home Loan Interest Rate; and no Debt Instrument provides for any
extension of the original term.
(r) Security. No Debt Instrument is, or has been, secured by any
collateral except the lien of the related Mortgage.
(s) Deed of Trust. If a Mortgage constitutes a deed of trust, a
trustee, duly qualified under applicable law to serve as such, has been properly
designated and currently so serves as such and is named in the Mortgage, or a
valid substitution of trustee has been recorded or may be recorded and no
extraordinary fees or expenses are, or will become, payable by the Transferor to
the trustee under the deed of trust, except in connection with default
proceedings and a trustee's sale after default by the related Obligor.
(t) Types of Home Loans. Each Home Loan is either (i) a Home
Improvement Loan, (ii) a Debt Consolidation Loan, (iii) a Combination Loan, or
(iv) a first or junior lien purchase money loan. No Home Loan was originated for
the express purpose of purchasing a manufactured home.
(u) Completion of Improvements. With respect to all Home Loans that are
Home Improvement Loans (except for such Home Loans that are first lien or junior
lien purchase money loans, the proceeds of which have been used in part to
acquire the related Mortgaged Property), all improvements to be made to each
Mortgaged Property with the proceeds of the related Home Loan have been
completed and, except as to Home Loans that are such purchase money loans or
that were
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made by the originator thereof directly to the owner of the property being
improved, the related Servicer's Home Loan File contains a Completion
Certificate.
(v) Origination Practices. The origination practices used by each
originator of the Home Loans and the servicing and collection practices used by
the Transferor with respect to each Home Loan have been in all material respects
legal, proper, prudent and customary with respect to the loan origination and
servicing business as applicable to the respective loan type.
(w) Servicing Practices. Each Home Loan has been serviced in
accordance with all applicable laws and, to the best of the Transferor's
knowledge, no fraud or misrepresentation was committed by any Person in
connection therewith.
(x) No Bulk Transfer. The sale, transfer, assignment, conveyance and
grant of the Debt Instruments and the Mortgages by the Transferor to the Seller
were not subject to the bulk transfer laws or any similar statutory provisions
in effect in any applicable jurisdiction.
(y) Delinquencies. As of the ____________________, 19__ Cut-Off Date,
no more than _____% of the Initial Home Loans (by outstanding principal balance)
and no more than _____ of the Initial Home Loans (by number) were 31 days or
more delinquent.
(z) Relief Act Matters. No Obligor has notified the Transferor, and no
relief has been requested or allowed to an Obligor under the Soldiers' and
Sailors' Civil Relief Act of 1940.
(aa) Selection Criteria. The Home Loans were not selected by the
Transferor for sale to the Seller or the Issuer on any basis intended to
adversely affect the Seller or the Issuer.
(bb) Superior Lien Delinquencies. No Superior Lien was more than 30
days past due at the time of origination of the related Home Loan.
(cc) Aggregate Principal Balances of the Home Loans. The aggregate
outstanding principal balances of the Home Loans as of each Cut-Off Date will
not represent more than 80% of the Pool Principal Balance.
(dd) Good Repair. The related Mortgaged Property described in each Debt
Instrument is, to the best of the Transferor's knowledge, free of damage and in
good repair.
(ee) Simple Interest. Interest for each Home Loan is calculated at a
rate of interest computed by the simple interest method.
The Transferor has reviewed all of the documents constituting each
Servicer's Home Loan File and each Issuer's Home Loan File and has made such
inquiries as it deems necessary to make and confirm the accuracy of the
representations set forth herein.
Section 3.04 Subsequent Home Loans.
(a) The Transferor shall represent and warrant to the Seller, the
Owner Trustee, the Indenture Trustee, the Securities Insurer and the
Securityholders that as of each Subsequent Transfer Date:
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(i) No Subsequent Home Loan provides for negative amortization;
(ii) No Subsequent Home Loan has a Cut-Off Date or a Subsequent
Transfer Date later than __________________, 19__ ;
(iii) No Subsequent Home Loan has a maturity date later than ,
____________________ 20__;
(iv) To the best of the Transferor's knowledge, the acquisition
of the Subsequent Home Loans as of such Subsequent Transfer Date will
not result in a downgrading in any rating of the Securities;
(v) The Subsequent Home Loans have not been acquired by the
Issuer for the primary purpose of recognizing gains or decreasing
losses resulting from market value changes in such Subsequent Home
Loans;
(vi) Each of the representations and warranties set forth in
Section 3.03 is true and correct with respect to each of the Subsequent
Home Loans being transferred to the Issuer; and
(vii) To the extent applicable to each Subsequent Home Loan being
transferred to the Issuer, the quantitative criteria set forth in
paragraphs 31 and 32 of that certain Commitment to Issue a Financial
Guaranty Insurance Policy (Application No.__________) dated as of
__________, 19__ (the "Securities Insurer Commitment") issued by the
Securities Insurer have been satisfied.
(b) The Transferor shall represent and warrant to the Seller, the
Owner Trustee, the Indenture Trustee, the Securities Insurer and the
Securityholders that as of the end of the Funding Period:
(i) The Home Loans have a weighted average Home Loan Interest
Rate of at least ____% and a Home Loan Interest Rate of at least ____%;
(ii) The Home Loans have a weighted average original term to
stated maturity of not more than _____ years;
(iii) No Home Loans have a Principal Balance as of the related
Cut-Off Date of greater than $___________;
(iv) There is not a concentration of Home Loans in a single
postal zip code in excess of ____% of the Pool Principal Balance;
(v) No more than ___% of the Home Loans by Principal Balance as
of the respective Cut-Off Dates shall be Combination Loans in which
less than 40% of the proceeds from each such loan have been used for
the improvement of the related Mortgaged Property; and
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(vi) The other quantitative criteria set forth in paragraphs
31 and 32 of the Securities Insurer Commitment (as defined in (a)(vii)
above) have been satisfied.
Section 3.05 Purchase and Substitution.
(a) It is understood and agreed that the representations and
warranties set forth in Sections 3.03 and 3.04, shall survive the conveyance of
the Home Loans to the Issuer and the delivery of the Securities to the
Securityholders. Upon discovery by the Seller, the Servicer, the Transferor, the
Custodian, the Owner Trustee, the Indenture Trustee, the Securities Insurer or
any Securityholder of a breach of any of such representations and warranties
which materially and adversely affects the value of the Home Loans or the
interest of the Securityholders or the Securities Insurer, or which materially
and adversely affects the interests of the Securityholders or the Securities
Insurer in the related Home Loan in the case of a representation and warranty
relating to a particular Home Loan (notwithstanding that such representation and
warranty was made to the Transferor's best knowledge), the party discovering
such breach shall give prompt written notice to the others. The Transferor shall
within 60 days of the earlier of its discovery or its receipt of notice of any
breach of a representation or warranty, promptly cure such breach in all
material respects. If, however, within 60 days after the notice to the
Transferor respecting such breach the Transferor has not remedied the breach and
the breach materially and adversely affects the interests of the Securityholders
or the Securities Insurer generally or in the related Home Loan (the "Defective
Home Loan"), the Seller shall cause the Transferor on or before the
Determination Date next succeeding the end of such 60 day period either (i) to
remove such Defective Home Loan from the Trust (in which case it shall become a
Deleted Home Loan) and substitute one or more Qualified Substitute Home Loans in
the manner and subject to the conditions set forth in this Section 3.05 or (ii)
to purchase such Defective Home Loan at a purchase price equal to the Purchase
Price (as defined below) by depositing such Purchase Price in the Collection
Account; provided any such substitution may be effected not later than the date
which is two years after the Startup Day. In the event the Seller or the
Transferor is notified that any Mortgage Property is not free of damage or not
in good repair, regardless of the Transferor's knowledge, the Seller shall cause
the Transferor to (x) substitute or purchase the related Home Loan in accordance
with clauses (i) and (ii), respectively, above or (y) repair any such Mortgaged
Property such that such Mortgaged Property is free of damage and in good repair.
The Transferor shall provide the Servicer, the Securities Insurer, the Indenture
Trustee and the Owner Trustee with a certification of a Responsible Officer on
the Determination Date next succeeding the end of such 60 day period indicating
whether the Transferor is purchasing the Defective Home Loan or substituting in
lieu of such Defective Home Loan a Qualified Substitute Home Loan. With respect
to the purchase of a Defective Home Loan pursuant to this Section, the "Purchase
Price" shall be equal to the Principal Balance of such Defective Home Loan as of
the date of purchase, plus all accrued and unpaid interest on such Defective
Home Loan to but not including the Due Date in the Due Period most recently
ended prior to such Determination Date computed at the applicable Home Loan
Interest Rate, plus the amount of any unreimbursed Servicing Advances made by
the Servicer with respect to such Defective Home Loan, which Purchase Price
shall be deposited in the Collection Account (after deducting therefrom any
amounts received in respect of such repurchased Defective Home Loan and being
held in the Collection Account for future distribution to the extent such
amounts represent recoveries of principal not yet applied to reduce the related
Principal Balance or interest (net of the Servicing Fee) for the period from and
after the Due Date in the Due Period most recently ended prior to such
Determination Date).
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Any substitution of Home Loans pursuant to this Section 3.05(a) and
Section 2.06(c) shall be accompanied by payment by the Transferor of the
Substitution Adjustment, if any, to be deposited in the Collection Account. For
purposes of calculating the Available Remittance Amount for any Distribution
Date, amounts paid by the Transferor pursuant to this Section 3.05 in connection
with the repurchase or substitution of any Defective Home Loan that are on
deposit in the Collection Account as of the Determination Date for such
Distribution Date shall be deemed to have been paid during the related Due
Period and shall be transferred to the Distribution Account pursuant to Section
5.01(c)(i) on the Determination Date for such Distribution Date.
As to any Deleted Home Loan for which the Transferor substitutes a
Qualified Substitute Home Loan or Loans, the Transferor shall effect such
substitution by delivering to the Owner Trustee (i) a certification executed by
a Responsible Officer of the Transferor to the effect that the Substitution
Adjustment has been credited to the Collection Account and remitted to the
Indenture Trustee for deposit into the Distribution Account, and (ii) the
documents constituting the Issuer's Loan File for such Qualified Substitute Home
Loan or Loans.
In addition to the preceding repurchase obligations, each of the Seller
and the Transferor shall have the option, exercisable in its sole discretion at
any time, to repurchase any Home Loan from the Issuer in the event that such
Home Loan is in foreclosure, default or imminent default; provided that any
repurchase pursuant to this paragraph is conducted in the same manner as the
repurchase of a Defective Home Loan pursuant to this Section 3.05.
(b) The Servicer shall deposit in the Collection Account all payments
received in connection with such Qualified Substitute Home Loan or Loans after
the date of such substitution. Monthly Payments received with respect to
Qualified Substitute Home Loans on or before the date of substitution will be
retained by the Transferor. The Issuer will be entitled to all payments received
on the Deleted Home Loan on or before the date of substitution, and the
Transferor shall thereafter be entitled to retain all amounts subsequently
received in respect of such Deleted Home Loan. The Transferor shall give written
notice to the Owner Trustee, the Servicer (if the Transferor is not then acting
as such), the Indenture Trustee and the Securities Insurer that such
substitution has taken place and shall amend the Home Loan Schedule to reflect
(i) the removal of such Deleted Home Loan from the terms of this Agreement and
(ii) the substitution of the Qualified Substitute Home Loan. The Transferor
shall promptly deliver to the Owner Trustee, the Servicer (if the Transferor is
not then acting as such), the Indenture Trustee and the Securities Insurer a
copy of the amended Home Loan Schedule. Upon such substitution, such Qualified
Substitute Home Loan or Loans shall be subject to the terms of this Agreement in
all respects, and the Transferor shall be deemed to have made with respect to
such Qualified Substitute Home Loan or Loans, as of the date of substitution,
the covenants, representations and warranties set forth in Section 3.03. On the
date of such substitution, the Transferor will deposit into the Collection
Account an amount equal to the Substitution Adjustment, if any.
(c) It is understood and agreed that the obligations of the Transferor
set forth in this Section 3.05 to cure, purchase or substitute for a Defective
Home Loan constitute the sole remedies of the Issuer, the Owner Trustee, the
Indenture Trustee, the Securityholders and the Securities Insurer hereunder
respecting a breach of the representations and warranties contained in Sections
3.03 and 3.04. Any cause of action against the Seller relating to or arising out
of a defect in a Issuer's Home Loan File as contemplated by Section 2.06 or
against the Transferor relating to or arising out of a breach of any
representations and warranties made in Sections 3.03 or 3.04 shall
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accrue as to any Home Loan upon (i) discovery of such defect or breach by any
party and notice thereof to the Seller or the Transferor, as applicable, or
notice thereof by the Transferor or the Seller, as applicable, to the Owner
Trustee, (ii) failure by the Transferor or the Seller, as applicable, to cure
such defect or breach or purchase or substitute such Home Loan as specified
above, and (iii) demand upon the Transferor or the Seller, as applicable, by the
Owner Trustee or the Majority Securityholders for all amounts payable in respect
of such Home Loan.
(d) Neither the Owner Trustee nor the Indenture Trustee shall have any
duty to conduct any affirmative investigation other than as specifically set
forth in this Agreement as to the occurrence of any condition requiring the
repurchase or substitution of any Home Loan pursuant to this Section or the
eligibility of any Home Loan for purposes of this Agreement.
ARTICLE IV
ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS
Section 4.01 Duties of the Servicer.
(a) Servicing Standard. The Servicer, as an independent contractor,
shall service and administer the Home Loans and shall have full power and
authority, acting alone, to do any and all things in connection with such
servicing and administration which the Servicer may deem necessary or desirable
and consistent with the terms of this Agreement. Notwithstanding anything to the
contrary contained herein, the Servicer, in servicing and administering the Home
Loans, shall employ or cause to be employed procedures (including collection,
foreclosure, liquidation and Foreclosure Property management and liquidation
procedures) and exercise the same care that it customarily employs and exercises
in servicing and administering loans of the same type as the Home Loans for its
own account, all in accordance with accepted servicing practices of prudent
lending institutions and servicers of loans of the same type as the Home Loans
and giving due consideration to the Securityholders' and the Securities
Insurer's reliance on the Servicer. The Servicer has and shall maintain the
facilities, procedures and experienced personnel necessary to comply with the
servicing standard set forth in this subsection (a) and the duties of the
Servicer set forth in this Agreement relating to the servicing and
administration of the Home Loans. Consistent with the terms of this Agreement,
the Servicer may, with the prior written consent of the Owner Trustee and the
Indenture Trustee, with respect to any material obligations hereunder which
consent shall not be unreasonably withheld, employ or retain agents or contract
with third parties to aid in the performance of the Servicer's obligations
hereunder; provided, however, that the Servicer shall remain obligated for all
actions taken by such agents or third parties.
(b) Servicing Advances. In accordance with the preceding general
servicing standard, the Servicer, or any Subservicer on behalf of the Servicer,
shall make all reasonable and necessary Servicing Advances in connection with
the servicing of each Home Loan hereunder. Notwithstanding any provision to the
contrary herein, neither the Servicer, nor any Subservicer on behalf of the
Servicer, shall have any obligation to advance its own funds for any delinquent
scheduled payments of principal and interest on any Home Loan or to satisfy or
keep current the indebtedness secured by any Superior Liens on the related
Mortgaged Property. No costs incurred by the Servicer or any Subservicer in
respect of Servicing Advances shall, for the purposes of distributions to
Securityholders, be added to the amount owing under the related Home Loan.
Notwithstanding any obligation by the Servicer to make a Servicing Advance
hereunder with respect
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to a Home Loan, before making any Servicing Advance that is material in relation
to the outstanding principal balance thereof, the Servicer shall assess the
reasonable likelihood of (i) recovering such Servicing Advance and any prior
Servicing Advances for such Home Loan, and (ii) recovering any amounts
attributable to outstanding interest and principal owing on such Home Loan for
the benefit of the Securityholders and the Securities Insurer in excess of the
costs, expenses and other deductions to obtain such recovery, including without
limitation any Servicing Advances therefor and, if applicable, the outstanding
indebtedness of all Superior Liens. The Servicer shall only make a Servicing
Advance with respect to a Home Loan to the extent that the Servicer determines
in its reasonable, good faith judgment that such Servicing Advance would likely
be recovered as aforesaid.
(c) Waivers, Modifications and Extensions. Consistent with the terms of
this Agreement, the Servicer may waive, modify or vary any provision of any Home
Loan or consent to the postponement of strict compliance with any such provision
or in any manner grant indulgence to any Obligor if in the Servicer's reasonable
determination such waiver, modification, postponement or indulgence is not
materially adverse to the interests of the Securityholders or the Securities
Insurer; provided, however, unless the Obligor is in default with respect to the
Home Loan, or such default is, in the judgment of the Servicer, reasonably
foreseeable, the Servicer may not permit any modification with respect to any
Home Loan that would change the Home Loan Interest Rate, defer (subject to the
following paragraph) or forgive the payment of any principal or interest (unless
in connection with the liquidation of the related Home Loan) or extend the final
maturity date on the Home Loan. The Servicer may grant a waiver or enter into a
subordination agreement with respect to the refinancing of a Superior Lien on
the related Mortgaged Property, provided that the Obligor is in a better
financial or cash flow position as a result of such refinancing, which may
include a reduction in the Obligor's scheduled monthly payment on the
indebtedness secured by such Superior Lien. The Servicer shall notify the Owner
Trustee and the Indenture Trustee of any modification, waiver or amendment of
any provision of any Home Loan and the date thereof, and shall deliver to the
Custodian for deposit in the related Issuer's Home Loan File, an original
counterpart of the agreement relating to such modification, waiver or amendment
promptly following the execution thereof. Notwithstanding the preceding
provisions of this subsection (c), if the Home Loans that have been waived,
modified or varied, in the aggregate, equal or exceed two percent (2%) of the
aggregate Principal Balances of the Initial Home Loans as of the related Cut-Off
Date, then any waiver, modification or variance of any Home Loan thereafter
shall be subject to the prior written consent of the Securities Insurer.
The Servicer shall make reasonable efforts to collect all payments
called for under the terms and provisions of each Home Loan and the related Debt
Instrument and Mortgage, if applicable. Consistent with the foregoing, the
Servicer may in its discretion waive or permit to be waived any late payment
charge, prepayment charge or assumption fee or any other fee or charge which the
Servicer would be entitled to retain hereunder as Servicing Compensation and
extend the due date for payments due on a Debt Instrument for a period (with
respect to each payment as to which the due date is extended) not greater than
90 days after the initially scheduled due date for such payment, provided that
such extension would not result in an extension of the final maturity date of
such Debt Instrument.
(d) Instruments of Satisfaction or Release. Without limiting the
generality of the foregoing, the Servicer is hereby authorized and empowered to
execute and deliver on behalf of the Issuer, the Owner Trustee, the Indenture
Trustee, each Securityholder and the Securities Insurer, all instruments of
satisfaction or cancellation, or of partial or full release, discharge and all
other
SALE AND SERVICING AGREEMENT (Series 19 - ) - Page 45
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comparable instruments, with respect to the Home Loans and with respect to the
related Mortgaged Properties. If reasonably required by the Servicer, the Owner
Trustee shall furnish the Servicer with any powers of attorney and other
documents necessary or appropriate to enable the Servicer to carry out its
servicing and administrative duties under this Agreement.
Section 4.02 Liquidation of Home Loans.
(a) In the event that any payment due under any Home Loan and not
postponed pursuant to Section 4.01(c) is not paid when the same becomes due and
payable, or in the event the Obligor fails to perform any other covenant or
obligation under the Home Loan and such failure continues beyond any applicable
grace period, the Servicer shall take such action as it shall deem to be in the
best interest of the Securityholders and the Securities Insurer. Without
limiting the generality of the preceding sentence, the Servicer shall, in
accordance with the standard of care specified in Section 4.01(a), take such
other action as the Servicer shall deem to be in the best interests of the
Securityholders and the Securities Insurer (including the resale or substitution
of such Home Loan pursuant to Section 3.05, or, if no Superior Liens exist on
the related Mortgaged Property, foreclose or otherwise comparably effect
ownership in such Mortgaged Property in the name of the Issuer for the benefit
of Securityholders and the Securities Insurer). The Servicer shall give the
Indenture Trustee and the Owner Trustee notice of the election of remedies made
pursuant to this Section 4.02. The Servicer shall not be required to satisfy the
indebtedness secured by any Superior Liens on the related Mortgaged Property or
to advance funds to keep the indebtedness secured by such Superior Liens
current. In connection with any collection or foreclosure activities, the
Servicer shall exercise collection or foreclosure procedures with the same
degree of care and skill as it would exercise or use under the circumstances in
the conduct of its own affairs.
(b) During any Due Period occurring after a Home Loan becomes a
Liquidated Home Loan, the Servicer shall deposit into the Collection Account any
proceeds received by it with respect to such Liquidated Home Loan or the related
Foreclosure Property ("Post Liquidation Proceeds").
(c) After a Home Loan has become a Liquidated Home Loan, the Servicer
shall promptly prepare and forward to the Owner Trustee, the Indenture Trustee,
the Securities Insurer and, upon request of any Securityholder, to such
Securityholder a Liquidation Report detailing the following: (i) the Net
Liquidation Proceeds, Insurance Proceeds or Released Mortgaged Property Proceeds
received in respect of such Liquidated Home Loan; (ii) expenses incurred with
respect thereto; (iii) any Net Principal Loan Losses incurred in connection
therewith; and (iv) any Post Liquidation Proceeds.
Section 4.03 Fidelity Bond; Errors and Omission Insurance.
The Servicer shall maintain with a responsible company, and at its own
expense, a blanket fidelity bond and an errors and omissions insurance policy in
such amounts as required by, and satisfying any other requirements of, the FHA
and the FHLMC, with broad coverage on all officers, employees or other persons
acting in any capacity requiring such persons to handle funds, money, documents
or papers relating to the Home Loans ("Servicer Employees"). Any such fidelity
bond and errors and omissions insurance shall protect and insure the Servicer
against losses, including losses resulting from forgery, theft, embezzlement,
fraud, errors and omissions and negligent acts (including acts relating to the
origination and servicing of loans of the same type as the Home Loans) of such
Servicer Employees. Such fidelity bond shall also protect and insure the
Servicer against
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losses in connection with the release or satisfaction of a Home Loan without
having obtained payment in full of the indebtedness secured thereby. In the
event of any loss of principal or interest on a Home Loan for which
reimbursement is received from the Servicer's fidelity bond or errors and
omissions insurance, the proceeds from any such insurance will be deposited in
the Collection Account. No provision of this Section 4.03 requiring such
fidelity bond and errors and omissions insurance shall diminish or relieve the
Servicer from its duties and obligations as set forth in this Agreement. Upon
the request of the Owner Trustee, the Indenture Trustee or the Securities
Insurer, the Servicer shall cause to be delivered to requesting party a
certified true copy of such fidelity bond and insurance policy. On the Closing
Date, such fidelity bond and insurance is maintained by the Servicer with
Reliance Insurance Company of Illinois.
Section 4.04 Title, Management and Disposition of Foreclosure Property.
In the event that title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure (a "Foreclosure Property"), the
deed or certificate of sale shall be taken in the name of the Issuer for the
benefit of the Securityholders.
The Servicer shall manage, conserve, protect and operate each
Foreclosure Property for the Issuer, the Securityholders and the Securities
Insurer solely for the purpose of its prudent and prompt disposition and sale.
The Servicer shall, either itself or through an agent selected by the Servicer,
manage, conserve, protect and operate the Foreclosure Property in the same
manner that it manages, conserves, protects and operates other foreclosure
property for its own account, and in the same manner that similar property in
the same locality as the Foreclosure Property is managed. The Servicer shall
attempt to sell the same (and may temporarily lease the same) on such terms and
conditions as the Servicer deems to be in the best interest of the
Securityholders and the Securities Insurer.
The disposition of Foreclosure Property shall be carried out by the
Servicer at such price, and upon such terms and conditions, as the Servicer
deems to be in the best interest of the Issuer, the Securityholders and the
Securities Insurer and, as soon as practicable thereafter, the expenses of such
sale shall be paid. The Net Liquidation Proceeds or Post Liquidation Proceeds,
as applicable, from the conservation, disposition and sale of the Foreclosure
Property shall be promptly deposited by the Servicer in the Collection Account
for distribution to the Securityholders in accordance with the Indenture or the
Trust Agreement, as applicable, which Net Liquidation Proceeds or Post
Liquidation Proceeds, as applicable, shall equal all cash amounts received with
respect thereto less the amounts retained and withdrawn by the Servicer for any
related unreimbursed Servicing Advances and any other fees and expenses incurred
in connection with such Foreclosure Property.
Section 4.05 Access to Certain Documentation and Information Regarding
the Home Loans.
The Servicer shall provide to the Owner Trustee, the Indenture Trustee,
the Securityholders, the Securities Insurer and the supervisory agents and
examiners of each of the foregoing access to the documentation regarding the
Home Loans required by applicable state and federal regulations, such access
being afforded without charge but only upon reasonable request and during normal
business hours at the offices of the Servicer designated by it.
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Section 4.06 Superior Liens.
(a) The Servicer shall file (or cause to be filed) of record a request
for notice of any action by a lienholder under a Superior Lien for the
protection of the Issuer's interest, where permitted by local law and whenever
applicable state law does not require that a junior lienholder be named as a
party defendant in foreclosure proceedings in order to foreclose such junior
lienholder's equity of redemption.
(b) If the Servicer is notified that any lienholder under a Superior
Lien has accelerated or intends to accelerate the obligations secured by such
Superior Lien, or has declared or intends to declare a default under the related
mortgage or promissory note secured thereby, or has filed or intends to file an
election to have any Mortgaged Property sold or foreclosed, the Servicer shall
take, on behalf of the Trust, all reasonable actions that are necessary to
protect the interests of the Securityholders and the Securities Insurer, and/or
to preserve the security of the related Home Loan, including making any
Servicing Advances that are necessary to cure the default or reinstate the
Superior Lien. The Servicer shall immediately notify the Owner Trustee and the
Indenture Trustee of any such action or circumstances. Any Servicing Advances by
the Servicer pursuant to its obligations in this Section 4.06 shall comply with
requirements set forth in Section 4.01(b) hereof.
Section 4.07 Subservicing.
(a) The Servicer may, with the prior written consent of the Owner
Trustee and the Indenture Trustee, enter into Subservicing Agreements for any
servicing and administration of Home Loans with any institution which is in
compliance with the laws of each state necessary to enable it to perform its
obligations under such Subservicing Agreement and is an Eligible Servicer. The
Servicer shall give prior written notice to the Owner Trustee, the Indenture
Trustee and the Securities Insurer of the appointment of any Subservicer. The
Servicer shall be entitled to terminate any Subservicing Agreement in accordance
with the terms and conditions of such Subservicing Agreement and to either
directly service the related Home Loans or enter into a Subservicing Agreement
with a successor subservicer which qualifies hereunder. Each of the Owner
Trustee, the Indenture Trustee and Securities Insurer hereby acknowledge and
consent to each Person identified as a Subservicer in the definition of such
term as of the Closing Date.
(b) Notwithstanding any Subservicing Agreement, any of the provisions
of this Agreement relating to agreements or arrangements between the Servicer
and a Subservicer or reference to actions taken through a Subservicer or
otherwise, the Servicer shall remain obligated and primarily liable to the Owner
Trustee, the Indenture Trustee, the Securities Insurer and Securityholders for
the servicing and administering of the Home Loans in accordance with the
provisions of this Agreement without diminution of such obligation or liability
by virtue of such Subservicing Agreements or arrangements or by virtue of
indemnification from the Subservicer and to the same extent and under the same
terms and conditions as if the Servicer alone were servicing and administering
the Home Loans. For purposes of this Agreement, the Servicer shall be deemed to
have received payments on Home Loans when the Subservicer has actually received
such payments and, unless the context otherwise requires, references in this
Agreement to actions taken or to be taken by the Servicer in servicing the Home
Loans include actions taken or to be taken by a Subservicer on behalf of the
Servicer. The Servicer shall be entitled to enter into any agreement with a
Subservicer for indemnification of the Servicer by such Subservicer, and nothing
contained in this Agreement shall be deemed to limit or modify such
indemnification.
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(c) In the event the Servicer shall for any reason no longer be the
Servicer (including by reason of an Event of Default), the successor Servicer,
on behalf of the Owner Trustee, the Indenture Trustee and the Securityholders
pursuant to Section 4.08, shall thereupon assume all of the rights and
obligations of the Servicer under each Subservicing Agreement that the Servicer
may have entered into, unless the successor Servicer elects to terminate any
Subservicing Agreement in accordance with its terms. The successor Servicer
shall be deemed to have assumed all of the Servicer's interest therein and to
have replaced the Servicer as a party to each Subservicing Agreement to the same
extent as if the Subservicing Agreements had been assigned to the assuming
party, except that the Servicer shall not thereby be relieved of any liability
or obligations under the Subservicing Agreements. The Servicer at its expense
and without right of reimbursement therefor, shall, upon request of the
successor Servicer, deliver to the assuming party all documents and records
relating to each Subservicing Agreement and the Home Loans then being serviced
and an accounting of amounts collected and held by it and otherwise use its best
efforts to effect the orderly and efficient transfer of the Subservicing
Agreements to the assuming party.
(d) As part of its servicing activities hereunder, the Servicer, for
the benefit of the Owner Trustee, the Indenture Trustee, the Securities Insurer
and the Securityholders, shall enforce the obligations of each Subservicer under
the related Subservicing Agreement. Such enforcement, including, without
limitation, the legal prosecution of claims and the pursuit of other appropriate
remedies, shall be in such form and carried out to such an extent and at such
time as the Servicer, in its good faith business judgment, would require were it
the owner of the related Home Loans. The Servicer shall pay the costs of such
enforcement at its own expense, and shall be reimbursed therefor only (i) from a
general recovery resulting from such enforcement to the extent, if any, that
such recovery exceeds all amounts due in respect of the related Home Loan or
(ii) from a specific recovery of costs, expenses or attorneys fees against the
party against whom such enforcement is directed.
(e) Any Subservicing Agreement that may be entered into and any other
transactions or services relating to the Home Loans involving a Subservicer in
its capacity as such and not as an originator shall be deemed to be between the
Subservicer and the Servicer alone and none of the Owner Trustee, the Indenture
Trustee, the Securityholders or the Securities Insurer shall be deemed parties
thereto or shall have any claims, rights, obligations, duties or liabilities
with respect to the Subservicer in its capacity as such except as set forth in
Section 4.07(c) above.
Section 4.08 Successor Servicers. In the event that the Servicer is
terminated pursuant to Section 10.01 hereof, or resigns pursuant to Section 9.04
hereof or otherwise becomes unable to perform its obligations under this
Agreement, the Indenture Trustee will become the successor servicer or will
appoint a successor servicer in accordance with the provisions of Section 10.02
hereof; provided that any successor servicer, including the Indenture Trustee,
shall satisfy the requirements of an Eligible Servicer and shall be approved by
the Rating Agencies.
Section 4.09 Title, Management and Disposition of Foreclosure Property.
In the event that title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure (each, a "Foreclosure Property"),
the deed or certificate of sale shall be taken in the name of the Issuer for the
benefit of the Securityholders and the Securities Insurer.
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The Servicer shall manage, conserve, protect and operate each
Foreclosure Property for the Securityholders and the Securities Insurer solely
for the purpose of its prudent and prompt disposition and sale. The Servicer
shall, either itself or through an agent selected by the Servicer, manage,
conserve, protect and operate the Foreclosure Property in the same manner that
it manages, conserves, protects and operates other foreclosure property for its
own account, and in the same manner that similar property in the same locality
as the Foreclosure Property is managed. The Servicer shall attempt to sell the
same (and may temporarily rent the same) on such terms and conditions as the
Servicer deems to be in the best interest of the Securityholders and the
Securities Insurer.
The disposition of Foreclosure Property shall be carried out by the
Servicer at such price, and upon such terms and conditions, as the Servicer
deems to be in the best interest of the Securityholders and the Securities
Insurer and, as soon as practicable thereafter, the expenses of such sale shall
be paid. The Net Liquidation Proceeds or Post Liquidation Proceeds, as
applicable, from the conservation, disposition and sale of the Foreclosure
Property shall be promptly deposited by the Servicer in the Collection Account
for distribution in accordance with Section 5.01(c), which Net Liquidation
Proceeds or Post Liquidation Proceeds, as applicable, shall equal all cash
amounts received with respect thereto less the amounts retained and withdrawn by
the Servicer for any related unreimbursed Servicing Advances and any other fees
and expenses incurred in connection with such Foreclosure Property.
ARTICLE V
ESTABLISHMENT OF TRUST ACCOUNTS
Section 5.01 Establishment of Collection Accounts; Deposits in
Collection Accounts; Withdrawals from the Collection Account.
(a) The Servicer, for the benefit of the Securityholders, shall cause
to be established and maintained one or more Collection Accounts, which shall be
Eligible Accounts, which may be interest-bearing, entitled "FIRST TRUST OF
CALIFORNIA, NATIONAL ASSOCIATION, IN TRUST FOR THE BENEFICIAL OWNERS OF
FIRSTPLUS HOME LOAN OWNER TRUST 19 - ASSET-BACKED NOTES AND ASSET-BACKED
CERTIFICATES, SERIES 19 - , COLLECTION ACCOUNT". The Collection Account may be
maintained with the Indenture Trustee or any other depository institution which
satisfies the requirements set forth in the definition of Eligible Account. The
creation of any Collection Account other than one maintained with the Indenture
Trustee shall be evidenced by a letter agreement between the Servicer and the
depository institution. A copy of such letter agreement shall be furnished to
the Owner Trustee, Indenture Trustee, the Securities Insurer and, upon request
of any Securityholder, to such Securityholder.
(b) The Servicer shall use its best efforts to deposit or cause to be
deposited (without duplication) within one (1) Business Day, and shall in any
event deposit within two (2) Business Days, of receipt thereof in the Collection
Account and retain therein:
(i) all payments on account of principal on the Home Loans
collected after the applicable Cut-Off Date;
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(ii) all payments on account of interest on the Home Loans
collected after the applicable Cut-Off Date;
(iii) all Net Liquidation Proceeds and Post Liquidation Proceeds
pursuant to Sections 4.02 or 4.07;
(iv) all Insurance Proceeds;
(v) all Released Mortgaged Property Proceeds;
(vi) any amounts payable in connection with the repurchase of
any Home Loan and the amount of any Substitution Adjustment pursuant to
Sections 2.06 and 3.05;
(vii) any amount required to be deposited in the Collection
Account pursuant to the receipt of proceeds from any fidelity bond or
errors and omission insurance under Section 4.03 or the deposit of the
Termination Price under Section 11.02; and
(viii) interest and gains on funds held in the Collection Account.
The foregoing requirements for deposit in the Collection Account shall
be exclusive.
(c) On the Business Day prior to each Distribution Date, the Servicer
(based on the information contained in the Servicer's Monthly Remittance Report
for such Distribution Date) shall make or cause to be made the following
deposits and distributions from the Collection Account by 11:00 a.m. (New York
City time), to the extent of the Available Collection Amount, in the following
order of priority:
(i) to the Securities Insurer, an amount equal to the Guaranty
Insurance Premium;
(ii) in the following order: (a) to the Indenture Trustee, an
amount equal to the Indenture Trustee Fee and all unpaid Indenture
Trustee Fees from prior Due Periods, (b) to the Owner Trustee, an
amount equal to the Owner Trustee Fee and all unpaid Owner Trustee Fees
from prior Due Periods, and (c) to the Custodian, an amount equal to
the Custodian Fee and all unpaid Custodian Fees from prior Due Periods;
(iii) to the Note Distribution Account, from the Total
Distribution Amount remaining after the application of clauses (i) and
(ii) above, the Noteholders' Interest Distributable Amount;
(iv) to the Note Distribution Account, from the Total
Distribution Amount remaining after the application of clauses (i)
through (iii) above, the Noteholders' Principal Distributable Amount;
(v) to the Certificate Distribution Account, from the Total
Distribution Amount remaining after the application of clauses (i)
through (iv) above, the Certificateholders' Interest Distributable
Amount;
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(vi) to the Certificate Distribution Account, from the Total
Distribution Amount remaining after the application of clauses (i)
through (v) above, the Certificateholders' Principal Distributable
Amount;
(vii) to the holder of the Residual Interest, the Total
Distribution Amount, if any, remaining after the application of clauses
(i) through (vi) above.
Notwithstanding that the Notes have been paid in full, the Indenture
Trustee shall continue to maintain the Collection Account hereunder until the
Certificate Balance is reduced to zero.
(d) The Servicer shall also make or cause to be made the following
investments in and/or withdrawals from the Collection Account, in no particular
order of priority:
(i) to invest amounts on deposit in the Collection Account in
Permitted Investments pursuant to Section 5.07 hereof;
(ii) to pay itself Servicing Compensation pursuant to Section
7.03 hereof and to pay itself any accrued but unpaid Servicing Fees;
(iii) to withdraw any amount not required to be deposited in the
Collection Account or deposited therein in error; and
(iv) to clear and terminate the Collection Account in connection
with the termination of this Agreement.
The Servicer shall not retain any cash or investment in the Collection
Account for a period in excess of 12 months and cash therein shall be considered
transferred to the Note Distribution Account on a first-in, first-out basis.
(e) So long as no Event of Default shall have occurred and be
continuing, the funds held in the Collection Account may be invested (to the
extent practicable and consistent with any requirements of the Code) in
Permitted Investments, as directed to the Servicer in writing or by telephone or
facsimile transmission confirmed in writing by the Seller. In any case, funds in
the Collection Account must be available for withdrawal without penalty, and any
Permitted Investments must mature or otherwise be available for withdrawal, not
later than one Business Day immediately preceding the Distribution Date next
following the date of such investment and shall not be sold or disposed of prior
to its maturity. All interest and any other investment earnings on amounts or
investments held in the Collection Account shall be deposited into the
Collection Account immediately upon receipt by the Servicer. All Permitted
Investments in which funds in the Collection Account are invested must be held
by or registered in the name of "FIRST TRUST OF CALIFORNIA, NATIONAL
ASSOCIATION, IN TRUST FOR THE BENEFICIAL OWNERS OF FIRSTPLUS HOME LOAN OWNER
TRUST 19_-_ ASSET-BACKED NOTES AND ASSET-BACKED CERTIFICATES, SERIES 19_-_".
Section 5.02 Initial Collection Account; Transfer of Collection
Account.
Pursuant to Section 5.01, the Collection Account shall be established,
as of the Closing Date, with __________________________, as an Eligible Account
pursuant to the definition thereof. The
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Collection Account may, upon written notice to the Owner Trustee and the
Indenture Trustee, be transferred to a different depository institution so long
as such transfer is to an Eligible Account.
Section 5.03 Pre-Funding Account.
(a) No later than the Closing Date, the Servicer, for the benefit of
the Securityholders, shall establish and maintain with the Indenture Trustee one
or more Eligible Accounts entitled "PRE- FUNDING ACCOUNT, FIRST TRUST OF
CALIFORNIA, NATIONAL ASSOCIATION, AS INDENTURE TRUSTEE FOR THE BENEFICIAL OWNERS
OF THE FIRSTPLUS HOME LOAN OWNER TRUST 19__-__ ASSET-BACKED NOTES AND
ASSET-BACKED CERTIFICATES, SERIES 19__-__". On the Closing Date, the Owner
Trustee, on behalf of the Seller, shall cause the Pre-Funding Account Deposit to
be deposited into the Pre- Funding Account from the proceeds of the sale of the
Securities. On any Subsequent Transfer Date, the Servicer shall instruct the
Indenture Trustee to: (i) withdraw from the Pre-Funding Account an amount equal
to the Subsequent Purchase Price for the Subsequent Home Loans sold to the
Issuer on such Subsequent Transfer Date pursuant to a Subsequent Transfer
Agreement; and (ii) pay such amount to or upon the order of the Seller upon
satisfaction of the conditions set forth in Section 2.02 of this Agreement with
respect to such transfer.
(b) So long as no Event of Default shall have occurred and be
continuing, amounts held in the Pre-Funding Account shall be invested in
Permitted Investments of the type specified in clause (vii) of the definition of
Permitted Investments, which Permitted Investments shall mature on the Business
Day following the purchase date of such investments or upon demand. The
Indenture Trustee shall not be liable for any losses on amounts invested in
accordance with the provisions hereof (except to the extent that the Indenture
Trustee is the obligor and has defaulted on such investments). Any losses
realized in connection with any such investment shall be for the account of the
Seller, and the Seller shall deposit the amount of such loss (to the extent not
offset by income from other investments) in the Pre-Funding Account immediately
upon the realization of such loss. All interest and any other investment
earnings on amounts held in the Pre-Funding Account shall be taxed to the Seller
and for federal and state income tax purposes the Seller shall be deemed to be
the owner of the Pre-Funding Account. All interest and any other investment
earnings on amounts or investments held in the Pre-Funding Account shall be
deposited into the Capitalized Interest Account on each Distribution Date.
(c) If the Pre-Funding Account has not been reduced to zero by the
close of business on the date on which the Funding Period ends, the Servicer
shall direct the Indenture Trustee to deposit any amounts remaining in the
Pre-Funding Account (net of reinvestment earnings which shall be transferred to
the Capitalized Interest Account) into the Note Distribution Account and the
Certificate Distribution Account on the Business Day immediately preceding the
Pre-Funding Termination Distribution Date for distribution to the
Securityholders pro rata based on the Class Principal Balance of the Note and
the Certificate Principal Balance of the Certificates. Amounts that are
transferred to the Note Distribution Account or the Certificate Distribution
Account from the Pre-Funding Account pursuant to this Section 5.03(c) may not be
invested in Permitted Investments or other investments after being transferred
into the Note Distribution Account or the Certificate Distribution Account.
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Section 5.04 Capitalized Interest Account.
(a) No later than the Closing Date, the Servicer, for the benefit of
the Securityholders, shall establish and maintain with the Indenture Trustee one
or more Eligible Accounts entitled "CAPITALIZED INTEREST ACCOUNT, FIRST TRUST OF
CALIFORNIA, NATIONAL ASSOCIATION, AS INDENTURE TRUSTEE FOR FIRSTPLUS HOME LOAN
OWNER TRUST 19___-___ ASSET-BACKED NOTES AND ASSET- BACKED CERTIFICATES, SERIES
19 ___-___ ". On the Closing Date, the Owner Trustee, on behalf of the Seller,
shall cause the Capitalized Interest Account Deposit to be deposited into the
Capitalized Interest Account from the proceeds of the sale of the Securities.
The Indenture Trustee shall hold the Capitalized Interest Account Deposit for
the benefit of the Securityholders and the Securities Insurer. On the Business
Day preceding each Distribution Date during the Funding Period and on the first
Distribution Date occurring after the Due Period in which the Funding Period
ends, the Servicer shall instruct the Indenture Trustee to withdraw from the
Capitalized Interest Account and deposit into the Note Distribution Account
and/or the Certificate Distribution Account the Interest Shortfall, if any, with
respect to such Distribution Date.
(b) So long as no Event of Default shall have occurred and be
continuing, amounts held in the Capitalized Interest Account shall be invested
in Permitted Investments of the type specified in clause (vii) of the definition
of Permitted Investments, which Permitted Investments shall mature no later than
the third Business Day prior to the Distribution Date. The Indenture Trustee
shall not be liable for any losses on amounts invested in accordance with the
provisions hereof (except to the extent that the Indenture Trustee is the
obligor and has defaulted on such investments). All interest and other
investment earnings on amounts held in the Capitalized Interest Account shall be
retained by the Indenture Trustee in the Capitalized Interest Account until
distributed pursuant to this Section and for federal and state income tax
purposes the Seller shall be deemed to be the owner of the Capitalized Interest
Account including, for such purposes, the recognition of income from such
earnings. Any losses realized in connection with any such investment shall be
for the account of the Seller, and the Seller and the Transferor shall deposit
into the Capitalized Interest Account an amount in cash equal to the amount of
any such loss (to the extent not offset by income from other investments)
immediately upon the realization of such loss. All amounts earned on amounts on
deposit in the Capitalized Interest Account shall be taxed to the Seller.
(c) On any Business Day occurring prior to the last Business Day of
each Due Period that occurs prior to __________________, 19__ the Transferor and
the Seller may deposit with the Indenture Trustee a letter of credit issued by a
financial institution, and in a form, approved by the Securities Insurer and the
Rating Agencies in an amount equal to any positive difference between the
Capitalized Interest Account Requirement and the Capitalized Interest Amount as
of any date of determination occurring prior to such Business Day, and the
Indenture Trustee shall notify the Securities Insurer of the receipt of such
letter of credit. The failure to deposit such letter of credit in respect of any
such difference before the close of business on the last Business Day of each
Due Period that occurs prior to __________________, 19__ will cause the Funding
Period to end as of the last day of such Due Period. On any Business Day
occurring prior to the last Business Day of each Due Period that occurs prior to
__________________, 19__, the Transferor and the Seller may request the Servicer
to calculate the Capitalized Interest Account Requirement as of such Business
Day; provided that if no such request has been received during a Due Period then
the Servicer shall calculate the Capitalized Interest Account Requirement on the
last Business Day of such Due Period to determine whether the Funding Period
will end pursuant to the preceding sentence. Any amounts
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remaining in the Capitalized Interest Account at the end of the Funding Period
and not used as described above will be distributed to the Seller, including any
net reinvestment income thereon.
(d) On any Business Day occurring prior to the last Business Day of
each Due Period that occurs prior to ________________, 19__ , the Transferor and
the Seller may request the Servicer to calculate the amount, if any, of the
Capitalized Interest Excess. If the Capitalized Interest Excess is greater than
zero on any such Business Day prior to ________________, 19__ , such Capitalized
Interest Excess will be released to the Seller on the following Distribution
Date. On the Distribution Date following the Due Period in which the Funding
Period ends, the Servicer shall instruct the Indenture Trustee to release and
distribute to the Seller the Capitalized Interest Amount, if any, that remains
after the distribution of any Interest Shortfall on such Distribution Date.
Section 5.05 Establishment of Note Distribution Account; Investment of
Funds Held in Note Distribution Account.
(a) No later than the Closing Date, the Servicer, for the benefit of
the Securityholders, will establish and maintain with the Indenture Trustee one
or more Eligible Accounts entitled "NOTE DISTRIBUTION ACCOUNT, FIRST TRUST OF
CALIFORNIA, NATIONAL ASSOCIATION, AS INDENTURE TRUSTEE FOR FIRSTPLUS HOME LOAN
OWNER TRUST 19 ___-___ ASSET-BACKED NOTES AND ASSET-BACKED CERTIFICATES, SERIES
19 ___-___ ". On each Distribution Date, the Indenture Trustee shall distribute
the Noteholders' Distributable Amount from the Note Distribution Account in
accordance with Section ___ of the Indenture.
(b) So long as no Event of Default shall have occurred and be
continuing, the funds held in the Note Distribution Account may be invested (to
the extent practicable and consistent with any requirements of the Code) in
Permitted Investments, as directed to the Indenture Trustee in writing or by
telephone or facsimile transmission confirmed in writing by the Servicer. In any
case, funds in the Note Distribution Account must be available for withdrawal
without penalty, and any Permitted Investments must mature or otherwise be
available for withdrawal, not later than one Business Day immediately preceding
the Distribution Date next following the date of such investment and shall not
be sold or disposed of prior to its maturity. All interest and other investment
earnings on amounts or investments held in the Note Distribution Account shall
be deposited into the Note Distribution Account immediately upon receipt by the
Indenture Trustee. All Permitted Investments in which funds in the Distribution
Account are invested must be held by or registered in the name of "FIRST TRUST
OF CALIFORNIA, NATIONAL ASSOCIATION, IN TRUST FOR THE BENEFICIAL OWNERS OF
FIRSTPLUS HOME LOAN OWNER TRUST 19 ___-___ ASSET-BACKED NOTES AND ASSET-BACKED
CERTIFICATES, SERIES 19 ___-___ ".
Section 5.06 Reserve Account.
(a) No later than the Closing Date, the Servicer, for the benefit of
the Securityholders, will establish and maintain with the Indenture Trustee one
or more Eligible Accounts entitled "RESERVE ACCOUNT, FIRST TRUST OF CALIFORNIA,
NATIONAL ASSOCIATION, IN TRUST FOR FIRSTPLUS HOME LOAN OWNER TRUST 19 ___-___
ASSET BACKED NOTES AND ASSET BACKED CERTIFICATES, SERIES 19 ___-___ ". On the
Closing Date, the Owner Trustee will deposit, on behalf of the Seller, the
Reserve Account Initial Deposit into the Reserve Account from the net proceeds
of the sale of the Notes and the Certificates. On the Closing Date, the Reserve
Account Initial Deposit will be equal to the Reserve Account Requirement. So
long as no Event of Default shall have occurred and be
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continuing, the funds held in the Reserve Account may be invested (to the extent
practicable and consistent with any requirements of the Code) in Permitted
Investments, as directed to the Indenture Trustee in writing or by telephone or
facsimile transmission confirmed in writing by the Servicer. In any case, funds
in the Reserve Account must be available for withdrawal without penalty, and any
Permitted Investments must mature or otherwise be available for withdrawal, not
later than one Business Day immediately preceding the Distribution Date next
following the date of such investment and shall not be sold or disposed of prior
to its maturity. All interest and other investment earnings on amounts or
investments held in the Reserve Account shall be deposited into the Reserve
Account immediately upon receipt by the Indenture Trustee.
(b) On any Business Day occurring after _________________, 19__ , the
Transferor and the Seller may deposit with the Indenture Trustee a limited
guaranty issued by an affiliate of the Transferor and the Seller or a letter of
credit issued by a financial institution in an amount equal to any positive
difference between the Reserve Account Requirement and the Reserve Account
Amount as of any date of determination occurring prior to such Business Day,
provided that such limited guaranty or such letter of credit is in a form
approved by the Securities Insurer and the Rating Agencies. The Indenture
Trustee shall notify the Securities Insurer of the receipt of any such limited
guaranty or letter of credit.
(c) If the amount on deposit in the Reserve Account on any Distribution
Date (after giving effect to all deposits thereto or withdrawals therefrom on
such Distribution Date) is greater than the Reserve Account Requirement for such
Distribution Date (such amount "the Excess Reserve Account Amount"), the
Servicer shall first instruct the Indenture Trustee to cause a reduction in the
amount available under the limited guaranty or letter of credit, if any, until
(A) the Excess Reserve Account Amount is reduced to zero or (B) the amount
available under the limited guaranty or letter of credit is reduced to zero.
After any limited guaranty or letter of credit has been reduced to zero, the
Servicer shall instruct the Indenture Trustee to distribute any Excess Reserve
Account Amount to the holder of the residual interest until the Excess Reserve
Account Amount is reduced to zero.
(d) The Servicer shall cause the amount of the Reserve Account
Requirement to be reduced incrementally (i.e., dollar-for-dollar) each time the
Overcollateralization Level is increased as a result of the application of
Excess Spread to the principal amount of the Securities until the
Overcollateralization Level equals the Required Overcollateralization Level and
the Reserve Fund Requirement is reduced to zero. Once the Reserve Account
Requirement is reduced to zero, the Servicer shall direct the Indenture Trustee
to distribute any amounts remaining in the Reserve Account to the holder of the
Residual Interest.
(e) If the Servicer determines pursuant to Section 4.01(b) that it is
required to make an Advance on a Determination Date and does not do so from its
own funds, the Servicer shall instruct the Indenture Trustee to withdraw funds
from the Reserve Account and deposit them in the Collection Account to cover any
shortfall. Such payment shall be deemed to have been made by the Servicer
pursuant to Section 4.01(b) for purposes of making distributions pursuant to
this Agreement, but shall not otherwise satisfy the Servicer's obligation to
deliver the amount of the Advances, and the Servicer shall within two Business
Days replace any funds in the Reserve Account so used.
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(f) (i) In the event that the Required Distribution Amount for a
Distribution Date exceeds the Available Collection Amount on such
Distribution Date, the Servicer shall instruct the Indenture
Trustee to withdraw from the Reserve Account on such Distribution
Date an amount equal to the Deficiency Amount, to the extent of
funds available therein and deposit such amount into the Note
Distribution Account and/or the Certificate Distribution Account,
as applicable.
(ii) In the event that the Total Distribution Amount on the
Final Scheduled Distribution Date for a Class of Notes or the
Certificates exceeds the amount deposited into the Note
Distribution Account and/or the Certificate Distribution Account
pursuant to Section 5.01(c) on such Distribution Date, the
Servicer shall instruct the Indenture Trustee to withdraw from the
Reserve Account on such Distribution Date an amount equal to such
excess, to the extent of funds available therein and deposit such
amount into the Note Distribution Account and/or the Certificate
Distribution Account, as applicable.
(g) Following the payment in full of the aggregate outstanding
Principal Balance of the Notes and the Certificates and of all other amounts
owing or to be distributed hereunder or under the Indenture or the Trust
Agreement to the Securityholders and the termination of the Trust, any amount
remaining on deposit in the Reserve Account shall be distributed to the holder
of the Residual Interest and any Permitted Investments in the Reserve Account
shall be transferred to the holder of the Residual Interest.
Section 5.07 Trust Account Property.
(a) The Indenture Trustee shall possess all right, title and interest
in all funds on deposit from time to time in the Trust Accounts and in all
proceeds thereof (including all income thereon) and all such funds, investments,
proceeds and income shall be part of the Trust Account Property. The Trust
Accounts shall be under the sole dominion and control of the Indenture Trustee
for the benefit of the Noteholders, the Owner Trustee and the
Certificateholders, as the case may be. If, at any time, any of the Trust
Accounts ceases to be an Eligible Account, the Indenture Trustee (or the
Servicer on its behalf) shall within 10 Business Days (or such longer period,
not to exceed 30 calendar days, as to which each Rating Agency may consent)
establish a new Trust Account as an Eligible Account and shall transfer any cash
and/or any investments to such new Trust Account.
(b) If any amounts are needed for disbursement from any Trust Account
held by or on behalf of the Indenture Trustee and sufficient uninvested funds
are not available to make such disbursement, the Indenture Trustee shall cause
to be sold or otherwise converted to cash a sufficient amount of the investments
in such Trust Account. The Indenture Trustee shall not be liable for any
investment loss or other charge resulting therefrom unless the Indenture
Trustee's failure to perform in accordance with this Section 5.07 is the cause
of such loss or charge.
(c) Subject to Section 12.01 hereof, the Indenture Trustee shall not
in any way be held liable by reason of any insufficiency in any Account held by
the Indenture Trustee resulting from any investment loss on any Permitted
Investment included therein (except to the extent that the Indenture Trustee is
the obligor and has defaulted thereon).
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(d) With respect to the Trust Account Property, the Indenture Trustee
agrees, by its acceptance hereof, that:
(i) any Trust Account Property that is held in deposit
accounts shall be held solely in the Eligible Accounts, subject to
the last sentence of Section 5.07(a); and each such Eligible
Account shall be subject to the exclusive custody and control of
the Indenture Trustee, and the Indenture Trustee shall have sole
signature authority with respect thereto;
(ii) any Trust Account Property that constitutes Physical
Property shall be delivered to the Indenture Trustee in accordance
with paragraph (a) of the definition of "Delivery" and shall be
held, pending maturity or disposition, solely by the Indenture
Trustee or a financial intermediary (as such term is defined in
Section 8-313(4) of the UCC) acting solely for the Indenture
Trustee;
(iii) any Trust Account Property that is a book-entry
security held through the Federal Reserve System pursuant to
federal book-entry regulations shall be delivered in accordance
with paragraph (b) of the definition of "Delivery" and shall be
maintained by the Indenture Trustee, pending maturity or
disposition, through continued book-entry registration of such
Trust Account Property as described in such paragraph; and
(iv) any Trust Account Property that is an "uncertificated
security" under Article VIII of the UCC and that is not governed
by clause (C) above shall be delivered to the Indenture Trustee in
accordance with paragraph (c) of the definition of "Delivery" and
shall be maintained by the Indenture Trustee, pending maturity or
disposition, through continued registration of the Indenture
Trustee's (or its nominee's) ownership of such security.
(e) The Servicer shall have the power, revocable by the Indenture
Trustee or by the Owner Trustee with the consent of the Indenture Trustee, to
instruct the Indenture Trustee to make withdrawals and payments from the Trust
Accounts for the purpose of permitting the Servicer or the Owner Trustee to
carry out its respective duties hereunder or permitting the Indenture Trustee to
carry out its duties under the Indenture.
ARTICLE VI
STATEMENTS AND REPORTS; SPECIFICATION OF TAX MATTERS
Section 6.01 Statements.
(a) No later than each Determination Date, the Servicer shall deliver
to the Indenture Trustee and the Securities Insurer, by facsimile, the receipt
and legibility of which shall be confirmed telephonically, and with hard copy
thereof to be delivered no later than one (1) Business Day after
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such Determination Date, the Servicer's Monthly Remittance Report, setting forth
the date of such Report (day, month and year), the name of the Issuer (i.e.
"FIRSTPLUS Home Loan Owner Trust 19___-___"), the Series designation of the
Securities (i.e. "Series 19___-___"), and the date of this Agreement.
Furthermore, no later than each Determination Date, the Servicer shall deliver
to the Indenture Trustee a magnetic tape or computer disk providing such
information regarding the Servicer's activities in servicing the Home Loans
during the related Due Period as the Indenture Trustee may reasonably require.
(b) On each Distribution Date, the Servicer shall prepare and the
Indenture Trustee shall distribute a monthly statement (the "Servicer's Monthly
Statement") to the Seller, the Securityholders, the Beneficial Owners (who have
notified the Indenture Trustee by delivery of an Investment Letter to the
Indenture Trustee), the Securities Insurer and the Rating Agencies, stating the
date of original issuance of the Securities (day, month and year), the name of
the Issuer (i.e. "FIRSTPLUS Home Loan Owner Trust 19___-___"), the series
designation of the Certificates (i.e. "Series 19___-___"), the date of this
Agreement and the following information:
(i) the Available Collection Amount and Required Distribution
Amount for the related Distribution Date;
(ii) the Class Principal Balance of each Class of Notes, the
Certificate Principal Balance of the Certificates, and the Pool
Principal Balance (including, until the Funding Period ends, the amount
remaining in the Pre-Funding Account and the Capitalized Interest
Account as of such Distribution Date) as of the first day of the
related Due Period and after giving effect to distributions made to the
holders of such Securities on such Distribution Date;
(iii) the Class Pool Factor with respect to each Class of Notes
then outstanding and the Certificate Pool Factor with respect to the
Certificates then outstanding;
(iv) the amount of principal and interest received on the Home
Loans during the related Due Period;
(v) the Noteholders' Distributable Amount and the
Certificateholders' Distributable Amount;
(vi) the amount, if any, of the Excess Overcollateralization
Amount and, if applicable, the Overcollateralization Reduction Amount
or any other amount to be distributed to the Securityholders or the
holder of the Residual Interest on such Distribution Date;
(vii) the Servicing Fee, the Indenture Trustee Fee, the Owner
Trustee Fee, the Custodian Fee, if any, and the Guaranty Insurance
Premium for such Distribution Date;
(viii) the Overcollateralization Level on such Distribution
Date, the Required Overcollateralization Level as of such Distribution
Date, the Net Principal Loan Losses incurred during the related Due
Period and the cumulative Net Principal Loan Losses as of such
Distribution Date;
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(ix) the Reserve Account Requirement and the amount remaining
on deposit in the Reserve Account on such Distribution Date after
giving effect to the distributions made to Securityholders on such
Distribution Date;
(x) the weighted average maturity of the Home Loans and the
weighted average Home Loan Interest Rate of the Home Loans;
(xi) certain performance information, including delinquency
and foreclosure information with respect to the Home Loans, as set
forth in the Servicer's Monthly Remittance Report;
(xii) the amount of any Guaranteed Payment included in the
amounts distributed to the Noteholders on such Distribution Date;
(xiii) as identified with respect to the each Insured Security,
the amount of any Securities Insurer Reimbursement Amount to be
distributed to the Securities Insurer on such Distribution Date and the
amount of any Securities Insurer Reimbursement Amount remaining
unsatisfied following such distribution;
(xiv) the number of and aggregate Principal Balance of all Home
Loans in foreclosure proceedings (other than any Home Loans described
in clause (xv)) and the percent of the aggregate Principal Balances of
such Home Loans to the aggregate Principal Balances of all Home Loans,
all as of the close of business on the first day of the related Due
Period;
(xv) the number of and the aggregate Principal Balance of the
Home Loans in bankruptcy proceedings (other than any Home Loans
described in clause (xvi)) and the percent of the aggregate Principal
Balances of such Home Loans to the aggregate Principal Balances of all
Home Loans, all as of the close of business on the first day of the
related Due Period;
(xvi) the number of Foreclosure Properties, the aggregate
Principal Balance of the related Home Loans, the book value of such
Foreclosure Properties and the percent of the aggregate Principal
Balances of such Home Loans to the aggregate Principal Balances of all
Home Loans, all as of the close of business on the first day of the
related Due Period;
(xvii) the aggregate Principal Balance of Home Loans that became
Defaulted Home Loans and the aggregate Principal Balance of Home Loans
that became Liquidated Home Loans during the related Due Period,
including the foregoing amounts by loan type (i.e. Combination Loans,
Debt Consolidation Loans and Home Improvement Loans);
(xviii) the cumulative aggregate Principal Balance of Home Loans
that became Defaulted Home Loans and the cumulative aggregate Principal
Balance of Home Loans that became Liquidated Home Loans from the
Closing Date through the most current Due Period, including the
foregoing amounts by loan type (i.e. Combination Loans, Debt
Consolidation Loans and Home Improvement Loans); and
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(xix) the scheduled principal payments and the principal
prepayments received with respect to the Home Loans during the Due
Period.
All reports prepared by the Servicer of the withdrawals from and
deposits in the Collection Account will be based in whole or in part upon the
information provided to the Indenture Trustee by the Servicer, and the Indenture
Trustee may fully rely upon and shall have no liability with respect to such
information provided by the Servicer.
(c) Within a reasonable period of time after the end of each calendar
year, the Servicer shall prepare and direct the Indenture Trustee to distribute
to each Person who at any time during the calendar year was a Securityholder,
such information as is reasonably necessary to provide to such Person a
statement containing the information set forth in subclauses (b)(iv) and (v)
above, aggregated for such calendar year or applicable portion thereof during
which such Person was a Securityholder. Such obligation of the Indenture Trustee
shall be deemed to have been satisfied to the extent that substantially
comparable information shall be provided by the Servicer to the Securityholders
pursuant to any requirements of the Code as are in force from time to time.
(d) On each Distribution Date, the Indenture Trustee shall forward to
the holder of the Residual Interest a copy of the Servicer's Monthly Statement
in respect of such Distribution Date and a statement setting forth the amounts
actually distributed to such holder of the Residual Interest on such
Distribution Date, together with such other information as the Indenture Trustee
deems necessary or appropriate.
(e) Within a reasonable period of time after the end of each calendar
year, the Servicer shall prepare and direct the Indenture Trustee to distribute
to each Person who at any time during the calendar year was a holder of Residual
Interest, if requested in writing by such Person, such information as is
reasonably necessary to provide to such Person a statement containing the
information provided pursuant to the previous paragraph aggregated for such
calendar year or applicable portion thereof during which such Person was a
holder of Residual Interest. Such obligation of the Indenture Trustee shall be
deemed to have been satisfied to the extent that substantially comparable
information shall be provided by the Servicer to the holder of Residual Interest
pursuant to any requirements of the Code as are in force from time to time.
(f) Upon reasonable advance notice in writing, the Servicer will
provide to each Securityholder which is a savings and loan association, bank or
insurance company access to information and documentation regarding the Home
Loans sufficient to permit such Securityholder to comply with applicable
regulations of the FDIC or other regulatory authorities with respect to
investment in such Securities.
(g) The Servicer or its agent shall furnish to the Indenture Trustee,
who in turn shall forward to each Securityholder and the holder of Residual
Interest, during the term of this Agreement, such periodic, special, or other
reports, including information tax returns or reports required with respect to
the Securities and the Residual Interest, including Internal Revenue Service
Forms 1099 and (if instructed in writing by the Seller on the basis of the
advice of legal counsel) Form 1066, Schedule Q and other similar reports that
are required to be filed by the Servicer or its agent and the holder of Residual
Interest, whether or not provided for herein, as shall be necessary, reasonable,
or appropriate with respect to the Securityholders or the holder of Residual
Interest, or otherwise with respect to the purposes of this Agreement, all such
reports or information to be
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provided by and in accordance with such applicable instructions and directions
as the Securityholders or the holder of Residual Interest may reasonably
require.
(h) Reports and computer tapes furnished by the Servicer and the
Indenture Trustee pursuant to this Agreement shall be deemed confidential and of
proprietary nature, and shall not be copied or distributed except in connection
with the purposes and requirements of this Agreement. No Person entitled to
receive copies of such reports or tapes shall use the information therein for
the purpose of soliciting the customers of the Seller or the Servicer or for any
other purpose except as set forth in this Agreement.
Section 6.02 Reports of Foreclosure and Abandonment of Mortgaged
Property.
Each year beginning in 19 the Servicer, at its expense, shall make
the reports of foreclosures and abandonments of any Mortgaged Property required
by Section 6050J of the Code. The reports from the Servicer shall be in form and
substance sufficient to meet the reporting requirements imposed by such Section
6050J of the Code.
Section 6.03 Specification of Certain Tax Matters.
Each Securityholder shall provide the Indenture Trustee with a
completed and executed Form W-9 prior to purchasing a Security. The Indenture
Trustee shall comply with all requirements of the Code, and applicable state and
local law, with respect to the withholding from any distributions made to any
Securityholder of any applicable withholding taxes imposed thereon and with
respect to any applicable reporting requirements in connection therewith.
ARTICLE VII
GENERAL SERVICING PROCEDURE
Section 7.01 Assumption Agreements.
When a Mortgaged Property has been or is about to be conveyed by the
Obligor, the Servicer shall, to the extent it has knowledge of such conveyance
or prospective conveyance, exercise its rights to accelerate the maturity of the
related Home Loan under any "due-on-sale" clause contained in the related
Mortgage or Debt Instrument; provided, however, that the Servicer shall not
exercise any such right if the "due-on-sale" clause, in the reasonable belief of
the Servicer, is not enforceable under applicable law. In such event or in the
event the related Mortgage and Debt Instrument do not contain a "due-on-sale"
clause, the Servicer shall enter into an assumption and modification agreement
with the person to whom such property has been or is about to be conveyed,
pursuant to which such person becomes liable under the Debt Instrument and,
unless prohibited by applicable law or the Mortgage Documents, the Obligor
remains liable thereon. The Servicer is also authorized to enter into a
substitution of liability agreement with such person, pursuant to which the
original Obligor is released from liability and such person is substituted as
Obligor and becomes liable under the Debt Instrument. The Servicer shall notify
the Custodian that any such substitution or assumption agreement has been
completed by forwarding to the Custodian the original of such substitution or
assumption agreement, which original shall be added by the Custodian to the
related Issuer's Home Loan File and shall, for all purposes, be considered a
part of such Issuer's Home Loan
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File to the same extent as all other documents and instruments constituting a
part thereof. In connection with any assumption or substitution agreement
entered into pursuant to this Section 7.01, the Servicer shall not change the
Home Loan Interest Rate or the Monthly Payment, defer or forgive the payment of
principal or interest, reduce the outstanding principal amount or extend the
final maturity date on such Home Loan. Any fee collected by the Servicer for
consenting to any such conveyance or entering into an assumption or substitution
agreement shall be retained by or paid to the Servicer as additional Servicing
Compensation.
Notwithstanding the foregoing paragraph or any other provision of this
Agreement, the Servicer shall not be deemed to be in default, breach or any
other violation of its obligations hereunder by reason of any assumption of a
Home Loan by operation of law or any assumption which the Servicer may be
restricted by law from preventing, for any reason whatsoever.
Section 7.02 Satisfaction of Mortgages and Release of Home Loan Files.
Subject to the provisions of Sections 4.01 and 4.02, the Servicer shall
not grant a satisfaction or release of a Mortgage without having obtained
payment in full of the indebtedness secured by the Mortgage or otherwise
prejudice any right the Securityholders or the Securities Insurer may have under
the mortgage instruments. The Servicer shall maintain the fidelity bond and
errors and omissions insurance as provided for in Section 4.03 insuring the
Servicer against any loss it may sustain with respect to any Home Loan not
satisfied in accordance with the procedures set forth herein.
Upon the payment in full of any Home Loan, or the receipt by the
Servicer of a notification that payment in full will be escrowed in a manner
customary for such purposes, the Servicer will immediately notify the Custodian
by an Officers' Certificate (which certificate shall include a statement to the
effect that all amounts received or to be received in connection with such
payment which are required to be deposited in the Collection Account pursuant to
Section 5.01(b) have been or will be so deposited) of a Servicing Officer and
shall request delivery to it of the Issuer's Home Loan File. Upon receipt of
such certification and request, the Custodian shall promptly release the related
Issuer's Home Loan File to the Servicer. Expenses incurred in connection with
any instrument of satisfaction or deed of reconveyance shall be payable only
from and to the extent of Servicing Compensation and shall not be chargeable to
the Collection Account or the Distribution Account. Upon receipt by the
Custodian of the certification of a Servicing Officer with respect to the
release of the Issuer's Home Loan File for any Home Loan or any documents
included therein, the Custodian shall release to the Servicer such Issuer's Home
Loan File and shall deliver such instruments of transfer presented to it by the
Servicer as shall be necessary or appropriate for the release of such Issuer's
Home Loan File in accordance with such certification of the Servicing Officer;
provided that in the case of a release of the related Issuer's Home Loan File in
connection with a substitution or repurchase of any Home Loan pursuant to
Section 2.06(c) and (d), Section 3.05 or Section 11.02 or a release for other
servicing reasons, such release of the Issuer's Home Loan File by the Custodian
shall be subject to the prior approval of the Indenture Trustee.
The Owner Trustee shall execute and deliver to the Servicer any court
pleadings, requests for trustee's sale or other documents necessary to the
foreclosure or trustee's sale in respect of a Mortgaged Property or to any legal
action brought to obtain judgment against any Obligor on the Debt Instrument or
Mortgage or to obtain a deficiency judgment, or to enforce any other remedies or
rights provided by the Debt Instrument or Mortgage or otherwise available at law
or in equity.
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Together with such documents or pleadings, the Servicer shall deliver to the
Owner Trustee a certificate of a Servicing Officer requesting that such
pleadings or documents be executed by the Owner Trustee and certifying as to the
reason such documents or pleadings are required and that the execution and
delivery thereof by the Owner Trustee will not invalidate or otherwise affect
the lien of the Mortgage, except for the termination of such a lien upon
completion of the foreclosure or trustee's sale. The Owner Trustee shall, upon
receipt of a written request from a Servicing Officer, execute any document
provided to the Owner Trustee by the Servicer or take any other action requested
in such request that is, in the opinion of the Servicer as evidenced by such
request, required by any state or other jurisdiction to discharge the lien of a
Mortgage upon the satisfaction thereof and the Owner Trustee will sign and post,
but will not guarantee receipt of, any such documents to the Servicer, or such
other party as the Servicer may direct, within five Business Days, or more
promptly if needed, of the Owner Trustee's receipt of such certificate or
documents. Such certificate or documents shall establish to the Owner Trustee's
satisfaction that the related Home Loan has been paid in full by or on behalf of
the Obligor and that such payment has been deposited in the Collection Account.
Subject to any other applicable terms and conditions of this Agreement,
the Owner Trustee and Servicer shall be entitled to approve an assignment in
lieu of satisfaction with respect to any Home Loan, provided the obligee with
respect to such Home Loan following such proposed assignment provides the Owner
Trustee and Servicer with a "Certification for Assignment of Home Loan" in form
and substance satisfactory to the Owner Trustee and Servicer, providing the
following: (i) that the Home Loan is secured by Mortgaged Property located in a
jurisdiction in which an assignment in lieu of satisfaction is required to
preserve lien priority, minimize or avoid mortgage recording taxes or otherwise
comply with or facilitate a refinancing under the laws of such jurisdiction;
(ii) that the substance of the assignment is, and is intended to be, a
refinancing of such Home Loan and that the form of the transaction is solely to
comply with or facilitate the transaction under such local laws; (iii) that the
Home Loan following the proposed assignment will have a rate of interest at
least 0.25 percent below or above the rate of interest on such Home Loan prior
to such proposed assignment; and (iv) that such assignment is at the request of
the borrower under the related Home Loan. Upon approval of an assignment in lieu
of satisfaction with respect to any Home Loan, the Servicer shall receive cash
in an amount equal to the unpaid principal balance of and accrued interest on
such Home Loan and the Servicer shall treat such amount as a Principal
Prepayment with respect to such Home Loan for all purposes hereof.
Section 7.03 Servicing Compensation.
As compensation for its services hereunder, the Servicer shall be
entitled to withdraw from the Collection Account, the Servicing Fee out of which
the Servicer shall pay any servicing fees owed or payable to any Subservicer.
Additional servicing compensation in the form of assumption and other
administrative fees, amounts remitted pursuant to Section 7.01 and late payment
charges shall be retained by or remitted to the Servicer to the extent not
required to be remitted to the Indenture Trustee for deposit in the Distribution
Account.
The Servicer shall be required to pay all expenses incurred by it in
connection with its servicing activities hereunder and shall not be entitled to
reimbursement therefor except as specifically provided for herein. The Servicer
also agrees to pay (i) all reasonable costs and expenses incurred by the
Indenture Trustee, the Owner Trustee or the Seller in investigating the
Servicer's activities hereunder when, in the reasonable opinion of the Indenture
Trustee, the Owner
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Trustee or the Seller, such investigation is warranted on the basis of adverse
information about the Servicer obtained from a reasonably reliable source, (ii)
all reasonable costs and expenses incurred by any successor servicer or the
Indenture Trustee in replacing the Servicer in the event of a default by the
Servicer in the performance of its duties under the terms and conditions of this
Agreement, and (iii) the annual Rating Agency monitoring fees.
Section 7.04 Quarterly Statements as to Compliance.
Not later than the last day of the second month following the end of
each quarter of the Servicer's Fiscal Year, beginning in , 19 , the
Servicer will deliver to the Indenture Trustee, the Owner Trustee, the
Securities Insurer and to each Securityholder, an Officer's Certificate stating
that (i) the Servicer has fully complied with the provisions of Articles V and
VII, (ii) a review of the activities of the Servicer during the preceding
quarter and of performance under this Agreement has been made under such
officer's supervision, and (iii) to the best of such officers' knowledge, based
on such review, the Servicer has fulfilled all its obligations under this
Agreement throughout such quarter, or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to such
officers and the nature and status thereof and the action being taken by the
Servicer to cure such default.
Section 7.05 Annual Independent Public Accountants' Servicing Report.
On or before 120 days after the end of each of the Servicer's fiscal
years elapsing during the term of its appointment under this Agreement,
beginning with the first fiscal year ending after the Closing Date, the
Servicer, at its expense, shall furnish to the Seller, the Indenture Trustee,
the Owner Trustee, the Securityholders, the Securities Insurer and the Rating
Agencies (i) an opinion by a firm of independent certified public accountants on
the financial position of the Servicer at the end of the relevant fiscal year
and the results of operations and changes in financial position of the Servicer
for such year then ended on the basis of an examination conducted in accordance
with generally accepted auditing standards, and (ii) if the Servicer is then
servicing any Home Loans, a statement from such independent certified public
accountants to the effect that based on an examination of certain specified
documents and records relating to the servicing of the Servicer's loan portfolio
conducted substantially in compliance with the audit program for mortgages
serviced for the United States Department of Housing and Urban Development
Mortgage Audit Standards, or the Uniform Single Attestation Program for Mortgage
Bankers (the "Applicable Accounting Standards"), such firm is of the opinion
that such servicing has been conducted in compliance with the Applicable
Accounting Standards except for (a) such exceptions as such firm shall believe
to be immaterial and (b) such other exceptions as shall be set forth in such
statement.
Section 7.06 Right to Examine Servicer Records.
Each Securityholder, the Indenture Trustee, the Owner Trustee, the
Securities Insurer and each of their respective agents shall have the right upon
reasonable prior notice, during normal business hours and as often as reasonably
required, to examine, audit and copy, at the expense of the Person making such
examination, any and all of the books, records or other information of the
Servicer (including without limitation any Subservicer to the extent provided in
the related Subservicing Agreement) whether held by the Servicer or by another
on behalf of the Servicer, which may be relevant to the performance or
observance by the Servicer of the terms, covenants or conditions of this
Agreement. Each Securityholder, the Indenture Trustee, the Owner Trustee and
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the Securities Insurer agree that any information obtained pursuant to the terms
of this Agreement shall be held confidential.
Section 7.07 Reports to the Indenture Trustee; Collection Account
Statements.
If the Collection Account is not maintained with the Indenture Trustee,
then not later than 25 days after each Record Date, the Servicer shall forward
to the Indenture Trustee, the Securities Insurer and to each Majority
Securityholder a statement, certified by a Servicing Officer, setting forth the
status of the Collection Account as of the close of business on the preceding
Record Date and showing, for the period covered by such statement, the aggregate
of deposits into the Collection Account for each category of deposit specified
in Section 5.01(b), the aggregate of withdrawals from the Collection Account for
each category of withdrawal specified in Section 5.01(c) and (d) and the
aggregate amount of permitted withdrawals not made in the related Due Period in
each case, for the related Due Period.
ARTICLE VIII
REPORTS TO BE PROVIDED BY SERVICER
Section 8.01 Financial Statements.
The Servicer understands that, in connection with the transfer of the
Securities, Securityholders may request that the Servicer make available to the
Beneficial Owners and/or Securityholders and to prospective Beneficial Owners
and/or Securityholders annual audited financial statements of the Servicer for
one or more of the most recently completed five fiscal years for which such
statements are available, which request shall not be unreasonably denied.
The Servicer also agrees to make available on a reasonable basis to the
Beneficial Owners and/or Securityholders, and any prospective Beneficial Owners
and/or Securityholder a knowledgeable financial or accounting officer for the
purpose of answering reasonable questions respecting recent developments
affecting the Servicer or the financial statements of the Servicer and to permit
the Beneficial Owners and/or Securityholders and any prospective Beneficial
Owners and/or Securityholder to inspect the Servicer's servicing facilities
during normal business hours for the purpose of satisfying the Beneficial Owners
and/or Securityholders and such prospective Beneficial Owners and/or
Securityholder that the Servicer has the ability to service the Home Loans in
accordance with this Agreement.
ARTICLE IX
THE SERVICER
Section 9.01 Indemnification; Third Party Claims.
(a) The Servicer agrees to indemnify and hold the Indenture Trustee,
the Owner Trustee, the Seller, the Securities Insurer and each Securityholder
harmless from and against any and all claims, losses, penalties, fines,
forfeitures, legal fees and related costs, judgments, and any other costs, fees
and expenses that the Indenture Trustee, the Owner Trustee, the Seller, the
Securities Insurer or any Securityholder may sustain directly resulting from the
negligence or willful
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misconduct of the Servicer in the performance of its duties hereunder or in the
servicing of the Home Loans in compliance with the terms of this Agreement. IT
IS THE EXPRESS INTENTION OF THE PARTIES TO THIS AGREEMENT THAT THE
INDEMNIFICATION AND HOLD HARMLESS OBLIGATIONS OF THE SERVICER SET FORTH IN THE
PRECEDING SENTENCE SHALL APPLY FULLY TO CLAIMS, LOSSES, ETC. RESULTING FROM ACTS
OR OMISSIONS THAT MAY CONSTITUTE ORDINARY NEGLIGENCE ON THE PART OF THE
SERVICER. The Servicer shall not be liable or responsible for any of the
representations, covenants, warranties, responsibilities, duties or liabilities
of any prior Servicer. The Servicer shall immediately notify the Indenture
Trustee, the Owner Trustee, the Seller, the Securities Insurer and each
Securityholder if a claim is made by a third party with respect to this
Agreement, and the Servicer shall assume (with the consent of the Indenture
Trustee and the Owner Trustee) the defense of any such claim and advance all
expenses in connection therewith, including reasonable counsel fees, and
promptly advance funds to pay, discharge and satisfy any judgment or decree
which may be entered against the Servicer, the Indenture Trustee, the Owner
Trustee, the Seller, the Securities Insurer and/or any Securityholder in respect
of such claim.
(b) The Seller agrees to indemnify and hold the Indenture Trustee, the
Owner Trustee, the Servicer, the Securities Insurer and each Securityholder
harmless from and against any and all claims, losses, penalties, fines,
forfeitures, legal fees and related costs, judgments, and any other costs, fees
and expenses that the Indenture Trustee, the Owner Trustee, the Servicer, the
Securities Insurer or any Securityholder may sustain directly resulting from the
negligence or willful misconduct of the Seller in the performance of its duties
hereunder or in compliance with the terms of this Agreement. IT IS THE EXPRESS
INTENTION OF THE PARTIES TO THIS AGREEMENT THAT THE INDEMNIFICATION AND HOLD
HARMLESS OBLIGATIONS OF THE SELLER SET FORTH IN THE PRECEDING SENTENCE SHALL
APPLY FULLY TO CLAIMS, LOSSES, ETC. RESULTING FROM ACTS OR OMISSIONS THAT MAY
CONSTITUTE ORDINARY NEGLIGENCE ON THE PART OF THE SELLER. The Seller shall
immediately notify the Indenture Trustee, the Owner Trustee, the Servicer, the
Securities Insurer and each Securityholder if a claim is made by a third party
with respect to this Agreement, and the Seller shall assume (with the consent of
the Indenture Trustee and the Owner Trustee) the defense of any such claim and
advance all expenses in connection therewith, including reasonable counsel fees,
and promptly advance funds to pay, discharge and satisfy any judgment or decree
which may be entered against the Seller, the Servicer, the Indenture Trustee,
the Owner Trustee, the Securities Insurer and/or any Securityholder in respect
of such claim.
(c) The Transferor agrees to indemnify and hold the Indenture Trustee,
the Owner Trustee, the Servicer, the Securities Insurer and each Securityholder
harmless from and against any and all claims, losses, penalties, fines,
forfeitures, legal fees and related costs, judgments, and any other costs, fees
and expenses that the Indenture Trustee, the Owner Trustee, the Servicer, the
Securities Insurer or any Securityholder may sustain directly resulting from the
negligence or willful misconduct of the Transferor in the performance of its
duties hereunder or in compliance with the terms of this Agreement. IT IS THE
EXPRESS INTENTION OF THE PARTIES TO THIS AGREEMENT THAT THE INDEMNIFICATION AND
HOLD HARMLESS OBLIGATIONS OF THE TRANSFEROR SET FORTH IN THE PRECEDING SENTENCE
SHALL APPLY FULLY TO CLAIMS, LOSSES, ETC. RESULTING FROM ACTS OR OMISSIONS THAT
MAY CONSTITUTE ORDINARY NEGLIGENCE ON THE PART OF THE TRANSFEROR. The Transferor
shall immediately notify the Indenture Trustee, the Owner Trustee, the Servicer,
the Securities Insurer and each Securityholder if a claim is made by a third
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party with respect to this Agreement, and the Transferor shall assume (with the
consent of the Indenture Trustee and the Owner Trustee) the defense of any such
claim and advance all expenses in connection therewith, including reasonable
counsel fees, and promptly advance funds to pay, discharge and satisfy any
judgment or decree which may be entered against the Transferor, the Servicer,
the Indenture Trustee, the Owner Trustee, the Securities Insurer and/or any
Securityholder in respect of such claim.
(d) The obligations of the Servicer, the Seller and the Transferor
under this Section 9.01 shall survive the termination of this Agreement.
Section 9.02 Merger or Consolidation of the Servicer.
The Servicer shall keep in full effect its existence, rights and
franchises as a corporation, and will obtain and preserve its qualification to
do business as a foreign corporation and maintain such other licenses and
permits, in each jurisdiction necessary to protect the validity and
enforceability of this Agreement or any of the Home Loans and to perform its
duties under this Agreement.
Any Person into which the Servicer may be merged or consolidated, or
any corporation resulting from any merger, conversion or consolidation to which
the Servicer shall be a party, or any Person succeeding to the business of the
Servicer, shall be an Eligible Servicer and shall be the successor of the
Servicer, as applicable hereunder, without the execution or filing of any paper
or any further act on the part of any of the parties hereto, anything herein to
the contrary notwithstanding. The Servicer shall send notice of any such merger,
conversion, consolidation or succession to the Indenture Trustee, the Owner
Trustee and the Securities Insurer.
Section 9.03 Limitation on Liability of the Servicer and Others.
The Servicer and any director, officer, employee or agent of the
Servicer may rely on any document of any kind which it in good faith reasonably
believes to be genuine and to have been adopted or signed by the proper
authorities respecting any matters arising hereunder. Subject to the terms of
Section 9.01 herein, the Servicer shall have no obligation to appear with
respect to, prosecute or defend any legal action which is not incidental to the
Servicer's duty to service the Home Loans in accordance with this Agreement.
Section 9.04 Servicer Not to Resign; Assignment.
(a) The Servicer shall not resign from the obligations and duties
hereby imposed on it except by mutual consent of the Servicer, the Seller, the
Indenture Trustee, the Owner Trustee, the Securities Insurer and the Majority
Securityholders, or upon the determination that the Servicer's duties hereunder
are no longer permissible under applicable law and such incapacity cannot be
cured by the Servicer. Any such determination permitting the resignation of the
Servicer shall be evidenced by a written opinion of counsel (who may be an
employee of the Servicer) to such effect delivered to the Indenture Trustee, the
Owner Trustee, the Securities Insurer and the Seller, which opinion of counsel
shall be in form and substance acceptable to the Indenture Trustee, the Owner
Trustee and the Securities Insurer. No such resignation shall become effective
until the Indenture Trustee or a successor servicer has assumed the Servicer's
responsibilities and obligations hereunder in accordance with Section 10.02.
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(b) The Servicer shall not assign this Agreement or any of its
obligations, rights and duties hereunder without the prior written consent the
Seller, the Indenture Trustee, the Owner Trustee, the Securities Insurer and the
Majority Securityholders; provided, however, the Servicer may assign this
Agreement without the prior written consent of the Seller, the Indenture
Trustee, the Owner Trustee, the Securities Insurer and the Majority
Securityholders to (i) the Indenture Trustee or (ii) any Person that (A) is
satisfactory to the Indenture Trustee, the Owner Trustee, the Securities Insurer
and the Majority Securityholders, (B) services not less than $25,000,000 in
aggregate outstanding principal amount of loans similar in type to the Home
Loans, (C) has a net worth of not less than $ , (D) has a blanket
fidelity bond and errors and omissions insurance coverage satisfying the
requirements set forth in Section 4.03 and (E) will not cause any rating of any
Class of the Securities in effect immediately prior to such assignment to be
qualified, downgraded or withdrawn, as evidenced by a letter from each Rating
Agency to such effect. Any such assignment to a successor servicer (other than
the Indenture Trustee) shall be effective only upon delivery to the Indenture
Trustee, the Owner Trustee and the Securities Insurer of an agreement, duly
executed by the Servicer and such successor servicer in a form reasonably
satisfactory to the Indenture Trustee and the Owner Trustee, in which such
successor servicer shall assume the due and punctual performance of each
covenant and condition to be performed or observed by the Servicer hereunder.
Section 9.05 Relationship of Servicer to Owner Trustee and the
Indenture Trustee.
The relationship of the Servicer (and of any successor to the Servicer
as servicer under this Agreement) to the Owner Trustee and the Indenture Trustee
under this Agreement is intended by the parties hereto to be that of an
independent contractor and not of a joint venturer, agent or partner of the
Owner Trustee or the Indenture Trustee.
ARTICLE X
DEFAULT
Section 10.01 Events of Default.
(a) In case one or more of the following Events of Default by the
Servicer shall occur and be continuing, that is to say:
(i) any failure by the Servicer to (1) deposit in the
Collection Account in accordance with Section 5.01(b) any payments in
respect of the Home Loans received by the Servicer no later than the
fourth Business Day following the day on which such payments were
received or (2) remit to the Indenture Trustee the amounts required to
be remitted to the Distribution Account on any Distribution Date
hereunder no later than the first Business Day after receipt from the
Indenture Trustee of notice of such failure; or
(ii) failure by the Servicer duly to observe or perform, in
any material respect, any other covenants, obligations or agreements of
the Servicer as set forth in this Agreement, which failure continues
unremedied for a period of 60 days after the date on which written
notice of such failure, requiring the same to be remedied and stating
that such notice is a "Notice of Default" hereunder, shall have been
given (a) to the Servicer by the Indenture
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Trustee or the Owner Trustee, or (b) to the Servicer, the Indenture
Trustee or the Owner Trustee by any Securityholder or the Securities
Insurer; or
(iii) 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 Servicer and such decree or order shall have remained in
force, undischarged or unstayed for a period of 60 days; or
(iv) the Servicer 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 Servicer or of or relating to all or substantially
all of the Servicer's property; or
(v) the Servicer 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; or
(vi) the Majority Securityholders or the Securities Insurer (A)
shall receive notice from the Servicer that the Servicer is no longer
able to discharge its duties under this Agreement or (B) shall
determine, in their reasonable judgment and based upon published
reports (including wire services), which they reasonably believe in
good faith to be reliable, that the Servicer
(1) has experienced a material adverse change in its
business, assets, liabilities, operations, condition
(financial or otherwise) or prospects,
(2) has defaulted on any of its material obligations, or
(3) has ceased to conduct its business in the ordinary
course; or
(vii) as of any Determination Date, the total Expected Loan
Losses (as defined below) exceed (1) commencing in ___________________
up to the fifth (5th) anniversary of the ____________________, 19__
Cut-Off Date, ___% of the sum of the Initial Pool Principal Balance and
the aggregate Principal Balance as of the applicable Cut-Off Dates of
all Subsequent Home Loans conveyed to the Issuer, or (2) thereafter up
to the tenth (10th) anniversary of the ____________________, 19__
Cut-Off Date, ___% of the sum of the Initial Pool Principal Balance and
the aggregate Principal Balance as of the applicable Cut-Off Dates of
all Subsequent Home Loans conveyed to the Issuer (where the "Expected
Loan Losses" shall be the sum of (A) the cumulative Net Loan Losses,
plus (B) ___% of the aggregate Principal Balance of the Home Loans
which are then more than 30 but less than 60 days delinquent, plus (C)
___% of the aggregate Principal Balance of the Home Loans which are
then more than 60 but less than 90 days delinquent, plus (B) ___% of
the aggregate Principal Balance of the Home Loans which are then more
than 90 days delinquent).
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(b) then, and in each and every such case, so long as an Event of
Default shall not have been remedied, the Majority Securityholders, the
Securities Insurer, the Indenture Trustee or the Owner Trustee by notice in
writing to the Servicer may, in addition to whatever rights such Person may have
at law or equity to damages, including injunctive relief and specific
performance, and with the consent of the Securities Insurer (which consent shall
not be unreasonably withheld), terminate all the rights and obligations of the
Servicer under this Agreement and in and to the Home Loans and the proceeds
thereof, as servicer under this Agreement. Upon receipt by the Servicer of such
written notice, all authority and power of the Servicer under this Agreement,
whether with respect to the Home Loans or otherwise, shall, subject to Section
10.02, pass to and be vested in a successor servicer acceptable to the
Securities Insurer, or the Indenture Trustee if a successor servicer cannot be
retained in a timely manner, and the successor servicer, or Indenture Trustee,
as applicable, is hereby authorized and empowered to execute and deliver, on
behalf of the Servicer, as attorney-in-fact or otherwise, any and all documents
and other instruments and do or cause to be done all other acts or things
necessary or appropriate to effect the purposes of such notice of termination,
including, but not limited to, the transfer and endorsement or assignment of the
Home Loans and related documents. The Servicer agrees to cooperate with the
successor servicer in effecting the termination of the Servicer's
responsibilities and rights hereunder, including, without limitation, the
transfer to the successor servicer for administration by it of all amounts which
shall at the time be credited by the Servicer to each Collection Account or
thereafter received with respect to the Home Loans.
Section 10.02 Indenture Trustee to Act; Appointment of Successor.
On and after the date the Servicer receives a notice of termination
pursuant to Section 10.01, or the Indenture Trustee receives the resignation of
the Servicer evidenced by an opinion of counsel or accompanied by the consents
required by Section 9.04, or the Servicer is removed as servicer pursuant to
this Article X, then, subject to Section 4.08, the Indenture Trustee shall
appoint a successor servicer acceptable to the Securities Insurer to be the
successor in all respects to the Servicer in its capacity as servicer under this
Agreement and the transactions set forth or provided for herein and shall be
subject to all the responsibilities, duties and liabilities relating thereto
placed on the Servicer by the terms and provisions hereof; provided, however,
that the successor servicer shall not be liable for any actions of any servicer
prior to it; provided further, however, that if a successor servicer cannot be
retained in a timely manner, the Indenture Trustee shall act as successor
servicer. In the event the Indenture Trustee assumes the responsibilities of the
Servicer pursuant to this Section 10.02, the Indenture Trustee will make
reasonable efforts consistent with applicable law to become licensed, qualified
and in good standing in each Mortgaged Property State the laws of which require
licensing or qualification, in order to perform its obligations as Servicer
hereunder or, alternatively, shall retain an agent who is so licensed, qualified
and in good standing in any such Mortgaged Property State. The successor
servicer shall be obligated to make Servicing Advances hereunder. As
compensation therefor, the successor servicer appointed pursuant to the
following paragraph, shall be entitled to all funds relating to the Home Loans
which the Servicer would have been entitled to receive from the Collection
Account pursuant to Section 5.01(c) and from the Distribution Account pursuant
to the applicable provisions of Section 6.01(b) if the Servicer had continued to
act as servicer hereunder, together with other servicing compensation in the
form of assumption fees, late payment charges or otherwise as provided in
Sections 7.01 and 7.03. The Servicer shall not be entitled to any termination
fee if it is terminated pursuant to Section 10.01, but shall be entitled to any
accrued and unpaid Servicing Fee to the date of termination.
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Any collections received by the Servicer after removal or resignation
shall be endorsed by it to the Indenture Trustee and remitted directly to the
Indenture Trustee or, at the direction of the Indenture Trustee, to the
successor servicer. The compensation of any successor servicer (including,
without limitation, the Indenture Trustee) so appointed shall be the Servicing
Fees, together with other Servicing Compensation provided for herein. In the
event the Indenture Trustee is required to solicit bids to appoint a successor
servicer, the Indenture Trustee shall solicit, by public announcement, bids from
housing and home finance institutions, banks and mortgage servicing institutions
meeting the qualifications set forth in Section 9.04(b)(ii) above. Such public
announcement shall specify that the successor servicer shall be entitled to the
full amount of the Servicing Fees and Servicing Compensation provided for
herein. Within thirty days after any such public announcement, the Indenture
Trustee shall negotiate and effect the sale, transfer and assignment of the
servicing rights and responsibilities hereunder to the qualified party
submitting the highest qualifying bid. The Indenture Trustee shall deduct from
any sum received by the Indenture Trustee from the successor to the Servicer in
respect of such sale, transfer and assignment all costs and expenses of any
public announcement and of any sale, transfer and assignment of the servicing
rights and responsibilities hereunder and the amount of any unreimbursed
Servicing Advances made by the Indenture Trustee. After such deductions, the
remainder of such sum shall be paid by the Indenture Trustee to the Servicer at
the time of such sale, transfer and assignment to the Servicer's successor. The
Indenture Trustee, the Owner Trustee, any Custodian, the Servicer and any such
successor servicer shall take such action, consistent with this Agreement, as
shall be necessary to effectuate any such succession. The Servicer agrees to
cooperate with the Indenture Trustee and any successor servicer in effecting the
termination of the Servicer's servicing responsibilities and rights hereunder
and shall promptly provide the Indenture Trustee or such successor servicer, as
applicable, all documents and records reasonably requested by it to enable it to
assume the Servicer's functions hereunder and shall promptly also transfer to
the Indenture Trustee or such successor servicer, as applicable, all amounts
which then have been or should have been deposited in the Collection Account by
the Servicer or which are thereafter received with respect to the Home Loans.
Neither the Indenture Trustee nor any other successor servicer shall be held
liable by reason of any failure to make, or any delay in making, any
distribution hereunder or any portion thereof caused by (i) the failure of the
Servicer to deliver, or any delay in delivering, cash, documents or records to
it, or (ii) restrictions imposed by any regulatory authority having jurisdiction
over the Servicer hereunder. No appointment of a successor to the Servicer
hereunder shall be effective until written notice of such proposed appointment
shall have been provided by the Indenture Trustee to each Securityholder, the
Owner Trustee, the Seller and the Securities Insurer and, except in the case of
the appointment of the Indenture Trustee as successor to the Servicer (when no
consent shall be required), the Seller, the Majority Securityholders, the Owner
Trustee and the Securities Insurer shall have consented thereto.
Pending appointment of a successor to the Servicer hereunder, the
Indenture Trustee shall act as servicer hereunder as hereinabove provided. In
connection with such appointment and assumption, the Indenture Trustee may make
such arrangements for the compensation of such successor servicer out of
payments on the Home Loans as it and such successor servicer shall agree;
provided, however, that no such compensation shall be in excess of that
permitted the Servicer pursuant to Section 7.03, together with other Servicing
Compensation in the form of assumption fees, late payment charges or otherwise
as provided in this Agreement.
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Section 10.03 Waiver of Defaults.
The Majority Securityholders may with the prior consent of the
Securities Insurer, on behalf of all Securityholders, waive any events
permitting removal of the Servicer as servicer pursuant to this Article X,
provided, however, that the Majority Securityholders may not waive a default in
making a required distribution on a Security or Residual Interest without the
consent of the related Securityholder or holder of the Residual Interest. Upon
any waiver of a past default, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been remedied for every
purpose of this Agreement. No such waiver shall extend to any subsequent or
other default or impair any right consequent thereto except to the extent
expressly so waived.
Section 10.04 Accounting Upon Termination of Servicer.
Upon termination of the Servicer under this Article X, the Servicer
shall, at its own expense:
(a) deliver to its successor or, if none shall yet have been appointed,
to the Indenture Trustee the funds in any Collection Account;
(b) deliver to its successor or, if none shall yet have been appointed,
to the Indenture Trustee all Home Loan Files and related documents and
statements held by it hereunder and a Home Loan portfolio computer tape;
(c) deliver to its successor or, if none shall yet have been appointed,
to the Indenture Trustee, the Owner Trustee, the Securities Insurer and the
Securityholders a full accounting of all funds, including a statement showing
the Monthly Payments collected by it and a statement of monies held in trust by
it for payments or charges with respect to the Home Loans; and
(d) execute and deliver such instruments and perform all acts
reasonably requested in order to effect the orderly and efficient transfer of
servicing of the Home Loans to its successor and to more fully and definitively
vest in such successor all rights, powers, duties, responsibilities, obligations
and liabilities of the Servicer under this Agreement.
ARTICLE XI
TERMINATION
Section 11.01 Termination.
This Agreement shall terminate upon notice to the Indenture Trustee of
either: (a) the later of the distribution to Securityholders of the final
payment or collection with respect to the last Home Loan, or the disposition of
all funds with respect to the last Home Loan and the remittance of all funds due
hereunder and the payment of all amounts due and payable to the Indenture
Trustee, the Owner Trustee, the Custodian and the Securities Insurer or (b)
mutual consent of the Servicer, the Seller, the Transferor, the Securities
Insurer and all Securityholders in writing.
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Section 11.02 Optional Termination by Holder of Residual Interest or
the Securities Insurer
The holder of the Residual Interest may, at its option, effect an early
redemption or termination of the Offered Securities on or after any Distribution
Date on which the Pool Principal Balance declines to ____% or less of the Pool
Principal Balance of the Initial Home Loans and Subsequent Home Loans conveyed
to the Trust as of the respective Cut-Off Dates. In addition, the holder of the
Residual Interest may, at its option, effect an early redemption or termination
of the Offered Securities on or after any Distribution Date on which the Pool
Principal Balance declines to ____% or less of the Pool Principal Balance of the
Initial Home Loans and Subsequent Home Loan conveyed to the Trust as of the
respective Cut-Off Dates. In connection with any such optional termination, to
the extent that sufficient proceeds are not available from the sale of the Home
Loans or the termination of the Trust, the holder of the Residual Interest will
pay the outstanding fees and expenses, if any, of the Indenture Trustee, the
Owner Trustee, the Securities Insurer, the Custodian, and the Servicer.
In addition, subject to Section 11.03, on any date on or after which
(i) ____% or more (based on Net Principal Loan Losses) of the Home Loans have
become Defaulted Home Loans on a cumulative basis and (ii) the
Overcollateralization Level has been reduced to zero or an amount less than
zero, then the Securities Insurer may, at its option, effect an early retirement
of the Securities and termination of this Agreement.
Any such early retirement and termination by the holder of the Residual
Interest, the Servicer or the Securities Insurer, as applicable, shall be
accomplished by depositing into the Collection Account on the Determination Date
immediately preceding the Distribution Date on which the purchase is to occur
the amount of the Termination Price together with an amount equal to the fees
and expenses of the Indenture Trustee, the Owner Trustee, the Servicer, the
Securities Insurer and any Custodian to be paid pursuant to the preceding
paragraph. On the same day that the Termination Price is deposited into the
Collection Account, the Termination Price and any amounts then on deposit in the
Collection Account (other than any amounts not required to have been deposited
therein pursuant to Section 5.01(b) and any amounts withdrawable therefrom by
the Servicer pursuant to Section 5.01(c)(ii)) shall be transferred to the Note
Distribution Account and/or the Certificate Distribution Account for
distribution to Securityholders on the final Distribution Date; and any amounts
received with respect to the Home Loans and Foreclosure Properties subsequent to
such transfer shall belong to the Servicer or the Securities Insurer, as
applicable. For purposes of calculating the Required Distribution Amount for the
final Distribution Date, amounts transferred to the Note Distribution Account or
the Certificate Distribution Account pursuant to the immediately preceding
sentence on the Determination Date immediately preceding such final Distribution
Date shall in all cases be deemed to have been received during the related Due
Period, and such transfer shall be made pursuant to Section 5.01(c).
Section 11.03 Notice of Termination.
Notice of termination of this Agreement or of early redemption and
retirement of the Securities shall be sent (i) by the Indenture Trustee to the
Noteholders in accordance with Section _____ of the Indenture or (ii) by the
Owner Trustee to the Certificateholders in accordance with Section _____ of the
Trust Agreement.
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ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01 Acts of Securityholders.
Except as otherwise specifically provided herein, whenever
Securityholder action, consent or approval is required under this Agreement,
such action, consent or approval shall be deemed to have been taken or given on
behalf of, and shall be binding upon, all Securityholders if the Majority
Securityholders agree to take such action or give such consent or approval.
Section 12.02 Amendment.
(a) This Agreement may be amended from time to time by the Seller, the
Servicer, the Transferor and the Owner Trustee by written agreement with notice
thereof to the Securityholders, without the consent of any of the
Securityholders, but with the consent of the Securities Insurer, to cure any
error or ambiguity, to correct or supplement any provisions hereof which may be
defective or inconsistent with any other provisions hereof or to add any other
provisions with respect to matters or questions arising under this Agreement;
provided, however, that such action will not adversely affect in any material
respect the interests of the Securityholders. An amendment described above shall
be deemed not to adversely affect in any material respect the interests of the
Securityholders if either (i) an opinion of counsel is obtained to such effect,
or (ii) the party requesting the amendment obtains a letter from each of the
Rating Agencies confirming that the amendment, if made, would not result in the
downgrading or withdrawal of the rating then assigned by the respective Rating
Agency to any Class of Securities then outstanding. Notwithstanding the
preceding, the Securities Insurer shall have the right to modify the definitions
relating to the calculation of the Required Overcollateralization Level without
the requirement of an amendment to this Agreement.
(b) This Agreement may also be amended from time to time by the Seller,
the Servicer, the Transferor and the Owner Trustee by written agreement, with
the prior written consent of the Majority Securityholders and the Securities
Insurer, 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 Securityholders; provided, however, that no such
amendment shall (i) reduce in any manner the amount of, or delay the timing of,
collections of payments on Home Loans or distributions which are required to be
made on any Security, without the consent of the holders of % of each Class of
Notes or the Certificates affected thereby and the Securities Insurer, (ii)
adversely affect in any material respect the interests of the holders of any
Class of Notes or Certificates in any manner other than as described in (i),
without the consent of the holders of % of such Class of Notes or the
Certificates, or (iii) reduce the percentage of any Class of Notes or the
Certificates, the holders of which are required to consent to any such
amendment, without the consent of the holders of % of such Class of Notes
or the Certificates and the Securities Insurer.
(c) It shall not be necessary for the consent of Holders under this
Section to approve the particular form of any proposed amendment, but it shall
be sufficient if such consent shall approve the substance thereof.
SALE AND SERVICING AGREEMENT (Series 19 - ) - Page 75
<PAGE> 84
Prior to the execution of any amendment to this Agreement, 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.
Section 12.03 Recordation of Agreement.
To the extent permitted by applicable law, this Agreement, or a
memorandum thereof if permitted under applicable law, is subject to recordation
in all appropriate public offices for real property records in all of the
counties or other comparable jurisdictions in which any or all of the Mortgaged
Properties are situated, and in any other appropriate public recording office or
elsewhere, such recordation to be effected by the Servicer at the
Securityholders' expense on direction of the Majority Securityholders or the
Securities Insurer, but only when accompanied by an opinion of counsel to the
effect that such recordation materially and beneficially affects the interests
of the Securityholders or is necessary for the administration or servicing of
the Home Loans.
Section 12.04 Duration of Agreement.
This Agreement shall continue in existence and effect until terminated
as herein provided.
Section 12.05 Governing Law.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS, WITHOUT GIVING
EFFECT TO PRINCIPLES OF CONFLICTS OF LAW.
Section 12.06 Notices.
All demands, notices and communications hereunder shall be in writing
and shall be deemed to have been duly given if personally delivered at or mailed
by overnight mail, certified mail or registered mail, postage prepaid, to (i)
the Seller, FIRSTPLUS INVESTMENT CORPORATION, 3773 Howard Hughes Parkway, Suite
300N, Las Vegas, Nevada 89109, Attention: Michael Orendorf, or such other
addresses as may hereafter be furnished to the Certificateholders and the other
parties hereto in writing by the Seller, (ii) in the case of the Owner
Trustee,__________________________________, Attention: _____________________, or
such other address as may hereafter be furnished to the Securityholders and the
other parties hereto, (iii) in the case of the Transferor and the Servicer,
FIRSTPLUS FINANCIAL, INC., 1250 Mockingbird Lane, Dallas, Texas 75247-4902,
Attention: Chris Gramlich, or such other address as may hereafter be furnished
to the Securityholders and the other parties hereto in writing by the Servicer
or the Transferor, (iv) in the case of a claim under the Guaranty Policy,
___________________, Attention:______________________, or such other address as
may be furnished to the Securityholders and the other parties hereto in writing
by such Fiscal Agent or the Securities Insurer, (v) in the case of the
Securities Insurer, _________________________,
Attention:_______________________, and (vii) in the case of the Securityholders,
as set forth in the applicable Note Register and Certificate Register. Any such
notices shall be deemed to be effective with respect to any party hereto upon
the
SALE AND SERVICING AGREEMENT (Series 19 - ) - Page 76
<PAGE> 85
receipt of such notice by such party, except that notices to the Securityholders
shall be effective upon mailing or personal delivery.
Section 12.07 Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be held invalid for any reason whatsoever, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other covenants,
agreements, provisions or terms of this Agreement.
Section 12.08 No Partnership.
Nothing herein contained shall be deemed or construed to create any
partnership or joint venture between the parties hereto and the services of the
Servicer shall be rendered as an independent contractor.
Section 12.09 Counterparts.
This Agreement may be executed in one or more counterparts and by the
different parties hereto on separate counterparts, each of which, when so
executed, shall be deemed to be an original; such counterparts, together, shall
constitute one and the same Agreement.
Section 12.10 Successors and Assigns.
This Agreement shall inure to the benefit of and be binding upon the
Servicer, the Transferor, the Seller, the Owner Trustee and the Securityholders
and their respective successors and permitted assigns.
Section 12.11 Headings.
The headings of the various sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed to be part of
this Agreement.
Section 12.12 Actions of Securityholders.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Agreement to be given or taken by
Securityholders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Securityholders in person or by agent
duly appointed in writing; and except as herein otherwise expressly provided,
such action shall become effective when such instrument or instruments are
delivered to the Seller, the Servicer or the Owner Trustee. Proof of execution
of any such instrument or of a writing appointing any such agent shall be
sufficient for any purpose of this Agreement and conclusive in favor of the
Seller, the Servicer and the Owner Trustee if made in the manner provided in
this Section.
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<PAGE> 86
(b) The fact and date of the execution by any Securityholder of any
such instrument or writing may be proved in any reasonable manner which the
Seller, the Servicer or the Owner Trustee deems sufficient.
(c) Any request, demand, authorization, direction, notice, consent,
waiver or other act by a Securityholder shall bind every holder of every
Security issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof, in respect of anything done, or omitted to be done,
by the Seller, the Servicer, the Owner Trustee or the Securities Insurer in
reliance thereon, whether or not notation of such action is made upon such
Security.
(d) The Seller, the Servicer or the Owner Trustee may require
additional proof of any matter referred to in this Section 12.12 as it shall
deem necessary.
Section 12.13 Reports to Rating Agencies.
(a) The Servicer shall provide to each Rating Agency copies of
statements, reports and notices, to the extent received or prepared by the
Servicer hereunder, as follows:
(i) copies of amendments to this Agreement;
(ii) notice of any substitution or repurchase of any Home Loans;
(iii) notice of any termination, replacement, succession, merger
or consolidation of either the Servicer, any Custodian or the Owner
Trustee;
(iv) notice of final payment on the Notes and the Certificates;
(v) notice of any Event of Default;
(vi) copies of the annual independent auditor's report delivered
pursuant to Section 7.05, and copies of any compliance reports
delivered by the Servicer hereunder including Section 7.04; and
(vii) copies of any Servicer's Monthly Statement pursuant to
Section 6.02(b); and
(b) With respect to the requirement of the Servicer to provide
statements, reports and notices to the Rating Agencies such statements, reports
and notices shall be delivered to the Rating Agencies at the following
addresses: (i) if to_________________________, Attention:___________________,
(ii) if to_________________________, Attention:___________________, or (iii) if
to_________________________, Attention:___________________.
Section 12.14 Securities Insurer Deemed Owner. Unless a Securities
Insurer Default shall be continuing, the Securities Insurer shall be deemed to
be the holder of % of the outstanding Insured Securities for purpose of
exercising the rights, including the voting rights subject to the provisions of
Section 12.02(b), of the holders of the Insured Securities under this Agreement.
The rights of the Securities Insurer to direct certain actions and consent to
certain actions of the Majority Securityholders hereunder will terminate at such
time as the Class Principal Balances of all Classes of Notes and the Certificate
Principal Balance of the Certificates have been reduced to zero and the
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<PAGE> 87
Securities Insurer has been reimbursed for all Guaranteed Payments and any other
amounts owed under the Guaranty Policy and the Securities Insurer has no further
obligation under the Guaranty Policy.
Section 12.15 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 12.16 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 Majority Certificateholders; provided that the Securities Insurer shall be
entitled to any distributions in reimbursement of the Securities Insurer
Reimbursement Amount.
(b) At such time as either (i) the Class Principal Balances of each
Class of Notes or the Certificate Principal Balance of the Certificates have
been reduced to zero or (ii) the Guaranty Policy has been terminated following a
Securities Insurer Default, 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
Securityholders (including in certain instances the Majority Securityholders)
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 Securityholders (including the Majority
Securityholders).
IN WITNESS WHEREOF, the Servicer, the Transferor, the Owner Trustee and
the Seller have caused their names to be signed by their respective officers
thereunto duly authorized, as of the day and year first above written, to this
SALE AND SERVICING AGREEMENT .
FIRSTPLUS HOME LOAN OWNER TRUST 19_-____,
By: ___________________________, as Owner Trustee
By:________________________________________________
Name:______________________________________________
Title:_____________________________________________
FIRSTPLUS INVESTMENT CORPORATION, as
Seller
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<PAGE> 88
By:________________________________________________
Name:______________________________________________
Title:_____________________________________________
FIRSTPLUS FINANCIAL, INC., as Transferor and
Servicer
By:________________________________________________
Name:______________________________________________
Title:_____________________________________________
SALE AND SERVICING AGREEMENT (Series 19 - ) - Page 80
<PAGE> 89
THE STATE OF NEW YORK )
)
COUNTY OF NEW YORK )
BEFORE ME, the undersigned authority, a Notary Public, on this day
personally appeared _______________________________, known to me to be a person
and officer whose name is subscribed to the foregoing instrument and
acknowledged to me that the same was the act of the said FIRSTPLUS HOME LOAN
OWNER TRUST 19 ___-___, as Issuer, and that he executed the same as the act of
such corporation for the purpose and consideration therein expressed, and in the
capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the _____ day of
___________________, 19__.
______________________________________________
Notary Public, State of New York
THE STATE OF NEW YORK )
)
COUNTY OF NEW YORK )
BEFORE ME, the undersigned authority, a Notary Public, on this day
personally appeared _______________________________, known to me to be a person
and officer whose name is subscribed to the foregoing instrument and
acknowledged to me that the same was the act of the said FIRSTPLUS INVESTMENT
CORPORATION, as the Seller, and that he executed the same as the act of such
corporation for the purpose and consideration therein expressed, and in the
capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the _____ day of
____________________, 19___.
______________________________________________
Notary Public, State of New York
SALE AND SERVICING AGREEMENT (Series 19 - ) - Page 81
<PAGE> 90
THE STATE OF NEW YORK )
)
COUNTY OF NEW YORK )
BEFORE ME, the undersigned authority, a Notary Public, on this day
personally appeared ________________________, known to me to be the person and
officer whose name is subscribed to the foregoing instrument and acknowledged to
me that the same was the act of the said FIRSTPLUS FINANCIAL, INC., a Texas
corporation, as the Transferor and Servicer, and that he executed the same as
the act of such corporation for the purposes and consideration therein
expressed, and in the capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the _____ day of
____________________, 19___.
______________________________________________
Notary Public, State of New York
SALE AND SERVICING AGREEMENT (Series 19 - ) - Page 82
<PAGE> 91
EXHIBIT 10.8
FORM OF ADMINISTRATION AGREEMENT
Dated as of _____________, 199__
among
FIRSTPLUS HOME LOAN OWNER TRUST 199_-__
(the "Issuer")
and
FIRSTPLUS FINANCIAL, INC.
(the "Administrator")
and
______________________, as Owner Trustee
(the "Owner Trustee")
<PAGE> 92
ADMINISTRATION AGREEMENT dated as of __________, 199__, among
FIRSTPLUS HOME LOAN OWNER TRUST 199_-__, a Delaware business trust (the
"Issuer"), FIRSTPLUS FINANCIAL, INC., a Texas corporation, as administrator (the
"Administration"), and ________________, a ____________ banking corporation, not
in its individual capacity but solely as Indenture Trustee (the "Indenture
Trustee").
W I T N E S S E T H:
WHEREAS the issuer is issuing the Class A-1 ___% Asset Backed Notes,
the Class A-2 ___% Asset Backed Notes and the Class A-3 ___% Asset Backed Notes
(collectively, the "Notes") pursuant to the Indenture dated as of ________, 199_
(as amended and supplemented from time to time, the "Indenture"), between the
Issuer and the Indenture Trustee (capitalized terms used herein and not defined
herein shall have the meanings assigned such terms in the Indenture);
WHEREAS the Issuer has entered into certain agreements in connection
with the issuance of the Notes and of certain beneficial ownership interests of
the Issuer, including (i) a Sale and Servicing Agreement dated as of ________,
199__ (as amended and supplemented from time to the "Sale and Servicing
Agreement"), among the Issuer, FIRSTPLUS FINANCIAL, INC., a Texas corporation,
as transferor and servicer, and FIRSTPLUS INVESTMENT CORPORATION, a Nevada
corporation, as seller (the "Seller"), (ii) Letter of Representations dated
_______, 199__ (as amended and supplemented from time to time, the "Note
Depository Agreement"), among the Issuer, the Indenture Trustee and The
Depository Trust Company relating to the Notes, (iii) Letter of Representations
dated _____, 199__ (as amended and supplemented from time to time, the
"Certificate Depository Agreement"), among the Issuer, the Administrator and The
Depository Trust Company (the Certificate Depository Agreement, together with
the Note Depository Agreement, the "Depository Agreements") and (iv) the
Indenture (the Sale and Servicing Agreement, the Depository Agreements and the
Indenture being hereinafter referred to collectively as the "Related
Agreements");
WHEREAS, pursuant to the Related Agreements, the Issuer and the Owner
Trustee are required to perform certain duties in connection with (a) the Notes
and the collateral therefor pledged pursuant to the Indenture (the "Collateral")
and (b) the beneficial ownership interests in the issuer (the registered holders
of such interests being referred to herein as the "Owners");
WHEREAS the Issuer and the Owner Trustee desire to have the
Administrator perform certain of the duties of the Issuer and the Owner Trustee
referred to in the preceding clause, and to provide such additional services
consistent"' with the terms of this Agreement and the Related Agreements as the
issuer and the Owner Trustee may from time to time request; and
WHEREAS the Administrator has the capacity to provide the services
required hereby and is willing to perform such services for the issuer and the
Owner Trustee on the terms set forth herein.
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NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties agree as follows:
Section 1. Duties of the Administrator.
(a) Duties with Respect to the Depository Agreements and the Indenture.
(i) The Administrator agrees to perform all its duties as Administrator
and the duties of the Issuer under the Depository Agreements. In addition, the
Administrator shall consult with the Owner Trustee regarding the duties of the
Issuer under the Indenture and the Depository Agreements. The Administrator
shall monitor the performance of the Issuer and shall advise the Owner Trustee
when action is necessary to comply with the Issuer's duties under the Indenture
and the Depository Agreements. The Administrator shall prepare for execution by
the Issuer or shall cause the preparation by other appropriate persons of all
such documents, reports, filings, instruments, certificates and opinions as it
shall be the duty of the Issuer to prepare, file or deliver pursuant to the
Indenture and the Depository Agreements. In furtherance of the foregoing, the
Administrator shall take all appropriate action that is the duty of the Issuer
to take pursuant to the Indenture including, without limitation, such of the
foregoing as are required with respect to the following matters under the
Indenture (references are to sections of the Indenture):
(A) the duty to cause the Note Register to be kept and to give
the Indenture Trustee notice of any appointment of a new Note Registrar
and the location, or change in location, of the Note Register (Section
2.4);
(B) the notification of Noteholders of the final principal
payment on their Notes (Section 2.7(b));
(C) the fixing or causing to be fixed of any specified record
date and the notification of the Indenture Trustee and Noteholders with
respect to special payment dates, if any (Section 2.7(c));
(D) the preparation of or obtaining of the documents and
instruments required for authentication of the Notes and delivery of
the same to the Indenture Trustee (Section 2.2);
(E) the preparation, obtaining or filing of the instruments,
opinions and certificates and other documents required for the release
of collateral (Section 2.9) ;
(F) the maintenance of an office in the Borough of Manhattan,
City of New York, for registration of transfer or exchange of Notes
(Section 3.2);
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(G) the duty to cause newly appointed Paying Agents, if any,
to deliver to the Indenture Trustee the instrument specified in the
Indenture regarding funds held in trust (Section 3.3);
(H) the direction to the Indenture Trustee to deposit moneys
with Paying Agents, if any, other than the Indenture Trustee (Section
3.3);
(I) The obtaining and preservation of 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
3.4);
(J) the preparation of all supplements, amendments, financing
statements, continuation statements, instruments of further assurance
and other instruments, in accordance with Section 3.5 of the Indenture,
necessary to protect the Trust Estate (Section 3.5);
(K) the delivery of the Opinion of Counsel on the, Closing
Date and the annual delivery of Opinions of Counsel, in accordance with
Section 3.6 of the Indenture, as to the Trust Estate, and the annual
delivery of the Officers' Certificate and certain other statements, in
accordance with Section 3.9 of the Indenture, as to compliance with the
Indenture (Sections 3.6 and 3.9);
(L) the identification to the Indenture Trustee in an
Officers' Certificate of a Person with whom the issuer has contracted
to perform its duties under the Indenture (Section 3.7(b));
(M) the notification of the Indenture Trustee and the Rating
Agencies of a Servicer Default pursuant to the Sale and Servicing
Agreement and, if such Servicer Default arises from the failure of the
Servicer to perform any of its duties under the Sale and Servicing
Agreement, the taking of all reasonable steps available to remedy such
failure (Section 3.7(d));
(N) the preparation and obtaining of documents and instruments
required for the release of the, Issuer from its obligations under the
Indenture (Section 3.10(b));
(O) the delivery of notice to the Indenture Trustee of each
Event of Default and each default by the Servicer or the seller under
the Sale and Servicing Agreement (Section 3.19);
(P) the monitoring of the Issuer's obligations as to the
satisfaction and discharge of the Indenture and the preparation of an
Officer's Certificate and the obtaining of the Opinion of Counsel and
the Independent Certificate relating thereto (Section 4.1);
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<PAGE> 95
(Q) the compliance with any written directive of the Indenture
Trustee with respect to the sale of the Trust Estate in a commercially
reasonable manner if an Event of Default shall have occurred and be
continuing (Section 5.4);
(R) the preparation and delivery of notice to Noteholders of
the removal of the Indenture Trustee and the appointment of a successor
Indenture Trustee (Section 6.8);
(S) the preparation of any written instruments required to
confirm more fully the authority of any co-trustee or separate trustee
and any written instruments necessary in connection with the
resignation or removal of any co-trustee or separate trustee (Sections
6.8 and 6.10);
(T) the furnishing of the Indenture Trustee with the names and
addresses of Noteholders during any period when the Indenture Trustee
is not the Note Registrar (Section 7.1);
(U) the preparation and, after execution by the Issuer, the
filing with the Commission, any applicable state agencies and the
Indenture Trustee of documents required to be filed on a periodic basis
with, and summaries thereof as may be required by rules and regulations
prescribed by, the Commission and any applicable state agencies and the
transmission of such summaries as necessary, to the Noteholders
(Section 7.3);
(V) the opening of one or more accounts Trust's name, the
preparation of Issuer Orders, Officers' Certificates and Opinions of
Counsel and all other actions necessary with respect to investment and
reinvestment of funds in the Trust Accounts (Sections 8.2 and 8.3);
(W) the preparation of an Issuer Request and Officers'
Certificate and the obtaining of an opinion of Counsel and Independent
Certificates, if necessary, for the release of the Trust Estate as
defined in the Indenture (Sections 8.4 and 8.5);
(X) the preparation of Issuer Orders and the obtaining of
Opinions of Counsel with respect to the execution of supplemental
indentures and the mailing to the Noteholders of notices with respect
to such supplemental indentures (Sections 9.1, 9.2 and 9.3);
(Y) the execution and delivery of new Notes conforming to any
supplemental indenture (Section 9.6);
(Z) the notification of Noteholders of redemption of the Notes
or the duty to cause the Indenture Trustee to provide such notification
(Section 10.2);
(AA) the preparation of all Officers' Certificates, Opinions
of Counsel and Independent Certificates with respect to any requests by
the issuer to the Indenture Trustee to take any action under the
Indenture (Section 11.1(a));
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<PAGE> 96
(BB) the preparation and delivery of Officers' Certificates
and the obtaining of Independent Certificates, if necessary, for the
release of property from the lien of the Indenture (Section 11.1(b));
(CC) the notification of the Rating Agencies, upon the failure
of the Indenture Trustee to give such notification, of the information
required pursuant to Section 11.4 of the Indenture (Section 11.4);
(DD) the preparation and delivery to Noteholders and the
Indenture Trustee of any agreements with respect to alternate payment
and notice provisions (Section 11.6);
(EE) the recording of the Indenture, if applicable (Section
11.15); and
(FF) the preparation of Reserve Account Definitive Notes and
other Notes and arranging the exchanges thereof (Section 2.12(b)).
(ii) The Administrator will:
(A) pay the Indenture Trustee from time to time reasonable
compensation for all services rendered by the Indenture Trustee under
the Indenture (which compensation shall not be limited by any provision
of law in regard to the compensation of a trustee of an express trust);
(B) except as otherwise expressly provided in the Indenture,
reimburse the Indenture Trustee upon its request for all reasonable
expenses, disbursements and advances incurred or made by the Indenture
Trustee in accordance with any provision of the Indenture (including
the reasonable compensation, expenses and disbursements of its agents
and counsel), except any such expense, disbursement or advance as may
be attributable to its negligence or bad faith;
(C) indemnify the Indenture Trustee and its agents for, and to
hold them harmless against, any losses, liability or expense incurred
without negligence or bad faith on their part, arising out of or in
connection with the acceptance or administration of the transactions
contemplated by the Indenture, including the reasonable costs and
expenses of defending themselves against any claim or liability in
connection with the exercise or performance of any of their powers or
duties under the Indenture; and
(D) indemnify the Owner Trustee and its agents for, and to
hold them harmless against, any losses, liability or expense incurred
without negligence or bad faith on their part, arising out of or in
connection with the acceptance or administration of the transactions
contemplated by the Trust Agreement, including the reasonable costs and
expenses of defending themselves against any claim or liability in
connection with the exercise or performance of any of their powers or
duties under the Trust Agreement.
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(b) Additional Duties. (i) In addition to the duties of the
Administrator set forth above, the Administrator shall perform such
calculations, and shall prepare for execution by the Issuer or the Owner Trustee
or shall cause the preparation by other appropriate persons of all such
documents, reports, filings, instruments, certificates and opinions as it shall
be the duty of the Issuer or the Owner Trustee to prepare, file or deliver
pursuant to the Related Agreements, and at the request of the Owner Trustee
shall take all appropriate action that it is the duty of the Issuer or the Owner
Trustee to take pursuant to the Related Agreements. Subject to Section 5 of this
Agreement, and in accordance with the directions of the Owner Trustee, the
Administrator shall administer, perform or supervise the performance of such
other activities in connection with the Collateral (including the Related
Agreements) as are not covered by any of the foregoing provisions and as are
expressly requested by the Owner Trustee and are reasonably within the
capability of the Administrator.
(ii) Notwithstanding anything in this Agreement or the Related
Agreements to the contrary, the Administrator shall be responsible for promptly
notifying the Owner Trustee in the event that any withholding tax is imposed on
the Trust's payments (or allocations of income) to an Owner as contemplated in
Section 5.2(c) of the Trust Agreement. Any such notice shall specify the amount
of any withholding tax required to be withheld by the Owner Trustee pursuant to
such provision.
(iii) Notwithstanding anything in this Agreement or the
Related Agreements to the contrary, the Administrator shall be responsible for
performance of the duties of the Owner Trustee set forth in Section 5.5(a), (b),
(c) and (d) of the Trust Agreement with respect to, among other accounting and
reports to Owners; provided, however, that the Owner Trustee shall retain
responsibility for the distribution of the Schedule K-1s necessary to enable
each owner to prepare its federal and state income tax returns.
(iv) The Administrator shall satisfy its obligations with
respect to clauses (ii) and (iii) above by retaining, at the expense of the
Trust payable by the Administrator, a firm of independent public accountants
(the "Accountants") acceptable to the Owner Trustee which shall perform the
obligations of the Administrator thereunder. In connection with paragraph (ii)
above, the Accountants will provide prior to _______, 199__, a letter in form
and substance satisfactory to the Owner Trustee as to whether any tax
withholding is then required and, if required, the procedures to be followed
with respect thereto to comply with the requirements of the Code. The
Accountants shall be required to update the letter in each instance that any
additional tax withholding is subsequently required or any previously required
tax withholding shall no longer be required.
(v) The Administrator shall perform the duties of the
Administrator specified in Section 10.2 of the Trust Agreement required to be
performed in connection with the resignation or removal of the Owner Trustee,
and any other duties expressly required to be performed by the Administrator
under the Trust Agreement.
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(vi) In carrying out the foregoing duties or any of its other
obligations under this Agreement, the Administrator may enter into transactions
with or otherwise deal with any of its affiliates; provided, however, that the
terms of any such transactions or dealings shall be in accordance with any
directions received from the Issuer and shall be, in the Administrator's
opinion, no less favorable to the Issuer than would be available from
unaffiliated parties.
(c) Non-Ministerial Matters.
(i) With respect to matters that in the reasonable judgment of
the Administrator are non-ministerial, the Administrator shall not take any
action unless within a reasonable time before the taking of such action the
Administrator shall have notified the Owner Trustee of the proposed action and
the Owner Trustee shall not have withheld consent or provided an alternative
direction. For the purpose of the preceding sentence, "non-ministerial matters"
shall include, without limitation:
(A) the amendment of or any supplement to the Indenture;
(B) the initiation of any claim or lawsuit by the Issuer and
the compromise of any action, claim or lawsuit brought by or against
the Issuer (other than in connection with the collection of the Home
Loans);
(C) the amendment, change or modification of the Related
Agreements;
(D) the appointment of successor Note Registrars, successor
Paying Agents and successor Indenture Trustees pursuant to the
Indenture or the appointment of successor Administrators or successor
Servicers, or the consent to the assignment by the Note Registrar,
Paying Agent or Indenture Trustee of its obligations, under the
Indenture; and
(E) the removal of the Indenture Trustee.
(ii) Notwithstanding anything to the contrary in this
Agreement, the Administrator shall not be obligated to, and shall not, (x) make
any payments to the Noteholders under the Related Agreements, (y) sell the Trust
Estate pursuant to Section 5.4 of the Indenture or (z) take any other action
that the Issuer directs the Administrator not to take on its behalf.
Section 2. Records. The Administrator shall maintain appropriate books
of account and records relating to services performed hereunder, which books of
account and records shall be accessible for inspection by the Issuer and the
Company at any time during normal business hours.
Section 3. Compensation. As compensation for the performance of the
Administrator's obligations under this Agreement and as reimbursement for its
expenses related thereto, the Administrator shall be entitled to a fee of
$_______ per month which shall be solely an obligation of the Company.
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<PAGE> 99
Section 4. Additional Information to be Furnished to the Issuer. The
Administrator shall furnish to the Issuer from time to time such additional
information regarding the Collateral as the Issuer shall, reasonably request.
Section 5. Independence of the Administrator. For all purposes of this
Agreement, the Administrator shall be an independent contractor and shall not be
subject to the supervision of the Issuer or the Owner Trustee with respect to
the manner in which it accomplishes the performance of its obligations
hereunder. Unless expressly authorized by the Issuer, the Administrator shall
have no authority to act for or represent the Issuer or the Owner Trustee in any
way and shall not otherwise be deemed an agent of the Issuer or the Owner
Trustee.
Section 6. No Joint Venture. Nothing contained in this Agreement (i)
shall constitute the Administrator and either of the Issuer or the Owner Trustee
as members of any partnership, joint venture, association, syndicate,
unincorporated business or other separate entity, (ii) shall be construed to
impose any liability as such on any of them or (iii) shall be deemed to confer
on any of them any express, implied or apparent authority to incur any
obligation or liability on behalf of the others.
Section 7. Other Activities of Administrator. Nothing herein shall
prevent the Administrator or its Affiliates from engaging in other businesses
or, in its sole discretion, from acting in a similar capacity as an
administrator for any other person or entity even though such person or entity
may engage in business activities similar to those of the Issuer, the Owner
Trustee or the Indenture Trustee.
Section 8. Term of Agreement; Resignation and Removal of Administrator.
(a) This Agreement shall continue in force until the dissolution of the Issuer,
upon which event this Agreement shall automatically terminate.
(b) Subject to Section 8(e), the Administrator may resign its duties
hereunder by providing the Issuer with at least 60 days' prior written notice.
(c) Subject to Section 8(e), the Issuer may remove the Administrator
without cause by providing the Administrator with at least 60 days' prior
written notice.
(d) Subject to Section 8(e), at the sole option of the Issuer, the
Administrator may be removed immediately upon written notice of termination from
the Issuer to the Administrator if any of the following events shall occur:
(i) the Administrator shall default in the performance of any
of its duties under this Agreement and, after notice of such default,
shall not cure such default within ten days (or, if such default cannot
be cured in such time, shall not give within ten days such assurance of
cure as shall be reasonably satisfactory to the Issuer);
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<PAGE> 100
(ii) a court having jurisdiction in the premises shall enter a
decree or order for relief, decree or order shall not have been vacated
within 60 days, in respect of the Administrator in any involuntary case
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect or appoint a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar officially for the
Administrator or any substantial part of its property or order the
winding-up or liquidation of its affairs; or
(iii) the Administrator shall commence a voluntary case under
any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, shall consent to the entry of an order for relief
in an involuntary case under any such law, or shall consent to the
appointment of a receiver, liquidator, assignee, trustee, custodian,
sequestrator or similar official for the Administrator or any
substantial part of its property, shall consent to the taking of
possession by any such official of any substantial part of its
property, shall make any general assignment for the benefit of
creditors or shall fail generally to pay its debts as they become due.
The Administrator agrees that if any of the events specified in clauses
(ii) or (iii) of this Section shall occur, it shall give written notice thereof
to the Issuer and the Indenture Trustee within seven days after the happening of
such event.
(e) No resignation or removal of the Administrator pursuant to this
Section shall be effective until (i) a successor Administrator shall have been
appointed by the Issuer and (ii) such successor Administrator shall have agreed
in writing to be bound by the terms of this Agreement in the same manner as the
Administrator is bound hereunder.
(f) The appointment of any successor Administrator shall be effective
only after satisfaction of the Rating Agency Condition with respect to the
proposed appointment.
(g) Subject to Section 8(e) and 8(f), the Administrator acknowledges
that upon the appointment of a Successor Servicer pursuant to the Sale and
Servicing Agreement, the Administrator shall immediately resign and such
Successor Servicer shall automatically become the Administrator under this
Agreement.
Section 9. Action upon Termination, Resignation or Removal. Promptly
upon the effective date of termination of this Agreement pursuant to Section
8(a) or the resignation or removal of the Administrator pursuant to Section 8(b)
or (c), respectively, the Administrator shall be entitled to be paid all fees
and reimbursable expenses accruing to it to the date of such termination,
resignation or removal. The Administrator shall forthwith upon such termination
pursuant to Section 8(a) deliver to the Issuer all property and documents of or
relating to the Collateral then in the custody of the Administrator in the event
of the resignation or removal of the Administrator pursuant to Section 8(b) or
(c), respectively, the Administrator shall cooperate with the Issuer and take
all reasonable steps requested to assist the Issuer in making an orderly
transfer of the duties of the Administrator.
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<PAGE> 101
Section 10. Notices. Any notice, report or other communication given
hereunder shall be in writing and addressed as follows:
(a) if to the Issuer or the Owner Trustee, to
FIRSTPLUS Home Loan Owner Trust 199_-__
In care of ________________
___________________________
___________________________
Attention: ________________
(b) if to the Administrator, to
FIRSTPLUS FINANCIAL, INC.
1250 Mockingbird Lane, 6th Floor
Dallas, Texas 75247-4902
Attention: ______________
(c) if to the Indenture Trustee, to
___________________________
___________________________
___________________________
Attention: ________________
or to such other address as any party shall have provided to the other parties
in writing. Any notice required to be in writing hereunder shall be deemed given
if such notice is mailed by certified mail, postage prepaid, or hand delivered
to the address of such party as provided above.
Section 11. Amendments. This Agreement may be amended from time to time
by a written amendment duly executed and delivered by the Issuer, the
Administrator and the Indenture Trustee, with the written consent of the Owner
Trustee, without the consent of the Noteholders and the Certificateholders, 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 Certificateholders; provided that such amendment
will not, in the Opinion of Counsel satisfactory to the Indenture Trustee,
materially and adversely affect the interest of any Noteholder or
Certificateholder. This Agreement may also be amended by the Issuer, the
Administrator and the Indenture Trustee with the written consent of the Owner
Trustee and the holders of Notes evidencing at least a majority in the
Outstanding Amount of the Notes and the holders of Certificates evidencing at
least a majority of the Certificate Balance 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 Noteholders or the
Certificateholders; provided, however, that no such amendment may (i) increase
or reduce in any manner the amount of, or accelerate or delay the timing of,
collections
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<PAGE> 102
of payments in respect of the Home Loans or distributions that are required to
be made for the benefit of the Noteholders or Certificateholders or (ii) reduce
the aforesaid percentage of the holders of Notes and Certificates which are
required to consent to any such amendment, without the consent of the holders of
all the outstanding Notes and Certificates. Notwithstanding the foregoing the
Administrator may not amend this Agreement without the permission of the
Company, which permission shall not be unreasonably withheld.
Section 12. Successor and Assigns. This Agreement may not be assigned
by the Administrator unless such assignment is previously consented to in
writing by the Issuer and the Owner Trustee and subject to the satisfaction of
the Rating Agency Condition in respect thereof. An assignment with such consent
and satisfaction, if accepted by the assignee, shall bind the assignee hereunder
in the same manner as the Administrator is bound hereunder. Notwithstanding the
foregoing, this Agreement may be assigned by the Administrator without the
consent of the Issuer or the Owner Trustee to a corporation or other
organization that is a successor (by merger, consolidation or purchase of
assets) to the Administrator, provided that such successor organization executes
and delivers to the Issuer, the Owner Trustee and the Indenture Trustee an
agreement in which such corporation or other organization agrees to be bound
hereunder by the terms of said assignment in the same manner as the
Administrator is bound hereunder. Subject to the foregoing, this Agreement shall
bind any successors or assigns of the parties hereto.
Section 13. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, 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 14. Headings. The section headings hereof have been inserted
for convenience of reference only and shall not be construed to affect the
meaning, construction or effect of this Agreement.
Section 15. Counterparts. This Agreement may be executed in
counterparts, each of which when so executed shall together constitute but one
and the same agreement.
Section 16. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall be ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
Section 17. Not Applicable to FIRSTPLUS FINANCIAL, INC. in Other
Capacities. Nothing in this Agreement shall affect any obligation FIRSTPLUS
FINANCIAL, INC. may have in any other capacity.
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<PAGE> 103
Section 18. Limitation of Liability of Owner Trustee and Indenture
Trustee. (a) Notwithstanding anything contained herein to the contrary, this
instrument has been countersigned by ____________________ not in its individual
capacity but solely in its capacity as Owner Trustee of the Issuer and in no
event shall _______________ in its individual capacity or any beneficial owner
of the Issuer have any liability for the representations, warranties, covenants,
agreements or other obligations of the Issuer hereunder, as to all of which
recourse shall be had solely to the assets of the Issuer. For all purposes of
this Agreement, in the performance of any duties or obligations of the Issuer
hereunder, the Owner Trustee shall be subject to, and entitled to the benefits
of, the terms and provisions of [Articles VI, VII and VIII] of the Trust
Agreement.
(b) Notwithstanding anything contained herein to the contrary, this
Agreement has been countersigned by _________________ not in its individual
capacity but solely as Indenture Trustee and in no event shall
_____________________ have any liability for the representations, warranties,
covenants, agreements or other obligations of the Issuer hereunder or in any of
the certificates, notices or agreements delivered pursuant hereto, as to all of
which recourse shall be had solely to the assets of the Issuer.
Section 19. Third-Party Beneficiary. The Owner Trustee is a third-party
beneficiary to this Agreement and is entitled to the rights and benefits
hereunder and may enforce the provisions hereof as if it were a party hereto.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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<PAGE> 104
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the day and year first above written.
FIRSTPLUS HOME LOAN OWNER TRUST 199 -
- --
By:
----------------------------,
not in its individual
capacity but solely as
Owner Trustee,
By:
---------------------------
Name:
Title:
By: , not in
--------------------
its individual capacity but
solely as Indenture Trustee,
By:
---------------------------
Name:
Title:
FIRSTPLUS FINANCIAL, INC.,
as Administrator,
By:
------------------------------------
Name:
Title:
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<PAGE> 1
EXHIBIT 10.8
FORM OF ADMINISTRATION AGREEMENT
Dated as of _____________, 199__
among
FIRSTPLUS HOME LOAN OWNER TRUST 199_-__
(the "Issuer")
and
FIRSTPLUS FINANCIAL, INC.
(the "Administrator")
and
______________________, as Owner Trustee
(the "Owner Trustee")
<PAGE> 2
ADMINISTRATION AGREEMENT dated as of __________, 199__, among
FIRSTPLUS HOME LOAN OWNER TRUST 199_-__, a Delaware business trust (the
"Issuer"), FIRSTPLUS FINANCIAL, INC., a Texas corporation, as administrator
(the "Administration"), and ________________, a ____________ banking
corporation, not in its individual capacity but solely as Indenture Trustee
(the "Indenture Trustee").
W I T N E S S E T H:
WHEREAS the issuer is issuing the Class A-1 ___% Asset Backed Notes,
the Class A-2 ___% Asset Backed Notes and the Class A-3 ___% Asset Backed Notes
(collectively, the "Notes") pursuant to the Indenture dated as of ________,
199_ (as amended and supplemented from time to time, the "Indenture"), between
the Issuer and the Indenture Trustee (capitalized terms used herein and not
defined herein shall have the meanings assigned such terms in the Indenture);
WHEREAS the Issuer has entered into certain agreements in connection
with the issuance of the Notes and of certain beneficial ownership interests of
the Issuer, including (i) a Sale and Servicing Agreement dated as of ________,
199__ (as amended and supplemented from time to the "Sale and Servicing
Agreement"), among the Issuer, FIRSTPLUS FINANCIAL, INC., a Texas corporation,
as transferor and servicer, and FIRSTPLUS INVESTMENT CORPORATION, a Nevada
corporation, as seller (the "Seller"), (ii) Letter of Representations dated
_______, 199__ (as amended and supplemented from time to time, the "Note
Depository Agreement"), among the Issuer, the Indenture Trustee and The
Depository Trust Company relating to the Notes, (iii) Letter of Representations
dated _____, 199__ (as amended and supplemented from time to time, the
"Certificate Depository Agreement"), among the Issuer, the Administrator and
The Depository Trust Company (the Certificate Depository Agreement, together
with the Note Depository Agreement, the "Depository Agreements") and (iv) the
Indenture (the Sale and Servicing Agreement, the Depository Agreements and the
Indenture being hereinafter referred to collectively as the "Related
Agreements");
WHEREAS, pursuant to the Related Agreements, the Issuer and the Owner
Trustee are required to perform certain duties in connection with (a) the Notes
and the collateral therefor pledged pursuant to the Indenture (the
"Collateral") and (b) the beneficial ownership interests in the issuer (the
registered holders of such interests being referred to herein as the "Owners");
WHEREAS the Issuer and the Owner Trustee desire to have the
Administrator perform certain of the duties of the Issuer and the Owner Trustee
referred to in the preceding clause, and to provide such additional services
consistent"' with the terms of this Agreement and the Related Agreements as the
issuer and the Owner Trustee may from time to time request; and
WHEREAS the Administrator has the capacity to provide the services
required hereby and is willing to perform such services for the issuer and the
Owner Trustee on the terms set forth herein.
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<PAGE> 3
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties agree as follows:
Section 1. Duties of the Administrator.
(a) Duties with Respect to the Depository Agreements and the
Indenture.
(i) The Administrator agrees to perform all its duties as
Administrator and the duties of the Issuer under the Depository Agreements. In
addition, the Administrator shall consult with the Owner Trustee regarding the
duties of the Issuer under the Indenture and the Depository Agreements. The
Administrator shall monitor the performance of the Issuer and shall advise the
Owner Trustee when action is necessary to comply with the Issuer's duties under
the Indenture and the Depository Agreements. The Administrator shall prepare
for execution by the Issuer or shall cause the preparation by other appropriate
persons of all such documents, reports, filings, instruments, certificates and
opinions as it shall be the duty of the Issuer to prepare, file or deliver
pursuant to the Indenture and the Depository Agreements. In furtherance of the
foregoing, the Administrator shall take all appropriate action that is the duty
of the Issuer to take pursuant to the Indenture including, without limitation,
such of the foregoing as are required with respect to the following matters
under the Indenture (references are to sections of the Indenture):
(A) the duty to cause the Note Register to be kept and to
give the Indenture Trustee notice of any appointment of a new Note
Registrar and the location, or change in location, of the Note
Register (Section 2.4);
(B) the notification of Noteholders of the final
principal payment on their Notes (Section 2.7(b));
(C) the fixing or causing to be fixed of any specified
record date and the notification of the Indenture Trustee and
Noteholders with respect to special payment dates, if any (Section
2.7(c));
(D) the preparation of or obtaining of the documents and
instruments required for authentication of the Notes and delivery of
the same to the Indenture Trustee (Section 2.2);
(E) the preparation, obtaining or filing of the
instruments, opinions and certificates and other documents required
for the release of collateral (Section 2.9) ;
(F) the maintenance of an office in the Borough of
Manhattan, City of New York, for registration of transfer or exchange
of Notes (Section 3.2);
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<PAGE> 4
(G) the duty to cause newly appointed Paying Agents, if
any, to deliver to the Indenture Trustee the instrument specified in
the Indenture regarding funds held in trust (Section 3.3);
(H) the direction to the Indenture Trustee to deposit
moneys with Paying Agents, if any, other than the Indenture Trustee
(Section 3.3);
(I) The obtaining and preservation of 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
3.4);
(J) the preparation of all supplements, amendments,
financing statements, continuation statements, instruments of further
assurance and other instruments, in accordance with Section 3.5 of the
Indenture, necessary to protect the Trust Estate (Section 3.5);
(K) the delivery of the Opinion of Counsel on the,
Closing Date and the annual delivery of Opinions of Counsel, in
accordance with Section 3.6 of the Indenture, as to the Trust Estate,
and the annual delivery of the Officers' Certificate and certain other
statements, in accordance with Section 3.9 of the Indenture, as to
compliance with the Indenture (Sections 3.6 and 3.9);
(L) the identification to the Indenture Trustee in an
Officers' Certificate of a Person with whom the issuer has contracted
to perform its duties under the Indenture (Section 3.7(b));
(M) the notification of the Indenture Trustee and the
Rating Agencies of a Servicer Default pursuant to the Sale and
Servicing Agreement and, if such Servicer Default arises from the
failure of the Servicer to perform any of its duties under the Sale
and Servicing Agreement, the taking of all reasonable steps available
to remedy such failure (Section 3.7(d));
(N) the preparation and obtaining of documents and
instruments required for the release of the, Issuer from its
obligations under the Indenture (Section 3.10(b));
(O) the delivery of notice to the Indenture Trustee of
each Event of Default and each default by the Servicer or the seller
under the Sale and Servicing Agreement (Section 3.19);
(P) the monitoring of the Issuer's obligations as to the
satisfaction and discharge of the Indenture and the preparation of an
Officer's Certificate and the obtaining of the Opinion of Counsel and
the Independent Certificate relating thereto (Section 4.1);
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<PAGE> 5
(Q) the compliance with any written directive of the
Indenture Trustee with respect to the sale of the Trust Estate in a
commercially reasonable manner if an Event of Default shall have
occurred and be continuing (Section 5.4);
(R) the preparation and delivery of notice to Noteholders
of the removal of the Indenture Trustee and the appointment of a
successor Indenture Trustee (Section 6.8);
(S) the preparation of any written instruments required
to confirm more fully the authority of any co-trustee or separate
trustee and any written instruments necessary in connection with the
resignation or removal of any co-trustee or separate trustee (Sections
6.8 and 6.10);
(T) the furnishing of the Indenture Trustee with the
names and addresses of Noteholders during any period when the
Indenture Trustee is not the Note Registrar (Section 7.1);
(U) the preparation and, after execution by the Issuer,
the filing with the Commission, any applicable state agencies and the
Indenture Trustee of documents required to be filed on a periodic
basis with, and summaries thereof as may be required by rules and
regulations prescribed by, the Commission and any applicable state
agencies and the transmission of such summaries as necessary, to the
Noteholders (Section 7.3);
(V) the opening of one or more accounts Trust's name, the
preparation of Issuer Orders, Officers' Certificates and Opinions of
Counsel and all other actions necessary with respect to investment and
reinvestment of funds in the Trust Accounts (Sections 8.2 and 8.3);
(W) the preparation of an Issuer Request and Officers'
Certificate and the obtaining of an opinion of Counsel and Independent
Certificates, if necessary, for the release of the Trust Estate as
defined in the Indenture (Sections 8.4 and 8.5);
(X) the preparation of Issuer Orders and the obtaining of
Opinions of Counsel with respect to the execution of supplemental
indentures and the mailing to the Noteholders of notices with respect
to such supplemental indentures (Sections 9.1, 9.2 and 9.3);
(Y) the execution and delivery of new Notes conforming to
any supplemental indenture (Section 9.6);
(Z) the notification of Noteholders of redemption of the
Notes or the duty to cause the Indenture Trustee to provide such
notification (Section 10.2);
(AA) the preparation of all Officers' Certificates,
Opinions of Counsel and Independent Certificates with respect to any
requests by the issuer to the Indenture Trustee to take any action
under the Indenture (Section 11.1(a));
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<PAGE> 6
(AB) the preparation and delivery of Officers'
Certificates and the obtaining of Independent Certificates, if
necessary, for the release of property from the lien of the Indenture
(Section 11.1(b));
(AC) the notification of the Rating Agencies, upon the
failure of the Indenture Trustee to give such notification, of the
information required pursuant to Section 11.4 of the Indenture
(Section 11.4);
(AD) the preparation and delivery to Noteholders and the
Indenture Trustee of any agreements with respect to alternate payment
and notice provisions (Section 11.6);
(AE) the recording of the Indenture, if applicable
(Section 11.15); and
(AF) the preparation of Reserve Account Definitive Notes
and other Notes and arranging the exchanges thereof (Section 2.12(b)).
(ii) The Administrator will:
(A) pay the Indenture Trustee from time to time
reasonable compensation for all services rendered by the Indenture
Trustee under the Indenture (which compensation shall not be limited
by any provision of law in regard to the compensation of a trustee of
an express trust);
(B) except as otherwise expressly provided in the
Indenture, reimburse the Indenture Trustee upon its request for all
reasonable expenses, disbursements and advances incurred or made by
the Indenture Trustee in accordance with any provision of the
Indenture (including the reasonable compensation, expenses and
disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or
bad faith;
(C) indemnify the Indenture Trustee and its agents for,
and to hold them harmless against, any losses, liability or expense
incurred without negligence or bad faith on their part, arising out of
or in connection with the acceptance or administration of the
transactions contemplated by the Indenture, including the reasonable
costs and expenses of defending themselves against any claim or
liability in connection with the exercise or performance of any of
their powers or duties under the Indenture; and
(D) indemnify the Owner Trustee and its agents for, and
to hold them harmless against, any losses, liability or expense
incurred without negligence or bad faith on their part, arising out of
or in connection with the acceptance or administration of the
transactions contemplated by the Trust Agreement, including the
reasonable costs and expenses of defending themselves against any
claim or liability in connection with the exercise or performance of
any of their powers or duties under the Trust Agreement.
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<PAGE> 7
(b) Additional Duties. (i) In addition to the duties of
the Administrator set forth above, the Administrator shall perform such
calculations, and shall prepare for execution by the Issuer or the Owner
Trustee or shall cause the preparation by other appropriate persons of all such
documents, reports, filings, instruments, certificates and opinions as it shall
be the duty of the Issuer or the Owner Trustee to prepare, file or deliver
pursuant to the Related Agreements, and at the request of the Owner Trustee
shall take all appropriate action that it is the duty of the Issuer or the
Owner Trustee to take pursuant to the Related Agreements. Subject to Section 5
of this Agreement, and in accordance with the directions of the Owner Trustee,
the Administrator shall administer, perform or supervise the performance of
such other activities in connection with the Collateral (including the Related
Agreements) as are not covered by any of the foregoing provisions and as are
expressly requested by the Owner Trustee and are reasonably within the
capability of the Administrator.
(ii) Notwithstanding anything in this Agreement or the
Related Agreements to the contrary, the Administrator shall be responsible for
promptly notifying the Owner Trustee in the event that any withholding tax is
imposed on the Trust's payments (or allocations of income) to an Owner as
contemplated in Section 5.2(c) of the Trust Agreement. Any such notice shall
specify the amount of any withholding tax required to be withheld by the Owner
Trustee pursuant to such provision.
(iii) Notwithstanding anything in this Agreement or the
Related Agreements to the contrary, the Administrator shall be responsible for
performance of the duties of the Owner Trustee set forth in Section 5.5(a),
(b), (c) and (d) of the Trust Agreement with respect to, among other accounting
and reports to Owners; provided, however, that the Owner Trustee shall retain
responsibility for the distribution of the Schedule K-1s necessary to enable
each owner to prepare its federal and state income tax returns.
(iv) The Administrator shall satisfy its obligations with
respect to clauses (ii) and (iii) above by retaining, at the expense of the
Trust payable by the Administrator, a firm of independent public accountants
(the "Accountants") acceptable to the Owner Trustee which shall perform the
obligations of the Administrator thereunder. In connection with paragraph (ii)
above, the Accountants will provide prior to _______, 199__, a letter in form
and substance satisfactory to the Owner Trustee as to whether any tax
withholding is then required and, if required, the procedures to be followed
with respect thereto to comply with the requirements of the Code. The
Accountants shall be required to update the letter in each instance that any
additional tax withholding is subsequently required or any previously required
tax withholding shall no longer be required.
(v) The Administrator shall perform the duties of the
Administrator specified in Section 10.2 of the Trust Agreement required to be
performed in connection with the resignation or removal of the Owner Trustee,
and any other duties expressly required to be performed by the Administrator
under the Trust Agreement.
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<PAGE> 8
(vi) In carrying out the foregoing duties or any of its
other obligations under this Agreement, the Administrator may enter into
transactions with or otherwise deal with any of its affiliates; provided,
however, that the terms of any such transactions or dealings shall be in
accordance with any directions received from the Issuer and shall be, in the
Administrator's opinion, no less favorable to the Issuer than would be
available from unaffiliated parties.
(c) Non-Ministerial Matters.
(i) With respect to matters that in the reasonable
judgment of the Administrator are non-ministerial, the Administrator shall not
take any action unless within a reasonable time before the taking of such
action the Administrator shall have notified the Owner Trustee of the proposed
action and the Owner Trustee shall not have withheld consent or provided an
alternative direction. For the purpose of the preceding sentence,
"non-ministerial matters" shall include, without limitation:
(A) the amendment of or any supplement to the Indenture;
(B) the initiation of any claim or lawsuit by the Issuer
and the compromise of any action, claim or lawsuit brought by or
against the Issuer (other than in connection with the collection of
the Home Loans);
(C) the amendment, change or modification of the Related
Agreements;
(D) the appointment of successor Note Registrars,
successor Paying Agents and successor Indenture Trustees pursuant to
the Indenture or the appointment of successor Administrators or
successor Servicers, or the consent to the assignment by the Note
Registrar, Paying Agent or Indenture Trustee of its obligations, under
the Indenture; and
(E) the removal of the Indenture Trustee.
(ii) Notwithstanding anything to the contrary in this
Agreement, the Administrator shall not be obligated to, and shall not, (x) make
any payments to the Noteholders under the Related Agreements, (y) sell the
Trust Estate pursuant to Section 5.4 of the Indenture or (z) take any other
action that the Issuer directs the Administrator not to take on its behalf.
Section 2. Records. The Administrator shall maintain
appropriate books of account and records relating to services performed
hereunder, which books of account and records shall be accessible for
inspection by the Issuer and the Company at any time during normal business
hours.
Section 3. Compensation. As compensation for the performance of
the Administrator's obligations under this Agreement and as reimbursement for
its expenses related thereto, the Administrator shall be entitled to a fee of
$_______ per month which shall be solely an obligation of the Company.
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<PAGE> 9
Section 4. Additional Information to be Furnished to the Issuer.
The Administrator shall furnish to the Issuer from time to time such additional
information regarding the Collateral as the Issuer shall, reasonably request.
Section 5. Independence of the Administrator. For all purposes
of this Agreement, the Administrator shall be an independent contractor and
shall not be subject to the supervision of the Issuer or the Owner Trustee with
respect to the manner in which it accomplishes the performance of its
obligations hereunder. Unless expressly authorized by the Issuer, the
Administrator shall have no authority to act for or represent the Issuer or the
Owner Trustee in any way and shall not otherwise be deemed an agent of the
Issuer or the Owner Trustee.
Section 6. No Joint Venture. Nothing contained in this
Agreement (i) shall constitute the Administrator and either of the Issuer or
the Owner Trustee as members of any partnership, joint venture, association,
syndicate, unincorporated business or other separate entity, (ii) shall be
construed to impose any liability as such on any of them or (iii) shall be
deemed to confer on any of them any express, implied or apparent authority to
incur any obligation or liability on behalf of the others.
Section 7. Other Activities of Administrator. Nothing herein
shall prevent the Administrator or its Affiliates from engaging in other
businesses or, in its sole discretion, from acting in a similar capacity as an
administrator for any other person or entity even though such person or entity
may engage in business activities similar to those of the Issuer, the Owner
Trustee or the Indenture Trustee.
Section 8. Term of Agreement; Resignation and Removal of
Administrator. (a) This Agreement shall continue in force until the
dissolution of the Issuer, upon which event this Agreement shall automatically
terminate.
(b) Subject to Section 8(e), the Administrator may resign its
duties hereunder by providing the Issuer with at least 60 days' prior written
notice.
(c) Subject to Section 8(e), the Issuer may remove the
Administrator without cause by providing the Administrator with at least 60
days' prior written notice.
(d) Subject to Section 8(e), at the sole option of the Issuer, the
Administrator may be removed immediately upon written notice of termination
from the Issuer to the Administrator if any of the following events shall
occur:
(i) the Administrator shall default in the
performance of any of its duties under this Agreement and, after
notice of such default, shall not cure such default within ten days
(or, if such default cannot be cured in such time, shall not give
within ten days such assurance of cure as shall be reasonably
satisfactory to the Issuer);
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(ii) a court having jurisdiction in the premises shall
enter a decree or order for relief, decree or order shall not have
been vacated within 60 days, in respect of the Administrator in any
involuntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect or appoint a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar
officially for the Administrator or any substantial part of its
property or order the winding-up or liquidation of its affairs; or
(iii) the Administrator shall commence a voluntary case
under any applicable bankruptcy, insolvency or other similar law now
or hereafter in effect, shall consent to the entry of an order for
relief in an involuntary case under any such law, or shall consent to
the appointment of a receiver, liquidator, assignee, trustee,
custodian, sequestrator or similar official for the Administrator or
any substantial part of its property, shall consent to the taking of
possession by any such official of any substantial part of its
property, shall make any general assignment for the benefit of
creditors or shall fail generally to pay its debts as they become due.
The Administrator agrees that if any of the events specified in
clauses (ii) or (iii) of this Section shall occur, it shall give written notice
thereof to the Issuer and the Indenture Trustee within seven days after the
happening of such event.
(e) No resignation or removal of the Administrator pursuant to
this Section shall be effective until (i) a successor Administrator shall have
been appointed by the Issuer and (ii) such successor Administrator shall have
agreed in writing to be bound by the terms of this Agreement in the same manner
as the Administrator is bound hereunder.
(f) The appointment of any successor Administrator shall be
effective only after satisfaction of the Rating Agency Condition with respect
to the proposed appointment.
(g) Subject to Section 8(e) and 8(f), the Administrator
acknowledges that upon the appointment of a Successor Servicer pursuant to the
Sale and Servicing Agreement, the Administrator shall immediately resign and
such Successor Servicer shall automatically become the Administrator under this
Agreement.
Section 9. Action upon Termination, Resignation or Removal.
Promptly upon the effective date of termination of this Agreement pursuant to
Section 8(a) or the resignation or removal of the Administrator pursuant to
Section 8(b) or (c), respectively, the Administrator shall be entitled to be
paid all fees and reimbursable expenses accruing to it to the date of such
termination, resignation or removal. The Administrator shall forthwith upon
such termination pursuant to Section 8(a) deliver to the Issuer all property
and documents of or relating to the Collateral then in the custody of the
Administrator in the event of the resignation or removal of the Administrator
pursuant to Section 8(b) or (c), respectively, the Administrator shall
cooperate with the Issuer and take all reasonable steps requested to assist the
Issuer in making an orderly transfer of the duties of the Administrator.
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<PAGE> 11
Section 10. Notices. Any notice, report or other communication
given hereunder shall be in writing and addressed as follows:
(a) if to the Issuer or the Owner Trustee, to
FIRSTPLUS Home Loan Owner Trust 199_-__
In care of ________________
___________________________
___________________________
Attention: ________________
(b) if to the Administrator, to
FIRSTPLUS FINANCIAL, INC.
1250 Mockingbird Lane, 6th Floor
Dallas, Texas 75247-4902
Attention: ________________
(c) if to the Indenture Trustee, to
___________________________
___________________________
___________________________
Attention: ________________
or to such other address as any party shall have provided to the other parties
in writing. Any notice required to be in writing hereunder shall be deemed
given if such notice is mailed by certified mail, postage prepaid, or hand
delivered to the address of such party as provided above.
Section 11. Amendments. This Agreement may be amended from time
to time by a written amendment duly executed and delivered by the Issuer, the
Administrator and the Indenture Trustee, with the written consent of the Owner
Trustee, without the consent of the Noteholders and the Certificateholders, 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 Certificateholders; provided that such
amendment will not, in the Opinion of Counsel satisfactory to the Indenture
Trustee, materially and adversely affect the interest of any Noteholder or
Certificateholder. This Agreement may also be amended by the Issuer, the
Administrator and the Indenture Trustee with the written consent of the Owner
Trustee and the holders of Notes evidencing at least a majority in the
Outstanding Amount of the Notes and the holders of Certificates evidencing at
least a majority of the Certificate Balance 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 Noteholders or the
Certificateholders; provided, however, that no such amendment may (i) increase
or reduce in any manner the amount of, or accelerate or delay the timing of,
collections
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<PAGE> 12
of payments in respect of the Home Loans or distributions that are required to
be made for the benefit of the Noteholders or Certificateholders or (ii) reduce
the aforesaid percentage of the holders of Notes and Certificates which are
required to consent to any such amendment, without the consent of the holders
of all the outstanding Notes and Certificates. Notwithstanding the foregoing
the Administrator may not amend this Agreement without the permission of the
Company, which permission shall not be unreasonably withheld.
Section 12. Successor and Assigns. This Agreement may not be
assigned by the Administrator unless such assignment is previously consented to
in writing by the Issuer and the Owner Trustee and subject to the satisfaction
of the Rating Agency Condition in respect thereof. An assignment with such
consent and satisfaction, if accepted by the assignee, shall bind the assignee
hereunder in the same manner as the Administrator is bound hereunder.
Notwithstanding the foregoing, this Agreement may be assigned by the
Administrator without the consent of the Issuer or the Owner Trustee to a
corporation or other organization that is a successor (by merger, consolidation
or purchase of assets) to the Administrator, provided that such successor
organization executes and delivers to the Issuer, the Owner Trustee and the
Indenture Trustee an agreement in which such corporation or other organization
agrees to be bound hereunder by the terms of said assignment in the same manner
as the Administrator is bound hereunder. Subject to the foregoing, this
Agreement shall bind any successors or assigns of the parties hereto.
Section 13. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, 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 14. Headings. The section headings hereof have been
inserted for convenience of reference only and shall not be construed to affect
the meaning, construction or effect of this Agreement.
Section 15. Counterparts. This Agreement may be executed in
counterparts, each of which when so executed shall together constitute but one
and the same agreement.
Section 16. Severability. Any provision of this Agreement that
is prohibited or unenforceable in any jurisdiction shall be ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
Section 17. Not Applicable to FIRSTPLUS FINANCIAL, INC. in Other
Capacities. Nothing in this Agreement shall affect any obligation FIRSTPLUS
FINANCIAL, INC. may have in any other capacity.
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<PAGE> 13
Section 18. Limitation of Liability of Owner Trustee and
Indenture Trustee. (a) Notwithstanding anything contained herein to the
contrary, this instrument has been countersigned by ____________________ not in
its individual capacity but solely in its capacity as Owner Trustee of the
Issuer and in no event shall _______________ in its individual capacity or any
beneficial owner of the Issuer have any liability for the representations,
warranties, covenants, agreements or other obligations of the Issuer hereunder,
as to all of which recourse shall be had solely to the assets of the Issuer.
For all purposes of this Agreement, in the performance of any duties or
obligations of the Issuer hereunder, the Owner Trustee shall be subject to, and
entitled to the benefits of, the terms and provisions of [Articles VI, VII and
VIII] of the Trust Agreement.
(b) Notwithstanding anything contained herein to the contrary,
this Agreement has been countersigned by _________________ not in its
individual capacity but solely as Indenture Trustee and in no event shall
_____________________ have any liability for the representations, warranties,
covenants, agreements or other obligations of the Issuer hereunder or in any of
the certificates, notices or agreements delivered pursuant hereto, as to all of
which recourse shall be had solely to the assets of the Issuer.
Section 19. Third-Party Beneficiary. The Owner Trustee is a
third-party beneficiary to this Agreement and is entitled to the rights and
benefits hereunder and may enforce the provisions hereof as if it were a party
hereto.
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<PAGE> 14
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the day and year first above written.
FIRSTPLUS HOME LOAN OWNER TRUST 199_-__
By: ,
-----------------------------------
not in its individual
capacity but solely as
Owner Trustee,
By:
------------------------------
Name:
Title:
By: ,
-----------------------------------
not in its individual capacity but
solely as Indenture Trustee,
By:
------------------------------
Name:
Title:
FIRSTPLUS FINANCIAL, INC.,
as Administrator,
By:
-----------------------------------
Name:
Title:
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